UK services sector under serious pressure
Over the last 30 years the UK has moved from a manufacturing based economy to a services based economy with literally millions of jobs created in the services industry. However, it has been revealed that for the ninth month in a row there have been significant job losses in the services sector and there are concerns that this could continue for some time to come. While there is one crumb of hope, with the rate of decline slowing in January, it is unclear whether this is indicating a stabilisation of the sector or a short-term pause.
The UK services industry now accounts for three quarters of the economic output of the country and is vital to the eventual recovery of the UK. The sectors hardest hit include hotels and restaurants with disposable income coming under severe pressure, leading to significant job cuts and cost reductions. The situation in these particular sectors could get worse before it gets better with money never tighter and the UK population targeting their income at other financial requirements.
This is one of the factors which have persuaded many economists that base rates will fall today but as we have covered in our earlier post, there are some suggesting that base reductions on their own are not enough.
Share this..
Related stories
Oh no, mortgage-backed bonds return
Lloyds bank has today announced the issue of £3 billion of mortgage-backed bonds which have been lifted from the HBOS loan book and used to raise funds in the money markets. Those who are aware of mortgage-backed bonds will be cautious to say the least as many people believe these particular investments led to the downfall of the worldwide economy nearly 2 years ago. So what has changed?
<...
Oil Price Shoots Ahead To $128
While many of us are still digesting the fact that the price of oil has moved over $100 a barrel, the price has pushed ahead still further to hit a high of $128 a barrel. If you believe the forecast of trusted financial outfit Goldman Sachs the price would be in for another major jump in the second half of 2008 â€" Goldmans are forecasting an average price for the second half of 2008 of...
Read MoreWill an increase in VAT kill the recovery?
As the UK government looks set to push the VAT level back to 17.5% from the reduced 15% rate there are concerns that the ongoing recovery in the UK economy could be strangled at source. There are real concerns about the financial stability of companies on the high Street and the fact that consumer spending has fluctuated enormously over the last few months with more and more consumers looking to t...
Read MoreIs The UK Nearing An Inevitable Recession?
News that growth in the economy has slowed to just 0.2% in the second quarter of 2008 is seen as further evidence that the UK is fast approaching its first recession since the early 1990s. This latest performance brings the annual rate at which the economy has grown to just 1.6%, a far cry from the heydays of just last year. So is recession inevitable?
While it would be wrong to s...
Defaqto warns on economic prospects
There are "good reasons" to expect the UK to experience deflation in the near future, Defaqto has said.According to the research firm, Britons could experience falling prices due to the current financial downturn - a trend which could make the slowdown even worse than it would be otherwise.This is because deflation can create a "negative feedback loop" in the economy, with consumers putting off pu...
Read More