Tag Archives: low growth

A year of good and bad times for the UK

2012 has been a mixed year for the UK with the two major London Olympic events creating a well earned diversion for the country from the unending economic turmoil. Success in both lifted the spirits of all and engendered enthusiasm for our younger generation in sporting competition. Unfortunately, the reality is continued economic uncertainty, low to no growth, austerity, cut backs in benefits, increased food, fuel and utility prices, likely a pattern to be repeated in 2013 for the majority of the population.

Christmas has also been a period in many recent years when excessive consumer credit spending has left a nasty hangover for the early part of the following year when paying off debt and the onerously high interest rates if payments are not cleared. It appears from initial surveys that a significant number of people have again used credit cards and short-term loans to pay for the festive celebrations so another delay in austerity that will eventually come home to roost during 2013. A happy new year ? 

All roundabouts and no swings………………

It appears that the UK economy is going around in circles. Remember Woolworths demise and now we have Clintons/Birthdays. There was a private sector led recession in 2009 and now a public sector led one in 2012 – the predicted double dip. Banks with problems still abound, low growth and record low interest rates for 3 years. It’s the roundabout that keeps on turning…………and no upward swing in sight.

The Eurozone crisis continues to ebb and flow as each deficit troubled country provides no clear signal of how it will recover, and this has been a factor in the stagnation of the UK economy.

To quote from the film Shakespeare in Love, “So what do we do? Nothing. Strangely enough, it all turns out well. How? I don’t know. It’s a mystery”. The real question however is when will it turn out well.…………?

UK base rates, inflation and unemployment – same old story but with worsening figures

Interest rates remain at 0.5% in the UK, but for how much longer as record monthly leaps in food and transport costs raised the consumer prices index (CPI) to 3.7% in December 2010, (up from 3.3% in November), according to the Office for National Statistics. Continued high level rises in food and fuel prices could send the inflation rate to 5% by the autumn, economists warned.

There is some suggestion that interest rates will have to rise to mitigate inflationary pressures however, pushing up interest rates may be a welcome relief for net savers but it is likely to have a greater adverse impact on those with mortgages and other borrowings.

The housing market is already falling back from the small gains during the last twelve months and, with an increasing level of job losses in 2011 possible, (currently at just under 2.5 million or 7.9%), any consumer confidence could be wiped out and the UK could slip into another economic downturn or consistent low growth period for the foreseeable future.