Global Economy Lights are flashing, says PM

“Red warning lights” are again flashing over the state of the global economy, the Prime Minister has warner.

Speaking after the G20 meeting of world leaders, David Cameron said a “dangerous backdrop of instability” threatened Britain’s recovery, and we should stick to our long-term plan”.

In a Guardian article, he warned of the impact from conflicts, low growth and a eurozone “on the brink” of another recession.

He said: “The Eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too.

“Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down.”

By contrast, the Bank of England has forecast that the UK economy will grow by 3.5% in 2014, remaining resilient in the face of the “subdued world demand”.

But it its latest update last week, it also warned that there were risks from the global economic situation and it revised down its forecasts for UK output next year.

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Latest forecast for UK economy

There is expected to be a GDP growth of 3pc this year, moderating to 2.5pc in 2015.

UK economic statistics have recently undergone significant revisions, but they do not change the 
wider picture. 

That being ‘the turnaround of the UK economy remains the weakest in the past century while the UK’s large productivity puzzle persists and, notwithstanding the gradual accumulation of an evidence base, remains largely unsolved.’ As suggested by the National institute of Economic & Social Research.

It is further proposed by the National Institute that the key risk to the progress of the recovery is productivity growth: ‘should this fail to recover as we expect, the impact on both living standards and public finances will be significant.’

Externally, the generalised weakness of the global recovery and, in particular, continued stagnation (or worse) in the Euro area, are obviously significant risks for the UK economy. 

Source: www.creditman.co.uk

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UK interest rates remain at record low of 0.5%

The Bank of England has held UK interest rates at a record low of 0.5% for another month.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.

The Bank’s Monetary Policy Committee has held rates at 0.5% since March 2009 in a bid to help economic recovery.

Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news.

The Chancellor, George Osborne, has also warned that the UK will not escape the slowdown in the
Eurozone.

The Bank of England has said it wants to be sure growth is on a firmer footing, and that slack in the labour market is reducing, before it raises interest rates.

Source: www.bbc.co.uk/news/business

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The Money Statistics - November 2014- Debt Management

The latest money management statistics have now been published by The Money Charity, which was known as Credit Action until October 2013, and is the UK’s financial capability charity.

These figures have been being produced since 2005 and have previously been called the debt statistics. But have now been renamed to encompass a wider range of how we spend money in the UK.

The key figures for November 2014 can be seen below.
• £55,223: average household debt (including mortgages) in September, up from £55,083 in August
• 270: Number of insolvencies every day
• £1,185: average amount paid in interest on debt per person annually
• 210,000: average house price paid by first-time buyers
• 1,033: number of people who became redundant every day between June and August
• £2,214: average household credit card debt
• 0.7%: estimated growth of the UK economy in Q3 2014
• £90m: daily increase in net lending to individuals
• 1,474: drop in unemployed people per day
• 17.8bn: gross mortgage lending in September 2014

If you know any businesses or individuals that are struggling with debt recommend they visit our website to see how we have helped similar people, we are happy to provide a free initial consultation with our obligation.

There is Life after Debt!

Source: http://themoneycharity.org.uk/money-statistics

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UK Faces ‘Debt Timebomb’ from Ageing Population

Institute of Economic Affairs calls for radical measures, including a smaller NHS, to bring Britain’s debt mountain back to sustainable levels.

Britain’s ageing population has created a “debt timebomb” that can only be defused, according to a respected think-tank, through a combination of significant spending cuts, faster increases in the state pension age and ending universal free healthcare.

The institute of Economic Affairs warned that the government would need to cut public spending by at least 25pc in order to get Britain’s debt down to sustainable levels.

In a set of radical proposals, the Institute of Economic Affairs called on the Government to end “unhelpful” policies such as the “triple lock guarantee” that ensures the state pension increases by the higher of inflation, average earnings or a minimum of 2.5pc every year.

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Source: www.telegraph.co.uk

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Business groups call on government to scrap legal reforms that will cost businesses and taxpayers £160m per year

There have been warnings from Business groups, including accounting and insolvency bodies, the institute of Credit Management, and the British Property Federation, that government legal reforms could cost creditors over £160 million per year from next April – with rouge directors being the big beneficiaries.

Six influential business groups have signed and sent a letter to the Prime Minister, David Cameron and Justice Secretary, Chris Grayling, outlining their concerns and calling for the government to scrap the planned change.

The letter highlights the planned changes and describes them as being “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

From April 2015, insolvency litigation will no longer be exempt from the crackdown on ‘no-win, no-fee’ legal funding introduced by 2012 reforms. This type of funding is often the only way creditors can afford to pay for court cases to retrieve money from rouge directors that have wrongly taken money out of a failed business.

Under the current system, successful claims see both creditors’ debts returned and the rouge director charged for the cost of the court case.

Source: www.r3.org.uk

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Bank OF England Says Keep Interest Rates Low For Now

Interest rates should remain low to avoid long-term economic stagnation, the chief economist at the Bank of England has said.

Global markets have tumbled this week, with investors disconcerted at the lack of growth in Europe and especially Greece, the impact of Ebola, and worrying economic data from China and the US.

Previously, UK interest rates had been expected to rise early next year.

Andrew Haldane said in a speech he was downbeat over the UK economy because of weaker global growth, low wage growth and financial and political risks.

He said there was still plenty of reasons to be cheerful. Growth is set to be the fastest of any major economy this year and inflation and borrowing costs are low, he said.

Source: www.bbc.co.uk/business

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Eurozone Gloom Hits Markets And Oil

Global stock markets plunged and the price of oil collapsed to its lowest level in more than fouryears this week as pessimism about the economic outlook for the Eurozone gripped investors around the world.


The FTSE 100 index of the UK’s leading shares fell 91.88 points, or 1.43pc, to 6,3339.97, its lowest mark in a year and 7.82pc below highs of 6,878 in May.


The “fear index” which is a measure of investor anxiety, known as the Vix, leapt by nearly 25pc as a draft of gloomy economic data emerged.


UK construction data showed output contracted by 3.9pc in August, much worse than analysts had predicted. Reports also emerged that Germany’s central bank would cut its official growth forecast next week.


The impact of Ebola and lurking geopolitical risks have added to the pessimism.


Source: The Telegraph


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UK Interest Rates Remain at Record Low of 0.5%

The Bank of England has held UK interest rates at a record low of 0.5%.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent. 

Rates have been at 0.5% since March 2009, with the market expecting a small rise early next year. 

There has been increasing speculation over when the bank will start to raise the rates again.

Markets are expecting a rise at some point next year. However some think it could be later this year due to the General Election which is scheduled for May 2015. 

The UK economy has been growing strongly this year – with GDP rising by 0.9% between April and June, following a 0.7% rise in the previous quarter – and is on course to outperform many other developed economies this year. 

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Weakness in Economy Continues

Disappointing figures have recently been issued showing continued weakness on the High Street. The volume of sales fell 0.6% in January (compared to January 2012).

The Governor of the Bank of England, Sir Mervyn King has recently said that spending will have to shrink before the economy corrects itself. “There is no point trying to persuade people to spend in the way that they were spending before the crisis”.

Sir Mervyn has also warned that inflation will also remain high for at least another three years. Average earnings are back to 2003 levels according to the ONS (office of National Statistics) and in the last three years real incomes have declined as inflation has risen faster than wages.

This is inevitably going to put pressure on retailers. The decline in January’s sales was affected significantly by a sharp 2.6% fall in food sales – the lowest level in almost nine years.

Tim Corfield

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