Interest rates may hit 8% by 2012
An influential think tank has warned that interest rates may have to rise to 8% to combat rampant inflation.
The warning comes from the Policy Exchange, whose chief economist, Andrew Lilico, argues an economic recovery will unleash a wave of money.
Doctor Lilico believes a double-dip recession is likely, which would then be followed by a boom. Read more...
Categories: The future Tags: double dip, interest rates, rise rapidly
Pound falls after uk recession risk
Pound falls against dollar and euro on 'recession risk'
The pound has fallen sharply against the dollar and the euro after a Bank of England policymaker said the UK could yet fall back into recession.
The pound fell 2.4 cents, or 1.5%, against the dollar, to $1.503. Against the euro, it fell 1 cent, or 0.9%, to 1.100 euros.
The Bank's Monetary Policy Committee member Andrew Sentance said there was a chance of a double-dip recession.
The pound has been falling recently in the run-up to the general election.
"You have to recognise there is some risk of a double dip, but that's not the central forecast," Mr Sentance said.
The UK exited recession during the last three months of last year, but growth remains weak.
There are also concerns about the high level of UK public debt, although figures released on Thursday suggest borrowing this financial year will come in under the government's forecast.
Deficit cuts
Uncertainty about who will win the election, and whether there might be a hung parliament, has increased concerns about plans to cut debt levels.
This uncertainty has weighed on the pound.
The government has been forced to borrow heavily during the downturn, and the UK's budget deficit currently stands at 12.6% of GDP, one the highest in Europe.
Labour has announced plans to reduce the deficit to 4.7% by 2015, arguing that making more drastic cuts could harm the UK's recovery from recession.
But a European Union report released earlier this week said the plans were not ambitious enough.
The Conservatives also argue that cuts need to be made more quickly.
From the bbc
Categories: Uncategorized Tags: cuts, defecit, double dip, pound falls, uk Recession
Retail sales fall
Retail sales fall
Poor winter weather drove UK retail sales down by 1.8% between December and January, the sharpest drop in 18 months, official figures have shown.
The fall was more than three times faster than analysts had forecast. However the figures were weighed down by the inclusion of petrol in the official figures for the first time as drivers stayed at home in the snow.
The data, from the Office for National Statistics, adds to concerns about the fragility of the UK economic recovery. Sales by value were up 0.9% from January 2009. Fuel sales slipped by 11.1% on the month. When the impact of car fuel sales was stripped out, overall retail sales fell by 1.2%. Food sales fell by 2.4%, but the ONS said the cold weather had boosted sales of clothing.
Double-dip' risk
The period covers the first month since Value Added tax (VAT) returned to 17.5% after a temporary drop to 15%. This is thought to have brought some sales forward to December, thereby hurting the January figures.The data follows on from news that UK inflation had accelerated to 3.5%, that the government borrowed another £4.3bn in January to plug the growing hole in the UK's finances and there had been an unexpected rise in people claiming Jobseeker's Allowance. "January's retail sales figures round off a pretty awful week for news on the UK economy," said Jonathan Loynes, chief European economist at Capital Economics."Of course, we knew the January sales figures would be bad after the VAT rise and bad weather. But the drop is even worse than the retail surveys had suggested." He added that sales could bounce back in the coming months - but that as people's wages grew only slowly and prices roses, spending growth was likely to slow.
"At the very least, these numbers provide a very weak platform for sales in the first quarter of this year and therefore raise the chances that the economy may succumb to a double-dip uk recession," Mr Loynes said.
The so-called 'double dip' refers to an economy in recession returning to growth, then quickly contracting again.
Categories: The future Tags: double dip, retail, sales fall, uk Recession
Double dip recession in uk
Double dip recession
There is a lot of talk in the media of a "double dip recession" but, What does that mean and what would cause it?
A double dip recession is where the economy tends to recover for a quater of positive growth then slides back into negative growth. The graph for a double dip recession would look like a W shape after recovery.
Watch video: Nouriel Roubini
Warning of a possible double dip recession in the usa.
Categories: uk Recession Tags: double dip, w shape recession