Tag: bank of england

Bank of England changes tack

Bank of EnglandThe governor of the Bank of England said that the UK recovery has “gained momentum”.

In his quarterly overview of the British economy, Mark Carney said output here is growing at its fastest rate since 2007, while jobs are growing more than since records began.

He believes that the recovery shows a revival in confidence and an ease on credit.  That, he said, meant households were spending more and saving less and there’s been a boost to the housing market.

But business investment is still subdued, although indications are that may change this year.

The Bank of England has revised its position on interest rates.  Last year, it said it wouldn’t revise interest rates until unemployment fell to seven percent.

But growth in productivity is “disappointing,” Carney said, while there is more slack in the labour market. Part time work continues to increase while half of the recent increase in jobs is because people are self employed.

But Carney warned the recovery “is neither balanced nor sustainable….If and when the time comes that the economy can sustain highter interest rates, bank rate is expected to rise only gradually”.

The Bank of England won’t raise interest rates until spare capacity has been absorbed further.  He said the rate will stay at low levels for quite some time.

UK plc shows signs of growth

ukflagAfter a dreadful dose of the recession clap, it appears the UK economy is showing signs of growth.

It’s growth, but not much growth, according to the Office of National Statistics (ONS).

In the fourth quarter of 2013 the economy grew by 0.7 percent. GDP is growing at 1.9 percent and that is the best UK plc has seen since 2007.

Industrial production fell, and the construction industry fell, too, during the fourth quarter. The other vital signs are a fall in unemployment, while inflation is wobbling along at the Bank of England’s targeted rate of two percent.

Fruit and veg saves UK’s bacon

David CameronInflation in the UK fell to two percent in December 2013 – hitting the Bank of England’s target for the rate.

The Office for National Statistics released the data today and said that the prices of food, including fruit and veg and bacon had slowed down their inflationary trend.

But while food has saved the Bank of England’s bacon, fuel prices rose in December.

Prime minister David Cameron expressed his delight at the news and claimed that as the economy grew and more jobs came into existence, that meant more security for people lucky enough to have jobs.

The news is bad news for savers though – because it means the Bank of England is unlikely to raise interest rates any time real soon now.

Bank of England says economy is on the up

churchillLower unemployment figures and a drop in inflation have led the Governor of the Bank of England to saw the UK economy will growth this year and next year.

Interest rates won’t be increased until unemployment falls to seven percent or below, Mark Carney said.

Growth in the UK is now likely to be 1.6 percent, slightly up from the 1.4 percent forecast. And Carney said annual growth could reach 2.8 percent, rather than the 2.5 percent the Bank predicted earlier this year.

In the quarterly inflation report, the Bank said that “recovery has finally taken hold. The economy is growing robustly.. thawing credit conditions start to unlock pent-up demand.”

Carney said that although house prices are showing signs of inflation, there did not yet seem to be evidence for a British property bubble.

Bank of England urged to support start-ups, SMEs

poundsA tech entrepreneur has called on the Bank of England to ramp up support for SMEs and start-ups, in what can only be a case of stating the obvious. However, every now and then the powers that be need a kick in posterior, as they tend to lose touch with reality quite often.

Powa Technologies CEO Dan Wagner said he would like to hear from the new Governor of the Bank of England and that he would like to see more support for entrepreneurial talent in the UK from Mark Carney.

“We have some fantastic, inspirational entrepreneurs who start great businesses, but unfortunately many of them have to go abroad to get the funding they need to grow and succeed and that is a shame,” he said. “Britain has great innovation across all areas and it needs to be nurtured and supported because it will be the lifeblood for the return of economic strength.”

Of course, Britain is no East Germany and it’s not experiencing a brain drain, but there is always room for improvement. Wagner believes the biggest problem for small businesses and start-ups is the lack of tax incentives for investment. In other words, even if a start-up comes up with a new idea and starts growing, it might choose to expand elsewhere, which means Britain could lose winners – and they are few and far between in the start-up world.

“I would like to see capital gains tax completely removed from the funding of start-up businesses. Any funds that are invested to create opportunities and jobs should see a full capital and profit return because of the great risks involved. This would be a political saviour. Small businesses represent 50% of the economy and its new small businesses that will drive future economic growth,” said Wagner.

Wagner told business leaders at an event in Nottingham that Britain knows a thing or two about coming up with brilliant ideas, such as the World Wide Web, and it needs to tap the potential by providing the right environment for start-ups and tech entrepreneurs. The long term benefits of losing a few quid on lower taxes for small outfits far outweigh the short-term tax revenue generated by such companies.

KPMG: Retail is recovering

highstreetThe KPMG/Ipsos run Retail Think Tank believes the UK’s retail sector is on the road to improvement and has overall steadied in the second quarter.

Demand increased particularly in the end of June, positively impacting sales of goods. Three key segments, demand, margin and cost, which drive growth, were neutral, with demand slightly increased compared to the first quarter, margins still under some pressure, but with cost factors “largely negligible”.

The RTT’s Retail Health Index was marked at 78 points, one up from the previous quarter and the first successive growth since a continued decline in early 2011.

The group pointed to the arrival of the new governor of the Bank of England, Mark Carney, who said interest rates will stay low and should not mess with economic recovery.

David McCurquodale, head of retail at KMPG UK, said the picture is much brighter than last year.
“Compared to the carnage that occurred in 2012, this year we are seeing a far more settled picture which is a welcome sign for the retail industry,” McCurquodale said. “Certainly, there is less gloom, and expectations that retailers will enter into administration are lower, but for those sitting on large debts, there is still inevitably a risk of insolvency.”

Inflation rate approaches three percent

poundsThe Consumer price index (CPI) inflation rate grew to 2.9 percent in June, an increase on May’s 2.7 percent, the Office for National Statistics has announced – approaching the Bank of England’s cut-off point of three percent.

Slower rises in food prices and air fare managed to keep the lid on the inflation rate, which was expected because of increases in clothing and petrol prices from the same time last year.

Prices in clothing and footwear fell by 1.9 percent between May and June 2013 – much less than the 4.2 percent fall the same time lastyear, which was the largest on record. Transport prices rose 0.1 percent between May and June, compared with a fall of 0.5 percent for the same period last year.

Petrol prices rose by 1.0 pence per litre, compared with a 4.3 pence decline last year. Diesel was also up, but air fares fell 2.8 percent compared with a 7.4 percent rise in 2012.

The largest downward effects came from food and non-alcoholic beverages, with prices dropping 0.5 percent compared to a small fall of 0.1 percent last year. Recreation & culture saw prices drop 0.2 percent compared to 0.1 percent the previous year, with the main effect coming from package holidays.

The pound fell three quarters of a cent compared to the dollar at roughly $1.506, the BBC reports.

Berenberg Bank analyst Rob Wood told auntie that inflation is “likely to bobble around three percent for the next few months before heading down towards the two percent target next year, as weak wage growth feeds through to lower costs and inflation”.

But chief economist at the British Chambers of Commerce, David Kern, said there is uncertainty whether inflation will peak before falling later this year, as expected.

“If this happens it is still possible that the recovery will continue to slowly gather momentum throughout the year and into 2014,” he said, adding that unexpected developments like surges in energy prices could push inflation. This would mean “our growth prospects will face new risks”, he said.

The Bank of England’s target is to keep CPI around the two percent mark. If CPI pushes past three percent, governor Mark Carney must speak with chancellor George Osborne.

Security resellers have golden opportunity

1-date-1805Resellers of security products have a golden opportunity to target the finance industry.

The Bank of England has warned that it is more concerned about hacking and other cyber attacks than it is about the Eurozone.

Andrew Haldane, the BoE’s director of financial stability, has met with five of Britain’s top banks six months ago and four told him that a cyber-attack was their biggest fear.

According to Reuters Haldane told the parliament’s Treasury Select Committee that the fifth bank did not have this on its top fear list until recently.

He said that the financial sector is a particularly good target for someone wanting to wreak havoc through the cyber route.

Earlier meetings with bank chiefs had pointed to the “usual suspects” of the euro zone crisis or a slump in the economy at the top risk, Haldane said.

But more now the financial industry thinks that economic worries have distracted attention from operational, and in particular cyber risks, at banks or in infrastructure like payment systems.