The Great Debate UK

Deflation? It’s inflation you need to watch

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– David Kuo is a director at the financial Web site The Motley Fool. The views expressed are his own. –

david-kuo_motley-foolWhat are consumers supposed to make of the latest inflation numbers? Do we have inflation, deflation or a bit of stagflation?

Truth is, it depends on who you are and what you do with your money. The Retail Prices Index or RPI tells us that prices today are exactly the same as they were a year ago. The Office for National Statistics reported that RPI was unchanged at 0%.

But be very careful when bandying around the term “prices”. The RPI includes elements of housing costs. So it is better to talk about the cost of living rather than prices. Prices have risen compared to a year ago, but the total cost of living as measured by RPI has fallen because of the disproportionately large drop in mortgage costs as a result of lower interest rates.

from UK News:

Late payments send small businesses to the wall

By clamping down on credit, Britain's newly cautious banks are making collapse almost inevitable for many small to medium enterprise (SMEs) who need a financial cushion now, more than ever, as suppliers and customers struggle to pay bills as the economic downturn bites.

Small businesses in Britain, which employ over half of the private sector workforce and annually generate some 3 trillion pounds, typically depend on loans for working capital to tide them over during lean spells.

What managers can do to maintain morale in a jobs crisis

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* Ian Kessler is a reader in employment relations at Said Business School at the University of Oxford. The views expressed are his own *

ian-kesslerThe Chinese define a crisis as ‘an opportunity on a dangerous wind’, and the crisis created by the current economic downturn has certainly placed the management of human resources centre stage. Corporate survival has become dependent on controlling and reducing labour costs, while future organisational viability has necessitated restructuring, placing further strains on the workforce. The challenge confronting human resources management is reflected in the predicted scale of job losses: the International Labour Organisations suggests that in 2009 as many 51 million jobs worldwide could be lost.

from UK News:

Bankers offer act of contrition

In the Middle Ages the four ousted British bankers who brought the Royal Bank of Scotland and HBOS to the brink of collapse would have probably had to endure the public humiliation of sitting in the stocks. 

On Tuesday the likes of former RBS chairman Tom McKillop and  former RBS chief executive Fred Goodwin had to undergo a more civilised form of public humiliation - a grilling by Parliament's Treasury committee.

Pound’s fall a symptom of crisis, not a problem in itself

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vince-cable

–Vincent Cable is Deputy Leader of Britain’s Liberal Democrats. He is a former economist who is also the party’s spokesman on economics and finance. The views expressed are his own. –

Most of Britain’s moments of high economic drama in the 20th century centred on sterling: the Gold Standard in the inter war period; the various balance of payments crises of 1949 and 1967; Black Monday and the ERM.  It is perhaps understandable that commentators should reach for these folk memories and attach the word “crisis” to the current fall of sterling against the main trading currencies particularly the Euro.  Understandable; but wrong.

from UK News:

Housing market: what is your prediction?

One thing looks to be sure this year - the housing market has further to fall. Some of the gloomiest predictions are for a further 20 percent slump before a recovery may set in.

Our own Reuters poll of 37 analysts at UK banks, published today, predicts that prices are likely to drop by about 11 percent this year and that it will take until 2010 before it gets better.

from UK News:

Would you take a pay cut?

A small but growing number of companies are considering asking their workers to take a pay cut as a means of cutting costs without having to fire anyone.

In the latest example, three unions representing steelworkers at Corus have offered to take a 10 percent cut across the company's entire UK workforce of 25,000 for six months in an attempt to save one of the last remaining steel factories in Britain -- the plant at Llanwern in Newport, South Wales.

from UK News:

Was one point enough?

The Bank of England has cut interest rates by a whole point to 2 percent in response to increasing worries over discouraging data and a looming recession.

This week, the all-important services sector (which makes up three quarters of economic output) recorded its weakest headline index since 1996 and seventh straight month of contraction. Together with dismal news on unemployment and inflation, these surveys confirm that recession is spiralling as we reach the close of 2008.

Doubts over whether pre-budget measures will prevent recession

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Roger Bootle is economic adviser to Deloitte. The views expressed are his own.

The Chancellor was right to try to give some help to the economy but, while the scale of the increase in future borrowing is huge, the economic effect of the reduction in VAT will be tiny.

The size of the PBR package, about £9 billion this year, rising to £16bn next year, was roughly equal to what had been mooted in the media. But the scale of the measures, although they sound large, is in fact small.

Pre-Budget Report: More will need to be done

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Brendan Barber is General Secretary of the TUC. Any views expressed are his own.Brendan Barber

The Chancellor was right to inject this extra money into the economy. We welcome the significant extra cash that he has put into the pockets of low and medium paid workers, and the extra help for pensioners. The new Ofgem probe into energy prices has the potential to reduce fuel bills if pursued with vigour.

It is absolutely right that the top one per cent, who have done so well in recent years, should pick up the bigger part of the bill for today’s boost. Indeed the Chancellor could have gone further. Cracking down on tax avoidance through new minimum tax rates on those earning more than £100,000 would probably make the planned National Insurance increases unnecessary.

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