UK News

Insights from the UK and beyond

from MacroScope:

UK house prices close to a trough?

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MacroScope is pleased to post the following from guest blogger Simon Ward. Simon is chief economist of Henderson Global Investors in London and previously worked for New Star Asset Management and Lombard Street Research. His own blog is Money Moves Markets.

UK house prices are no longer expensive relative to a measure of "fair value" based on rents. Prices fell significantly below fair value during the major house price busts in the 1970s and 1990s but a big undershoot is unlikely in the current downturn because low interest rates will limit forced selling.

The notion that housing is no longer overvalued is controversial because the house price to income ratio remains far above its average since 1965. This average, however, is unlikely to be a good guide to fair value because the ratio has trended higher over time, reflecting factors such as improving quality, the pressure of an expanding population on constrained supply and a high income elasticity of demand for housing.

An alternative approach is to use rents rather than income as the basis of comparison. Rents already incorporate fundamental influences on housing demand and supply. People need to live somewhere – the choice is between buying your own home or renting, not between spending money on housing or retaining income for other purposes.

from Africa News blog:

A question of scale

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For days now Britons have been regaled with newspaper stories detailing the dubious expense claims of their Members of Parliament.

The Honourable Members, it seems, have been charging for everything from a few thousand pounds for clearing a moat to a few pence for a new bath plug. An outraged nation has risen almost as one to denounce its greedy lawmakers.

Is the government being unfair to Gurkhas?

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Nepalese Gurkhas have a long and justifiably proud history of serving alongside Britain – Gurkha units fought with the East India Company in India as early as 1817. Over the years, the Gurkhas have developed a reputation for tenacity, bravery and dogged loyalty to their adopted army.

But when it comes to giving something back once they have finished their military service, Britain has something of a mixed track-record on the Gurkhas and has even been accused of disloyalty.

Punters cash in on Darling’s budget tie choice

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Smokers and top earners were clear losers in Britain’s budget this year, as the government hiked taxes on cigarettes and the highest incomes.

 

But a lucky few must have been cheering in front of their televisions during the 51-minute speech.

from The Great Debate UK:

The devil will be in the Budget detail

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fay-- Fay Goddard is chief executive of The Personal Finance Society. Any opinions expressed are her own. --

Though it’s a cliche to say that a budget is eagerly awaited you can be forgiven for saying so this time around. This year all eyes and ears will be focused on the Chancellor’s economic figures and forecasts. The big question is how will he balance the books – cut public spending or raise taxes? In the run up to an election cuts are ideal but needs must. What will it mean for personal finances?

Another bumper Budget?

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All we’ve heard for the past few weeks is how little room there is for Labour to pump more money into the economy to fight the recession.

The increasingly popular — and confident — opposition Conservatives have gained ground by blaming Prime Minister Gordon Brown for turning the public purse into a public hearse.

from MacroScope:

Show us the money

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It says something about the current world that a new economic indicator is about to be unleashed by the Bank of England and it basically tells you whether banks have been doing what they are supposed to do -- lend.

The first Trends in Lending report is due out on April 21 at 0830 GMT. Always nice to have a new indicator, but this one may get a bit more attention than would have been the case a few years ago. It is designed to provide up-to-date information about bank lending to households and businesses.

Fit for a banquet?

By Rosalba O’Brien

I’ll tell the truth. When I went to preview tonight’s royal banquet at Britain’s Buckingham Palace, being held as part of the pomp accompanying the state visit of the Mexican president Felipe Calderon, I expected to be writing something on the lines of ‘Credit crunch? What credit crunch?’ – not for the global aristocracy, diplomatic corps and oil company bosses in attendance.

The truth, however, is something rather more ordinary.

Sure, the banquet room is lavish enough, with its giant bouquets, golden tableware, classical carvings and gilded ceiling. It’s certainly a bit bigger than my living room, what with the military band on the mezzanine and all.

from MacroScope:

Watch out for the G20 spin

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Be careful this week about buying wholeheartedy into any G20-related spin about supposedly savvy, free-spending Britain and America doing more to combat the world economic crisis than supposedly stubborn, overly cautious Germany and France. The actual figures show it is much more complex than that.

A Reuters calculation on discretionary fiscal stumuli and the International Monetary Fund's assessment show that, if anything, Britain is the significant laggard and that German spending almost matches the United States over the next two years. Here are the IMF's numbers (% of GDP):

UK minister in a spin over climate change doubters

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As a top-flight racing driver, Britain’s Science Minister Paul Drayson may seem an unlikely critic of the auto industry.

The self-confessed “car nut” owns a motor racing team and competes in a 200mph Aston Martin in competitions around the world.

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