UK News

Insights from the UK and beyond

Green shoots in the housing market?

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House prices have dropped, interest rates are low and plenty of people are straining at the leash to get on the housing ladder.

Now the Nationwide Building Society says house prices have risen for the first time since October 2007. 

The Nationwide cautioned about jumping to conclusions on the basis of one month’s figures but the news was enough to send the pound up against the dollar and some analysts said it was more evidence that the battered housing market may be recovering. 

On the other hand mortgages have become much harder to get and rising unemployment is working against any recovery.

Snow event?

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When in Rome . . .

As I watched the snow fall gently from London skies on Sunday night, I asked an acquaintance if I would have to go to work the next day.

My Canadian “snow radar” — fine-tuned from living in the snowy cities of Toronto, Ottawa and Halifax — was telling me that there wasn’t going to be much accumulation, but given the regular daily London transit delays in fair weather during the rush hour, I had a gleeful feeling a “snow day” might be in store.

How far will central banks go in 2009?

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The year 2008 has been filled with unprecedented events and all-time lows, a financial system overhaul and global turmoil. Could the New Year herald positive re-evaluation and a positive turnaround? And in what has been a year of sleepless nights for many, will a nation steeped in debt start to curb excess?

Rate cuts figured high on the news agenda as banks undertook radical measures to stabilise the economy. Within the space of one week, Britain saw the lowest base rate since the mid-1950s, the ECB took its rate to a two-and-a-half year low, the U.S. Federal Reserve aggressively slashed rates and a 175 point reduction was made by Sweden’s central bank.

The key question remains – will governments run out of weapons to boost the economy in 2009?

from The Great Debate UK:

Put your questions to David Cameron

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(UPDATED Dec 18 - This post is now closed for questions)

Conservative Party leader David Cameron will be speaking on the economy and the credit crunch at Thomson Reuters' Canary Wharf office on Monday, followed by a question and answer session.

The Tory leader has argued that two main problems face Britain at present – a recession coupled with a record level of government debt, and that the government is trying to tackle one while ignoring the other.

Was one point enough?

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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.

Will Aldi and Lidl open up in posh areas now?

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A report published today by Verdict Research predicts a surge in discount grocers in Britain.  Verdict Research says discounters like privately owned German groups Aldi and Lidl should raise as much finance as possible to aggressively expand in markets where they are under-represented.

This could be good news for the thrifty, middle class shopper – no more need to venture outside one’s turf to areas one would not normally set foot into but which have become a weekly destination because they have a Lidl or Aldi.

from Global Investing:

To spend, or not to spend?

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A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy.

Nick Parsons, head of market strategy at nabCapital, has come to this conclusion:

Pre-budget report: what it means for personal taxes

Here is a guide on what the pre-budget report means for personal taxation by accountancy firm BDO Stoy Hayward. Income tax – changes to allowances and rates

The basic personal allowance for 2008/09 was increased above inflation from £5,225 to £6,035 as a one off measure to compensate for the loss of the 10 per cent starting tax rate.

Job crunch Britain: how have you been affected?

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Net job creation in the UK has almost stopped as employers feel pessimistic about prospects for the economy, the latest quarterly Labour Market Outlook survey by KPMG and the Chartered Institute of Personnel and Development (CIPD) has found.

The balance between the proportion of employers looking to increase staff levels over the next three months and those expecting to cut has fallen from +41 in autumn 2007 to +2 in autumn 2008 – the lowest figure recorded since the survey began in spring 2004, according to the Payroll and Human Resources Newsletter.

Of the 721 employers surveyed, 83 per cent anticipated that Britain’s economic condition would further deteriorate this autumn and only one percent said they thought there would be an improvement.Respondents felt more optimistic about their own organisation though, with only 25 per cent believing that things would get worse.

Spend and spend some more?

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Recent headlines alarmed us with news of the country’s budget deficit having risen to its largest in six decades, while top economists ominously declared that we’ve moved beyond merely tipping into a recession, to hurtling towards one.

Pennies
More crucially, both Chancellor Alistair Darling and Prime Minister Gordon Brown have sought inspiration from revered economist Maynard Keynes’ oft-cited advice – spend and spend some more to fight off the ill effects of an economic slump. Keynesian theory’s greatest principle is the fundamental concept of the circular flow of money. He opined that when individuals rein in money outflow, the government needs to be “priming the pump”.

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