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Category Archives: Interest rates

Homeowners paying off mortgages at record rate

In 2010, homeowners paid back over £24bn of their mortgage borrowings, which was the highest amount since records began in 1970. Detailed figures from the Bank of England also showed that £7bn was repaid in the final quarter of 2010, compared to £6.6bn in the third quarter. This means that mortgage repayments have exceeded borrowings for eleven consecutive quarters. This … Continue reading

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Shock rise in UK prices

CPI annual inflation, the government’s target measure, was 4.4% in February, which was a substantial rise on the figure of 4.0% recorded in January. Most analysts had been expecting a rise, but not by as much as this. This is the highest figure since October 2008. The main upward pressure on prices came from domestic heating costs – particularly gas, … Continue reading

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Pensioners have been ‘hit particularly hard’ by the recession

Both pensioners and the poorest households have been badly hit by the recent recession, according to a report produced by the Institute of Fiscal Studies (IFS) and funded by the BBC. The IFS estimates that in the three years from 2008 to 2011 real household incomes will have fallen by 1.6%, or £360 per year. This means that households are … Continue reading

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The UK’s Inflation Problem: Selling England by the Pound?

This is the title of a speech which Andrew Sentence, of the Bank of England’s Monetary Policy Committee has just given. He is diametrically opposed to Mervyn King’s analysis of the current situation, believing that current levels of inflation are not temporary; that interest rates need to be raised; and, that in not taking action now the Bank is putting … Continue reading

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Inflation continues to climb

CPI annual inflation was 4.0% in January, rising from 3.7% in December, according to figures released by the ONS today. The ONS said that: “Two of the main factors that had an impact on the January data are the increase in the standard rate of Value Added Tax (VAT) to 20 per cent and the continued increase in the price … Continue reading

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Squeeze on living standards is inevitable says Merv

“In 2011, real wages are likely to be no higher than they were in 2005. One has to go back to the 1920s to find a time when real wages fell over a period of six years.” “The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK … Continue reading

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Oops! CPI inflation rises to 3.7%. Zimbabwe here we come

“Inflation will soon be in double figures” says Governor of the Bank of England. “We can’t raise interest rates. That’s the only thing preventing David Cameron’s fiscal policy turning the country into a total wasteland.” Well he didn’t actually say that, but he might have liked to. The Governor’s mantra that inflation will eventually come down of its own accord, … Continue reading

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Continued rise in UK producer prices

Output price inflation rose to 4.2% in December 2010 according to the Office for National Statistics.  This is sometimes referred to as ‘factory gate’ annual inflation, and measures the output prices that manufacturers sell their products at. The rise on the month was 0.5% which is considered quite significant. At the same time, input price annual inflation rose by 12.5% … Continue reading

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House prices are now 18% below their pre-recession peak

House prices fell 1.3% between November and December 2010 according to the Halifax. This meant a further fall of about £2,000 in the average price of a house, which now stands at £163,435. Overall, there was a fall in prices of 1.6% over 2010 as a whole, and house prices are now about 18% below their peak in the third … Continue reading

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“We’re absolutely certain that nobody knows what’s going to happen.”

This could have been the headline from the Bank of England’s November Inflation Report that was published this morning. All in all, it was riddled with uncertainty. Mr King, the governor of the Bank, said that given the slower growth in government spending, the strength of any recovery depended heavily on what was happening externally. He said: “The biggest …. … Continue reading

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