UK budget deficit reaches record level
March 20, 2009
The UK’s deficit widened to a whopping £8.99bn in February. This is a record level for the month, according to official data.
The data shows that tax receipts have fallen 10%. This made the UK government to borrow more. Unemployment has risen; firms have witnessed falling profits. This has hit the government revenue from taxes.
This fiscal year’s cumulative deficit is £75.2bn. This has increased the chance of government borrowing exceeding its own £77bn forecast for the year. The total debt is already equivalent to nearly 49% of gross domestic product (GDP). An economist at Investec, Philip Shaw, stated the deficit was ‘slightly wider than earlier expectations’.
He added:
“The escalation of public borrowing in the medium term is of great concern. There is going to be a significant pressure on capital markets over the next couple of years.”
According to him, public borrowing next year could well be in the region of £150bn. In longer term it would be “unsustainable”.
The finances have been hit as the UK government is being forced to spend money for the bailout of ailing banks. The Office for National Statistics stated last month that the debts of Lloyds Banking Group and Royal Bank of Scotland (RBS) would be added to the public finances as the government took stakes in the firms.
Britons love dicount coupons and online voucher codes
March 11, 2009
According to information released by shopping website, BView.co.uk, more people than ever are making good use of discount coupons and voucher codes offered on websites.
According to BView, shoppers are expected to save a total of £600million by the end of the current year, this works out as an average of ten pounds per person in the whole of the UK. This is despite the fact we are only taking advantage of 2% of the savings we could be making, meaning everyone could be saving up to £500 every year.
If everyone were to make full use of the potential savings available with voucher codes online and discount coupons in store, the total amount saved could be up to £30billion pounds.
This suggests more and more people are disregarding the “cheapskate” stigma that used to envelop using discount vouchers, instead replacing it with a wiser, more sensible persona.
Head of BView, Brad Liebmann, states:
“Moneyoff vouchers have suddenly become very popular among families who are watching the pennies but still want an occasional treat.
“There may’ve been some stigma towards using discount coupons in the past but that seems to have disappeared.”
So, it seems the recession is teaching us all new lessons to help cut the costs.
Workers putting in record hours of ‘unpaid overtime’
March 10, 2009
The economic downturn is making workers to put in record hours of ‘unpaid overtime’, according to the TUC. It estimated that nearly 5.24 million workers put in additional work worth almost £26.9bn in 2008. Read more
UK retail sales increase in January
February 23, 2009
UK retail sales increased in January, as savvy shoppers decided to take advantage of post-Christmas price cuts and promotional gifts, according to official data released. Total sales increased 0.7% compared with December. They were up by 3.6% compared with sales in January 2008, stated the Office for National Statistics.
ONS figure confirmed earlier data from the British Retail Consortium that also noted sales indeed rose during January 2009. Clothing and footwear witnessed the biggest increase in sales said the ONS. The 0.7% rise noted in overall sales compares with an estimated average 0.1% decline that was expected by economists. For the quarter to the end of January, retail sales were up 3.2% in comparison with the same period a year ago. Analysts cautioned the rise was unlikely to last.
The UK economist at Capital Economics, Vicky Redwood, stated:
“Anecdotal evidence suggests that January spending started off very strong, and tailed off as the clearance sales ended. Meanwhile, further falls in house prices and rising unemployment will mean that households save any money freed up by falling inflation.”
Ms Redwood expects consumer spending to go down by about 3.5% this year. Howard Archer, the Chief European and UK economist, IHS Global Insight, stated he was expecting sales to now decline.
Mortgage lending on the rise
January 30, 2009
The number of new mortgages has risen to 31,000, up from 27,000 in November 2008. While the rise is slightly reassuring for the market that is always on edge during these pessimistic times, the number is still one of the lowest on record.
With banks being highly withdrawn and lending at a minimum this news, though not amazing, will hopefully help to raise spirits.
The difference is obvious, when you cast back to as little as a year ago and it was common to see advertisements offering bad credit loans and mortgages to anyone. Now, you are luck if you can get a loan with a perfect credit rating.
The cycle caused by banks not lending and people not spending their money, has been on a downwards spiral for around a year now. Maybe this positive result will mark a slight improvement in somewhat bleak times. Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors (Rics) suggests that it is no accident there has been an increase in mortgages;
“The pick-up in activity reflects in part the increased interest from buyers who are being attracted to the market by both the fall in house prices and drop in mortgage rates,” he stated.
Who knows? Another year from now and you may be able to get your bad credit loans and banks might be offering great deals on their mortgages once again. Only time will tell.
A death knell for final salary schemes
January 24, 2009
A quarter of leading private sector companies expect to shut their final salary pension plans to existing members, according to a survey.
Many firms have already stopped their schemes to new members, stating they are too costly to finance. Barring current contributors is going to get more common, states the National Association of Pensions Fund. The association is pressing for additional government help. Nearly 25 of the 100 firms that responded to its study expected to do so, it found.
Final salary schemes that offer guaranteed benefits are facing intense pressure from falling interest rates, plunging stock markets and growing life expectancy. The latest estimate of overall company pension deficits is close to £200bn.
Many final salary schemes have stopped catering to new recruits. The finding that some of the UK’s biggest private firms are planning to close them to even existing members points to a new worrying trend. A former government adviser, Ros Altmann, noted the ‘death knell’ had already been sounded for the system of final salary pension. He added:
“”Employees cannot anymore afford to fund these long term, open-ended commitments.”
Closing schemes to new members will be more likely owing to the credit crunch, the NAPF survey pointed out.
Meaningful work or training opportunities for the unemployed
January 12, 2009
Gordon Brown has promised to assist 500,000 people into meaningful work or training opportunities, as the government makes an attempt to stop unemployment rising further. The prime minister stated employers would be provided up to £2,500 for each individual whom they train, who has been without a job for over six months. Hosting a jobs summit, the PM also promised that communities are not going to be “written off”.
The Tories think that the government’s existing job package ‘does not really go far enough’ with almost 1.8 million people already out of work. In a speech given at the London’s Science Museum, Mr Brown unveiled a plan to prepare the country for growth in sectors like environmental technology, healthcare, education and advanced manufacturing.
He stated:
“Failure to act now and also to do so in coordination with our international partners would mean a deeper, longer global recession. It would mean temporary increase in unemployment becoming permanent. It would also mean whole communities written off as in the past. That would in a way lasting damage to our economy and also a bigger bill to pay, in the future. And this will not happen on my watch.”
Mr Brown said told the audience that those unemployed for at least three months would also be given help.
Gordon Brown and the French President meet
December 11, 2008
Gordon Brown and the French President, Nicolas Sarkozy, will discuss at Downing Street on what more steps can be taken to stimulate the economy. Jose Manuel Barroso, the European Commission President, will also join them, ahead of a new EU summit to take place in Brussels later this week. They will also meet business leaders from all over Europe to discuss the various ways to ease problems.
They are also expected to discuss ways in which switching to a low carbon economy would end up generating more jobs. Presidents Sarkozy and Barroso are likely to be at Downing Street for a meeting before they meet with business leaders. The European Commission unveiled in November an economic recovery package – worth 200bn euros – including 5bn euros for the car industry to develop green technologies.
France has become the latest of the leading European economies to release a fiscal stimulus package. The country will spend close to 26bn euro (£23bn) to boost its economy. This includes a loan for troubled car manufacturers apart from public sector investments worth 5bn euro. Britain has already come up with a £20bn plan that includes a VAT cut. The prime ministerial spokesman has already indicated much more needs to be done across Europe.
IT illiteracy is hampering the economy
November 27, 2008
UK is losing a lot of precious work hours owing to a lack of basic IT literacy. As per a recent study, a deficit of basic IT skills is greatly overbearing on the economy. General IT issues, it found out, are solved by people having basic knowledge, but they are not capable of fixing specific problems. Almost 5.3 million workers, as a result, lose around 2.5 hours almost every week, while dealing with the IT problems of their IT-illiterate colleagues.
Most companies tend to depend on staff that do not have any orientation towards IT. And small companies are the biggest sufferers on this count. In fact, some of them do not retain specialised IT staff to save cost.
The study also found that call centers have a comparatively higher level of IT training with almost 56 percent of their employees having the capacity to take care of their own IT problems. It also concluded that 43 percent of workers in the age group of 19 and 21 failed in resolving a problem on time owing to their lack of IT skills. In fact, some of them even chose to ignore it, hoping that the same will be solved by someone else, resulting in a waste of time and productivity.
Complaints against credit card lenders
November 26, 2008
Ministers have received several complaints against credit card lenders failing to pass on cuts in rates to customers and some actually increasing interest rates for lenders. Others have been accused of exploiting many households under pressure amid the growing recession by giving out cards with high interest rates in the run-up to Christmas. Lord Mandelson stated the Office of Fair Trading might be asked to investigate the matter amid growing concerns about such practices.
Consumer affairs minister Gareth Thomas and Lord Mandelson are meeting the big credit card firms in Whitehall. In an interview before the meeting, the latter made it clear that the Government will take action unless these firms agree to change their ways.
“We have a tough consumer watchdog (the Office of Fair Trading). I will have no hesitation, if these firms do not fall in line and start treating people in a fair, responsible and consistent way. Or else, I will ask the Office of Fair Trading to look into their practices, report to me. Then I will be able to take even further action.”
Ministerial pressure on these credit card lenders is sure part of wider pressure faced by the financial sector. Number 10 has already threatened to fully nationalise British banks unless they start lending more freely to smaller firms and families. The governor of the Bank of England (BoE) Mervyn King said restoring credit to ‘normal’ levels is now the single most important issue in UK economic policy.
