Inflation Falls
The Consumer Price Index (CPI) has fallen below the Bank of England's 2% target, for the first time since September 2007, to 1.8%.
The alternative Retail Price Index (RPI) measure, which includes housing costs, fell from -1.1% to -1.6% as a result of falls in mortgage costs.
RPI is used to determine some pay deals.
When CPI falls to below 1% (as it is expected to do) Mervyn King (Governor of the Bank of England) will have to write to the Chancellor to explain the fall.
However, before the champagne corks start popping, people should realise that by next year the downward pressure on these measures (as a result of lower mortgage deals and cheaper oil) will have abated and the measures will start to rise again.
Labels: bank of england, cpi, inflation, Mervyn King, mortgages, rpi
Paper Losses
UK Financial Instruments (UKFI), the body that manages the Government's shares in Britain's semi nationalised banks (RBS and Lloyds), is sitting on paper losses of £10.9BN.
The UKFI says that every household in Britain has over £3K invested in Lloyds and RBS shares
It is likely, given the shambolic state of the banks' finances, that Britain's households will hold their £3K "investment" for many years to come.
Labels: debt, Lloyds, nationalisation, RBS, ukfi
Warning These Products Can Seriously Damage Your Wealth
Alistair Darling has announced proposals for the use of cigarette type health warnings on mortgages and other financial products. These would be highly visible, and would be appended to all financial products.
However, much like the warnings on cigarette packets, whether anyone will take the slightest bit of notice of them is open to debate.
Labels: Alistair Darling, financial services industry, mortgages
The Return of The 125% Mortgage
Hot on the heels of a warning from Barratt Developments and Redrow, that stability in the UK housing market were being undermined by banks' reluctance to provide mortgage finance to borrowers, comes a new product from Nationwide.
Nationwide are bringing back the 125% mortgage, for homeowners facing negative equity.
The product will only be available to existing customers wanting to move house, whose homes are now worth less than their mortgage.
Borrowers in negative equity can get a new mortgage worth 95% of the value of the new property. They have to fund the remaining 5% in the form of a deposit, but then they can also carry over negative equity in their original home. The negative equity carry over can be worth up to 25% of the total cost of the new property.
However, Nationwide caution:
"
We're certainly not relaxing our lending criteria."
Others will now be forced to follow suit.
Labels: debt, mortgages, Nationwide, negative equity
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TaxwiseLabels: HMRC, insurance, tax
FSA To Increase Fines
The Financial Services Authority (FSA), in an attempt to cast off its sleepy old watchdog image, is attempting to look tough by upping the level of its fines.
In a consultation paper it proposes a new tariff system, for rule breaches committed after February 2010. The new tariffs will fine insider dealers a minimum of £100K, and companies could be hit with penalties of up to £50M.
Margaret Cole, the head of enforcement for the FSA, is quoted in The Times:
"
By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others on what they can expect to pay for flouting our rules."
All very well, but the FSA will still need to be able to prove misconduct before it can levy these fines.
Labels: financial services industry, fraud, fsa
Recession To Get Worse
The Times reports that, in a departure from his usual "sunny" disposition, Gordon Brown is telling people that the recession will worsen.
This, coupled with Alistair Darling's suggestion that there will be a public sector pay freeze, means that history will most assuredly be repeating itself this winter as Labour "leads" us into another winter of discontent.
Labels: Alistair Darling, Gordon Brown, labour, public sector, recession
Pension Age Should Be Raised
Lord Adair Turner (Chairman of the FSA) has called for the state pension age to be raised to 70.
In 2005 he wrote a report on pensions that has led to the incremental rise in the pension age from 65 to 68 by 2044.
Turner now, belatedly, realises that this is too little too late.
Politically this will be rather "difficult" to push through. However, if one were to take the emotion out of the argument, given that the UK state pension is absolutely pathetic there is little money being given up by deferring retirement by a few years.
Aon reports that British pensioners are being paid just 17% of their average earnings as pension, compared to the European average of 57%.
Unsurprisingly the unions state that they will oppose this suggestion.
What precisely then is their solution to Britain's pension black hole?
Labels: bankruptcy, fsa, pensions, recession
Credit Card Companies Given a Slap
The Consumer White Paper, published today, proposes a number of measures that will change how credit card firms interact with their customers:
- they will be banned from raising credit limits without asking the customer first
- unsolicited credit card cheques will be banned
- they will not be able to raise interest rates on existing debts
- repayments will have to be put towards paying off the most expensive debt, rather than the cheapest as most now do.
However, there is of a course downside, monthly payments will have to rise. Which ironically will hit hardest that section of the community (ie the poor and debt burdened) which the White Paper allegedly was meant to help.
Have they really thought this through?
Surely a better course of action would have been to pressurise the companies to reduce their extortionate interest rates (17% or more), in the face of base rates that are 0.5%?
Labels: bankruptcy, banks, credit cards, credit crunch, debt, interest rates
Government Takes With Its Right Hand What It Gives With Its Left
It seems that Tesco may well be interested in bidding for the government's holding in Northern Rock, as the government is desperate to offload its stake before the next general election.
Ironically, the Treasury claim that politics has nothing do with the hasty private sale.
That being the case, why not float it?
Answer, because it would take too long!
Meanwhile, Britain's most profitable rail franchise (the East Coast Main Line - run by National Express) is set to be nationalised.
Talks between the Government and National Express over the franchise broke down last week. The company will hand back the service to the Department of Transport, when its funding runs out later this year.
National Express runs two other rail franchises and it is now entirely possible, under the terms of the contract re defaults, that they will be nationalised too.
Lord Adonis, the Transport Secretary, said that there would be no limit placed on the amount of taxpayers' money that would be allocated to the nationalised service to ensure it continued to run as normal.
Hardly true surely, given that Britain is bankrupt?
Labels: bankruptcy, government, national express, nationalisation, recession, treasury
