The Pound has had a rough time against the Euro, in recent months. But, whilst the UK economic climate is far from strong, the Eurozone economy looks to be experiencing increasing problems. Led by the German economy, the Eurozone experienced a sharp contraction in the first quarter of this year. Eurozone GDP fell by 2.5% [...]
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Why Credit Crunch in the UK?
Readers Question: I still dont understand why the credit crunch in US caused a credit crunch in UK? is it because banks in UK depend on US banks to borrow money? See: Causes of Credit Crunch Many UK Banks bought bundles of the bad mortgage debt from US mortgage companies (either directly or indirectly). Therefore, [...]
Why UK Recession is Deep
It is a mute point whether the UK or US is facing the worst recession. So far there has been a close correlation between the US economy and the UK economy. The UK housing market bubble ended later than the US, but since then the UK economy has fallen into recession in a similar way [...]
Monetary Policy Committee and Recession
Until 1997, Monetary policy was controlled by the Government. However, this was blamed for many boom and busts, e.g. Lawson boom – when government allowed economy to grow too quick causing inflation. Therefore, the government made the MPC independent to set interest rates. The government gave the MPC an objective of: 1. Low inflation of [...]
Predictions for Pound Sterling
Looking at Economics fundamentals, it is hard to understand why the Pound rose so much against the dollar in recent years. I think the main reason for the Pound’s strength is that it offered an easy alternative to the dollar, but, in looking for an alternative to the dollar the merits of the Pound has [...]
Prospects for Interest Rates in 2009
Today, I receive a nice surprise from my mortgage lender, Standard Life. Standard Life had reduced there APR by the full 0.5% that the MPC cut base rates. This meant by 47 year interest only mortgage was reduced from £627 to £571. It’s a significant saving, and if interest rates fall by another 1%, my [...]
The Safety of Bank Deposits
With news of banks facing bankruptcy across Europe, these are nervous times. There are few things that financial authorities and governments fear more than a rush to withdraw savings from banks. It evokes memories of the Great Depression, and in Germany the hyper inflation which made money worthless, facilitating the rise of the Nazis. In [...]
UK Economy Facing Lengthy Recession
Even before the recent problems in the financial markets, the UK economy looked to be heading into recession. Economic growth was 0% in the second quarter Now, the recession could be much deeper than previously anticipated. Bad News on Economy Falling House prices reducing consumer confidence and consumer spending Problems of Bradford & Bingley and [...]
What is Cost of Bailout for Taxpayer?
If the government nationalise Bradford and Bingley, the taxpayer is taking responsibility for the mortgage loans. This gives the government a balance sheet of £150bn in mortgage loans (£50bn from Bradford & Bingley, £100bn from Northern Rock) It is misleading to say this will cost the taxpayer £150bn (like the Telegraph does in the heading). [...]
HBOS / Halifax Facing Takeover
HBOS, the owner of Halifax, admitted that they were in talks with Lloyds TSB to try and work out a merger deal. The two banks are working very fast to arrange a deal to safeguard the company. The Competition Commission is likely to grant special permission for the merger (despite increase in monopoly power) given [...]
