Business Recovery and Insolvency Practitioners

NEWS: How We Manage Our Money

Added: 06/10/2005

The Bank of England met on the 6th October 2005 and decided that because of the mixed signals on the economy interest rates would remain at 4.5%.

It is clear from recent data that the economy has slowed down considerably. There is a continuing slow down on the High Street with many retailers reporting poor trading conditions and indeed one of the large multiples has only just recently announced that sales have reduced by 30%. A number of household names have this year entered into a mode of insolvency themselves.

Retail sales in September fell at their fastest pace for over two decades.

To compound matters inflation has risen above the Chancellor’s target of 2% and currently stands at 2.4%.

The housing market has in recent weeks picked up and an annual increase is predicted for this year of circa 3%, but this is considerably less than the 20% achieved in recent years.

At the end of August the Bank of England published data which indicates that consumers owed over £56 billion on credit cards and a further £34 billion to personal loans, overdrafts etc. We also owe an estimated £932 billion to mortgage lenders.

The Chancellor, Gordon Brown, forecast economic growth between 2½ and 3% in 2005. However, the IMF expects that the economy will only grow by approximately 2% and therefore there will be less tax revenue and combining this with ever increasing public spending some experts now predict that there will be a rise in income tax from 22p to 25p in the £ which can only yet further stifle the economy.

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