Far be it from me to say, “I told you so,” so I won’t, and I haven’t got a crystal ball in the Rolfe East office, but over the months…he continues!...and as a ‘reminder’ I spoke…pretty often!...about the fact that the property market was being hindered by Government measures based on old data, and that it was far too early to think about increasing rates as it was regulating itself. I also explained that it was very unlikely to happen until after the General Election, as there was too much politically and economically at stake, and even when it eventually did it would need to be slow and gradual.
So…according to the latest Bank of England inflation report, it has been announced that interest rates may remain at 0.5% until next autumn and inflation could fall below 1%, with Howard Archer - of analysts IHS Global Insight - agreeing that, “The report suggests that the first interest rate hike in interest rates from 0.50% to 0.75% is currently more likely to occur next autumn or even later, rather than around mid-2015.”
Bank Governor Mark Carney put the focus firmly on low inflation as he delivered the Inflation Report, while also concentrating on feeble wage growth and continued slack in the economy. He wouldn’t be drawn on any timing of a rate rise, but confirmed that when it was necessary it would be slowly and gradually, saying, “We will decide when to tighten policy based on the inflation target.”
On another tack, economics can be a very strange beast, which was rather confirmed when it was announced recently that the UK is liable for a whopping £1.7 billion European Union bill, for being quite successful in getting back on track, as contributions are based on essentially how well you’re doing.
Part of this success is that ‘Illegal activities’ have been included in estimates of household spending for the first time by the Office for National Statistics (ONS) and that illegal drugs and prostitution boosted ‘reserved’ Britain's economy by £11 billion! Because of this our gross domestic product (GDP) rose 0.9% in the 3 months from April to June this year – the fastest increase since the third quarter of 2013.
So, I’m wondering, could we try and recoup some of this enormous charge from the EU by suing them for living off our immoral earnings?!