Abstracts » Business, international

Foot on the brake

Article Abstract:

British interest rates look set to rise due to concerns about lack of spare capacity leading to rising inflation. Wage rises for the qtr to Oct 199 were higher than for the previous year, and demand is strong. House prices rises are stronger than they have been since the late 1980s, and this could lead homeowners to borrow on the strength of increased wealth, a trend that is starting to appear. Pound sterling has risen, and this could depress inflation, but the rise may be temporary.

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Up we go again

Article Abstract:

The monetary policy committee (MPC) of the Bank of England has increased interest rates twice, in Jan and Feb 2000, despite concerns about the high value of pound sterling. Strong currencies tend to depress demand by depressing exports, and curb inflation by cutting import prices. A drop in the value of pound sterling could give rise to inflationary pressures, as is shown by prices of services. Tighter fiscal policy could also depress inflation, but the government is under pressure to spend on health and other areas, especially prior to an election, scheduled for 2001.

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Up again

Article Abstract:

The British economy has achieved growth rates of 0.6% for 2nd qtr 1999, and may have achieved 0.9% for 3rd qtr 1999, so appears likely to achieve government forecasts for 1999 as a whole. This is higher than some other forecasts, and interest rates may be raised on Nov 4 1999, due to concerns about inflationary pressures. The strength of pound sterling has tended to hold back inflation, and retail prices do not show inflationary pressures, while wages data are mixed. Interest rates will not inevitably rise, but there is more chance than not that they will do so.

Gross Domestic Product

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