UK economy: rates rising

Article Abstract:

UK interest rates could be raised to 8.5% by year-end 1997, according to Charterhouse's Richard Jeffrey. UK inflation looks set to accelerate and could reach 4% in 1997, excluding mortgage payments. A tighter labor market will also lead to pressure from wages, while commodity price rises will push up companies' costs. Consumer spending is likely to increase by more than 3% for 1996 rising to 4% for 1997, and this is likely to lead to pressure from the Bank of England for a rates rise.

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Beware the lure of an easy Tessa fix

Article Abstract:

UK tax exempt special savings accounts (Tessas) were launched in 1991, and the first such accounts are maturing in 1996. Some four fifths of investors are selecting a Tessa giving a fixed return for their second Tessa investment. This assumes that interest rates will drop, which may not be the case. Rates could rise if UK consumption rises. The election of a Labor Party government could also lead to a drop in the value of pound sterling so a rise in interest rates.

Savings accounts

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Doubts about rate optimism of financial markets

Article Abstract:

Different views on forecasts for British interest rates are examined in detail.

Economic forecasting

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