Clarke looking on the sunny side, says City

Article Abstract:

Kenneth Clarke, the UK chancellor's forecast for economic growth for 1996 has been revised downwards to 2.5% from 3% but some economists believe that growth may be even lower. Clarke's prediction for inflation is also seen as optimistic and is seen as a justification for reductions in UK interest rates by critics. Data from the UK Treasury shows investment at lower levels than forecast, while imports are above forecast levels. Government borrowing is above levels forecast in Nov 1995.

Gross domestic product

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Pounding profits, not inflation

Article Abstract:

The UK chancellor sees the rise in the value of pound sterling as likely to be deflationary, while the Bank of England sees this as having a one-off effect. The Bank argued that a rising pound was deflationary in 1990, and hassince changed its mind. Profits could be hit by a rise in the pound, instead of trade volumes being affected, due to price stickiness. A drop in import prices may not reach consumers, so the strong pound may not be deflationary, but will hit exporters' profits.

Prices, Pound (United Kingdom)

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Rising wage rates 'greatest threat' to inflation outlook

Article Abstract:

There is concern about United Kingdom wage inflation which is estimated at 4.75%, the biggest rise since Jan 1993, apart from a period when major financial services bonuses pushed up inflation in winter 1996. The Bank of England is concerned about wage inflation. Skills shortages are arising so wages rate increases may accelerate. The Labor Force Survey shows a higher unemployment rate than official claimant data, so this could help dampen wage pressures.

Wages, Inflation (Finance), Wages and salaries, Inflation (Economics)

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