Tag Archives: economy

Economy beats expectations

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UK's topography
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Interesting article about how the economy in the UK is shrinking at a slower rate than was expected. That must be good news right? Here’s a snippet from the article:

The 0.7% decline was a significant improvement on the 2.4% contraction in the previous quarter.

But the annual drop of 5.5% remains the biggest since records began in 1955.

It’s a bit too early to see whether this is an emerging trend of just a seasonal glitch. But, whether you’re in the business of selling wedding invitations, or producing fast cars, everyone needs this economy to start getting better.

(The comment on economies getting better being a good thing for everyone is really a global comment, not just one for the UK)

UK Interest Rates hold steady

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As was widely anticipated, it seems like the UK Interest Rates have remained fixed at 0.5%, the historic low they had dropped to in March this year. This is good news for people on tracker mortgages as it means their mortgages are still costing them very little. However, there’s a concern for home owners that new mortgages at those rates are impossible to find and people are getting locked into higher rate mortgages. Does this translate into more profit for banks, who’s borrowing rate from the Bank of England has dropped?

It’s food for thought, especially if you’re in the market for a new mortgage; but don’t forget the knock on effect on other industries. At the end of the day, borrowing is what drives other businesses, whether you sell peanuts or diamond heart jewelry, whether you’re into services or hard liquor. Banks need to remain viable to provide this service to the economy, so producing a good margin of profit is imperative for them. But the question is, who decides what a reasonable margin of profit is? Should it be regulated by the government? Or should the free market decide?

So many questions!

Japan doesn’t have it easy either

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With economic turmoil at our shores it is easy to forget that others around the world are facing similar hardships. I was reading today that Japan’s economy isn’t looking too hot at the moment. The base rate is set to 0.1% (lower that the UK or the US), unemployment has risen to 4% and output has dropped 8% in November with another expected 8% drop in December.

The problem is that forcast sales of the goods produced by the Japanese economy is down. This is felt by factories and support industries, all the way down janitor and programmer jobs, everyoen is affected. Unfortunately until a positive outlook appears, everyoen is going to be affected and this is the net effect of the economic crisis we are facing.

There have been a couple of ripples here in the Isle of Man, but the politicians feel that we will not technically suffer a recession. The reality is that the Island has had a number of years of unprecedented growth and the hope is that any short-term blips will be cancelled out by long-term growth. We’ll just have to watch that …

Everything costs £1

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Interesting article on BBC News about how pound shops in the UK are handling problems like rising inflation. They have an interesting view on this as they see it as a shift in the products they carry rather than something that is damaging their business. So, items they sold at £1 last year might have gone out of budget and not be on their shelves any more, but items that sold at 90p in other shops are now more expensive and fall into the range where they can offer a bargain to their suppliers.

Interesting article and worth a read. I guess you’ll never find things like jewellery and bamboo blinds, but I’m pretty sure it’s only a matter of time before MP3 players will be on sale there.