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The Times: U K Economy Too Weak To Stand An I R Hike

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http://business.timesonline.co.uk/article/...2179137,00.html

Business

The Sunday Times May 14, 2006

Bank is told rates hike will harm UK

David Smith, Economics Editor

BRITAIN’s recovery remains fragile and the Bank of England should not contemplate higher interest rates, according to a forecast to be released this week by the British Chambers of Commerce.
The body, which represents small and medium-sized firms, will say business is being held back by the “vast and relentless regulatory burden” and by rising taxation.
It predicts 2.2% growth this year, edging up to 2.5% in 2007, but warns this is not guaranteed. Household spending will remain subdued, it will say, with no guarantee that exports and investment will rise to take up the slack.
“The economy is past its worst and growth is edging slowly towards trend,” said David Kern, the BCC’s economic adviser. “
But our forecast assumes that UK growth will remain mediocre
. Many risks persist and a reversal cannot be ruled out. An interest-rate rise would be damaging and unjustified.”
The CIPD/KPMG Labour Market Outlook will say that while employment intentions are stronger,
a rising number of organisations are planning redundancies,
mainly in the public sector.
Unemployment figures this week are expected to show a further rise but the official retail sales numbers, due on Thursday, are set to confirm that stores had a strong Easter.

Given the weakness in the economy and growing unemployment further IR hikes may well tip the Miracle Economy into recession as the rampant borrowing has to stop soon. Gordon has us in a fine mess because if he doesn't direct the BoE to hike the rates the grossly overvalued pound may have another black day soon. A weak economy and a strong currency is a conundrum of Greenspanian proportions.

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Given the weakness in the economy and growing unemployment further IR hikes may well tip the Miracle Economy into recession as the rampant borrowing has to stop soon. Gordon has us in a fine mess because if he doesn't direct the BoE to hike the rates the grossly overvalued pound may have another black day soon. A weak economy and a strong currency is a conundrum of Greenspanian proportions.

So would this mean, more easy credit by expanding money supply even more and therefore devaluing the GBP?

<_<

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Freezing or raising interest rates will cause economic problems resulting in redundancies & an increase in bankruptcies...........

Lowering interest rates will allow the afflicted to dig an even deeper hole from which they already cannot climb out of...........

What is the answer?

Might as well raise interest rates 3%, sit back & watch the strong survive, the weak flounder & put everybody back into realistic pigeon holes when the dust settles.

But what do I know?

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Freezing or raising interest rates will cause economic problems resulting in redundancies & an increase in bankruptcies...........

Lowering interest rates will allow the afflicted to dig an even deeper hole from which they already cannot climb out of...........

What is the answer?

Might as well raise interest rates 3%, sit back & watch the strong survive, the weak flounder & put everybody back into realistic pigeon holes when the dust settles.

But what do I know?

Not sure about the 3% part of this, but this is PERHAPS what needs to be done.

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BRITAIN’s recovery remains fragile and the Bank of England should not contemplate higher interest rates, according to a forecast to be released this week by the British Chambers of Commerce

So even the BCC don't understand that the BoE have a mandate to control inflation, not look after idiots who've dug themselves into a massive debt hole.

Why am I surprised.

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The BCC do understand - its all about short term benefits and discounting the future.

Their members want this months figures to show a profit over last months and they see little further than a month ahead.

But then most of the population act like that.

Any correction in the ecconomy will be far to painful for them to even contemplate.

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Thanks for the link RB.

This is where i see the biggest dangers for us Bears, we cannot afford to raise rates because it will stuff the stupid who borrowed when they should not have borrowed, the sensible will pay for stupid mistakes that they stayed clear of.

When will the Country start rewarding hardworking people, i am all for helping the weak and vulnerableI(i give up 3 days a month to work for Scope for nothin)g, i just do not want low life chancers abusing the system. Why am i paying for 12 year old mothers or mothers with 5 kids and 5 fathers, why am i struggling in MY Country to buy a home where i have worked 25 years without ever stopping, no criminal record, top 10% earner, paid taxes, just to watch hijackers moved staright into property and given an allowance for years, WITH MY F***** MONEY :(

You really have to laugh though, it would send you nuts otherwise :rolleyes:

I am worried because the housing market has been Tony Blairs and Gordon Browns ticket to three terms in number 10, in order to TRY and prop the market up interest rate rises must be avoided at all costs(and i know that the BOE control rates ;)

The reckless and stupid borrowers could well be protected for a while longer, they after all choose who is next in number 10, and who gives a toss about us.

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can anyone give an example of any bill that rose in value this year by only 2% ?

because i cant. every rise i have seen is at least 4%. most are 8-15% rises.

so wheres the 2% inflation come from.

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If inflation is rising, does it mean that people who have big mortgage will in fact

feel less pain? Would inflation wipe out the big mortgage debts?

gal_env_agr_09.jpg

Only an increase in income above and beyound real inflation can do that.

That is why this absurd situation is so dangerous. The more that is borrowed (over and above increase in income - cost of living) the worse it gets. Everything is going in the wrong direction.

Edited by OnlyMe

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If inflation is rising, does it mean that people who have big mortgage will in fact

feel less pain? Would inflation wipe out the big mortgage debts?

Exactly, that's why some of us are quite worried.

That's why it's better to have spare cash invested in real wealth that can't be created at any goverments whim (cough splutter I didn't say the G word, OK!?)

In this country the majority of the voting population own their own homes, and any government that wants re-election is not going to shaft homeowners.

Inflation is an easy way to erode their mortgage debt, whilst screwing the savers (who are a minority).

It's got nothing to do with fair, it's got everything to do with staying in power.

Welcome to the wonderful world of politics.

(Poly from the Greek Polus, meaning many, and Tick, a blood sucking parasite.)

Edited by BandWagon

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Thanks for the link RB.

This is where i see the biggest dangers for us Bears, we cannot afford to raise rates because it will stuff the stupid who borrowed when they should not have borrowed, the sensible will pay for stupid mistakes that they stayed clear of.

When will the Country start rewarding hardworking people, i am all for helping the weak and vulnerableI(i give up 3 days a month to work for Scope for nothin)g, i just do not want low life chancers abusing the system. Why am i paying for 12 year old mothers or mothers with 5 kids and 5 fathers, why am i struggling in MY Country to buy a home where i have worked 25 years without ever stopping, no criminal record, top 10% earner, paid taxes, just to watch hijackers moved staright into property and given an allowance for years, WITH MY F***** MONEY :(

You really have to laugh though, it would send you nuts otherwise :rolleyes:

I am worried because the housing market has been Tony Blairs and Gordon Browns ticket to three terms in number 10, in order to TRY and prop the market up interest rate rises must be avoided at all costs(and i know that the BOE control rates ;)

The reckless and stupid borrowers could well be protected for a while longer, they after all choose who is next in number 10, and who gives a toss about us.

I used to help out with Scope too. Good on yer.

I'm fed up with being punished for being sensible. It reminds me of the story of the prodigal son - I always thought that was warped logic - what a bummer for the good son! It surely teaches him a lesson to go out on the razz!!

Although knowing reality, when the good son returns after weeing the family fortune up a tavern wall he'll get lambasted in the "You should know better! Get out"

The Conservatives will sort it all out when they get this mafia gang of scumbags out of our government.

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What is needed is one pre-emptive IR rise of 0.5% to send a clear message to the debt junkies to reel in their profligate borrowings.

When the dust has settled we might all return to sanity

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Guest Bart of Darkness

BRITAIN’s recovery remains fragile

Recovery from what? Isn't everything hunky-dory now in Gordon's wonderful boom and bust free era?

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What's the debate?

Interest rates are going up. The question is how far?

If there were weaknesses in the economy, the BoE would have lowered rates this year, but they didn't.

When we get the MPC minutes, we'll perhaps see that one or maybe two member voted for a 0.25% hike.

The economy has had it's chance; we've had ultra-low interest rates for the last few years. Now it's time to increase them. Some companies are going to go out of buisiness. Some individuals are going to go bankrupt. That's the reality, I'm afraid. There's nothing that the BoE can do to help them now.

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BRITAIN’s recovery remains fragile

Recovery from what? Isn't everything hunky-dory now in Gordon's wonderful boom and bust free era?

Yes, all we ever hear about from the BBC is the good news that house prices have gone up anothe 10% this month and that the high street is booming again, and how unemployment is down and that inflation is on target and... How surprising!!!!?????? that they should come up with statements like this when our economy has never been better! :lol:

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
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