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Old 12-09-2008, 04:51 PM   #1
Jacqui D
Avalon Senior Member
 
Join Date: Sep 2008
Location: Kent,England
Posts: 1,267
Default UK Economy at all time low.

Bank cuts UK rates to 57-year low

The Bank of England has cut interest rates by one percentage point, from 3% to 2% - the lowest level since 1951.

The move, which followed a dramatic cut in November, has been welcomed by many commentators who said the cut should help the slowing economy.

Prime Minister Gordon Brown has urged lenders to pass on the cut to homeowners and business.

So far, only a handful of lenders have said they will pass on the cut in full to standard variable rate mortgages.

There has been no news yet for savers, with banks and building societies saying their savings rates are "under review".

"If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it's of benefit to homeowners and businesses right across the country," Gordon Brown told BBC Radio 5 Live.

HSBC, Bristol & West, and Lloyds TSB, which also owns Cheltenham and Gloucester, have said their standard variable rate (SVR) mortgages would be cut by the full one percentage point cut.


If you think rates might need to fall a bit further from where they are now, why hang around?

Hugh Pym


Pym: Where now for rates?
What the cut means for you
Which lenders have passed on cut?

But the UK's biggest mortgage lender HBOS has announced it will cut its SVR rates by a quarter of one percent.

Nationwide, the UK's biggest building society, will pass on 0.69 of a percentage point.

Woolwich said their SVR mortgages would be reduced by 1.15 percentage points. The Barclays-owned lender, however, did not pass on any of last month's 1.5 percentage point cut.

Royal Bank of Scotland and Lloyds TSB/Cheltenham & Gloucester will also pass on the rate cut to their small business customers, they said.

Before the interest rates decision, Halifax said its customers with existing tracker mortgages, that follow moves in the Bank of England's Base Rate, would benefit in full from any cuts.

This was despite a clause in the Halifax's paperwork which would have allowed it to put a limit on the cuts it passed on to mortgage customers.

Economic turmoil


HAVE YOUR SAY Brilliant, once again the sensible savers get kicked in the teeth
Jason Jones, Birmingham
Send us your comments
Commenting on the reaction to the Bank's latest interest rates cut, BBC economics editor Hugh Pym said: "There wasn't quite the shock value of the dramatic one-and-a-half point reduction in November.

"But we shouldn't forget the scale of the Bank of England's action. The cost of borrowing has been more than halved since early October, as the Bank got to grips with the rapid decline in confidence and spending."

Earlier, there was further evidence of the rapidly slowing economy in the UK:

• House prices fell 2.6% between October and November - their sharpest monthly drop since the housing market crash of the 1990s - according to the Halifax.

• New car sales in November fell 36.8% on the year before - the steepest decline in nearly three decades according to the Society of Motor Manufacturers and Traders

• Homewares retail chain The Pier - which has 31 stores and 17 concessions across the UK - was placed in administration. It employs about 400 workers.

Central banks across Europe also cut rates in an effort to stem the economic decline.

The European Central Bank cut its key interest rate to 2.5% from 3.25%, the biggest reduction in its history.

Denmark's central bank also lowered its main interest rate by three-quarters of a percentage point, to 4.25%.

Earlier on Thursday, Sweden's central bank cut interest rates from 3.75% to 2% - a bigger-than-expected reduction.

'Bold but necessary'

This latest dramatic move by the Bank of England means that its Bank Rate is now at its lowest since November 1951- a year which saw the Festival of Britain and Winston Churchill become Prime Minister again.

ALSO IN 1951...

January-June, Korean War saw heaving fighting across the 38th parallel
May, King George VI opened the Festival of Britain
October, the Conservatives won the general election
The average house cost £2,100
A loaf of bread cost 6d (2.5 pence)

Hetal Mehta of the Ernst & Young Item Club said: "You could almost hear the sigh of relief up and down the country."

"Anything less would have been a missed opportunity. The Bank has given the economy the right medicine at the right time."

"Manufacturing and services surveys this week have confirmed that the recession is gathering momentum. At the same time, commodity prices have collapsed and inflation is set to fall dramatically, the dire prospect of deflation is becoming more likely."

Graeme Leach of the Institute of Directors welcomed the Bank's decision, calling it "bold but necessary".

The British Chambers of Commerce (BCC) said that because of worrying signs that UK activity was falling sharply, it was "critically important" the the Bank to persevere with "aggressive" rate cuts.

"There is a clear danger that unemployment will increase even more dramatically without urgent counter-measures," said David Kern, of the BCC.

And he strongly urged the Bank of England's monetary policy committee to cut interest rates by at least a further half a percentage point at its January meeting.

Stephen Robertson of the British Retail Consortium said: "This is exactly the type of decisive action we need during these uncertain times. With the threat of inflation fading, the Bank of England is right to concentrate on jump-starting the economy."
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Old 12-09-2008, 10:48 PM   #2
Antaletriangle
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Join Date: Sep 2008
Location: U.K.
Posts: 3,380
Default Re: UK Economy at all time low.

Yeah then we get this enforcement by the govt from all parties.Job losses everywhere and unemployed and sick forced into cleaning grafitti from walls and picking up litter etc.
http://www.telegraph.co.uk/news/news...-their-CV.html

The new system, which is to be unveiled in the Welfare Reform White Paper today,[weds] had been billed as a radical crackdown designed to stop people languishing on benefits by forcing them to abide by a intensive regime to improve their job prospects.

Announcing the move, James Purnell, the Work and Pensions Secretary, will claim that the measures will prevent all but a small group of people, including the severely disabled, their carers and mothers with "babes in arms", from receiving hand-outs while doing nothing in return.

But it has emerged that demands on parents with children between the ages of one and seven, who will be included in a new "progression to work" category, may amount to little more than tinkering with a CV or looking up the local child care facilities on offer in the neighbourhood.

Mr Purnell will say: "I believe that for the majority, work is part of the path to that better life which is why our reforms put the individual, and their needs, at the heart of the welfare system.

"We will give people the support they need and in return we will have higher expectations on people to take up that support.

"I believe it is wrong to have a welfare system which doesn't encourage people to prepare for or get back to work. In future virtually everyone will be expected to do something in return for their benefits.''

Officials confirmed that the new regime would introduce a system where "virtually everyone" will be expected to do something in return for their benefits, with the "progression to work group" being asked to show that they are taking active steps to return to the workforce.

For the parents of small children, a Department for Work and Pensions source suggested: "This could be as simple as updating their CV or finding out about locally available childcare, or could be something more intensive like full time training or a work trial.

"The only exceptions will be carers, workless parents of very young children and severely disabled people."

The revelation was slammed by David Green, director of the Civitas think tank, who said: "If you allow people to monkey about with their CV you just get people playing the system. It's a waste of time. It has got to be all about getting people into work."

The so-called crackdown is designed for the first time to cover unemployed couples as well as lone parents.

At present, around 350,000 couples receive benefits such as Jobseeker's Allowance and Income Support, and can choose for themselves which partner submits the claim.

The other partner is currently spared any requirement to seek work, even if they are fully capable of finding employment.

More than 400,000 children live in a home where no one works, and ministers say that it is only "fair" to extend the recent shake-up of the benefits paid to lone parents to cover couples as well.

In future couples will be made to submit a joint claim for Jobseeker's Allowance.

Those with children aged seven or more will have to prove that they are actively seeking work, while parents of younger children will be categorised in the progression to work group once they reach the age of one.
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