Property Renovations Ely Ltd

Extract from the Mais Lecture on “Maintaining stability in a global economy”, given by The Chancellor of the Exchequer, The Rt Hon Alistair Darling MP, at the Cass Business School yesterday, within which the green light would appear to have been given to the MPC to cut interest rates without worrying about short term effects on inflation.

Property Renovations Ely Ltd

The Financial Services Authority (FSA) has published today its latest mortgage lending data covering the period from Q1 2007 to the end of Q2 2008.

The report shows the total value of outstanding loans is £1,178bn, an increase of 7.5% compared to a year earlier. But quarterly growth continues to slow, with a Q2 increase of just 1%;

New lending peaked in Q3 last year at £102bn before declining to £72bn in Q2, leaving gross lending 26% lower than a year earlier.

Loans to borrowers with an impaired credit history represented 2.1% of new lending in Q2, compared to 3.4% a year earlier.

While the number of new arrears cases has stayed constant at around 54,000 each quarter since early 2007 consumers are increasingly struggling to clear their arrears and consequently the total number of accounts in arrears is increasing. At the end of Q2 there were 312,000 loan accounts in arrears, an increase of 3% on Q1 and 16% up on a year earlier, with the total amount of arrears now standing at £1.6bn.

Numbers of new possessions have grown significantly since Q3 last year, with the 11,054 new cases in Q2 (after 9172 in Q1) being 71% higher than a year earlier.

Property Renovations Ely Ltd

In a very interesting speech last night to the CBI, Institute of Directors, Leeds Chamber of Commerce and Yorkshire Forward in Leeds, Mervy King mentioned the fact that we are probably in a recession, but also pointed to the among other things potentially selling units in the Banking Reconstruction Fund. Here is the speech which commences after the introduction, and includes bold print for key points made for those that don’t wish to read it in full.

Property Renovations Ely Ltd

Figures released today show that inflation as measured by the Consumer Price Index is running at 5.2% in September up from 4.7% in August.

The increase is mainly due to higher energy costs, and it is thought that with prices of energy now falling back, inflation has probably now reached its peak. Once the energy price reduction feed through in the next few months the index should start to go back towards target.

The Retail Price Index (RPI) is currently running at 5% up from 4.9% in August, and it will be this figure that is used to calculate the increase in pensions. So we have one group that will be happy as they should get sharply rising pensions at a time of falling inflation. However it will of course not bring pensions back to previous levels in real terms.

Property Renovations Ely Ltd

It’s all happening in the financial markets, with the Bank of England cutting the base rate to 4.5 per cent and Alistair Darling’s £500 billion rescue plan…

Chancellor Darling’s plan aims to bring Britain’s high street banks back from the brink of collapse and boost consumer confidence with a part-nationalisation.

Mr Darling has been a busy bee. On top of gambling £500 billion of taxpayers’ money to beat the credit crunch, he has told the Bank of England to cut interest rates and even found time to bail out all of Icesave’s savers.

He has said that the moves come in response to ‘extraordinary times.’

Half of the money is being offered to banks in a move that would make them semi-nationalised, allowing them to have the cash as capital in return for the Government taking a stake in the form of preferential shares. The other half will be metered out at a later date.

£200 billion will be given to the banks in short-term loans under the Special Liquidity Scheme set up to keep the financial system working on a day-to-day basis.

If no bank goes bust then none of the money will be needed atall. The total amount of public money involved is more than the entire £324 billion annual spending total by Whitehall departments.