In a report out today, the Bank of England has accepted that it must do more to improve its predictions. Inflation has been damaging British living standards and crippling the economy but the officials who were meant to keep a lid on prices didn’t do enough because their forecasts were too often wrong. Even though the Bank was consistently worse at predicting changes in growth and inflation than other economists, it stuck with its flawed model, making excuses for its errors rather than making efforts to improve its forecasts. Cover of City A.M. and cover of the Financial Times.
The National Institute of Economic and Social Research (NIESR) has warned that UK growth will be worse than expected next year after a collapse in demand across the world. They have predicted that growth would be 1.1% in 2013, lower than 1.4% predicted by the CBI and International Monetary Fund – this is not enough to bring down unemployment. P.34 of The Guardian.
House prices climbed during last month after the slip in September and months of weakness in the housing market, Nationwide revealed yesterday. The Nationwide House Price Index grew 0.6% last month, after a 0.4% slip into September. Earlier slips, however, mean that the Index is still 0.9% lower than it was a year ago. P.12 of City A.M.
The Met Office and the Government’s flooding watchdog have warned that the UK must brace itself for a high likelihood of winter floods. Saturated ground across the country and high river and groundwater levels from the wet summer will mean that much less rainfall than usual is needed to top up water levels and cause severe flooding, according to the Environment Agency. Households have been advised to check for warnings in their area as one in six homes are at some risk of flooding. P.18 of The Guardian.
People saving for pensions will see the projected size of their final pension pots slashed under new rules imposed by the Financial Services Authority (FSA). It was confirmed yesterday that the projection rates used by pension companies to give investors an idea of what their pension will be worth when they retire must be cut significantly. The FSA plans to reduce the intermediate projection rate for tax-advantaged products such as personal pensions from the current 7% to 5%. The FSA said it was making the change in order to give consumers a more realistic impression of the investment returns they might receive. P.6 of City A.M. and Cover and p.2 of the Daily Telegraph.