Martin Weale, a member of the rate-setting Monetary Policy Committee, said that interest rates could remain at record lows even after unemployment falls below the 7% threshold set by the Bank of England. At a speech in London, Weale said that “a rise is not automatic” when the rate hits the 7% threshold, something the bank expects could happen towards the end of next year rather than in 2016. “It is perfectly possible that, as time moves on, the right thing to do will be to keep Bank Rate at 0.5pc even when unemployment has dropped below our 7pc threshold,” he said. (Daily Mail, p.96)
The Telegraph (p.39) reports that in the same speech, Weale also warned that the Sterling is too strong and must weaken if Britain is to secure a balanced recovery. While the pound’s recent strength had helped to ease the cost of living, he remained uncomfortable with its current value. The UK’s current account deficit is on course to hit a 25-year high next year, the worst of any major industrial country. This is made worse by the strong pound, making British exports unattractive and fuelling imports of cheaper goods from abroad.
Knight Frank research predicts that house prices are set to soar by 24% over the next five years, pushing the price of an average three-bedroom semi to £185,833. In London, average prices will jump by £76 each day next year. Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The arrival of Help to Buy has been an integral part of improving the outlook for the wider property market.” (Express, Sarah O’Grady, p.4)
Britain has become a nation of downsizers, with almost half of homeowners planning to sell their property in the next three years to move into somewhere smaller, saving £100,000 on average. The research by Lloyds Bank found that more than a third of potential downsizers wanted to free up cash to support their retirement plans, while nearly half wanted to reduce their bills and outgoings. (Times, Kathryn Hopkins, p.8)
The number of people switching bank accounts to Nationwide Building Society has risen by almost 50 per cent to more than 400 per day since the new rules on switching bank accounts were introduced. The increase in switchers to Nationwide was much more dramatic than across the sector as a whole, where reports of 11 per cent increases in switching were reported during the first few weeks of the scheme. (Times Business, p.51, Guardian, p.43, Daily Mail, p.96) The news signals the company’s ‘aggressive push into the current account market’ (FT, p.18) as a means of attracting new customers and offering them other products, and was announced together with their half-year financial results.
Youth unemployment poses a major threat to the global economy and will led to more crime and social unrest if it is not tackled, according to the World Economic Forum. The problem is particularly acute in the Eurozone where one-in-four under 25s who want a job cannot find work – in Spain and Greece, this proportion rises to half. SD Shibulal, chief executive of Infosys, who contributed to the report, said: “There is a growing consensus on the fact that unless we address chronic joblessness we will see an escalation in social unrest.” ‘The Outlook On the Global Agenda’ report was published on Friday. (Daily Mail, p.97)