The UK’s inflation rate as measured by the Consumer Prices Index (CPI) rose to 2.9% in May, up from 2.7% in April, data published by the Office for National Statistics (ONS) has revealed.
The rising costs of package holidays and imported computer games helped to push the rate to its current level. The ONS found that food and clothing prices also rose, but fuel prices fell.
Economists had previously predicted that the rate of inflation would remain at 2.7% in May.
Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), commented: ‘Higher inflation is a key business concern as it squeezes margins and weakens their ability to invest, particularly during this time of heightened political uncertainty.
‘A key focus of the new government must therefore be on easing the current pressure on firms’ cost base by tackling the burden of upfront costs and taxes associated with doing business in the UK.’
Meanwhile, the Trades Union Congress (TUC) expressed concerns that the UK’s rising inflation rate ‘continues to far outstrip wage growth’.
Frances O’Grady, General Secretary of the TUC, warned: ‘The election showed that working people are struggling. The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK.’
29 Apr 2015
Liberal Democrat leader Nick Clegg has announced that his party will only enter another coalition government with either the Conservatives or Labour on the condition that an emergency “stability Budget” is held within 50 days of the General Election.
In a press conference yesterday Mr Clegg insisted that the economy was a ‘red line’ issue in any post-election agreement. He said: “I choose my words very carefully. If we don’t have, in any coalition agreement which we enter into… a stability budget within 50 days to keep the economic recovery and economy on track, Liberal Democrats will not enter government”.
Continuing his efforts to position his party on the middle-ground between the Conservatives and Labour, Mr Clegg claimed that the Lib Dems would keep both major parties “on the straight and narrow”.
He said: “We won’t let Labour risk your job or your economy with reckless borrowing. And we won’t let the Conservatives risk our schools, hospitals and public services with reckless cuts”.
The Lib Dems have previously been critical of Labour for failing to set out a clear timescale for eliminating the deficit, but have also rejected Tory plans to cut £12bn from welfare without increasing higher rates of income tax.
Mr Clegg insisted that the Lib Dem plans would: “calm jittery markets, keep interest rates low, keep Britain on track and show the British people how we will finish the job fairly and continue to support our public services”.
The ‘stability Budget’ is the second issue which Mr Clegg has described as a “red line” in any coalition negotiations, the first being a pledge to increase education funding in England from £49bn to £55.3bn. He said he would “not accept under any circumstances the cuts to nurseries, to schools and to colleges that both Conservatives and now Labour have announced”.
27 Apr 2015
5,025 small businesses have signed an open letter in the Daily Telegraph calling for the Conservative Party to be ‘given the chance to finish what they started’.
The letter states: ‘We run small businesses right across the country . . . It was tough during the recession, but we kept going. This Conservative-led Government has been genuinely committed to making sure Britain is open for business.’
It continues: ‘We’ve been helped by the steps to lower taxes, reduce red tape, simplify employment law and get the banks lending.’
Business leaders who have signed the letter include managing directors, owners and CEOs operating businesses in every region of the UK.
Labour’s Shadow Business Secretary, Chuka Umunna, has responded: ‘The Tories have spent five years letting down Britain’s small businesses.
‘Government scheme after Governments scheme designed to boost finance for small firms has failed, and small business lending has fallen by £500 million in the last three months.’
16 Apr 2015
As political parties continue to put forward their pledges ahead of the forthcoming General Election, the International Monetary Fund (IMF) has warned that the next Government could face difficulties balancing the public finances, forecasting that the economy will still be in deficit in the final year of the next Parliament.
At the time of the 2015 Budget, the independent Office for Budget Responsibility (OBR) forecast a £7bn surplus for 2019/20.
However, the watchdog has warned that spending on public services and welfare will continue to exceed the amount raised through tax revenues.
According to the IMF there is likely to be a deficit of £7bn remaining in 2020, with lower than predicted growth and tax revenues, and uncertainty surrounding the outcome of the election which could impact on the rate of spending cuts.
Despite its more gloomy long-term projections, the IMF has predicted growth of 2.7% for the UK this year and 2.3% for next year.
12 Jan 2015
Chancellor George Osborne has announced plans to use a predicted budget surplus to cut taxes, should the Conservative party win the next election.
Chief Whip Michael Gove had previously claimed that a Conservative Government could eliminate the budget deficit by 2018 and have a surplus by 2020.
Mr Osborne said: ‘What Michael Gove is saying – and I completely agree with him – is the spending plans we have set out show you can deliver a surplus. The forecast surplus is £23 billion by the end of this decade.
‘Those spending plans deliver economic security and by having a surplus you can not only eliminate your deficit but you can start to get your debt down’.
Reinforcing the Conservative party’s long term goals in a recent speech, Prime Minister David Cameron said: ‘If we fail to meet this national challenge, the writing is on the wall. More borrowing, and all the extra debt interest that brings, meaning there is less money to spend on schools and hospitals and all the things we value as a country’.
02 Oct 2014
Prime Minister David Cameron has pledged to raise both the personal tax allowance and the 40p income tax band, in a pledge to benefit millions of earners.
In the recent Conservative conference, Mr Cameron said that the tax-free allowance would go up from £10,500 to £12,500 by the year 2020. The threshold for the 40p tax rate would also go up from £41,900 to £50,000.
The total number of people estimated to benefit from these changes is 30 million. But the cuts are not expected until around 2018, when the party hopes to have the budget deficit eliminated.
Mr Cameron said: ‘I am not a complicated man, I believe in some simple things. Families come first, they are the way you make a nation strong from inside and out. If you work hard, we will cut your taxes, but only if we keep on cutting the deficit, so we can afford to do that’.
12 May 2014
One of the UK’s leading business groups has predicted that interest rates will rise to 0.75% in the first quarter of next year.
According to the Confederation of British Industry (CBI), interest rates are likely to rise from their current level of 0.5% to 0.75% in the first three months of 2015, rather than in the third quarter as previously predicted by the organisation.
The CBI has also revised upwards its forecasts for economic growth, anticipating growth of 3% for 2014 and 2.7% for 2015.
However, despite reporting increased levels of confidence and business investment across all areas of the economy, the business group has urged political parties to ensure that the positive economic message does not become buried in the run-up to the election.
CBI director-general John Cridland warned, ‘Politicians must be wary of the risk of headline-grabbing policies that weaken investment, opportunity and jobs’.
The CBI’s upgraded forecasts follow a recent report from the National Institute of Economic and Social Research (NIESR), which suggests that the UK economy is nearing pre-financial crisis levels.