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Bank of England inflation forecastIn its latest quarterly inflation report the Bank of England states that the economic slowdown in the UK reached its low point in the last three months of 2001, and that recovery is now under way. Projections indicate that if interest rates remained at 4% inflation would be below the Government’s 2.5% target until late-2003 UK interest ratesInterest rates remain unchanged, with the cost of borrowing held at its 38-year low of 4% for the seventh consecutive month. However, indications are that there will be an increase by the autumn, strengthened by a record rise in retail sales. Retail sales for April grew by 1.7%, contributing to a rise of 6.9% for twelve months, the biggest increase for more than two years and four times higher than analysts’ predictions. Sales of clothing, textiles and footwear were up 17.1% for the month, the highest sector rise since National Statistics began recording the information in 1986. Manufacturing slumpFigures published by National Statistics revealed that, instead of showing the expected 0.3% rise, manufacturing output fell by 0.8% in March, contributing to a decline of 6.8% over 12 months – the sector’s worst performance since 1991. Recent
survey evidence had appeared to indicate increasing confidence that
manufacturing was emerging from its year-long recession, and these figures
are now seen as casting doubt about the pace of recovery in the economy as a
whole, despite a rise of 0.5% in manufacturing output prices in April. Growth forecast for ScotlandEconomists predict that significant upturns in the US and world economies will prompt a 1.8% increase in Scotland’s GDP in 2002. Scottish cities’ wealth creationEdinburgh and Glasgow rank second and third respectively in the UK, behind London, in terms of wealth creation per head of population, according to Barclays. In Europe as a whole, Frankfurt headed the table for 2001 with figures of £43,317 per capita, ahead of Karlsruhe and Paris, with Edinburgh (£21,718) in 25th place and Glasgow (£19,837) 31st. UK unemploymentThe latest unemployment figures from the National Statistics Office show that the number of people claiming unemployment benefit in the UK rose by 5,400 in April to a total of 953,000, the highest so far this year, although the International Labour Organisation total which includes those not eligible for benefit fell by 19,000 over the first quarter to 1.54m. 170,000 manufacturing jobs were lost in the first three months, reducing the total number working in the sector to a record low of 3.2m. Average earnings rose by 2.9% in March, an increase of 0.4% on February’s figure. Ageing populationBy 2011, life expectancy rates are expected to have risen to 80 years for men and 85 for women, compared with 45 and 49 respectively a century before. The FSA is warning insurers and pension providers that underestimating the impact of increased longevity could result in bankruptcy. Scotland’s declining populationThe population north of the border is expected to fall from 5.1m to 4.8m by 2040, in contrast to an increase for the UK as a whole from 58m to 66m, and within 30 years the number of people under the age of 24 could have declined by nearly 25%. Birth rates are falling in all parts of the UK, but are more than offset in England, Wales and Northern Ireland by the inflow of migrants, to which Scotland is contributing. However, despite the economic and social problems, which are likely to be a consequence of skills shortages and an aging population, a recent poll revealed that up to half of all Scots are in favour of repatriation of immigrants. Bankruptcy law reformsThe Scottish Executive has announced bankruptcy law reforms in line with the Government’s enterprise bill, with proposals to reduce from three years to 12 months the discharge period for most bankrupts. Whilst existing outdated restrictions will be reviewed, new restriction orders imposed for two to fifteen years are proposed where businesses have failed as a result of irresponsible practices. House pricesHouse prices in Scotland have risen by 37% in six years. The latest figures from Lloyds TSB Scotland show an increase in the average price of 2.2% for the three months to April and 7.1% for the year, the biggest annual rise since 1998. Property rentsThe continuing boom in the supply of buy-to-let properties has resulted in average rents falling to their lowest level for more than two years, according to a report from the Royal Institute of Chartered Surveyors. MortgagesFigures from the British Bankers’ Association showed a 47% increase in new mortgage lending for the twelve months to April, with the monthly rise of 5% being the third record in four months. Endowment mortgage shortfallsIncreasing numbers of homeowners with endowment mortgages are finding that their policies will not provide sufficient funds to repay their loans, as a result of a decline in the performance of the underlying investments. Some 6 million of the 10.7 million endowment mortgage holders receiving warning letters from their mortgage providers will face a shortfall, according to figures published by the Association of British Insurers. E-commerce on the increaseFollowing the upsurge in the use of IT to generate commercial opportunities during the dot.com boom, a change of emphasis has seen companies increasingly using e-business technology internally in order to remain competitive and improve relations with suppliers and staff. A report from the CBI and KPMG Consulting shows the IT applications most widely used as being intranet internal communications systems and electronic payroll facilities. Online tax payment service suspendedThe Inland Revenue’s ‘Self Assessment Online’ service has been suspended following reports that other taxpayers’ details were appearing on users’ return forms. Around 75,000 taxpayers file their returns online, and the Government is considering imposing fines on companies and individuals who are not using the service by 2010. Gold marketA survey by the World Gold Council reports that the UK is now Europe’s largest market for gold jewellery. Sales for the first quarter of 2002 showed a 3% increase on the corresponding period last year. UK company successEurope’s top 15 wealth-creating companies includes five British firms, according to DTI research comparing the wealth created by companies for paying staff and shareholders, investment and tax contributions. The five are Shell, BP, HSBC, Glaxo Smith Kline and BT. Bribe payers indexCorruption is undermining fair trade in the emerging markets, according to German watchdog Transparency International, whose Bribe Payers Index 2002 ranks the countries whose companies use bribes to win contracts in emerging market countries. The worst offenders are listed as Russia, China, Taiwan, South Korea, Italy, Hong Kong, Malaysia, Japan and the USA. At the clean end of the scale, those least likely to offer or pay bribes are Australia, Sweden, Switzerland, Austria and Canada, with the UK in eighth place. Venture capital boost for ScotlandThe downturn in the technology sector lead to a 69% drop in Scottish investment by venture capital firm 3i in the year to March 2002, but with a revival in business confidence the expectation is that the next year should show a gradual increase. Tourism woe for ScotlandThe foot-and-mouth epidemic and September 11 hit tourism last year harder than had been predicted. The National Statistics Office reports a drop in visitors of 7% to 23.4m for the UK as a whole, with Scotland’s share down 5.7% to 1.5m, the lowest total since 1994. Spending by overseas tourists in Scotland fell by 14% to £679m - £108m below the national average for the previous seven years, and nearly twice the decline forecast by Visit Scotland, whose chief executive Philip Riddle warns that the slump in the US market is set to continue. American and Canadian tourists are traditionally the biggest spenders, and their numbers for the last quarter of 2001 were 30% down on the same period in the year before. Airline punctuality improvingArrivals at Glasgow and Edinburgh airports in the last quarter of 2001 showed increases in punctuality rates to 81% and 79% respectively, compared with 76% on time for each airport in the corresponding period the year before. The Civil Aviation Authority’s definition of “on time” includes arrivals ahead of the scheduled time and those up to 15 minutes late. Commuter stressTransport problems on the UK’s roads and railways could be costing British business more than £5bn a year as a direct result of delays. In a nationwide poll by recruitment agency Reed, half of the 6,000 commuters surveyed find their journey to work more stressful now than four years ago, and delays of up to four hours a week are prompting an average of one worker in six to consider changing jobs. Transport delays are worst in London, although those most likely to have considered changing jobs include workers in Wales and the south-west of England as well as those in the Thames Valley, while the average for Scotland is one in eight. Company carsThe Guild of Experienced Motorists warns that high-mileage company car drivers have a one in 8,000 risk of being killed or injured in road accidents, and that a third of the average firm’s company car fleet could be involved in accidents each year. By comparison, the risk for construction workers is one in 10,000 and for coal miners one in 7,100. The guild suggests that firms should treat company cars as a place of work, and implement a proper health and safety policy for drivers, including driving licence checks, training programmes and restricting long periods behind the wheel. WorkaholismA report from the Japanese health ministry says that the number of deaths from overwork showed a 68% increase in the year to March. The effects of working more than 80 hours overtime a month contributed to 143 deaths, mostly from heart attacks, strokes and suicide. Tax on beerThe EC claims that huge differences across Europe in the level of tax on beer are causing major trade distortions and hampering the smooth running of the single market. Excise duty and VAT on beer in the UK is ten times that of some countries, and is higher only in Finland and the Irish Republic. World Cup threatThe FTSE 100 index could suffer a fall of at least 25 points if England are eliminated from the World Cup in the opening stages, according to Leeds University’s business school. |