UK economic growth 2018 started more slowly than end of 2017. The UK economy news is normally weaker at the beginning of the calendar year. Most of the UKs economic growth comes as the calendar year progresses.
Latest economic news for UK and global economy
Governor of the Bank of England Mr Carney
Mr Mark Carney the head of the Bank of England says poor UK economic activity at the beginning of the calendar year 2018 was due to the weather and not UK economic climate.
In addition Mr Carney reports that all slack in the UK economy has been taken up and this is likely to push up UK prices and UK inflation.
With very high levels of employment low levels of unemployment and a million plus job vacancies unfilled it is more likely that wages will increase faster. UK employers will need to pay more to attract candidates and to keep existing staff.
Mr Carney paints a rosier future for the UK economy in 2018 with downside risks including global international trade war. UK interest rates more likely to rise later this year and this should boost value of the UK pound.
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Current interest rate in UK is 0.25 percent but this is set to rise in 2017
If the Bank of England pushes up UK interest rate, lenders will follow suit and it will cost you more money to buy a house build that extension lease a new car or invest in your business.
17th October 2017 UK Inflation Rises Even Further Beyond Bank of England Target of 2 percent
UK’s inflation reached 3 percent in September 50 percent higher than targeted according to the Office for National Statistics ONS.
3 percent is the UKs highest inflation level in since April 2012. This is a continuation a rising inflation trend in the UK. This validates the expectation of a UK interest rate hike in November 2017 especially as rising UK inflation should herald rising wages.
Pensioners will definitely win from September’s increase in inflation. UK state pension is linked to September’s inflation rate and this means pensioners will get a 3 percent wage rise next April 2018. The triple lock on pensions means that pensioners are guaranteed a minimum increase each year by whichever is the highest of Septembers inflation rate average earnings growth or 2.5 percent.
If you are planning on borrowing money in UK get in now whilst lenders rates are at their lowest
Could UK interest rates fall even further? Of course they could! Will they? Not on your nelly!
UK interest rate is currently at its lowest. The only way is up but when will they rise? They should have risen by now and as each day passes the likelihood of an increase in interest rate in UK increases.
Currently the UK manufacturing sector is selling more than it has ever done since 1988. Exports are at their highest since 1995. The UK manufacturing sector is trying to recruit more people.
Unemployment is at its lowest rate since the 1970s. Employment rate is at its highest ever. Millions of job vacancies are unfilled. Employers will have to increase pay to retain and attract staff and this will push inflation up higher.
Inflation is running at 2.9 percent and is probably already at 3.0 percent. The Bank of England has a KPI to trigger interest rate increases. Its 2.0 percent. UK inflation is currently 50 percent higher than the optimal inflation rate of 2.0 percent and if the Governor of the Bank of England was a balanced analyst he would know that he needs to help the Monetary Policy Committee to increase UK interest rate to 0.5 percent in 2017.
Mr Carney has today admitted UK businesses are investing more as the global economy is set to boom. The UK economy will probably grow at least as fast as 2016 and by the end of 2017 growth in UK will be a healthy 2.0 percent.
Increasing UK interest rate will support the value of the UK pound and this will make it slightly harder to export and slightly easier to import to UK which will help control inflation.
The UK needs to prepare for the next financial disaster that the financial services industry cook’s up. Part of the preparation is increasing interest rate towards the long-term UK average of 5.0 percent yes 5.0 percent not 0.5 percent. Even if the Bank of England did increase UK interest rate to 0.5 percent it would still be at a rate that is a tenth of the normal for the UK. Thats how far interest rates will go and it will go relatively fast to stop consumer bubble like that in car sales by finance.
So if you want to borrow money in the UK you will never get a better time to borrow than now. Mr Carney flip flops about when it comes to monetary guidance. One minute the economic data points to a UK interest rate rise the next Mr Carney thinks the same data points to maintaining UK interest rate, or even cutting UK interest rate. Mr Carney will soon be going on a mid career break with Mrs May. She will bore him to death about her policy of a strong and stable government, and he can bore her about his kangeroo petrol monetary guidance policy.
The new and enlightened and emboldened MPC should increase UK interest rate this year. If the MPC doesn’t then we need a new MPC.
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UK Pension Liabilities In Private Sector Public Sector and Not For Profit Sector Are Out Of Control
Why are the systems meant to protect those saving for retirement so inadequate? You might say they are underfunded rather than unfunded until you see how much underfunding there is and then you might agree that really pensions are unfunded!
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Pension News Headlines Risk Analysis and Reviews
18th March 2018 In Future UK Employees Pensions Maybe Better Protected
Avoiding or abusing pension responsibilities maybe made a crime under plans to crack down on business leaders who fail to comply with their responsibilities to protect pensions and pensioners in UK.
The UK’s Insolvency Service will also be given extra powers to help protect employees from negligent corporate business decision makers who put pension schemes at risk.
22nd January 2018 UK Prime Minister May Says UK Will Stop Abuse Of Pension Schemes By Executives and Shareholders
The scandal of continuous underfunding of UK pensions and the abuse of pension provision in the UK has been highlighted once again by the collapse of the UK’s second biggest construction company Carillion. Some 28,000 pensioners are likely to face reduced pension payments due to the collapse of Carillion with perhaps a £1 billion pension hole where Carillions money should be.
Instead of addressing the pension hole Carillion executives chose to boost the performance of the firm by underfunding the pension pot paying higher dividends and paying themselves larger bonuses than they would otherwise have been entitled to. Carillion pensioners will transfer to the Pension Protection Fund after the collapse of Carillion but many pensioners many pension members out of pocket when their pension is likely to be cut.
The UK Prime Minister says the UK will clamp down on executives who line their own pockets while not protecting workers pensions.
New rules in the spring of 2018 will aim to deal with executives who threaten worker’s pensions in order to benefit personally from bigger bonuses or rewards.
However Mrs May said last year after the BHS scandal that she would tackle executive abuse to pension contributions with no progress to date.
27th June 2017 UK Pension Regulator published its report into a deal under which Philip Green paid £363m to BHS pension scheme
The Pension Regulator says the main purpose in selling BHS was to prevent taking on liability for the BHS pension scheme. The Pension Regulator says that under Mr Greens watch the BHS pension fund had moved from a surplus into a deficit. However after Mr Greens personal recent substantial contribution BHS pension fund now has a £100m surplus.
However what is clear is that pension fund risk management is highly inadequate. Periodically massive pension fund shortfalls materialise into real financial loss to pensioners. This will continue until legislation corrects the inadequacy of the present regulatory control and monitoring. Perhaps the Pension Regulator could also do its job better. It needs to show its teeth earlier.
Citibank Report 2016
According to Citibank, the 20 largest OECD countries alone owe $78 trillion to their public sector pension funds funding for pay-as-you-go and defined benefit public pensions.
Do you pay into a private pension in UK? Your employer is not! Overall private pension funding in UK is only up to around two-thirds of what is needed. Around three quarters of a trillion pounds extra is needed to fully fund private UK pensions!
Where is this money going to come from to make sure you get your pension when you retire?
Carillion BHS Steelworkers et al are not the only ones who are worried about their retirement money!
Too many people in the UK who think they are saving for their retirement via a pension have been let down and will continue to be let down
Unfunded public sector pensions make up two-thirds of the £2 trillion UK pension liabilities. Private sector pension funds should hopefully become less of an issue as private pension funds or closed to new members and subsequently closed down altogether. However BHS has shown how private pension funds can throw up real problems for those saving for retirement or in retirement.
Why has the UK got saving for retirement so badly wrong?
Unfunded state pensions are the legacy of our fathers and mothers. They have failed to grasp the nettle of saving for retirement and have left a mess to the next generation in the UK whilst pocketing relatively generous pensions for themselves. This is compounded by unfunded central and local government employee pensions.
Public sector pensions are essentially like illegal Ponzi schemes where people think they are investing in their future retirement, but largely they are paying the pensions of those who are retired in UK now. They are really paying money with little more than a hope that the young of today will pay their pension when they retire. However there is no guarantee that the young of today and government’s of the future will feel inclined to pay for retired people’s lifestyles they have no hope of matching when the young eventually retire. The main risk control measure seems to be increasing the state retirement age. And so it continues.
Corrupt business leaders are also failing to pay into private pensions to fund the pension of many people in private sector funds. They seem to be hoping that they will get away with it and someone else will pick up the tab which is normally the retired person who did pay their fair share into the pension fund.
The pension scandal is yet more evidence of the failure of risk management, corporate governance and compliance to create a fair society and corporate culture. A demographic time bomb will soon explode but at the moment successive UK governments are happy to pass the parcel in the hope that the music doesn’t stop when they are in charge.
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Dealing with reckless management of UK pension schemes
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Scores of bankers have been jailed for their part in the financial crisis but the rest of the world should hang its head in shame for its lack of demonstration of accountability for actions and inaction in face of corporate risk
Financial services industry leaders not just bankers were highly culpable for the financial crisis upon which people committed suicide and a lost their shirts. Financial leaders should lose their liberty.
The next financial crisis is just around the corner. We have seen many incidents since the financial crisis that haven’t quite been systemic risk events but they have cost financial services companys billions in fines for poor and deliberate malpractice. Financial services leaders haven’t learnt their lesson. They are just paying lip-service to good corporate governance. Only the real threat of the jail will stop the next financial crisis happening.
Not only have the culprits for the financial crisis got away with it, they have gone on to be leaders in the financial services industry or other leading businesses.
From leading bankers to leading politicians to leading regulators to leading credit rating agency leaders to leading central bankers they have all prospered despite the financial crisis and many have gone from causing the financial crisis to other positions of power without being held to account for their actions or inaction.
There has been limited tightening of global financial services regulations but the ultimate sanction of losing your liberty is still highly unlikely. It still more likely that financial services leaders will depart their employer with handsome pay-offs and pension packages rather than serving time in a USA or UK jail.
Until individual financial services industry leaders face and are convicted of criminal prosecutions business leaders will continue to lead their employers to hefty financial penalties and even liquidation. If you kill someone at work, you at least have some real chance of going to jail. If you kill a corporate entity, you will almost certainly not go to jail in UK and USA. Appearing in court to face charges is not the same as losing your liberty for 7 to 10 years.
European countries have been a little more robust at jailing the guilty but only a few can be proud of their resolve to improve corporate governance in practice.
Financial Services Industry Risk News Headlines Industry Analysis and Risk Reviews
15th October 2019 Reckless Business Leaders Who Mismanage Pension Schemes May Face Up To 7 Years In Jail Under New UK Legislation.
The Pension Schemes Bill will bring in a new sentence of up to seven years in prison for business leaders who are reckless in the management of their pension schemes.
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20th June 2017 SFO charges former Barclays chief executive John Varley and three others Roger Jenkins Tom Kalaris and Richard Boath. After a five-year investigation into the £12bn bailout fundraising recapitalisation of Barclays bank by Qatar
Barclays strategy was to go to Qatar for money instead of UK government. The bank and the ex-bank executives will officially respond to SFO charges on 3rd July. The charges include conspiracy to commit fraud by false representation in relation to a fundraising in June 2008. The ex bank executives are facing potential jail of up to 10 years if convicted.
Other charges for some of those accused and the bank include providing unlawful financial assistance through a loan.
Barclays said it was considering its position in relation to these developments and awaiting further details of the charges.
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