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Wednesday, 10 August 2011

UK Economic Growth

Yesterday it was announced that the US Federal Reserve (Central Bank) will keep US interest rates at 0.25% until at least mid 2013. It has been 0.25% since December 2008 and the main reasoning behind this is to try and prevent the US economy from undergoing a double dip recession. Because of this, the Bank of England are likely to keep interest rates in the UK 0.5% until the end of the year. See article for more and watch the video for what Mervyn King (Governor of the Bank of England) had to say.

There are fears that many major economies may face double dip recessions and this risk is heightened by the turmoil in the EU which poses great risk to the UK economy in terms of the banking system and how it will affect UK banks. Furthermore, the rate of inflation is likely to increase to 5% or higher at some point this year before dropping down, affecting disposable incomes and thus decreasing consumption.

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