Four interesting indicators:
- Public borrowing up. The Government needs to balance its books which means higher taxation and less public expenditure. University Hospital of North Staffordshire in Stoke-on-Trent will cut 1000 jobs to rebalance the books with other hospitals also in financial distress. Civil service and local government are also cutting jobs. British citizens will pay increased tax. These effects are immediate and running for several years. Predictions: Unemployment increases; job security fear increases; personal expenditure increases.
- Inflation up. Inflation surprised with increase 1.9% to 2.0%. Fuel costs, books, newspapers and computer games were blamed for increase. Demand is outstripping supply of fuel as the likes of China and India pull in more and more fuel resources into their expanding economies. Newspapers are being wiped out by the internet as their advertising is being captured. I do not believe there is any major increase in expenses for the suppliers of books and computer games, but it appears that British citizens are willing to pay a premium to be entertained and the suppliers are cashing in on this need to increase profits. Prediction: personal expenditure increases.
- Kingfisher reports downturn in spending on DIY Very interesting report for DIY firm, Kingfisher, who reports whilst worldwide sales are good that British citizens are not spending their money on DIY. Kingfisher blames the failure by British citizens to spend money on DIY due to increased household debt, taxation and fuel costs. The writer notes household debt, taxation and fuel costs are on the move upwards and will do for many years to come. DIY works hand in hand with the housing market. DIY boosts house prices, or is carried out by an owner either to maintain the upkeep of the building, or to satisfy a personal need to mark the identity or lifestyle of the owner on the home. Prediction: British recession in the DIY market has started and will last several years. British citizens are running out of financial resources with immediate cuts on expensive non essentials like home improvements. Home improvements are one of the major drivers of house price increases hence house price inflation will slow.
- February mortgage lending slows Loans to feed the British house sales market continues an upward trend but it is slowing. Spending on credit cards and overdrafts continues to increase. Credit and increasing housing prices all power the British economy. Low interest rates are enabling this to happen. If interest rates increases then this will wipe out the housing market together with the financial ability of the British citizen to cope. Prediction: increased expenditure to pay back larger loans; British citizens are showing financial distress but still have the credit and financial resources to maintain their current spending habits.
Mabon Dane