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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

4 Feb 2010

Bank distances itself from Government

I believe that it was during the Thatcher reign that the Bank of England formally became independent from Government, yet the BoE and Treasury have naturally continued to seek unified responses to the economy. As we enter the run up to an election in a few months time, the BoE is caught between whether to prepare for a continuance of current policies or a new broom sweeping through. The only sensible approach to take is to keep a watching brief, hence interest rates remain unchanged, and it is widely expected that the government-inspired asset-buying program will be put on hold.
Analysts agree that it is likely that interest rates will remain low for at least until the end of this year, as it is likely that the bank will want to establish a convincing upward trend in the economy before allowing interest rates to rise.
The opposition are promising their own fiscal package if they gain control after the election, and the government will probably present a budget in March, either measure is likely to tighten policy after some of the 'loosest' fisacl policy ever seen... The general outlook, despite the statistically positive rise in GDP, is cautious if not downright glum. GDP did not rise anything like as much as was hoped and inflation has taken a hike over Christmas - this will not be helped by ceasing of the VAT 'holiday'. There are still tough times ahead despite the encouraging signs.

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