As the VAT increase came in on Jan 1st the rate for this month is
likely to to go over 4%. This looks like stagflation. The BOE is
forecasting a drop, suppose it carries on rising to over 5% surely
they will raise interest rates to 3 or 4% immediately.

In message
, mick
writes
As the VAT increase came in on Jan 1st the rate for this month is
likely to to go over 4%. This looks like stagflation. The BOE is
forecasting a drop, suppose it carries on rising to over 5% surely
they will raise interest rates to 3 or 4% immediately.

The rate for December was 2.9 against a City predicted rate of 2.6 this
is against the falling price of oil a year ago and the cut in VAT that
took place at that time. There will be some concern that the rate was
above prediction but they are unlikely to act at this time as a rise in
interest rates would be counter productive in other areas such as the
building industry. The target is 2% if it stays above that level or
increases then they may have to consider taking action.
--
Paul Harris

On Tue, 19 Jan 2010 13:13:06 +0000, Paul Harris
wrote:

In message
, mick
writes
As the VAT increase came in on Jan 1st the rate for this month is
likely to to go over 4%. This looks like stagflation. The BOE is
forecasting a drop, suppose it carries on rising to over 5% surely
they will raise interest rates to 3 or 4% immediately.

The rate for December was 2.9 against a City predicted rate of 2.6 this
is against the falling price of oil a year ago and the cut in VAT that
took place at that time. There will be some concern that the rate was
above prediction but they are unlikely to act at this time as a rise in
interest rates would be counter productive in other areas such as the
building industry. The target is 2% if it stays above that level or
increases then they may have to consider taking action.

I think it unlikely that interest rates will rise while quantative
easing is still continuing. That really would be crazy.

The BoE predicted than inflation will rise in the short term and fall
back later this year. In this case it is unlikely that interest rates
will rise soon.

The outcome of the general election could change all this though.
--
(\__/) M.
(='.'=) Due to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
[Reply-to address valid until it is spammed.]

In message , Mark
writes
On Tue, 19 Jan 2010 13:13:06 +0000, Paul Harris

The rate for December was 2.9 against a City predicted rate of 2.6 this
is against the falling price of oil a year ago and the cut in VAT that
took place at that time. There will be some concern that the rate was
above prediction but they are unlikely to act at this time as a rise in
interest rates would be counter productive in other areas such as the
building industry. The target is 2% if it stays above that level or
increases then they may have to consider taking action.

I think it unlikely that interest rates will rise while quantative
easing is still continuing. That really would be crazy.

It would be but they have returned VAT to 17.5% at a time when they are
still trying to stimulate the economy.

The BoE predicted than inflation will rise in the short term and fall
back later this year. In this case it is unlikely that interest rates
will rise soon.

The outcome of the general election could change all this though.

Good points, the Country is deep in debt and needs to reduce borrowing
which is going to be a long and painful process but it still looks like
inflation could go above 3% in the short term and rise further still in
the first half of the year which is not something Brown will want to see
happen. It will be a difficult balance but I doubt we will see any
major steps taken if they can avoid them.

There will have to be some action after the election but with pay levels
stagnant, inflation rising and a Government that has to reduce Public
Sector borrowing looking for ways to do so we are still in for a rough
ride. The threat of inflation is still very real and coupling that with
tax increases won't go down well.
--
Paul Harris

Bitstring , from the wonderful
person Paul Harris said
In message , Mark
writes
On Tue, 19 Jan 2010 13:13:06 +0000, Paul Harris

The rate for December was 2.9 against a City predicted rate of 2.6 this
is against the falling price of oil a year ago and the cut in VAT that
took place at that time. There will be some concern that the rate was
above prediction but they are unlikely to act at this time as a rise in
interest rates would be counter productive in other areas such as the
building industry. The target is 2% if it stays above that level or
increases then they may have to consider taking action.

I think it unlikely that interest rates will rise while quantative
easing is still continuing. That really would be crazy.

It would be but they have returned VAT to 17.5% at a time when they are
still trying to stimulate the economy.

And THAT increase hasn't even kicked thru into the inflation numbers yet
... the 2.9% was just the 'real' rate of 15% VAT vs 15% VAT, after nearly
a year of 15% VAT vs 17.5% VAT.

.. next month (and for the next years) we'll have 17.5% VAT vs 15% VAT,
which has to be worth at least another 1.5%-2% on inflation surely?

--
GSV Three Minds in a Can
16,110 Km walked. 2,937 Km PROWs surveyed. 53.1% complete.

"GSV Three Minds in a Can" wrote in message
...
It would be but they have returned VAT to 17.5% at a time when they
are still trying to stimulate the economy.

And THAT increase hasn't even kicked thru into the inflation numbers
yet .. the 2.9% was just the 'real' rate of 15% VAT vs 15% VAT,
after nearly a year of 15% VAT vs 17.5% VAT.

.. next month (and for the next years) we'll have 17.5% VAT vs 15%
VAT, which has to be worth at least another 1.5%-2% on inflation
surely?

Not necessarily, for a start loads of things are VAT free (most food,
most housing costs, second hand goods etc) or 5% VAT on fuel which
didn't change, and secondly VAT is really a tax on retailers rather
than customers, quite a lot of things didn't change in price when the
VAT rate went down. Prices are usually set based of what people are
prepared to pay rather than eg cost+margin+VAT.

--
Andy

In message , Andy Pandy
writes

"GSV Three Minds in a Can" wrote in message
...

.. next month (and for the next years) we'll have 17.5% VAT vs 15%
VAT, which has to be worth at least another 1.5%-2% on inflation
surely?

Not necessarily, for a start loads of things are VAT free (most food,
most housing costs, second hand goods etc) or 5% VAT on fuel which
didn't change, and secondly VAT is really a tax on retailers rather
than customers, quite a lot of things didn't change in price when the
VAT rate went down. Prices are usually set based of what people are
prepared to pay rather than eg cost+margin+VAT.

VAT is only one aspect, we have a large public sector debt and are still
borrowing, that has to stop and over time the debt must be reduced. It
is probably going to hurt although who and where isn't clear yet but the
chances are most if not all of us will feel it. There is still a chance
of inflation rising and the Bank won't want to raise interest rates but
we could have stagflation. It certainly won't be an easy ride for the
next Government whoever is in power and VAT at 17.5% may be the least of
our concerns.
--
Paul Harris

On Wed, 20 Jan 2010 23:16:24 +0000, Paul Harris
wrote:

In message , Andy Pandy
writes

"GSV Three Minds in a Can" wrote in message
...

.. next month (and for the next years) we'll have 17.5% VAT vs 15%
VAT, which has to be worth at least another 1.5%-2% on inflation
surely?

Not necessarily, for a start loads of things are VAT free (most food,
most housing costs, second hand goods etc) or 5% VAT on fuel which
didn't change, and secondly VAT is really a tax on retailers rather
than customers, quite a lot of things didn't change in price when the
VAT rate went down. Prices are usually set based of what people are
prepared to pay rather than eg cost+margin+VAT.

VAT is only one aspect, we have a large public sector debt and are still
borrowing, that has to stop and over time the debt must be reduced. It
is probably going to hurt although who and where isn't clear yet but the
chances are most if not all of us will feel it. There is still a chance
of inflation rising and the Bank won't want to raise interest rates but
we could have stagflation. It certainly won't be an easy ride for the
next Government whoever is in power and VAT at 17.5% may be the least of
our concerns.

I'm sure the BoE took the VAT rise into consideration in their
forecast. That's probably why they say it will rise and then fall
later in the year.

With the massive tax increases on the horizon people will have less
spending money so this could exert downward pressure on inflation.
--
(\__/) M.
(='.'=) Due to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
[Reply-to address valid until it is spammed.]

In message , Mark
writes
On Wed, 20 Jan 2010 23:16:24 +0000, Paul Harris

VAT is only one aspect, we have a large public sector debt and are still
borrowing, that has to stop and over time the debt must be reduced. It
is probably going to hurt although who and where isn't clear yet but the
chances are most if not all of us will feel it. There is still a chance
of inflation rising and the Bank won't want to raise interest rates but
we could have stagflation. It certainly won't be an easy ride for the
next Government whoever is in power and VAT at 17.5% may be the least of
our concerns.

I'm sure the BoE took the VAT rise into consideration in their
forecast. That's probably why they say it will rise and then fall
later in the year.

If they are comparing month to month (Feb to Feb and March to March
etc.) then the VAT increase will be there every month throughout the
year rather than affecting just the first half.
--
Paul Harris

In message , Paul Harris
writes

VAT is only one aspect, we have a large public sector debt and are
still borrowing, that has to stop and over time the debt must be
reduced. It is probably going to hurt although who and where isn't
clear yet but the chances are most if not all of us will feel it.
There is still a chance of inflation rising and the Bank won't want to
raise interest rates but we could have stagflation. It certainly won't
be an easy ride for the next Government whoever is in power and VAT at
17.5% may be the least of our concerns.

The CPI means that my Company Pension will increase by 2.9% in Apriol,
compared with less than 1% last year. Whoopee!

VAT is the least of my worries. I tend to buy against the trend.
The next election is between a bumbling, unattractive bloke who is
tackling the economic problems reasonably well, and a clean cut Eton
Toff who hasn't a clue what to do other than help his chums by reducing
Inheritance Tax. That affects me nearly as much as the VAT rise.
;-)

Everyone I speak to seems to agree that Vince Cable is the only Party
spokesman who talks much sense.

Now to serious matters. The gym didn't reduce my monthly fee when VAT
was reduced, but I received a letter describing all their new facilities
and sneaking in a reference to the impending VAT increase.
We'll see.
--
Gordon H
Remove "invalid" to reply