Economic strategy under fire
FISCAL stimulus measures came under fire this week with an unexpected inflation rise and rising concerns over the state of public finances.
On Tuesday, the consumer prices index (CPI) rose to 3.2 per cent, after a sharp fall in the value of the pound led to higher import prices being passed onto shoppers.
The surprise rise of 0.2 per cent came despite predictions it would actually fall to 2.6 per cent, and that the UK was entering a deflationary period.
The Retail Prices Index, which is used in wage negotiations and reflects housing costs, fell to 0 per cent that day, sparking fears workers could see stagnating earnings against a rising cost of living.
The Office of National Statistics said the CPI figure also showed firms were reversing the VAT cut announced by chancellor Alistair Darling in last year’s pre-budget report.
Then on Wednesday, it emerged an auction of government-guarunteed bonds had failed for the first time in seven years, raising fears over public finances.
The Debt Management Office was selling 1.75bn in treasury gilts, bonds regarded as being the safest of investments, to raise cash on behalf of the government, but attracted bids worth just 1.63bn.
Bank of England governor Mervyn King has also cautioned against another round of major spending to help the UK through the recession.
His remarks came after it emerged the government’s forecast of 118bn in net borrowing for 2009/10 was set to rise even higher in April’s budget.
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Weather for Wakefield
Wednesday 23 May 2012
Today
Sunny spells
Temperature: 12 C to 23 C
Wind Speed: 10 mph
Wind direction: North east
Tomorrow
Cloudy
Temperature: 10 C to 21 C
Wind Speed: 10 mph
Wind direction: North east
