April 2015: An Update on the UK’s Economy

A new financial year has now begun and we’re optimistic for the financial future in 2015/2016. But what is the state of the economy like going into this new term? Let’s take a look.

UK Interest Rates at Record Low

The Bank of England and the Monetary Policy Committee have held interest rates at 0.5% for another month. Now 6 years after the record low began, these low interest rates have been hugely beneficial for savers and mortgage owners.

Many feared, despite the low lasting for the entire Coalition government period, that prices may rise with the possible introduction of new powers after the general election, however, the Consumer Price Index (CPI) has debunked these by setting the inflation figure at zero.

David Kern, chief economist at the British Chambers of Commerce, told the BBC that:

“While official interest rates are very low, the fall in inflation over the past year has effectively raised interest rates in real terms, for both businesses and consumers.

“The UK recovery is on course, but remains fragile and should not be unsettled by an unnecessary interest rate rise. Business confidence will be strengthened if the MPC states clearly that official interest rates are likely to stay at their low levels for at least another 12 months.”

 

A Growing Economy

According to the Office of National Statistics, in 2014 the economy grew by 2.8%, the highest rate it has risen since 2006, before the crash. And the purchasing managers’ index (PMI) has shown accelerated growth in manufacturing and the services sector too.

So what does this mean? Well, the UK economy has now overtaken France to become the second largest in the EU, behind Germany. The International Monetary Fund (IMF) forecasts growth of 2.7% in 2015 and 2.3% in 2016, with only the US expected to outperform the UK within the G7.

A statement from the IMF said:

‘In the United Kingdom, lower oil prices and improved financial market conditions are expected to support continued steady growth,’

However, it has also been revealed that the UK trade deficit widened in February 2015 and the deficit in goods and services expanded from £1.54billion to £2.86billion.

British Business is More Profitable than Ever

British business is doing better than ever! The ONS has released figures that show the overall rate of return for British companies is the highest it has been in 20 years. Profits are the power behind a free market economy and these funds often decide other essential figures, such as how much company tax is paid and how much they invest.

Despite a marginal drop in the final quarter of 2014, figures over the whole of last year were impressive. In 2014 the rate of return for private non-financial companies was 11.9pc!

So with a growing economy and British business at its best, today could be the perfect time to invest your money. If you require help on finding the best deals to maximise your return using these low interest rates, speak to our trained financial brokers on 02920 766 565. The future looks bright for UK finance and investments!

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