Britain teeters on the brink of recession after inflation soars to 40-YEAR high

[hollydolly]

Rishi Sunak is promising tax cuts today after inflation soared to an eye-watering 40-year high with fears things are set to get even worse - but he will make clear they are being targeted at business.

The Chancellor will give a hint at his plans for the Autumn Budget in a speech to the CBI this evening, hours after it emerged the headline CPI rate rose to 9 per cent in April.

That was up from 7 per cent in March and a peak since 1982, when Margaret Thatcher was PM, the Falklands War was about to start, and unemployment was running at three million.

The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of the year amid the biggest squeeze on incomes since records began in the 1950s. That would be more than five times its 2 per cent target.

Experts said 'this is what Stagflation looks like', while ministers were urged to recognise that the 'warning lights are flashing red' with the UK economy teetering towards recession after the pandemic and Ukraine war.

Analysts said another interest rate hike next month is now 'inevitable', potentially to 1.25 per cent, as the Bank of England scrambles to stop prices spiralling out of control. But the Pound still dipped further against the US dollar as investors priced in the increasingly grim situation.

• Unite chief Sharon Graham threatened strike action against employers who do not give pay rises in line with inflation, saying calls for wage restraint should be directed at FTSE 100 chief executives;
• The average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p, higher than the previous record of 167.3p set on March 22 - the day before Mr Sunak announced a 5p cut in fuel duty. Diesel prices have risen to 180.9p;
• Tories have warned the Bank of England not to overreact now by pushing up interest rates too quickly, dooming the country to recession;
• The average UK house price jumped by £24,000 in the year to March, according to official figures.

https://www.dailymail.co.uk/news/ar...indfall-tax-inflation-soars-40-YEAR-high.html

 

[shedevil7953]

Rishi Sunak is promising tax cuts today after inflation soared to an eye-watering 40-year high with fears things are set to get even worse - but he will make clear they are being targeted at business.

The Chancellor will give a hint at his plans for the Autumn Budget in a speech to the CBI this evening, hours after it emerged the headline CPI rate rose to 9 per cent in April.

That was up from 7 per cent in March and a peak since 1982, when Margaret Thatcher was PM, the Falklands War was about to start, and unemployment was running at three million.

The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of the year amid the biggest squeeze on incomes since records began in the 1950s. That would be more than five times its 2 per cent target.

Experts said 'this is what Stagflation looks like', while ministers were urged to recognise that the 'warning lights are flashing red' with the UK economy teetering towards recession after the pandemic and Ukraine war.

Analysts said another interest rate hike next month is now 'inevitable', potentially to 1.25 per cent, as the Bank of England scrambles to stop prices spiralling out of control. But the Pound still dipped further against the US dollar as investors priced in the increasingly grim situation.

• Unite chief Sharon Graham threatened strike action against employers who do not give pay rises in line with inflation, saying calls for wage restraint should be directed at FTSE 100 chief executives;
• The average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p, higher than the previous record of 167.3p set on March 22 - the day before Mr Sunak announced a 5p cut in fuel duty. Diesel prices have risen to 180.9p;
• Tories have warned the Bank of England not to overreact now by pushing up interest rates too quickly, dooming the country to recession;
• The average UK house price jumped by £24,000 in the year to March, according to official figures.

https://www.dailymail.co.uk/news/ar...indfall-tax-inflation-soars-40-YEAR-high.html

Awful!

 

[Lavinia]

During the pandemic, when people were not able to get out and spend money...many shops were forced to close down and the high street still hasn't recovered. This really brought it home to many of us just how vital to the economy simple shopping is. With prices rising, people will have less flexible cash to spend and this will have the same effect. The government surely realises this and will take steps to minimise the effects, (hopefully!)

 

[hollydolly]

During the pandemic, when people were not able to get out and spend money...many shops were forced to close down and the high street still hasn't recovered. This really brought it home to many of us just how vital to the economy simple shopping is. With prices rising, people will have less flexible cash to spend and this will have the same effect. The government surely realises this and will take steps to minimise the effects, (hopefully!)

I won't be holding my breath

 

[Bellbird]

Gosh, I've not heard that on the news, not good, many countries are experiencing high inflation, and still rising, New Zealand is one of them.

 

[Don M.]

Nearly all economic signs are pointing towards a global recession in the coming months....and likely lasting through much of 2023.

 

[chic]

The USA is not far behind. I paid $4.59 a gallon for gas the other day and for the first time all fifty states have gas prices over $4.00 per gallon some as high as $6.00. Throw in high food prices and astronomical utility bills and we're catching up quick.

 

[hollydolly]

In that OP it says the average price of a LITRE of petrol is £1.67.. but in reality there are many places near me where it's actually 1.70 per litre.. making it £7.50 per gallon.....

 

[Tish]

That is absolutely horrible.

 

[hollydolly]

What’s causing these inflation rates?​

Europe and much of the wider world were already being hit with soaring energy prices - which contribute to inflation - before Russia’s invasion of Ukraine in late February.

The conflict has exacerbated the energy crisis by fuelling global worries it may lead to an interruption of oil or natural gas supplies from Russia.


Russia is the EU's top supplier of oil, natural gas, and coal, accounting for around a quarter of the bloc’s total energy.

An EU ban on coal from Russia is due to come into effect in August, and a voluntary effort is underway to reduce demand for Russian natural gas by two-thirds this year.

A proposed oil embargo has hit roadblocks amid reservations from some landlocked countries that are highly dependent on Russian oil, such as Hungary.

But the prices of many commodities - crucially including food - have also been rising ever since COVID-19 pandemic lockdowns were first introduced two years ago, straining global supply chains, leaving crops to rot, and causing panic-buying in supermarkets.

The war in Ukraine again dramatically worsened the outlook, as Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world's exports of sunflower oil used for cooking. Ukraine is also the world's fourth-biggest exporter of corn.

The United Nations food agency said prices hit an all-time record in February and again in March, and the World Bank forecasts wheat prices could rise more than 40 per cent this year.

Gentiloni also warned things could get even worse than EU statisticians are currently forecasting.

"Our forecast is subject to very high uncertainty and risks," he said. "Other scenarios are possible under which growth may be lower and inflation higher than we are projecting".

 

[horseless carriage]

What’s causing these inflation rates?​

That is a very good question. Back in 1968, when I got married, my bride and I bought a terraced house in the East London district of Forest Gate. We paid the full asking price of: £3,000.

The house that we bought was number 118. It's all but identical to what you see in the photo, the main house being number 112 in the same road. The reason for sharing our first purchase with you is to highlight exactly what inflation is. 112 is on the market and this is the sales pitch:
Last updated: 02/07/2024
112 Strone Road, London is a 3 bedroom terraced house spread over 861 square feet, making it one of the smaller properties here - it is ranked as the 22nd most expensive property* in E7 8ES, with a valuation of £465,000.

Since it last sold in May 2021 for £391,000, its value has increased by £74,000.

A mid-terraced house, no car parking, you park in the street, it has very small rooms, and all for close on, half-a-million pounds. When we bought 118 it was advertised as ideal first time buyer's property, and it was. My salary in 1968 was just short of £1,500, so my mortgage was twice my earnings, the threshold back then was two and a half times earnings.

Today if the two and half times salary was still the stipulation a first time buyer would need a salary of £186,000. The average pay for 22 to 29 years old in London in 2024 is £35,500. Two and a half time that is £88,750, just enough to buy one bedroom. Had I kept 118, what a pension that would be. Joking aside, how do young couples afford a home?

 

[chic]

That is a very good question. Back in 1968, when I got married, my bride and I bought a terraced house in the East London district of Forest Gate. We paid the full asking price of: £3,000.
View attachment 356561
The house that we bought was number 118. It's all but identical to what you see in the photo, the main house being number 112 in the same road. The reason for sharing our first purchase with you is to highlight exactly what inflation is. 112 is on the market and this is the sales pitch:
Last updated: 02/07/2024
112 Strone Road, London is a 3 bedroom terraced house spread over 861 square feet, making it one of the smaller properties here - it is ranked as the 22nd most expensive property* in E7 8ES, with a valuation of £465,000.

Since it last sold in May 2021 for £391,000, its value has increased by £74,000.

A mid-terraced house, no car parking, you park in the street, it has very small rooms, and all for close on, half-a-million pounds. When we bought 118 it was advertised as ideal first time buyer's property, and it was. My salary in 1968 was just short of £1,500, so my mortgage was twice my earnings, the threshold back then was two and a half times earnings.

Today if the two and half times salary was still the stipulation a first time buyer would need a salary of £186,000. The average pay for 22 to 29 years old in London in 2024 is £35,500. Two and a half time that is £88,750, just enough to buy one bedroom. Had I kept 118, what a pension that would be. Joking aside, how do young couples afford a home?

Their parents buy them one. This happened to the daughter of a man I know. He bought the kids a house for a wedding present. He can afford it. It's a nice start for them because I don't know how else newlyweds can make it these days.

 

[hollydolly]

That is a very good question. Back in 1968, when I got married, my bride and I bought a terraced house in the East London district of Forest Gate. We paid the full asking price of: £3,000.
View attachment 356561
The house that we bought was number 118. It's all but identical to what you see in the photo, the main house being number 112 in the same road. The reason for sharing our first purchase with you is to highlight exactly what inflation is. 112 is on the market and this is the sales pitch:
Last updated: 02/07/2024
112 Strone Road, London is a 3 bedroom terraced house spread over 861 square feet, making it one of the smaller properties here - it is ranked as the 22nd most expensive property* in E7 8ES, with a valuation of £465,000.

Since it last sold in May 2021 for £391,000, its value has increased by £74,000.

A mid-terraced house, no car parking, you park in the street, it has very small rooms, and all for close on, half-a-million pounds. When we bought 118 it was advertised as ideal first time buyer's property, and it was. My salary in 1968 was just short of £1,500, so my mortgage was twice my earnings, the threshold back then was two and a half times earnings.

Today if the two and half times salary was still the stipulation a first time buyer would need a salary of £186,000. The average pay for 22 to 29 years old in London in 2024 is £35,500. Two and a half time that is £88,750, just enough to buy one bedroom. Had I kept 118, what a pension that would be. Joking aside, how do young couples afford a home?

..yep and smaller 3 bed houses are even more expensive here where i live in the rural shires on the edge of North London.. because commuters have pushed the prices up largely.. and we have a millionaires row here right in the woods.. with many well known celebrities..and singers

My daughter couldn't buy a home here where she was born and raised being the one age earner... she had to buy out in Cambridgeshire/Lincs borders in the rural fens..where she got a 2 bed bungalow Christmas before last, after selling her property and business in Southern Spain.. ... the bungalow cost £180k because it's ex local authority..... and that's in a village with no infrastructure to speak of...

She's spent another 50k.. having it all remodelled...

In Spain she owned a Big Business... Boarding kennels and cattery ( 40 kennels) on 5 acres of land with Almond trees, orange & lemon groves ... along with a 200 year old 3 bed finca.. ..and a seprate one bed, one bath /kitchen and livingroom.. Casita...

Cost ?.. £350k...

 

[Muskrat]

Here in America we totally ignore the fact that it is a global economy. We prefer to think our current president single handedly caused inflation. It is a stick his political opponents beat him with. So do not tell us different…it’s our story and we are sticking to it.

 

[TennVet]

Inflation in the US is a problem. Food is higher, gas is higher, and just about everything has risen in cost while wages haven't kept pace. I'm recognize that the Covid pandemic had a direct impact on many things, but I've seen the resilience of country rise above national issues before. At the same time our country is viewed as weaker on the world stage, and I pray that those who hate this country won't be able to prey on our confusion before the problems are overcome. We don't need more rhetoric we need positive action, and some of the necessary changes may be painful.

 

[Brookswood]

Inflation is down to 3.1%. That is good. Some higher prices came down a bit (used cars for example) but others have not. But a lower rate of inflation does not mean prices over all will go down. They are just going up much less than they were a few years ago.

Sadly, two things that continue to go up in my area are food and housing. It’s hard to go without those. I can put off buying a new car. I can vacation in a tent at Mt. Runamuck National Park. I can skip eating out. But, I still have to put food on the table and put a roof over my head.

 

[TennVet]

Because of housing prices, higher interest rates and wages not keeping pace with cost of living, many just can't buy their own home. When you are struggling to pay for the basics it becomes a climb too steep to make. Every where we look apartments are being built and reach total occupancy right away. Renting used to be one of the stepping stones we used toward owning a home, that isn't the case today.

 

[hollydolly]

Because of housing prices, higher interest rates and wages not keeping pace with cost of living, many just can't buy their own home. When you are struggling to pay for the basics it becomes a climb too steep to make. Every where we look apartments are being built and reach total occupancy right away. Renting used to be one of the stepping stones we used toward owning a home, that isn't the case today.

here it's the opposite barely any homes are being built for renters... so you end with the Rent to buy Landlords who rent the property out at extortionate prices... what happens then is that people cannot afford the rent.. so they stop working and go on the dole..Social security pays the rent. The tax payer pays the robbing Landlord....

 

[TennVet]

here it's the opposite barely any homes are being built for renters... so you end with the Rent to buy Landlords who rent the property out at extortionate prices... what happens then is that people cannot afford the rent.. so they stop working and go on the dole..Social security pays the rent. The tax payer pays the robbing Landlord....

It would be easy to reason that it is a supply and demand economic issue, but its more than that. An apartment requires credit approval and I guess first and last month rent. Those homes offered for sale are quickly sold, many times for more than asking price. When trying to purchase a home requires credit approval, come up with significant down payments, and meet increased costs of ownership; interest, insurance, taxes, maintenance, and utilities. With these obstacles the market responds by increasing the rental inventory, for which they can and do require higher rents.