Having reached the end of the first month in the 15th year of the millenium (yes, it’s true), we summarize what’s happened in the last four weeks with money and the economy in the UK and US.
**Inflation has steadily been decreasing since the height of the financial crisis in 2008. Inflation in the UK has benefited in December especially, from cheaper fuel and falling energy prices, and was recorded as just 1%. As a result, wages are starting to rise faster than inflation but still have a way to go before reaching pre-2008 levels. We also saw a further fall in the number of people out of work down to 1.91 million in the three months to November 2014 which gives the UK an unemployment rate of less than 6%. To top the good news, the UK economy grew by 2.6% last year, the fastest pace since 2007 and up from 1.7% in 2013 according to the Office for National Statistics.
With the changes in Stamp Duty Land Tax rates in December 2014, I had expected an increase in house buyers across the country and for house prices to rise even faster than the did in 2014. That was before I took into account the impact of the impending election in May of this year which may mean huge tax penalties for those buying mansions. Property became cheaper between November and December last year in the South West, North West and the Midlands, according to the Land Registry. A slowdown in December is normal as most people don’t want to think about moving house when they’re preparing for Christmas, and when money is tighter in January, it’s clear that it’s not a favorable time of year for people to go through one of the most stressful tasks in life.
**In the last three months of 2014, the US economy grew by just 2.6%, 0.4% lower than economists’ predictions. US economy growth is measured by gross domestic product (GDP) – the measure of goods and services produced by the country. If the slow growth continues it’s likely that the Federal Reserve will not raise interest rates (currently between 0% and 0.25%) meaning bad news for savers and good news for mortgage-holders. What does the future hold for the US economy? According to Federal Bank Reserve Bank President John Williams, the US economy should grow by 3% and the unemployment rate should be around 5% by the end of the year.
Both UK and the US are experiencing growth but we still have a long way to go before we see real returns in terms of interest rates for savers. A story that’s been all too familiar since the credit crisis in 2008. Looks like savers will need to remain patient.
All information provided at Life-Life Balance is for informational purposes only. MM is not a qualified financial advisor. Before making any decisions on your finances you should seek advice from a qualified advisor.
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