UK Unemployment to Increase in 2012
Unemployment in the United Kingdom is set to go up to 2.5 million by the year 2012 and will carry on increasing by year 2013, according to a report released by the Chartered Institute of Personnel and Development or CIPD. The organization that focuses on employment has issued warnings to the private sector that there will be a possibility of a failure in offsetting the 120,000 job losses in the public sector in 2012. However, their study does not identify any redundancies that may occur in the private sector. According to John Philpott who is the chief economic adviser of the CIPD, “As long as there is a relatively benign outcome to the eurozone crisis, we expect the 2012 jobs recession to be milder than that suffered in 2008 to 2009. But unemployment in the coming year will be rising from a much higher starting point, so the UK jobs market in 2012 will be weaker than at any time since the recession of the early 1990s.”
BBA Sees Consumers Reducing Debts
People in the UK are still trying t reduce their debts even when the stores along the High Street are offering massive discounts to lure shoppers into spending more money, according to a report presented by the British Bankers’ Association (BBA). Retail sales were up during November however there were only a few requests for loans and overdrafts, according to the BBA. There was an increase in credit card borrowing due to the interest from existing debts. Mortgage approvals were also down, according to the BBA report. The statistics director of the BBA Mr. David Cooks said, “Until there are clear signs of improvement in the economy and stability on the international front, households and businesses lack the confidence needed to seek credit for spending or investment. Stocks of bank lending therefore continue to be driven down, as repayments dominate over the absence of any material rise in borrowing demand.”
Osborne to Announce to MPs Banking Report by Vickers
UK Chancellor George Osborne is going to make his announcement to the Members of the Parliament regarding his plans to put into law the separation of retail banking from the other financial investment activities. This action is under the recommendation by Sir John Vickers based on his banking report that was released following the economic crisis. According to Vince Cable who is the Business Secretary, the government will acknowledge the report “in full”. According to Robert Peston who is the editor of the business section in BBC, the banking report of Sir Vickers may not be 100 percent as originally billed. One of the things that may be revised in the proposal is that the largest UK banks should have enough capital plus loans that may be exchanged into cash in order to manage any possible financial damages equivalent to 20 percent of the total balance sheet.
Moody’s Issue Warnings on UK’s Risks
Moody’s, one of the biggest ratings agencies in the world, has warned the UK government on the high scores that the country’s government has garnered on economic governance because these may make them feel very confident amidst the approaching “formidable and rising challenges”. Moody’s has pointed out that the UK showed “significant structural strengths” and still can hold on to their top AAA rating. However, the UK has a big weakness at hand which is their partnership with the eurozone. This can stunt their growth as a country may place a loophole in the government’s plans of lessening their debt. According to the official statement by Moody’s, “A need to support the banking system could temporarily set back the government’s fiscal consolidation efforts.
