With an earlier than expected rise in inflation, which soared to 2.9% in December, interest rates could be rising sooner than expected in 2010.

The reading for the consumer prices index (CPI) came in well above the expected 2.4% figure making for the largest ever rise in inflation over a single month, according to figures issued by the Office for National Statistics (ONS) Reasons given were reduced s discounting from retailers in the run-up to Christmas and fuel prices remaining unchanged compared with sharp falls a year earlier.

The Bank of England had already expressed fears that inflation would rise this year, but this high figure will curtail the bank’s efforts to store up inflationary pressures while kick-starting the economy out of recession.

The Bank’s target for CPI inflation for 2010 is 2% and the jump to 2.9% puts its policymakers in a delicate position. While higher than expected inflation would force them to raise rates before the economy has properly recovered.

The head of the International Monetary Fund head has again warned that the global economy could yet experience another downturn, known in financial circles as a double dip recession.

Managing Director Dominique Strauss-Kahn said countries should rush to exit from stimulus packages that have bolstered growth through huge amounts of government spending and that it is too early for policy makers to withdraw stimulus that’s driving the global recovery.

“The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a recent speech. "While a plan to withdraw emergency measures “should be designed today” it should not yet be “implemented” because world economies are still dependent on government support and private demand remains weak" Strauss-Kahn has previously voiced his opinion that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than $2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the U.S. housing market. Separately, Germany and France raised their growth forecasts for the year. Strauss-Kahn went on to add that China and Asian economies are leading the recovery.

British Airways cabin crew is to vote again on possible strike action, according to a recent announcement from the Unite union.

A spokesman for Unite predicted that a fresh ballot of its members would be held in the near future. The move came after recent talks with BA failed to find a resolution to a long-running dispute. BA announced in reply that they were "saddened but not surprised" by the decision, whilst promising to make every effort to allow talks to continue. If talks fail, a strike could begin as early as March if cabin crew vote in favour of industrial action.

BA had already planned a 12-day strike for Christmas last year which was blocked by a court injunction.

The long protracted takeover of Cadbury by US food company Kraft now appears to be going forward after the Cadbury board approved a new increased bid. Cadburys will now advise their shareholders to accept a new offer of 840 pence a share – valuing the company at £11.5 billion ($18.9 billion). Shareholders will also receive a dividend of 10 pence a share.

The additional cash represents a 90 per cent premium to the Cadbury share price before the deal was announced and a 50 per cent premium to Cadbury’s undisturbed share price of 568 pence before Kraft approached Cadbury in late August

Spokespersons from both Cadbury and Kraft jointly announced that details of the agreement were still being finalising and would make a statement later.

Many city pundits were surprised that the deal eventually went through so smoothly after months of animosity between the two companies.

It is expected that Kraft’s final offer consisting of 500 pence in cash, with the rest made of Kraft shares made the deal much sweeter for Cadbury shareholders. To finance the takeover Kraft will require borrowing around £7 billion ($11.5 billion)

Shares in Cadbury topped the FTSE 100 on Tuesday.

Sterling was among the few currencies to rise against the dollar and the Euro on Tuesday after UK inflation jumped in December, increasing the possibility of monetary tightening and increases in interest rates being brought forward. The pound closed at 1.636 against the dollar, with the Euro being traded at 1.1459

The FTSE 100 index rose 41.6 points to 5,496.9, while the FTSE 250 index added 33.4 points to 9,571.6.

In the US, Citigroup announced losses of $7.6 billion for the last quarter of 2009, large due to their efforts to repay US government bail-out funds, and coming after three consecutive profitable quarters. Citigroup’s ’s loss was in line with Wall Street analysts’ expectations and would amounted to a loss of $1.4 billion, had it not been for its repayment of the $20 billion in funds it received from the troubled asset relief programme. For the same period of a year ago, Citigroup reported a loss of $17.3 billion. In 2009 as a whole, Citigroup made a loss of $1.6 billion on $80.3 billion turnover.

The Dow Jones Industrial Average rose sharply on early trading after being closed on Monday for Martin Luther King Day. The index rose 115 points to close on 10,725.43. The NASDAQ Composite was also on the up, 32 points to 2320.4

Computer giant IBM has announced that after cost-cutting work helped to increase its earnings by 9% in the last three months of 2009.

They have raised their profit target for 2010. IBM made a net profit of $4.8 billion (£2.9 billion) for the fourth quarter, up from $4.4 billion from the same period in 2008, with turnover for the quarter increased by 1% to $27.2 billion

Crude prices fell to a three week low on Tuesday, with prices averaging around $77.00 a barrel. Traders pointed out the implications in the oil market of the bankruptcy of Japan Airlines, as the Tokyo-based carrier made extensive use of oil derivatives to hedge its cost and the bankruptcy is likely to force investment banks to unwind the hedges.

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Tags: Bank, Bank of England, Banking, British airways, British Economy, British Pound, Cadbury, Citigroup, consumer prices index, Crude oil, Currency, Dominique Strauss-Kahn, Dow Jones, Economics, Economy, Financial News, FTSE, IBM, Inflation, Interest Rates, International Monetary Fund, Japan Airlines, Kraft, Money, Money Management, Money Markets, NASDAQ, Office for National Statistics, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unite, US Government

The UK in the first decade of the new century recorded the lowest economic growth of the postwar period and the worst returns for stock market investors since the 1930s. Information provided by the Office of National Statistics points out that gross domestic product, on average, rose by only 1.7 per cent annually in real terms throughout the so-called noughties, making them Britain’s weakest period of economic expansion of any since the war years. The manufacturing sector was particularly hard hit with output actually contracting over the decade by 1.2 per cent annually.

Meanwhile, the British stock market suffered its weakest performance of any decade since the Great Depression, with prices on the FTSE All Share Index recording negative returns, averaging minus 1.8 per cent per year. The particularly sharp contraction in the real economy as a result of the financial crisis of the past 18 months continues to fuel pessimistic assessments of the UK’s prospects for the new decade.

In his New Year message, that well know optimist Prime Minister Gordon Brown is expected to give an upbeat assessment of Britain’s economic prospects for the forthcoming 12 months. Under pressure amid Labour Party concerns that they are destined to lose the next election, Brown is expected to take a gamble on a positive prediction that UK unemployment will have decreased by the end of 2010, with more smaller businesses starting up during the period, His gamble is calculated by details of latest forecast from the Chartered Institute of Personnel and Development (CIPD) stating that UK unemployment will peak at 2.8 million in 2010, and would continue to rise for the first six months of the new year, despite the recovery in the UK economy. .

Earlier this year, the CIPD had said it expected unemployment to peak at 3.2 million as a result of the recession. The total number of UK unemployed in currently stands at 2.49 million, 7.9% of the population, with around a quarter of these job losses happening in 2009.

UK homeowners pumped almost £5 billion into their home equities during the third quarter of 2009, according to recent figures issued by the Bank of England. Analysts pointed out that the trend of homeowners repaying mortgage debt would continue to restrain consumer spending, as they took advantage of record low interest rates to reduce mortgage debts. This development is in healthy contrast to much of the previous decade when homeowners had continuously drawn on equity from their homes to fund durable purchases.

Pressure is being applied to the UK government to make some changes to the Sunday trading laws in time for Christmas next year. Boxing Day falls on a Sunday in 2010, and shopping centres are lobbying to relax the law that restricts outlets of more than 3,000 square foot to just six hours of trading during this peak trading day. According to surveys, the number of shoppers soared by 17.9 percent last Sunday against a year ago, making it the highest increase in UK consumer traffic on record for a December 27.

Waitrose, the John Lewis-owned supermarket, reported an increase of 13.5 percent for the week before Christmas compared to the same period last year, making it their most successful Christmas on record. Total sales jumped 20.5 percent to reach £134.6 million s in the week to December 26, compared with £111.7 million for the same period in 2008.

Sterling remained below the $1.60 level on early week trading, even falling a little, whilst while remaining static against the Euro

• Dollar 1.5924
• Euro 1.1089

London stocks pushed higher on Tuesday, the first day back from the Christmas break, following the lead set in global equity markets in the previous session.

With US stocks failing to add much momentum, London’s FTSE 100 stayed at the same level for much of the session, adding 35 points or 0.7 per cent by the close to 5,437.61, extending its winning run to five days.

This was the index’s highest level in 15 months and took it above the point at which it stood on September 12, 2008, when Lehman Brothers collapsed.

Shares in US airlines fell on Monday following the alleged bomb attack on a US plane bound for Detroit, fueled by fears that renewed security concerns could further depress demand for air travel. Airport security measures have been tightened following the security incident on Christmas Day.

On Wall Street, the Dow Jones Industrial Average returned from the Christmas break in buoyant mood, climbing 36 points to close on 10,521.1 while the NASDAQ Composite jumped just three points to 2,288.46. Retailers had initially lifted the market after data from the International Council of Shopping Centers and Goldman Sachs showed like-for-like sales across the sector were up 2.3 per cent last week from the same period a year ago

US house prices rose in October for the fifth month in a row, according to a leading index.

Prices were 0.4% higher than they were in September on a seasonally-adjusted basis, according to a recently published index.

Confidence among US consumers has shown a larger-than-expected rise; with improved optimism over the jobs market saw consumer confidence hit a three-month high in December

Oil prices have climbed to more than $79 a barrel, reaching the highest levels for five weeks. During Monday’s trading in London, US crude touched $79.12 a barrel before falling back later to $78.77.

Heating oil futures led the gains, while London Brent crude rose by more than a dollar to $77.32 a barrel.

Prices rose following forecasts of colder weather in the United States, and the expectation of increased consumption and falling reserves.

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, British stock market, Chartered Institute of Personnel and Development, CIPD, Council of Shopping Centers, Credit Crunch, Currency, Dow Jones, Economic Growth, Economics, Economy, Employment, Financial News, FTSE, Goldman Sachs, Gordon Brown, Heating oil, House Prices, John Lewis, London Brent crude, Manufacturing, Money, Money Management, NASDAQ, Noughties, Office of National Statistics, Recession, Savings, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, UK unemployment, Waitrose, Wall Street

There were one or two petted lips around Westminster yesterday in response to governor of the Bank of England Mervyn King’s call for Britain’s biggest banks to be split up to prevent the possibility of a financial crisis of similar proportions to the one that the UK is going through, in the future. Particularly peeved were Gordon Brown and Alistair Darling who even went as far as rebuking. Mr. King for his comments. King was seemingly unfazed at their comments.

According to Terry Duddy, chief executive of Home Retail Group, owners of the Argos and Homebase chains, the rise in VAT due on January 1 could act as a major for sales of large value items in the weeks leading up to the increase. Whilst announcing that the company had returned to profit in the six months to August 29, , Duddy said went on to announce a rise in consumer confidence and that his company was more optimistic about the outlook for the fourth quarter.

Chocolate kings, Cadbury have subtly increased the pressure on Kraft to raise its proposed £10 billion ($16.6billion) takeover offer. They did so through reporting unexpectedly strong third-quarter trading figures, surpassing even the toughest analysts’ expectations, The Company have succeeded in raising its full-year revenue targets to the “middle” of its 4-6 per cent goal range. Cadbury announced quarterly revenue growth of 7 per cent, which they claimed had been achieved by increasing prices and profit margins, despite a fall in turnover for the period of percent. Correspondingly, Cadbury had made considerable efforts to cut costs and reduce market spending. Since Kraft announced its offer proposal in early September, indications are that investors expect the US food group to pay at least 800 pence per share, while the current cash and shares proposal values Cadbury’s equity at 731pence a share. In the light of the recent results, some investment banks have revalued the target price on Cadbury to 900 pence, however a Kraft offer at this level is considered unlikely, unless counter-bidders suddenly emerge. The consensus is that Kraft will succeed with their offer, if it comes back with a 50-50 split of cash and stock bid of around 825 pence per Cadbury share. Kraft are understood to be considering returning with a formal offer but may wait until after its third-quarter results on November 3, while the UK Takeover Panel has set Kraft a final deadline of November 9 to make a formal offer.

Sterling continued its steady rise against the ever weakening dollar, recovering against the Swiss Franc. whilst faltering against the Euro.

• Pound/US dollar 1.6606
• Pound/Euro 1.1093
• Pound/Japanese Yen 151.6918
• Pound/Swiss Franc 1.6587

The FTSE 100 lost out on some of yesterday’s gains, down 33.79 points to close on 5257.85 The FTSE 250 25 shed all of the previous days gains. Down 143.60 points to close on.9421,04

Morgan Stanley has returned to profit after three quarterly losses in a row, after reporting a net income of £457m in the third quarter of 2008. The bank’s investment banking division fared particularly well with underwriting revenues up 74% from 2008 levels. Meanwhile, Wells Fargo, the country’s fourth-largest bank, reported record $3.2bn profits for the quarter, reporting that revenues from mortgages and consumer credit had surged.

Despite that positive news, the Dow Jones was down for the second consecutive day, yesterday by 92.12 points to crash below the ten thousand points on 9949.36. The NASDAQ Composite index also continued to fall, this time by 12.74 points to close on 2,150.73.

Recent reports continue to speculate that US companies who received billions of dollars of government aid in the financial crisis are to be forced to cut any excessive salary packages awarded to their leading executives. Of the seven companies that received the highest aid from the US Treasury will be obliged to reduce the basic salaries of their 25 best-paid employees, by up to nine tenths of the salary packages, while each firm’s 125 top earners would be see their pay slip cut in half, under the US government plan. There has been widespread outrage in the US over the high level of bonuses paid by firms that not so long ago were forced top go to the government cap in hand and ask for government help to stave of bankruptcy .

Figures just published confirm that China has exceeded its target for economic growth in the third quarter, for the first time this year. Chinese government figures show year on year GDP growth was up 8.9% from 7.9% in the previous quarter. Chinese officials have also said they are sure they will reach their full year target of 8% for economic growth, with the economy grewing by 7.7% in the nine months to September.

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Tags: Alastair Darling, Argos, Bank of England, Banking, British Economy, British Pound, Brown, Cadbury, Currency, Darling, Dow Jones, Economics, Economy, Employment, Financial News, FTSE, Global Credit Crisis, Gordon Brown, Home Retail Group, Homebase, Kraft, Mervyn King, Money, Money Management, Money Markets, Morgan Stanley, NASDAQ, Recession, Terry Duddy, UK Banks, UK Economy, UK government, UK Recession, US Treasury, Wells Fargo

Governor of the Bank of England, Mervyn King, , in a landmark speech made on Tuesday night, reiterated his calls for the UK banks to be split into two separate entities, one handling utility and the other financing risk capital ventures. He emphasized his argument by stating that “a delusion” to think tougher regulation would prevent a future financial crisis that would be no less severe than the current one. His remarks strengthened the certainty that the economic crisis has prompted the UK government as well as countries across the world to re-evaluate their financial regulatory frameworks

King’s call for a break-up of banks comes from an ever-increasing theory that the UK banks had considered themselves to big to fail , and has made the Governor less than popular with the key figures in the move for domestic and international banking reform.

The Treasury and the Financial Services Authority have consistently rejected the theory of splitting up the banks whilst internationally, the proposals of the Group of 20 have been principally aimed at increasing both the quantity and quality of the banks’ working capital to ensure that the future of banking would be more stable.

In his speech, King raised a few eyebrows by his use of Churchill a style oratory, the speech was delivered at a meeting held in Edinburgh, intended to highlight and discuss the burden banks had placed on taxpayers. The Governor used the theme of one Churchill’s most famous speeches to deliver the message “Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, capital venture, Credit Crunch, Currency, Economics, Economy, Financial News, Financial Services Authority, financing risk, Mervyn King, Money, Money Management, Recession, Taxpayers, Treasury, UK Banks, UK Economy, UK government, UK Recession

Millions of members of the UK community of retirees are looking at the dim prospect of receiving a pension hike of less than ten pounds a month when the new rates kick-in in April 2010 The reason for the minimal increase is that UK inflation on which pension rises are calculated. Is considerably less than the minimum of 2.5%. government pledge to annually increase the state pension.

Instead, recently released figures from the Office for National Statistics show that UK retail prices index registered actually recorded a fall of 1.4% for the year ending September 2008. This means that both state and public sector pensions, both of which are calculated according to September inflation, will reach only the minimum figure of 2.5%.

A spokesman for the charity, Age Concern rushed to state that at £97.65 a week the basic state pension was seriously inadequate to guarantee the UK elderly a reasonable standard of living. Thy went on to insist that the current pension system is in need of urgent reform that will ensure older people can live off their pensions without having to apply for benefit top ups.

A monthly study has shown that living costs for pensioners are rising at a rate much higher than those for younger people, with the elderly spend a disproportionate amount on energy bills and food.

This daunting piece of news for UK retirees is only the latest in a line of unexpected pitfalls they will have to bear. Recent studies have shown that not only are many Britons are dramatically reshaping their retirement plans to match a new reality. A reality that depicts those who were due to retire in the near future, are putting off their retirement for as long as possible as the reality hits home that those who are retiring today will need to live off less than what represents half of the UK national average wage.

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Tags: Age Concern, British Economy, British Pound, Credit Crunch, Debt, Economy, Financial News, Government, Inflation, Interest Rates, Money, Money Management, Office for National Statistics, pensioners, Recession, Retail, retirees, Savings, state pensions, UK Economy, UK elderly, UK government, UK inflation

It seems such a short time ago that people who invested all of their money in the stock market were regarded as being "risqué," and those who kept their money in the bank in short and long term deposit accounts were described as being "sensible". Well that role has certainly been reversed over the last crazy year or so, when the financial world turned upside down for so many.

Nowadays people who still have money on deposit at the bank are regarded as being some form of masochists, and no less than the banks themselves. With interest rates seemingly stuck forever on 0.5%, money left in a bank account is not only gathering dust, it is also paying for the privilege. On the other hand, the FTSE can almost do no wrong. And it has been that way for more than half a year, when the first indications that the global economic downturn might not last forever began to look evident. Sufficient to say that, the FTSE 100 rose by 21% in the third quarter of 2009, and 45% since March the highest percentage rises since the exchange was created in 1983. At current interest levels, investors would have to leave their money in the bank for around 7 years to earn that kind of return on their investment.

Leading economists argue that by trying to jump start the economy, the UK government has damaged national growth for the foreseeable future, with the only way that the situation can be reversed is to put an end to the stimulus passage and increase interest rates. They go on to suggest that as soon as the government does increase interest rates, only then will the stock market boom begin to fizzle out. That will be the time for the smart investor to release their equity exposure and return most if not all their capital to their bank account and earn some reasonable interest. Like the good old days.

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Tags: Bank Account, Banking, British Economy, British Pound, Credit Crunch, Currency, Economic Downturn, Economics, Economy, Financial News, FTSE, Global Credit Crisis, Interest Rates, Investment, Money, Money Management, Recession, Savings, stimulus passage, stock market, Stock Markets, Stocks and shares, UK Banks, UK Banks, UK Economy, UK government, UK Recession

The Financial Services Authority (FSI) recently announced that they will be taking a much closer look in the future at firms who provide financial services firms, In particular, they will be reviewing the methods used by these companies to market their payment protection insurance policies, (PPI) The FSI initiative is designed to curb continuing hard-sell tactics and miss-selling of the product.

PPI is designed to cover repayments on products bought on long term credit products, in the event that if the borrower is unable to do as a result of reduced earnings caused by accident, redundancy, sickness or to project the family in the event that the debtor passes away. Setting a precedent was the record £7 million pound imposed in October 2008 by the FSA on the Alliance & Leicester building society, for reported serious failings in procedures during recorded telephone conversations discussing PPI to prospective clients. .

The FSA are about to issue a series guidelines,- due to take effect by the end of the year that are designed to ensure that PPI sales will be handled properly and complaints will be at a minimum.

In addition, the FSA are liable to request that certain companies reassess 185,000 previously rejected customer complaints. The reason given is that the FSA complain that there are an excessively high number of complaints of rejected complaints by firms offering PPI. The average percentage level of rejected claims is around 60% with certain companies showing a reject rate of almost 100%.

Most PPI service providers, among them Lloyds Banking Group, the country’s biggest provider of PPI accounting for 40 percent of PPI contracts sold directly to borrowers have agreed to screen all such sales since July 2007.

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Tags: Bank, Banking, British Economy, Economy, Financial News, Financial Services Authority, FSI, Lloyds Banking Group, Money, Money Management, Mortgage, payment protection insurance policies, PPI, Recession, UK Economy, UK Recession

Controversial new rules that allows suppliers to increase their tariffs without the need to advise consumers for a period of up to 65 days has been slammed by a leading consumer group.

This power bill scam has been highlighted by the consumer protection group, Which who have been calling on the industry regulator Ofgem as well as the UK Government to ban the tactic.

Under the new regime, a family or a business can be paying higher gas or electricity tariff for more than two months without their knowledge. Additionally, which claim that the delay in notification also deprives the customer the opportunity of shopping around to look for a less expensive tariff?

Which officials are now claiming that the new rules, applying as they do, to all power suppliers, might even be illegal. If this is proven to be the case, consumers whose tariffs have been raised without prior notice may be eligible to launch a legal test case and claim for substantial refunds.

The UK courts as well as the Office of Fair Trading have previously established that contracts allowing a company to increase a charge without notice are deemed as illegal. A case worthy of comparison are UK banks who were ordered to repay hundreds of thousands of pounds to customers, after they were charged inflated exit fees on mortgages that were put up without consultation or notice.

Research by the consumer champion shows that 98 per cent of consumers hold the belief that suppliers should be required by law to notify them ahead of price rises, with almost the same percentage insisting that their current supplier of utility services should be legally obliged to notify them when a cheaper tariff becomes available.

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Tags: Banking, British Economy, consumer protection, Credit Crunch, Current Account, Economics, Economy, Financial News, Money, Money Management, Office of Fair Trading, Ofgem, power suppliers, Recession, Retail, scam, UK Banks, UK courts, UK Economy, UK Recession

A new deadly computer virus is doing the rounds and this one, which goes by the name of Clampi, is proving to be a headache for literally thousands of on-line banking customers.

The Clampi virus is spreading quickly throughout both the UK and US, and has a particularly invidious way of effecting people’s computers.

The virus, what’s known in the jargon as a Trojan, has been created by hackers intent on stealing people’s personal banking details. It effects people’s computers after they visit certain websites and then sits quietly waiting its chance. Then, once the computer users accesses their personal banking website, it activates, and captures such vital information as login and password details.

Once harnessed, these details are then sent back to the waiting hackers, who using them to commit on-line fraud scams.

The Clampi virus courts some 5,000 financial websites; ones which include British and American banks, but also mortgage lenders, on-line shopping sites, casinos and email service providers.

And although the Clampi virus has been around since 2005, only now is it really beginning to make its presence felt. In the US for example, thousands of dollars of fraudulent transactions are already being blamed on the Trojan.

Computer security experts are warning that the Clampi virus represents a complex threat and one which people should take very seriously indeed. They warn that it is just beginning to seriously target UK banks and there is potential for wave after wave of attacks. But only now are the experts fully aware of its devastating potential.

With the US under attack from the Clampi virus, it is believed that over 1,000 computers in the UK have been penetrated. And those computers running Microsoft Windows based operating systems are especially vulnerable to the Clampi virus.

Computer security experts are urging everyone to be particularly careful of falling victim to the virus. They advise all computer users to be on their guard against links embedded within emails from people not known to them, or likewise unfamiliar emails with attachments; but, also be cautious of social networking sites, instant messages, blogs, or websites that they come across during a surf. Innocent appearing websites are one of the most popular ways that such Trojans are distributed around computer networks. The general rule is, say the boffins, never download anything from any site unless you can completely vouch for its credentials.

What’s more, the experts are warning everyone to not only run a good anti-virus software programme, but also keep it up to date.

For more information on this and other computer viruses, help protecting your computer and staying safe on the web visit http://www.computer-protection.co.uk/

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Tags: anti-virus software, Bank, Banking, Clampi, Clampi Virus, Computer Virus, Current Account, hackers, Microsoft Windows, Money, Money Management, on-line banking, on-line fraud, personal details, Trojan, UK Banks, UK Credit Cards

In times gone by, the self righteous members of the community were often heard to say "neither a lender nor a borrower be." Not a bad piece of advice it would transpire and one that should have been heeded more carefully a few years ago. However it must have been hard to take when handed out by your maiden Aunt who refused to lend you sixpence for your bus fare, which you had mistakenly spent on liquorice allsorts.

The last year has seen an all time low for both savers as well as those whose life style forces them to borrow just to survive. For savers it has been especially tough. According to statistics gathered by the Bank of England’s the average interest rate for savers has plunged from 4.49% to 0.41% in the last twelve months, as the BOE has cut interest rates to the bone to prop up the banks.

Interest rates for the average instant access account has plunged from 1.85% before tax (2.31% after tax) to 0.14% (0.17%), while the average price of fixed rate bonds has fallen from 4.53% (5.66%) to 2.42% (3.03%).

However the true picture for many savers is a lot less colourful than that, as these rates are only on offer frosh fresh deposits, while much of the money held in UK banks are on older long terms plans, where interest rates have plunged as low as 0.08% (0.1 %) interest, returning just 80 pence interest a year for every £1,000 saved.

For borrowers the picture is just as gloomy. Overdrafts are being cut and default interest rates being applied with a heavy hand. Those whose debt package is linked to their credit card have fared no better. Reports of rates hiking reduced borrowing limits or even having their credit cut off completely abound. And balance transfer deals and reward schemes are rapidly becoming part of banking history.

It may be a bitter pill for many to swallow, but Auntie might have been right!

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Tags: Bank of England, Banking, BOE, British Economy, British Pound, Credit, Credit Crunch, Current Account, Debt, Economy, Financial News, Interest Rates, Money, Money Management, Overdraft, Recession, UK Banks, UK Economy, UK Recession