KATE BARKER, member of the Monetary Policy Committee has said there is no need to cut rates further ...
KATE BARKER, member of the Monetary Policy Committee has said there is no need to cut rates further because of the effects of the falling value of sterling on the international currency markets, The Scotsman reports today.
She also says that consumers spending is not going to fall off a cliff, despite signs that it is definitely slowing down.
"Sterling hit a four-year low against the euro on Tuesday, and the pound is falling much faster than the MPC has built into its inflation forecasts," The Scotsman writes.
"The slide in sterling threatens a rise in consumer prices as imports become more expensive."
And that in turn could force the MPC's hand, even to the extent of forcing rates up despite continued slow growth.
THE TIMES reports a wider problem: the UK economy is about to slip in the world rankings below France because of the continued rise in the value of the euro against sterling.
The difference may be slim, but the French are gearing up to crow the difference, particularly as the Labour government was so keen to point out Britain's ascendancy when it overtook France some years ago, the paper says.
LEGAL & GENERAL and Royal Bank of Scotland have today unveiled solid profits and dividend commitments, which show that some companies are doing better than others in the current economic environment.
The FT says L&G suffered higher costs associated with changing mortality rates, but because of the rights issue it got away last year is sitting pretty compared to competitors' free asset ratios, and is able to provide a growing dividend even in the face of falling overall profits.
RBOS reported profits of £6.45bn for last year, at the top end of the forecast range among bank analysts, and added that it wants to continue expanding in the US market, where profits increased 53%.
THE DAILY Telegraph underlines the negative messages coming out of the industry, however, by dwelling on yesterday's poor results from Aviva and Abbey National.
Aviva reported a drop in new business sales and a quadrupling of its losses to £2.5bn, which it blames on falling stock markets.
The company says it can weather the storm, but the results point out that Aviva's free asset ratio has dropped to 7.7% from 10.8%, and that its life funds are now only 35% invested in equities, down from 53% at the start of 2002.
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