Migration from new EU member states in Eastern Europe has helped limit inflation in the UK over the past year, according to comments from Bank of England governor Mervyn King.
He says migrants have filled the gaps created by increased demand for labour in the UK economy, helping keep wage inflation down, rather than has previously been the case when such demand has stoked UK prices.
The Daily Telegraph quotes King stating this is one of the beneficial effects of globalisation, and a change that is leading to the concept of the ‘output gap’ – a measure used by economists to calculate spare capacity in the economy – should be ditched.
King cites Home Office figures suggesting 120,000 people moved to the UK from the new EU member states in the year to March, however, the Telegraph cites Andrew Green head of think tank Migrationwatch, stating that Home Office figures show the rate of migration is actually between 12,000 to 14,000 monthly.
The Guardian says King has “weighed into the debate about immgratio” through his speech.
The Guardian also adds, however, that this has been just part of King’s messages, which also includes warnings about the possibility of a slowdown in consumer spending spreading to services, while inflationary pressures could increase on the back of rising money supply, labour costs and import prices.
EU INVESTIGATORS ARE to comb through documents at European insurance companies to try to find out whether price rigging or other banned practices are ongoing, The Telegraph reports.
The year-long investigation is part of a broader look at insurance, banking and energy sectors.
London-based businesses are in the firing line more than most because the investigation centres on business insurance in markets such as shipping and aviation rather than mass market motor and life insurance. The European Commission says it is concerned trade associations may be engaged in activities that result in “distortive forms of co-operation”.
Insurance lawyers and others questioned by the paper yesterday compared the investigation to the one carried out by New York State attorney general Eliot Spitzer, but also stated the move is a “fishing expedition”.
BIG OIL IS FACING big problems making new discoveries to top up reserves, The Times quotes a new report by industry consultant Wood Mackenzie.
This is forcing oil majors to search for new reserves in areas previously ‘off limits’ such as in the fields of Russia uncovered during the Soviet era. Saudi Arabia, Kuwait and Iraq are known to have reserves, but foreign firms are limited in their scope of activities in these countries.
A meeting of OPEC ministers is meanwhile set to offer rises in production, but oil prices are unlikely to fall, according to the cartel, because the current global bottleneck in supply is at the point of refineries, The Times writes.
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