Lunchtime news Thursday 10 January 2024

Bank of England policymakers have kept interest rates unchanged at 5.5 per cent. Many experts who thought the bank would cut rates today following poor Christmas sales figures are now hoping the cost of borrowing will be lowered in February.

The World Economic Forum has predicted that 2008 will have the highest levels of political and economic uncertainty for a decade in the wake of the credit crisis. A potential recession in the US and the knock-on effects of a collapse in the housing and financial markets could throw the world economy into chaos. Britain is more vulnerable than almost any other country due to its economic reliance on the housing and financial markets. Less anticipated problems expected include a potential food crisis as prices reach record highs and food reserves fall to a 25-year low, a ‘supply chain vulnerability’ where unexpected disruptions cause the transfer of goods to be held up, and further dramatic increases in oil prices.

Britain’s largest housebuilder, Persimmon, warns of further problems in the housing market as lower consumer confidence and a squeeze in the credit markets has hurt business. Sales of homes not yet built have fallen 14 per cent in the past year, while there has also been a 5 per cent decrease in completions in 2007. Shares in the company and other housebuilders, such as Taylor Wimpey and Barratt Developments are also down.

After yesterday’s news that 9 January was the day many people ran out of money following the Christmas spending spree, research out today has found that 25 per cent of cardholders are more reliant on their credit cards this year than last, and 41 per cent said they would use their plastic to meet day-to-day living costs such as groceries. An estimated 6.9 million household bills were also found to be either paid late or went unpaid during the past six months. A report from Moneyexpert.com also warned that consumers’ finances were likely to come under increasing strain due to rising energy costs and difficulties in gaining credit.

The housing revenue account, that helps government finance council housing, is set to receive a £194 million surplus in 2008/2009 according to the department of Communities and Local Government, as tenants pay more in their rent than the councils will receive to manage and maintain their homes. Over the next 15 years it is estimated that £7.5 billion could be taken from the account by Treasury, with no guarantees that any of it will be spent on improving tenants’ homes. Housing Minister, Yvette Cooper, who launched a review of the entire housing subsidy system last year is said to be concerned about the findings.

And finally, a homeowner who terrorised his next door neighbours for five years has been banned from living and sleeping in his own house, in what has been described as a legal first. After the gentleman is released from his current prison sentence for breaching an earlier restraining order, he will only be able to visit his own home at set times.