Posts Tagged ‘Economy’

Darling unveils ‘10% compensation package’

Wednesday, May 14th, 2008

The chancellor, Alastair Darling has announced a £600 increase in the previously budgetted 2008/09 personal allowance as a “compensation package” for lower earners affected by the controversial abolition of the 10% band for earned and pension income.

This measure also reduces the higher rate threshold to compensate and so higher rate tax paying earners do not also receive the £120 windfall, which applies for this tax year only.

Gordon Brown had previously announced the removal of the 10% tax band for this year in his 2007 budget, but it seems that MPs, cross party were unable to appreciate the full effect of the tax change until recently.

Darling, in this ‘mini-budget’ has now silenced Labour’s ‘tax rebels’ and attempted to strengthen his party’s position ahead of the Crewe and Nantwich by-election.

UK inflation reaches 13 month high of 3%

Tuesday, May 13th, 2008

UK consumer inflation reached its highest level in 13 months, primarily driven by high food and fuel costs, according to the Office for National Statistics.

The Consumer Prices Index (CPI) hit 3% on a yearly basis in April, up from 2.5% in March. The monthly rate was 0.8%, the biggest leap since May 2001.

According to the figures, the Retail Prices Index rose to 4.2%, up from 3.8%.

The inflation data would probably stop the Bank of England cutting interest rates in the near term, some analysts have said.

“It was a pretty horrific headline number,” said Lee Hardman, an economist at BTM-UFJ.

“It limits the scope for monetary easing from the Bank, it will be hard for them to cut in June.”