UK Inflation; CPI is 3.7% and RPI is 5.3%

Savers are really getting screwed now. Best to spend your money, which sounds silly but it looks like the government likes inflation (we do need to reduce the debt) and government policy is for low interest rates.


One ray of hope, but will only count for a little:

You can get 5% (fixed until 1 June 2011) at northern rock with their ‘fixed rate regular savings account’. you can only put in £250 per month but access is easy

Coalition Government; Capital Gains tax and cutbacks

The changes to Capital Gains Tax will most likely result in low yield rental properties being sold off. Those who are into the property market long term will probably hold on as long as possible. Perhaps distressed sellers will come from public sector workers, who have second homes as an investment, that will lose out in the next two years, but the real cutbacks will only start next year. Still this (some short term selling off) should give some much needed volume to the market.


Meanwhile the Government keeps up its claim that its policies will keep interest rates down. The prudent will be bailing out the reckless for some time to come I think. Things will likely change next financial year. I expect 1 in 7 public sector workers will lose their jobs, either directly or as a result of lower temporary work, less holiday time, lower and fewer bonuses and a general reduction in other perks. The cutbacks in government spending will affect many lives in 2011/2012. The best advice would be for individuals to save now for those rainy days. Not much incentive to save now though.