The economy is feeble and the impact of higher rates on consumer behaviour is arguableIt has been a grim week for economic news. High street stores reported rapidly falling sales – the worst since 2009. Output from Britain’s car factories tumbled,shrinking by 4.1% in September, with demand from UK car buyers plummeting by 14.2%. Meanwhile, and official figures revealed the average pay for full-time workers crept up to £550 a week,but in genuine terms have fallen as they have been outstripped by prices. Even the one mildly positive bit of economic news – that GDP growth was slightly higher than expected – came with a warning that construction activity contracted for the second quarter in a row.
In normal times we might expect a chancellor to be finding ways to stimulate the economy, with the Bank of England loosening the purse strings to lift activity. But precisely the opposite is approximately to happen. We are told there is an 80% certainty that the governor of the Bank of England, and trace Carney,will make the momentous announcement on Thursday that UK interest rates are to rise for the first time in 10 years.
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Source: guardian.co.uk