The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
Base rate held and ‘no sign of rise until 2014’
Interest rates held at record low of 0.5% and quantitative easing programme remains at £375 billion.
Image © Carl Court - PA Wire
The Bank of England has unsurprisingly voted to hold rates at 0.5% and it could be years before we see any sort of rise.
News that the UK might finally be emerging from the longest double-dip recession on record was not enough to convince the Bank to increase rates from their current record low.
Indeed, such is the level of gloom surrounding our economic prospects that many analysts believe a rate cut to 0.25% is a far more likely outcome.
Earlier this week, the British Chambers of Commerce (BCC) claimed the economy had grown by 0.5% between July and September, marking the first quarter of growth of 2012. However, it quickly tempered any cause for optimism by stressing that economic performance remained "weak and inadequate".
BCC chief economist David Kern added that it was "clear the economy has been stagnant for too long, and urgent measures are needed to enable businesses to drive a sustainable recovery".
How to stimulate growth
The Bank of England has two ways of boosting the economy. The first is by pumping money into the economy through its quantitative easing programme.
While it voted to hold fire on this measure this month, we certainly can't rule out the possibility of increasing it beyond the current £375 billion threshold in the coming months.
The second, and more immediate, stimulant is a rate cut. This was once considered highly improbable, but many analysts are predicting that the base rate will fall to 0.25% early next year.
So when will rates rise?
Image © MSN Money
Poll of MSN Money readers
Undoubtedly a rate hike is now seen as a long way off. We polled almost 7,000 MSN Money users on the matter and you told us that 2014 was the most likely year for an increase, with 24% of the votes. Interestingly (or depressingly, depending on how you look at it), more than one in five felt it would be 2017 or later.
If that particular prediction were to prove true, it would be catastrophic news for savers, who have been hard-hit in this low-rate environment.
For homeowners on variable rate mortgages, on the other hand... well, that scenario would suit them down to the ground as it would guarantee cheap loans for a few years yet.
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7Comments
04/10/2012 12:31
The savers of this country, especially those who have scrimped and saved for many years to give themselves some income in retirement have now collectively lost approx £50 billion in the value of their savings since 2008. The government has sat on its collective hands and used this money to subsidise their own petty schemes all over the world. With a further two or three years with no interest, the value of their savings money will decrease by a further minimum of 5%. Does the government care, not one jot. They are using the money that should have gone to savers quite openly and have made no move whatsoever to mitigate the massive losses to savers caused by their actions. So who do the politicians serve? Certainly not the savers, we are just a convenient cash cow to be milked dry if neccessary to satisfy their personal policies.
04/10/2012 12:50
Could someone out there please tell and explain to me the real reason WHY if rates are held again, and are the lowest we have seen in the U.K. why oh why then is my mortgate rate with Santander so high and continues to increase. I would like to know so I can also explain to all the home owners I know who are asking the same question. Are us borrowers so gullible that lenders are allowed to penalise the borrowers to claw back profits from us that other parts of the banking fraternity have lost? It has to stop.
04/10/2012 12:29
The thing is that the three things that seem to dominate the human system are all governed by perspective. Economics is not a science but a branch of psychology,statistics can be easily manipulated as with inflation, politics have been the domain of those who believe democracy is rule of the populace by business for business. Unless we change direction we can only continue to have our heads banged against the wall at the end of the cul-de-sac.
05/10/2012 20:38
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