BANKING & INSURANCEGoodwin expects interest rate riseRoyal Bank of Scotland chief executive Sir Fred Goodwin has predicted a rise in the base interest rate despite falling house prices and slowing economic growth
. The comments highlighted the dramatic shift in economic sentiment after strident calls for the Bank of England's Monetary Policy Committee to further cut the benchmark rate in an attempt to kickstart the flagging markets. He commented: "The likelihood is that rates will go up from here: I don't think by very much but I think up is the current thinking." Such an interest rate move will inevitably have an impact on RBS' mortgage business and Goodwin commented: "In doing mortgage business, if interest rates are going up, the person we are lending money to here... we need to factor in the fact that their mortgage costs might go up. We also need to factor in the fact that the value of the property might go down. Wherever you draw the line on who you would or wouldn't lend to, it has just moved." Such a stance will, of course, lead to more mortgage refusals and Goodwin added: "Absolutely (more mortgage applications will be rejected) – which I think is better than having your application accepted and then finding out you can't afford the mortgage."
(The Herald) Read all today's banking news from scotsman.comECONOMYIoD comes out against local income taxThe Institute of Directors has warned the SNP that plans for a local income tax to replace council tax would be a 'real problem' for business north of the Border. The director general of the IOD, Miles Templeman, also counseled caution on the commitment to raising a different level of corporation tax in Scotland. Speaking during a visit to Scotland, Templeman told the Scotsman: "A local tax we tend to think is a risk path that may lead to problems that aren't advantageous. We'd rather not go down that route." While he admitted that Scottish businesses would benefit from lower corporation tax he branded the plan 'unrealistic' and warned firms in England would see the differing tax levels as hugely unfair. He commented: "Then we'd have all the companies in the North East (of England) saying, hey, we are next door to a different tax regime. It is unrealistic within the UK to have different rates. But I do strongly feel it should be lower rates overall."
(The Scotsman)Inflation forecast hints at rate riseThe Bank of England's latest quarterly survey of inflation attitudes has revealed the general public expects the rate of inflation to surge to 4.3 per cent over the next year. The gloomy outlook will only reinforce the growing belief in the money markets that the Bank will soon be forced to raise the base interest rate. While analysts are still holding to the expectation that rates will be cut by the end of the year, the money markets have now priced two quarter-point rises into their predictions. UK economist at Capital Economics Vicky Redwood commented: "While the link between the public's inflation expectations and wider inflationary pressures is uncertain to say the least, these figures will reinforce fears that the next move in interest rates could be up. We still think that the MPC will hold its nerve and trust in the slowing economy to bring both inflation and inflation expectations back down to target. But with inflation expectations likely to rise even further as inflation itself accelerates, there is clearly a risk that the MPC decides to fire a warning shot in the form of a rise in interest rates."
(The Herald) Read all today's economics news from scotsman.comENERGY & UTILITIESIberdrola back out of British Energy auctionNuclear power firm British Energy has suffered a blow after Spanish energy giant Iberdrola withdrew from the takeover race for the Livingston energy generator. The parent company of ScottishPower has backed out of the auction for BE after confirming that the price tag on the company is too rich for its tastes. The decision will come as a serious blow to British Energy after it was forced to admit that the solitary offer it had received was well below the level it deemed acceptable. The only bid received so far came from French energy giant EDF who are believed to be in direct competition with German group RWE despite the Germans having yet to make an offer.
(The Herald) Read all today's energy and utilities news from scotsman.comMEDIA & LEISUREFunds agreed for 'Angel of the Border'A funding package has been agreed for the construction of a landmark artwork near the Scottish border intended to rival the Gateshead Angel of the North. Dumfries and Galloway Council, Scottish Enterprise and the Nuclear Decommissioning Authority have agreed to fund the £3 million project which aims to recognise Gretna's position as the gateway to Scotland. Council planning committee chairman Roger Grant said: "This project would offer a fantastic opportunity to put the area on the map and raise our profile. It would be a landmark icon that would be identified with the region and, like the Angel of the North, become a destination in its own right."
(BBC Scotland Online) Read all today's media and leisure news from scotsman.comTRANSPORTMSP warns on rail delayMSP Claire Baker has warned that plans for a Levenmouth rail link are being threatened by delays to signing off on the new Fife structure plan. The MSP has written to ministers urging them to make a final decision on the plan to allow major projects, including the Leven railway, to be progressed. She said: "The whole point of a structure plan that lasts 20 years is to provide certainty over a long period of time for the large-scale infrastructure projects that communities like Fife need. The Redhouse Roundabout upgrade and Leven/Thornton rail link are Fife Council's two top transport priorities but getting the investment needed to see them become a reality depends greatly on certainty over the numbers of homes in Fife. The SNP's dithering is damaging and can therefore not continue."
(BBC Scotland Online) Read all today's transport news from scotsman.comPROPERTYHousing slump hitting broadband sales say Carphone WarehouseThe housing market slump is impacting on Carphone Warehouse's broadband business according to chief executive Charles Dunstone. The UK's largest mobile phone retailer warned that it was adopting a 'cautious' outlook and admitted the number of new broadband connections being established was below their expectations. Charles Dunstone told the Scotsman: "Everything I read that you guys (reporters) write and everything I hear from other people, it's all very gloomy out there. So it feels very dangerous and foolhardy not to break that (sentiment) into our plans." He added: "It's definitely something to do with the housing market which is one of the biggest catalysts for people to change broadband providers when they change houses."
(The Scotsman) Read all today's property news from scotsman.com
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