Debt worry: Inflation report paints uncertain economic picture

11/02/2010

The Inflation Report from the Bank of England has suggested that Britain's financial future remains uncertain in the months after the recession.

Some analysts have even suggested that the unsteady economic climate is a warning that a 'double-dip' recession is likely in the future.

For consumers, the rising rate of inflation reported by the Bank could lead to a higher cost of living.

Many people could face severe financial difficulties as a result of risings cost despite the low Base Rate, which was maintained at 0.5 per cent earlier this week.

Debt management could be needed to help in this situation, as credit becomes less available due to rising lending rates and a cautious atmosphere which could result in banks becoming less willing to lend.

David Kuo, director of financial website the Motley Fool, commented: "The last thing the UK needs right now is an economy on Prozac and inflation on steroids.

"For now, the Bank of England has chosen to focus on the greater of the two evils, namely to prevent the UK economy slipping back into recession. Consequently, interest rates are likely to remain low, even though inflation would suggest that it do otherwise."

Director of EuroDebt Kevin Still commented: "The Bank of England Inflation Report suggests that interest rates will stay low for some despite rises in fuel prices and increased VAT.

"This is beneficial for those trying to clear debt. It is a lifeline to those that have debt problems and who may have to look at some form of debt solution if disposable income is reduced further."

Posted by Jim Mead

EuroDebt offer debt management plans to suit your needs.

Tags; Current UK Economy,

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