MORNING MEETING: Businesses welcome fall in inflation but wary of wobbling eurozone
LOW inflation is generally a good thing and for years the policymakers’ main concern has been ensuring it does not race away.
The Bank of England governor must write a letter of explanation to the Chancellor if inflation is more than one percentage point either side of the Government-set target of 2 per cent.
In the recent past, mail from Threadneedle Street to 11 Downing Street has been triggered by inflation rising above 3 per cent but the way things are going the delivery van could be dispatched when it drops below 1 per cent.
Yesterday’s fall in the Consumer Price Index to 1.2 per cent will be broadly welcomed by policymakers, households and businesses.
But ultra-low inflation can also be dangerous and leave an economy in the doldrums.
The eurozone is teetering on the brink of such a situation and the risk is it will infect the UK which is why some analysts think UK interest rates will now stay on hold until November 2015.
WHATEVER the problems the global economy has gone through demand for luxury goods has appeared insatiable.
But the appetite for opulence is waning, as Burberry and Mulberry reported yesterday.
Weaker foreign demand and the strong pound are having an effect on both firms while Mulberry has also to overcome the self-inflicted problem of moving too far upmarket. Jimmy Choo and its City advisers must be watching nervously as the luxury shoe maker prepares for its stock market listing.
THE so-called “Double Irish” tax loophole that allowed multinational firms based in Ireland to save billions of pounds in tax is to be phased out.
It allowed profits collected at one Irish subsidiary to be transferred to another in a tax haven.
Such opaque measures not only distort international markets they leave Irish taxpayers out of pocket.
And there is no need for them when Ireland already offers among the most attractive corporate tax rates in the world.