Mr Micawber would not be pleased. British households, companies and government together are spending approximately 5% more than we are earning. We are now worse than any other OECD country; even below the US who spend 1%.
UK employment
The number of people in work rose by 179,000 to 32.71 million in the three months to the end of February, the highest since 1971. The Office for National Statistics said that jobless numbers fell by 27,000 to 1.34 million, putting the unemployment rate at 3.9 per cent, the lowest since 1975.
U.S. Q4 GDP revised down
The U.S. economy showed further signs of slowing as the 4Q18 GDP figure was revised down to 2.2%, which was significantly lower than the 2.6% initially reported. After business investment, consumer spending and local government expenditures were accounted for, the final GDP figure came in below economists forecast of 2.5%. The revised figure did not change the full year GDP growth rate, which remains at 2.9%.
House price growth slows
Annual house price growth has slumped to 1.7 per cent in January 2019 – the lowest rate since 2013. The latest House Price Index from the Office for National Statistics showed the average UK house price was £228,000 in January 2019, an increase of 1.7 per cent over the year, but down from the 2.2 per cent annual growth in December 2018.
Office for National Statistics Report
Some good numbers for a change. More people were employed today since records began in 1971. The unemployment rate also dropped to a low of 3.9% for the first time since the dark days of the 1970’s.
Autumn 2018 Budget
As the government is busy at the moment the Chancellor did not introduce many initiatives. The key changes were:
- There is a new capital allowance for new non-residential structures and buildings.
- The apprenticeship levy would be halved to 5% from 10%
- Don’t forget making tax digital for VAT returns comes into force on the 1st April 2019.
Follow the money
We met with the monetarist Simon Ward at our monthly forum meeting. He is seeing signs of improvement but we might have to wait a while.
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Do you have any NI gaps?
Paying out for voluntary National Insurance contributions now could improve your state pension by up to £4,000 – but it’ll cost more if you wait until after 5 April 2019.
Anyone who reaches state pension age after 5 April 2016 and has a gap in their NI payments between the 2006-07 to 2015-16 tax years has until April 2023 to ‘plug’ the holes by making voluntary contributions. In the new tax year, the amount you pay for voluntary National Insurance (NI) will increase to a more expensive flat rate for all tax years. But, if you pay between £600 and £700 – the equivalent of £100 a week between now and April – you could pay off a missing year in your NI record and secure thousands of pounds of state pension when you retire.
Euro growth slows
Although GDP growth in the Euro Area remained positive, the headline figure was quite disappointing, as on a quarterly basis, growth was 0.2% in 4Q18. Italy’s economic environment is deteriorating. Not only has the economy now contracted for three straight months but the banking system also proved problematic with Banca Carige entering into temporary administration.