Hello, and HAPPY NEW YEAR. Here's a round up of some recent business and finance news...
Oil prices still falling
Last time I wrote about plunging oil prices, a barrel of Brent Crude Oil would have set you back $63.56. The current price is $48.87 (20/01/2015). The drop in price has been described as a ‘giant tax cut to the economy’, providing a boost to consumer spending. For the first time in years, motorists have seen sub-£1 petrol (my mum didn’t even mind driving me back to uni after Christmas). In his Autumn Statement, Chancellor George Osborne predicted that UK GDP would grow by 2.4% in 2015, but this has since been revised to 2.9%.
It’s not all good news though – BP, which employs 3500 people in the North Sea, has announced 300 job cuts, and Tullow Oil are expected to follow suit.
Supermarket price war
It’s been a good year for Aldi and Lidl, with growth of 22.6% and 15.1% respectively. Half of UK shoppers visited at least one of the two stores over the Christmas period. Asda and Tesco have announced price cuts in a bid to become more competitive and regain market share. Even Waitrose has got involved, lowering the price of chicken from £4.23 to £2.11, but raising concerns about quality.
Tesco also announced that it will be closing 43 unprofitable stores as it tries to recover from an abysmal year.
…Contributing to lower inflation
Inflation (the cost of stuff) fell from 1% in November to 0.5% in December – its joint lowest ever figure on record. Inflation is measured by calculating the average price of a ‘basket’ of goods and services – staples like bread, milk, electricity, as well as things like cars, and gadgets. The average price is compared month on month to see if things are getting more or less expensive. Here’s a short video explaining how this works
The Bank of England, which controls monetary policy, has a 2% target for inflation. A fall of inflation below 1% triggers a letter of explanation from the Bank’s governor Mark Carney to the chancellor (George Osborne).
Swiss Franc cap scrapped (try saying that 3 times fast). Chaos ensues.
The Swiss National Bank decided last week to abandon it’s cap against the euro. Previously, the Franc was pegged to the euro, so there was a fixed exchange rate: 1 Euro bought 1.20 Swiss Francs. At one point after the cap was dropped, one euro bought just 0.85 francs. The value of the euro against the franc is expected to decline further if the European Central Bank starts quantitative easing – printing money and buying bonds to push cash into the eurozone banking system to stimulate a recovery.
The lifting of the cap came as a surprise to many, including the International Monetary Fund's head, Christine Lagarde. The sudden rise in the value of the Franc will make exports more expensive and ski lift queues shorter. One major reason for the decision to un-peg the franc is that the falling value of the euro against the dollar dragged down the value of the franc too.
And finally... Boy, 5, invoiced after birthday party no-show
Apparently the £15.95 bill included ‘half an hour on a snow tubing run, three toboggan rides, a hot meal, ice cream, jelly and balloons’ – pretty decent. Here are some pictures of said boy and his father looking devastated (courtesy of the Daily Mail, of course). And here’s a crash-course on birthday party etiquette (courtesy of the BBC, of course).
Clive Coleman, the BBC’s legal correspondent assures us that “for there to be a contract, there needs to be an intention to create legal relations. A child's party invitation would not create legal relations with either the child "guest" or its parents... it is inconceivable that a five-year-old would be seen by a court as capable of creating legal relations and entering into a contract with a "no show" charge.” Phew.