The front pages of the weekend papers carry a finance theme this sunny Saturday morning.
Starting with FT Weekend is a story about the European Central Bank (ECB) considering a negative inflation rate in order to combat the threat of deflation.
Economists expect the ECB to move to negative interest rates at their rate-setting meeting next week; negative interest rates would encourage more borrowing but also savers to withdraw their cash and spend it, which should both combat deflation.
Such a move would be in contrast to the UK, where Bank of England officials are expected to start increasing interest rates in the not too distant future.
We are edging closer to a time when the Bank of England will start hiking rates, although this is expected to be a modest and very gradual increase. A rise to interest rates no higher than 3% until 2018/19 is the current consensus forecast.
Moving away from their usual headlines about pensions and the weather, the Daily Express featured house prices this morning.
According to the paper, economists are forecasting average house price inflation of 12% over the next 18 months, with the current property boom lasting until at least 2016.
Property prices are expected to rise by a further 5% during the remainder of 2014, and then a further 7% in 2015.
House price inflation tends to generate improved consumer confidence, as we feel wealthier when the value of our homes is increasing. This could prompt more High Street spending, although restrictive lending practices is likely to hold back the release of much cash from property wealth.
Finishing with the Daily Mail is a story about ‘bully-boy’ tactics from HM Revenue & Customs, following a new attack on suspected tax avoiders.
The paper is claiming that HMRC is sending letters to taxpayers demanding explanations for why they are paying less than expected in tax.
It appears the taxman is writing to people who are paying less tax than those with similar income levels. There are of course legitimate reasons for paying less tax, such as making charitable donations or pension contributions which can both reduce tax bills.
The article should serve as a reminder to keep good records when it comes to your tax affairs and seek specialist advice if you are unsure about the calculations for your self-assessment tax return.
