British business failures are set to rise in the second half of 2010 as Government and central bank support measures are unwound, the corporate distress specialist Begbies Traynor has warned.

It said that Government help had provided companies with “welcome relief” during the recession but despite the support more than 140,000 experienced “significant and critical” financial problems in the fourth quarter of 2009. That was 6pc more than the third quarter, and 14pc fewer than in the same period in 2008, the report said.

Ric Traynor, executive chairman of Begbies Traynor Group said the situation was likely to worsen later in the year: “With tax and interest rates certain to rise, as well as increasing pressure on consumer spending, there is every reason to suggest that the insolvency peaks of this recession remain some way off,” he said.

“While business finance is expected to become more readily available during the first half of 2010, we anticipate a rise in the levels of financial distress during the second half of 2010, as temporary financial support measures are unwound.”

Despite the extension to the car scrappage scheme, the automotive sector experienced the largest rise in critical problems in the fourth quarter, up 26pc compared with the third. On the other hand the retail sector saw a 32pc decline in critical actions as the temporary VAT cut and improved consumer confidence resulted in a rise in sales over Christmas, the report said.

Begbies Traynor warned that while conditions in the construction sector had improved in the fourth quarter, it remained particularly vulnerable to the removal of Government support. More broadly it said that companies reliant on the public sector as a customer would also be vulnerable as spending cuts are introduced after the next general election.

“Government support measures are providing welcome relief to the UK’s struggling companies in the short term but they may exacerbate problems for some businesses as the need to repay debt catches up with them later in the year,” said Mr Traynor.

On a regional basis, Scotland was the only area in the fourth quarter where companies experiencing significant financial problems increased compared with a year earlier, up 2pc. The south east and east Anglia fared the best, with an 18pc reduction.

http://www.workfromhomeinuk.com/

http://www.telegraph.co.uk/finance/financetopics/recession/

Britain will turn in stronger growth than any other major economy next year, Goldman Sachs has declared, predicting a significantly stronger-than-expected recovery in the coming years.

The investment bank said that the pound’s 25pc depreciation over the course of the crisis would help boost exports, and broader economic growth, and turn the economy around. The forecast flies the face of the conventional wisdom, which has it that the UK will suffer a protracted, sluggish recovery, and could slide back into a slump.

However, it has also emerged that a key bellwether for economic growth, the Organisation for Economic Co-operation and Development’s leading indicator, is now at its highest level since 1972, pointing towards a strong recovery.

In its key annual investment conference, Jim O’Neill, chief economist at Goldman, said that he expects the UK economy to expand by 3.4pc next year, compared with 2.4pc growth in the US and just 1.9pc in the eurozone. Although Goldman had always been more optimistic than most other banks about the UK’s prospects, the fact that it expects Britain to achieve even stronger growth than the US comes as a surprise.

The rebound is largely thanks to sterling’s sharp fall, which Goldman expects to increase demand for British exports, and to boost inward investment from overseas. However, it is also basing the forecast on hopes that the financial sector will recover enough to finance a surge in companies’ investment spending, which tumbled to the lowest level last year since the 1930s.

There are worries, though, that the pound’s depreciation may be stolen back off the UK in the coming months, with sterling rising against other major currencies as Britain’s prospects for recovery become clearer. The pound rose to a four-month high against the euro, and hit a two-month peak in its trade-weighted level, amid speculation that today’s inflation data will be higher than expected, and as UBS advised clients to buy sterling against the euro.

The forecast will underline expectations that the Bank of England will soon be forced to increase interest rates from their current low rate of 0.5pc. Ben Broadbent, UK economist at Goldman, thinks this will happen towards the end of the year, but the Bank will come under further pressure to consider an increase tomorrow, with Consumer Price Index inflation set to rise well above its 2pc target.

However, Goldman thinks that US interest rates will remain at their current effective-zero rate all the way until 2012 – far longer than most other institutions. In further evidence of the potential strength of Britain’s recovery, economists pointed towards the OECD’s leading indicator. At a level of 105.7, it is at the highest point since 1972, something which may point towards a sharp rebound from recession.

http://www.workfromhomeinuk.com/

http://www.telegraph.co.uk/finance/economics/

Enterprise is key to UK economic growth, says Gordon Brown.
Prime Minister Gordon Brown pledged on Thursday to “unleash” Britain’s entrepreneurial talents in a bid to promote prosperity.

Speaking alongside Business Secretary Lord Mandelson at the launch of a government strategy for economic growth, Mr Brown said “going for growth” was the government’s number one priority. He added: “We will do everything we can to support and unleash the entrepreneurial, innovative and dynamic talents we know we have in Britain.”

The strategy places enterprise and industry at the heart of Britain’s recovery, with the Government planning to increase support for sectors such as life sciences, as well as boost funding for manufacturing research by £70m.

The announcement came as Lord Mandelson condemned Tory plans to accelerate the reduction of debt as “potentially dangerous nonsense” that could stall the recovery.

He insisted the Government was committed to cutting Britain’s £178bn annual deficit, but said it was important to focus on growth as well as spending cuts and tax increases. Fostering growth was “the best antidote to debt, both in the short and long term”, he said.

David Frost, director of the British Chambers of Commerce, said the initiatives should be supported by policies that stimulate enterprise “as any additional taxes on business will merely stunt growth”.

http://www.telegraph.co.uk/finance/economics/

CES 2010: Amazon Kindle under threat from ‘unbreakable, light-as-paper’ Que e-reader.

A company founded by two Cambridge University professors is making an ambitious attempt to challenge Amazon, Sony, Apple and Co. in the increasingly competitive electronic book reader market.

Among the blackjack tables and cancan girls of Las Vegas’s famous strip, Plastic Logic unveiled a new e-reader with a screen made of plastic, rather than glass, that has the potential to reinvigorate newspaper and magazine publishing.

Henning Sirringhaus, one of the Cambridge dons who founded the company, which was spun out of the university’s Cavendish Laboratory in 2000, said the 10in screen on the Que reader is “unbreakable”. “It’s light, you can treat it like paper, you can stuff it in your briefcase,” he added.

Developers claim future devices based on the innovative technology might even be flexible enough to be rolled up like a sheet of papyrus. The current market leaders, Amazon’s Kindle and Sony ’s eReader, have been criticised for having heavy glass screens.

As they can connect to the internet through mobile phone networks, analysts believe e-readers open a new world to the publishing industry as new editions can be downloaded on to them effortlessly.

The huge potential impact of e-books was underlined this Christmas, when more people downloaded an electronic book from Amazon than ordered a hard copy.

Hearst, the US publisher of Cosmopolitan, Esquire and the San Francisco Chronicle, believes the trend towards e-books is so strong that it has produce its own its own e-reader – the Skiff – which at mere 0.25in thick is the slimmest on the market.

James McQuivey, analyst at Forrester Research, said the e-reader category is “red hot” and will “dominate” the CES (Consumer Electronics Show) trade fair , which sprawls over 1.8m square feet of exhibition space across Las Vegas’ most famous super-casinos.

“The Kindle set the bar pretty high. It’s the entire end-to-end experience, with instant delivery [of new books]” he said. “But Plastic Logic is clearly pointing to the next generation of these devices.”

Plastic Logic has already signed deals with the Financial Times and USA Today and is in discussions with other major newspaper and magazine publishers.

However, the Que is launching into a ferociously competitive market currently dominated by the Kindle and Sony’s eReader. Yesterday, Korean electronics group Samsung entered the market, and host of other companies, including Indian start-up Notion Ink, are expected to use the trade fair to launch rival products.

Amazon has attempted to stamp its authority on the market by announcing it would make its larger 9.7in Kindle available 100 countries later this month, following its launch in the US last year.

The Consumer Electronics Association, which hosts the Las Vegas show, estimates that e-reader sales will double each year before peaking at 16m in 2014.

Although the market for e-readers is expected to grow in the short-term, some analysts say the products may be superseded by so-called “tablet” computers, which allow users to browse the internet and play games as well as read books.

The launch of Apple ’s much-anticipated touchscreen tablet, thought to be called iSlate, on January 27, is expected to be the device which turns the e-reader market on its head.

Although Apple has not provided any details about the device, Kai Fu Lee, a former employee and ex-president of Google China, claims the California-based iPhone developer plans to sell 10m tablets at $1,000 (£628) a pop in the first year.

John Jacobs, of computer market research company DisplaySearch, estimates that sales of tablets could reach $3.5bn by the end of the year.

However, he warned that the key to creating a successful product is providing a comprehensive catalogue and an intuitive interface for consumers to browse and download titles.

“Apple does a great job of this. The question will be whether others can match or better what it did with music and the iStore,” he said.

Mr McQuivey said it was “impressive” that Plastic Logic has got its device to market ahead of Apple’s tablet, which has been rumoured since 2007, and suggested the iSlate should really be called the “isLate”.

Analysts warn that the array of tablets and smartbooks – a new category designed to fill the “gap” between sophisticated mobile phones and mini laptops – could stall the growth of the netbook and laptop market.

Lenovo, the Chinese-owned laptop maker that bought IBM’s PC business for $1.25bn in 2004, and Hewlett Packard both launched smartbooks this week.

The rise of this category is a boost to ARM, the British microchip designer, as most of the devices run on its smartphone chip designs.

As internet search giant Google vaults into the mobile phone market with the Nexus One, analysts say it will become increasingly difficult to draw a line between mobile phones and the new wave of handheld computers.

“The average consumer will be asking themselves ‘What the heck is this thing?’,” McQuivey said. “It’s not a phone, but it’s something that’s light that you carry with you all the time to give you an even richer experience wherever you go.”

Despite the recession and a sharp fall in electronics spending, Garry Sharpio, president and chief executive of the Consumer Electronics Association, said attendance is expected to hold steady at about 110,000 after a 20pc drop in numbers to last year’s show.

“In my 28 years of attending CES … I can honestly say there will be more innovation at this show than any one in history,” he said.

http://www.telegraph.co.uk/technology/ces/

The number of workers getting permanent jobs rose at its fastest rate since the beginning of the credit crisis, the latest employment statistics have disclosed.

Employment experts said the news highlighted confidence returning to the private sector as the recession eases.

But they warned the jobs market will remain “extremely competitive”, particularly among younger jobseekers, in 2010.

The figures published by accountancy firm KPMG revealed 62.8 per cent of the 400 recruitment agencies surveyed said they placed more staff in jobs in December than the previous month.

It compared with a percentage of 61.7 per cent in November and is the highest figure since July 2007.

Bernard Brown, Partner and Head of Business Services at KPMG said: “The jobs market has continued its journey back to health and the data are certainly encouraging. We now need to see this improvement carried over into 2010 for the jobs recovery to be consolidated.”

Last month, figures from the Office for National Statistics revealed unemployment jumped to 2.49 million between August and October, up 21,000 from the three months to July 2009.

http://www.telegraph.co.uk/finance/personalfinance/

Google is to launch its first official mobile phone, the Nexus One, in a move that will see the search giant directly challenge the dominance of Apple’s iPhone.

Called the Nexus One, Google will unveil the handset at its Silicon Valley headquarters in America tomorrow, and the device is set to go on sale there from January 12. A UK launch date has not yet been announced, but it is likely to follow early this year.

As increasing numbers of people are using their mobile phones to access the internet, Google has already launched its own mobile phone operating system, called Android, that works on a range of devices. However the Nexus One will be the first handset that the company has designed itself.

Like the iPhone, Android offers fully integrated web-browsing, music and video playing and a large library of applications that users can choose to install to add to their phone’s capabilities. One of the services likely to be available for the first time in America is European-based music service Spotify, which challenges Apple’s iTunes.

The Nexus One has been built by manufacturer HTC, and is rumoured toinclude a larger screen and better camera than those featured on the iPhone. It also offers free satnav capabilities, which are only available for an additional charge on the iPhone.

The handset is likely to cost consumers $179.99 (£111) on a contract with T-Mobile, but will also be available for $529.99 (£324) without any contract tying users to a specific network.

Google’s announcement is timed to challenge the dominance of the world’s largest technology fair, the Consumer Electronics Show in Las Vegas, which takes place this week, and to overshadow Apple’s launch of a tablet computer, which is expected on January 26.

The name Nexus One is a reference to the film Blade Runner, which is reported to have led to the estate of author Philip K Dick threatening to sue Google.

http://www.telegraph.co.uk/technology/google/

Britain may have been rocked by the worst recession in decades in 2009, but budding entrepreneurs have been starting up new businesses at record rates.

Figures from the British Bankers Association show that the total number of new business accounts opened this year is set to exceed the total for 2008. Almost 430,000 new businesses began trading in the nine months to September. By this measure, and with the monthly average exceeding 47,000, it will mean that last year’s 525,000 total is passed.

But it has not been plain sailing, with tough trading conditions prompting a rise in closures. Barclays estimates closures are up 2pc on 2008, although this is lower than expected.

The challenging conditions are reflected in the fortunes of some of the companies that have featured in the Starting Out column during the year.

UR in the Paper

Rebecca Philipson set up her personalised newspaper company in 2005 after hearing her grandfather reminisce how he used to buy them from a kiosk on Blackpool pier. To start with she produced a generic newspaper but soon struck deals with a host of local newspapers to produce personalised versions of their titles. This year the company agreed licensing deals with football clubs to supply personalised football shirts, photographs and gifts.

It was a gamble that has paid off, says Ms Philipson. “It launched in the summer and this Christmas it’s been absolutely phenomenal,” she says.

It’s been a welcome turnaround in fortunes for the Stanhope, County Durham-based company. “The beginning of the year was very tough for everyone. We felt it like everyone else. We had suppliers who were going bust,” says Ms Philipson. “People were tightening their belts. And the summer is always hard for gift companies as people don’t buy them. We were probably a bit down before Christmas. But this has definitely been a fantastic Christmas for us.”

She adds: “It’s been very much hard work this year. We extended the day by two hours and most people have done four hours. It’s been a long slog but it’s definitely worth it.”

www.inthepaper.co.uk

Alderney Angling

Mark Harding moved to Alderney, one of the smallest Channel Islands, in 2004. After settling in, he spotted that the local fishing tackle shop was up for sale and snapped it up. Working with his girlfriend, Fieona Cosheril, he built up the business, moving the shop from a side street onto the main high street in St Anne and diversifying into shore guides and angling lessons. Last year they redeveloped the flat above their shop to act as a B&B, which is run by Ms Cosheril. This year was all about marketing the tackle shop and B&B. The plan has worked well. Mr Harding says sales are up between 20pc and 25pc for the year. “We had bookings all the way through to last weekend [on the B&B],” he says. “We have got quite an empty book for next year, but what usually happens is that the old man’s fishing holiday comes after everything else if there’s any money left.”

He’s relaxed about trading in 2010. “I would be more worried if the bookings were not there come February. I’m sure the business will come. I don’t think it’ll be great but it will be OK.” The plan for 2010 is to expand the business further. An online shopping facility and the purchase of a second shop on the harbour front will mean hiring their first staff. “We do need some help. If we get another 20pc lift next year we will not cope,” says Mr Harding.

www.alderneyangling.com

Clippy

Personalised see-through plastic bag maker ClippyKit became Clippy London since featuring in The Sunday Telegraph in February. The move marked founder Calypso Rose’s plan to take her venture from bags, wallets and umbrellas into a fashion brand. Since setting up the business in 2004, Ms Rose has built up a diverse fan base, from famous actresses such as Helena Bonham Carter and Thandie Newton to teenage girls using Clippy- branded stationery. This year, however, provided a bit of a reality check. “When we hit February, looking back at the Christmas before we realised we really had to pick up sales,” says Ms Rose. “It’s meant more focus on sales this year, getting on the phone, ringing people.” The effort has paid off. While the London-based company’s sales at 250-odd independent shops have been flat at best, Ms Rose has struck distribution deals with new partners that should pay off next year. “I have looked at Japan and went a couple of months ago. It was very successful,” she says.

Upmarket department store Isetan and a stationery chain called Plazastyle will both stock Clippy ranges. Stiff competition for fashion gift sales has also forced Ms Rose to re-examine her cost base and as a result production has moved from Britain to China, helping to keep the business profitable this year.

“The recession really makes you think about your business. Instead of pootling along it makes you fight so you can be around next year. I have learnt a lot this year,” she says.

www.clippykitlondon.co.uk

Charlotte Designs

Sarah Hodgkins has two recessions under her belt. In the early 1990s her interior design company, which did show homes for builders and developers, failed when several of her customers went bust. She applied those lessons to her new venture, decorating childrens’ bedrooms from her base in Northamptonshire.

Charlotte Designs’ projects range from £200 for a simple mural to 10 times that for a major refurbishment and Ms Hodgkins says that even after raising her prices at the end of last year, domestic commissions continued to flow in.

However, this year was also meant to be about the expansion of the business with the launch of “Murals by Numbers”. The idea was to use the website to sell traceable designs that could be sent to customers all over the world. It did not take off and the investment has dented profits.

The main business continues to prosper and Ms Hodgkins is already booked up for the first couple of months of 2010.

“I have friends whose businesses have been affected [by the recession]. We have not grown this year, but we have not shrunk either,” she says. “My marketing campaign for the next three months is around public sector work. There’s money going into libraries and schools.”

www.charlottedesigns.co.uk

http://www.telegraph.co.uk/finance/yourbusiness/

Banks have gathered almost £6m in fees by charging small businesses inflated rates to access the Government’s £1.3bn loan support scheme, official research has revealed.

The 5,800 companies that have drawn down their loans have typically had to pay 1.8pc of the loan in “administration fees” and accept a 6.75pc rate of interest. Both charges exceed standard industry levels.

Small business groups called for the Government to investigate. Stephen Alambritis from the Federation of Small Businesses said: “This scheme should be the cheapest in town. The Government should look at these charges and bring them in line with the charges imposed by the partially state-owned banks.”

Royal Bank of Scotland and Lloyds, two of the heaviest users of the scheme, have pledged to not charge customers more than 1.5pc in fees in any one year, stating that fees above this level would not be “fair”.

However, research for the Business Department found that the 37 different lenders, ranging from high street banks to community development institutions, typically charged higher fees.

Durham University’s Policy Research Group polled 385 companies with loans and discovered that the typical £55,000 loan attracted a £1,000 fee. The fees increased with the size of the loan, with the average fee hitting £2,430 against a loan of £113,000.

Lenders were told to assess EFG loan applications against their normal commercial criteria but the Business Department did not set the level of fees that could be charged, the researchers noted. “The administration fees charged by the lender were the issue of greatest concern for most businesses,” they stated

More than 9,000 companies have had loan applications approved and Alistair Darling, the Chancellor, has extended the scheme for another year. It is targeted at businesses with sales of less than £25m that are seeking loans of £1,000 through to £1m.

The research found that the typical loan attracted a 5.25pc rate of interest from the bank, with the Government’s 1.5 percentage point premium for its guarantee charged on top. Some businesses were charged 9pc interest, including the premium, alongside £3,302 of fees.

Businesses were frustrated at the time that applications took to be processed, with almost 40pc taking longer than three months.

However, nearly half those asked by the bank to provide a personal guarantee on the loan said they accepted the need to do so, while two-thirds of all the businesses were happy with the scheme.

Mr Alambritis said that the loans were “trickling through”. “Certainly we would expect any Government scheme to be better, quicker and more reliable than a bank scheme. It’s important that the Government looks at these issues,” he said.

Lloyds said that its fees are now capped at 1.5pc. “It may be that these are figures from a number of lenders that could be charging more than us,” said a spokesman.

RBS, which capped its fees at 1.5pc in November, admitted it had charged a maximum fee of 1.75pc through the year. “But the average fee would have been significantly lower,” said a spokesman.

The Business Department said the scheme had “helped thousands of companies save jobs and improve their prospects”.

” We look to lenders to apply commercial rigours to lending decisions and set appropriate rates and fees to reflect the risk of the individual borrower and loan size,” a spokesman said.

“Almost all EFG offers are drawn down which indicates businesses feel they are able to meet the conditions of the loan and the scheduled repayments.”

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/

Britain may have been rocked by the worst recession in decades in 2009, but budding entrepreneurs have been starting up new businesses at record rates.

Figures from the British Bankers Association show that the total number of new business accounts opened this year is set to exceed the total for 2008. Almost 430,000 new businesses began trading in the nine months to September. By this measure, and with the monthly average exceeding 47,000, it will mean that last year’s 525,000 total is passed.

But it has not been plain sailing, with tough trading conditions prompting a rise in closures. Barclays estimates closures are up 2pc on 2008, although this is lower than expected.

The challenging conditions are reflected in the fortunes of some of the companies that have featured in the Starting Out column during the year.

UR in the Paper

Rebecca Philipson set up her personalised newspaper company in 2005 after hearing her grandfather reminisce how he used to buy them from a kiosk on Blackpool pier. To start with she produced a generic newspaper but soon struck deals with a host of local newspapers to produce personalised versions of their titles. This year the company agreed licensing deals with football clubs to supply personalised football shirts, photographs and gifts.

It was a gamble that has paid off, says Ms Philipson. “It launched in the summer and this Christmas it’s been absolutely phenomenal,” she says.

It’s been a welcome turnaround in fortunes for the Stanhope, County Durham-based company. “The beginning of the year was very tough for everyone. We felt it like everyone else. We had suppliers who were going bust,” says Ms Philipson. “People were tightening their belts. And the summer is always hard for gift companies as people don’t buy them. We were probably a bit down before Christmas. But this has definitely been a fantastic Christmas for us.”

She adds: “It’s been very much hard work this year. We extended the day by two hours and most people have done four hours. It’s been a long slog but it’s definitely worth it.”

www.inthepaper.co.uk

Alderney Angling

Mark Harding moved to Alderney, one of the smallest Channel Islands, in 2004. After settling in, he spotted that the local fishing tackle shop was up for sale and snapped it up. Working with his girlfriend, Fieona Cosheril, he built up the business, moving the shop from a side street onto the main high street in St Anne and diversifying into shore guides and angling lessons. Last year they redeveloped the flat above their shop to act as a B&B, which is run by Ms Cosheril. This year was all about marketing the tackle shop and B&B. The plan has worked well. Mr Harding says sales are up between 20pc and 25pc for the year. “We had bookings all the way through to last weekend [on the B&B],” he says. “We have got quite an empty book for next year, but what usually happens is that the old man’s fishing holiday comes after everything else if there’s any money left.”

He’s relaxed about trading in 2010. “I would be more worried if the bookings were not there come February. I’m sure the business will come. I don’t think it’ll be great but it will be OK.” The plan for 2010 is to expand the business further. An online shopping facility and the purchase of a second shop on the harbour front will mean hiring their first staff. “We do need some help. If we get another 20pc lift next year we will not cope,” says Mr Harding.

www.alderneyangling.com

Clippy

Personalised see-through plastic bag maker ClippyKit became Clippy London since featuring in The Sunday Telegraph in February. The move marked founder Calypso Rose’s plan to take her venture from bags, wallets and umbrellas into a fashion brand. Since setting up the business in 2004, Ms Rose has built up a diverse fan base, from famous actresses such as Helena Bonham Carter and Thandie Newton to teenage girls using Clippy- branded stationery. This year, however, provided a bit of a reality check. “When we hit February, looking back at the Christmas before we realised we really had to pick up sales,” says Ms Rose. “It’s meant more focus on sales this year, getting on the phone, ringing people.” The effort has paid off. While the London-based company’s sales at 250-odd independent shops have been flat at best, Ms Rose has struck distribution deals with new partners that should pay off next year. “I have looked at Japan and went a couple of months ago. It was very successful,” she says.

Upmarket department store Isetan and a stationery chain called Plazastyle will both stock Clippy ranges. Stiff competition for fashion gift sales has also forced Ms Rose to re-examine her cost base and as a result production has moved from Britain to China, helping to keep the business profitable this year.

“The recession really makes you think about your business. Instead of pootling along it makes you fight so you can be around next year. I have learnt a lot this year,” she says.

www.clippykitlondon.co.uk

Charlotte Designs

Sarah Hodgkins has two recessions under her belt. In the early 1990s her interior design company, which did show homes for builders and developers, failed when several of her customers went bust. She applied those lessons to her new venture, decorating childrens’ bedrooms from her base in Northamptonshire.

Charlotte Designs’ projects range from £200 for a simple mural to 10 times that for a major refurbishment and Ms Hodgkins says that even after raising her prices at the end of last year, domestic commissions continued to flow in.

However, this year was also meant to be about the expansion of the business with the launch of “Murals by Numbers”. The idea was to use the website to sell traceable designs that could be sent to customers all over the world. It did not take off and the investment has dented profits.

The main business continues to prosper and Ms Hodgkins is already booked up for the first couple of months of 2010.

“I have friends whose businesses have been affected [by the recession]. We have not grown this year, but we have not shrunk either,” she says. “My marketing campaign for the next three months is around public sector work. There’s money going into libraries and schools.”

www.charlottedesigns.co.uk

http://www.telegraph.co.uk/finance/yourbusiness/

Inflation accelerated to 1.9pc last month, rising more than economists expected, as fuel and transport costs climbed.

The Consumer Prices Index (CPI) – the measure of inflation used by the Bank of England to set interest rates – was 1.9pc higher in November than in the same month in 2008. Economists had pencilled in a gain to 1.8pc. On the month, CPI climbed 0.3pc.

The Bank has already said that it expects inflation to breach its 2pc target and possibly rise as high as 3pc in coming months, as a combination of higher oil prices and the reversal of the cut in VAT – it will return to 17.5pc from 15pc on January 1 – push up prices across the economy.

However, given the record contraction in gross domestic product over the past 12 months, the Bank expects inflation to remain subdued.

“The BOE has been as explicit as they possibly can, saying: ‘Look, we can’t control near-term inflation, the medium term is our job’,” Alan Clarke, an economist at BNP Paribas, told Bloomberg.

The rise in CPI on the month was driven by a 2.8pc gain in fuels and lubricants, while the cost of second-hand cars and air travel also rose.

The broader Retail Price Index (RPI), which includes the cost of housing, rose 0.3pc on the month and is also 0.3pc higher than a year ago.

http://www.telegraph.co.uk/finance/economics/