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Key facts on 1998
1998 - Unemployment continued to fall slowly, down to 1.3million. New Deal Programme to reduce long-term unemployment among young is launched in January in selected areas and nationwide in April. Government changed method of calculation of unemployment figures to the `Labour Force Survey' method in February. The LFS uses the International Labour Definition of
unemployment: "those without a job who have looked for work in the last 4 weeks, and could start work in the next 2 weeks."
Commercial Union and General Accident merged to form CGU in a £14bn deal, but Margaret Beckett (Trade & Industry Secretary) didn't allow merger of Bass and Carlsberg to go ahead. Somerfield and Kwik-Save merged in an attempt to stay competitive against bigger retailers.
Inflation - upward pressure continues, but interest rate increases from '97 take effect and inflationary pressures ease through the year. Inflation 3.4% for '98.
Balance of payments current account stays in surplus, but surplus falls to £1.5bn. Visible trade worsened sharply as strong £ takes effect on exports, but invisibles stayed strong.
Competition in electricity industry begins in Sept. 98 (delayed from April by IT problems). New firms are now allowed to compete to sell electricity in selected areas. Full competition in the whole of the UK should happen by June '99.
A report on BSE from DTZ Pieda Consulting (commissioned by the government) estimates the cost of the BSE crisis to the UK economy at between £740m and £980m in its first year.
The first Labour Spring Budget - key features:
- Introduction of a radical package of tax and benefit reform - in particular a new working families tax credit to be introduced
- Corporation tax cut 1% from April '99
- £500m package for health and £250m for education
- Extension of New Deal scheme
- New savings account - ISA - will replace PEP's and TESSA's from April '99.
Public finances continue healthy with a small Public Sector Net Cash Requirement (PSNCR) - the new name for the PSBR. PSBR R.I.P.
Growth still healthy, but unsteady by the end of the year - annual figure 2.1%. Growth helped marginally by MPC starting to lower interest rates towards the end of the year.
Minimum wage recommendations of the Low Pay Commission published in May. £3.60 per hour with a reduced rate of £3.20 per hour for 18-20 year olds and no minimum below 18.
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