7 big money stories of 2013

The Momentum UK Team 2 January 2014

Here’s our rundown of 7 hot topics that hit the money headlines in 2013, and a few thoughts on the year ahead.

1. Interest rates

The Bank of England base rate remained at its historic low of 0.5% for another year, with governor Mark Carney suggesting that it’s unlikely to rise any time soon. In his latest statement he highlighted the importance of keeping rates low and not rushing into any “extreme” measures until the UK economy is well into a stable and sustainable recovery. That could potentially be bad news for savers, but may be good news for borrowers.

2. House prices

Lenders and commentators alike raised the question of whether we’re in a “housing bubble” - and with new house price figures emerging every week the jury is still out on that one. Latest figures from the Land Registry show that prices continued to rise in the year to the end of November, with a wide range of regional variations. We suspect that house prices will be one to watch in 2014 too.

3. Banknotes

When it was announced that in the next rotation of banknotes, Elizabeth Fry would be replaced by Winston Churchill, uproar ensued. Realising that this would mean no women on any of our currency, campaigner Caroline Criado-Perez - supported by women’s groups and MPs such as Stella Creasy - started a campaign to rectify this. Eventually, the Bank of England announced that when Charles Darwin’s time on the £10 note is up in 2017, he will be replaced by Jane Austen.

Banknotes made the news again recently, when the Bank of England announced that plastic banknotes will enter circulation in the UK in 2016. The new polymer notes can survive a spin in the washing machine, and have already been adopted by 20 countries.

4. Payday loans

Some short term, high interest loans have been the subject of criticism and fierce debate this year, after claims that payday loan companies may exploit the vulnerable. The government is now considering a cap on the amount of interest they can charge, although some believe that this won’t get to the root of the problem, citing the business practices of some payday lenders as the real issue. These include concerns about aggressive marketing tactics, lack of affordability checks and pressuring customers to “rollover” their loans.

5. Recovery?

With positive figures emerging from some industry sectors, there have been signs this year that the economy is finally starting to gather pace again after the recession. Chancellor George Osborne was keen to emphasise growth in the Autumn Statement - however the opposition maintained that ordinary people weren’t feeling the benefit of the recovery. A report from the Joseph Rowntree Foundation found that the cost of living has gone up by 25% since the start of the downturn, and that the number of working families in poverty has reached unprecedented levels.

6. Bitcoins

Although the virtual currency has been around since 2009, it is only in the past year that they have gained mass media attention. Bitcoin is a peer to peer payment network and digital currency; there are a finite number of Bitcoins in existence which are “mined” by individuals. This year people increasingly started to see them as an exciting investment opportunity, and many who bought Bitcoins cheaply in the early days found that their investment has grown substantially - some bought for less than £100 are now thought to be worth millions. However, Bitcoins have come under increasing scrutiny after being used by various criminal gangs, leading some countries to ban them completely.

7. Energy prices

As one energy company after another announced price rises this autumn, winter fuel bills were pushed to the top of the political and news agendas - the phrase “heat or eat” made regular appearances in the press. The debate around high prices and whether the government should intervene rumbled on into the winter, with energy companies insisting that the price rise was necessary to cover production costs. As households begin to feel the impact of the announced price rises, this issue is sure to stay near the top of the political agenda in 2014.

What’s in store for 2014?

Katie MacMahon, financial product manager at shares some thoughts on what might be ahead in 2014:

“Interest rates and unemployment will continue to make the headlines next year - especially with Governor Carney announcing that interest rates will not fall until unemployment falls to 7%. The cost of living is also going to be big news, with all the major political parties hoping to gain ground before the 2015 election. Much of the good news stories around the recovery have been on the back of increased consumption, and lending to individuals has seen a large scale recovery from the lows following 2008.

“Many UK households will continue to see high levels of personal debt. Is it possible that this could put pressure on the ability to increase consumption? There will also be continued debate around the ‘housing bubble’. Funding for Lending ends in the retail market in the new year and this could potentially see a shift in rates, mortgage approvals and/or house prices.

“Finally of course, austerity and the debate on whether George Osborne is doing the right thing or not will most likely continue to hit the headlines.”