That's torn it ...

[suein56]

Life will just become more and more expensive if this article is right.

It's the bit about the £ value falling below that of the euro that concerns me.

Botheration.

Sue

[woody234]

life will be cheaper if you have a uk mortgage but expensive if you have a uk pension paid into a euro account

[AnOther]

The problem is that there is a significant chance of inflation taking off and the only weapon to combat that in the UK's 'one trick pony' of an economy is the interest rate.

But bring it on I say. I want a swift return to the double digit interest rates of 1989-92 to enhance my annuity prospects.

[tuppence]

AnOther, I am raising a glass to that possibility as we speak!![:(] But don't hold your breath and keep a hold of your glass as I feel double digit interest rates are a loooooooooong way away.

tuppence

[baypond]

[quote user="AnOther"]The problem is that there is a significant chance of inflation taking off and the only weapon to combat that in the UK's 'one trick pony' of an economy is the interest rate.

But bring it on I say. I want a swift return to the double digit interest rates of 1989-92 to enhance my annuity prospects.

[/quote]

This thing about inflation and annuity prospects is a zero sum game isn't it? My understanding (which may be out of date) is that you can buy a flat annuity, or an inflation linked annuity.

In a high inflation economy, it costs a massive amount to inflation link the annuity, and very much less to buy a non-inflation linked annuity. The problem is that if you do not inflation link with say inflation at 10%, within 5 years your monthly pension payments will be worth 50% less. In a low inflation world it is very cheap to buy an annuity that is inflation linked. So all in all it makes no difference to the REAL value of a pension.

[AnOther]

I'm not thinking of the types of annuity it is possible to buy but the basic payout rates which are inexorably linked to the interest rate.

Cast your mind back to Equitable life who in the late 80's were selling guaranteed annuities base on double digit interest rates. That is why I'm hoping for mega inflation and an equally meag high interest rate to give me the best return for my pot, followed of course by a rapid tumble back to 0.5% [:D]