According to the Bank of England, inflation in the UK will be stable at the targeted 2% over the next two years. In this regard, the Bank is not likely to make changes in domestic interest rates anytime soon, in retrospect to recent talks that a slowdown in inflation might lead to the Bank’s having to lower rates to keep inflation levels within the target of 2%.

For now, we see a stable rate of growth in the medium term, at least for the next couple of years. The rate-setting Monetary Policy Committee, however, has indicated that it might have to cut short-term interest rates to stimulate the economy if the expected growth benefits of a stable economic environment does not kick in soon.

Company formation and business solutions experts are confident in the expected upturn in the economy. While rate cuts might be beneficial in the short run, a more stable environment is more likely to give businesses—especially small enterprises—a boost.

British Airways has reported a healthy quarter-on-quarter pre-tax profit growth where the last quarter of 2005 saw an 8% increase as compared to that of the previous year’s, from £152 million to £164 million. BA attributes this growth to rising ridership and cost-cutting activities on its part.

This growth was not very easy to achieve, with the need to cut costs in face of rising fuel prices over the span of the three months, and increasing pension commitments. BA likewise had to undertake massive marketing campaigns to boost its ridership. The airline also opened up new routes to Asian countries, particularly to India and Shanghai.

Premium carriers like BA are facing intense competition from the no-frills airlines that offer only the barest of necessities at very low prices, company formation experts note. Competition has been healthy from the consumers’ standpoint, though, having forced premium airlines to re-think their business models. Business solutions consultants believe there is still a place for airlines such as BA, in that some sectors—particularly the business and executive classes—still opt for premium and packaged-services. And with some, it’s still the customer service that counts—something low-cost airlines may not be offering at this time.

Chancellor Gordon Brown has announced that Mr Alan Greenspan, who just retired yesterday as chairman of the US Federal Reserve Bank, will be serving the UK Treasury as an honorary adviser.

Mr Greenspan’s role with the UK Treasury will be on an advisory capacity, and he is expected to provide inputs and advice on global economic issues. While he will be attending regular meetings and be involved in regular exchanges of documents, the former Fed Chairman dies not expect a pay cheque from the British government.

Mr Greenspan, who was given an honorary knighthood in 2002, has recently launched his own economic consultancy firm, Greenspan Associates. He has served as Fed Chair for 18 years, and is best known by his influence in determining the US monetary authorities’ responses to pressing economic conditions, such as the stock market crash of 1987, the 1990s’ emerging market crisis, and the 2000 bursting of the dotcom bubble, among others.

He is the man known to have the most influence in how the world economy turns out, with the Fed’s monetary policy making resulting to increases or decreases in interest rats, which in turn influences inflation, and a host of other economic factors.

Company formation and business solutions experts view Mr Greenspan’s new role in the UK Treasury as a godsend to businesses in the country, particularly small and medium enterprises. Mr Greenspan was able to effectively keep the US economy stabilized during his stint as Fed Chair, and we expect his expertise to be very beneficial to the UK Treasury as well.