News that the UK was finally out of recession did wonders for consumer confidence.

Just last week Nationwide, the UK's largest building society, reported its Consumer Confidence Index had risen for the second consecutive month, increasing by six points to 80 in February.

The index is now at its highest level since January 2008 and almost double the level recorded during the same period last year.

Tracking confidence can be tricky though and when it comes to the economy the UK is by no means out of the woods yet. And many economists are worried that we may even experience a double-dip recession.

The UK is in a real state of economic uncertainty. The budget deficit grows on a daily basis, inflation is creeping up and we are faced with the prospect of higher taxes while spending cuts lurk on the horizon.

Meanwhile the BBC also reported last week that at least 25,000 council jobs in England could be under threat in the next three to five years.

The broadcaster's survey of 49 councils with a combined workforce of 256,000 suggested cuts of around 10%. If applied to all councils this would result in 180,000 job losses.

The prospect of more job losses has not been lost on retailers.

Olympic Holidays is just one travel operator that is offering free holiday redundancy protection for customers booking a package holiday. With Olympic if you are made redundant you can cancel your holiday booking free of charge and be refunded for anything that you have paid.

Holidays aside, the prospect of losing your job is difficult to plan for at the best of times.
But every one of us is vulnerable to suddenly being made involuntarily redundant, even when the country isn't in economic turmoil.

Yet you can help prepare for the unexpected though.

There are three main types of protection products that can help you during difficult times: mortgage payment protection insurance; loan payment protection insurance and income payment protection insurance.

- get a quote that is tailored to your personal needs

The type of plan you choose will be based on your own circumstances.

If meeting your mortgage repayments in the event of involuntary redundancy is your main concern, then mortgage payment protection insurance (MPPI) could be best for you.

If you have loans or credit card commitments, then you may wish to consider taking out loan payment protection insurance. The income from the policy will help you maintain your monthly credit commitments, which can help stop debt from building up.

Alternatively, you may wish to choose how you spend the money yourself. If you want to have an income that you could use as you wanted, then you can take out insurance as an income payment protection insurance plan.

If you think that your job may be at risk then there are other steps that you can take too.

Start looking for new employment

Keep an eye out for another job, whether visiting a recruitment consultant or looking at the jobs section in the local newspaper. Jobcentre Plus has Britain's largest database of job vacancies. You can use the jobs and skills search to find a job that is suitable for you.

Stop spending money and start saving

Cut down on excessive spending. Do you need that gym membership? Do you need a digital TV subscription? Can you trade your car in for a cheaper to run model? Try and run down your debts as fast as possible.

It's never a safe bet to try and second guess what will happen when the Bank of England's Monetary Policy committee meets to decide what it will do with interest rates.

But with the announcement due out at noon today, we take a look at the background.

We may have officially moved out of recession last month but our economy is still in a fragile state, having previously contracted for six consecutive quarters, the longest period since quarterly figures were first recorded in 1955. Indeed, we were the last major economy still in recession with Germany and France coming out of recession last summer and Japan and the USA coming out of recession last year.

Inflation

The UK recovery is all about consumer confidence and the easiest way for the MPC to bolster this will be to hold interest rates steady.

But with inflation also rearing its ugly head again last month could we be in store for a rise in the base rate?  The rise in the Consumer Prices Index to 2.9% in December from  1.9% in November has certainly led some commentators to believe interest rates would have to go up.

Yet minutes from the Bank's previous meeting showed that the spike in inflation was indeed expected.

And then there's the whole issue of quantitative easing (QE) to take into account.

The Bank of England's QE programme swaps high street banks' assets, such as bonds, for cash, so that the banks would lend more money to both individuals and businesses.

But so far all the evidence seems to suggest that the banks are sitting on the cash rather than lending it out. That means the effects on the economy have yet to be seen.

That being the case it's difficult to see what kind of state the UK economy is really in. To do that we need a period without quantitative easing, without the car scrappage scheme and without any changes to VAT to see what's really happening.

While it seems inevitable that inflation will shoot through the 3% ceiling, wage inflation is far from matching that figure. And with a general election just around the corner it seems unlikely that the bank will look to move rates this half of the year.

One thing is certain though and that is that the next move in interest rates will only be up. For borrowers on tracker rates that could be cause for concern. Just last week Santander reported that demand for its tracker deals had plummeted as more homeowners started to look at fixed rates.

"A significant number of people could remortgage in the next six months and among those considering their next deal there is a potential for a fall in demand for tracker deals," Phil Cliff, director of mortgage marketing at Santander said.

"Borrowers have seen a large number of highly competitive fixed deals come on to the market recently and with many commentators predicting a base rate rise this year, homeowners now seem more inclined to play it safe with a fixed rate deal."

To fix or not to fix

Remember, if you are looking to fix your mortgage rate while your existing mortgage lender may be able to help you it pays to shop around.

There are a whole host of deals that will be available to you and many will be better than those on offer from your existing lender.

You should speak to an independent whole of market mortgage adviser to make sure you have access to the best deals available.

- compare fixed rates

- compare variable rates

The overwhelming picture we are getting now is that mortgage lending is increasing, banks' profits are up, and customers are beginning to benefit from a little more competition again.

So why has Skipton decided to invoke the "exceptional circumstances" clause in its contracts with its mortgage customers?

The lender has decided to increase its standard variable rate (SVR) from 3.5% to 4.95%, affecting 64,000 customers over the coming months.

Independent mortgage brokers have said the change would mean that the monthly cost on a typical £130,000 interest-only mortgage would increase by a whopping £157. For customers on a repayment mortgage, this figure would still be as high as £105.

Skipton have said that this is a necessary step as savings account offers from retail banks are becoming more competitive, so driving up the cost of lending.

Chief executive David Cutter said:

"We hope [customers] will understand this is a necessary step that is in the best interests of our membership and the society itself"

However Liberal Democrat treasury spokesman, Lord Oakeshott, said: "This does raise an issue of trust. The Financial Services Authority should have a look,"

With so much talk of a return to massive profits (and bonuses!) in the banking sector, we're inclined to agree.

- remortgage to get a better deal

What do you think? Leave a comment below.

The Office for National Statistics has released Consumer Price Index (CPI) data showing that inflation had risen to 2.9%, increasing from a 1.9% rate in November.

At face value, it certainly seems to be a steep increase given that we are still (just) in a recessionary environment and high inflation is normally associated with an economy reaching the peak of its cycle as consumer spending exceeds economic output.

The usual response from the government is an increase in interest rates in order to curb spending and promote investment; this is of course a worry to those of us on variable rate mortgages or have any other variable-rate debts as we would inevitably see our monthly repayments increase.

I wouldn't say this is a cause for worry though - the 2.9% figure is based on the increase compared to December 2008 when we were in the worst of the credit crunch; instead in December 2009 we were facing the prospect of the VAT increase that hit us at the beginning of this month, so Christmas spending was up in anticipation, as of course were fuel prices compared to 2008.

So all in all, to quote BBC economics editor Stephanie Flanders, this is disappointing but not surprising - and it seems likely that inflation will stabilise in the coming few months.

If not, those on tracker / variable rates will face increases to their monthly repayments (some SVRs are already creeping up) so it may be worth finding out if a fixed rate mortgage would suit you.

It's that time of year when Money Hospital likes to look forward to the year ahead.

And who could blame us. For many 2009 will be a year that they will simply want to forget.

Last year and with the help of one of the country's top futurists, Dr Patrick Dixon, we were pretty spot on with our predictions.

• On the UK economy we said 2009 would be pretty dire – it has been – and that things would start to look up as we entered 2010, which they are.
• We also got it right on the UK housing market – predicting correctly that it would continue to fall sharply but then bottom out, which it has. Although we were a little bit presumptive about the return of 90% loan-to-value mortgage deals.
• Yet we were right in predicting some wonderful mid-year property bargains and the fact that first time buyers would need larger deposits than they ever have done in the past.
• Our predictions for UK employment didn’t fare so well however and unfortunately more people lost their jobs than we dared forecast.
• And we were slightly off the mark with our prediction of the UK entering another period of cheap credit but were spot on when it came to the world economy as over the last 12 months we have indeed lurched "from event to event" and the US dollar is ending the year relatively strong.

But what of 2010? Has old Blighty got the will power to surge through another expected year of gloom or will we all give up the ghost as the world economy continues to teeter on the brink of the unknown?

The UK economy

• January is likely to see a return to life after the traditional Christmas slow down – and with 2010 being an election year it’s going to be pretty exciting in terms of what happens to the economy.
• Once the exact date is known you can expect a raft of manifesto commitments to come out that will have the market on edge until the deed is done and we have a new government in power.
• Whichever party that is the effect on the UK economy should generally be positive as an air of certainty returns to the market.
• With the date of the General Election as yet undecided 2010 could be unique from pervious years in that we could have two Budgets in the one year.
• If the General Election is called in March then there will be just one Budget – but if it is in May, as is more widely expected, that means a Budget from the existing government and a new Budget from the new Government after the election. This is likely to play short-term havoc with the markets.
• The Bank of England will have a large part to play when it comes to the state of the UK economy in 2010.
• At some point the decision will be made to stop the program of quantative easing.
  The precise effect this will have on the UK economy when the Bank decides it no longer needs to print extra money is still unknown and will have economists on the edge of their seats. Again this is likely to cause havoc with already jittery financial markets.

Overall, 2010 looks like it’s going to be an interesting year for the UK economy but what do you think?

The UK housing market

All the evidence seems to suggest house prices will continue to edge up but then because 2010 is an election year they are likely to stall again as the date draws closer, which could be as early as March.

That's because with the Conservatives already firm on their pledge to scrap Home Information Packs you can expect the number of new instructions to estate agents to fall off a cliff as the election date nears. Why pay to market your property when in a couple of months time you may not have to?

• Once the election is over expect more confidence to return to the housing market and as lenders start to lend again and a number of new entrants enter the market the housing market recovery should start to gather pace.
• With the Bank of England potentially having more power over lenders I would expect more controls to limit the growth in new lending and keep a lid on any potential housing bubbles.

So a steady as she goes approach to housing market, but what do you think?

The UK jobs market

• Unforseen disasters aside, I expect the jobs market to improve throughout 2010, but only after the General Election.
• If the recent rise in employers National Insurance contributions can be reversed then the overall prospect for employment will fare much better in the second half of 2010.
• A new government will bring stability and new opportunities for enterprise, investment and job creation.
• Coupled with an increase in lending to small businesses the prospect for employment in 2010 is looking good but much will depend on what’s contained in both Budgets.

What do you think?

The credit and borrowing markets

Underlying credit issues will be a major factor as we head into 2010.

• At some point in the New Year, and maybe even the first quarter, I would expect to see a couple of new niche mortgage lenders to enter the market but neither will have the clout to get the market out of its current rut.
• Their appetite will only be for a tiny slice of an already competitive market and acquired through an extremely limited distribution base.
• 2010 should see a small, modest but healthy increase in total lending but on the back of that the Bank of England will also have the issue of inflation to deal with.
• Christmas spending will make this even harder to determine than normal and should the Bank decide to use an increase in interest rates to counter the inflationary threat we could see the entire new house of cards that we have built come crashing down around our ears.
• And don't forget, that house is still propped up on the stilts of quantative easing.

But what do you think?

The World Economy

Is there another global catastrophe around the corner? Nobody really can be quite sure.

It's certainly a possibility but almost to close to call.

As we have seen recently with Dubai it's still possible for the world to spring surprises on us. That disaster seems to have been averted for the time being but will certainly remain an issue throughout 2010.

We've learnt over recent years that being part of a global economy means that when one country sneezes it’s easy for us all to quickly catch a cold.

2010 will be no different, but what do you think?