On balance, the UK government would support this idea but is less than enthusiastic about some of the other banking union proposals on the table and Chancellor George Osborne has today spoken out against power being removed from the City of London. He stressed that safeguards would have to be in place to protect the UK’s financial sector if such moves towards a banking union were implemented.
One proposal could see Brussels being able to parachute n a “special manager” to run an ailing bank; another is the idea of "intra-group support agreements", under which banks with operations in several countries across the eurozone would be allowed to transfer resources from one part of the group to another in times of crisis.
Speaking this morning on Radio 4’s Today programme, Mr Osborne said: "There is no way that Britain is going to be part of any eurozone banking union. I think Britain will require certain safeguards if there is a full blown banking union."
He also urged the eurozone to use its bailout fund to recapitalise Spain's banks but said that he did not know how swiftly eurozone leaders would reach an agreement on the issue, as he was "not directly party to these discussions".
However, he said: "I am optimistic they are working hard on solution and I think a solution is coming.”
The Chancellor also stressed the UK government's commitment to a referendum on Europe in the event of a "significant transfer of power and sovereignty" to the EU but said he did not believe that would necessarily happen as a result of the current negotiations.
For more information, speak to London Accountants Harris Lipman
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( 3 / 150 )Economists are divided over whether or not the Bank of England’s Monetary Policy Committee (MCP) will maintain or increase its quantitative easing (QE) programme at the monthly policy meeting to be held over the next two days.
The consensus is that interest rates will be held at 0.5 per cent, where they have been since March 2009, but while some economists think that the QE programme will remain at £325bn, others predict that a further £50bn will be released in response to the worsening economic outlook highlighted by poor PMI figures on Friday.
Last month’s minutes from the MPC meeting revealed that several members were close to voting for more QE. An extract from the minutes said that the decision not to expand the QE at this meeting was “finely balanced” for several members and that “there was a case for injecting further monetary stimulus”.
Howard Archer, Chief UK & European Economist at IHS Global said: “On balance, we lean towards the view that the Bank of England will hold fire on more Quantitative Easing at its June meeting, but we certainly would not rule it out.
“Much could depend on the May purchasing managers’ survey for the dominant services sector. And even if the Bank of England does hold off from more QE next Thursday, it is looking ever more likely that it will go back down that road before long,” he added.
And Michael Saunders of Citi commented: “We continue to expect that worsening economic prospects will prompt the MPC to expand QE markedly further – to a total of about £500bn – and that the next instalment will occur soon. On balance, we forecast the MPC will expand QE by another £50bn at the June meeting."
For more information, speak to London Accountants Harris Lipman
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( 3 / 131 )The British Chambers of Commerce (BCC) has slashed its forecast for economic growth for 2012.
The BCC have said that as a result of the 0.3 percent fall in GDP during the first quarter of 2012 coupled with continued troubles in the Eurozone will keep GDP growth in the UK at minimal levels for the remainder of this year.
As a result, during the latest Quarterly Economic Forecast report from the BCC, which follows official figures published earlier this year that revealed the UK has fallen back into recession, the group – who represent over 100,000 businesses – have cut their forecast from 0.6 percent to 0.1 percent.
However, they have increased their economic forecast for the following year from 1.8 percent to 1.9 percent; showing a glimmer of hope for the economy.
Following the release of the latest data, the BCC director-general, John Longworth, called for more “enterprise friendly” action from the government, as well as the creation of a business bank to provide capital for small businesses.
Mr Longworth has also warned that without action the economy will “bumpy along the bottom” for longer than expected, adding: “We need growth and we need it now.
“If the government works together with the private sector to create the right environment over the long term, we'll be able to prove once and for all that bold businesses can propel us forward out of stagnation and firmly on the road to recovery.”
For more information, speak to London Accountants Harris Lipman
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( 3 / 150 )HMRC have shifted their stance in regard to RDR adviser-charging rules, meaning implementation costs will no longer incur an unauthorised payment charge; although concerns still remain about the impact that providing “wider pensions advice” will have on a member’s tax free cash.
Earlier this month it was widely anticipated that HMRC would rewrite their adviser-charging guidelines following concerns raised by insurers that including implementation costs could result in a fifty-five percent unauthorised payment charge.
Now, the rewritten guidelines states that implementation fees can be included in the overall cost of advice and so will not incur an unauthorised payment charge, under adviser-charging; although uncertainty still remains over how consultancy-charging, which is not specifically mentioned in the guidelines, will be applied for group schemes.
Along with shifting their stance, HMRC’s rewrite of the guidelines has also created a distinction between an adviser charge relating to lifetime annuity advice and a charge relating to “wider pensions advice”, such as drawdown.
As part of the new proposed rules, a quarter of the costs relating to wider pensions advice would be taken from the client’s tax-free cash while any costs for advice on the lifetime annuity would only be taken from the member’s remaining fund.
Following the rewrite of the guidelines, a HMRC spokesman said: “The draft guidance was sent to the ABI for review and we are currently considering its comments.
“We are expecting to make some changes to the draft guidance as a result of the helpful feedback we have received.
“HMRC will consider as a separate matter whether guidance is needed about commercial payments for consultancy- charging by a non-occupational scheme not normally being regarded as unauthorised payments made to or in respect of the member.”
For more information, speak to London Accountants Harris Lipman
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( 3.1 / 143 )Barclays bank has hit back at the government for singling it out for criticism over using schemes that were intended to avoid substantial amounts of tax, despite voluntarily disclosing its use of two such schemes to HM Revenue & Customs. (HMRC)
The Government took the highly unusual step of introducing retrospective legislation back in February, saying it would close two "aggressive tax avoidance schemes" used by Barclays and applied a new tax to a bond buyback the bank did in December. This could see Barclays having to pay back over £120 million.
Barclay’s chief executive Bob Diamond said in a letter to the Treasury Select Committee dated May 15th but only released this week: "The way in which this situation was handled seems to us to have been completely unwarranted."
Mr Diamond's letter went on to say: "We were ... surprised to be singled out in the way that occurred; not only through a retroactive change of law, but the effective naming of Barclays ... accusing the bank of entering into a 'highly abusive' scheme".
"Unnecessary damage was placed on Barclays reputation just at a time when the focus should be on rebuilding confidence and accelerating growth, not undermining it," Diamond added.
Tax avoidance is not illegal, of course, and Barclays designed the two schemes, one involving not having to pay corporation tax on profits made when buying back its own IOUs, the other involving investment funds claiming that non-taxable income entitled the funds to tax credits that could be reclaimed from HMRC and disclosed both to HMRC under rules that have been in place since 2004.
However, the timing is embarrassing, with the letter being published less than a week after the bank held its “citizenship day”, when it set out its commitments on matters such as tax avoidance.
For more information, speak to London Accountants Harris Lipman
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