In a research paper, NIESR Director Dr Andrew Armstrong said: “Deeper and more fundamental reforms of the governance of banking and funding markets are required,"
"There is a strong case for full separation between retail and wholesale banking. Full separation, rather than just ring-fencing as proposed by the ICB, would have a better chance of addressing the severe corporate governance issues in banks," he added.
And NIESR added that there is a strong case for a full separation of companies' retail and wholesale banking activities, which is an option the UK has decided against.
In September, the ICB published its final report on reforms for the banking industry, which is dominated by the “big four” of Barclays, HSBC, Lloyds and Royal Bank of Scotland.
The ICB said banks should form separate subsidiaries for their retail and investment activities under the same parent holding company, and establish a ring-fence to limit the extent to which a bank can use money in its retail arm to prop up its investment bank.
The ICB also called on UK banks to store up billions of pounds in extra capital, but gave them until 2019 to implement the new regime.
However, earlier in the week, there was concern that UK banking reforms could be illegal under EU law, which could take the debate to a whole new level.
The revelation that EU law could disrupt the government’s flagship overhaul of the banking and regulatory system will add fresh impetus to calls for a renegotiation or withdrawal from the EU.
For more information, please visit www.harris-lipman.co.uk
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( 3 / 161 )With the state pension age for men and women set to increase to reach 66 by 2020 for those born before April 1960; and 68 by 2044 for those born after April 1960, it’s likely that very few new workers will have considered planning for retirement.
However, from October 2012 UK based companies will be legally obliged to start enrolling staff into workplace pension schemes, which will have an affect on workers salaries – with some experts concerned that this will push millions of low incomes workers further into debt.
Under the proposed changes workers who don’t opt out of the auto-enrolment pension, will be required to make a contribution to the scheme each month – this contribution will start at 1% of their salary.
But the Consumer Credit Counselling Service (CCCS) are warning that even this small amount could have an affect on personal financial situations; with their research showing that a £50 reduction in monthly income amongst those that are financially vulnerable would double the number of people with “no money left” to live off.
The CCCS believe that auto-enrolment onto pension schemes will lead to increased financial pressure, with low incomes workers being left struggling to pay off existing debts.
These comments are contained in a report by the CCCS into the UK’s spiralling debt crisis, which shows that almost a quarter of households within the UK have already fallen behind with payments or are “at risk” of doing so.
A spokesperson for the Department of Work and Pensions (DWP) has moved to quell the worries by stating that those earning over £7,475 per annum will be auto-enrolled onto the pension schemes, meaning those on very low incomes will be exempt.
If you’re concerned about what these changes will mean to your finances or if you’d like advice on pensions, contact the accountant London at Harris Lipman today.
For more information, please visit www.harris-lipman.co.uk
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( 3 / 149 )According to data published yesterday by the Office for National Statistics (ONS), the UK economy grew by 0.5 per cent in the third quarter of this year, compared with a 0.1 per cent expansion in the previous quarter.
And service industries output jumped by 0.7 per cent in the period, up from 0.2 per cent. Services accounts for more than three quarters of the nation’s total GDP.
The overall growth was better than expected, as most economists had predicted a figure of between 0.3 and 0.4 per cent. However, growth is still below its long-term average and it is feared that the GDP was just playing catch-up after the previous quarter, which as hit by one-off factors such as the Royal wedding.
The statement from the ONS said “As with 2010 Q4 and 2011 Q1 (affected by the bad weather in Q4), it may be wise to look at 2011 Q2 and 2011 Q3 together, rather than separately, On that basis, GDP has grown by 0.6 per cent in the last two quarters and by 0.5 per cent in the last year.”
Notably, the ONS says that there is ‘no evidence’ that the riots in August had any significant impact on GDP during the third quarter.
David Kern, chief economist at the British Chambers of Commerce, said of the data, “The figures for Q3 are better than expected, though they follow particularly disappointing 0.1 per cent growth in the previous quarter, which was affected by special factors.”
He went on to say: “Over the last year growth has been relatively weak at only 0.5 per cent, but it is reassuring that fears of a recession have so far been unfounded. There are still risks ahead. Early indications from the fourth quarter are concerning, and if the situation in the Eurozone worsens there could be serious adverse repercussions for the UK.”
For more information, please visit www.harris-lipman.co.uk
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( 3 / 163 )According to data released today by the Bank of England, lending to small businesses fell by over 5 per cent in August against an overall decline in corporate credit of 3.4 per cent.
Considering that such businesses make up 60 per cent of the private sector workforce, employing almost 23m people, the news will not please the Government, which yesterday pledges £1bn to help kick-start the economy.
And the European Investment Bank (EIB) is tightening a credit line for small businesses that enables high street banks to offer discounted loans, although the banks says that it still wants to lend to the UK’s small business sector.
Bank sources report that the EIB is changing its terms and making less money available, which is a worry when it has been an important source of mall business loans since 2008.
However, Simon Brooks, the EIB’s Vice President said that he is putting pressure on the UK banks to pass on its discounted lending rate.
“We are always keen to make sure that the financial advantage that we bring to the deal reaches the SME,” he said.
The EIB says its funding has supported discounted loans to 7,500 UK small and medium-sized businesses in the last four years. The average loan, which has to be used for investment and not working capital, comes in at around £400,000.
Mr Brooks went on to say that the EIB would maintain “a good level of commitment” to SME lending this year but is less sure of 2012, given the condition of the European economy.
“Clearly things have not returned to normal as quickly as we hoped and expected and we continue to maintain a strong level of loans for SMEs for 2011 and beyond. Whether it will be quite the level of 2010 remains to be seen but we are not about to pack up our bags,” he said.
For more information, please visit www.harris-lipman.co.uk
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( 3 / 158 )The Government has announced that it is on an “all-out mission” to kick-start industry amidst claims that it has been too focused on reducing the country’s deficit and not doing enough to boost growth.
In a newspaper interview, Chancellor George Osborne wrote: “In terms of future productivity, this infrastructure deficit is as serious as our budget deficit. In terms of job creation today, getting construction projects off the ground is critical.”
“Too often projects get hobbled by planning restrictions, funding blockages or regulatory burdens. So this autumn the government is on an all-out mission to unblock the system and get projects under way.”
With plans to create 35,000 jobs in the initiative, more than 100 projects should attract further investment from private enterprise to the tune of around £6bn.
The funds raised will be focused on small companies and those in the manufacturing supply chain and will benefit every sector from telecommunications and services to electronics and automotive.
There are also plans to build two new power plants in Ferrybridge and Thorpe Marsh in Yorkshire, which will create 1,000 new constructions jobs and news has been announced that BT will complete its roll-out of superfast broadband by 2014, thus generating work for 500 more engineers.
As well as creating them, the scheme will help to safeguard more then 200,000 jobs with more infrastructure announcements expected over the coming months.
Prime Minister David Cameron has said that the eurozone crisis was having a “chilling effect” on global growth and warned that there were “no short-cuts to success.”
"The eurozone crisis has had a chilling effect on major economies around the world, and has added to the unprecedented pressures facing the global economy," he said.
"But, in spite of the difficulties, I am confident that we can both resolve the crises at hand and come through them with an economy that is stronger and fundamentally fairer."
For more information, please visit www.harris-lipman.co.uk
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