Compared to September 2008, when the British banking industry began its economic decline, the UK economy is 2.8 percent smaller and 4 percent smaller than the economic peak in March 2008.
The analysis by ONS has shown that the contraction in banking activity is accounted for one percentage point of the 2.8 percent fall.
Banks are only accountable for 5.1 percent of the national output; however, they are to blame for 35 percent of the national decline, making the impact the banks have on the economy completely out of proportion.
The banking industry has contracted by 2.6 per cent this year – this follows a 5.1 percent fall in 2010 and 7 per cent decline in 2009.
Chancellor George Osborne said: "While our economy as a whole has grown by 2.5 percent, the financial sector has shrunk by 4 percent. Take the financial sector out of the equation, and economic growth in the rest of the economy during the recovery has actually been above its average rate of the last two decades."
Philip Shaw, economist at Investec, said that in reality the damage was larger because of the effects on households and small business from restricted finance.
"For whatever reason, you've also got tighter lending conditions for households and small business now... the lack of credit is acting as a drag on the economy,” he said.
In comparison to the drag UK banks has brought onto the economy, retail has continued to provide support although the sector has been hit by a lack of consumer confidence. The industry, which accounts for 5.2 percent of total national output, grew 1.4 percent in 2010 and so far this year is up by 0.2 percent.
formation, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 10 views ) | permalink |
( 2.9 / 941 )The Government has launched a new drive to help families who are blighted by poverty and crime with the launch of “social impact bonds”.
Government Ministers are encouraging private investors, philanthropists, charity group and other groups to donate money to the bonds, which will be used to help break the cycle of deprivation and would therefore not cost the taxpayer anymore money.
The taxpayer already foots a bill of £4bn a year for assisting 46,000 of the most deprived families in the UK.
Investors who support the bonds will get paid a return for any of the projects which are a success.
The scheme will be trialled in Hammersmith, Fullham and Westminster in London, and Birmingham and Leicestershire, with an aim to raise up to £40 million.
The scheme has been launched after Ministers became concerned that the current focus on treating the problems of individual cases creates a costly cycle of deprivation which can be impossible to break. Therefore, it is hoped that with the use of social impact bonds, several problems will be intensively tackled in a family setting.
Civil Society Minister Nick Hurd, said: "We must not be afraid to do things differently to end the pointless cycle of crime and deprivation which wrecks communities and drains state services.
"Social impact bonds could open serious resources to tackle social problems in new and innovative ways."
Mr Hurd went on: "We want to restore a stronger sense of responsibility across our society and to give people working on the front line the power and resource they need to do their jobs properly.
"Social impact bonds could be one of many Big Society innovations that will build the new partnerships between the state, communities, businesses and charities and focus resources where they are needed."
The trials are expected to be up and running next year.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 13 views ) | permalink |
( 3 / 797 )A Government Minister has defended a deal with the Swiss authorities that will see UK tax evaders with hidden overseas accounts targeted. The deal will see the Treasury recoup more than £5bn in unpaid tax from Britons with Swiss banks accounts.
The deal was signed between the UK and Switzerland last night. The account holders’ identities will be kept secret but their money will be taxed for the first time, at up to 34 percent of the sum hidden.
Treasury Minister David Gauke has defended the move, calling the deal ‘historic’.
In 2013, the Swiss banks will hand over a one-off levy of more than £5bn to settle past tax liabilities of Britons with money hidden away in the country’s discreet banking system.
Switzerland will then impose a withholding tax of 48 per cent on income such as interest and 27 per cent on capital gains such as shares rising in value.
Dave Hartnett, the permanent secretary for tax at HMRC, signed the agreement in Zurich.
"The world has changed for tax evaders," he said. "A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion."
Chancellor George Osborne said: "We will be as tough on the richest who evade tax as those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over."
There will be much criticism over the ongoing anonymity that the deal allows.
David Gauke told the BBC: "There was no prospect of the Swiss abandoning bank secrecy altogether.
"There is no political appetite for doing that and we also have to remember with Switzerland, with something like that, you would actually need to have a referendum on it, so there was no prospect of that happening.”
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 11 views ) | permalink |
( 3 / 814 )Concerns are being raised over the Government’s economic growth strategy following Barclay Capital’s claiming that business investment in the UK is heading for a record low.
Despite encouragement from the Government for corporate activity, Friday’s figures are expected to reveal that companies are not spending. It was hoped that by slashing employers’ National Insurance contributions and corporation tax, business owners would feel more comfortable to spend more.
Following a brief bounce back to growth following the fall from 13 percent to 10 percent of Gross Financial Expenditure during the recession, BarCap claim that spending is now virtually at its record lowest level and is therefore heading back down.
However, in contrast to these reports the Office for Budget Responsibility expects business investment to expand by 6.7 percent this year and contribute a third of total growth. Trade is expected to deliver the bulk of the rest.
In May, Deputy Prime Minister Nick Clegg called on businesses "to do your bit, too ... expand and invest" to secure the recovery.
Chris Leslie, Labour's Shadow Treasury Minister, said: "The Chancellor banked on business investment and exports to counter his cuts but his reckless plan isn't working.”
The Department for Business, Innovation and Skills said: "The Government has set out an ambitious path for growth ... creating the right conditions for businesses to start up, invest and grow."
David Kern, chief economist at the British Chambers of Commerce, explained that business will only start to see improvements to growth when confidence in both consumers and exports improve.
"Although business investment will eventually come back, in the short term there is no great argument as demand is going to be low," he said.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 11 views ) | permalink |
( 2.9 / 827 )Spot gold soared to an all-time high above $1,900 an ounce in the Eastern markets this morning, scoring a record top for a fourth consecutive session and aiming for its biggest monthly rise in 29 years, amid growing concerns for the safety of the global economy.
And some analysts say this could help gold vault $2,000 an ounce within the coming weeks if risk aversion on financial markets gains momentum.
"Everyone says that gold has been rising too fast, beware, beware, beware!" said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong. "But there is no sign of gold prices turning to point south."
"We are not hearing much good news out of Europe or the United States," said Darren Heathcote, head of trading at Investec Australia.
"The picture looks pretty bleak in the short term... For the time being investors are happy looking at gold as safe haven in these troubled times, and will continue to do so until we see something positive and sustainable."
Global analysts say that demand for gold is also being driven by speculation that the US Federal Reserve may announce new stimulus measures in a bid to boost the economy.
Central bank governors from across the globe are scheduled to gather for their annual meeting at the Jackson Hole summit later this week amid speculation that Ben Bernanke, the governor of the US central bank, may announce fresh stimulus measures in his speech at the summit.
Colin Whitehead of Fat Prophets said: "If they push through with more stimulus, gold could rise even further."
He explained that a fresh stimulus package would mean that the US will have to print more money to boost liquidity in the markets, which in turn could see the US currency weaken further.
"The underlying driver of gold prices is the depreciating US dollar value, so the more money they print, the stronger gold gets," Whitehead added.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 10 views ) | permalink |
( 3 / 613 )
Random Entry
