Mr Cable defended the Project Merlin agreement but admitted that “new mechanisms” would have to be considered, including the ‘credit easing’ announced by the Chancellor last week.
In an interview with The Guardian Mr Cable said that Project Merlin had been just one response to the “near collapse” of the banking system in 2008.
"I think the Merlin agreement, contrary to some of the criticism, has been useful. But there is a deeper problem and that is why new mechanisms have to be looked at," he said.
However, as recently as last month, the Governor of the Bank of England, Sir Mervyn King implied that Project Merlin’s figures were misleading.
Under the credit easing scheme, the Treasury will buy small firms' corporate bonds, providing cash direct to SMEs unable to gain funds from the banks, with the Bank of England acting as the Treasury's agent.
The scheme in itself could be viewed as an admission that the banks are still not lending properly and its announcement has been jumped upon by critics of Project Merlin as an admission of just that. It also represents a major step by the Treasury and brings it closer to direct involvement in monetary policy.
Mr Cable admitted that there were “procedural issues” with the credit easing policy, such as the small size of the SME bond market, but he believes that securitizing SME loans, where loans are bundled together and sold to investors, cold be one solution.
"It would have to be coupled with measures to ensure that the banks ensure that credit goes where it is supposed to go," he added.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 144 )According to economists at Oriel Securities, consultants in corporate and institutional stockbroking, spending on essentials such as food utilities, petrol and mortgages accounts for over 7 per cent of household income. Ten years ago the spending on such items was more than 10 per cent less.
The rise in the basic cost of living has come despite a sharp fall in mortgage rates to their lowest level on record. Mortgages are households' second-highest monthly expenditure after food,
The average mortgage rate is 3.43 per cent, but the size of households' debt burden means that this accounts for 17.7 per cent of disposable income.
Darren Winder, Oriel's UK economist, said that interest rates will have to remain low for the forseeable future if households are to deal with their debt. "Debt is crowding out growth in the economy," he said. "Households need more cash."
The analysis come as householders surveyed reveal that over half of them are considering eating into their savings to meet mortgage payments or just to pay for other essentials such as food and heating.
Oriel's analysis estimates that the average household spends £2,091 a month on essentials, puts £162 into savings, and has just £854 left for "discretionary", that is non-essential items, which could be anything from holidays, to books, to clothes. Adjusting for inflation, the last time discretionary spending was so low was in 2000.
Household spending accounts for 60 per cent of GDP and this has contracted by 1.7 per cent in the last year as householders feel the economic squeeze. According to Mr Winder, the biggest impediment to an improvement in cash flow would be a rise in interest rates.
However, the Bank of England’s Monetary Policy Committee (MPC) has indicated that interest rates are likely to remain at the historic low of 0.5 per cent until 2014.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 4 views ) | permalink |
( 3.1 / 167 )The Government announced the start of a consultation yesterday, which could see small businesses saving more than £600m in audit fees every year. The consultation on Audit Exemptions and Change of Accounting Framework sets out plans to allow more small companies and subsidiaries of larger ones to change their accounting framework.
Current EU rules mean that to classify as ‘small’ for accounting purposes, a company must comply with two out of three criteria relating to their turnover, balance sheet total and number of employees. However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria.
Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving them an estimated £206m per year.
The Government is also proposing to introduce legislation in 2012 to exempt most subsidiary companies from mandatory audit, provided their parent is prepared to guarantee their debts. Savings are estimated at £406m per year.
These moves are part of the Government’s wider focus on cutting red tape and reducing unnecessary burdens on business, in particular addressing the impact of European legislation.
The Minister responsible for Corporate Governance, Edward Davey, said:
“Over time, both the volume and costs of reporting requirements for UK companies have increased, and businesses have stressed to us the need for more flexible and targeted rules. Tackling these problems now will save UK SMEs millions every year and give them more opportunities to expand and grow their business.
“Audit is very valuable for many companies. But the proposals we’ve published today are aimed at removing EU gold plating and freeing up enterprise, which ultimately benefits the whole UK economy and will help put us on the path to long-term, sustainable growth.”
The consultation closes on December 29th 2011.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 4 views ) | permalink |
( 2.9 / 135 )The UK economy only grew by 0.1 per cent in the second quarter of this year, which was less than the 0.2 per cent estimated by the Office for National Statistics (ONS). And output from the service sector grew by 0.2 per cent in the quarter, compared with the previous estimate of 0.5 per cent.
However, since the figures actually show some growth, small though it might be, the Treasury has said that it will continue with its deficit-cutting measures.
A Treasury spokesperson said: "While the UK cannot insulate itself from what is happening to our major trading partners, with financial turbulence in the eurozone and a weaker outlook for global growth, the economy is still growing and this week's survey data for the manufacturing and service sectors are consistent with continued expansion."
Critics point to past figures, however, and given the 0.5 per cent contraction in the final three months of 2010, the new figures actually reveal that the economy has remained static for the past nine months.
Ed Balls, the shadow Chancellor, said: "These deeply concerning figures show the British economy has stagnated since the autumn of last year, well before the eurozone crisis... They show things are even worse than we thought."
Alan Clarke at Scotia Capital said: “What we believe is of more significance, not least for monetary policy, is where GDP growth has been over the last year and where it is going from here. The Bank had banked on some chunky upward revisions to the last year or so and what we have got is the opposite – slight downward revisions!
Some analysts now believe that the pressure is on the Bank of England to back calls for another stimulus into the economy, which could well mean further quantitative easing. Others think that the Bank will hold on until after the publication of third quarter GDP data later this month.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 4 views ) | permalink |
( 3 / 148 )For the first time since the survey began 12 years ago, stress is the most common cause of long-term sickness absence for employees, according to this year’s Chartered Institute of Personnel and Development (CIPD) Simplyhealth Absence Management survey.
Apparently most of the stress is caused by worries about job losses, with particularly acute stress levels in the public sector, where half of employers reported an increase in stress-related absence over the past year.
Other causes of stress are tougher workloads, having a ‘bad’ boss and money worries leading to problems at home. All these add to a “vicious circle” of workers’ woes according to the survey.
However, the report praised many workplaces for increasing their focus on worker wellbeing despite squeezed budgets. Counselling services were being offered by almost three-quarters of the 592 employers surveyed.
But CIPD adviser Jill Miller seized on evidence of the downturn's repercussions for mental health to urge employers to do more to reassure nervous staff.
"Stress is a particular challenge in the public sector where the sheer amount of major change and restructuring would appear to be the root cause," she said.
For manual workers stress is now level with acute medical conditions as a cause of absence and has overtaken musculoskeletal problems to become the main cause of long-term absence.
UK employers estimate that they lose an average £673 per employee per year because of time away from work for reasons ranging from serious illness to stress and family responsibilities, according to the report.
David Frost, the former head of the British Chambers of Commerce, is leading a review for the Government on what the country can do to reduce absence rates. The review was commissioned as part of the Government’s drive to create the right conditions for economic growth.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 4 views ) | permalink |
( 3 / 131 )
Random Entry
