Global Economy Lights are flashing, says PM

“Red warning lights” are again flashing over the state of the global economy, the Prime Minister has warner.

Speaking after the G20 meeting of world leaders, David Cameron said a “dangerous backdrop of instability” threatened Britain’s recovery, and we should stick to our long-term plan”.

In a Guardian article, he warned of the impact from conflicts, low growth and a eurozone “on the brink” of another recession.

He said: “The Eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too.

“Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down.”

By contrast, the Bank of England has forecast that the UK economy will grow by 3.5% in 2014, remaining resilient in the face of the “subdued world demand”.

But it its latest update last week, it also warned that there were risks from the global economic situation and it revised down its forecasts for UK output next year.

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DEBTS SOAR FOR OVER 55’s

Recent insolvency statistics make grim reading for the older generation.

In the second quarter of 2011 the typical debt level for the over 55’s was just over £17,000. By the second quarter of 2012 the figure is now nearly £25,000 – an increase of over 30%.

Tim Corfield commented “Yes, the figures are worrying. Research also shows that the cost of living for pensioners has risen by 20% due to food inflation and the increasing cost of household utilities. This is the wrong time of life to have financial problems. Let’s hope the insolvency and debt industry can make a better job of assisting these people than their lenders ever did”.

Tim Corfield - August 2012

WHY THE HURRY TO PRODUCE GDP FIGURES IF THEY COULD BE MISLEADING?

We are now being told that better than expected construction figures may well mean that the second quarter GDP figures published last month will be revised upwards. The Office for National Statistics (ONS) reported last month that the economy shrank by 0.7% and based on this more recent data this may well now be revised upwards to 0.5%. 

The initial estimate was based partly on the assumption that construction output fell by 5.2% but now more data has been analysed, the ONS believe that the reduction was only 3.9%.

The ONS admits that much of the data gathered for the second quarter was a ‘best guess’. It bases its initial estimates solely on a monthly survey of 44,000 businesses covering the production, manufacturing, services, retail and construction industries. It polls firms of all sizes, but admits that those with fewer employees are less likely to be included – meaning that small fast growing businesses would be excluded from the calculation.

By the time the preliminary estimate is released, the ONS will have around 70%to 80% of responses back from its survey covering the first two months of the quarter (April and May) but for June the responses received is only around 20% to 30% and the ONS fill in the gaps based on historical data and a lot of assumptions.

The ONS admits that the bad weather and extra bank holiday made the estimate ‘more challenging’! These figures are unlikely to be fully revised for up to five years by which time who will care! Are we really to believe that Spain’s economy declined by 0.4% while the UK’s economy was down by 0.7%?

Tim Corfield commented “Given the political turmoil that these figures can produce and influence on business wouldn’t it be better to hold fire with producing figures that could indicate the wrong trends? Sending out the wrong signals could be damaging for the economy.” 

Andrew Sentence (a former member of the Bank of England’s monetary policy committee) has called for the ONS to include broader data including employment information. He commented “What the ONS is not very good at is taking a common sense view of economic data. They need to be much better at cross-checking technical data to give a true picture.”

Written by Tim Corfield

http://straightalkdebt.com/

OFT Announce Revised Debt Management Guidance

The Office of Fair Trading (OFT) has estimated commercial fee charging debt management companies (DMC’s) make £250 Million a year from over-indebted clients.

Since the last review issues have continued to be raised over advertising and marketing practices as well as the quality of advice given by these firms.

Following the OFT’s earlier review, 129 warnings were issued to DMC’s while a further 67 warning letters were sent out. The OFT has since claimed 87 firms have left the market either voluntarily or due to enforcement action.

However, there remains concern over the quality of the management advice in this sector where there are “vulnerable consumers”.

The new guidance looks to clamp down on firms making “false or misleading claims” about the business such as operating websites which appeared to be run by a Government of a charitable body.

Any “unfair or improper practices” could lead to the loss of a firm’s consumer credit licence. Among the practices identified were the sending of unsolicited text messages, email or voicemails and the issue of inappropriate financial incentives to staff giving debt advice.

The latest guidance has been welcomed by the two leading trade associations for the industry: The Debt Manager Standards Associate (DEMSA) and the Debt Resolution Forum (DRF). The pair together represent some 46 DMC’s and aim to promote professional standards in the industry.

Tim Corfield

http://straightalkdebt.com/ 

SHOWDOWN ON AUSTERITY GATHERS PACE

Germany and France have moved towards a bruising and potentially destabilising showdown on how to tackle the European debt crisis.

Francois Hollande has made a presidential pledge to re-open the EU’s financial pact. Angela Merkel said in response “the fiscal pact has been negotiated; it has been signed by 25 Government leaders, and has already been ratified by Portugal and Greece. Parliaments all over Europe are about to pass it. Ireland has a referendum on it at the end of May. It cannot be negotiated anew”.

There is a backlash across Europe against austerity and a greater emphasis on boosting growth and job creation. If Hollande wins the French presidency and also secures a parliamentary majority in June he and his team are committed to not ratifying the EU pact unless it is modified to include growth boosting policies. Technically, the pact can come into force without French ratification but this is politically inconceivable.

The Dutch Government has collapsed recently over a failure to agree on spending cuts and comply with the new rules.

Spain’s credit rating has been revised downwards recently because the austerity is defeating the chances of economic growth.

The Romanian Government has recently been ousted in a vote of no confidence triggered by opposition budget cuts.

The Czech Government is fighting for its survival.

Herman Van Rompuy said “Over the past two and a half years the EU has had to react to the economic and financial crisis. This has not been easy and lead to some frustration at times and strains. We have had to deal with the urgent pressures of the sovereign crisis. The emphasis should now shift increasingly to measures that can boost growth and jobs.”

Hollande responded robustly to Merkel “it’s not Germany that decides for the whole of Europe”.

Tim Corfield

EU TO RAISE CAPITAL RESERVE RATIO FOR BANKS

Europe’s biggest banks could see the amount of capital they are required to hold in reserve more than double. Current plans due to be fully implemented within the next seven years could require banks to hold a minimum of 7% of core capital to act as a buffer against potential losses. However, the EU is now considering requiring the banks to have as much as 17% in reserve in an attempt to avoid another Lehman style bank collapse. The Treasury is preparing a White Paper on new capital rules for UK banks that is expected to be published soon. It will pave the way for putting into law the recommendations of the Independent Commission on Banking for restructuring the UK banking industry. Under the rules, British retail banking businesses would be required to maintain a minimum core capital ratio of 10%, to ensure that retail deposits are not put at risk in a future crisis. http://straightalkdebt.com/

COMPANY INSOLVENCIES ON THE INCREASE

Company insolvencies were up 7.4 per cent during the final report of last year in England and Wales compared to the same period in 2010.

Overall, there were 4,260 compulsory and creditors’ voluntary liquidations (CVLs) – 0.4% increase on Q3 (three months ended 30th September 2011) according to statistics released by the Insolvency Service.

Compulsory liquidation recorded the biggest increase at 1,389 – any increase of 14.1% on Q3 and 16.1% on the same period from the previous year.

The number of CVLs recorded a 5.1% drop on Q3 yet this was still 3.4% up on the same period in 2010.

Frances Coulson, President of R3 said “We have known for a while that many businesses are surviving but not thriving, operating as “zombies” and eventually some will have to fail. This is certainly the calm before the storm. In fact if the economy is to recover, we must see some businesses fail to allow viable ones to thrive”.

The statistics indicate a beginning of a change in the mentality of lenders. It appears that this may be the beginning of a reduced appetite to continue to support stressed companies.

Unpaid invoices costing UK economy £1.4 trillion

Research released today from Tradeshift finds that 13% of invoices issued by UK
small businesses remain unpaid every year, causing a £1.4tr black hole in the
economy. At a time when life is tough for many small businesses, just under a third
(30%) said cash flow issues caused by unpaid invoices could force them to lay off
staff and 20% said they would have to turn down business or take out a business
loan.

The responses to the Tradeshift survey from UK small business owners and financial
decision makers are revealed in a report entitled “Getting Paid”, available to
download from shiftbusiness.net/getting-paid. It found that small businesses issue
528 invoices on average every year and yet 69 of these remain unpaid, totaling 177m
invoices.

In addition to these unpaid invoices and, despite the majority of small businesses
having payment terms of less than 60 days, 39% of all invoices issued are not paid
on time. When asked about the reasons for non-payment of invoices, 34% put slow
payers at the top of the list, followed by companies going out of business (24%),
disputes over work (19%), cash flow (11%) and administration (9%).

The resulting administrative burden of chasing these payments requires an average of
25 employee hours per week spent managing, processing and chasing invoices. Small
business owners estimate that 76% of this time could be saved if all invoices were
managed online, but only 28% said they currently handle invoices in this way. This
burden is magnified by the fact that over a third of invoices are still received by
post.

Mikkel Hippe Brun, Co-founder and Chief Strategy Officer at Tradeshift, an online
platform that aims to revolutionise e-invoicing by eliminating charges for small
businesses, sees this as a dangerous trend that is crippling UK companies: "For
centuries, the invoicing process has held small, innovative businesses at the mercy
of others with a clear disregard of agreed payment terms and damaging cultural
precedents. This is 2012 and there's no reason why invoicing shouldn’t undergo a
revolution that fits the modern times in which we live rather than acting as a noose
waiting to drop around the necks of the UK’s army of small businesses.”

The full report – available to download from shiftbusiness.net/getting-paid –
contains the full research as well as tips for small businesses looking to reduce
the burden of unpaid invoices. Small businesses can use Tradeshift’s e-invoicing
platform free of charge. For more information, visit www.tradeshift.com.

Experian reports rich getting poorer

Experian has reported a massive 100% increase in the level of borrowing amongst high
income families in their 30s and 40s over the past three years, with many citing the
rising cost of living as the main cause.

Over a third (33%) of high income families are now reliant on overdrafts of over
GBP1,000 to keep the family finances ticking over between pay-days, compared to just
15% in 2008. This is according to the results of a three-year survey commissioned by
Experian, the global information services company and the largest credit reference
agency in the UK.

The report reveals a high proportion of these families (52%) are regularly borrowing
money against their overdrafts resulting in expensive repayments because of the high
rates of interest charged on overdrafts compared to other credit products.

47% of UK adults have applied for additional credit in the past two years, with some
borrowing from sources which charge relatively high interest rates, potentially
adding to their financial pressures and risking missed repayments and a chequered
credit history.

Despite this, nearly two-thirds of high income families are actually optimistic
about their financial future, with 61% believing their financial situation will
improve in the next 12 months, despite dipping in to their savings and relying on
their overdrafts to make ends meet.

When many are borrowing to make ends meet, Experian highlights that many people are
missing out on the best rates because they're unaware of the benefits of managing
their credit report with a service such as Credit Expert.

Brits are getting better at accessing and managing their personal information that
lenders see which is inevitably resulting in them securing better borrowing rates.

Making the right decisions where borrowing is concerned is vital, and getting a good
credit rating is one of the ways you can give yourself the best chance of finding the

deals you want.

Peter Turner, Managing Director at Experian Interactive said: "UK families often
rely on their overdraft to get by, but that is not always the best option. Many of
us choose to borrow, but it's where you borrow from that makes all the difference.
The current financial climate is tougher than ever and seeing your credit report
could help families manage their credit better, as well as helping them plan for
their financial futures."

Credit Expert from Experian shows customers what a lender sees in their name. Every
time someone applies for credit or a loan, that request is recorded. Multiple
requests on borrower's credit history can look as if you are over-extending yourself
or a fraud is being committed. For those looking for a good credit deal or mortgage,
Credit Expert allows them to check their report
instantly online to ensure that it accurately reflects their position, and then as
often as they want after that. Credit Expert members can also match their credit
report to credit offers they are more likely to be accepted for using Experian's
Lower My Bills service.

http://www.straightalkdebt.com/

Article sourced from:

Experian

R3 comments on Government’s response to the personal insolvency review

“R3 welcomes the Government’s announcement today to consult on increasing the petition debt levels for creditors. R3 believes that a rise from the current level of £750 to £3000 would be a more appropriate sum for a creditor to petition for bankruptcy.

“R3 has long campaigned for the rebalancing of the relationship between debtors and creditors, as a number of creditors petition for bankruptcy on low levels of debts. The threshold of £750 which was set in 1986 is now outdated. The Government today acknowledged: ‘that to be able to threaten someone with bankruptcy for such a small amount is disproportionate.’ We are pleased the Government is listening to R3’s concerns on this issue.

“The Minister also revealed that the Government recognises the potential for regulatory reform of Debt Management Services. We have called for better regulation of the Debt Management Plans (DMP) industry for some time. R3 research shows that DMPs are often unworkable because the level of debt is too high, and 10% of individuals in a fee-charging DMP were not told they would be charged until the scheme began. We call on the Government to go beyond recognising the need for reform and make the necessary changes to the industry. R3 suggests the regulation of the DMP market be removed from the OFT and become the responsibility of the Insolvency Service, to ensure all insolvency providers are regulated to the same high standard.”

Appointment of Administrators - 17 June 2011

Jun 17 2011
3B VIEW LIMITED
ALFA SELF-STORAGE (HERSHAM) LIMITED
BARTHOLDI LIMITED
KYMO HOLDINGS LIMITED
LONSDALE LEISURE LIMITED
MINMAR (929) LIMITED
PAPERVATION LIMITED
REDCARE TELECOM LIMITED
SEAFLAME COMPANY LIMITED
V8 GOURMET LIMITED

HMRC to extend its tax campaigns

HM Revenue and Customs (HMRC) has announced that it intends to target more groups of workers in its efforts to recoup unpaid taxes.

Last month, HMRC launched a campaign aimed at businesses that might be trading above the VAT threshold of £73,000 but have yet to register with the tax authorities.

Now HMRC will be looking at e-marketplaces and private tuition providers in an effort to tighten up the tax-take.

The campaigns should be rolled out in 2011/12.

As part of the new campaigns, those who provide private tuition and coaching will come under the spotlight. The aim is to look at professionals who are able to earn money from providing tuition and coaching, either as a main or a secondary income.

It will cover people providing private lessons and could include, for example, fitness/dance/lifestyle coaches through to national curriculum subject tutors and others.

Another target for HMRC will be those who use e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. People who only sell a few items and who are not traders are unlikely to be liable to tax and will be excluded from the investigation.

Following on from the recent offer of a partial amnesty to businesses working in the plumbing industries, HMRC also said that it would be inviting other groups of tradespeople to come forward and declare unpaid tax.

Mike Wells, HMRC's director of risk and intelligence, said: "We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.

"By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.

"We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily."

So far, more than £500 million has been raised by HMRC from voluntary disclosures and a further £100 million from follow-up activity.

Business debt under the weather

Statistics on debt judgments in England & Wales released today (May 24) by Registry Trust Ltd show that the total value of county court judgments (CCJs) issued against businesses rose 14.4 percent (£19.6m) from £136.2m to £155.8m in the first quarter of 2011.

Registry Trust is the non-profit organisation which operates the Register of Judgments, Orders and Fines for England and Wales on behalf of the Ministry of Justice in the public interest.

Year on year the value of CCJs against businesses has fallen by 11.2 percent or £19.6m from £175.4m to £155.8m

Judgment numbers reflect a similar pattern in that they rose 8.9 percent over the last quarter but fell 7.2 percent year-on-year. Businesses in England and Wales faced 37,794 CCJs in Q1 2011, compared with 34,713 in the previous quarter and 40,711 during the same period of 2010.

This quarter a record 23,832 searches were requested. Anyone can search the registers online at www.trustonline.org.uk.

Announcing the statistics Malcolm Hurlston, Registry Trust chairman, said:

“The weather was blamed for the sluggish performance of the economy in the last quarter of 2010 and could be one of the reasons for an increase of judgments against businesses in the first quarter of 2011.

P35 (PAYE) Deadline 19 May: Comment from Frances Coulson, President of insolvency trade body R3

“Typically many businesses will be caught out by the P35 deadline on 19 May, having been ‘getting by’ and not submitting the full amount of PAYE they owe each month. This deadline is traditionally a time when HMRC uncovers any shortcomings in the payments due and the payments made in terms of PAYE, as well as those businesses which do not file at all.

“I suspect this will lead to an increase in actions by HMRC in a couple of months time, as well as pushing up corporate insolvency numbers towards the end of the year.

“One in four (24%) businesses are concerned about their debts, according to the R3’s latest Business Distress Index. Of this group, 37% are worried about Crown debts and this deadline will be a test for them. Seeking professional advice as soon as possible is the best way to allay those fears.”

Frances Coulson, R3 President

Methodology note on R3’s Business Distress Index: BDRC Continental conducted 501 telephone interviews with small, medium and large business owners and Financial Directors between 7th and 18th March 2011. Quotas are set by size, region and sector and the data weighted to the profile of GB businesses. The respondent in each case is a senior financial decision maker. Small businesses are those with a turnover of £50,000 to £1million pa.

R3 is the trade body for Insolvency Professionals, representing 97% of the UK’s Insolvency Practitioners.

Credit Action releases May Debt Statistics

May 6 2011
Money education charity Credit Action has today released the May debt statistics, a monthly release which details the level of debt in the UK.
Key statistics from the release, which shows month-by-month trends, include:

* CAB deal with 8,004 new debt problems each working day
* 1,392 people are made redundant daily
* 847,000 people have been unemployed for more than 12 months
* £55,870 is the average household debt (including mortgages)
* £29, 843 is the average amount owed by every UK adult (including mortgages)
* £180m is the personal interest paid in UK daily
* £24.88m is the daily write-offs of loans by banks & building societies
* Every 17 minutes a property is repossessed
* £67.90 is the amount it costs to fill a car with a 50-litre tank with unleaded petrol
* £133,200,000 is the daily increase in Government national debt (PSDN)
* £1,156,000,000 is the total value of all purchases made using plastic cards today

Joanna Parsley, Associate Director at Credit Action says, "May's debt statistics show some interesting trends. Although the amount owed by every UK adult has fallen by approximately £30, in light of rising credit card interest rates- which at an average of 19.1% are now at the highest levels seen in 13 years- paying down debt has never been more sensible advice.

"With the cost of petrol rising still and with households experiencing the changes made last month to tax, national insurance and welfare benefits, 2011 looks set to be a year where household budgets are further squeezed."

The full debt statistics can be accessed from the Credit Action web site:
http://www.creditaction.org.uk/helpful-resources/debt-statistics.html

Winding Up Petitions - 28 April 2011

Apr 28 2011
AARDVARK ENGINEERING LIMITED
ASG VISION I P SYSTEMS LTD
BENZ INTERNATIONAL TECH DISTRIBUTION LIMITED
CASHBACKCHIEF LIMITED
CLIMATE SOLUTIONS (LEIC) LTD
DRAGON FEEDS LIMITED
EARLY DOORS PUB COMPANY LIMITED
ECOLOGICAL PARTNERSHIPS LIMITED
GOLDHART PROPERTIES LIMITED
THE GREEN MILE COMPANY LIMITED
HGS CONSULTANCY LIMITED
HOUSTON COX HOLDINGS LIMITED
HURRY CONSULTANTS LIMITED
J2HT LIMITED
LACEMARKET DEVELOPMENT LTD
LCF FRANCE LIMITED
LIGHTHOUSE IFA (NORTHAMPTONSHIRE) LIMITED
LIGHTSPACE PARTNERSHIP LIMITED
MATTY COAN & CO. LIMITED
MCCONNELL-DOUGLAS LIMITED
THE MED LOUNGE LIMITED
MINC INVESTMENT MANAGEMENT LTD
NEXUM (HOLDINGS) LIMITED
NEXUM UTILITIES LIMITED
OAKBUILD GB LIMITED
ONE AIM GROUP LIMITED
PEACOCK PRINT [NORTHAMPTON] LIMITED
REISSING LIMITED
RUSHDEN AND DIAMONDS F.C. LIMITED
TERNDEEN LEASING LIMITED
VIVID BRANDS UK LIMITED
XOU SOLUTIONS LIMITED
LOWICK ROSE LLP
WYNNES MOTOR SERVICES (NUNEATON) LIMITED