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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Payday loan charges cap announced by FCA

It has been announced by the City regulator that a cap on the amount that payday lenders can charge their customers is being introduced.

Payday loan rates will be capped at 0.8% of the amount borrowed a day, said the Financial Conduct Authority (FCA).

In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.

The regulator has said the changes will come into force in January.

“For people who struggle to repay, we believe the new rules will put an end to spiraling payday debts,” said FCA chief executive Martin Wheatley.

Source: www.bbc.co.uk/news

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Latest forecast for UK economy

There is expected to be a GDP growth of 3pc this year, moderating to 2.5pc in 2015.

UK economic statistics have recently undergone significant revisions, but they do not change the 
wider picture. 

That being ‘the turnaround of the UK economy remains the weakest in the past century while the UK’s large productivity puzzle persists and, notwithstanding the gradual accumulation of an evidence base, remains largely unsolved.’ As suggested by the National institute of Economic & Social Research.

It is further proposed by the National Institute that the key risk to the progress of the recovery is productivity growth: ‘should this fail to recover as we expect, the impact on both living standards and public finances will be significant.’

Externally, the generalised weakness of the global recovery and, in particular, continued stagnation (or worse) in the Euro area, are obviously significant risks for the UK economy. 

Source: www.creditman.co.uk

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The hidden cost of going under without insolvency- corporate insolvencies

Creditors could be losing billions of pounds each year to “hidden” business closures, where companies shut their doors without going through formal insolvency procedures.

The number of businesses simply being struck off the Companies House register has risen by almost 30pc over the past three years, to 179,000 in the year to April.

Formal corporate insolvencies have been in decline since 2008. The strike-off numbers may explain the lower-than-expected official company failure figures since the downturn, according to R3, the insolvency trade body that conducted the study.

Source: www.thetimes.co.uk

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Fuel price drop expected after fall in oil price

The Chancellor, George Osborne, has said the government will be watching petrol and diesel
distributors “very carefully” to ensure they pass on oil price reductions to customers.

Oil has fallen from about $115 per barrel in June to about $84 per barrel, a decline of about a quarter.

In comparison, petrol prices in the UK have fallen from a high of about 131.7p per litre in the summer to 124.22p – a decline of about 6%.

Diesel dropped from 136.37p to 128.58p.

Campaigners argue that taxes account for the bulk of UK pump prices, and that the government therefore has more power to reduce prices than petrol companies.

“our message is clear – the oil price has fallen and we expect that to be passed on to people at the
petrol station filling up their cars,” said Mr Osborne.

“We expect the oil companies to do this and we will be watching very carefully to make sure they do.”

Source: www.bbc.co.uk/news/business
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UK interest rates remain at record low of 0.5%

The Bank of England has held UK interest rates at a record low of 0.5% for another month.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.

The Bank’s Monetary Policy Committee has held rates at 0.5% since March 2009 in a bid to help economic recovery.

Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news.

The Chancellor, George Osborne, has also warned that the UK will not escape the slowdown in the
Eurozone.

The Bank of England has said it wants to be sure growth is on a firmer footing, and that slack in the labour market is reducing, before it raises interest rates.

Source: www.bbc.co.uk/news/business

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The Money Statistics - November 2014- Debt Management

The latest money management statistics have now been published by The Money Charity, which was known as Credit Action until October 2013, and is the UK’s financial capability charity.

These figures have been being produced since 2005 and have previously been called the debt statistics. But have now been renamed to encompass a wider range of how we spend money in the UK.

The key figures for November 2014 can be seen below.
• £55,223: average household debt (including mortgages) in September, up from £55,083 in August
• 270: Number of insolvencies every day
• £1,185: average amount paid in interest on debt per person annually
• 210,000: average house price paid by first-time buyers
• 1,033: number of people who became redundant every day between June and August
• £2,214: average household credit card debt
• 0.7%: estimated growth of the UK economy in Q3 2014
• £90m: daily increase in net lending to individuals
• 1,474: drop in unemployed people per day
• 17.8bn: gross mortgage lending in September 2014

If you know any businesses or individuals that are struggling with debt recommend they visit our website to see how we have helped similar people, we are happy to provide a free initial consultation with our obligation.

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Source: http://themoneycharity.org.uk/money-statistics

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UK banks to face competition inquiry

A full competition inquiry into the market for current accounts and small business banking has been launched by the Competition and Market Authority.

After being proposed in July, the probe, will investigate into the lack of smaller competitors to the “big four” High Street names and the difficulties customers face in switching banks.

Also lending to small and medium-sized business will be looked in to.

Some of the large banks have labelled the probe as unnecessary.

In a submission to the CMA, Barclays said it felt the review was “not appropriate at this time”.

“Various developments, innovations and stimuli are changing the competitive landscape in relation to both [personal current accounts] and [small and medium enterprises] banking, and these must be given time to mature,” it added.

The competition inquiry will take 18 months to complete. The CMA also said it would review the 2002 report by its predecessor, the Competition Commission, to see if its findings were still relevant.

Source: www.bbc.co.uk/news/business

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Overtime should count in holiday pay, landmark tribunal hearing rules

Millions of workers could now have their holiday pay recalculated to take into account overtime. Businesses are facing a multibillion-pound bill as a tribunal ruled today that overtime should be taken into account when holiday pay is calculated.

In a landmark case, the Employment Appeal Tribunal ruled that it is wrong for employers to only take into account basic pay when calculating how much an employee should be paid while they are on holiday.

The ruling added that workers can make backdated claims, but only if it is less than three months since their last holiday, or last incorrect payment.

“This will have huge repercussions for UK employers. Employers who pay only basic pay during holidays are selling employees short. Holiday pay is an issue that impacts every business and many employers now face a whole-sale rethink of how they pay their employees and calculate costs,” said Paul McFarlane, partner at Weightmans law firm.

Source: www.thetimes.co.uk

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Cooling Property Market Hits UK Construction Activity

Businesses start to delay new contracts as slower growth and cooling property market dents business confidence.

House building fell to its lowest level in a year in October amid signs that Britain’s recovery is slowing down and the property market is slowing.

While demand remained strong, Markit’s closely-watched survey showed some businesses were delaying new contracts as slower growth dented business confidence.

“Some survey respondents commented that less favourable housing market conditions had resulted greater caution among clients and delays to the launch of new development projects,” Markit said.

Source: www.telegraph.co.uk

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Bankrupt Goalkeeper David James Auctions Football Memorabilia

The retired England goalkeeper, David James, is to auction hundreds of items of football memorabilia collected during his career.

James who was declared bankrupt in May had a long career playing for Liverpool, Aston Villa, West Ham, Manchester City, Portsmouth and England.

Items to be sold through London-based auctioneer Hilco are 150 signed shirts, shorts and match balls.

The 44-year-old won 53 caps for England in a career that also saw the goalkeeper play for Watford, Bristol City and Bournemouth. James is currently the goalkeeper and manager for Indian Super League side Kerala Blasters FC.

Source: www.bbc.co.uk/news

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Rip-off Payday Loan Broker Warning

Consumers are being cautioned to be wary of “rip-off” payday middlemen, after the NatWest bank stated that it is receiving hundreds of new complaints a day.

NatWest reported that they were receiving up to 640 complaints a day in July and August.

Customers are often unaware that they have even authorised a payment and the money is being taken by payday loan middlemen.

It is thought the regulator, the Financial Conduct Authority (FCA), is now looking closely at such activities.

In the meantime, the Financial Ombudsman has repeated a warning that consumers should be vigilant.

It said it had received 11,500 complaints about “rip-off” loan brokers since April, more than double the number in the whole of last year.

Source: www.bbc.co.uk/news/business

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UK Faces ‘Debt Timebomb’ from Ageing Population

Institute of Economic Affairs calls for radical measures, including a smaller NHS, to bring Britain’s debt mountain back to sustainable levels.

Britain’s ageing population has created a “debt timebomb” that can only be defused, according to a respected think-tank, through a combination of significant spending cuts, faster increases in the state pension age and ending universal free healthcare.

The institute of Economic Affairs warned that the government would need to cut public spending by at least 25pc in order to get Britain’s debt down to sustainable levels.

In a set of radical proposals, the Institute of Economic Affairs called on the Government to end “unhelpful” policies such as the “triple lock guarantee” that ensures the state pension increases by the higher of inflation, average earnings or a minimum of 2.5pc every year.

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Source: www.telegraph.co.uk

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Liquidations at lowest rate since 1984, says Insolvency Service

Experts cautious as figures also show company administrations in third quarter this year rose 17% over the previous quarter.

The rate of companies being liquidated has fallen to its lowest level since records started in 1984, Insolvency Service figures show.

In the 12 months to September, one in 186 active companies, or 0.54%, went into liquidation in England and Wales, in a continuation of a downward trend since 2011. 

Experts welcomed the business insolvency figures as another sign that the economy is “firmly in recovery mode” but they also warned that firms will face growing pains as economic improvement continues and interest rates climb.

3,368 firms were liquidated between July and September, which is a 12 % fall compared with the same period a year ago and also the lowest quarterly total seen since spring 2008.

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Business groups call on government to scrap legal reforms that will cost businesses and taxpayers £160m per year

There have been warnings from Business groups, including accounting and insolvency bodies, the institute of Credit Management, and the British Property Federation, that government legal reforms could cost creditors over £160 million per year from next April – with rouge directors being the big beneficiaries.

Six influential business groups have signed and sent a letter to the Prime Minister, David Cameron and Justice Secretary, Chris Grayling, outlining their concerns and calling for the government to scrap the planned change.

The letter highlights the planned changes and describes them as being “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

From April 2015, insolvency litigation will no longer be exempt from the crackdown on ‘no-win, no-fee’ legal funding introduced by 2012 reforms. This type of funding is often the only way creditors can afford to pay for court cases to retrieve money from rouge directors that have wrongly taken money out of a failed business.

Under the current system, successful claims see both creditors’ debts returned and the rouge director charged for the cost of the court case.

Source: www.r3.org.uk

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Rising Property Values Prompt Equity Release Loans

Borrowing drawing on the equity tied up in people’s property has hit its highest quarterly level since records began in 2002, figures show.

The Equity Release Council trade body has stated that equity release lending totalled £375.5m in the third quarter of the year. 

More than 5,500 people aged over 55 released equity from their homes over the same three months, it added. 

However, the Money Advice Service suggests this form of borrowing can be “expensive and inflexible”.

The average value of equity release also reached its highest level since 2002 in the third quarter of the year, with homeowners typically “releasing” £67,467. 

Nigel Waterson, chairman of the Equity Release Council, claimed that for many people aged over 55, pension savings were failing to cover rising costs. 

Source: http://www.bbc.co.uk

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Public Borrowing Rises to £11.8bn in September

Government borrowing increased to £11.8bn in September, an increase of £1.6bn in comparison with a year earlier, according to the Office for National Statistics. 

The latest figures have been a setback for Chancellor George Osborne, who in March pledged to cut the budget deficit by more than 10% over the next 12 months. 

Between April and September borrowing was £58bn, a rise of £5.4bn compared with the same period last year. Economists were forecasting that borrowing would become stable. 

That is an increase of 10.3%. Last month’s figures showed borrowing between April and August was 6% higher than a year earlier.

“We have seen stronger growth in receipts this month, but as today’s figures show, the impact of the great recession is still being felt in our economy and the public finances,” a treasury spokesman said. 

Source: www.bbc.co.uk/business

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Bank OF England Says Keep Interest Rates Low For Now

Interest rates should remain low to avoid long-term economic stagnation, the chief economist at the Bank of England has said.

Global markets have tumbled this week, with investors disconcerted at the lack of growth in Europe and especially Greece, the impact of Ebola, and worrying economic data from China and the US.

Previously, UK interest rates had been expected to rise early next year.

Andrew Haldane said in a speech he was downbeat over the UK economy because of weaker global growth, low wage growth and financial and political risks.

He said there was still plenty of reasons to be cheerful. Growth is set to be the fastest of any major economy this year and inflation and borrowing costs are low, he said.

Source: www.bbc.co.uk/business

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Government To Consult On New Peer-to-Peer Lending ISA

The government is considering setting up a separate tax free individual savings account (ISA) for people who want to lend out money.

The new ISA would be for people who lend money via Peer-to-Peer (P2P) borrowing sites.

It would be in addition to the two longstanding ISAs for cash and shares.

Peer-to-peer websites, like Zopa and Rate Setter, accept money from savers which they then lend out to individuals or businesses.

Often they attract an above-average return, albeit with more risk. Lenders can, in theory, lose their money, if the borrower is unable to pay it back.

The idea has snowballed: £1.8bn has been loaned through such sites so far, and the industry believes including such lending within ISAs will boost it further.

Source: www.bbc.co.uk/business

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Eurozone Gloom Hits Markets And Oil

Global stock markets plunged and the price of oil collapsed to its lowest level in more than fouryears this week as pessimism about the economic outlook for the Eurozone gripped investors around the world.


The FTSE 100 index of the UK’s leading shares fell 91.88 points, or 1.43pc, to 6,3339.97, its lowest mark in a year and 7.82pc below highs of 6,878 in May.


The “fear index” which is a measure of investor anxiety, known as the Vix, leapt by nearly 25pc as a draft of gloomy economic data emerged.


UK construction data showed output contracted by 3.9pc in August, much worse than analysts had predicted. Reports also emerged that Germany’s central bank would cut its official growth forecast next week.


The impact of Ebola and lurking geopolitical risks have added to the pessimism.


Source: The Telegraph


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The Money Statistics - October 2014

The latest money management statistics have now been published by The Money Charity, which was known as Credit Action until October 2013, and is the UK’s financial capability charity.

These figures have been produced since 2005 and were previously called the debt statistics, but have now been renamed to encompass a wider range of how we spend money in the UK.

The key figures for October 2014 can be seen below.
• £55,008: average household debt (including mortgages) in August, up from £54,981 in July
• 6.7%: percentage of household pre-tax income saved
• £521: average annual increase household debt per UK adult
• 6,405: new debt problems dealt with by Citizens Advice Bureau every working day
• £115,940: average mortgage size for households with mortgages
• 1,000: number of people who became redundant every day between May and July
• 4 Minutes and 51 Seconds: time between each bankruptcy and/or insolvency
• £162.6bn: outstanding consumer credit debt at the end of August 2014
• £4,347 per second: government borrowing in July 2014
• £29,013: average first-time buyer deposit

If you know any businesses or individuals that are struggling with debt, recommend they visit our website to see how we have helped similar people. We are happy to provide a free initial consultation without obligation.

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Source: The Money Charity

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No State Pension For Under 35s

Younger generations will receive a “derisory” state pension in retirement because the cash reserves that fund payouts to the elderly will run dry next year, a report will warn. 

A think tank claims to have discovered a “serious flaw” in the national accounts that within 12 months will leave the Government short of money to pay pensioners. 

As a result, the Treasury will be forced to raid income tax receipts to ensure old-age payouts continue, according to the influential Centre for Policy Studies.

Michael Johnson, an academic at the think tank, which has links to the Conservation Party, said his research indicated the state pension was “unsustainable”.

Millions of taxpayers under the age of 45 faced steep tax increases and would have to wait longer to collect a state retirement income, he claimed, while the under-35s should prepare for the state pension to be scrapped.

Official figures this week showed Britain’s state pension bill will quadruple to £420 billion over the next six decades as the population ages.

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UK Interest Rates Remain at Record Low of 0.5%

The Bank of England has held UK interest rates at a record low of 0.5%.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent. 

Rates have been at 0.5% since March 2009, with the market expecting a small rise early next year. 

There has been increasing speculation over when the bank will start to raise the rates again.

Markets are expecting a rise at some point next year. However some think it could be later this year due to the General Election which is scheduled for May 2015. 

The UK economy has been growing strongly this year – with GDP rising by 0.9% between April and June, following a 0.7% rise in the previous quarter – and is on course to outperform many other developed economies this year. 

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Problem Debt Costs the UK Economy £8.3bn, Charity Warns

A charity says the problem of mounting personal debt is costing the British economy £8bn annually, due to the burden it puts on state services.

StepChange, which hears from half a million people in financial difficulty each year, said dealing with housing problems and job losses due to stress made up the bulk of that figure.

It added the government could save £3bn if it offered people effective help.

The Treasury said it had “taken a series of steps” to help those in debt.

Problem debt which is defined as debt that people have taken on but cannot afford to repay as required.

The biggest cost caused by problem debt was that of having to rehouse, and provide higher housing benefit payments for, people who lose their home after falling behind on mortgage or rent payments.

Approximately 2.9 million people in the UK are estimated to have some form of problem debt, and StepChange said it expected there would have been a 20% year-on-year rise in those using its services by the end of 2014.

Source: bbc.co.uk/news/business

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Wonga Sees Profits More Than Halve

Profits at payday lender Wonga have fallen by more than half, the company has announced.

In the year to the end of December 2013, profits fell by 53% to £39.7m.

The company blamed “remediation costs” – money it had to pay back to customers as a result of its own mistakes.

Wonga also say that they expect to be “smaller and less profitable” in future, in part due to new controls set by the regulator, the Financial Conduct Authority (FCA).

Since July 2014, all payday loan companies have had to conform to new rules, which limit roll-overs of loans and force them to increase affordability checks. From January 2015, they will also have their charges capped.

In June this year, the FCA ordered Wonga to pay £2.6m in compensation to 45,000 customers, after fake letters were sent out from non-existent law firms.

At the same time Wonga was told to compensate 200,000 customers who were overcharged, as the result of a technical issue.

In total costing the company £18.8m.

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Economic Recovery Comes With Cash Flow Woes For Some

The number of businesses just paying the interest on their debts – a key characteristic of ‘Zombie businesses’ – has jumped from 103,000 in November 2013 to 154,000 now, according to research by insolvency trade body R3. This is at its highest level for eighteen months.

But rather than a return of the ‘zombie business’ phenomenon, insolvency practitioners suspect that late payment and over-trading problems associated with economic recovery are behind the rise.

‘Zombie Businesses’ emerged after the 2009 recession when thousands of businesses that might have been expected to fail were kept afloat by a combination of low interest rates, lenient creditors, and a sluggish recovery.

100,000 businesses say they would not be able to pay their debts if there was a small rise in interest rates, while 64,000 say they struggle to pay their debts when they fall due.

‘Zombie business’ numbers peaked at 160,000 in November 2012 before falling back to 102,000 in August 2013.

Source: creditman.co.uk