UK Could Lose AAA Rating 
The UK has been warned that it faces a one in two chance of losing its safe haven status, if the government eases its deficit reduction measures.

Following a ratings assessment, the credit ratings agency Fitch have said that Britain still has a higher budget deficit and debt than most triple A rated bonds, and was in a similar position to France and the US, who also had a top rating with a negative outlook.

Within a statement released following the closure of the London markets on Wednesday, Fitch warned the UK had, "very limited fiscal space to absorb further adverse economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery".

Fitch’s announcement, which echoes that made previously by Moody’s comes a week before the UK’s budget, and adds more pressure on the Chancellor, George Osborne, who said: “A week from the Budget, this is a reminder of why it is essential Britain sticks to its plans to deal with its debts.

“As Fitch itself says, the reason we are keeping our triple A rating is because of ‘the progress made in reducing the government’s structural budget deficit and the credibility of the fiscal consolidation effort.”

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Government Considering Long-Term Bond 
The government are reported to be considering a new long-term bond, which it hopes will cut the country’s interest payments for years to come.

At present the government, like many, issue bonds – a form of IOU – which pay interest before being paid back after a fixed term; however a long-dated bond typically gives the government thirty years to repay in full.

Currently, the average duration of the Government's £1 trillion debt is around 14 years – with maturities ranging from months to a 50-year bond issued in 2005.

However longer-dated debt is widely thought to offer a country more stability, and under radical plans the Chancellor, George Osborne, is looking at issuing bonds with a 100 year repayment date, in the hope of the long-term gilt allowing the government to lock in the current record low interest rate.

A Treasury source said: "This is about locking in for the future the tangible benefits of the safe haven status we have today. The prize is lower debt interest repayments for decades to come.

"It is a chance for our great-grandchildren to pay less than they otherwise would have done because of the government's fiscal credibility."

If the bond proved popular with investors, future governments would pay less debt interest, with Treasury officials saying their figures reveal that the low cost of long-term interest rates would save the UK £20 billion in debt interest over the next five years.

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Boost to UK Economy 
A leading global think-tank, the Organisation for Economic Co-Operation and Development (OECD), has reported that the UK may finally be in the early states of economic recovery.

The OECD’s composite leading indications for January rose 0.1 percent – the biggest monthly rise since Britain pulled out of recession in 2009.

The OECD’s widely watched indicators having a track record of being roughly six months ahead of events, these latest findings suggest the seeds of recovery have now taken root.

Following a 0.2 percent contraction in the UK economy during the final months of last year, 2012 has started strongly with retail sales and domestic indicators of both services and manufacturing sectors suggesting a return to growth; and the OECD say that the small rise in the January index, following a stable month in December suggests “a possible change in momentum.”

Although the UK may have started an economic revival, there is a warning that work still remains to be done before growth climbs back above trend.

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Clegg Goes Soft on Tycoon Tax 
The deputy Prime Minister, Nick Clegg, ahs been forced to go back down on proposals for a tycoon tax, less than forty-eight hours after announcing his proposals.

Speaking at the Liberal Democrats Spring conference on Saturday, Nick Clegg proposed the tycoon tax on millionaires, with the aim of introducing a minimum tax rate to ensure high earners didn’t pay less than twenty percent of their incomes tax.

Clegg told the conference: “There are hundreds of people earning millions per year who are barely paying 20 per cent tax – forget 40 per cent, forget 50 per cent, forget 30 per cent.

“I think it’s time that we look at what I call a tycoon tax.”

However, no sooner had Clegg announced his proposals than the Treasury announced they were surprised by the deputy Prime Minister’s mention of a minimum tax rate, with sources close to the Chancellor saying a minimum tax rate wasn’t being considered.

One Treasury source added: “There are people out there making use of various reliefs and loopholes who don’t pay much tax at all.

“There is a commitment across government to close those loopholes.”

During his keynote speech at the conference on Sunday, Nick Clegg appeared to have softened his stance on the tycoon tax, telling the conference: “We will call time on the tycoon tax dodgers and make sure everyone pays a fair level of tax.”

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Report Makes HMRC Recommendations 
A Treasury Committee report has made a number of suggestions to the HMRC, including making sure that tax disputes with big companies are dealt with in exactly the same way as other taxpayers.

The report by the MPs, although supportive of recent moves by HMRC, such as its campaigns against specific groups of tax dodgers, believes that HMRC should introduce a number of changes, which the MPs believe will help improve public confidence in the organisation.

George Mudie MP, the chairman of the Treasury Committee, said: “Taxpayers must have confidence that HMRC is being even-handed at all times, otherwise rates of voluntary compliance with the tax code could suffer.”

Among the suggestions, the Treasury Committee have said that HMRC should spend less time and effort in trying to calculate how much tax goes uncollected each year; encourage greater voluntary tax paying by the public and offer a general disclosure "facility" for all tax payers, like the one for offshore account holders.

They have also said that HMRC should look to vigorously prosecute people who do not admit to hiding taxable money and assets offshore.

HMRC recently decided that all tax deals worth more than £100m would be handled from now on by a senior official acting as an "assurance commissioner"; and Mr Mudie said of this decision by HMRC: “It is encouraging that HMRC has recognised that its processes for settling tax disputes were flawed and is implementing changes.”


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