UK Already In Recession 
According to a leading Think-Tank the UK has already double-dipped back into recession, as interest rates look set to stay on hold at their record low until 2016.

It’s believed that the predicted growth of around or under 1pc for years to come will force the Bank of England to keep base rates at 0.5pc.

The Think-Tank, the Centre for Economics and Business Research (CEBR) believes the UK economy shrank in the last three months of 2011 and is still contracting during the current quarter, marking another recession.

Chief Executive of CEBR, Douglas McWilliams, said: “The world is going through a fundamental change where previously poor economies are industrialising fast. This is good news for them, but because of the limits imposed by shortages of energy, minerals and food, some of their growth is at our expense.

“This is not to say that if we break off trading with them we will be better off. On the contrary, a strategy of disengagement with the rest of the world would make matters very much worse.”

The CEBR have already slashed its expectations from the already low 0.7pc it predicted in October 2011, to a 0.4pc fall, advising prospects for the economy in the UK hinge on the fate of the Eurozone.

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Treasury Close Tax Avoidance Scheme 
With only a few weeks to go until the tax return deadline, the Treasury have closed a tax avoidance scheme which could have cost £1.5billion in lost tax receipts.

Following a tip-off that artificial trading companies were being set up in tax heavens, the Treasury has opted to close a scheme which could have cost the economy in lost tax receipts.

It’s believed that wealthy individuals were planning to use to use a long standing “past-cessation trade relief” – designed for tradesmen and professionals to offset legitimate costs against their income – to artificially reduce their tax bills.

Exchequer Secretary, David Gauke, said the scheme would have put a “significant” amount of money at risk, adding: “It is unacceptable, at a time when we are trying to bring down the deficit, that there are those who try to avoid paying the tax they owe.”

The current scheme could have legitimately been used by a tradesperson or professional who had ceased trading, but later incurred costs from responding to customer requests where they remained liable.

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HMRC Must Help Small Businesses 
Ministers have called on Her Majesty’s Revenue and Customs (HMRC) to clarify how the introduction of real time information (RTI) for universal credits will affect SMEs.

In a report released today, the Parliament’s public accounts committee says HMRC must clarify how RTI, which is being developed by HMRC to support the introduction of the new universal credit, will affect small businesses and the self-employed who may not use electronic payroll systems.

Chair of the Public Accounts Committee, Margaret Hodge, said: “The sheer complexity of the benefits system places a heavy burden on claimants.

"People claiming multiple benefits, such as housing benefit and child tax credit, deal with different public bodies.

“This can be confusing and potentially discourage legitimate applications. Departments responsible for means testing must work together to get a better understanding of the burdens placed on claimants."

The report also states that HMRC need to develop an effective approach for those claimants and businesses that are likely to be outside RTI in order to try to prevent previous problems which have affected tax credits.

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Investors Pay to Lend Money to the UK 
Yesterday the Treasury sold gifts which will pay returns below the level of inflation for only the second time ever, when the Debt Management Office sold £700 million of inflation-linked bonds which will mature in 2047.

The 35-year gifts were adjusted to exclude inflation and therefore sold with a rate of 0.116pc; meaning investors were accepting a small real-terms loss in exchange for lending their cash to the UK.

Bond yields are partly a sign of the markets’ confidence in a governments ability to repay their debits in future; and the greater the demand for bonds, the lower the interest rate a borrowing government has to pay buyers.

Treasury sources have highlighted that amid fears for the weaker European economies, the UK gift sale is a sign of the markets’ confidence in the Coalition government.

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UK Risks Recession 
The British Chamber of Commerce (BCC) has predicted that UK growth will be flat this year, with one quarter of contraction expected. But it says a recession isn’t inevitable if the government acts.

The BCC surveyed nearly 8,000 members and their findings suggest that the economy has significantly weakened; but stopped short of forecasting an outright recession. They believe that whilst one quarter of negative growth was likely over the next six-months, a recession hinged on the government’s action to help businesses.

John Longworth, the BCC’s director general, said: “Britain's economy is at a critical stage – and now is not the time to shy away from the radical decisions needed to inspire confidence and increased investment for years to come.

“The results of our latest survey are a cause for concern and point towards stagnation in the first quarter of this year. Many of the balances are now at levels last seen in the third quarter of 2009, meaning improvements seen in the last two years have largely been cancelled out.

“Ministers need to move faster on promises made in the Chancellor's Autumn Statement. Measures to improve the flow of credit to businesses, reforms of our complex planning system, and investment in infrastructure projects are all needed now."

The British Chamber of Commerce’s forecast is almost identical to the view of the Bank of England and other economists, with the latest data from the retail, property and manufacturing sectors doing little to dispel this view.

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