Bank of England to Resist More Quantitative Easing 
The Bank of England are expected later today (May 10th 2012) to call time on the latest round of quantitative easing, following signs that inflation is proving to be “stickier” than expected.

With the second round of the quantitative easing programme complete, the Bank of England now need to consider whether they are to extend it further, or leave the total £325 billion programme unchanged.

Many economists believe the Bank of England will opt for the latter option, following the rise in inflation to three point five percent during March; which has raised hope that the Consumer Price Index (CPI) will reach its target of two percent during 2012.

The British Chambers of Commerce have urged the Monetary Policy Committee (MPC) to keep the quantitative easing programme at its current levels; although they have again called on the government to consider creating a “business bank” to help improve lending to small and medium sized businesses throughout the UK.

Along with business leaders calling for the Bank of England to maintain quantitative easing at its current levels, Adam Posen, a MPC member who has previously been calling for further quantitative easing to be introduced, has also changed tact and called for the bank to keep the programme as it is.

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Pension Deficit Continues to Rise 
It has been revealed that the combined deficit of Britain’s private pension scheme rose to £216.8 billion – an increase of nearly £11 billion – as the funds were hit by the knock-on effects of the Bank of England’s “money printing”.

The figures released from the Pension Protection Fund (PPF) show that the aggregate deficit of the schemes it covers rose; with the Bank of England’s quantitative easing scheme being blamed for rising the cost of paying for pensions.

It has been claimed that the quantitative easing scheme has driven up the cost of government bonds, and because they pay a fixed income, reduced the yield that investors gain by buying them.

This has had an adverse effect on pension schemes, as the cost of paying for pensions is often bench-marked against the return on bonds. Therefore quantitative easing has had the knock-on effect of driving up the estimated stock of assets that pension schemes need now, in order to pay all their pension liabilities in the future.

The PPF have said: “Over the month, scheme assets fell by naught point six percent and over the year there was an increase of four point five percent.

“Total scheme liabilities were £1248.2 billion at the end of April 2012, an increase of naught point four percent over the month, and an increase of twenty-five point four percent over the year.”

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Bank Balances Boosted by Careful Saving 
A study has reported that despite the tough economy, careful savers have managed to increase their balances to the highest levels in nearly two years.

The study, which is based on a consumer savings monitor report – which has been running since 2009 – has revealed that tight control over household budgets by squeezed consumers has seen the average bank balance increase by £284 during the first quarter of 2012; which is said to be a record increase.

The monetary increase reported, equates to an eighteen percent rise in savings during the first three quarters of the year, compared with the previous quarter; which is said to take the average balance of savers to just under £2,000.

A spokesperson for the company behind the study, has said: “Our research told us that ordinary Britons saw restoring savings as their top financial priority for 2012, but in the current climate we thought it would be tough for them to deliver on this.

“Six months of relatively restrained spending may not have helped the economy in terms of GDP growth, but it has allowed Britons to deliver on their determination to restore their savings.”

The latest figures, along with showing that careful savers have managed to increase their finances to the highest levels; also show marks the first time there has been two quarterly rises in savings in a row since 2009.

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HMRC to Yield £6 Million in Fines Per Day 
It has been revealed that as a result of harsher penalties which took effect earlier this week, HMRC is now imposing over £6 million in fines each day on 650,000 taxpayers who have failed to file their tax returns.

Estimates have suggested that 850,000 taxpayers missed the January 31st 2012 deadline, each receiving a fixed penalty of £100; whilst 650,000 tax returns were still outstanding on May 1st 2012, with each of these now incurring an additional fine of £10 per day it is outstanding, which can total a maximum of £900.

In addition to the fines already imposed for missing HMRC’s deadlines, the tax office have also announced they will be imposing extra penalties of £300 or five percent of any tax liability, plus a further £300 or five percent of the outstanding tax if the return still isn’t received after a year.

The total of fines could see HMRC yield over £6 million a day; but Stephen Banyard from HMRC said: “We want the returns and not penalties. So, if you haven’t sent us your 2010/11 return, you need to do so urgently – or call us if you think you shouldn’t have to complete one.”

Although HMRC could potentially yield over £6 million in fines, the organisation have admitted that 12,000 people have been wrongly fined for failing to file their tax return; despite there being no need for them to complete a self assessment return.

HMRC is now writing to those wrongly fined to apologise; and they have also published a statement on the Chartered Institute of Taxation’s website confirming that they will not have to pay any penalties.

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Bank of England Could Have Done More 
The head of the Bank of England, Sir Mervyn King, has admitted that the central bank failed to do enough to warn about the risks building up in the banking sector, ahead of the financial crisis.

Speaking at a lecture in London yesterday (May 2nd 2012), Sir Mervyn King said the bank was not blind to what was happening in the financial markets and it had tried to warn that the risks were being underestimated.

However, he admitted the banks could have tried harder, saying: “We did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallised.

“With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this.”

Along with admitting that the Bank of England could have perhaps done more to warn about the financial risks; Sir Mervyn King also demanded that the financial system went through an urgent reforming, stressing that an overhaul which should include the separation of retail banking from “risky investment banking” was essential “to make our economy safer.”

His comments are set to add pressure on the Chancellor, George Osborne not to cave into the banking lobby and instead press ahead with planned legislation to ringfence retail banking by 2015.

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