Pay Vs Inflation 
There has been a very gentle rise to private sector pay deals, with the latest analysis revealing they have risen to 3 per cent. However, the majority of pay rises are failing to keep pace with the cost of living as they still remain below the rate of inflation.

The study by IDSPay.co.uk said that a small number of pay rises are above 4 per cent, with some car and utilities industry deals being close to the days of pre-recession.

In the first quarter of 2011, pay rises for private sector workers rose from 2.5 per cent at the end of March to 3 per cent by the end of April, showing very small signs that wages are slowly climbing back up. Workers in the manufacturing sector saw their level of pay rising considerably, from 0.5 per cent to 3 per cent during the same period.

Ken Mulkearn, editor of IDS Pay Report, said: “The latest figures show that private sector pay awards are where we thought they would be at this time, reflecting a degree of recovery in profitability and higher levels of inflation .”

However, the future for workers wages continues to look bleak as inflation sores and employers not being in the position to match the rate with pay rises. Economists have warned that there is a “limited” chance pay would catch up with inflation in the near term. Therefore, workers are set to continue to struggling as their take-home income fails to match the cost of living.

Economist at BNP Paribas, Ken Wattret, said workers would continue to feel the pinch as there were a number of recent factors, including disappointing figures for manufacturing output and yesterday’s low mortgage approval levels, showing that the economy was still “really struggling”.

Mr Wattret also said employers were under little pressure to hand out pay rises to match the inflation rate, saying: “It’s going to be a very difficult period for the economy in general and the labour force. In the short run inflation will get higher.”

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EU Joins the Red Tape Battle 
The battle against red tape continues with the EU now agreeing to cut red tape for the UK’s smallest firms, which would see them benefiting from simplified accounting rules.

In Brussels yesterday, the EU came to an agreement to cut red tape for ‘micro-entities’ during a meeting of business ministers from across Europe. The move could see very small businesses being excused from the burden of certain accounting regulations. By being exempt from these regulations, firms will save money that could be used elsewhere, such as expanding to become a bigger company.

‘Micro-entities’ is a term created at the agreement to describe very small businesses. To be a micro-entity a company must not exceed two of the three criteria’s, which are:
- a balance sheet total of €250,000 (£217,000)
- a net turnover of €500,000 (£434,000)
- an average of 10 employees during the financial year in question

The rules for the profit and loss account and balance sheet reporting requirements have been simplified by the agreement. This allows EU member states the discretion to exempt the smallest companies from filing these accounts. However, simplified balance sheet information would still need to be filed at Companies House.

Business minister Ed Davey said the agreement could save firms as much as £300 million a year. Mr Davey said: “This is a significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation.

“I believe this shows what can be achieved by a positive and constructive engagement with the European Union. We now need to build on this breakthrough and I hope that further improvements can be agreed before the proposal becomes law."

This a good move for the UK’s very small firms and it shows that the EU have recognised how much of a burden unnecessary regulations are on struggling small firms.

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Easy Money 
Following news that UK banks missed their small business lending targets under the Government’s Project Merlin agreement, UK manufacturers have reported an increase in the availability of new areas of borrowing allowing them to benefit from increased lending from the banks for the first time since the recession.

A survey by the manufacturing industry body EEF, reported that UK manufacturers are finding it easier to gain access to loans from high street banks.

However, the availability of funding from the banks comes at a price to manufacturers. EEF warned that companies must be prepared for high costs of credit, with one-in-five businesses reporting an increase to the overall cost of credit in the past two months.

Lee Hopley, chief economist of the EEF, said: "For the first time since the recession ended, manufacturers are reporting improving access to finance.

"Hopefully, this will translate into better news on new lending in coming months. But availability of is only part of the story and we also need to see costs coming down.

"Ensuring companies have access to the finance needed to invest and grow is critical for the recovery. We need to see a sustained improvement before concluding that the actions taken by banks and Government are bearing fruit and that no further measures are required."

The positive news for lending comes as the British Chambers of Commerce (BCC) downgrades their forecasts for economic growth. The BCC cut its forecasts for growth for 2011 from 1.4 per cent to 1.3 per cent, and have also reduced the figures for 2012 from 2.3 per cent to 2.2 per cent.

The BCC has also raised its predictions for inflation rates for 2011, from 4.2 per cent to 4.5 per cent.

News of an increase to the availability of lending for manufacturers will hopefully encourage SMEs to apply for the much-needed funding from the banks, which will in turn encourage economic growth.

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Big Society Shock 
Big Society tsar, Nat Wei stepped down from his unpaid post as driver of the project’s agenda this week after claiming that he could not devote the time to it that he had hoped.

Lord Wei had already cut down on the time he could devote to the Big Society initiative from three days a week to two and has now quit to work with the Community Foundation Network to drive "practical development of Big Society ideas."

The resignation must be a blow to Prime Minister David Cameron, who has described the Big Society as his “mission in politics”.

In a speech in Milton Keynes, Mr Cameron said: "The Big Society is not some fluffy add-on to more gritty and more important subjects. This is about as gritty and important as it gets - giving everyone the chance to get on in life and making our country a better place to live.”

Initiatives will include donating at cash machines and by mobile phone, and the use of social networking sites to promote volunteering. And Government policies will also be tested for social value as well as value for money.

However, the project has been criticised by the opposition and in the voluntary sector.

Referring to the idea that Ministers are to undertake a day of voluntary service with a charity or community group, John Low, of the Charities Aid Foundation, said: "While the move to encourage Ministers to volunteer is a step in the right direction, Government could have encouraged them to pledge money as well as time, helping to shape social norms around giving."

Commenting on Lord Wei’s departure, Mr Cameron said: "Nat has worked incredibly hard over two years to develop policies that support the Big Society… I wish him every success in his new role with the Community Foundation Network.”

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The Ostrich Generation 
The aptly named ‘Ostrich Generation’ is a generation of people who are facing pension poverty because they continue to bury their heads in the sand and are not making plans as to how they will fund their retirement, according to a HSBC report.

The members of the ‘Ostrich Generation’ are fully aware that traditional state and company pensions are not going to be as generous as past generations experienced, and know they will be living longer.

According to the report - The Future of Retirement: the future of planning - they are unproductive in working against this change and making preparations for their financial future. Alarmingly, the majority have made no plans as how they will fund their retirement.

HSBC questioned 1,000 working age Britons and found nearly one-in-five do not know what their main source of retirement income will be, with a further 21 per cent saying they will rely solely on the state pension.

Just under half expect to be worse off in retirement than their parents – three-in-five believe this is due to state and company pensions not being as generous as previous generations. And only 27 per cent believe they will be better off.

Overall, 68 per cent of those surveyed are worried about coping financially and 48 per cent fear they are not saving enough for their retirement.

However, despite all this, slightly fewer than four-in-ten Britons have actually got a financial plan in place that will provide for their future retirement.

Joanne Segars, chief executive of the National Association of Pension Funds, said: “Far too many people are trapped in the headlights when it comes to their own retirement. They know they'll need money in their older age, but they're doing nothing to prepare for it.”

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