Business Confidence at Two-Year Low 
There is a bleak outlook for economic growth following the latest optimism index from BDO revealing that business confidence has hit a two-year low.

The BDO Output index, which measures the state of companies' order books, fell from 95 in July to 93.6 in August, which suggests that the economy could contract in the third quarter.

The score of 93.6 is the lowest score for 26 months, only scores above 95 indicate growth.

Peter Hemington, partner at BDO said: "It's worrying to see such a reliable growth indicator fall to a two-year low.

"Our predictions should serve as a wake-up call to policymakers that action must be taken to avoid economic contraction.

Mr Hemington also said the Bank of England may likely be forced to implement quantitative easing, having voted against renewing its quantitative easing programme last week.

"Those asking for a rise in interest rates are doing so prematurely. What is needed and what we have long called for is a further round of quantitative easing, and it is heartening to see this stance becoming an increasingly credible position. The MPC must therefore give QE3 profound consideration if we are to arrest the forecasted economic slump,” he added.

However, the forward-looking optimism index was more optimistic, coming in at 95.5, forecasting slight growth for the beginning of next year.

BDO said the index has been “teetering around the 95 point for three consecutive months”.

There was also some optimism regarding expectations of inflation, which showed its first monthly fall since December 2010.

The reports from BDO follows a report by Organisation for Economic Co-operation and Development (OECD) who slashed its growth expectations for the UK and said the country was at "significant risk" of a double-dip recession.

For more information, please visit

Bookmark and Share

[ add comment ] ( 3174 views )   |  permalink
Bank Shake-up to Cost Customers Billions 
Amid fears that customers will bear the brunt of the “biggest reform on the financial sector since 1930s”, Chancellor George Osborne yesterday signalled that he will give the controversial bank reforms the go ahead.

The Chancellor said it would be “very foolish” not to take action to prevent another financial crisis.

Although there has been opposition from the banks, next week the Treasury is expected to press ahead and accept the need for stricter “firewalls” in order to insulate High Street retail banks from their extended arms that focus on risky investment banking.

Mr Osborne said: “This country had probably the greatest banking crash in its history a couple of years ago.

“It would be very foolish not to learn the lessons of what went wrong and to protect British families from having to bail out the banks again on the scale they did a few years ago.”

Independent experts have calculated that the cost of the reforms could be as high as £15bn, and with charges expected to rise for customers, it will be them who will be picking up the price.

Sir John Vickers, the chairman of the Independent Commission of Banking, admitted that it was likely that there would be “some effect” on costs to customers.

Mr Vickers said the changes could raise the level of mortgage rates up to around one percent, which would add almost £1,000 a year to the cost of paying a typical mortgage of £140,000.

So how will the money be spent? It is expected the reforms will see High Street banking arms being required to have separate staff, funding arrangements and computer systems from investment banks.

The move is designed to ensure the banking industry will not be thrown into another financial crash, as High Street banks would be unaffected if a bank’s investment divisions is thrown into financial difficulty with the changes in place.

For more information, please visit

Bookmark and Share

[ add comment ] ( 2977 views )   |  permalink
Interest Rates Held at 0.5 percent 
The Bank of England’s Monetary Policy Committee (MPC) is holding UK interest rates at a record low of 0.5 percent.

Economists had predicted the rate, which has remained the same since March 2009, would remain unchanged due to concerns about the strength of economic recovery.

The MPC also chose not to increase its quantitative easing (QE) programme.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “Evidently, most MPC members maintain the view that further QE is not warranted yet, particularly given current elevated inflation levels and still significant upside inflation risks.

“However, unless the economy shows signs of picking up soon and global financial market conditions stabilize, the pressure for Bank of England action will mount and it could very well pull the QE trigger within the next few months.”

It is bad news for those who rely on the interest on savings for an income, such as pensioners, who will continue to suffer due the low level of rates.

Banks recently revealed that savers have missed out on £43 billion as a result of low rates. The figure comes from comparing their income before and after the Bank cut rates to 0.5 percent.

Whilst savers will continue to bear the brunt, families with mortgages will continue to benefit from the low interest rates. This is due to savings in banks and building societies being outstripped by mortgages, therefore mortgage borrowers have gained by a wider margin.

The figures show that mortgage borrowers have paid £51bn less in monthly interest.

Although the Bank of England issued no comment, minutes from the meeting due in a couple of weeks are likely to show policymakers discussed options for injecting more stimulus into the economy, against a backdrop of sharply weakening conditions in the United States and euro zone and ongoing financial market turbulence.

For more information, please visit

Bookmark and Share

[ add comment ] ( 2750 views )   |  permalink
Economists Urge Government to Axe 50p Tax Rate 
Leading economists are calling for the Government to drop the 50p tax rate, claiming that it is doing “lasting damage” to the UK economy.

In a letter written to the Financial Times, which was signed by 20 top economists, they urge the Government to axe the tax rate “at the earliest opportunity” in order to boost economic growth.

The Chancellor George Osborne has said that the 50p rate on earnings over £150,000 is only a temporary measure, and that he would ask the Inland Revenue to review how effective the rate it is at raising tax revenue.

In a speech on Tuesday, he said: "I've said with the 50p rate I don't see that as a lasting tax rate for Britain because it's very uncompetitive internationally, and people, frankly, can move."

Unions say cutting the 50p tax rate would be "monstrously unfair" during a time of austerity cuts.

Brendan Barber, general secretary of the Trades Union Congress, said: “At a time when cuts are biting hard and ordinary people are suffering the biggest squeeze on their living standards in years, the last thing we need is a handout to the wealthiest in our society.”

In the letter, signed by two former members of the Bank of England’s Monetary Policy Committee, DeAnne Julius and Sushil Wadhwani, the economists state that the tax rate is making the UK "less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers".

The letter was sent as part of a campaign, promoted through PR agency Westbourne, who say that the move is funded by businesses who are concerned about the impact the 50p rate is having on the economy.

This news comes as Mr Osborne announced that short-term economic forecasts for the UK had been revised downwards.

Chancellor George Osborne said recent economic data had led to short term forecasts being revised down over recent weeks. However, he said that he would continue to stick to the budget’s deficit-cutting plan.

For more information, please visit

Bookmark and Share

[ add comment ] ( 3041 views )   |  permalink
Private Sector Backs Big Innovation Centre  
Small businesses are joining forces with universities and corporations and investing in a new “hub” that aims to improve the UK’s ability to commercialise innovation.

The Big Innovation Centre (BIC) is to be launched on Thursday by Business Secretary Vince Cable. BAE Systems, GSK, Unilever, Google and EDF Energy are among the 11 companies that have joined forces with Oxford University to invest in the latest Government scheme to boost innovation.

BIC has mostly been funded by its private sector backers, 80 percent of the initial £1.5 million fund for the project has come from private sector backers.

The innovation hub aims to boost investment in emerging sectors such as health science, virtual reality and cyber-security. BIC will act a bridge between universities and business to enable research to be commercialised.

The body of BIC will be part of the Work Foundation think-tank but will also make “evidence-based” policy recommendations.

BIC’s Director Birgitte Anderson said: “Just talking about tax cuts and R&D (research and development) tax credits is not going to do the job.”

“The UK has a fantastic history in innovation but that hasn’t been the case for the last decade. Radical action is needed if we’re to avoid another decade of stagnation.”

BIC is also hoping to encourage small businesses to participate in its projects, which will include establishing joint research projects and 'pilot-companies', Miss Anderson said.

According to research from IPPR, compared to 80 percent of German firms, only 46 percent of UK businesses are currently carrying out “innovation activity”.

And it could be that businesses are struggling to gain funding to help boost the much-needed innovation activity. Credit-scoring group Experian is helping BIC research the efficiency of bank lending in terms of financing innovation.

“Our preliminary research shows the banks have been lending to large companies in decline rather than growing businesses," Miss Anderson said.

For more information, please visit

Bookmark and Share

[ add comment ] ( 1840 views )   |  permalink

<<First <Back | 109 | 110 | 111 | 112 | 113 | 114 | 115 | 116 | 117 | 118 | Next> Last>>