Business Financial Health Improving 
A recent report into the insolvency rates of businesses throughout the UK has shown that the financial health of all businesses is heading in the right direction.

The report, whose findings were out earlier this week have revealed that compared to last year, the number of businesses to become insolvent has decreased from over 1,800 last year to just over 1,500 last month.

Along with showing a decrease in the number of firms becoming insolvent, the report revealed that all areas of the UK saw their average financial health score improve from an average of 83.24 in April 2011 to 83.76 last month.

The latest figures make for particularly positive reading for medium sized firms, which have traditionally struggled, as it was shown that these were the most improved during April.

Businesses with fifty-one to one-hundred employees saw the biggest improvement from 0.22 percent April 2011 to 0.10 percent in April 2012.

A spokesperson for the report said of the findings: “The figures show a more stable business environment, with some areas and sectors that have historically seen the highest rates of business failures moving in the right direction.

“Since January 2009, when the average financial strength score of UK firms had fallen to its lowest level recorded, there has been a definite and positive upward trend.

“Combined, these two valuable indicators show how UK businesses are faring and highlight areas where there are opportunities, as well as risks.”

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IMF Call on Bank of England to Cut Interest Rates 
Yesterday, the head of the world’s economic watchdog called for the Bank of England to cut interest rates even further, amid warnings the income squeeze could last another eighteen months.

Delivering her annual assessment of the UK economy in London, Christine Lagarde of the IMF said that the Bank of England should “reassess the efficacy” of cutting rates below the current record low of 0.5 percent; in an effort to reduce the costs of borrowing for businesses and homeowners.

Economic experts last night backed the IMF’s call for interest rates to fall, with one saying: “Cutting rates from 0.5 per cent won’t be the solution on its own, but would send out the right signal.”

The calls by the IMF for the Bank of England to cut the interest rates even further have raised questions as to whether the Bank of England will introduce its first zero percent interest rate since it was founded in 1694.

Christine Lagarde’s assessment of the UK economy is said to have delighted the Chancellor, George Osborne, due to it backing the deficit reduction measures in place; meanwhile, Labour have claimed that the IMF’s warning show that the UK needs to come up with a “plan B” to kick-start growth and stop the economy sliding further into recession.

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Inflation Rate Drops to Three Percent 
Recent figures from the Office for National Statistics (ONS) have shown that the UK inflation rate fell last month to its lowest levels since February 2010; as a result of the slowdown in transport price rises and the timing of Easter.

The figures show that the Consumer Price Index (CPI) measure fell from 3.5 percent to 3 percent – its lowest figures since February 2010, when it was also at 3 percent – whilst the Retail Prices Index (RPI) also fell, from 3.6 percent to 3.5 percent, for the same period.

Following the release of the latest inflation rate figures, the Chancellor, George Osborne said that it was “a welcome relief to families with high budgets” adding: “The Bank of England expects the inflation rate to fall in the next year or so.”

His comments were partly supported by the TUC general secretary, Brendan Barber, who agreed that the slower rate was "a relief to millions of people", but added that pay was still lagging behind.

Mr Barber said: “With earnings growing by just 0.6%, people are still getting poorer every month.

“We need falling inflation to be matched with far better pay rises to get people's incomes growing again. This will only happen when our economy is moving in the right direction.”

The drop in inflation rate, according to the ONS is partly as a result of the timing of Easter, whilst the cost of clothing – especially womenswear – and alcohol bought in off-licenses is also said to have helped contribute to the lower rates.

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Chancellor Urged to Introduce Thirty Percent Income Tax 
The Chancellor, George Osborne has been urged to cut taxes for millions of employees and businesses, in what is being described as a radical blueprint to “kick-start the economy”.

A report by the 2020 Tax Commission has called for Britain’s “extraordinary complex and punitive” tax system to be replaced with a “simple” thirty percent flat rate of income tax.

The 2020 Tax Commission believe that the “single income tax” would allow workers to keep thousands of pounds more of their earnings to spend in the High Street, helping to make the UK a global “hub” for trade.

Within the 400-page report, the 2020 Tax Commission suggest that the change to a flat-rate income tax of thirty percent, would result in roughly a £3,400 tax cut for a two-earner household with an income of around £28,000; and could lead to an 8.4 percent increase in the UK's gross domestic product after fifteen years.

Allister Heath, the chairman of the commission, said that a “single, much more reasonable” income tax could transform the UK’s economic prospects.

He added: “It is time for Britain to make a vital choice between tweaking the status quo and letting our economy continue to be crippled by complex and punitive taxes, and drastically changing course with a radical but realistic plan for a tax system fit for the 21st century.”

The report, which was released amid concern of the country’s stalling economy and vulnerability to the growing crisis in the Eurozone, has also recommended the Chancellor cuts fuel duty and looks at the abolition of National Insurance and Stamp Duty.


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Treasury Examines Growth Plan 
It has been revealed that the government is to examine plans to commit more than £20 billion of taxpayer money to infrastructure projects, in an effort to rekindle flagging economic growth.

With the government said to be desperately seeking “cost-free” ways of lifting growth that do not threaten the deficit and debt reduction plan, the Prime Minister revealed during a speech to the Institute of Directors that he has instructed the Treasury to consider using state guarantees “to boost credit for business, housing and infrastructure”.

The idea of using state guarantees to boost credit for business, housing and infrastructure would see private sector borrowing wrapped with state insurance, so that companies would be able to raise funds more cheaply to invest in projects that might otherwise have been uneconomic.

The Treasury have already used such a policy for its credit-easing plan to boost lending to small businesses and a Treasury source has said there was no reason why more taxpayer money could not be used on such schemes as the “contingent liability” only becomes a debt if the guarantee is ever called in.

During his speech, the Prime Minister described guarantees as a way of using “the hard-won credibility of the Government’s balance sheet to help the economy grow without adding even further to our debt”.


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