Archive for December 2010

Pound Weakened By Slow Economic Growth

December 22, 2010

The British pound was weakened today as the Office for National Statistics confirmed a lower than expected third quarter growth in the UK’s gross domestic product.

The pound extended its losses against the dollar dropping from 1.5467 to 1.5454 at 12.2 GMT on Wednesday, shortly after the GDP figures were released.

Tax blunder continues as employees miss out on rebates

December 21, 2010

Hundreds of thousands of taxpayers are in danger of missing out on tax rebates due to the lack of accurate contact data held by HM Revenue and Customs.

Following a government computer glitch, 4.3 million employees were overcharged during the last two financial years via the Pay As You Earn (PAYE) scheme. These employees have been identified and the HMRC is in the process of sending out refund cheques.

However, personal finance website MoneySavingExpert.com has discovered this week that HMRC is sending important correspondence to incorrect households due to a lack of accurate address information.

It is thought that the HMRC has failed to update home addresses for employees who have moved, despite this information appearing on the documents it receives from employers.

There are also an additional 1.4 million people who have paid too little tax as a result of the computer glitch and are due to repay on average £1,400 each.

The concern is that these individuals will be charged for late payment should they fail to receive HMRC correspondence.

MondySavingExpert.com is advising people who have moved in the last few years to contact the HMRC or visit the Revenue website.

Energy Bills Set To Reach Record High This Winter

December 16, 2010

As the UK prepares for yet another big freeze this weekend, consumers have been warned that energy prices are expected to reach record highs.

A forecast undertaken by comparison site Energyhelpline.com has suggested that the average winter energy bill in the UK could exceed £600 if temperatures continue to plummet across the country.

For the period December to February, Energyhelpline.com predicts the combined cost of gas and electricity to reach £630 per household, a significant increase on last year’s average winter spend of £553.

The forecast comes after a month of price hikes from the UK’s biggest energy providers who have cited rising costs from energy wholesalers as cause of the increases.

Scottish & Southern Energy increased prices by 9.4 percent at the start of December whilst British Gas announced 7 percent price hikes for 8 million customers only last week.

“The combination of severe weather and the recent inflation-busting domestic fuel rises could leave the UK with a record national dual fuel bill of £17 billion, “said Mark Todd, director of Energyhelpline.

“This is a chilling prospect for millions of households facing New Year VAT hikes and general economic uncertainty.”

Despite rising prices, customers have been forced to increase their energy consumption as a result of the UK’s bitter weather conditions.

Temperatures between now and February are expected to average a bleak -1.4C.

Euro Falls Amid Fears Of A Credit Rating Downgrade For Spain

December 15, 2010

The Euro has fallen against the US dollar today as Moody’s warned of a possible downgrade of Spain’s credit rating.

The announcement, made by financial analysis agency Moody’s, said that the credit rating of Spain was under review following growing concern over the country’s debt and funding needs for 2011.

The euro fell to a low of 1.2288 against the US dollar as the news broke and the Dow Jones Index dipped 75 points, reflecting market concern that Spain may be next in line for an EU bail-out.

The news comes at the close of a year in which Spain has dragged itself out of its worst recession in half a decade.

The country reported a growth rate of a mere 0.1 percent in its first quarter and now faces a tough austerity budget in an attempt to reduce its debt.

“News that Moody’s has put Spain’s debt rating on review has knocked the euro,” said Jane Foley, analyst for Rabobank.

“It plays on fears that contagion could extend to the Spanish bond market, though it does not enlighten the market much further with respect to the underlying issues with respect to Spain.”

Market focus has been on Spain since Ireland was forced to accept an EU bail-out package of 85b euros last month.

Madrid however, denies any similarities between the two economies and believes the austerity measures will help the country avoid accepting any EU assistance.

Housing Market Sees Further Falls In Sking Prices

December 14, 2010

The UK housing market has seen the largest fall in asking prices during the November and December for three years, according to new research released on Monday.

The asking price of houses has been slashed by 3 percent over the past four weeks according to research undertaken by property website Rightmove.

In the biggest drop during the winter months since 2007, the average asking price of a house in the UK fell by almost £7000 to £222,420 in the four weeks leading up to 4 December.

All regions were affected by month-on-month falls with the West Midlands experiencing the most severe price drop of 5 percent. Wales was the least affected with asking prices dropping by only 1.3%.

The Director of Rightmove, Miles Shipside said that the figures demonstrated the current financial strain on new buyers and those wishing to sell their homes:

“The fact many would-be buyers do not have the ability to proceed, and some homeowners may find themselves in a position where they are forced to sell, drives prices down.

“These negative factors are likely to outweigh the positive price pressures of pent-up demand for housing and a price under-pinning shortage of quality homes in popular locations,” he added.

Rightmove predict that house prices call fall up to as much as 5 percent in the New Year as the result of forced sales.

Big Banks Up, Regionals Down On Banking Reforms

December 13, 2010

Australia’s four biggest banks soared whilst regional banks fell in the market on Monday after the release of Federal Treasurer Wayne Swan’s banking reforms over the weekend.

The value of Westpac, Commonwealth Bank, National Australia Bank and ANZ rose $3 billion during Monday’s trading, reflecting the market opinion that the ‘big four’ would not be adversely affected by the reforms.

Westpac saw the biggest gains, rising 35 cents to $22.92 with Commonwealth up 58c to $51.17, NAB up 31c to $24.53 and ANZ rising 23c to $24.06.

However, the shares of smaller regional banks such as Bendigo & Adelaide and Bank of Queensland feel steeply. Bendigo shares dropped 35c to $9.90, whilst the Bank of Queensland decreased 38c to $10.99.

Some of Mr Swan’s most impacting reforms include a ban on mortgage exit fees from July 2011 and stricter regulations on price signalling.

Whilst Monday’s market response suggested that the reforms would do little to affect the performance of Australia’s largest banks, analysts were concerned that proposals could be potentially damaging to smaller banks and loan providers.

Without exit fees, smaller lenders may be forced to increase mortgage rates, ultimately impacting on the Australian home buyer.

Mr Swan hopes that the reforms will introduce more competition into the banking sector and reduce the financial burden for mortgage holders.

D-day for Tuition Fee debate

December 9, 2010

The controversial issue of raising tuition fees in England to £9,000 per year will be voted on in the House of Commons today after weeks of student protests and political debate.

Prime Minister David Cameron, who yesterday addressed the nation in attempt to quell public and political rebellion, has proposed that tuition fees for UK students triple from £3,290 to £9,000 a year.

The proposal has generated a great deal of anger from the public as it is felt that the Liberal Democrats have turned their back on their pledge they made during the general election to vote against fee increases.

Whilst Liberal Democrat Party Leader Nick Clegg is standing by the coalition’s decision, deputy leader Simon Hughes has voiced his disagreement with the tuition fee hikes claiming he will rebel against the coalition agreement:

“I have a duty to listen to my local party members and my supporters in my constituency, and they have asked me, on this occasion, to rebel against and break the coalition agreement,” he said.

In addition to the fee increase, further anger has been caused over the proposal that new fees will only apply to students in England. Welsh students will not have to pay the higher rate, even if they study at university in England.

Over 20,000 protesters are expected to descent on Westminster today and anarchist groups have threatened to ‘shut down’ the capital.

The debate is expected to begin the House of Commons today just after midday GMT. The duration of the debate may be no longer than five hours, after which MP’s must cast their votes.