The great interest rate rip off part 1

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IMF Says New Reserve Currency to Replace Dollar Is Possible - Bloomberg.com

 

The International Monetary Fund said it’s possible to take the “revolutionary” step of creating a new global reserve currency to replace the dollar over time. The IMF’s so-called special drawing rights could be used as the basis for a new currency, First Deputy Managing Director John Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today.

“There are many, many attractions in the long run to such an outcome,” Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today. “But this is not a quick, short or easy decision,” he said, adding that it would be “quite revolutionary.”

The SDRs would have to be delinked from other currencies and issued by an international organization with equivalent authority to a central bank in order to become liquid enough to be used as a reserve, he said.

As much as 70 percent of the world’s currency reserves are held in dollars, according to the IMF, leading to calls for nations to diversify their cashpiles to avoid excessive exposure to the U.S. economy as it quadruples its budget deficit in a bid to counter the worst recession since the Great Depression.

The dollar fell on June 3 to its lowest level in 2009 against the euro on concern that the ballooning deficit would sap demand for Treasuries among foreign investors and central banks.

“The largest debtor is very unlikely to dominate any currency arrangement today,” said Ousmene Mandeng, head of Ashmore Investment Management Ltd.’s public sector investment advisory.

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Barclays eyes stake in funds giant - Telegraph

 

Merkel's inflationary fretting may wake the bears from hibernation - Telegraph

 

Time to examine tough truths rather than talk of green shoots - Telegraph

 

ITV investors push for ex-Sky boss to be chief - Telegraph

 

Mervyn King battles for control of his court - Telegraph

 

Sales kick off as clubs feel the pinch - Telegraph

 

Triumph owner breaches covenants

 

 

Royal Mail pensions warning

 

 

Mandelson to overhaul export insurance unit

 

 

West Bromwich deadline loom

 

UK must export its way out of recession, says Lord Davies - Telegraph

Export to whom?

 

Time for a debate on private sector's role in delivering public services - Telegraph

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Strike ballot follows breakdown in foreign worker talks | Business | guardian.co.uk

 

Barclay twins join tax-haven CD retailers | Business | The Observer

 

Iceland to reimburse UK for £2.3bn paid to Icesave customers | Business | guardian.co.uk

 

HBOS's Hornby in line for top job at Boots | Business | guardian.co.uk

Fail in big business and you get another job. No other sector is like it.

 

Small firms put off paying 2.5bn in tax | Business | The Observer

 

Beyond oil: a Switzerland in the sands | Business | The Observer

 

Barclays closes on £8bn deal with Blackrock | Business | guardian.co.uk

 

William Keegan: Yes, Britain's Got Problems, but we shouldn't exit the EU stage | Business | The Observer

 

The horrible truth is that cowards prosper in Britain | Nick Cohen | Comment is free | The Observer

 

Rail regulator warns train lengths may need to be cut | Business | The Observer

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BBC NEWS | Business | Court asked to stop Chrysler sale

 

BBC NEWS | Business | Hornby in talks on top Boots job

 

BBC NEWS | Business | Hornby in talks on top Boots job

 

BBC - Peston's Picks: Sugar and Hornby: why they're hired

 

BBC NEWS | Business | Floating wind turbine launched

 

BBC NEWS | Scotland | SPL pays up in lieu of TV money

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http://www.clarity.net/~jake/bubble.htm

 

Speculative Bubbles:

 

 

"Financial Genius Before the Fall"

 

Almost everyone, in one way or another, makes investments via the financial markets. Whether deciding what stocks to buy themselves, relying on the decisions of an investment manager when purchasing mutual funds, or relying on a company pension plan, most people are financially dependent on decisions made about their investments.

Others, for fun or profit, choose to speculate in the marketplace. This involves making short term, risky bets on the value of one security or another. Investors and speculators have different goals; investors look for long term gains at relatively little risk, and speculators go after large, quick profits while taking large risks.

Investing and speculation are all about decision making. In particular, they are about decision making under uncertainty, and under the alternating emotional pressures of greed and fear. Under most circumstances, the market is dominated by rational investors who are willing to pay reasonable prices for stocks based upon reasonable, feasible expectations for a given company's future. However, periodically throughout the history of free markets, there have been recurring "speculative bubbles" in which the market for a given stock, all stocks, or other assets such as real estate, art and even tulip bulbs is overcome by euphoria and rushes upward, only to collapse a short time later, usually over a time period spanning less than three years. What causes these bubbles? Why do investors suddenly become speculators?

Experiments in virtual trading among humans in a controlled environment also show evidence of speculative bubbles, even when the money is fictional, and the "true" values of securities are given to the participants at the beginning of the experiment. In this case, participants have nothing material to gain from such speculation, and by some arguments should behave in a purely rational manner and buy and sell at or near the given "true" values. Yet experimentally this does not happen, raising the hypothesis that for some reason, an attribute of markets is that at certain points they reach levels that are clearly above the true value of the underlying goods. Why does this happen? This paper will attempt to get into the decision making dynamics of markets that are crowded with investors-turned-speculators who are eager to profit.

 

More at the link.

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UK sub-prime RMBS arrears more than double in 12 months - 3 June 2009

 

UK sub-prime RMBS arrears more than double in 12 months

 

Lee Jones - 03-Jun-2009

Arrears on mortgages in UK sub-prime residential mortgage-backed securities have more than doubled over the last 12 months.

 

According to Moody’s latest report into sub-prime RMBS, arrears have increased from 8 per cent in Q1 2008 to 18 per cent in Q1 2009.It also found that one in five borrowers in these portfolios were more than 90 days delinquent in Q1 2009.

Moody's senior associate Georgij Ludmirskij says: "Eleven transactions posted 90+ days delinquencies higher than 30 per cent. All vintages and transaction series deteriorated, and delinquencies increased in all transactions during the quarter.”

Among the transactions with the greatest arrears are Lehman Brothers’ Eurosail securities, and Rooftop’s Mansard, ranging between 28 per cent and 32 per cent in arrears.

Moody’s also found that Platform’s Alba, Leek and Great Hall Mortgages remained the series with the lowest levels of delinquencies, ranging from 11 per cent to 16 per cent.

The rating agency has downgraded seven securities in Q1 2009, and since December 2007, Moody's has reviewed and adjusted the loss expectations in 55 UK sub-prime transactions. Currently it says the reserve funds in 37 of the 89 outstanding securities are below their target level.

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Birmingham Post - Business - Business News - Financial - West Bromwich Building Society linked to rescue deal

 

West Bromwich Building Society has refused to deny speculation that Treasury advisers were on standby for a Government-backed rescue following the alleged failure of merger talks with its counterpart in Coventry.

The Black Country society issued a terse statement distancing itself from weekend reports that a Dunfermline Building Society-style state-endorsed salvage operation was planned for the West Bromwich.

Reports claimed that the West Bromwich was close to breaching regulatory capital requirements, with auditors yet to sign off the group’s accounts ahead of next month’s annual general meeting.

The claims have fuelled speculation that the West Bromwich could be forced into a merger by the Financial Services Authority or be broken up, with rivals such as Coventry Building Society waiting in the wings.

Meanwhile, the latest results are expected to reveal big losses when they are announced in a week’s time because of the West Brom’s exposure to risk-laden buy to let lending.

One national newspaper report claimed “early discussions” with the Coventry had failed, leaving the Treasury poised to nationalise the West Brom and sell off its assets in a Dunfermline-style bailout.

But a West Bromwich Building Society spokesman issued a guarded press statement, saying: “We cannot comment on speculation.

“We are looking forward to announcing our results on Monday June 15, the date always planned by our new finance director Jonathan Westhoff, who joined us in early May, who will be addressing any questions or issues that you might have then.”

Just three weeks ago the society, the UK’s ninth largest mutual, assured its members that it was “safe and secure” following claims that the Financial Services Authority was “secretly” courting “potential white knight bidders” for the West Brom.

 

We've not had a rescue for awhile.

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Let's have a five-year public spending freeze to kill off big government - Telegraph

 

With a general election now looking possible sooner rather than later, the issue of what to do about it could soon be a live one.

How bad is the situation? Since the Budget, we have had the borrowing figures for the first month of the fiscal year. Already the Chancellor's forecasts are looking testing. Net public borrowing came in at £8.5bn compared to last April's figure of £1.8bn.

 

The Budget forecast for borrowing for this fiscal year was £175bn. I think the outturn will be more like £200bn. Next year, the Treasury expects borrowing to nudge down a touch to £173bn, but I reckon that it will probably rise further, perhaps to £230bn. This would be over 16pc of GDP and far and away the highest peacetime deficit ever.

If the election comes sooner, is there a case for an emergency Budget? There is, but in all likelihood an early election will not come before October and at that point the financial year would be more than half way through.

It would, though, be possible to implement some emergency spending cuts and certainly possible to raise VAT and excise duties with more or less immediate effect (increasing the VAT rate to 20pc would raise about £10bn per annum. It would be quite feasible to announce this new rate to coincide with the planned expiry of the temporary VAT cut in December).

But income tax measures and a wholesale review of public spending for this financial year would not be possible. The sensible thing would be to use the pre-Budget report, which is usually presented to parliament in November, to announce measures to take effect next April.

What should those measures be? There will be considerable pressure on the new government to raise taxes. Historically, this has been easier to do than cutting spending. And some leading Conservatives apparently think that this would also be easier politically.

Perhaps political considerations will require that some taxes go up, in order to "share the pain". But the economic case for higher taxes is weak.

 

Uncomfortable reading for those in public sector jobs but unfortunately govt employment has gone to unsustainable levels, which means cuts to bring it back to a sustainable level.

 

The country has run out of money.

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Public sector pension millionaires - Telegraph

 

The largest number of "pension millionaires" is found in the National Health Service, which has 22,999, according to figures released under the Freedom of Information Act.

Other public sector pension millionaires include 3,680 former civil servants and 2,658 teachers.

Almost 400 retired staff from Glasgow city council and 223 from Kent county council also have pension pots worth £1m or more.

The £1m assessment was based on analysis by Terry Arthur, a fellow of the Institute of Actuaries, who found it would cost £1m on the open market to buy a pension of £33,000 a year, net of lump sum.

The Freedom of Information request by a Sunday newspaper asked the pension trustees of almost 1,000 public sector pension schemes how many retired members were being paid more than £33,000 per year, net of lump sum.

Mervyn King, governor of the Bank of England, has a pension now worth £5.4m, the largest in the public sector.

He is among more than 20 civil servants and quango heads who have accumulated pensions worth £2m or more.

Three BBC board directors also feature in the top five.

John Smith, who heads BBC Worldwide, the corporation's commercial arm, has accumulated a £3.1m pension pot after 18 years' service.

 

All of these pensions are completely unsustainable, and unaffordable all funded by the future taxpayer.

 

If we don't have growth we have a major problem.

 

As I said at the start of the year the pension crisis will be revealed. Obviously if you've been reading this thread you will already know about it.

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Standard & Poor?s Lowers Rating on Ireland to AA From AA+ - Bloomberg.com

 

Standard & Poor’s today lowered its long-term sovereign credit rating on the Republic of Ireland to ‘AA’ from ’AA+’ and said the outlook is negative.

 

Time appears to be running out for Ireland.

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Poll shows recession over for now | Top News | Reuters

 

The recession in Britain is over for now, a slim majority of economists said in a poll published by the Financial Times on Monday. The newspaper said 11 of 20 economists surveyed believed the economy had stopped contracting in June and was likely to start growing in coming months, while those who said the economy was still shrinking thought the bottom of the downturn was near.

The survey suggests the government's forecast that growth would return by the fourth quarter may have been too pessimistic, and it may resume sooner, the newspaper said.

Chancellor Alastair Darling said at the time of last month's budget that he expected recovery by the end of 2009, with 1.25 percent growth slated for 2010.

The FT cited Morgan Stanley economist Melanie Baker saying: "Our central forecast is for a (small) positive GDP growth number in the second quarter already."

JP Morgan's Malcolm Barr saw "a transition into modest positive growth as the data move into the third quarter."

 

So it appears that over 50% of economists believe debt is wealth.

 

For all our sakes I hope they are correct.

 

If they are Gordon Brown is a genius and must keep spending money we've not got.

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Alliance Boots set to name Hornby as new chief executive

 

Shock return for discredited former HBOS banker at pharmacy chain

 

 

• Job losses expected as LDV folds
  

Another company collapse, I doubt LDV will be saved as they are. Yet more of our manufacturing base destroyed.

 

• Business sentiment growing more confident
  
• JD Sports fashion sales gather pace
  
• Strong interest in Lloyds cash call
  
• Jobs at risk as LDV applies for administration
  
• Cost of TV ads falls to lowest in decades as recession bites
  
• Redundant City high-flyers take their money and run
  

 

Margareta Pagano: More balls, please, at the Treasury

 

With the economy in such a shocking state, Labour's only hope is a sharp U-turn on public spending – but does it dare?

 

 

• Hamish McRae: We must seize the opportunity to radically rethink our government
  
• Jeremy Warner: Rio Tinto – another lesson in the perils of empire-building
  
• Jeremy Warner: Sir Alan Sugar – you're hired!
  

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Fraudsters jailed over Aviva [problem] - Times Online

 

UK jobs at risk as LDV files for administration - Times Online

Pity LDV wasn't a bank, they could have got billions.

 

Time running out for Setanta rescue - Times Online

 

Lloyds confirms £2.5bn bailout repayment to Brown - Times Online

Due the banking loss scheme created by the govt I'm sure this repayment will be dwarfed by the losses the taxpayer will make on the bad loans of HBOS.

 

Oliver Sweeney bought out of administration

 

The founders of Oasis and Warehouse chains have teamed up with a former M&S executive to rescue Oliver Sweeney shoes

 

Sterling falls on Labour defeat

 

Update: 6.15pm Pound falls further from seven month high as pressure builds on Gordon Brown

 

• Rio unveils BHP pact and $15bn rights issue
  

 

• Why small and tacky is, in fact, beautiful
  

UK private equity buyouts slow to a crawl

 

Only 13 buyouts of British companies were announced in the first quarter, a fifth of the 63 deals in 2008, says Dealogic

 

• Blackstone drops payout as it tumbles into the red
  

 

• The rise and fall of private equity deals
  

South leads as regions chase revival

 

Half of the UK's regions have enjoyed a return to growth, a survey suggests, but this recovery is strongest in the South

 

 

Ireland credit-rating cut for second time

 

Former Celtic Tiger is today dealt a fresh blow as S&P downgrades the country and warns a further cut could follow

 

 

Airlines to lose $9bn as recession bites

 

Global industry is set to lose nearly double original forecasts due to a 'rapidly deteriorating revenue environment'

 

• IATA chief fights to prevent crash of airlines
  

 

• Holiday protection is not what it was
  

Madoff case pits Britons against Americans

 

Grant Thornton, which is liquidating London operations, faces battle with Irving Picard, trustee liquidating US business

Germans point to Qatari talks with Porsche

 

Focus, a German weekly, says Qatar Investment Authority is in talks about an investment in debt-laden carmaker

 

 

Gordon Brown’s legacy is a nation more divided than ever - Times Online

 

 

Days of open-ended pension promises are over - Times Online

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Backer of Post Office savings faces credit rating downgrade - Telegraph

 

Whoops! Browser Settings Incompatible

 

The establisment Left had been crushed across most of Europe, just as it was in the early 1930s.

We have seen the ultimate crisis of capitalism -- what Marxist-historian Eric Hobsbawm calls the "dramatic equivalent of the collapse of the Soviet Union" -- yet socialists have completely failed to reap any gain from the seeming vindication of their views.

It is not clear why a chunk of the blue-collar working base has swung almost overnight from Left to Right, but clearly we are seeing the delayed detonation of two political time-bombs: rising unemployment and the growth of immigrant enclaves that resist assimilation.

Note that Right-wing incumbents in France (Sarkozy) and Italy (Berlusconi), survived the European elections unscathed.

Left-wing incumbents in Germany, Austria, the Netherlands, Spain, Portugal, Hungary, Poland, Denmark, and of course Britain were either slaughtered, or badly mauled.

The Dutch Labour party that has dominated national politics for the last half century fell behind the anti-immigrant movement of Geert Wilders (banned from entering Britain). It serves them right for the staggeringly stupid decision to force through the European Constitution (renamed Lisbon) after it had already been rejected by their own voters by a fat margin in the 2005 referendum.

The Portuguese Socialists face Siberian exile after seeing a 18pc drop in their vote. The slow drip-drip of debt-deflation for a boom-bust Club Med state, trapped in the eurozone with an overvalued exchange rate (viz core Europe, and the world), has suddenly turned into a torrent. The country is already in deflation (-0.6pc in April). It has been suffering its own version of Japanese perma-slump for half a decade.

Portugal's opposition is calling for an immediate vote of no censure, while the Government clings to constitutional fig-leaves to hide its naked legitimacy. "O Governo está na sua plenitude de funções," said the chief spokesman. You can guess what that means. Not long for this world, surely.

 

More at the link.

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Andy Hornby: The parable of the prodigal banker - Telegraph

If only I could be a failed CEO, I'd be made for life.

 

Gordon Brown leadership chaos 'will keep pound lower' - Telegraph

 

IMF tells Europe to come clean on bank losses - Telegraph

 

Lloyds takeover of HBOS 'beginning to show results', says chairman Sir Victor Blank - Telegraph

Well he would say that wouldn't he?

 

BA takes survival fight to its unions - Telegraph

BAA bondholders offer 'special regime' alternatives

 

 

 

• Bank of England to buy more frozen assets
  
• LDV back in administration, 7,000 jobs at risk
  
• Merrill's Bob Wigley to chair Yell
  
• Thomas Cook owner Arcandor turned down for state aid
  
• Barclays closes in on sale of Barclays Global Investors
  

Oil price poised to spike

 

 

 

http://www.telegraph.co.uk/finance/financetopics/recession/5473623/Scottish-economy-will-not-recovery-until-2011.html

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Lloyds set to pay back taxpayers

Taxpayers will claw back some cash from Lloyds Banking Group after investors strongly backed a share sale.

Fair share for Lloyds investors?

Lloyds set to shed 530 jobs

Lloyds chairman to step down

 

BBC NEWS | Business | 'Vast majority' of LDV jobs to go

 

BBC NEWS | Business | Pound slides more against dollar

 

OTHER TOP BUSINESS STORIES

Virgin to sell Nigerian airline

 

Minister denies Sugar 'conflict'

 

Setanta holds crunch SPL meeting

 

Top Boots job for ex-HBOS chief

 

Taxman 'faces £500m bingo bill'

 

Obama pledges 600,000 summer jobs

 

MORE FROM BUSINESS

US bank deadline on stress tests

 

Forensic service may cut 800 jobs

 

Postal pensions face more change

 

Global slump hits net ad revenues

 

Bank planning trade credit help

 

BMW's sales decline slows in May

 

Fears grow on Latvian currency

 

GM and Citigroup drop out of Dow

 

S&P cuts Irish debt rating again

 

Japan current account drops 55%

 

Airlines' losses to soar further

 

Blackrock targets Barclays firm

 

OECD says recession easing

[user2006]

are there any template letters for banks who increase intrest on CC's unfairly/

i.e i have a card that when opened was at 15.9% now 24.9%??????

 

cheers....

[interestrateripoff]

Van maker LDV collapses into administration | Business | guardian.co.uk

 

Airlines 'to lose $9bn' as they fight to survive recession | Business | guardian.co.uk

 

Eurostar faces rivals for cross-channel route | Business | guardian.co.uk

 

Nine banks seek way out from under Tarp | Business | guardian.co.uk

 

Barclays confirm BlackRock among bidders in BGI sale | Business | guardian.co.uk

 

Tweaks to network could deliver high-speed broadband, BT says | Business | guardian.co.uk

 

Pound falls back as Labour woes mount | Business | guardian.co.uk

 

Most recent

 

 

• Dazed, gripped by delusion, the party last night bottled it
   
   
  8 Jun 2009: Polly Toynbee: There is a bold, reviving leader's speech that might yet salvage Labour. It just can't be delivered by Gordon Brown
   
   
  
• Pound falls back as Labour woes mount
   
   
  8 Jun 2009: Sterling has fallen broadly in the past week as mounting resignations by Cabinet members stepped up the pressure on Brown to stand down
   
  
• Labour's stock may rise as the recovery picks up - but beware the sucker's rally
   
   
  8 Jun 2009: Larry Elliott: Gordon Brown wants an uplift in spending, but deep-seated structural issues require attention
   
  

 

Most recent

 

 

• Ten lessons for the left from Europe
   
   
  8 Jun 2009: Denis MacShane: Developments such as a rise in racism, the collapse of faith in the left and the recession have changed the political landscape 34 comments
   
   
  
• A new people's bank
   
   
  8 Jun 2009: Kate Hoey: Now is the time for an ethical bank that saves the Post Office and incorporates another state-owned institution – Northern Rock
   
  
• LDV: Countdown to collapse
   
   
  8 Jun 2009: LDV rose from the ashes of Leyland, launched an acclaimed van but failed to secure the aid needed to stay afloat
   
  
• BAA urges reforms over government control if it goes bust
   
   
  8 Jun 2009: Complaints from creditors owed £13bn by the Heathrow operator highlight administration rights if BAA were to go under
   
  
• Ryanair boss sells 5m of his company shares
   
   
  8 Jun 2009: O'Leary's sale of £16.5m of shares reduces his personal Ryanair stake to 4%
   
  
• Room at the top - but who will fill the talent gap in Britain's companies?
   
   
  8 Jun 2009: City headhunters are facing one of the biggest challenges of their careers as they seek to fill empty or soon to be vacated posts at the top of five of Britain's largest corporations
   
   
  

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Bankruptcies rise among over-45s | Money | guardian.co.uk

 

The over-45s are experiencing the biggest rise in bankruptcies as multiple marriages and falling house prices take their toll on people's finances, it was claimed today.

The number of individuals in that age group going bankrupt increased by 124% between 2004 and 2008, rising from 10,600 to 23,800, according to research by accountancy firm Wilkins Kennedy. Over the same period the total number of bankruptcies rose by 89% to 67,500.

The firm, which analysed figures from the Insolvency Service, said an increase in second and even third marriages was a factor. One in five people divorcing in 2007 had a previous marriage ending in divorce compared to just one in 10 in 1980.

Anthony Cork, director of Wilkins Kennedy, said: "By the time people hit 45, many will have established a second or even a third family with additional numbers of children and ex-wives or ex-husbands to support financially.

"This could mean people are having to help pay off part of the mortgage for their ex-husbands' or ex-wives' home, contributing to expensive child care and maintenance costs whilst paying for a second set of school fees and mortgage payments from a new marriage."

Cork added that recent double-digit falls in house prices meant those who had previously turned to their homes for finance in times of crisis were now finding they had less equity or were unable to remortgage.

"The property boom saw a lot of people remortgaging their houses to cash in on the rising value of property, but with the crash many people now haven't got much equity, if any, to rely on if they are made redundant or if their incomes fall.

"The problem may get worse if property prices continue to fall and unemployment continues to rise."

 

Not looking very good is it.

[interestrateripoff]

are there any template letters for banks who increase intrest on CC's unfairly/

i.e i have a card that when opened was at 15.9% now 24.9%??????

 

cheers....

 

General Debt Issues - The Consumer Forums

 

I'd ask your question here.

[interestrateripoff]

Drop in retail sales hits hopes of economic recovery | Business | The Guardian

 

Shop sales fell back last month in spite of growing optimism that the recession may be coming to an end, with retailers reporting that market conditions remain "extremely challenging," the British Retail Consortium reports today.The BRC's latest monthly report shows that retail sales on a like-for-like basis – which excludes the effect of changes in floor space – fell 0.8% in May compared to May 2008, which was a strong month.

"Negative results show spring has been extremely difficult for most non-food retailers. The turnaround in sales of big-ticket items such as furniture and large electricals, which would indicate real change in the mood of customers, still eludes us," said BRC director-general Stephen Robertson.

Helen Dickinson, head of retail at the report's sponsors KPMG, said: "These figures may look disappointing after last month's positive results were flattered by the timing of Easter, but extremely challenging market conditions – particularly for the non-food sectors – continue.

"We might have expected better figures as, while there are consumers struggling financially due to actual, or the prospect of, job losses, there are also those with greater disposable income due to lower mortgage payments, easing inflation and lower fuel costs. It remains to be seen when those who have cash to spare will feel confident to start spending again."

The survey showed that clothing and footwear fell below last May's strong sales while big-ticket homewares and furniture sales remained "difficult".

Further evidence that the economy remains under pressure came from a survey by recruitment specialists Manpower showing that employers' hiring plans have fallen to their lowest in 17 years, although the pace of decline has slowed.

 

Turbulent times, although I think it's unlikely we are having any sort of sustained recovery.

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Darling to cut public spending, admitting difficult choices lie ahead | Politics | guardian.co.uk

 

Cabinet ministers were last night served notice by the Treasury of a tough clampdown on public spending as Alistair Darling outlined three key areas for economic policy before the general election. The chancellor said the government should make health, education, transport and housing its four spending priorities as it seeks to reduce a budget deficit forecast to balloon to a record £175bn this year.

In an interview with the Guardian, the chancellor said: "We are going to be moving into a difficult environment. We have choices to make and some of them will be difficult." Darling declined to be drawn on which spending projects would face the axe, and said a belief in the impact that good public services had on the quality of life helped differentiate Labour from the Conservatives. But he added that every household knew that during tough times having more of one thing meant having less of something else. "Governments face the same challenge."

After being left in his post after last week's Cabinet reshuffle, Darling said he had three aims: to ensure the government delivered on its anti-recession strategy; to put the public finances on a sustainable footing; and to help diversify the economy away from financial services.

The Treasury predicted in April's budget that the economy would contract by 3.5% this year – the biggest annual decline since 1945. But Darling said he was encouraged by some of the recent evidence suggesting that the economy was through the worst of the recession. "I am confident but I am still cautious. A number of indicators are showing confidence is coming back.

"But there are reasons to be cautious. The European economy and some of its member states are being hit a lot harder than was thought."

The chancellor also expressed concern that a rising oil price could choke off recovery.

Darling said the government needed to ensure that pledges by Britain's banks to resume lending to homeowners and businesses should be met in full. He said he wanted the asset protection scheme for toxic loans to be implemented and improvements made to Job Centre Plus, the scheme to help the jobless find work.

"Unemployment will carry on rising this year and next, and we must step up our efforts to get people back into work."

Darling said that borrowing would be allowed to rise in order to soften the impact of the recession, but that action would be needed to make the *public finances sustainable in the medium and long term.

 

As I keep saying there will be cuts to the public sector, the spending is unsustainable.

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Tax advice of the week: holiday lets to lose tax break - MoneyWeek

 

For years, the taxman has treated UK furnished holiday lets as a business, so any losses can be used to reduce the tax on other income. It turns out, however, that the current rules are not compliant with European law and therefore, as the small print in Alistair Darling's last Budget reveals, the "special tax treatment" will end on 5 April 2010.

This tax concession doesn't just relate to losses, says Myra Butterworth in The Daily Telegraph – there are other tax breaks available to reduce inheritance and capital-gains tax, which will also be withdrawn.

That's bad news, but it does at least still leave the "door ajar" for maximising tax relief. If your holiday let loses money (accountants Baker Tilly estimates that owners lose around £10,000 on average on each property every tax year), get those maintenance jobs you've been putting off done soon.

Check your holiday let qualifies for the special tax relief first (see PIM4110 on HMRC's website) and don't confuse repair costs with improvements, which "count as capital expenditure and aren't deductible for income tax".

 

Anyone would think this govt is desperate for cash.

[interestrateripoff]

UK economy News - UK and Austria in line for possible credit rating downgrades

 

As the dust starts to settle on the downgrade of Irish national debt by the credit rating agency S&P there are concerns this evening that Britain and Austria could be next on the list. Britain is the only one of the two countries on a negative outlook from S&P and could be in line to lose its valuable AAA rating. The move to reduce the rating on Irish sovereign debt has set a very difficult precedent and one which is striking fear into investment market.

 

However, when you consider the massive amounts of money which the UK government has ploughed into financial sector, the ongoing budget deficit and enormous funding required for the future, it is easy to see why companies such as S&P are concerned. While the UK government will reiterate its stance that the UK will move out of recession in the latter part of 2009 and the early part of 2010 this is not a belief held by every economic analyst.

Let's not underestimate the impact which a downgrade of UK sovereign debt would have on the finances of the UK, with interest payments increasing substantially, access to funding more expensive than ever before and serious problems going forward.

 

The unsustainable debt.

 

If only we had an economic genius in charge.

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Lloyds confirm C&G branches will close new

 

Lloyds is to close its Cheltenham & Gloucester branches as part of a fresh wave of cuts which will see more than 1,000 jobs axed.

 

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Jeremy Warner: Best not to count on those green shoots

 

The case for a double-dip recession is all too easy to make

 

 

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Why the UK's van makers are disappearing over the horizon

 

LDV's collapse yesterday may mark the final chapter in the story of a British industry. Sean O'Grady reports