UK May Experience Recession Soon
The United Kingdom may start to get into another bout of recession during the first six months of the year 2012 as many of the households are trying to lessen spending, according to the National Institute of Economic and Social Research. In light of this, the influential research think tank said that the government should try to ease their spending cuts in order to foster growth and development in the country. The economy is expected to decline by 0.1 percent this year but is also expected to grow in 2013 should there be a positive change in the current crisis in the eurozone. The recession that NIESR is referring to is the two consecutive quarters of economic contraction. Official statistics show that in January, the UK economy declined by 0.2 percent during the last quarter of 2011.
UK Did Not Agree to Join Fiscal Treaty
There are 25 out of the 27 member states of the European Union who have said yes to join a fiscal treaty to put force budget discipline measures. The two member states who did not agree were the United Kingdom and Czech Republic. According to the UK Prime Minister David Cameron, the UK government will have actions in place should there be a conflict in the treaty with the UK interests and threaten the country’s economy. Cameron said that there are legal concerns regarding the utilization of EU institutions in pushing forward the fiscal treaty. “It’s good that the new treaty is absolutely explicit and clear that it cannot encroach on the competences of the EU.
UK Bank Boss Declines £1M Bonus
Chief executive Stephen Hester of the Royal Bank of Scotland has declined receiving his bonus worth almost £1 million. According to BBC Business editor Robert Peston, Mr. Hester turned down the £963,000 shares only bonus after it becoming highly controversial. The CEO declined the bonus due to “enormous political pressure”. According to Chancellor George Osborne, the decision of Mr. Hester was “sensible and welcome”. This will help Mr. Hester put the spotlight on putting efforts together in getting back billions of pounds for the UK taxpayers. “Mr. Hester has done the right thing,” said Ed Miliband, leader from the Labour Party. However Robert Peston has pointed out that Mr. Hester deserved the bonus because he has made a lot of effort in making the Royal Bank of Scotland be a less risky financial institution.
Tax Deadline Put Back by Two Days
There will be no extra charges over self-assessment tax returns submitted online during the first two days of February, according to the HM Revenue and Customs. The official deadline was set on January 31 but due to a strike scheduled that day, there may be a last minute disruption, hence the extra two days. There are over two million people who are expected to file their returns through the website. There was a change in the process after an announcement that there might be leniency due to the strike. PCS, the public sector union, will hold a strike against the decision to have private companies execute some call trials in two call centres. “This strike could have caused thousands of people to incur fines, so I am pleased that HMRC has taken this common sense approach,” said David Gauke, exchequer secretary to the Treasury.
UK Government Debt Reaches £1 Trillion
The government debt of the UK has gone up to a record breaking £1 trillion from £883 billion from the past year. Even when this is the current figure, Chancellor George Osborne is still determined to attain his borrowing goal this financial year of £127 billion. The total for the year is at £103.3 billion. According to the Office for National Statistics, the government tax receipts have been given a boost by the bank levy. This was enforced on various financial institutions in order to recover some of the expenses during the economic crisis. There was a VAT increase this January – from 17.5 percent to 20 percent – which increased the tax take as well. The expenses of the central government declined by 0.9 percent as debt reduction plans have been implemented.
Wide Gap Between Economies in Cities Now Apparent
There has been a big difference in economic performances in various cities and towns in the United Kingdom according to a report presented by the Centre for Cities. In Cambridge and Hull, the number of people getting their Jobseeker’s Allowance has gone up to almost double the figure since the beginning of the year 2008, which is from 3.2 percent to 6.1 percent. In Rochdale, there are about six times as much as those people claiming their unemployed benefits in Cambridge. Cambridge has a rate of 5 percent, while Rochdale has 30.3 percent. According to the research group, the efforts of the private sector in trying to provide more jobs for the people were “playing out very differently across UK cities.” Doncaster, Hull and Newport have been described as towns and cities that have private sectors that are less active and less dynamic compared to others.
House Rent Declined by 0.8% Since November
Renting a home in England and in Wales has now gone down for another month this December, according to LSL Property Services. The average rent is now down by 0.8 percent compared to £711 per month during November. However, rental prices are higher by 4 percent compared to December 2010. One of the main reasons for this is having more people prioritize their Christmas expenses and became behind on their rental payments. LSL noted that there were about 10.7 percent of the rent paid in December was marked late or unpaid, which is higher than the recorded 9.3 percent in November. According to David Newnes who is the director of LSL, “The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive.”
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