The British pound sterling currency is getting weaker according to recent reports stating that there has been a reduction of approximately 8% compared to the dollar. Although this has been criticised by some saying the sterling is now “properly valued”. The fall has been the lowest in two-and-a-half years.
Reports from the Bank of England say that the sterling has “a roughly 50:50 chance” when it comes to entering a triple dip recession. The Bank of England went on and “suggested that GDP was likely to be broadly flat in 2013 Q1, with a roughly 50:50 chance of a further contraction in headline GDP”.
Although the Bank did reiterate that “further ahead, a modest recovery seemed likely” and that there is a much more positive outlook when it comes to businesses. Despite the smaller companies continued struggle “indicators of business uncertainty had decreased recently, suggesting that increased investment might be in prospect”
“Small and medium sized enterprises were unlikely to have significant access to capital markets, so, unless those firms could finance capital spending from retained earnings or access to bank credit, investment growth could remain restrained.”
When it comes to businesses providing pensions they may be tempted to keep hold of their money in order to be able to provide for pensions.
Despite The Governor requiring £25 billion more than the £375 billion QE fund the other six members disagreed. Inflation rates will continue at 0.5%. The committee’s outcome has been the only time that the Governor’s move to reform has been denied in his 10 year appointment.
Although sterling has increased by 0.3% to $1.5139 the QE feels this “might lead to an unwarranted depreciation of sterling if it were misinterpreted as a lack of commitment to maintaining low inflation in the medium term”. However the MPC has seen that it was “appropriate to accommodate the first-round impact on [inflation] of movements in sterling”.
The 81% government owned Royal Bank of Scotland saw a £5.17 billion loss before tax, facing numerous costs with regards to the mis-sold Payment Protection Insurance scandal as well as inability to repay loans.
RBS has faced a £5 billion cost for unpaid loans with a further £450 million payout for mis-sold PPI as well as a £381 million fine for trying to rig the lending rate between banks, which has brought the total cost to £2.2 billion. Despite this RBS have still provided £215 million for bonuses for their staff. This has faced heavy criticism by RBS chief executive, Mr Hester who believes that this illustrates the faults within the banking industry, also thinks that the bank will be able to rectify this and be in a better position by 2015.
RBS later spoke of an opportunity for the government to sell its shares of the bank by 2014. The intended method by the government to sell its shares of the bank is to sell one quarter of the bank’s shares with more being sold gradually in the future.
The bank has also discussed the future sale of shares in approximately two years of its’ business, Citizens. The shadow financial secretary to the Treasury, Chris Leslie, has remained apprehensive on the idea of putting the bank on the stock market believing that it would not be a long-term solution to protect the taxpayer. In contrast to this the Chancellor of the Exchequer, George Osborne believes that this will largely benefit the British economy by allowing the bank to devote its’ funds towards British-based ventures which will help both businesses and consumers.
This years operating profit for RBS minus special costs totals £3.5 billion; Mr Hester commented on the recent reform within the bank, stating that it has “defused an economic time bomb”.
Chancellor of the Exchequer George Osborne faced fierce criticism from the Opposition as the latest official data show Britain’s economy had contracted 0.3% in the final quarter of last year. Overall, the economy was stagnant with zero percent recorded growth in 2012. The Office of National Statistics reported whilst there was 0.9% growth in the third quarter, the countries’ gross domestic product remained flat.
Shadow Chancellor Ed Balls said, “David Cameron and George Osborne’s complacency is completely exposed.” He added it “confirms what business leaders, retailers and families have known for many months – that depressed confidence and a chronic shortage of demand mean our economy continues to flat line.” Mr Balls has urged The Chancellor “to heed the advice now coming to him from right, left and centre…” and ease the rate of spending cuts.
Mr Osborne has remained resolute and said the new data will not deter him from continuing with planned austerity measures which slashed the countries’ spending and increased taxes. The Chancellor told reporters at the World Economic Forum in Davos that he is determined to confront economic problems and go on creating jobs for people.
Last week, Chief economist at the International Monetary Fund Olivier Blanchard had suggested the Chancellor reconsider austerity measures when the annual budget is announced in March. The IMF’s advice has been to slow the rate cut- backs if the economy was still failing to recover.
Deputy Prime Minister Nick Clegg responded with support for the Chancellor saying the government’s current plan “is tough, but pragmatic”.
Official forecasts from the Treasury and the Bank of England had predicted a contraction in the fourth quarter of 2012; however the shrinking in the economy is worse than was expected. Should the economy shrink further in the first quarter of 2013, Britain could be in its third recession since 2008. A statement from the Treasury said “whilst the economy is healing, it is a difficult road”.
Taking up gym a membership comes with advantages and disadvantages, as highlighted by the recent court case of Asbourne Management Services Limited, a gym company, in August 2011 which resulted in having to amend the terms of their contracts and its methods of collecting money owed by customers. This sparked an Office of Fair Trading investigation into the length and consumer fairness of gym contracts. The investigation has continued with a number of gyms falling under scrutiny by the OFT. The OFT has initiated this under the Unfair Terms in Consumer Contracts Regulations 1999 and the Unfair Trading Regulations 2008.
Senior Director of the OFT Goods and Consumer Group Cavendish Elithorn elaborates on the consumer trend; “Memberships to gyms and health and fitness clubs soar each January. People can initially be enthusiastic about a new fit and healthy lifestyle but then find that they can’t go as often intended or that their circumstances change.”
The gym contract registration process will have added guidelines. The marketing behind current 12 month gym contracts is that New Year resolutions often involve a customer becoming fitter, these customer will sign a gym membership contract for a 12 month period, and even if the customer wants to give up they must still continue and pay for the full 12 months of membership. It is the OFT’s intention that this investigation will strengthen customer rights in the membership process. The OFT are also anticipating further changes to long-term contracts by simplifying the termination process.
Due to the expensive nature of gym membership some may seek other cheaper methods of getting fit, such as running regularly, which can be incorporated into your journey to and from work, also try taking up Zumba classes which are becoming increasingly popular. The best advantage to these alternatives is that it works around your lifestyle rather than you having to fit everything around an expensive gym contract.
If however, you decide that you want to sign up to a gym anyway you need to know the minimum contract length so you can prepare for any future circumstances where you may be without money, and also be sure to read all of the small print as this contains vital information on how to exit your contract.
The recent announcement that the benefits system will be heavily revised has led to many UK families worrying about the future. Instead of child benefit being a set rate it will now become means tested, with families earning more than £50,000 per annum being required to pay back a proportion of the benefit awarded. Furthermore, families with an income in excess of £60,000 will not receive any child benefit.
The news has been met with dismay by consumer groups and is causing a rift within the coalition government. The opposition Labour party, however, has declared that it thinks the rule unfair, yet has not indicated any proposed reversal of the scheme should it win the next election. Concerns have also been raised about the ‘opt out’ option in which, rather than receive the money and then pay it back, families can choose not to be registered for child benefit in the first place.
Analysts have been looking at the situation and advising on the best way to approach the new system. It is strongly advised that those earning less than £60,000 do not choose the opt out option as they will then receive nothing. Instead, the general advice is that they take the payments as given and put them into a savings account. This way the money will accrue interest – admittedly not very much – and will be available to pay back the required amount when the time is due.
All recipients will need to complete a self-assessment form to declare their earnings and valid income, and this will further add to the confusion in the long run. The change has been one of the most controversial of all of the current governments’ changes, but they insist it is necessary in order to keep things afloat in these times of austerity.