Osborne fails to instil confidence in consumers

Earlier this week the Chancellor of the Exchequer, George Osborne, delivered his 2011 Budget speech, which was watched by many people hoping to get a glimmer of hope with regards to their financial situations. Osborne did announce a range of measures that were aimed at trying to boost affordability for different groups such as first time buyers and drivers. However, according to the results of a recent poll many people are still facing uncertainty and are not feeling any more confident about their futures following the budget.

The chancellor announced a number of measures designed to try and help struggling consumers in the current climate, such as a new equity loan scheme for first time buyers to help them get onto the property ladder and a cut in fuel tax instead of an increase in order to help drivers cope with the soaring cost of petrol.

Despite these measures a recent poll carried out by uswitch.com has shown that many people now feel less confident about their financial situations than they did before the budget speech was delivered. The survey resulted showed that around 36 percent of consumers were less confident about their finances now than they had been prior to the budget speech. Another 20 percent of respondents admitted that they were concerned about their jobs.

Around 58 percent of the people that were polled as part of the survey said that they believed that now as not a good time to take on any additional financial commitments or make any major decision relating to finances because of the uncertainty that they faced with regards to their finances and their jobs.

One official from uswitch.com stated: “Stripping down living costs and household bills to the bare minimum will help consumers enjoy more disposable income.”

Tags: additional financial commitments, Kenneth Clarke, chancellor of the exchequer, George Osborne, part, chancellor, fuel, loan

New government may reverse stamp duty break for first time buyers

In the budget by the former Chancellor of the Exchequer, Alistair Darling, earlier this year it was announced that there was to be a stamp duty break for first time buyers in the UK, and that first time buyers would be able to buy a property up to the value of £250,000 without having to pay any stamp duty.

The former Labour government was hoping to help more first time buyers onto the property ladder and to revive the housing market through this move. The increased stamp duty exemption threshold was twice the standard levels, which is £125,000, and was made available for first time buyers only.

However, it has emerged that the new coalition government is considering scrapping the extension on stamp duty exemption, which means that first time buyers could have this important tax break pulled out from under them just months after it was originally introduced.

The extension on stamp duty exemption was set to last for two years until 2012, but as part a range of cutbacks the new coalition government could end up getting rid of the stamp duty break. The Conservative party had previously supported increasing the stamp duty exemption threshold for first time buyers, and the Labour party was said to have pinched the idea from the Tories.

In fact, many thought that the Conservative party would make the increased exemption permanent if elected, but instead the government is considering scrapping the tax break altogether in a bid to save more money to clear the public deficit.

The recent budget stated: ‘As announced in the Coalition Agreement, the Government will review the stamp duty land tax relief for first time buyers taking into account its impact on affordability and value for money.’

Tags: move, first time buyer, tax, coalition agreement, chancellor

Is quantitative easing working?

When the Chancellor of the Exchequer, Alistair Darling, first announced plans for quantitative easing in the UK he said that £75 would be allocated for the scheme with an additional back up of a further £75 billion if necessary. Read more

Tags: chancellor, industry, Economic policy, economy, recession, bank, thing, quantitative easing

Talent will be forced abroad due to 50p tax

Following the recent budget, where the Chancellor, Alistair Darling, announced that those on a certain level of income would be charged a new, higher tax rate, some industry officials have expressed concern that the new level of tax could end up forcing much of Britain’s talent abroad. Read more

Tags: 50p personal tax, recent budget, switzerland, higher taxes, 50% tax rate, chancellor, tax hikes, uk tax

Darling admits that he was too optimistic about the recession

Earlier this month the Chancellor of the Exchequer, Alistair Darling, boldly admitted that his initial predictions about the ongoing recession that has gripped the UK were too optimistic. Darling said that he had underestimated the recession, which he had originally predicted would be over by the middle of this year. In an interview with a leading national newspaper, the chancellor simply said ‘It’s worse than we thought’. Read more

Tags: recent budget, contraction, optimistic story, Late 2000s recession in Europe, chancellor, recession, Late-2000s recession, recent g20 summit

Is chancellor too optimistic about recovery of the nation?

Most people in the UK are now well aware that the UK is going through a very rocky period, with the global financial crisis still taking effect and the recession further impacting on the economy. Read more

Tags: course, opposition party members, chancellor, growth, couple

Drop in interest rates causes surprise for consumers

Struggling homeowners trying to cope with high mortgage repayments welcomed a surprise earlier this month after the Bank of England slashed the base rate by 1.5% just a month after applying a surprise 0.5% cut a day ahead of the scheduled Monetary Policy Committee meeting. The slash in interest rates has now taken the base rate down to just 3%. Just a year ago the base rate stood at 5.75%, so it is now nearly half of what it was a year ago. Read more

Tags: Business Finance, interest rates, bank of england, CBI, borrowers, chancellor, policy, order

Who is the best ‘pilot’…Brown or Cameron?

Following a highly controversial and frank interview given to a national newspaper by the Chancellor, Alistair Darling, with regards to the state of the economy earlier this week, the Justice Secretary Jack Straw has now spoken out to BBC reporters about his take on the situation. In relation to the interview that Darling gave, Mr Straw stated that he did not think that Darling had spoken out of turn when he gave the interview, but he added that the chancellor had, in fact, been referring to the global economic situation and not specifically to the economic crisis facing Britain. Read more

Tags: interview, economic management, global economic situation, gordon brown, whilst, prime minister, david cameron, chancellor

Stamp duty rumours spark further slowdown in housing market

Over recent months the housing market in the UK has experienced a real slump, with house prices falling and property sales falling to their lowest level in many years. Property sales and housing transactions have been affected in a number of ways over recent months and for a number of reasons. The tight credit conditions that have come into play since the onset of the global credit crunch have resulted in more people being unable to get a mortgage. In addition to this falling house prices have put many people off taking the plunge for fear of house prices falling further and leaving them quickly facing negative equity. Read more

Tags: lowest level, stamp duty, recent reports, property sales, GBP, house, chancellor

Darling accused of incompetence over Northern Rock loan

Chancellor, Alistair Darling, found himself the recipient of a vicious verbal attack by the shadow chancellor George Osborne earlier this week, when he was challenged in the Commons over the loan that was granted to Northern Rock by the Bank of England.

The chancellor has been accused of exercising secrecy in authorising the loan to ailing bank Northern Rock, and the attack came on a day that saw the Rock’s shares plummet again, falling by over 20% in the light of no successful sale to rescue the bank.

Osborne accused Darling of misleading the public by not making the loan public, but Darling stated that the way the Northern Rock loan was handled was normal operating procedure for the Bank of England, and that making the public aware of every move could have adverse effects, which indeed it did when the public did finally learn about the loan. He added that the loan was secured against Northern Rock’s assets after being accused of putting taxpayers’ money at risk.

Mr Osborne stated: ‘Can the Chancellor tell us that all the money lent by the taxpayer will be repaid? Yes or no.’

He also said: ‘This is a tale of incompetence and weak leadership from a government that now reels from one disaster to another. We have a Chancellor who made loans he kept secret from Parliament. We have a Chancellor who has made guarantees to the taxpayer he cannot be sure of honouring. And we have a Chancellor whose weakness is contributing to the instability of the financial system. That is why we have a Chancellor whose job is on the line.’

Darling has been accused by the shadow chancellor of withholding information from the public as well as from parliament, but Darling insists that he did the right thing in authorising the loan for Northern Rock, and said that there was no secrecy involved.

Tom Smith
30th November 2007

Tags: rock, chancellor, bank, Loans, england, darling, northern

King advised Darling not to lend to Lloyds

The Governor of the Bank of England Mervyn King has spoken out about his advice to the Chancellor of the Exchequer with regards to a loan request from banking giant Lloyds TSB.

The high street bank had approached the Bank of England for a loan to the tune of £30 billion in order to fund the takeover of Northern Rock. However, the governor advised the chancellor not to authorize the loan, which Lloyds wanted to take out over two years at competitive rates.

According to Mr King he told Darling that the Bank of England should not be providing loans to a company in order to allow the takeover of another company.

Speaking on Radio 4 Mr King stated: “I said to the chancellor: ‘This is not something which a central bank can do. They don’t normally finance takeovers by one company for another, let alone to the tune of £30bn, which is rather a large amount of money’.”

When speaking on Radio 4 Mr King also added that it could take months before banks get back to normal following the effects of the credit crunch.

He stated: “I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we’re going in the right direction.”

He also added: “There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities, but to some extent there are always risks, there are always fragilities. What I would say is that the situation now is, in my view, different from that in August, though it’s not without risk.”

Tom Smith
15th November 2007

Tags: crunch, darling, credit, england, lloyds, bank, northern, king

Chancellor Darling Would Like Longer Fixed Rates

New Chancellor of the Exchequer, Alistair Darling, has indicated that he would like to see longer terms for fixed rate mortgages in the UK.

Darling would like to see more fixed rates lasting up to 25 years and on Monday 9 July he pledged a shake-up of the housing market following concerns that have been expressed regarding lenders only offering short term fixed rates in order to maximise their profits.

If homeowners have to renew their fixed rate deals more often, they will be liable for thousands of pounds worth of charges in arrangement fees, which have rocketed in the last couple of years. As interest rates have risen five times in the last twelve months, consumers are looking to fix their interest rates so they know what their payments will be for a reasonable period of time, but the number of deals beyond two years are few and far between.

The Chancellor said that longer-term fixed rates were available around Europe and would be useful in the UK to reduce volatility. He was unhappy with the incentives built in to products that meant mortgage brokers were more likely to advise homeowners to choose short-term products – and the associated high arrangement fees – some now nearly £2,000.

Mr Darling said that the Financial Services Authority have noted the problem of brokers wanting homeowners to return to them every two or three years rather than every ten or twenty.

The Chancellor also talked about the possibility of building on greenbelt land in the future as the lack of affordable housing in the South East in the last five years was now becoming a problem for the whole country. Last year’s Government target of 223,000 new houses was not met with only 160,000 being built. Mr Darling agreed that planning is a sensitive issue, but whilst determined to protect Britain’s heritage he said that if we don’t increase the supply of houses the problem will get worse and worse and worse. There was no way he would accept that housebuilding should stop.
   
Ex-Chancellor Gordon Brown, now Prime Minister, oversaw house prices that trebled between 1997 and 2007, and promised to end the boom and bust cycle in house prices, but as it is evident that we are coming to the end of a boom cycle in house prices, both Brown and Darling will be hoping that we don’t enter a bust period of falling or crashing house prices. However, with interest rates having risen from 4.5% last August to 5.75% last week the increased payments to be found by most homeowners will bring about a slowdown in the market.

Malcolm Harris, CEO of Bovis Homes, yesterday warned that any further rate rises could bring the housing market to a grinding halt. Average mortgage payments are now at a record level when compared with how much people earn.

Mr Darling acknowledged that housing is a huge issue and concerns more than the buyers, with parents and grandparents keen for their children to be able to afford housing, but a monthly repayment on a £125,000 mortgage s now £130 higher than it was last year.

Tom Smith
16th July 2007

Tags: rates, debt, longer, boom, chancellor, prices, afford