2009 Budget in brief

Whilst we wade through the budget looking for a scrap of good news, here are the salient points:

Tax changes:
Cigarettes & Alcohol up by 2%
Car fuel up by 2p per litre in September
Income tax for those earning £150,000+ to go up to 50% from April 2010
Child element of tax credits to be increased by £20
Stamp duty exemption on houses up to £175,000 to be extended to the end of 2009

Spending:
(as usual some spending has already been announced, so the Government can claim the credit twice..)
£500m to boost housing projects that have stalled
£1bn for climate change projects
£50m to upgrade military housing stock

Other:
£2,000 off a new car purchase for those trading in a 10 year old car
Pledge to reduce house possessions
New power plants to be exempt from climate change levy from 2013
A range of changes to pensions to keep them in line with inflation
Worlds first 'carbon budget' announced £435m to be earmarked for promotion of carbon efficiency

When you consider how eagerly this budget has been awaited, the damp squib that has been delivered is full of small and seemingly insignificant steps. When you consider the dynamic approach that Gordon Brown has demonstrated on the world stage, the few crumbs that Alistair Darling has been left to rearrange into an attractive offering are looking decidedly pathetic.
Gordon Brown has been announcing steak dinners to the world in terms of money pumped into economies, and we are left with a small rather unappetising unsatisfactory snack... Of course, the truth is that the money has gone (not the the money was actually there in the first place), the government is spent out and frugality is all that is left. Some might say that we should have employed frugality in the first place so that there was still some 'wriggle room' for sweeping gestures to boost the economy when it started to show signs of recovery. Instead of which we have thrown good money after bad debts and are left with disgraced bankers enjoying the fruits of their mismanagement.
A summary of the budget for the majority will be something like this:

You are due an increase in child tax credit which should hopefully cover the rise in car fuel tax, you've probably already given up smoking, so the couple of beers or glasses of wine you have each week will now cost you more. You haven't a hope of earning £150,000, and you probably could care less (if you really tried hard) about carbon emmissions right now..
You are considering flogging your 10 year old car for £1000 and buying a 10 year old 'banger' for £90 before attempting to get the part-exchange deal...You are also considering joining the army when your house gets repossesed as you hear they are refurbishing army accomodation.

Nothing much to whoop about for anyone as far as I can see...

Related posts:
UK bank rate drops to 1%
UK bank rate at 1.5%
Negative interest rates?
UK bank rate at 3%

Modern Business Practice

For years now modern business practices have been becoming more advanced, more automated and more reliant on technology. In the current economic climate, streamlining of businesses and business practice is vital to remain competitive in all areas of industry.

Software is available that can track employees, automatically generate a Timesheet and complete payroll tasks. This accomplishes two distinct tasks which are sadly required to keep your company at the fore-front of your industry:
It makes sure that you are paying employees only for time that they should be paid for
It cuts down on tedious administrative tasks, and also on staff requirements (for bigger organisations)

Whilst it may appear mean to find ways to cut your workforce (and to try to make sure that they are not claiming for more time than they are working), the reality is that companies that strive to remain profitable are those that will survive the current crisis at the expense of those that don't. The harsh reality of the current deep recession is that a 'survival of the fittest' culture will emerge, with lean and mean companies swallowing up the markets, and the slower-to-react companies will be those that leave themselves facing closure.

The reality is that modern technology and the 'first-adapter' companies will be able to combine to take market share from the more staid and less responsive companies.

CBI makes another prediction..

This current crisis is now widely recognised by measurement of all sorts of parameters as having been the worst recession in the last sixty years, yet the CBI went public with it's 'shallow' recession prediction last September... Buoyed by the outstanding (in)accuracy of their previous prediction, the CBI are now more or less telling us that the recession is all but over... Curiously, they go on to say that there will be no recovery until this time next year - so it's not over then??
This all goes to impress on us how good the CBI are at a guaging the UK economy - ie. next to useless - to be fair it is the CBI's remit to help Gordon Brown to re-inflate the economy, and putting a positive slant on things is the means which they have employed.

Whilst we are waiting for what the budget has in store for us, there is news about house prices too, but once again one has to be wary about who is publishing the figures. Property sellers 'rightmove' have published figures illustrating a rise in house prices for the third consecutive month. This is enough to indicate a possible leveling out, although prices are still dropping in some areas, most notably in London.
Mortgage approvals are also on the up, although there is still some way to go in order to reach the levels of twelve months ago. However retail spending is not showing any reported rises as yet.

Related posts:
When will the property market recover?
25% house price drop expected
Effects of the crunch in the UK

UK banks to be investigated

Further to the announcement of an investigation into RBS and their activities before the bailout, the UK financial watchdog, the Financial Services Authority is now recruiting audit firms to carry out investigations of Royal Bank of Scotland Group PLC and HBOS Group PLC.
These, and other major financial houses are now under the control of the UK government and taxpayers.
The authorities would dearly like to find some scapegoat reason to make sense of the financial mess and hopefully draw some fire away from themselves. Bankers should now be nervous especially Sir Fred Goodwin, as he can certainly expect no favours from any reports that might be forthcoming from this investigation.
The banks are by no means out of the woods yet, and although it seems apparent that the major failures in the financial houses are over, the economy itself has yet to show any signs of hope. Spending is still on the decline as are house prices, and the rise of negative equity now has close to a million UK home owners with a net zero (or less) equity in their property. One slightly encouraging sign was the fact that the Bank of England declined the opportunity to drop bank base rate last week, although that is small comfort when there is only 0.5% left to play with...

Related posts:
When will the property market recover?
Mortgage safety net
Negative interest rates?
RBS investigation

Financial crisis in the UK

The UK economy is obviously not the only economy to be hit by the current crisis, but it may be hit harder than others - why is this?
The fact is that over recent decades the UK economy has shifted towards service industries and has been particularly successful in the financial sector. The UK has concentrated on new innovative financial 'products' and is therefore overly exposed on this front. Although we are heavily reliant on the financial sector, we are nowhere near as exposed as Iceland, who's entire GDP was more or less totally dominated by it's banks. Nevertheless, it is a fact that the proportion of the UK GDP which comes from 'service' rather than physical goods actually produced on a shop floor, makes us vulnerable in this crisis. If you were wondering why Gordon Brown is on a crusade to stimulate the global economy, the reason is simple. The UK still has the ears of both the US and Europe (and the commonwealth) amongst others and still has some global influence, Gordon is trying to use this influence to get the global economy moving in order to help out the home market as much as anything. We have more global influence than Iceland, and we have more at stake than Germany and the rest of Europe, possibly even more at stake than the US since their manufacturing base up until now is still largely intact compared with the UK.
The more reliant, we have become upon banking, the more exposed we became to a banking collapse. This does not bode particularly well for the future as there is no doubt that the banking sector will be more heavily 'policed' and regulated meaning that there will probably be a net decline in UK productivity even after the worst of the crisis is over. We must wave goodbye to the carefree days of limitless revenue from shady financial products and knuckle down to some hard graft.

Related posts:
How long will the credit crunch last?
UK reports GDP decline
Icelandic banks in trouble
Automobile industry bailout

'Bad' credit cards

I have often extolled the virtue of 0% credit cards as a means to get rid of debt and am nearing the point when I can finally be rid of my credit card balance. However, 0% cards are getting harder to come by and are near-impossible for those with a bad credit record. Those with a bad credit record are of course the very people that need a break when it comes to trying to pay off their creditors. So what are the deals that are available for those without a perfect credit record?
Varying from 7.9% up to just under 20% (still very competitive), there are a number of options available in the bad credit credit cards category on BadCreditOffers.com, expert providers for credit cards for bad credit along with other services including home loans for bad credit and bad credit loans.
The site has handy links taking you straight to application forms ensuring that in some cases, a loan or credit card can be secured in minutes. I am just a few payments away from clearing my own credit balance and hope to post about it in about two months time. Getting debt-free is a double positive, not only does it mean you are no longer beholden to a bank, it also frees up money that you have been using to pay off loans leaving you with more disposable income. My personal intention is to ensure that most of my 'disposable' income ends up not being disposed of...

Sir Fred is 'considering' pension cut

RBS have announced that Sir Fred Goodwin is considering a cut in his proposed pension of £703,00 - perhaps he has realised that he can survive on a little less??
This is probably part of the inevitable negotiations after the Government announced it was prepared to legislate to remove or reduce his pension. I would not see this so much as a nod towards public opinion as acknowledgment that coming to the negotiating table will probably result in more cash for him than if he flatly refuses.
I guess that in the meantime he has been getting £14,000 a week and realised how difficult it is to spend that sort of cash when you are a 50 year old pensioner...!
It's also worth noting that RBS are about to hold an AGM and a lot of angry shareholders plan to disrupt proceedings in protest at Fred's pension. I imagine that Chairman Sir Philip Hampton is having to plead with Sir Fred to throw them a few crumbs to prevent the board from being lynched in Edinburgh.
Reports from other sources have claimed that although Sir Philip has reported that Sir Fred is 'considering' a cut in the pension, he is actually doing no such thing and will cling to his 'entitlement' come what may.
Personally I would pay to see these 'knights of the realm' sort the problem out in a befitting manner, preferably jousting or hand-to-hand combat - either that or give up the knighthood - I would love to hear reader's comments - please feel free to comment below..

France prepared to go it alone...

Nicolas Sarkozy has announced that unless the global finance houses are regulated, Europe will get it's own house in order and shut out non-European investments.
The French President claims to have the backing of Germany and says that if the G20 meeting does not pledge to regulate the global economy to prevent a repeat of the current crisis, then Europe (ie. Germany and France) will 'go it alone'. Whether there are realistic contingency plans is doubtful, but certainly Sarkozy has grabbed the headlines in a way that will portray him in a good light at home. This is his way of pointing the finger firmly at the US as the cause of the current crisis, something that Gordon Brown has been more wary of doing for fear of spoiling that 'special relationship' between the US and the UK. Sarkosy also says that he will quit the summit if he does not get what he wants, or if he feels that measures discussed do not go far enough. Gordon Brown responded by stating that he was sure that Mr Sarkozy would still be there at the end of the day...