Tag Archives: Economy

Bankers face more taxes

Financial Activity Tax comes to Banks

Just weeks after George Osborne’s budget, where it looked good for banks, a new financial activity tax is to be implemented. This new tax is expected to raise £2.5bn and will be implemented upon bank’s profits and pay. On June 22nd 2010, the Chancellor outlined in the budget that the banks would benefit from taxes; however this news comes to a surprise and shows that it could raise more money to help reduce the deficit.

           

I feel the banks should face more scrutiny in the future, but this second levy shows that Mr Osborne is trying to lead the way in banker’s tax. As mentioned in the article, the Chancellor is hoping other countries follow suit in introducing such a bank tax. I know that banks need to pay the penalty for the current global financial crisis, but I feel this bank levy will not work and raise enough finances to help reduce the deficit. I feel Mr Osborne’s budget was unclear and does not show any transparency, which is currently needed by banks.

The link to the Guardian article is shown below:

Bankers warned of further tax on profits and pay

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Accounting Standards supported by G20

G20 reinforces need for International Standard

Two weeks ago, at the G20 Summit in Toronto, Canada the 20 leaders of the highest-developed countries reiterated the need for International Accounting Standards to be used worldwide in order to strengthen the state of the global financial markets. The need for accounting standard convergence was discussed in Toronto and shows that it could improve the global financial system. International Accounting Standards (IAS) will show more transparency and comparability in the financial system.

I feel that the International Accounting Standards should be introduced worldwide as soon as possible because the convergence will enable the global financial system to find some stability. Currently the USA use US GAAP (Generally Accepted Accounting Principles) and this has proven to be a big barrier in the past. At this G20 meeting the reiteration of international standards can only mean a step in the right direction, not only for the global economy but also the accounting sector in the future. The accounting language should become standardised where all countries use IAS’s. I feel this will only help the accounting sector and eliminate the lack of comparability of financial statements, and create more transparency.

The link to the Ashdown Group article is shown below:

G20 reiterates support for accounting standards convergence

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Double-dip recession is feared

Financial concerns fear finance directors

Today, finance directors have feared that a double-dip recession could occur. In a survey by Deloitte, the probability of a double-dip recession rose from 33% to 38%. With volatility in the financial markets, the threat of returning to recession has sparked fears with many finance directors. 

I feel that a double-dip recession will occur because of the instability in the financial sector and the lack of predictability in the economic future. The UK only escaped the recession in January 2010, but since then GDP growth figures have been very small and may show that they could return to negative growth in the future. I feel if a double-dip recession occurs, this could lead another financial meltdown and could take the UK many more years to find its feet in the financial sector. I hope that a double-dip recession does not occur, but with many experts predicting a double-dip, it raises fears as to whether to the UK can cope with another decline. 

Below is the link to the Financial Times article

Finance directors fear double-dip recession

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G20 summit – the shakeup in and out of Toronto

Deficit cuts, earthquake and city troubles

I am currently holidaying in Toronto, and I experienced two major events all the space of a few days. On 24th June 2010, I experienced an earthquake tremor whilst visiting family in Waterloo, ON. This felt strange as this was not the major talking point of the weekend. Many may have evacuated buildings in Canada, but the main topic on the agenda was the G20 summit.


Leaders from the 20 biggest countries in the world descended on the largest city in Canada to discuss many things, but most importantly the economic situation and how to resolve it.  The deficit cuts are the main areas of concern that were discussed. I hope this summit will be a spring board for economic recovery in the near future.

Whilst the summit was taking place in the heart of Toronto, many troubles were being witnessed on the streets. Whilst watching CBC News (a Canadian news channel) I witnessed a police car being broken into and set on fire. This along with many store fronts being vandalised were the actions of many protestors. The last time I saw anything of the sort was at the last G20 summit in London 15 months ago. I feel these kind of actions need to be expressed, but should be expressed in a civilised way that ensures real action and not more trouble.

Below is the link to a Guardian news article: 

G20 summit has major implications for the UK’s economic recovery

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Banks look to profit after Osborne’s Budget

Budget looks favourable to banks

Chancellor of the Exchequer, George Osborne’s first Budget looks to help the financial stricken banks. The cut in corporation tax from 28% to 24% for higher rate tax firms will help business save a lot of tax expenses. The banks in particular will benefit as it will help them return to higher profits, or even turn their losses into profits.

I feel this is a good decision by George Osborne, as it will help in the short term by helping business and banks find their feet again and hopefully this will see some stability in the financial sector. The only negative to this is that KPMG believe that the VAT rise from 17.5% to 20% will cost banks £500m. This could prove to be a tough balancing act played by Mr Osborne, by outweighing the loss in revenue of corporation tax, and the potential increase in revenue from VAT. I feel this decision could help in the short term, but in the long term it could affect the government’s finances, especially due to the 4% cut in the higher rate of corporation tax.

Below is the link to The Guardian article:

George Osborne’s tax changes good for banks, say analysts

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UK economy may return back to recession

Britain still at risk of a double –dip

On Tuesday 26th January 2010, the Office for National Statistics (ONS) announced that the UK economy had grown 0.1% in the final quarter of 2009. Britain had been in recession for 18 months, and today’s news may be good news. This is an initial estimate and could be revised upwards or even downwards. This could show the UK could be at risk of a double-dip.

Even though Britain grew in Q4 of 2009, it may not be the end of the misery. The likelihood of a double-dip is predicted by KPMG. Even if Britain shows a revised negative growth in Q4 of 2009, or if there is a double-dip in 2010, I think that the UK will be back on the road to recovery within the calendar year.

This economic downturn should teach lessons to all industries, but especially banks. I think bank’s decision making and risk management will improve and prevent another recession in the near future.

Therefore, the results announced today may not mean good news as there is a risk of a double-dip. However, I feel the future will be more secure when we pull ourselves out of it!

Below is the link to the Accountancy Age article on this subject:

http://www.accountancyage.com/accountancyage/news/2256791/uk-economy-risk-double-dip 

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Pre-Budget Report date announced

Chancellor announces Pre-Budget date

Chancellor Alistair Darling today announced the date of the Pre-Budget Report. On Wednesday 9th December, Darling will outline his plans to try and reduce the deficit of the UK economy.

I feel this will be the last time Alistair Darling will publish a Pre-Budget. I think the Labour party will not be in power this time next year. However, I do hope Mr Darling attempts to help the UK economy in a realistic way.

Below is the link to the BBC News article:

http://news.bbc.co.uk/1/hi/uk_politics/8354236.stm

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Gordon Brown losing Tobin tax argument

Another tax to repay the government’s losses reaching dead-end

Last weekend the G20 finance ministers met to discuss the global economic climate. Gordon Brown, the Prime Minister, proposed a new tax called Tobin Tax (or to me and you,’ Financial Transaction Tax’). It appears that the PM is losing is battle to create this tax and losing his battle to remain Prime Minister.

I believe that a new tax is not needed and not a feasible way to repay the debt that has burdened the government’s balance sheet. I feel this tax will not prevail and agree with the other G20 countries. In the article (which is linked below) it states that the PM has backing from a fund manager and states that the banks cannot assume trust to resume without significant change. However, I believe that the significant change cannot come in the form of Financial Transaction Tax. I think there are other forms of revenue for the government and Tobin Tax is not one of them.

Below is the link to the Accountancy Age article:

http://www.accountancyage.com/accountancyage/news/2252747/brown-losing-tobin-tax-argument

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