Posts Tagged ‘Autumn Statement’

Bank of England must be wary of interest rate rise, says chief economist

Saturday, January 21st, 2017

The Bank of England

Andy Haldane says UK at risk of sharp slowdown as BoE weighs up conflicting forces of inflation from weak pound and the Brexit vote denting confidence. The Bank of England should be wary of rushing into interest rate rises to curb inflation, according to its chief economist, in a warning that the UK economy is vulnerable to a sharper slowdown next year than forecasts would suggest.

Andy Haldane said he was comfortable with the Bank’s current wait-and-see stance on borrowing costs as it weighs up the conflicting forces of a lower pound stoking inflation and the Brexit vote denting business confidence. In a bid to shore up confidence after the referendum, the Bank cut interest rates to a record low of 0.25% in August and expanded its programme of electronic money-printing, known as quantitative easing (QE). It had hinted at another interest rate cut before the end of the year but a flurry of brighter than expected economic news forced the Bank to row back on that guidance. Haldane said on Friday that economic output had outperformed the expectations of the Bank’s monetary policy committee (MPC) back in August while inflation had picked up, largely as a result of the pound’s sharp fall since the referendum, which makes imports to the UK more expensive. “That configuration now leaves me comfortable with the current stance of monetary policy, with no bias on the direction of the next move in interest rates,” he said.

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Top 1.5 per cent of earners to pay £20bn more in income tax

Sunday, January 15th, 2017

The Chancellor

Half of all additional income tax collected by the Government by 2021 will be paid by the top 1.5 per cent of earners as hundreds of thousands of people are dragged into paying the top rate, figures have shown. Just 469,000 people earning more than £150,000 a year will account for almost £20 billion of additional income tax paid to the Treasury, a record high according to the Office for Budget Responsibility (OBR).

Senior Conservative MPs on the Treasury select committee called on Philip Hammond, the Chancellor, to look again at the tax system in the wake of the figures and warned that the burden should be spread more widely. The number of people paying the additional 45 percent rate has increased from 0.75 percent in 2010 to 1.1 percent today and will rise further to 1.5 per cent in 2021 as a result of the threshold being frozen by successive Chancellors. More people will pay no tax at all on their income in 2021 than those who pay the top rate, OBR analysis has shown. But there are fears that additional rate taxpayers may choose to move their money into incorporated companies instead, in order to avoid higher tax bills.The OBR estimates the Government may lose more than £3 billion in tax it expects to bring in from those earning more than £150,000 a year because of such a  shift.

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“Not enough time” to implement MTD by 2018, says Tyrie

Thursday, January 12th, 2017

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ANDREW TYRIE has suggested there will not be enough time to implement Making Tax Digital (MTD) by April 2018.

In correspondence between Andrew Tyrie, chairman of the Treasury committee and Jane Ellison, financial secretary to the treasury, the government’s response for MTD consultations were discussed, with Tyrie outlining a lack of time to implement the controversial tax reporting regime by the planned date. Mr Tyrie said of the correspondence: “It is welcome that the government has decided not to rush its response to HMRC’s consultation. But this may mean that there is insufficient time for adequate consultation to take place on the draft clauses, once published.”

Page 41 of the Autumn Statement document states: “In January 2017, the government will publish its response to the Making Tax Digital consultations and provisions to implement the previously announced changes.”

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Britain’s economy could face £84bn black hole post-Brexit

Tuesday, November 29th, 2016

Image result for uk economy

Britain’s economy could face a black hole of £84bn ($102.3bn) by the time the Chancellor sets out his spending plans in the Autumn Statement next month, a think tank has warned.

According to a report from the Resolution Foundation, the deteriorating economic outlook, increased spending and lower tax receipts in the aftermath of Brexit could leave the government facing a shortfall until 2020-21.

The think-tank warned the Treasury would face a £23bn deficit at the end of the parliament, meaning the government would have to find a combined £84bn to balance the books over the next five years. However, the Foundation added, the only way to do so would be by implementing cuts or allow for extra borrowing.

George Osborne’s pledge to achieve a budget surplus by 2020 has already been abandoned by the government, which by then could be confronted with an economy £60bn smaller than it was expected to be before the referendum.

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UK economy is braced for interesting times as Brexit phoney war end

Saturday, November 26th, 2016

Theresa May and Philip Hammond

The four months since the Brexit vote have been something of a phoney war. Life for most has trundled on just as before. The shops have been full. Employment has continued to rise. Britain is still the low pay, low productivity country it always was. If someone had left in early June and returned today without access to the news, they would never know there had been a referendum.

The release of the growth figures for the third quarter of 2016 on Thursday will reinforce the sense that not much has changed.

In August, the Bank of England expected the economy to almost stall but it has had second thoughts in the light of more upbeat data. The consensus in the City is for growth of 0.3-0.4%, down on the second quarter but hardly a disaster.

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