The Chancellor survives a difficult month

April saw a raft of economic news, but ended with two small rays of light for Mr Osborne.

The Government’s chosen economic course, Plan A for Austerity, has not been receiving much good publicity of late. An economics paper by two Harvard economists that was seen as academic backing for austerity was found to contain significant errors.

At much the same time, the International Monetary Fund’s chief economist suggested that it may be time for the UK to relax its tight budgetary plans. On cue, unemployment figures rose by 70,000, taking the level to 7.9% of the labour force. Just to add to the Chancellor’s woes, a second credit-rating agency, Moody’s, stripped the UK of its AAA rating.

Towards the end of the month Mr Osborne had two pieces of good news.

The initial estimate of government borrowing figure for 2012/13 came in at £300 million below the 2011/12 figure. This allows Mr Osborne to say he is still cutting the deficit year by year, although a reduction of just 0.25% could well be revised away in the future.

The Office for National Statistics (ONS) announced that in the first quarter of 2013 the UK economy grew by 0.3%, reversing the 0.3% decline in the final quarter of last year. As a result, Mr Osborne avoided the much talked-about triple dip recession that had been forecast in some quarters. 

The falling borrowing and positive economic growth figures do not yet mean the UK economy has returned to health. The government deficit is stuck at close to 8% of GDP – it will be virtually unchanged again in 2013/14 – and in the words of the ONS the economy “has been broadly flat over the last 18 months.”

The UK’s economic peak was five years ago and the latest data show that we are still 2.6% below that level today.

The stock market took this all in its stride, and was little changed over April. Whether that reflects optimism about UK plc’s future or the impact of loose global monetary policy is open to debate.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. 

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances

Ben Korklin joins Lawrence Grant as a new Partner

Lawrence Grant, Chartered Accountants are very pleased to announce that Ben Korklin, sole practitioner, will be joining as partner with effect from 1st May.

Ben brings with him an established and growing client base having started his own firm Benjamin Alan in 2010.

Paul Levy, senior partner at Lawrence Grant says “Ben’s modern, fresh and innovative approach will be a key asset to our firm and will complement our core values. His ability to help clients grow their business in a difficult economic environment and his track record in establishing his own practice in such a short period of time make him an excellent addition to our team. We view his appointment as a continuing sign of our commitment to being a driving force within the industry.

 “I am confident that Ben will play a vital role in growing our existing client base, and in addition, develop new opportunities within our ‘specialist accountancy services’ which currently include Legal, Dental and Medical professionals to now encompass the Media and Beauty sectors which Ben will be bringing with him.”

Ben Korklin says “I am very excited to be starting a new challenge at Lawrence Grant and look forward to working with the other partners and staff.  I am very fortunate to be joining such a respected firm that prides itself on providing top quality accountancy services.”

For further information, or to arrange an interview with Paul Levy or Ben Korklin, please contact Paul Atkinson, Marketing Manager at Lawrence Grant on 020 8861 7575

Workers ‘losing track’ of pension funds

Nearly a quarter of UK adults have lost track of at least one of their pensions, adding to the pressures facing the pension system, according to Age UK.

In a recent poll conducted by the charity, 23% of adults reported that they have lost track of at least one of their pensions, and many are not sure how to go about tracing their lost funds.

With today’s employees increasingly having a variety of different jobs during the course of their career, individuals are likely to draw on several, smaller pension funds on their retirement.

The survey also revealed that 24% of adults are currently failing to plan for their retirement, as they ‘cannot afford’ to do so.

Lucy Harmer, Head of Services at Age UK, said, ‘It’s really important we all set aside time to keep on top of our personal admin, such as organising paperwork and keeping details of any financial products safe and secure. This is especially crucial for pensions as it may be some years down the line until they need to be accessed’.

We can help with your tax and financial planning needs, including planning ahead for a comfortable retirement. Please contact us for further advice.

New body aims to boost local High Streets

A new body will aim to help town centres to adapt to the modern marketplace, by building on the foundations laid down in the High Street Review conducted by Mary Portas.

The Future High Streets Forum brings together civic and business leaders from across the retail, property and hospitality sectors.

Speaking after the first meeting of the Forum, Local Growth Minister Mark Prisk said, ‘Over the last year this Government has worked hard to help boost the High Street, including initiatives to simplify planning, revamp the public realm, cut the business rate burden and revive local markets’.

‘Now, the Future High Streets Forum will take a joint lead in driving forward these initiatives and providing the strategic leadership needed to analyse the competition and tackle the difficult problems which conventional High Streets need to address.’

The Forum will address a number of key issues, including:

• helping to accelerate the local mentoring programme
• advising the Government on the more efficient use of existing buildings, in order to encourage people to live in town centres
• supporting the expansion of such initiatives as Love Your Local Markets and pop-up shops
• researching into a practical toolkit to help town teams to ‘futureproof’ High Streets
• exploring solutions to barriers to the High Street, such as local parking policies

The Association of Town and City Management will offer a £1m two-year peer-to-peer support package for the 27 Portas Pilots and 330 town teams across country.

Is your High Street full of empty shops and requiring a much needed boost? Do you think this forum will make a difference? Please let us know what you think

If you are thinking about starting your own business and would like some practical and professional advice, please visit our Business Start upspage.

Chancellor set to announce £2.5bn cuts in a Budget ‘to tackle the economy’

Chancellor George Osborne will announce an additional £2.5bn of Whitehall cuts when he presents the 2013 Budget at 12.30pm today.

The Chancellor will outline the details of the additional 2% departmental spending cuts, to be spread over the next two years, with the money set to be spent on infrastructure projects.

George Osborne has been under increasing pressure to cut taxes and increase spending in a bid to boost the economy, and the latest economic forecasts from the Office for Budget Responsibility are likely to be negative.

However, despite the growing pressure, and the recent loss of the UK’s AAA credit rating, the Chancellor has insisted that the Government will stick to its reduction plan.

Posting his first ever message on Twitter, George Osborne commented, ‘Today I’ll present a Budget that tackles the economy’s problems head on helping those who want to work hard and get on’.

Business groups have urged the Chancellor to take action on business taxes, including an acceleration in the planned reduction in the main rate of corporation tax, and many economists are predicting that the Government will announce a further increase in the personal tax allowance, to reach the Coalition’s target of £10,000.

In the run-up to the Budget, the Government announced plans to allow some working parents to claim back up to £1,200 a year in childcare costs, with effect from 2015.

We’ll keep you posted on all the latest developments happening on this very important day of the Budget, or alternatively, you can visit our Twitter page @LGaccountants for all the latest tweets about pensions, tax and cross border trading, as well as tax saving tips! So, why not follow us too, as it would be great to have you onboard.

If you have any questions about how the Budget will affect you, or require advice about your current tax arrangements, please call us on +44 (0)20 8861 7575

If Tax Matters To You, YOU Matter To Us

Is this You? Survey highlights UK’s reluctance to save for retirement

One of the major clearing banks recently undertook a retirement planning survey across 15 countries in which it operates. Among its findings for the UK were:

 

• One third of people were not making any preparation for retirement, while a virtually identical proportion thought they were not doing enough.
•  The average expected time spent in retirement was 19 years, which was 12 years longer than the average time retirement savings were expected to last.
•  In terms of retirement income, the average amount thought appropriate was 73% of pre-retirement income.
•  Just 38% of people are regular savers, leaving the UK only above Egypt in terms of thrift. 
• The UK came top in one unfortunate category: prioritising saving for a holiday over saving for retirement. Given the choice of only one savings goal for the year, 58% of the UK respondents chose a holiday, while 32% opted for retirement.

One interesting point the survey threw up was that, for those on average incomes, there was a strong relationship between financial planning and greater saving. People who had carried out some type of financial planning had at least four times the retirement savings of those who had failed to plan. Where professional advice is used, savings were two and a half times more than those of people who have not taken expert advice. 

Everyone hopes to maintain the same standard of living in retirement as they presently enjoy whilst working, but to achieve this requires considerable forward planning.

Please contact us on 0208 861 7575 or visit our website for more information, or book a FREE initial consultation so that you can come in and see us and talk over your requirments.

The Bank of England changes its inflation stance

In recent years the Bank of England (BoE) has gained an unfortunate reputation for over-optimism about the path of inflation. The BoE’s Quarterly Inflation Reports (QIRs) have regularly said that inflation would be back on target (2% of the consumer prices index [CPI]) by the end of its two-year forecast period.

Each quarter’s bulletin has contained a graph which, almost magically, showed the chances of inflation being above target were 50% two years out. However, CPI inflation has been over 2% since December 2009 and has only been below 2% for six months in the last five years, and reached a peak of 5.2% as recently as September 2011.

The BoE’s latest QIR, the penultimate of Sir Mervyn King’s tenure as Governor, has changed tack somewhat. The February edition says that ‘Inflation has remained stubbornly above the 2% target…CPI inflation is likely to rise further in the near term and may remain above the 2% target for the next two years.’ The graph now shows a near 60% probability that inflation will be over 2% in the first quarter of 2015, with the 50% level not being reached for another year.

The BoE’s new inflation calmness is a reflection of the state of the economy and government finances.

• In normal times, above-target inflation would mean that the BoE would increase interest rates. However, the parlous state of the UK economy rules out such a course of action. Rate rises and the threat of a triple-dip recession are not compatible.

•  Some of the inflationary pressure is the result of Government policy, which the BoE is powerless to counter. The QIR comments that moves such as increases to tuition fees and green levies on energy suppliers added around 1% to inflation at the end of 2012, and are likely to continue to add to it. 

The message of the BoE’s new stance is that, at least for now, inflation is less of a concern than helping the economy by keeping interest rates low and taking other monetary action, such as quantitative easing. That is not good news if you hold large sums on deposit.