Oxfam: Fat cats' tax havens cost us £100bn every year

Cameron accused of undermining plans to stop tax evasion

Rhetoric and reality on tax

 

Will we get central registries on beneficial ownership at the G8?

It’s hanging in the balance – and with it Cameron’s reputation

Posted on June 18 2013

Richard Murphy

 

What’s a tax haven?

• Escape from tax (of course)
• Secrecy, in various forms
• Avoidance of financial regulations
• Avoidance of criminal laws
• Escape from other rules of society, such as inheritance or corporate governance rules

Tax havens can be whole countries, dependencies of bigger countries, or even areas within countries.

The City of London is a whopping tax haven, for example.

Who knew?*

Grab the Prezi here.

Drill down into what tax havens provide, and two core elements stand out: escape, and elsewhere.

Escape

Secrecy jurisdictions offer the chance to avoid scrutiny, tax, financial regulations, criminal laws and more.

The ‘escape’ feature helps powerful individuals and organisations avoid the responsibilities and costs

associated with the things that made them rich in the first place.

You know, things like educated and healthy workforces, smooth roads, police protection and the courts of law

that uphold their contracts.

They leave the riff-raff to actually pay for all of that stuff.

This burden takes the form of higher taxes that make the daily shop more expensive for those to whom every

penny counts, and it means degraded public services.

Sound familiar?

Elsewhere

Secrecy jurisdictions change their laws for individuals and organisations who are actually located somewhere

else! Hence the term ‘offshore’. See, it makes sense now, doesn’t it?

But the citizens who live within tax havens and are affected by these laws are not consulted. In fact, that is the

whole point of offshore.

This is about insiders talking to other insiders, in secret.

The exclusion of local populations in favour of wealthy foreign interests represents a pretty big smack down of

democracy.

We’re flexible!

Tax havens like to boast about their ‘flexibility.’

Take the rather creepy Luxembourg Bankers’ Association for example, who proudly state that a key attraction is the “easy access to decision-makers” and “limited red tape”.

What ever happened to theme parks and castles?

We’re even more flexible!

As more and more capital flows into one tax haven, lining the pockets of local movers and shakers, other countries look on in envy.

So they deregulate their economies ever further and cut their taxes on the rich even more. It’s a ‘race to the bottom’! Except the race is against other countries, and their citizens are going down too, whether they like it or not.

So who wins?

The biggest users of secrecy jurisdictions are, contrary to long-held popular views, not celebrity tax exiles or mafiosi, but big corporations and wealthy individuals.

In multiple surveys, the biggest corporate user in every jurisdiction surveyed was a bank. Their ability to operate in zones of extreme secrecy has proved to be profoundly dangerous.

Indeed, a whopping 98% of the companies listed on the London Stock Exchange are using tax havens.

To find out who else wins, see our What’s the problem section.

*The Tax Justice Network knew

At last, some good news: UK mortgage market is on the up again

The mortgage market's moving again, rates are at an all-time low, lenders are flush with government cash, and – at

last – they're keen to hand it over

Julian Knight  Sunday 02 June 2013

Whisper it quietly, but there is just a touch of boom-times about the UK mortgage market. Cash-rich lenders,

flushed with £80bn of readies from the Bank of England's Funding for Lending scheme, are once again competing

for borrowers' attention with eye-catching deals. It's not quite 2006 and 2007 all over again, but for a fair few credit-

worthy borrowers it sort of feels that way.

  

Take Tesco's new deal, launched last week. A newcomer to the mortgage market, the supermarket giant offers a

two-year, fixed-rate deal at 1.75 per cent. It comes with a hefty £1,300 arrangement fee, but, nevertheless, the rate is

below inflation. Elsewhere, Norwich and Peterborough Building Society offers two- and five-year fixed-rate

mortgage deals with ultra-low fees at just 2.24 per cent and 2.74 per cent respectively. "Banks are taking

advantage of cheap money courtesy of the Government's Funding for Lending Scheme," said Ashley Brown,

director of the independent mortgage broker Moneysprite. "That's why we're seeing record low rates."

  

Sylvia Waycot, of the financial information firm Moneyfacts, subscribes to the idea that some mortgage borrowers

have never had it so good: "The Funding scheme has kick-started the mortgage market in a way previous

quantitative easing has not. Today's market is all about enticing the less-risky borrower [who has] a large deposit.

There's less chance of things going sour."

  

Less-risky borrowers are those who have been a salaried employee for, say, three years or more, have kept up all

their loan and credit repayments during the past few years, have a hefty deposit – 25 per cent and above – or have

a large amount of equity in their current home. These winners from the global financial crisis and recession are the

ones best placed to scoop all-time low mortgage rates. And rates may go lower still. Mark Harris, chief executive of

the mortgage broker SPF Private Clients, said: "Rates are likely to fall further still, but we also expect lenders to

loosen criteria as they get fed up with competing with each other over pricing. Some of the smaller lenders may not

have the capacity for big battles on the rate front and are likely to tweak criteria instead, which will be welcome."

This could mean that lower rates for first-time buyers, who generally have smaller deposits, are on the way.

  

But does all this mean the UK is on the cusp of another house-price boom, fuelled by the lenders again? Probably

not. First, there is still a huge debt hangover from the last boom, nearly £1.2 trillion of mortgage debt remains to be

paid off and several hundred billion of loans and credit cards. All that has happened since the global financial

crisis of 2007 and 2008 is that consumers have slowed their rate of new debt accumulation, rather than paying off

substantial amounts. Any major rise in interest rates, for instance, would still have a potentially catastrophic impact

on family finances in millions of British homes.

  

What's more, property transaction levels are still historically low. During the boom years new mortgages would top

100,000 a month. In figures for April, released on Friday, the Bank of England says that there were 53,710 new

mortgages granted for house purchase. By far the fastest-growing sector is existing homeowners staying put and

moving to one of the new ultra-low rate deals, with 30,313 remortgages taken out in April compared with 25,766 in

January.

  

More generally, house prices are rising in London and the South-east owing to the better economy, greater

mortgage availability and the torrent of property investment cash ploughed in from wealthy foreigners. Outside the

capital, commuter towns and second-home destinations such as the South-west, the market is still in a state of

torpor. Prices are edging lower in much of the North and West, with the backdrop of a struggling economy and

rising unemployment.

  

The mortgage boom doesn't quite equal higher house prices – yet.

Santander launches record-low 10 year fixed rate mortgage under 4% –

but should you fix for a decade?

By Victoria Bischoff

PUBLISHED: 10:21, 22 May 2013 | UPDATED: 16:42, 23 May 2013

Santander has launched a record-low 10 year, fixed-rate mortgage at under four per cent. Those with a 40 per

cent deposit can lock into a 3.94 per cent rate for a decade.

On a typical £150,000 loan, monthly repayments will work out at £787. The total cost over the 10 years, including a

£995 fee, will be £95,435.

Homebuyers will get a free valuation and £250 cashback. Those remortgaging will get a free valuation and can

then choose between free legal work and £250 cashback.

However, borrowers may be better off opting for a slightly higher rate and lower fee. Yorkshire BS offers

borrowers with a 25 per cent deposit a ten-year deal at 3.99 per cent with a £130 fee.

Monthly repayments are £791 and total cost, including the £130 fee, is £95,050 - £385 less than the Santander

deal. However, there are no freebies.

Homeowners should bear in mind that if they want to ditch their deal before the 10 years are up, they will be hit

with steep early repayment charges.

 

Santander charges six per cent of your loan value if you want to remortgage before 2023. Yorkshire BS charges

seven per cent until June 2016, six per cent until 2018, four per cent until 2020, two per cent until 2022 and one

per cent in the final year.

Borrowers who want to secure their rate but don’t want to be tied in for 10 years should note that five-year fixes

have never been so cheap.

First Direct is offering borrowers with a 35 per cent deposit a rate as low as 2.49 per cent.

Repayments work out at £672 - more than £100 cheaper than Santander’s ten-year deal. Total cost over the five

years, including £1,999 fee, is £42,319.

Rates fall for first-time buyers and the best five-year fix for big deposits is below 2.5%.

What next for mortgage rates and should you fix?

By Simon Lambert
 

UPDATED: 17:22, 24 May 2013

Mortgage rates for those with smaller deposits are on the way down, while those with plenty to put down can

secure a five-year fix below 2.5 per cent.

So how low can rates go?

Simon Lambert rounds up the latest predictions, tips, analysis and the best mortgage rates

Fixed rates at record low levels

Standout deal: The Co-op Bank's 2.79 per cent five-year fix substantially undercuts rivals offers.

Mortgage rates have taken a substantial dip for home buyers and borrowers with small deposits, giving first-time

buyers and those with low amounts of equity a shot in the arm.

More deals for those with just a 5 per cent deposit are emerging, while rates for those with a 10 per cent deposit

have fallen up to 1.5 per cent in a year.

Data firm Moneyfacts says that, on average, two-year fixed rates for buyers with smaller deposits have fallen from

5.44 per cent a year ago to 4.50 per cent today.

And the average five-year fix has also dropped — from 5.65 per cent last May to 4.83 per cent.

One in four first-time buyers put down a deposit of 10 per cent or less in the first three months of the year,

compared with one in five in the same period last year, according to the Council of Mortgage Lenders.

Among the top deals, Yorkshire Building Society has a two-year fixed rate of 3.64 per cent for those with a 10 per

cent deposit. First Direct offers 4.19 per cent for five years.

For borrowers with big deposits both HSBC and First Direct still have the lowest rates on five-year fixes at 2.49

per cent, but those carry £1,999 fees, so borrowers may be better off plumping for Norwich and Peterborough's

2.74 per cent five-year fix with a £385 in total fees.

Those with big mortgages will find it most worthwhile paying a hefty fee for a low rate, while borrowers with

smaller loans should look elsewhere.

It is also important to weigh up the benefits of deals offering cashback and free legal and valuation work -

common on remortgages and some do this even for purchases. The value of this can swiftly add up.

 

What next for rates?

The good news for borrowers is that not only are banks and building societies cutting mortgage rates but they

are also easing back on tough checks that have been making it tough for even those with good credit and

employment histories to get mortgages.

While Britain's property boom and bust highlighted that there was no doubt that lenders needed to become far

more prudent, many have also been using checks to weed out only the best prospects for their limited funds -

leaving first-time buyers and those with small deposits somewhat in the lurch.

The Funding For Lending scheme aims to lift that burden and reopen the mortgage market to those without

substantial equity or cash reserves. The signs so far are that it is having some effect, however, it is too early to

judge it properly and rates are still not falling as fast as many had hoped for those with ten per cent deposits.

Banks are sitting on a pile of cash from the scheme and have the firepower to boost lending and cut rates further,

whether those for borrowers with big deposits can go any lower remains to be seen. There is certainly plenty of

wriggle room for cutting rates for smaller deposits.

But ultimately whether mortgage rates have further to drop will be heavily influenced not just by the Bank of

England's cheap money but by how long the relative calm in the banking sector lasts.

What is Funding For Lending?

The BoE has said it will lend cheap money to banks who then pass this on to borrowers with its funding for

lending scheme.

Banks and building societies can access finance at rates from around 0.75% - far cheaper than the equivalent

money market rates or what they must pay to attract savings deposits - rates on savings accounts have tumbled

in response to this.

They will be able to borrow up to 5% of their existing lending stock, and for every £1 of additional lending made

by a bank, it will be able to access an extra £1 of cheap funding from the scheme.

Fix vs tracker: where are the best rates?

Borrowers should have a quick look at the rates below for our favoured mortgage options - the lifetime tracker

and five-year fix.

For a fuller rate check use This is Money's mortgage finder service and best buy tables, these are supplied by our

independent broker partner London & Country. When dealing with any broker, remember some lenders will not

usually be included as they do not pay commission, some of these such as HSBC, First Direct, Post Office

consistently offer top rates, so check their deals.

Fixed rates

Bigger deposits

HSBChas a five-year fix at 2.49 per cent for those with a 40 per cent deposit paying a £1,999 fee- fee-free it is 2.99 per cent.

First Direct also has a five-year fix at 2.49 per cent for those with a 40 per cent deposit paying a £1,999

Yorkshire Building Society  has a five year fix at 2.59 per cent deal for those with 40 per cent deposits or equity and £1,475 in fees.

N&P BS has a five-year fix at 2.74 per cent with a £295 fee for those with a 40 per cent deposit, this comes with £200 cashback on purchases. Borrow less than £230,000 and this proves cheaper over five years than the YBS deal above.

Yorkshire Building Society is offering a five-year fix at 2.89 per cent for borrowers with a 25 per cent deposit paying £975 in fees.

Nationwide has a four-year fix Flexclusive for its Flexaccount holders at 2.49 per cent with a £999 fee for those with a 40 per cent deposit, or 2.79 per cent with a £99 fee. Or at 2.59 per cent with a £999 fee for those with a 30 per cent deposit, or 2.89 per cent with a £99 fee.

Yorkshire BS has a two-year fix at 1.79 per cent for those with a 40 per cent deposit, with £1,475 in fees.

HSBC has a two-year fix at 1.79 per cent for those paying a £1,999 fee with a 40 per cent deposit.

Chelsea BS has a two-year fix at just 1.74 per cent for those with a 40 per cent deposit paying fees of £1,675.

The margin between five-year and two-year fixes has trimmed but a shorter fix remains cheaper. Be warned you

may end up coming off a two-year fixed rate just as rates are rising though if a move comes earlier than markets

forecast, that is why This is Money prefers five-year fixes. However, if you think you will move in that period you

may face large early repayment charges if your mortgage cannot go with you.

Smaller deposits

Co-op Bank has a five-year fixed rate at 3.69 per cent with a £999 fee for those with a 15 per cent deposit, or at

4.09 per cent fee-free.

Those with just 10 per cent to put down can also get a 4.20 per cent five-year fix from Hanley Economic BS, with

no fee.

Yorkshire BS  has a two-year fix at 3.74 per cent for borrowers with a 10 per cent deposit, paying a £975 in fees. It

also has a 3.99 per cent deal for those paying £475.

Co-op has a two-year fix at 3.59 per cent for purchases only for those with a 15 per cent deposit, fee-free, or at

3.79 per cent fee-free.

Trackers

This is Money likes lifetime trackers, or longer-term trackers, with no early repayment charges in case you need

to bail out if rates rise sharply.

Big deposit

HSBChas a lifetime tracker at 2.38 per cent with a £1,499 fee for those with a 40 per cent deposit, or at 2.69 per

cent fee-free.

At 30 per cent equity or deposit you can get a lifetime tracker with a £599 fee with HSBC at 2.69 per cent, pegged

at 2.29 per cent above base for the entire mortgage term. Fee-free the rate rises to 2.99 per cent.

Nationwide has a five-year tracker at 2.59 per cent for new borrowers with a 30 per cent deposit, with a £99 fee

and a free legal and valuation package, but you must have or take out its FlexAccount current account to qualify.

Existing borrowers can get a 2.49 per cent rate.

Medium deposit

If you have a 20 per cent deposit you can get a 3.49 per cent lifetime tracker from HSBC for a £599 fee, or 3.79 per

cent fee-free.

Nationwide has a five-year tracker at 3.49 per cent for new borrowers with a 20 per cent deposit, with a £99 fee

and a free legal and valuation package, but you must have or take out its FlexAccount current account to qualify.

• A note on changing rates: Our mortgage rates round-up is kept regularly updated. We do not simply pick the absolute lowest rates but instead scour the market for the best overall deals, using a combination of rates, fees and other extras. Rates can change on mortgages at short notice and sadly lenders do not always inform us when they alter them (especially if they raise rates rather than lower them). This can lead to occasions when the rates listed above are not available. If you ever spot this situation - or a good rate we have not listed - please email editor@thisismoney.co.uk with mortgage rates in the subject line and we will update the round-up asap.

What is a standard variable rate and why have they risen?

Santander announced recently that its standard variable rate would rise for an estimated 300,000 borrowers from

the start of October - moving up from 4.24 per cent to 4.74 per cent.

It's move followed a raft of lenders raising their standard variable rates earlier this year -  more than 1m borrowers

saw theirs go up from 1 May, which the Bank of England said affected 10 per cent of existing borrowers.

An SVR is the default rate that most mortgages switch to once an initial fix or tracker deal period ends, and

unless there is a cast-iron clause preventing it, lenders are free to raise them at any time - independent of the

Bank of England base rate.

Where next for mortgage rates?

Mortgage rates have fallen again as lenders compete a little more and the Bank of England's Funding for Lending

scheme has helped push down money market borrowing costs.

Prior to this they had been pushed up by the lack of competition in the market and yet more bad news from the eurozone and banks.

As SVR hikes arrived and more borrowers were pushed to remortgage, lenders raised prices to both take

advantage and try and limit the new business coming to them.

The good news is that cuts have finally arrived and rates have now slipped back. Interestingly, the gap between

fixes and trackers has narrowed substantially over this period - you can fix for five years at 2.64 per cent while the

best lifetime tracker is at 2.38 per cent.

These are the major factors affecting rates right now.

The eurozone crisis

Interest rates and the money markets

Money markets now forecast the first hike from the record low 0.5% base rate may come as late as 2018.

Economists call a rate rise slightly earlier, but the consensus is not before 2015 to 2016.

After this, base rate is expected to rise slowly and gradually, as the Bank of England fears damaging the weak

recovery.

That revision of how soon rates will rise has led money market swap rates - which influence fixed rate mortgage

costs - to slip back.

Five-year swaps have plummeted since they stood at above 3 per cent two years ago and are now at 0.93 per

cent. (17 April 2013)

[More on interest rate predictions and swap rates]

Economic gloom means interest rates are likely to stay low for longer.

The eurozone debt crisis had taken a dramatic turn for the worse, with Spain dominating the headlines and talk of

Greece falling out of the currency continuing. A fix of sorts has been found with the European Central Bank's

bond-buying plan, critics say this may only be a sticking plaster though and that the problem is not solved.

Inflation slips

Inflation has been stuck at 2.7 per cent since October but the BoE insists this is not a concern and once

temporary pressure falls back out it will resume its trend towards the 2 per cent target.

Latest Bank minutes suggest base rate will not go any lower than 0.5 per cent but the money markets do not

price in a  rise until 2017.

But the base rate does not really drive new mortgage rates anymore.

Lenders' funding costs

A number of things influence mortgage rates: the price of funding on the wholesale money markets, the cost of

getting funds in from savers and also the amount of capital regulators demand banks hold against their loans.

While the Bank of England base rate has remained at a rock bottom 0.5 per cent, banks and building societies

must pay just below 3 per cent rate to attract new cash from easy access savers.

The financial authorities have also tightened how much capital banks must hold, thus raising funding costs.

The good news is that money market funding costs have fallen and not only is the Funding For Lending scheme

pushing cheap money through to lenders, they are also having capital requirements eased. Swap rates, which

heavily influence fixed rate mortgages, are at 1.11 per cent over five years, while Libor, which influences variable

rate deals, has fallen to 0.51 per cent.

Competing not to compete

Lenders have been opting to maintain their healthy profit margins and squeeze borrowers to cover their extra

funding costs.

Even with the latest round of cuts they are only really targeting the best borrowers

Until proper competition returns to the mortgage market lenders will hold all the cards and rates will be twitchy. It

is likely that they could fall back again if a bit of confidence returns, or the Bank of England's funding for lending

scheme works, but borrowers angling for a new mortgage may like to consider snapping a deal up, if they feel

they will be disappointed if rates head north.

Should you get a new mortgage? And what to get?

Certainly, those on standard variable rates of 4 per cent or higher with reasonable equity in their home should

seriously consider moving.

Tracker

One option is a fee-free, early repayment charge free, life-time tracker.  This could shave money off their monthly

repayments - or leave them equal - and ensure their rate will only rise when base rate does.

Fix

Many could grab a fix and pay less than they are now, or just slightly more. If you are on an SVR you should

seriously think about moving, unless you have a Nationwide / C&G-style guarantee capping it at a certain level

above base rate.

Events have highlighted the vulnerability of standard variable rates and discount rates linked to them, with

Santander's rise following mortgage giant Halifax raising its SVR, along with Bank of Ireland, Co-op and

Clydesdale/Yorkshire Banks. RBS also raised rates for 200,000 borrowers with Offset and One Account 

mortgages. Unlike standard variable rates, which are at the mercy of bank's whims, trackers will only move up if

the base rate rises.)

[Latest charts and predictions on wholesale borrowing markets]

HOW FUNDING FOR LENDING WORKS

Funding for Lending allows banks to swap assets such as existing loans with the Bank of England for up to four

years in exchange for gilts, which they can then use to borrow money for their lending at close to base rate.

They pay a small fee to access the scheme, of 0.25 per cent per year. This will remain the same if they keep grow

net lending or keep it stable. If they shrink it the fee will rise by 0.25 per cent for every 1 per cent decline in net

lending up to a maximum of 1.25 per cent.

The price of each bank’s borrowing in the Scheme will depend on its net lending between 30 June 2012 and the

end of 2013.

Banks can borrow up to 5% of their existing lending stock, and for every £1 of additional lending made by a bank,

it will be able to access an extra £1 of cheap funding from the scheme.

The way the scheme is set up means that with base rate at 0.5 per cent banks can access funding at a rate of just

0.75 per cent and even if they shrink net lending they will not pay more than 2 per cent for it.

 

Why fix for five years or track for life?

At This is Money we have typically favoured five-year fixes and lifetime trackers over two or three year deals. The

first give a good rate and security over a medium term period for those who want it, the second should allow

borrowers to leave without incurring early repayment charges.

By contrast two or three year deals have slightly lower rates but will incur more remortgage fees and require

borrowers to be looking around for a new mortgage just as rates may be starting to rise.

That said two-year fixes are offering some extremely low rates at the moment - below 2 per cent - and so could be

worth a look, however, you must make sure paying fees makes them worth it.

The gap between a top five-year fix and a best lifetime tracker has substantially narrowed: with decent equity or

deposits the former sit at about 3 per cent and the latter just under.

Five-year fixes are cheap money locked in for a decent term and very tempting, but make sure you read the small

print - ensure it can move home with you if needed - and compare costs including fees to see what is best for

you.

• Go to thisismoney.co.uk/mortgage-calculator to do so.

Safety first or take a gamble

Locked in: A five-year fix offers the security that your payments will not rise.

The appeal of a five-year fix to both buyers and remortgagers is the longer term security it gives and that there is

no need to remortgage in a short period of time, when rates are likely to be higher.

Homeowners should check that deals they are looking at are portable, and can therefore go with them if they move home.

Never forget the pay rate on trackers will rise when the base rate does.

The bigger margin on fixed rates means that borrowers willing to take a gamble on rates rising slowly are being

tempted by tracker rate mortgages.

Those happy to take a punt on rates rising slowly can save money over time by opting for a tracker,but they need

to be comfortable with the risk of higher payments and factor in a decent safety margin when working out future

mortgage costs.

• Check the best mortgage rates with our tables

Big fees vs rates

The best rates require big fees, but in most instances, fee-free or low-fee options are available and that highlights

how vital it is for borrowers to work out if a big fee-low rate mortgage is worth it for them.

Typically, the bigger your mortgage the more worthwhile it is paying a large fee, although watch out for those that

are a percentage of your loan.

• Mortgage true cost calculator: Compare deals including fees

Should I wait to see if rates go lower?

The problem for borrowers in recent years is that they don't know when mortgage rates will hit the bottom.

The past year is a case in point. Just as it looked like we had already seen the best mortgages ever that were

around a year ago vanish with months of hikes, rates then headed back lower again. Of course, they then jumped

again and are now back at record lows.

Lenders certainly have room to push rates down further with more money to lend, but there is no guarantee that

they will do so though and many are likely to use chunky margins to rebuild balance sheets.

The Bank of England believes that the way it has structured the Funding For Lending scheme will achieve the

desired falls, however, there is no guarantee this money will end up with those who need help the most -

borrowers with smaller deposits.

Borrowers need to be aware that in these repeated financial crisis days there is something else factored in to

mortgage rates: risk.

Lenders are boosting rates to cover their fear of bad debts and the financial authorities' demands that they cover

themselves adequately.That fear factor will remain for years to come, so don't expect a return to the easy credit

days before 2007.

A brief guide to what decides rates

Mortgage rates and savings rates are part of a complex financial web that draws on official lending costs, ie base

rate, money market funding costs, and competition for savers' deposits.

The traditional influence on fixed rate mortgages over the past decade has been swap rates [latest on swap

rates], the cost of obtaining fixed term funding on the money markets for lenders.

Meanwhile, the traditional influence on tracker rates over the same period has been Libor, the cost of floating rate

funding on the money markets.

Banks use savings deposits to fund mortgages as well as money market borrowing, while building societies are

heavily limited in how much of the latter they can use.

This means fixed savings rates are also influenced by swap rates, while instant access savings are influenced by

variable interest costs - base rate and Libor.

How the financial crisis changed things

Typically money market costs tended to move in line with the Bank of England's base rate, with Libor about 0.1

per cent above it and swap rates reflecting what the market thinks interest rates will be over a set period of time,

ie two years, five years etc.

The credit crunch put paid to this relationship temporarily, but things then returned almost back to normal.

However, Libor rose once more, from its level at about 0.8 per cent, as the Eurozone debt crisis has deepened to

reach almost 1.09 per cent in early 2012. It has since fallen back to 0.57 per cent.

Swap rates stood at 0.60 per cent over two years and 0.93 per cent over five years on 17 April 2013.

Generally, a rise in Libor or swap rates will push up mortgage costs and a fall will allow lenders to cut them. [Latest on Libor rates]

However, at the moment mortgage lenders' levels of confidence and their access to funding are equally important

to rates, this has manifested itself in demands for big deposits and high margins on mortgages above money

market rates

If confidence increases, in the economy, the banking sector and the outlook for house prices, lenders will find it

easier to raise funding and borrowers can expect rates to come down and deposit requirements to ease.

This would ironically be bad news for savers, even if base rate rose slightly, as the unfreezing of the money

markets would make their deposits less important to lenders - leading to worse rates being offered.

Choosing a mortgage - the essential quick guide

1. Mortgages are still being rationed - but you can get them

The problem is that rates are being used not just to make money but also to ration mortgages - most lenders

could not cope with the demand that offering say 3 per cent over five years to those with a 25 per cent deposit

would bring.

If you are in the position of needing to fix, remember if you have a 25 per cent deposit or equity, despite the doom

and gloom, now is not a bad time to be looking for a mortgage.  After all, any rates below 5 per cent are

historically cheap.

•  Compare deals: True cost mortgage calculator

2. How big a deposit do I need?

To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you

have this then you'll be getting close to the best rates, although for an absolute cheapest deal you're still likely to

need 40 per cent.

However, things are looking up for homemovers and first-time buyers who can't raise that hefty quarter of a

property's value. A selection of better deals for 15 per cent deposits are available and even the 10 per cent

deposit market is looking perkier.

The most consistent rates in recent times come from YBS, Nationwide, First Direct, HSBC, the Co-op / Britannia

and the Post Office. Tesco has also recently added itself to this list. Check them out if you are searching for a

mortgage. 

3. Should I take a fixed rate?

Borrowers face a tough decision on this, as fixed rates still remain comparatively expensive by comparison with

tracker deals. That leaves the big question: when will interest rates rise?

The consensus is that there will be no dramatic sudden increases. However, these forecasts are no guarantee

that rates won't rise and when rates rise trackers will get more expensive. [Remember almost no one forecast

base rate heading down to 0.5 per cent]

Borrowers needing security should consider the extra cost of a fix as worthwhile. If you are taking a tracker

because you couldn't afford the equivalent fixed rate then you are putting yourself in a very dangerous position.

For those remortgaging, or buying and able to take their mortgage with them, if you don't need to act right now,

i.e. you are on an existing low tracker rate or guaranteed standard variable rate, it might be worth keeping your

cheap deal - but remember you are taking a punt on low rates and setting aside some savings that you make is a wise move.

4. Should I take a tracker rate?

Tracker rates look good right now. They are cheaper than fixes but they should come with a massive warning

sign attached, as essentially they are a gamble.

What looks like a bargain rate now, could soon get very expensive when interest rates rise.

Even the best trackers are at about 2 to 3 per cent above base rate. That's fine when base rate is 0.5 per cent, but

a whole a lot more expensive if it rises to just 2.5 per cent, which would still be a historically low level.

Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the

tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your

finances could take a rise of at least 2 per cent to 3 per cent in interest rates.

Of course, that may not happen. Inflation may subside, the UK may remain mired in economic gloom and rates

may stay below 1% for many years to come. If that happens a tracker looks a good bet, but just to reiterate - it is a

gamble.

For that reason we at This is Money like tracker deals that fit into one of these three categories: no early

redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.

• More predictions: When will the UK base rate rise? 

5. Will my lender hike my standard variable rate?

A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates, despite the

base rate remaining stable.

Santander announced it would raise its SVR for an estimated 300,000 borrowers in mid-August

Halifax had been the biggest name to do this when it announced it was bumping its SVR from 3.5 per cent to 3.99

per cent in spring.

Some RBS and NatWest borrowers also suffered a recent hike, as have Co-op, Clydesdale and Yorkshire Bank

customers and Bank of Ireland borrowers.

Skipton Building Society did it too when its SVR soared from 3.5 per cent to 4.95 per cent. It had previously

pledged its SVR would never be more than 3 per cent above base rate and had reduced it accordingly as the

Bank of England cut rates. To change its SVR, Skipton had to cite 'exceptional circumstances'.

A number of small building societies, including Marsden, Scottish, Cambidge, Kent Reliance and Accord

Mortgages, have also raised SVRs since the base rate hit rock bottom.

Other lenders like Nationwide have introduced a new SVR  - it has a new one at 3.99 per cent, instead of 2.5 per

cent, for new borrowers and those remortgaging.

Borrowers with smaller societies or lenders shut to new business are most at risk of seeing SVRs raised.

Previously it was thought that those with larger societies or banks should be safe but the Halifax and RBS moves

put paid to that view.

Never forget than without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as

could a discount rate linked to it

Weak pound sends holiday costs soaring

Sterling has weakened against 38 out of 50 of the biggest currencies over the past 12 months

 By Lana Clements | Yahoo! Finance UK – 4 hours ago

Yahoo! Finance UK - Time spent in the sun is set to cost a little more

Brits heading overseas this Bank Holiday weekend can expect to pay more for their ice cream on the beach, as

the pound has weakened against 80% of the top global currencies over the last year.A slow start to summer in

Britain has boosted demand for trips abroad over the coming months. But holidaymakers will find their money

won't stretch nearly as far as it did this time last year.Sterling has lost value against 38 out of 50 major currencies,

including the euro and American dollar, according to analysis Moneycorp. The spending power of those travelling

to the continent this weekend is 6% lower than last May, meaning Brits will have to spend approximately £30 more

for every£500.

Sterling has dropped 4% against the American dollar, costing Brits an extra £20 for every £500. Top 10 currencies

sterling has weakened most against

Country	Currency	% decrease in pound over 12 months	Amount lost on £500
Mexico	Mexican Peso	10.5%	£52.5
Iceland	Icelandic Krona	9.9%	£49.5
Thailand	Thai Baht	9.8%	£49
Sweden	Swedish Krona	7.9%	£39.5
Philippines	Philippine Peso	7.7%	£38.5
New Zealand	New Zealand Dollar	7.5%	£37.5
Sri Lanka	Sri Lanka Rupee	6.2%	£31
Eurozone	Euro	6%	£30
Singapore	Singapore Dollar	5.4%	£27
China	Chinese Yuan Renminbi	5.3%	£26.5

Source: MoneycorpThose looking to make their money stretch further will have to head further afield to

destinations in the Far East and South America. The pound has increased by 14% against the Japanese yen,

saving Brits £74 to achieve the same spending power as £500 a year ago.Sterling has also picked-up against the

South African rand and Argentinean peso.However, holidaymakers heading to Europe later this summer could

find rates have improved. One pound currently buys €1.17 but it could edge up to €1.20, according to Richard

Driver from Caxton FX. He said: "There’s a good possibility that we’ll see sterling improve against the euro in the

months ahead, so now isn’t particularly an opportune moment to buy your euro spending money.’’

Top 10 currencies sterling has strengthened most against:

Country	Currency	% increase in pound over 12 months	Amount gained on £500
Japan	Yen	14.8%	£74
Argentina	Argentinean Peso	11.7%	£58
South Africa	Rand	11.5%	£57
Jamaica	Jamaican Dollar	8.9%	£45
Egypt	Egyptian Pound	8.6%	£43
Gambia	Dalasi	8.1%	£41
Brazil	Real	3.3%	£17
Mauritius	Mauritius Rupee	2.3%	£12
Russia	Ruble	1.7%	£8
Indonesia	Rupiah	1.4%	£7

Source: Moneycorp

How to make money from your wardrobe

Last updated: Jan 3rd, 2013

Feature by Emma Gunn

Selling, mending and swapping all offer solutions to your 
wardrobe overload and could make you money too, as

Emma Gunn discovers.

The average woman owns £204 worth of clothes that they have only worn once, while 70% of Brits have bought

an item of clothing this year they have not worn at all, according to recycle website Musicmagpie.

On top of that the average family in Britain has around 134 unwanted items in their home, worth around £850, the

website says.

But there are ways you can get rid of these unwanted items - and make some dosh at the same time.

1. eBay

One of the most common ways to flog old rags is to sell them on eBay, the auction site.

The bidding process will most likely get you the best price, and it allows you to sell almost anything.

However, it can be hard to predict how much you'll get for an item, and with eBay charging you for posting the item and take a percentage of the cut, it can be a hassle.

2. Gumtree & Preloved

You could also consider posting an ad on classified ad websites such as gumtree.co.uk, which helps sellers find local buyers, or preloved.co.uk which specialises in second-hand items.

3. Musicmagpie

The website has recently launched a new service meaning you can now sell your unwanted clothes to it as well as DVDs, games, electronics and technology.

The site prices your stuff according to size, brand and type. For example, it offers £3.93 for a dress from Whistles, £11.33 for a mens Barbour jacket or £0.95 for a Mini Boden kids jumper. After the website has given you your price, you then box it all up and send it off for free.

4. Stuffusell & Sellyourstuffonebay

If you don't have the time to sell it yourself, you could also try using sites such as stuffusell.co.uk and sellyourstuffonebay.co.uk. These sites sell your items on eBay for you, they will charge you about a third of the selling price, but stuffusell.co.uk for example, claims to get you a price 25% higher than regular eBay sellers.

5. Recycleforcash

If you would rather recycle your unwanted items, check out recycleforcash.co.uk, which lists the best recycling websites for each different category of item you might want to sell.

Where next for gold: What the experts say

Last updated: May 1st, 2013

Feature by Ceri Jones

 

Gold has been under pressure recently, but although the downward move has intensified spectacularly in recent days, it's nothing new, say most of the experts we canvassed, and very possibly represents a buying opportunity.

Below we show a snapshot of expert opinions on the yellow metal.

Mike Turner, head of global strategy and asset allocation, Aberdeen Asset Management

Gold's fall from grace is arguably puzzling. Developed countries remain mired by huge debt and anaemic growth, and even in relatively buoyant emerging markets expansion has slowed. In such uncertain times, one would think gold would be seen as a safe haven.

No one really knows the long-term consequences of the huge monetary stimulus packages. Inflation remains a risk, however distant, and gold remains one of its best insurance policies.

Speculation that Cyprus may set a trend for eurozone central banks to sell off gold reserves and an easing in inflation concerns have weighed on sentiment. But more important is the fact that the yellow metal has "morphed" in recent years from being seen purely as a good store of value to merely another risk asset and now trades more like other commodities.

But investors should not forget the attractions of gold. No one really knows the long-term consequences of the huge monetary stimulus packages. Inflation remains a risk, however distant, and gold remains one of its best insurance policies. Equally if deflation prevails this brings into question the soundness of fiat money, in particular currencies such as the euro which seems less stable at the moment and gold represents the best store of value against that prospect.

Central banks, particularly in emerging markets, are only just beginning to increase their exposure to gold as they diversify away from US Treasuries and the dollar.

Gary Dugan, chief investment officer Asia and Middle East, Coutts

We believe an attractive entry opportunity is unfolding, especially if gold consolidates around its next technical support level of around $1,250 per ounce.

Part of the reason is the robust performance of the dollar. The currency has been buoyed by suggestions that the Federal Reserve might pull back on its quantitative easing (QE) efforts, by the Bank of Japan's commitment to pushing the yen lower and ongoing worries in the eurozone. As a result, there is less reason to hold gold.

In recent days, the dramatic decline in the gold price has been driven by high-volume and high-intensity selling. A number of traders have hit stop-loss levels, which exacerbated the decline. Industry reports suggest that two waves of selling in Commodities Exchange (Comex) June futures amounted to a contract value of $20 billion (£13 billion) and were key factors triggering gold's collapse.

Short positions in both metals and steel/metal equities are at record highs. According to some sources, London Metal Exchange short positions in copper and aluminium are equally large.

We believe the sell-off is exaggerated. Sales of gold exchange traded funds (ETFs) have unwound almost all of the eurozone crisis buying seen in 2012. At these prices, gold is a good buying opportunity. We also believe some central banks in emerging markets may be minded to buy at these levels.

Our technical analysts believe the gold price will consolidate before declining to the next medium-term support level of $1,250. This would represent an attractive entry point.

Koen Straetmans, commodities strategist, ING Investment Management

Worryingly it appears that not only the gold speculators but traditional buy-and-hold investors have thrown in the towel. More than 200 tonnes have been sold by gold ETF investors in a sharp reversal of a multi-year trend of ever-rising tonnage held by ETFs. The latter peaked at over 2,600 tonnes at the end of last year and currently hovers under 2,400 tonnes.

The sheer size of these holdings (around 80% of mine production) highlights the risk to the gold price should these investors further reduce positions, in particular as some are still in-the-money. Similarly, silver exchange traded product (ETP) holdings represent 50% of annual mine production.

There are some compensating forces. There has been renewed physical gold buying in India and China after recent price falls. Central banks are unlikely to become gold sellers - Cyprus only holds 13.9 tonnes, other central banks actually bought some 534 tonnes last year. Eurozone central banks, plus Sweden and Switzerland, are bound by a combined 400-tonne maximum selling agreement annually until September 2014.

We hold the view that we will witness a consolidation phase of global economic growth. On signs of further economic recovery it is therefore likely that equally beaten-up cyclical segments within commodities may do better initially.

Given the high level of uncertainty over the final dominance of forces we currently have a neutral position to precious metals.

For industrial metals, the latest Chinese gross domestic product (GDP) figures, plus industrial production and fixed asset investments (including real estate development) have been disappointing. Within the sector we prefer aluminium over copper as the former trades within the cost curve and the latter above. Aluminium is also expected to be the metal that could benefit the most from a shift to a Chinese consumer-led economy because of its uses in packaging and transportation.

Ashley King, head of treasury, Arbuthnot Latham

Ultimately, any price support for gold depends on whether central banks will continue with their quantitative easing policy. Recent poor economic data from China, Europe and the US shows that global economic recovery is far from certain. Commodity prices have also fallen sharply in recent weeks and possibly have further to fall.

The lower price of gold has resulted in an increase of physical purchases of bars and coins, although this has been outweighed by investors liquidating other variants of gold exposure such as ETFs and moving into asset classes such as equities.

Technically the break below $1,550 may open a move lower towards medium-term support at the $1,265 level. This level may represent a good buying opportunity for the longer-term investor.

Bart Van Craeynest, chief economist, Petercam

The theories (of why the gold price has dropped so spectacularly) include: possible gold sales by eurozone central banks; reduced inflation fears because of a hesitant global recovery; signs that the US Federal Reserve is looking to end QE3; the fact that the Cyprus issue did not affect the entire eurozone as much as could be expected; and improving confidence in the global recovery.

It is impossible to assess which is the correct one. In itself, gold does not generate any income or represent any economic activity, and as such, it is impossible to put a fair value on it.

However, gold has a strategic place in our portfolios. We do not hold it because it is a risk-free, stable asset: it is not. Nor because we expect inflation to become a major issue in the near term. Money printing holds inflation risks, but only if that money is actually used and if the economy is running close to potential. Neither condition is fulfilled in developed markets today. And we do not hold gold because we fear that the world is slipping into a doom scenario: on the contrary we expect the global recovery to continue.

We hold positions in gold for two specific risk scenarios: sustained and extremely loose monetary policy with massive liquidity injections has never been tried on today's scale. Textbook economics suggest that at some point this will lead to higher inflation and bubble formation.

Our long-term view is that the euro is gradually unravelling, and that eventually several countries will leave the euro, with significant implications for confidence in paper money.

These risks have not disappeared. If anything with Japan joining the global printing party and Cyprus getting closer to euro exit, these risks have become more prominent.

Paul O'Connor, director of multi asset, Henderson Global Investors

The most obvious trigger is the revelation that the government of Cyprus floated the idea of selling the central bank's gold holdings during recent bail-out discussions. Commentators have been quick to extend this theme to other eurozone countries, providing alarming estimates of potential gold sales.

It's worth noting that the central bank of Cyprus has shown no intent to sell gold; press comments suggest it would be opposed to the idea. If the Cypriot central bank sold its gold reserves it would only raise about 2% of the bail-out and would also deplete its foreign exchange reserves. It is questionable whether other eurozone central banks would pursue such a path, given the impact on the gold price and the stability of financial markets.

It's quite possible that the move was amplified by a few big trades from major funds, liquidating long positions or initiating shorts. The latest data from the Commodity Futures Trading Commission (CFTC) shows a surge in speculative short interest in gold in recent weeks, to its highest level since 1999. Options prices also show a surge in demand for downside protection in gold.

I would also highlight the futures market. Gold futures require only a 5% margin, which enables investors to place significant directional trades for a small amount of upfront capital. When the price moves sharply, stops get hit, triggering a "domino effect" in the price of gold.

Other sources confirm widespread capitulation in commodities. The April Merrill Lynch Global Fund Manager Survey showed that the number of funds reporting an overweight exposure to commodities is at its lowest since 2009. CFTC data suggest that speculative positioning in copper is at its lowest level for a decade.

There is a risk that a move of this size will trigger selling in related commodities and even in other assets as investors raise funds to meet margin calls.

Richard Davis, managing director and portfolio manager, BlackRock's Natural Resources team

Some holders of gold bullion are probably fatigued after seeing the strong performance of other assets such as equities. They may also be questioning the merits of holding gold as an insurance policy as the global economy is showing signs of a recovery, so gold was already poised for selling.

We don't see this sell-off as the beginning of a bear market for the metal. Longer term, the factors that have driven the bull market in gold have not gone away. We are yet to see the ramifications of quantitative easing, in terms of inflation. At the same time, we expect jewellery demand to pick up at these lower prices, especially in China, and some Indian jewellers are already returning to the market.

In the gold equity market, the recent sell-off has been largely indiscriminate, which has presented some excellent buying opportunities.

Wolfgang Pflüger, senior analyst, Berenberg Bank

The "Great Gold Crash" of late has not been a singular event. To put it into perspective, as at 25 April gold has lost some 9% since the start of the year. That compares to copper (-11%) or lead (-13%). Silver has been hit harder with -28%.

All these metals have broken out of their long-term upward trends. Technically speaking, they are now in a cyclical bear market. That may last a little bit longer for those whose fundamentals have changed, as it has for industrial metals: weaker demand figures combined with higher mining supply coming on stream spells output surplus, and downward pressure on prices for months to come.

The fundamentals for gold haven't changed at all. We still live in a world of governments caught in a debt trap, trying to reflate out of it with the help of unsound monetary policy, swamping the world with liquidity. We still have negative real yields on government paper and we have weak currencies (look at the yen).

So gold and to a lesser degree silver keeps its value (at least as an insurance you pay for the stability of your portfolio). But when almost 40% of the demand for precious metals now comes from financial investors not buying the physical metal but paper stuff like ETFs or future contracts and those investors switch their holdings with a short-term view, then from time to time prices can crash.

That has been a typical sell-off. Markets should be clean now. And after a period of bottom building which could last from a couple of weeks to a couple of months, precious metals should resume their upward trend. In other words, I'm much more confident for price gains in the precious metal sector than for industrials. At year end we expect gold to be around $1,600 an ounce and silver should reach $26,50.

John McManus, portfolio manager, Union Investment, Frankfurt

We see four main reasons for the gold price drop. First, nervousness that the Fed might end QE3 at the beginning of the fourth quarter. Secondly, the discussions about a potential gold sale of the central bank of Cyprus, possibly followed by similar activities in Italy, Spain or Portugal. Thirdly, a downgrade of the gold price by several investment banks, and fourthly sales of ETFs and futures.

We expect a gold price level of about $1,550 on a 12-month basis, as the supporting frame is still intact, with low real yields, lose monetary policy and competition in the field of devaluation.

In the context of the gold-price drop, other precious metals have also been affected, such as platinum and palladium. But palladium is attractive on a 12-month basis due to rising demand for catalyst production, as car sales are increasing in the US and China. For platinum, we also expect growing market demand.

This article was written for our sister website Interactive Investor

Still stuck on central-bank life support

 By Alan Wheatley, Global Economics Correspondent | Reuters – Sun, Apr 28, 2013 20:18 BST

LONDON (Reuters) - Five years after the onset of the global financial crisis, the world economy is in such a

chronic condition that the European Central Bank might cut interest rates this week and the Federal Reserve is

likely to indicate no let-up in the stimulus it is providing the U.S. economy.

With the euro zone economy in recession, momentum is building for the ECB to lower interest rates for the first

time since July 2012, according to senior sources involved in the deliberations.

If the bank does not act on Thursday, a quarter-point cut in June is considered a racing certainty.

The ECB is the most conservative of the world's main central banks. Its main short-term rate, now at 0.75 percent,

is higher than the equivalent rate of the Fed, the Bank of England and the Bank of Japan.

And unlike its peers the ECB has not engaged in quantitative easing - printing new money to buy bonds.

But the ECB seems to be softening. "I would argue that the ECB should be thinking of easing policy; whether

they are currently is more debatable," said Stephen King, global chief economist for HSBC in London.

Only a small majority of 76 economists polled by Reuters expected a cut as early as this week.

The swing factor for King is what is happening to Germany, the euro zone's largest economy. Until recently,

Germany had been showing resilience thanks to its export sector.

But April's survey of purchasing managers and the Munich IFO institute's monthly poll were distinctly soft.

"Germany is becoming more like everybody else. It is being dragged down, whether it likes it or not, through

weakness in southern Europe, slowing growth in China and the depreciation of the Japanese yen," he said.

"None of these things are good for Germany. So the weaker Germany becomes, the easier it is to agree on a

common monetary policy," he added.

China's official purchasing managers' survey for April, to be released on Wednesday, is likely to provide more

evidence that the world's second-largest economy is shifting down to a lower trend rate of growth after three

decades of averaging around 10 percent a year.

Economists polled by Reuters expect the index derived from the survey to have edged up to 51.0 from 50.9 in

March, holding above the threshold of 50 that demarcates month-on-month expansion from contraction.

Jian Chang, who tracks the Chinese economy for Barclays in Hong Kong, prefers to describe the economy as

being in a stabilisation rather than a recovery phase.

"As long as the PMI comes in above 50 it will show that modest, slow growth is continuing," she said.

Global markets have become addicted to the drug of super-fast Chinese growth and tend to react badly to signs

of softness. But Chang said the authorities in Beijing, intent on guiding the economy to a more sustainable

growth rate, are not panicking.

There has been no big investment package, for example, to support the government's urbanisation drive.

Policymakers will be comfortable as long as growth for the year as a whole comes in above their target of 7.5

percent, she said. Barclays is forecasting an outcome of 7.9 percent.

Whether that target is met will depend in part on an improvement in exports to the European Union and to the

United States, which on Friday reported a disappointingly soft first-quarter gross domestic product growth rate of

2.5 percent.

The pace of expansion has averaged just 1.4 percent over the last two quarters and 1.8 percent over the past

year, noted Jay Feldman, director of U.S. economic research at Credit Suisse in New York.

"All in all, growth is persistent, but decidedly underwhelming. At this trajectory, achieving a labour market

recovery beyond the fits-and-starts progress of the last few years will be a challenge," he told clients.

Figures this week are likely to fit into the same pattern.

The Institute of Supply Management's April manufacturing survey is forecast to dip to 51.0 from 51.3 in March,

while the economy is likely to have generated 150,000 jobs in April, up from just 88,000 in March but not enough to

reduce the jobless rate from 7.6 percent.

Because the Fed has pledged to stick to its super-loose policy until unemployment falls to 6.5 percent, the central

bank is expected to confirm at this week's policy meeting that it will keep buying $85 billion (54.8 billion pounds)

in bonds every month to keep bond yields low and encourage investment.

Talk had started to grow that the Fed might start to wind down, or taper its quantitative easing programme. But

after the latest economic data, the central bank's tone is likely to change, according to Steve Ricchiuto, chief U.S.

economist for Mizuho Securities in New York.

"They're going to come out of this meeting with a more balanced view on tapering and say, ‘we could increase or

we could taper'," he said.

Indeed, price pressures are so muted because of slack in the economy that some Fed policymakers have raised

the prospect of injecting even more stimulus.

The core personal consumption expenditure deflator, the Fed's favourite inflation gauge, rose just 1.3 percent in

the year to March, Friday's GDP report showed.

"Low inflation leaves that much more leeway for the Fed to focus on growth and jobs. If the core PCE index falls

much farther, look for ‘inflation being too low' to show up in more Fed communications," Feldman said.

(Editing by Greg Mahlich)

What a pound coin bought 30 years ago... And what it gets today
 

The pound coin was introduced 30 years ago this week on April 21st 1983.
 

lovemoney.com – Tue, Apr 16, 2013 15:23 BST
• 
 Yahoo! Finance UK -

These days, there are more than 1.5 billion coins in circulation and it’s estimated that around 2.9% are forgeries!

But what could you have bought with a brand new pound coin in 1983?

Here are a few examples:

- Two pints of London Pride beer - 20 cigarettes - 6lbs of frozen chicken 
 
- 3 loaves of sliced white bread - 2.77 litres of petrol Fotolia

A packet of 20 cigarettes for a pound back in ’83?

These days, the price is more like £8.

Let’s look at what you can get for a pound these days:
- 1 hour in a car park Fotolia
 

- 1 bottle of water from a vending machine

- 5 trips to a public toilet in London -

3 cans of diet Coke from Poundland -

0.72 litres of petrol
 
Clearly we’ve had to endure a lot of inflation over the last 30 years, and you can’t buy much for a pound in 2013,

unless you visit your local pound shop anyway!
 

That said, when you visit a pound shop, don’t assume that everything is a bargain.

For example, a pack of chewing gum can be quite expensive at £1, so you may be better off buying your gum at

a supermarket or even at a local corner shop.
 

You may also find that some products are in smaller sizes than you’d normally find in shops.

Hiding the World's Money

Written by Philip Bowring

Tuesday, 16 April 2013

Caymans: Great place to go visit your money The thieves get the blame but as usual the bankers are home and dry The lines between fraud, tax evasion and avoidance, theft of documents, duty to report crimes, etc. grow ever murkier, as evidenced by the widespread publicity given to the International Committee of Investigative Journalists, which in the past two weeks has made public a long and embarrassing list of politicians, hedge fund managers, government officials and major and minor satraps who have stuffed multiples of billions of dollars into tax havens across the world. But the organizations at the murkiest heart of the situation are not Mexican drug cartels nor Russian oligarchs. They are some of the world's best-known financial institutions and some of its largest multinational companies. Almost every day brings news of some new case of misdeeds being exposed, whistleblowers and scapegoats alike prosecuted and politicians embarrassed. Governments make pious noises about cracking down on tax havens but in reality they can do little. They can sit on this or that little island – goodbye Cyprus as a safe place for money – but money is fungible. This is a world with few really effective foreign exchange controls to discourage the wily and any number of places willing to hide it. That includes the likes of Singapore as well as more obviously dodgy avoidance centers like the Cayman Islands, all too keen to pick up any business driven from elsewhere (including Switzerland now that the Germans have been getting tough). The chances of achieving much are dim. Or dim unless governments of major countries are actually prepared to take on their own big banks and the likes of major internet soft and hardware companies that use essentially dishonest transfer pricing tricks and complex devices to pay minimum taxes and keep billions of cash offshore. The hypocrisy at the heart of the system is well illustrated by Hong Kong and its leading, though London-headquartered bank, HSBC. As Asia Sentinel readers will be aware, Hong Kong courts have taken to giving 10-year and longer jail sentences to tiny cogs in the so-called money laundering schemes – in these cases depositing funds which were alleged, without any supporting evidence, to be the profits of crimes on the mainland. Every week Hong Kong banks knowingly launder billions of dollars of mainland money which may be the profits of crimes but more likely is the product of another crime - under - or over invoicing of trade transactions to avoid both tax and foreign exchange regulations. But the government lawyers and tame judges are either too dumb or compromised to accept that reality so give outrageous sentences to minor players and let the banks go free. Meanwhile across the world, in Spain in this case, the Swiss government is, with the connivance of HSBC, trying to extradite a former employee of HSBC in France who provided the authorities with a list of foreign account holders with HSBC in Switzerland. Then French Finance Minister and now IMF head Christine Lagarde passed the list on to US and some European governments. The whistleblower faces prosecution on grounds of theft of information. Yet reporting knowledge of or reasonable suspicion of crimes is supposed to be a duty. In Hong Kong you can get 10 years jail for not recognizing that fact. It may be a crime in Switzerland to reveal bank account information, but it is a national duty for a French citizen to reveal criminal activity by one of its citizens. Sorry, Switzerland. If you want to be an international banker, you have to follow foreigners' rules or stick to guarding the hoards of African dictators and assorted war criminals. An even bigger storm has broken out over the release by the International Committee of Investigative Journalists of the thousands of documents about offshore accounts held in such notorious jurisdictions as the Caymans and British Virgin Islands (BVI). Cries of theft have gone up and appeals made to the right to privacy. But transparency is also a right and obligation in most well-run countries. What gives a citizen of, say, the US or France the right to hide tax and money affairs in informational black holes such as the Caymans? For sure there are legitimate reasons for operating through, for example, BVI holding companies. Many of the companies listed in Hong Kong do so for a variety of reasons which have more to do with procedural and regulatory issues rather than tax or other money ones. Nonetheless, every nation has a right to expect its citizens to obey its laws and hence there is also an obligation to report criminal breaches of those laws. Hong Kong has the whole situation upside down, prosecuting locally for supposed crimes committed elsewhere, while its top bank in effect is defending its role in shielding illegal activity by citizens of the US and some European countries. However it is hardly surprising that wealthy individuals such as the French budget minister, recently exposed as having a secret offshore account, engage in such practices given the lax attitudes of governments to tax schemes employed by corporate giants and which fail to prosecute individual bankers for their roles in the outright dishonesties which contributed to the global financial crisis. These are usually described as "tax avoidance" and hence legal but examined closely they almost invariably involve dishonest reporting of values and of where the transactions actually took place, so that profits are retained in some offshore zero or low-tax location. The little cartel of major international auditors who also act as tax consultants are key to creating these fictions. They often have all too close links to government revenue departments which are responsible for cracking down on such manipulations. Meanwhile governments more broadly are constantly threatened by companies that threaten to move their headquarters to Ireland or Singapore or Hong Kong if the local authorities take tax gathering too seriously. Meanwhile the City of London feeds off the many tax havens which rely on British laws and protection, and Germany is lenient towards bank secrecy in Austria and the whole EU ignored Cyprus abuses before the recent crisis. There is a real danger that abuses by big corporate as well as banks are turning middle classes in many countries against the idea of free markets. They are having to pay more taxes while the richest get richer. Yet as any student of Adam Smith can tell you, these are not free markets but ones manipulated by insiders against the interests of all other producers and consumers. Some authorities have made a fetish of cracking down on money laundering in the name of fighting El Qaeda or drug cartels. This is nonsense. El Qaeda was never in the big money league and the drug cartels have networks of legitimate business through which to move money around. Open trade and open movement of money are inseparable. But the same does not apply to tax liabilities and the reasonable requirement that citizens pay taxes as required by their national laws, and that multinational corporations pay tax where they actually make money – which you can be sure is not some Cayman or Cook Islands post-box, or cloud in the Google sky

Falling Commodity Prices Spell Trouble

Written by Philip Bowring

Wednesday, 17 April 2013

Gold bug scurries for cover Indonesia, Malaysia, Australia on the firing line The wheels are finally coming off the decade-long commodity boom. Watch out, Australia in particular. But beware Indonesia and to a lesser degree Malaysia. The price decline has probably only just begun. Take gold, often seen as a harbinger of commodity price trends generally. Those who think it is cheap after a 20 percent fall from its high should remember that it is still four times its price just 10 years ago. Iron ore is still five times and thermal coal three times 2003 levels. Of course valuing a commodity mainly seen as a store of value rather than a useful metal is almost impossible. But there are some guidelines worth keeping an eye on in assessing gold's average price over long cycles. One is the cost of production. This matters less for gold than other metals simply because annual output of around 90 million ounces is still small - about 1.5 percent -- relative to the total existing supply. But much of that supply is locked up in central bank vaults so at the margin changes in demand and supply can be very significant. That is where supply issues enter. It is currently estimated that the all-in cost of new mines is around US$1,300 an ounce. So new companies are not going to open new mines unless they believe the price is going to be sustained above that level. But many projects are already well under way on the assumption that it will. Added in is the impact of new copper mines producing gold as a by-product. A more important number too than all-in cost is the marginal cost of production for existing mines. That is now estimated to be around US$800 an ounce so the price still has a long way to fall before these find additional production uneconomic. By chance, perhaps, this price roughly coincides with another so-called "fair price" calculation - the ratio of the gold price to the US consumer price index. Gold like other minerals has seen advances in mining and processing techniques which have enabled production to double in the past 30 years without the discovery of huge new deposits such as those which once existed in South Africa. Clearly gold was driven to nearly US$2,000 not by either the cost of production or as a multiple of the US CPI but by "safe haven" concepts associated both with the global financial crisis and more recently by fears of inflation caused by central bank quantitative easing, sometimes dubbed "money printing." In real terms gold almost regained the US$800 peak seen in 1980 when global inflation was rampant in the wake of massive oil price increases. But once perceptions change the impact on prices can be sudden. Now the evidence that inflation is about to surge is hard to find. Despite QE, advanced economies are growing very slowly, if at all, China and India and most of the developing world have also slowed. Yet fears of global crisis have also receded. Gold was always a momentum play and one encouraged by the emergence of gold Exchange Traded Funds which have been in existence for less than a decade but which were heavily promoted and even now, after significant withdrawals in recent months, hold some 80 million ounces or nearly a year's mine output. Some gold funds are also leveraged. Add in the possibility that some central banks may sell gold rather than buy it and the short term demand/supply situation looks as weak as the longer term marginal cost one. Quantitative easing may be creating some asset bubbles but definitely not in gold or other commodities. Indeed the broader fall in commodity prices caused both by underlying demand/supply issues as well as sentiment and ETFs may well ensure that inflation remains low despite QE in the US, Europe and Japan and by official stimulation efforts in China. Already there is evidence that the fall in energy prices in the US caused by the shale gas boom is providing more stimulus to the rest of the economy than QE is. The fall in the price of thermal coal could well do the same for China. And it is only a matter of time before a combination of new gas and oil production elsewhere, plus shale gas development in other countries, ensures that energy prices are likely to be a global stimulus, not a drag - except of course for countries such as Australia, Indonesia and Malaysia. In Australia mining and gas producers are seeing the writing on the wall and putting major projects on hold. But meanwhile others are too advanced to stop now and will go into production, having incurred costs far above original estimates thanks to the strength of the Australian dollar and the outlandish costs of labor in the remote regions of the country where the mines are located. The much advertised and criticized Chinese mining investment binge in Africa, South America and parts of Asia is also beginning to have an impact on supply - much to the future discomfort of many Chinese companies but to the broader advantage of China which will see lower import prices. Just as miners big and small failed to see the boom in Chinese demand and thus profited from shortages and high prices, so now the opposite is occurring. Chinese (and other developing country) demand is not increasing as fast as assumed. China's overall growth rate was unsustainable if only because of demographics. But more importantly, the miners forgot that as China grew richer demand increases would shift from commodity-hungry housing and infrastructure to services, household appliances etc. China would well continue to grow by 6-7 percent a year while barely increasing commodity imports. The scope for increasing energy efficiency also remains huge. ETFs and momentum plays have had a role in prices of other commodities than gold - though to a much lesser extent. Speculative buying by Chinese companies has also played a role though it is hard to see whether unwinding is needed. Not every commodity has suffered to the extent of gold or even oil. But the iron ore price looks more propped up by the collapse - for political reasons - of Indian production. Agricultural ones may in the medium term be less impacted if only because of scares about the impact of climate change on production. However, there is scant evidence that overall supply is falling behind demand, and China's need for imports may be plateauing given the huge increases already seen in protein and fat intakes in local diets. Prices will likely continue to be driven by shorter term shifts in supply but those of tree crops have long cycles so with an oil price spike or a big setback to soybean production rubber and palm oil look more likely to go down than up. So all this sounds like bad news. But it is actually good news for the majority of the world's population who are consumers, not commodity producers and will be a spur to growth in every country which is a net importer of them. Meanwhile new commodity exporters will make life harder for the traditional ones like Australia.

Marx: Bankers are parasites and bandits

1. Is your money guaranteed by the UK government?

The most important thing to understand is if you save with Santander in the UK, it is for all intents and purposes

a UK bank, fully regulated by the FSA and protected by the Financial Service Compensation Scheme (FSCS). In

technical terms, if you have savings with Cahoot and Abbey they’re just sub-brands of Santander UK, so all

three share one lot of protection.

So let’s examine what would happen in the unlikely event of a fully UK regulated bank going bust…

The UK government (via the FSCS) would be in charge of sorting it out – all money saved in fully UK regulated

bank accounts is protected up to £85,000 per person, per institution.

This, it is now said, would be paid out within 7 days for most cases, 20 days if it’s complex.

This new shorter time period has never been tested, but the last time the FSCS needed to pay out it was

relatively speedy.

For those with money in ISAs or current accounts, that’s all part of the same thing (ie, you’re protected up to

£85,000 in total for all three), and if a bank were to go bust and you had an ISA with them, the way it has worked

before is you get a certificate saying it’s ISA cash, so you can use the certificate to put your money into another

ISA (ie, it wouldn’t count as using this year’s allowance, it’d count as a transfer of a past allowance).

So in practical terms, if you’ve less than £85,000 then your money is protected so there is no problem. If you’ve

more, then as I always suggest for all banks, it’s worth spreading the cash in different institutions in £85,000

lumps to keep it safe

See the Safe Savings guide for full help on this – and answers about what to do if you’ve saving and debts in one bank etc.

It’s arguable too that if you think you’d ever need access to cash at speed, ie, within the 7 day FSCS period, then

splitting amounts below £85,000 is a safe precaution to mitigate the risk of all your money being locked-up at

once.

Now, do note I described Santander as a “fully UK regulated bank”, but don’t think that means all bank accounts

in the UK have the same level of protection as it.

Unlike Santander, some European banks, including ING Direct, opt for the passport exemption of the FSCS

regulations – which in effect means in the event one of those went bust, you’d be reliant on the Dutch, not the

UK government to pay out your compensation.

2. How safe is money in Santander UK?

We’re being told by Santander that its UK bank is ring-fenced from its Spanish parent.

In other words, the Spanish bank owns shares in the UK bank, but its cash and operations are ring fenced.

Now I have no way of knowing this, and haven’t checked it out as it’s not my bag, but assuming it’s true (and we

must assume it is, as if it wasn’t the Financial Services Authority (FSA) would be coming down on it like a tonne

of bricks for saying so) then problems at the Spanish bank shouldn’t impact its UK arm.

As for how stable the UK bank is, well most commentators seem pretty strong on it, though again that’s not our

forte so please read articles from This Is Money or the BBC for more info.

3. Why are a few councils withdrawing cash?

The most important thing to understand is that while money saved by consumers is protected, money invested

by councils and large businesses isn’t, so in the unlikely event even a fully UK regulated bank went bust, they

wouldn’t get their cash back.

So during the Icelandic bank collapse, while no UK savers lost money as it was protected and paid out by the

government, many councils and institutions use more complex ways of savings (ie, we’re not talking just cash in

accounts here) and were exposed.

This has made some adopt an ultra-cautious stance and they are relying on credit ratings to help set their

policies. I suspect there are some tick-box exercises going on here (ie, they need to keep cash within banks with

certain credit rating settings).

4. What happens if a bank were to collapse?

Now while I don’t want to scaremonger, and think this is an unlikely outcome.

Let’s just explore what’d happen in that eventuality, as it may help put some minds at rest.

The only precedent we have here is what happened in 2007-8 when we saw a spate of banks in trouble. The

outcome for banks in the UK depended very much on whether they were fully UK regulated (as Santander UK

is), not whether they were UK owned.

Finding the right bank account

How safe is my bank account?

As the world of finance is still going through a turbulent time, you might be worried about whether the money in

your bank account is safe.

The collapse of Northern Rock, Bradford & Bingley, and Icelandic banks are still fresh in peoples' minds and

with the Euro crisis is ongoing, it is important to know your money will be safe should the worst happen.

How to check your bank account is safe

If you’re worried about the safety of your bank and the money you have in it, the first thing to do is to check

whether the bank is regulated by the Financial Services Authority (FSA) by using the regulator's online register.

If the provider is authorised, then you will be covered under the Financial Services Compensation Scheme

(FSCS) up to £85,000.

It's important to remember that this £85,000 coverage is per person, not per account.

So if you have more than this amount you might want to consider spreading it around several financial institutions.

However, you can be penalised if you withdraw money early from certain bank accounts, such as notice and

fixed-term accounts, so check with your bank first.

Action point: Read our step-by-step guide to finding the best bank account or, if you’re looking to make a bit

more from your money, take a look at our round-up of best rate savings accounts and best rate cash Isas.

Who owns your bank account?

In recent years some banks and building societies have merged with their larger competitors which might affect

the FSCS coverage their customers would get in the event of a crisis.

Some banks, such as Lloyds and HBOS, have retained their own banking licences post-merge, so you have

compensation coverage from both banks (i.e. up to £170,000).

However, others have given up their separate banking licences, meaning that you may now only have one 'dose'

of coverage.

So if you have multiple deposit accounts with one bank or building society – or several accounts with different

brands that come under the same authorisation – you will only be protected under the FSCS up to a total of

£85,000.

To find out how your money is spread across different financial institutions, read our guide to who owns who in

the banking industry.

Action point: If you want to move your money, our guide and tips to switching bank accounts will help.

Joint bank accounts

If you and your partner have saved a significant amount of money and you don’t like the idea of spreading it

around multiple banks, consider opening up a joint savings account.

The FSCS covers £85,000 of savings per individual, per financial institution – so by placing your savings in a

joint savings account along with your partner, you're effectively doubling your coverage to £170,000 in total.

Foreign bank accounts

Many foreign-owned banks that operate in the UK have to be authorised by the FSA so money deposited with

them will be covered by the FSCS.

However, a bank based in the European Economic Area (EEA) can offer certain products or services in the UK

while still being authorised in their home country.

So if you deposit money with an EEA bank it will be covered by the compensation scheme of the bank’s home

country, rather than the FSCS, up to a limit of €100,000 (about £85,000).

Compensation rules vary depending on the country the bank is authorised in so if you are not sure how your

money is protected you should check with your bank.

Euro crisis: what it means for UK consumers Savings not covered by the FSCS

Banks not covered by the UK compensation scheme

The only major savings institutions operating onshore in the UK which are not covered by the FSCS are Anglo-

Irish Bank and Triodos Bank. Anglo-Irish is now closed to new business.

Triodos Bank

Triodos is a Dutch bank and in the event that it was to become insolvent, savers' money would be protected up

to €100,000 (£86,000) by the Dutch depositors' protection scheme.

All depositor protection schemes are only as strong as the nation state that sits behind them.

The Netherlands has a AAA credit rating, which is the best rating available.

Which? does not believe that savers should have to make an assessment of a country's financial strength when

deciding where to deposit their money.

As such, our best rate savings tables do not include banks which are not fully protected by the UK FSCS.

Anglo-Irish Bank

Anglo-Irish Bank has now been nationalised by the Irish government, and deposits would only be at risk if the

Irish government were to become insolvent. Ireland has a much weaker credit rating than the UK, and the

likelihood of it defaulting on its financial commitments is significantly higher than most European countries.

Therefore, if you still have savings deposited with this institution, we would advise that you move them to a bank

that offers full UK FSCS protection.

Are my savings safe in an offshore bank account?

All offshore bank accounts are protected by the depositor protection scheme of the territory where the offshore

bank is based. For example, Nationwide's offshore banking arm is based in the Isle of Man.

Therefore, if Nationwide were to become insolvent, depositors with Nationwide International would need to rely

on the Isle of Man depositors' protection scheme to recoup their money. It is unlikely that the depositor

protection schemes of small offshore territories would be able to meet the obligations caused by a major

insolvency, so depositors would be likely to lose money.

In the 2008 banking crisis, some depositors who had money in the offshore arms of the insolvent Icelandic

banks lost their money.

If you need to have money in an offshore bank or savings account, the risk of problems is likely to be lower if

you opt for a bigger brand with a more stable financial footing.

Are my savings safe if my account was opened in another European country?

If you travel regularly or own property abroad, you may have a bank account or savings account opened within

an EU country other than the UK.

Money in these accounts is likely to be protected by the depositor protection scheme of the country where your

bank is based. If the government of the country where your bank is based were to default on its debts, and was

unable to prop up its depositor protection scheme, you could lose some of your money.

If possible, you may want to consider moving some or all of your money to an account protected by the FSCS.

Sterling hits 28-YEAR LOW against Aussie dollar

despite Sir Mervyn's pep talk that  prompted

comeback against euro and dollar

By This Is Money Reporter

PUBLISHED: 10:10, 15 March 2013 | UPDATED: 17:11, 15 March 2013

Sterling staged a comeback against the euro and the dollar today as investors piled in to back up the currency

after Sir Mervyn King called time on the sell-off that has seen the pound fall 6 per cent against both reserve

currencies since the year began.

But in a strange twist the pound found itself under attack from down under as the Australian dollar reached a 28-

year high trading at AUS$1.454 - with foreign exchange traders suggesting the pound could fall as low as

AUS$1.43 next week.

Charles Murray, senior broker at currency broker FC Exchange said although sterling had risen following Sir

Mervyn's comments the UK economy still faced the prospect of a triple dip recession and was still reeling from

the loss of its AAA rating last month.

'Sterling is getting sold off quite a lot because of issues such as the loss of the AAA rating and the possibility that

the UK could be falling into a third recession in four years,' he said.

'The Qatari’s have said they are going to pump a few billion into the economy but that’s the only good news on

the horizon.'

In contrast the UK economy had flat-lined and the Bank of England had been forced to pump money into the

economy in order to get British banks to lend to small businesses and homeowners and boost exports.

He added the Aussie had been gaining on the pound for around six to eight months with sterling being valued at

AUS$1.55 last summer.

'It's a matter of confidence,' Murray added. 'There is lots in Australia and none in the UK.'

Earlier today sterling rose a cent against the dollar, or 0.5 per cent, to $1.5167 continuing a three day rally in

which it has so far risen 1.2 per cent, after hitting 33-month lows on Tuesday. Against the euro the pound was

trading almost half a cent, or 0.06 per cent, higher at €1.1603.

The rise in the pound came after the Bank of England governor warned the recent sharp fall in sterling’s value

against the dollar and the euro had gone far enough, adding the pound was now ‘properly valued’ and that the

economic recovery 'was in sight'.

Sir Mervyn's intervention reflected fears the recent slump in the value of the pound would raise inflation and

squeeze household budgets further.

Until yesterday he had repeatedly talked down sterling since the Autumn. In November, he said sterling’s rise in

2012 ‘was not a welcome development’. And January he said the 25 per cent fall in the value of the pound since

2007 ‘was certainly necessary for a full rebalancing of our economy .

But last night he suggested things had gone far enough.

‘We are moving to a properly valued exchange rate. I think we’re probably there,’ he said. ‘Basically we’re at the

same level [of sterling] we were after the impact of the financial crisis,' he told ITV News.

He also refuted any notion that the Bank had taken action to devalue the pound.

‘We’re certainly not looking to push sterling down. We’re looking to ensure recovery in the UK economy and

gradually bring inflation back to our 2 per cent target,’ he said.And analysts warned sterling could still struggle to

make further headway given persistent concerns about the British economy and expectations the Bank may

have to resort to more asset purchases to support the economy.

The pound bought nearly $1.63 in December: it was worth less than $1.50 on Tuesday.

In contrast, the U.S. economy is showing signs of a sustained recovery, adding to speculation that the Federal

Reserve may halt its quantitative easing programme sooner than many expect.

Peter Kinsella, currency strategist at Commerzbank: ‘further weakness [in the pound] will only generate more

(imported) inflation. What King is trying to do is stem more sterling weakness. But sterling/dollar remains a sell on

rallies given the different growth outlooks between the U.S. and the UK.’

Earlier this week, weak manufacturing output figures added to a string of sluggish data that has raised concerns

the British economy could be heading for a third recession in four years.

Against that backdrop, the Bank might opt for more monetary easing to stimulate growth via its programme of

asset purchases, which is generally negative for the currency as it involves the central bank flooding the market with sterling.

Analysts said investors would also be wary before Chancellor George Osborne presents his budget next week.

Speculation is mounting that Osborne will announce a review of the BoE's remit and give it more leeway on

inflation targeting, allowing scope for a further easing of monetary policy.

Andy Scott, premier account manager at foreign currency exchange brokers HiFX said: 'Markets tend to listen to

central bankers but talk is cheap and memories short. The figures on the economy are what matter and they don’t

look great with there still being a risk of a third technical recession in the last four years if we see contraction in

the current quarter.

'There’s also the possibility that the Bank of England will do more quantitative easing which will keep investors

wary due to such measures usually having a negative impact on a currency’s value. Next week’s releases on

inflation, the bank’s minutes and the budget will make for interesting viewing.'

Morrison backs fight against 'chicken tax'

14 March 2013 | By Alistair Driver

Tax efficient giving to charity: the basics

 

Confusion - I rang HMRC who told me I couldn't claim tax relief on Gift Aid charities.

If you know more- do "Get in Touch"- Radical

 

If you want to donate to a charity or Community Amateur Sports Club (CASC) and you're a UK taxpayer, there

are a range of tax incentives and schemes available to help you get the most from your donation.

How you can give in a tax efficient way

There are a number of tax efficient ways to give to charity as an individual.

You might be able to claim some tax back using these methods.

In order to claim these, the organisation you give to must be recognised as a charity for tax purposes by HM

Revenue and Customs.

You can check this by asking the charity to confirm that it has an HMRC charity reference number.

If your donations are under the Gift Aid scheme, your chosen charity can also claim tax back (known as tax

relief) from the government.

Depending on the type of gift you make, you may have to make a claim to receive the tax relief (either on your

Self Assessment tax return or by contacting your own Tax Office).

Find your tax office

The different ways you can give in a tax efficient way are summarised below.

Who's the fattest cat of all?

Barclays bonanza for 428 millionaires

Wednesday, 6 March 2013

 

“We don’t pay taxes. Only little people pay  taxes.” Leona Helmsley,

wealthy widow of a  New York property tycoon *

SchNEWS reckons it’s time to point  out the bleedin’ obvious – it’s  always Christmas time for the super- rich

and the multinational corpora- tions. Under Neo Labour those with  the most cash have doubled their  money.

A report on inequality from  the Office for National Statistics  shows that the top 1% increased their  share of

national wealth from 20% to  23% in the first six years of the  Labour government. The top ten per  cent of

Britain now owns an incredible 54% of the wealth.

Meanwhile Chief Executive (CEO)  pay is out of control. In the UK it  rose 25 per cent a year from 1983 to  2002 –

no matter how a company was  performing. If a CEO remained in  post for seven years, he (and it is  always a

he) could expect to see his  salary double – twice. CEOs now  pocket around 50 times as much as  ordinary

employees. In fact, a new  paper from business school academics  reckon that “corporate managers are 

somewhat like landed aristocracy in  the 19th century, or political elites of  the Third World” with their pay far 

outstripping their contribution to the  company or the country.

Office cleaner Abdul Durrant stood  up at HSBC annual general meeting in  June and asked if cleaners at the 

bank’s Canary Wharf headquarters  could be paid more than £5 an hour.  It was not, he said, enough to live on. 

HSBC Bank chief executive William  Aldinger didn’t answer – and why  should he care. He has a £37 million 

three-year package to live on, as well  as free dental and medical treatment  for life.

Not that you’ll read about this in the  corporate media where it’s divide and  rule. You skint? Then blame those 

poorer than you. So The Sun runs  another ‘Shop a Skiver’ campaign but  forgets to nominate its owner

Rupert  Murdoch. In 1999 The Economist  reported that Murdoch had made £1.4  billion in profits over the

previous 11  years but had paid no corporation tax.  After an examination of what was  available of the

accounts, it reckoned  Murdoch would normally have  expected to pay enough tax to “build  seven new

hospitals, 50 secondary  schools or 300 primary schools”.

Or what about Richard Desmond,  owner of Express Newspapers, who  paid himself £46.2m last year. Yet his 

papers run a relentless campaign  against asylum seekers and how they  are bleeding the country dry.

Richard Branson’s Virgin Group is  based in the Caribbean – yet since  privatisation, Virgin Trains have 

received £1.57 billion in public  subsidies. That’s taxpayers’ money, for  someone who pays hardly any tax, for 

a service that is crap

Britain’s ratings downgrade described as ‘a humiliating blow’

Ed Balls, Britain's Shadow Chancellor

Sat Feb 23, 2013 9:7PM GMT

Shadow chancellor Ed Balls attacked the Conservative-led coalition government’s economic policy and its

devastating austerity measures, urging the Chancellor George Osborne to "kick-start our flat-lining economy".

According to Moody’s, which has for the first time since 1978 downgraded the country’s rating, growth would

"remain sluggish over the next few years". The ratings agency said the coalition’s debt reduction programme

faced significant "challenges".

"This credit rating downgrade is a humiliating blow to a prime minister and chancellor who said keeping our

AAA rating was the test of their economic and political credibility”, said Balls, speaking on BBC Radio 4's

Today programme.

"I have always said... that you should not set your policy by the credit ratings agencies.

They have got things wrong in the past.

"But what matters is the underlying economic reality.

There has been no growth now for two years, our deficit is getting bigger... the plan has not worked."

"In the budget, the government must urgently take action to kick-start our flat-lining economy and realise that

we need growth to get the deficit down", added the shadow chancellor.

However, the Chancellor Osborne warned that Britain's situation would get much worse if the government

abandoned its "commitment to deal with that debt problem".

"What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling

the country for years that we've got a debt problem, we've got to deal with it”, he said.

"We've got to take tough measures to do that and I think people understand that."

Osborne claimed that the UK was still able to borrow money "very cheaply with very low interest rates" from

investors all around the world.

Earlier, Liberal Democrat’s chief secretary to the Treasury, Danny Alexander, told BBC News that losing the

AAA rating was not a devastating blow.

Alexander insisted the government was trying to "deal with huge financial problems we inherited from Ed Balls

and his colleagues and get the country back on track".

Meanwhile, Scottish finance secretary John Swinney said the cut proved the UK's "vigorous austerity

programme" was not working and confirmed "the utter failure of the UK government's economic strategy".

The UK's net sovereign debt was the equivalent of 68 percent of the country's annual economic output, or

GDP, at the end of 2012.

The country has experienced a double-dip recession since 2008. It grew in the third quarter of last year,

boosted by the impact of the Olympics, but shrunk again by 0.3 percent in the last three months of 2012.

All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its

rating if performance deteriorates.

“What the credit rating agencies are doing though is reflecting the reality and the reality is an economy which

is not growing, a deficit which is getting bigger, families in real stress and a government which is ploughing on

regardless with a plan which is not working -- saying 'the medicine is not working, let's increase the dose of the

medicine' that is completely crazy economics”, Ed Balls added.

The downgrade may fuel unease amongst members of the ruling Conservative Party and his Liberal Democrat

coalition partners that Osborne's gamble that he could slash the deficit and ensure a return to growth by the

May 2015 election is failing to pay off.

Sterling fell by almost a cent to around $1.5160 after the downgrade, just off Thursday's fresh 2-1/2-year low,

and analysts expected it to weaken further on Monday, even if many had seen a downgrade coming sooner or later.

Britain joins the United States and France in having lost its triple-A rating from at least one major agency, after

holding a top-notch rating from Moody's and Standard & Poor's since 1978, and from Fitch Ratings since 1994

Supermarkets 'Now Take 58% Of Retail Spend'

Consumer spending trends show supermarkets are the big winner,

amid a forecast of plastic's demise as a retail payment method.

1:31pm UK, Tuesday 19 February 2013

Video: Retail Spend: Supermarkets Take 58%

Kantar Worldpanel

Graph: Trolley Wars: UK Supermarket Share

Nearly 60% of all retail spending is now made in supermarkets, according to a new report.

The Payments Council study found that 58p in every retail pound is handed to them, up from 46p a decade ago.

The changing trend shows that in the last 10 years supermarkets have taken an extra 26% of retail sector spending.

The Payments Council said the latest data also showed that the UK spent £58bn on entertainment last year, 60%

more than in 2001 and outstripping growth in consumer spending by over a quarter.

However, the wide-ranging survey was carried out before the discovery of horsemeat in a number of processed

meat products across several supermarkets which is believed to have hit sales.

It came as spending in restaurants and cafes was revealed to have almost doubled in the same period.

According to the report, The Way We Pay, a number of consumer trends have been combined for the first time.

It said cash purchases continue to migrate to debit card payments but it warns that plastic spending may become

history.

The study said that mobile phones, led by the smartphone revolution, look increasingly likely to become the

primary payment vehicle.

Smartphones are expected to become an important payment vehicle

The Payment Council also said cheque usage halves every five years.

In 2003, 43% of our retail spending by value was with cash, but now it is just 30% - with the majority being for payments under £5.

Chief executive Adrian Kamellard said: "We scarcely notice the steady changes in the way we pay, yet someone

in their thirties today will see more change in their lifetime than in the entire history of money.

"Even recent innovations such as payment via a mobile phone, which ten years ago some felt to be science

fiction, will soon be commonplace. The 2000s were the decade of the debit card.

"The 2010s are likely to be the decade of the mobile phone.  Just as we can't imagine how we ever did without the

internet, many people will soon wonder how we used to be so dependent on cash and cheque - 20 years from

now even cards may seem archaic."

The report also looked at how leisure pursuits continue to shift for many people.

Spending in furniture and homeware shops is down by nearly half during the last decade, as is spending in DIY stores.

Meanwhile, the digital revolution of the media has now hit the delivery of publishing - newsagents have lost nearly

20% of their trade in the past 10 years.

Pound plunges as King loses QE vote

By (c) Sky News 2013 | Sky News – 7 hours ago

Fri, Feb 15, 2013 19:21 GMT

The pound has plunged against key economies after it was revealed that the Bank of England boss lost a vote for

an increase in monetary stimulus.

Sterling fell to fresh multi-month lows against the euro and the dollar after minutes from the BoE showed governor

Sir Mervyn King wanted an increase of quantitative easing (QE) to £400bn.

The notes showed that unexpectedly three out of the nine BoE policymakers voted for an increase in asset

purchases under the bank's QE programme, which currently sits at £375bn.

However, they were outvoted by the six others who preferred to keep policy unchanged.

The minutes also show that the Monetary Policy Committee (MPC (KOSDAQ: 050540.KQ - news) ) considered

cutting interest rates below the current historic low of 0.5%.

The pound slid to at least an 8-1/2-month low against the dollar, dropping 1.1 cents in a day and reaching $1.549.

Meanwhile the slide with the euro continued, with the pound dropping to 1.145 euros, down 1.15 cents in the day.

The FTSE 100 index peaked above 6409 after news of the MPC minutes was released and finished at 6395 - a five-

year closing high as investors anticipated benefits from extra QE stimulus.

James Knightley, economist at ING bank, said it was "significant" that Sir Mervyn voted for more QE.

"Clearly, if the data disappoints, more QE will be on its way," Mr Knightley said.

The MPC meeting was held on February 6 and 7, with the governor being supported by BoE economist Paul

Fisher and Professor David Miles.

The British economy has been stagnant for the past two years, and the central bank only sees sluggish future growth.

But concerns about inflation and how effective more buying of bonds or other assets would be have stayed the bank's hand.

However, the swing in the governor's views provided the sharpest divergence in views since June last year, when

a split vote was followed the next month by a majority in favour of an extra £50bn of purchases.

"A case could ... be made for undertaking additional asset purchases at this meeting," the minutes said.

"The degree of slack in the economy, and the likely positive response of supply capacity to increased demand,

meant that higher output growth would not necessarily lead to any material additional inflationary pressure."

More broadly, the MPC said it was willing to allow longer for inflation to fall to its target, and to consider measures

to boost lending from sources other than banks.

Most economists have seen it as unlikely that the BoE would opt to try and pump yet more cash into the economy,

due to persistently high inflation and doubts from King among others about further asset purchases.

The meeting was only the fourth time that the governor has been outvoted since he took office in 2003.

Barclays and the sack race