Daily Mail
"Britain national debt is fast heading towards £1.4trillion and, this year, the Treasury expects to borrow £178billion.The markets are in a febrile state and - should drastic action not to be taken to reduce the deficit immediately after the election - investors are expected to pummel the already weak pound.So what is the latest response of the Government which did so much to get us into this mess?On Thursday, in a quite extraordinary intervention, Treasury Chief Secretary Liam Byrne said there would be no new tax rises to pay back our horrendous national debt.Now it is being revealed that, having found itself £3billion less in debt than expected, the Treasury plans to blow this money on pre-election Budget bribes.In many ways, this Budget is an irrelevance, so close to an election which may render its contents redundant.But the Chancellor's overall message will be crucial in defining the choice faced by the electorate.Does it want a Tory Party which, while vague on detail, is honest about the need to make spending cuts to ensure Britain's long-term economic health.Or a Labour Party which is living in cloud cuckoo land or - worse - is prepared to cynically deceive voters about tax rises and cuts which are inevitable whoever wins the election and, if fudged, will condemn the country to decades of poverty.
Saturday, 13 March 2010
EU countries agree to €25bn Greece bailout
The Times
"Plans for a bailout for Greece totalling €20 to €25 billion will be put to a meeting of Eurozone finance ministers on Monday.A system of co-ordinated bilateral moves has been agreed behind the scenes by major players among the 16 countries in the single currency, led by Germany. They will step in as a last resort if Greece requests help in meeting its huge sovereign debt repayments.The package has been formulated to work around a "no bailout" clause in EU rules, and would amount to an agreement to facilitate loan guarantees if Athens finds the price of selling its debt pushed too high by speculators."
"Plans for a bailout for Greece totalling €20 to €25 billion will be put to a meeting of Eurozone finance ministers on Monday.A system of co-ordinated bilateral moves has been agreed behind the scenes by major players among the 16 countries in the single currency, led by Germany. They will step in as a last resort if Greece requests help in meeting its huge sovereign debt repayments.The package has been formulated to work around a "no bailout" clause in EU rules, and would amount to an agreement to facilitate loan guarantees if Athens finds the price of selling its debt pushed too high by speculators."
Eurozone could risk 'sovereign debt explosion'
Telegraph
"Europe's governments are at increasing risk of an interest rate shock this year as the lingering effects of the Great Recession drive debt issuance to record levels and saturate bond markets, according to Standard & Poor's. "
"Europe's governments are at increasing risk of an interest rate shock this year as the lingering effects of the Great Recession drive debt issuance to record levels and saturate bond markets, according to Standard & Poor's. "
Another banking crisis looms
Telegraph
"..The FSA document reports that UK banks need to find approximately £440bn by 2012 to replace maturing debt. This figure includes more than £300bn of funding provided under the Government’s Special Liquidity and Credit Guarantee Schemes. The Governor of the Bank of England, Mervyn King, has made it clear that these schemes will not be rolled over.As the FSA notes, that’s an awful lot of alternative funding that has to be found. But the problem may be much bigger. According to the Bank of England’s last Financial Stability Report, published in December, UK banks face a £1trillion funding timebomb. Or to put it another way, that’s around £1trillion of term money which matures over the next five years for which alternative funding has to be sought."
"..The FSA document reports that UK banks need to find approximately £440bn by 2012 to replace maturing debt. This figure includes more than £300bn of funding provided under the Government’s Special Liquidity and Credit Guarantee Schemes. The Governor of the Bank of England, Mervyn King, has made it clear that these schemes will not be rolled over.As the FSA notes, that’s an awful lot of alternative funding that has to be found. But the problem may be much bigger. According to the Bank of England’s last Financial Stability Report, published in December, UK banks face a £1trillion funding timebomb. Or to put it another way, that’s around £1trillion of term money which matures over the next five years for which alternative funding has to be sought."
Friday, 12 March 2010
'No more tax rises' gaffe by minister: He insists £178bn deficit is under control
Daily Mail
"A Treasury minister caused astonishment last night by apparently ruling out tax rises for the next four years if Labour stays in office. ....The Institute of Fiscal Studies, Britain's leading independent economic body, has said the Government must deliver £13billion in spending cuts or tax hikes in order to restore international credibility.The Treasury has announced that £57billion will be found using a combination of tax rises and spending cuts over the next four years. But the IFS says £70billion will have to be raised - 5 per cent of national income - in the next parliament.Options include a three percentage-point rise in income tax rates and National Insurance contributions, or raising VAT to 21 per cent."
"A Treasury minister caused astonishment last night by apparently ruling out tax rises for the next four years if Labour stays in office. ....The Institute of Fiscal Studies, Britain's leading independent economic body, has said the Government must deliver £13billion in spending cuts or tax hikes in order to restore international credibility.The Treasury has announced that £57billion will be found using a combination of tax rises and spending cuts over the next four years. But the IFS says £70billion will have to be raised - 5 per cent of national income - in the next parliament.Options include a three percentage-point rise in income tax rates and National Insurance contributions, or raising VAT to 21 per cent."
Europe's banks brace for UK debt crisis
Telegraph
"...Mr Purps said the UK had been cushioned at first by low debt levels but the pace of deterioration has been so extreme that the country can no longer count on market tolerance.
"Britain's AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that," he told The Daily Telegraph.
"Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points."
"...Mr Purps said the UK had been cushioned at first by low debt levels but the pace of deterioration has been so extreme that the country can no longer count on market tolerance.
"Britain's AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that," he told The Daily Telegraph.
"Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points."
Thursday, 11 March 2010
UK inflation expectations nudge higher in Feb - BoE
Reuters
"LONDON (Reuters) - The publics' expectations for inflation over the next 12 months rose slightly to 2.5 percent in February from 2.4 percent in November, a quarterly survey from the Bank of England showed on Thursday.Consumer price inflation hit 3.5 percent in January, well above the BoE's 2 percent target, though the central bank expects it to fall back within target by the end of the year.The public estimated in February that inflation was running at an annual 3.4 percent, compared to 3.2 percent in November."
"LONDON (Reuters) - The publics' expectations for inflation over the next 12 months rose slightly to 2.5 percent in February from 2.4 percent in November, a quarterly survey from the Bank of England showed on Thursday.Consumer price inflation hit 3.5 percent in January, well above the BoE's 2 percent target, though the central bank expects it to fall back within target by the end of the year.The public estimated in February that inflation was running at an annual 3.4 percent, compared to 3.2 percent in November."
Wednesday, 10 March 2010
Double-dip recession fears hit pound as output stalls
Daily Mail
"Sterling took a further dip today after a January slump in manufacturing raised fears that the UK economy is not out of the woods.The pound at one point lost 1.5 cents to trade at $1.48 after the Office for National Statistics said output had plunged by 0.9 per cent - its sharpest drop since last August.The data surprised the markets as analysts had expected a 0.3 per cent increase, and the discrepancy will revive fears that the UK economy risks entering a second phase of recession this year, having barely emerged into growth at the end of 2009."
"Sterling took a further dip today after a January slump in manufacturing raised fears that the UK economy is not out of the woods.The pound at one point lost 1.5 cents to trade at $1.48 after the Office for National Statistics said output had plunged by 0.9 per cent - its sharpest drop since last August.The data surprised the markets as analysts had expected a 0.3 per cent increase, and the discrepancy will revive fears that the UK economy risks entering a second phase of recession this year, having barely emerged into growth at the end of 2009."
Brown claims his 'sufficiently impatient and strong-willed' character helped Britain avoid a worse recession
Daily Mail
# Brown tries to turn bullying row to his advantage
# He implies Cameron is too lightweight to be PM
# Defends Labour's lack of savage spending cuts
# May 6 election very likely after Budget on March 24
# Shock 0.9 per cent fall in manufacturing output
"Critics condemned the speech as more 'waffle' and questioned how Mr Brown could set himself up as the saviour of the economy after proclaiming he had abolished boom and bust while Chancellor only to preside over the worst bust since the 1930s.The Prime Minister has been forced to change tack in his election campaign due to a slew of bleak economic data that means he cannot hail the UK's return to growth.Yesterday figures showed exports suffered their sharpest monthly fall since 2006, the Pound fell below $1.50 and there were warnings Britain's credit rating is under threat.And today, there was yet more bad news as official figures revealed a shock 0.9 per cent drop in manufacturing output in January - the biggest fall since last August.This compares to a 0.9 per cent rise in December, which helped the economy grow slightly in the fourth quarter, and will fuel fears of a double dip recession."
# Brown tries to turn bullying row to his advantage
# He implies Cameron is too lightweight to be PM
# Defends Labour's lack of savage spending cuts
# May 6 election very likely after Budget on March 24
# Shock 0.9 per cent fall in manufacturing output
"Critics condemned the speech as more 'waffle' and questioned how Mr Brown could set himself up as the saviour of the economy after proclaiming he had abolished boom and bust while Chancellor only to preside over the worst bust since the 1930s.The Prime Minister has been forced to change tack in his election campaign due to a slew of bleak economic data that means he cannot hail the UK's return to growth.Yesterday figures showed exports suffered their sharpest monthly fall since 2006, the Pound fell below $1.50 and there were warnings Britain's credit rating is under threat.And today, there was yet more bad news as official figures revealed a shock 0.9 per cent drop in manufacturing output in January - the biggest fall since last August.This compares to a 0.9 per cent rise in December, which helped the economy grow slightly in the fourth quarter, and will fuel fears of a double dip recession."
Budget to be held on March 24
Telegraph
"The Prime Minister Gordon Brown has said the Budget will be delivered on March 24, in what will be one of the most hotly anticipated statements since Labour came to power. ...It will come just weeks ahead of a general election, which is widely expected to held on May 6, and the Chancellor Alistair Darling will be under pressure to outline measures for supporting economic recovery. At the same time, he has to convince financial markets the Government has a credible plan for reducing Britain’s record deficit. "
"The Prime Minister Gordon Brown has said the Budget will be delivered on March 24, in what will be one of the most hotly anticipated statements since Labour came to power. ...It will come just weeks ahead of a general election, which is widely expected to held on May 6, and the Chancellor Alistair Darling will be under pressure to outline measures for supporting economic recovery. At the same time, he has to convince financial markets the Government has a credible plan for reducing Britain’s record deficit. "
Government's plan to cut the deficit is lacking something ... the cuts
Telegraph
"Many dismal scientists have, of late, predicted a sterling crisis if Britain acts quickly to address its appalling public deficit — none more so than those at UBS. "
"Many dismal scientists have, of late, predicted a sterling crisis if Britain acts quickly to address its appalling public deficit — none more so than those at UBS. "
Tuesday, 9 March 2010
Pound falls below $1.50 again as credit agency warns that efforts to cut deficit are moving at 'pedestrian pace'
Daily Mail
"The Government's attempts to tackle its mounting national debt are taking place at a 'pedestrian pace' that is 'too slow', an influential ratings agency warned today.In a boost to the Tories, Fitch insisted that the shortfall in the country's finances must be reduced quickly because the nation’s credit profile has 'deteriorated'.Its head of global economics Brian Coulton warned: 'If we don’t get an improvement in the medium-term outlook in the UK, there will be cause for concern.'The declaration sparked fresh fears about the strength of the UK's economic recovery and prompted the pound to hit a week-long low of $1.4965 against the dollar this afternoon.And there was further dire economic news as new figures showed that exports took their biggest plunge in more than three years in January."
"The Government's attempts to tackle its mounting national debt are taking place at a 'pedestrian pace' that is 'too slow', an influential ratings agency warned today.In a boost to the Tories, Fitch insisted that the shortfall in the country's finances must be reduced quickly because the nation’s credit profile has 'deteriorated'.Its head of global economics Brian Coulton warned: 'If we don’t get an improvement in the medium-term outlook in the UK, there will be cause for concern.'The declaration sparked fresh fears about the strength of the UK's economic recovery and prompted the pound to hit a week-long low of $1.4965 against the dollar this afternoon.And there was further dire economic news as new figures showed that exports took their biggest plunge in more than three years in January."
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