Finance Matters

• 24Sep

  ‘Years needed’ to rebuild wealth

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  From The BBC:

  Years of saving would be needed to return household wealth to pre-recession levels, a report by the Bank of England suggests.If households saved 10% of their income, it would take nine years to bring wealth back up to the average of the last 20 years. The Bank’s quarterly review reported that householders’ decisions on saving could affect the economic outlook. However, history provides no “clear guide” as to how they will react. “It is difficult to assess how much, if at all, households might seek to rebuild their wealth,” the report said. Saving habitThe largely theoretical report found that the ratio of household saving to spending fell between 1995 and 2007 to historical low levels.
  Falling interest rates, easy access to credit, rising asset prices – such as property values – and economic stability meant people were more tempted to spend than save. But the financial upheaval of recent times has reversed many of these trends, as well as making people’s jobs less secure. There might…

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• 24Sep

  Charge students more, say bosses

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  From The BBC:

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  ‘It might change my decision to study’
  University students in the UK should pay more for their loans and accept higher tuition fees as “inevitable”, says a report from business leaders.The Confederation of British Industry says the extra money needed to fund universities should come from savings in the student support system. It also calls for more sponsorship and bursaries from businesses. The National Union of Students attacked the report as “gross hypocrisy” from the “fat cats at the CBI”. In England, the government is set to launch a major review of the funding of higher education and student fees. Higher education minister for England, David Lammy, said the government still wanted 50% of young people to go to university. “We should continue to widen access, not only because it’s socially just, but also because our future economy will depend on having more people with higher level skills,” he said. The CBI says the aim…

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• 24Sep

  Court approval for Aviva payout

  Money No Comments

  From The BBC:

  The High Court has approved the offer by the Aviva insurance company to pay out about £500m to one million savers in two of its with-profits funds.It means most payments should be made by the end of the year. So far about 850,000 savers have voted to accept the deal, which will see most receive between £200 and £1,000 each. Under the “re-attribution” process, policyholders have been asked to accept money to relinquish any future claim to the surplus cash in the funds. “Today’s decision by the High Court is an important step towards completing the reattribution,” said Mark Hodges of Aviva. “We believe the offer represents good value for 99% of our customers and the High Court’s approval brings individuals closer to receiving their tax-free payments.” Derisory?The vote is not a ballot requiring a majority decision.
  Instead, each policyholder in the two funds – CGNU Life and CULAC – is being asked to make an individual decision. Consumers’ association Which? had describ…

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• 23Sep

  FSA argues for ‘radical change’

  Business No Comments

  From The BBC:

  “Radical change” is needed in the financial sector in order to restore public trust, according to the head of the City watchdog.Banks must focus on their “essential social and economic functions”, the Financial Services Authority (FSA) head Lord Turner said on Tuesday night. He also told the BBC the FSA had got regulations on the amount of money banks keep in reserve “quite wrong”. Excessive risk taking by banks was seen as a factor in the economic downturn. Banks must focus on restoring the public’s trust in their role, despite signs of economic improvement, Lord Turner said. He argued that the industry should consider carefully any business that fell outside its core roles, saying that bank bosses should walk away from activities that had no “social benefit”. Lord Turner told the BBC that banks should “rededicate and commit themselves” to their traditional role of deposit-taking and lending to individuals and businesses.
  He said they “had fooled themselves into thinking that continu…

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• 23Sep

  Charitable giving hit by downturn

  Business No Comments

  From The BBC:

  The amount of money donated to good causes fell by 11% in the year to April as the downturn hit charities, a new survey suggests.Estimated total donations fell from £11.2bn in 2007-8 to £9.9bn. Although half of all adults in the UK donated to charitable causes in 2008-9, the average amount they gave fell by £1 a month to £10 per month. The figures came from the Charities Aid Foundation and the National Council for Voluntary Organisations. Medical research is the most popular sector for donations, the report said. However, religious charities take the largest share of the total amount given. High earnersThe report, based on a survey of 3,316 people, found that the drop in giving was due in part to the fall in large donations made by high-earning professionals. Most people give cash donations, although larger amounts tend to be given via direct debit. “Even though there are welcome signs the recession is technically ending, the economic downturn is still severely…

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• 23Sep

  EU unveils new ‘super-regulators’

  Business No Comments

  From The BBC:

  The European Union (EU) has unveiled plans for new “super-regulators” across the banking sectors in Europe.The proposals include a European Systemic Risk Board to warn of future risks, and watchdogs over banks and insurers across the EU’s 27 nations. The EU said it was necessary to prevent another financial crisis, and even suggested deeper reforms. “The European system can also inspire a global one and we will argue for that in Pittsburgh,” it said. Landmark proposalsLeaders of the G20 are meeting in Pittsburgh later this week. The reforms, unveiled by European Commission President Jose Manuel Barroso, are the first attempts to create supra-national regulators that can overrule local watchdogs. As well as a new systemic risk board, which would be staffed by the European Central Bank and based in Frankfurt, the EU has proposed three new bodies to watch banks, insurers and exchanges. “Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when government…

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• 23Sep

  UK economy ‘faces tough recovery’

  Business No Comments

  From The BBC:

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  UK economy ‘faces tough recovery’
  The UK economy has begun to emerge from recession but growth next year will be fragile, a forecast by business group the CBI has warned.It predicts UK GDP will grow by 0.3% between July and September from the previous three months, and will rise by 0.4% between October and December. However, it said a lack of demand meant it was hard to foresee rapid growth. January’s increase in VAT would dampen spending, it warned, while firms would be “cautious” in raising output.
  Growth in the three months to the end of September would follow five consecutive quarters of contraction which has seen UK GDP fall by a cumulative 5.5%. CBI director-general Richard Lambert said that the short-term outlook for the UK was “brightening” thanks to the recovering global economy, the weak pound and the government pumping more money into the economy through its quantitative easing programme. There was also likely…

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• 23Sep

  UK ‘blocking tough finance rules’

  Business No Comments

  From The BBC:

  German Finance Minister Peer Steinbrueck has accused the UK of blocking tougher financial rules ahead of the G20 summit.”There clearly is a lobby in London that wants to defend its competitive advantage tooth and claw,” Mr Steinbrueck told Stern magazine. Germany and France have led calls for more restrictions on banks, which have been resisted by the US and UK. But the UK Treasury told the BBC the UK was not blocking more regulation. The leaders of the richest 20 nations will discuss reforming the global economy when they meet in Pittsburgh later this week. London oppositionThe UK has “particular difficulties” regulating hedge funds “to put it politely”, Mr Steinbrueck told the weekly German news magazine.
  He said the financial sector accounted for 15% of the UK’s gross domestic product (GDP) in contrast to just 6% in Germany. However, a spokesman for the UK Treasury told the BBC the finance sector accounted for 8% of UK GDP, not 15%. Despite the debates leading up to the summit, Mr S…

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• 23Sep

  Mortgage approvals up 81% in year

  Business No Comments

  From The BBC:

  The number of mortgages approved by the major banks in August was up 81% from the same month a year ago when the housing market was in a slump.The British Bankers’ Association (BBA) said the annual rise was exaggerated by the low lending levels of a year ago. Approvals for house purchases in August dipped slightly compared with July after seven months of month-on-month rises, the figures show. The BBA said major banks had been more active than other lenders recently. However, the number of homes being put up for sale was low. Consumers cautiousThere were 38,095 mortgages approved for house purchases in August by the major banks, compared with 21,001 in August last year.
  A year ago the mortgage market was at an “all-time low”, according to David Dooks, the BBA’s statistics director. However, the figure actually fell even further in November to 18,330. He said that the annual change was “difficult to understand”, but was an “exaggeration” as a result of the combination of the low number…

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• 23Sep

  MPC unanimous on rates decision

  Business No Comments

  From The BBC:

  The Bank of England’s monetary policy committee was unanimous in their decision to keep rates on hold at 0.5% this month.They were also in agreement not to extend further the Bank’s programme of pumping money into the economy. But members who in August called for a bigger injection of money than the £25bn decided, said the Bank may still need to extend the programme further. This increased the amount pumped into the economy to £175bn from £150bn. At that meeting in August, three members, including the Bank Governor Mervyn King, had voted for a bigger injection of £50bn. The Bank publishes the minutes of its meetings on monetary policy two weeks after the event….

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