Chancellor George Osborne believes that Britain needs to save more, announcing a new “Budget for savers” aimed at rewarding Britain’s savers. Mr Osborne noted the importance of saving during an answer to a question about the 2014 Budget, which the government delivered on the 19th of March.
The new budget is aimed at people who have “worked and saved hard all their lives” and strongly encourages an increase in saving. The Chancellor said: “We need to save more. The measures I have set out incentivise savings and reward savers, but it can’t happen overnight.”
Included in the new budget is a massive overhaul of Britain’s pensions. Rules that required people to use their pension balances to purchase an annuity will soon be removed, making it easier for people to withdraw from their savings. It also raises the amount that can be saved tax-free using an Isa – people will now be granted a £15,000 annual limit on tax-free savings.
The Chancellor denied that the new budget is designed to encourage savers to take money from their pensions. Mr Osborne noted that the new budget makes pensions more flexible, and that since it was a new area of policy, it remained “uncertain” how it would affect pensions and savings.
Other questions answered by Mr Osborne relate to the growing concern that there is a property bubble affecting the UK. Osborne noted that people should see London as a separate housing market from the rest of the UK, and that the Help to Buy scheme had not resulted in an increase in home prices.
He also stated that individuals and the government need to remain “vigilant” about the growing level of household debt in order to avoid a repeat of the 2005 onwards period. An estimated nine million individuals in the UK are trapped in a “debt cycle” and use one credit card to repay another, according to the FCA.Read more
Chancellor George Osborne has confirmed that £11.5 billion in spending cuts will go into effect within the next three years. The Chancellor reached a compromise with a range of government departments over their operating budgets that will see a large decrease in government spending over the next three years.
Spending cuts will begin in 2015 and will target several government departments in an effort to spread the effects of the reduced budgets. The Chancellor’s 2015 budget, which was outlined in a Spending Review, was completed last night after close to a month spent negotiating with government departments and economic groups.
Mr Osborne’s budget has come under scrutiny from a variety of leaders in the public sector, including Defence Secretary Philip Hammond, who claimed that the cuts may affect the country’s defence forces. Troop numbers have been cut twice recently due to the government’s austerity programmes, but will not be reduced further.
The Chancellor commented that the defence department had been the ‘biggest and most difficult challenge’ of the new budget, and that Mr Hammond will need to take a tough approach regarding the Ministry of Defence’s size. The new budget includes new funds dedicated to fighting cyber terrorism and other online military attacks.
Public spending has remained fairly high despite serious budget cuts made in recent years. The amount of money borrowed for public projects has also remained higher-than-normal despite increases in tax rates for many Britons. Economists believe that the new budget cuts could go some way towards decreasing the national deficit.
Osborne commented that the nation was ‘out of intensive care’ and that future fiscal policy would be aimed at promoting growth and limiting spending. He added that an economic relapse could occur if the government moved away from its spending cuts and returned to borrowing money for large-scale public spending.Read more
George Osborne indicated that the 39 percent of Lloyds current owned by taxpayers could be sold ‘within months.’ The Chancellor announced the impending sale during a Mansion House speech, which he makes every year. He claimed that Lloyds could be sold at a profit for the government, freeing up billions of pounds in revenue.
Lloyds shares are currently valued at above the 61.2p that the government needs in order to break even on its holdings in the company. While a sale could potentially be profitable for the government, the huge amount of shares that are publicly owned – around 39 percent of the bank – means that they will likely be sold at a discount.
The shares should likely be sold to fund managers first, allowing large quantities of the government’s shares to be sold relatively quickly. The Chancellor claimed that a portion of the government’s shares could later be sold to the general public as part of a larger offering.
Lloyds’ return to private ownership has been designed to benefit British taxpayers, according to the government. The bank is reportedly more effective in managing its operations when privately owned, supporters claim. Sir Mervyn King, the outgoing Bank of England Governor, claimed that the bank required ‘decisive action.’
Royal Bank of Scotland Group, another financial services company largely owned by the government, aims to return to private ownership by the end of 2014. RBS chief executive Stephen Hester recently stood down from his post, leaving the bank in a search for a replacement that will guide it while under private ownership.
With Lloyds returning to private ownership within months and RBS following in the next eighteen months, the UK’s financial sector could see a change in services that’s beneficial for the re-emergence of the financial services industry as a whole.Read more
The departure of Royal Bank of Scotland boss Stephen Hester caused the company’s share price to drop in Thursday morning trading. Hester, who joined RBS in 2008 at the peak of the financial crisis, managed the bank through a series of restructuring efforts as it moved towards returning to non-government ownership.
The Royal Bank of Scotland group has experienced a turbulent four years after the failure of its credit market positions in 2008. A 58 percent share in the investment bank was acquired by the government in late 2008 in the effort to increase capital and avoid a major collapse in the financial sector.
Stephen Hester’s departure signals a change for the bank, which is due to return to private ownership this year. George Osborne is expected to announce information about the bank’s privatization in the coming week, allowing investors – many of whom are disgruntled with the bank’s state ownership – to purchase shares.
News of Mr. Hester’s departure resulted in a six percent decrease in the value of RBS shares, down from a larger eight percent drop earlier. RBS announced that it would be axing up to 2,000 positions, primarily in its Asian operations, in order to lower its costs and allow for a more streamlined future.
The bank will also axe several of its retail investment products in order to refocus its investment arm on fixed-income operations. The bank will emphasize currency and stock trading and end ‘peripheral money-making activities.’ Many of the bank’s additional financial operations would continue under its RBS Markets division.
The departure of Mr. Hester signals a long-term change for the bank, which admits that finding a suitable replacement could be difficult. Public backlash against RBS, as well as what the group calls ‘political interference,’ are the biggest issues RBS faces in finding a replacement for Mr. Hester.Read more
During his annual Budget, the Chancellor announced cutting pensioners’ allowances by £3.3 billion and then stating that the top earners would realise a rate reduction of 5p. This has voters up in arms as they believe his is robbing the poor to pay the rich.Read more
Pensions March 24, 2012
This year the elderly have taken rather many setbacks in terms of services being offered. As reported earlier in the year, government is pushing elderly patients through hospitals and releasing them before they are truly ready. Now the Chancellor hinted that in his White Paper to be released, a new system will be launched to care for the disabled and elderly.Read more
Amidst all the hype in regards to cutting the upper earner’s taxes from 50% to 45%, Labour leader, Ed Miliband is calling for a full disclosure by the Chancellor in regards to his earnings and how the new lower tax would affect him.Read more
Economy October 22, 2011
In a latest comment released from George Osborne, the Chancellor states that leaders in Europe need to act and they need to act fast because the debt crisis in the eurozone is spreading well beyond their region. As well, their indecisiveness on how to resolve their problems is prolonging the crisis. He states that they need to come up with some type of credible solution and act on it without delay before the contagion spreads even further afield.Read more
Pensions October 4, 2011
After UK Chancellor George Osborne recently proposed a credit easing scheme that would make more credit available to UK businesses, several pension fund executives have stated that they are open to the idea.Read more
Finance Minister George Osborne is expected to announce Monday that the UK will be freezing the tax that households are required to pay in order to fund local services. The government will allegedly fund the tax cut using more than 800 million pounds that went unused by government departments this year.Read more