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After last week’s flurry of snow and slowly sinking high street shops, it looks like we could finally have a bit of sunshine and good news coming through.
Last week, we started the week with music chain HMV announcing that they were being forced into administration due to competition from online retail outlets and a failure to adapt to the changing market place. This was shortly followed by the DVD chain Blockbuster also announcing that they too would be going into administration. Read More »
Today marks the 32nd significant retail company to bite the dust and go into administration in little over a year, with media chain HMV announcing their intentions this morning.
This move has raised concerns that all of the 4,000 employees may find themselves without a job in the very near future.
HMV (an acronym for His Master’s Voice – the title of the image that the company have taken as their logo), which has been a part of the high street since 1921, has in recent years struggled against its online competitors.
This is a problem that has affected many businesses on the high street, with Comet and Jessops suffering recent closures, and it looks set to claim more lives in the coming months.
[Update: As of 16/01/2013 the DVD chain Blockbuster has become the 33rd significant retail store to fall into administration, making it the third in less than a week.]
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A round-up of the main news stories from this week. (Audio to follow)
HSBC Faces Money-Laundering Fine
HSBC faces a $1.9 billion fine after the US senate concluded that lax procedures at the bank had facilitated money laundering by drug barons and war-mongering nations. The report alleged that the bank had overlooked suspicious transfer activity from Mexico to the US and had flouted safeguards designed to prevent criminal activity. The bank apologised for its past mistakes, saying that it has invested hundreds of millions on improving its systems to ensure that this will never happen again.
Peer-to-Peer Lenders Celebrate “Watershed Moment”
Peer-to-peer lenders are celebrating a “watershed moment” after learning that they are to be fully regulated by the new Financial Conduct Authority in 2014. Peer-to-peer lending has reached £300 million to date, and has become popular given the difficulty in raising loans from banks and the high cost of payday loans. The industry has argued for regulation to support its credibility, and the new measures will encourage depositors because of the protection on offer from the Financial Services Compensation Scheme.
E-On to Raise Gas and Electricity Prices in January
Energy company E.On, having pledged not to raise its gas & electricity prices in 2012, is to do so at the first opportunity in 2013. From 18th January, dual-fuel customers will see prices rise by 8.7%, the firm announced, which is expected to add around another £100 on to the average annual dual-fuel bill. The company attributed the hike to rising wholesale prices and higher energy transport costs. The announcement means that all major providers will have raised their energy prices during this winter.
Grim Forecast for Savers
And finally. The forecast for savers is looking grim as banks and building societies have started withdrawing their bonds and savings accounts. With savers realising that already tumbling rates may not recover in the near future, the scramble for remaining deals has led stretched banks to withdraw the products. Experts have pointed to the contribution of the government’s Funding for Lending Scheme, which has reduced the need for banks to attract deposits from savers.
At Which4U, we’re suggesting ‘apply while you may’, as market-leading deals are not hanging around for long.
For the latest news and product updates, remember to visit us at Which4U.co.uk.
Admittedly, there hasn’t been a great deal of good news recently on the financial front. Savings rates are plummeting; the Autumn Statement was hit and miss; there’s colossal fines for HSBC; gas and electricity prices are heading up again… So, as it happens, two slices of good news on the same day seems quite a novelty.
And not only that, but it’s comparatively rare that two separate stories from the same day see a resolution or a twist months later on the same day again. So, for the sheer delight of serendipity, I thought I’d bring them to the fore.
Cold as Ice
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A round-up of the main news stories from this week.
Data Monitoring to Highlight Potential Tax Dodgers
Credit reference agencies and HMRC are to combine in a new measure designed to combat tax avoidance. Under new proposals, the income declared on up to two million tax returns could be monitored against spending patterns to detect possible tax dodgers. Credit reference agencies will identify suspect candidates, with details passed on to HMRC for further investigation.
FCA to Receive Power to Intervene
The new city regulator, the Financial Conduct Authority, will have new powers to act where it believes mis-selling to be taking place. The new body, which assumes control from the Financial Services Authority in the spring of 2013, will act to prevent further scandals involving large compensation claims. Moves are being made to implement these powers so that the new body’s responsibilities are clear at the point of takeover.
Fixed-Rate Bonds Hit All-Time Low
Fixed-rate bonds are no longer the safe-haven for savers, after falling to an all-time low. According to financial analysts Moneyfacts, the average rate of one-year bonds has tumbled to just 2.18%. The best one-year products on Which4U have crashed by 70 basis points in just 3 months. The inconvenience of locking money away for a set period is confounded by the fact that bonds no longer match inflation.
Osborne Accused of Targeting the Weakest in Autumn Statement
And finally: chancellor George Osborne has been accused of heaping more misery on the weakest in his Autumn Statement this week. The chancellor announced a number of cutbacks in government spending and welfare as he attempts to claw back what remains a considerable deficit. He said that debt and borrowing were down and described the economy as “healing”; though he confessed that slow growth had extended the austerity measures by a further year, to 2018.
You can find more reaction to the Autumn Statement here on our Finance Blog as well as at the main Which4U website.
George Osborne has been rigorously defending himself from accusations that the poorest are the hardest hit by Wednesday’s Autumn Statement, insisting that the squeeze is fair and that there are measures for growth to improve the economy.
We’ve detailed the main points of the statement here, but let’s reaffirm them below.
- UK economy predicted to contract this year. Growth forecasts down for forthcoming years.
- Supported by OBR figures, Chancellor claims that borrowing and the deficit are down.
- Welfare cuts, adjustments to the pension allowance, government efficiency, and a tax avoidance crackdown are all required to cut the deficit.
- Rise in personal tax allowance to £9,940.
- Working-age benefits capped for first time, at just 1%.
- Annual tax-free pension contribution lowered from £50K to £40K.
- 3p rise in petrol scrapped.
- Business taxes to be lowered, while investment relief rises tenfold to support businesses trying to grow.
So, what did the chancellor get right? What did the chancellor get wrong? A few thoughts below.
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