Welfare Reforms Won’t Include Child Welfare Benefits

The government has been facing a number of roadblocks in its efforts to develop new plans for welfare reform. Recently, they have proposed measures to create a £26,000 cap on welfare benefits. Representatives announced that the child welfare benefits will not apply to this rule.

The conservative base has attempted to create substantial welfare reform and is responsible for the initiation of the welfare cap. However, those policies have been consistently attacked by liberals. As a result, the reforms are not expected to be nearly as strong as conservatives would have hoped. Nevertheless, they feel that the cap is still popular and will be widely supported by the political community when it is enacted.

Lords Kirkwood and Ashdown are two of the liberals who took a stand against the bill. This is the fifth time the government has met to discuss potential reforms, but the first time that Lord Ashdown voted against the coalition. Ashdown demanded to know what reasons any of the ministers could have for denying benefits to impoverished families receiving less than £26,000 a year, but not to wealthier citizens earning more than thrice that.

The government will be forced to continue discussing how they will institute child benefits. New data shows that a cap of £26,000 will affect over 300,000 citizens, more than two thirds of which are children. The new measures will save almost £120 million in a year. However, exempting child benefits from the cap will mean that 40,000 fewer households will be affected.

More than half of the households that will be affected will be in London and surrounding areas. Due to rising costs of living in those areas, families affected by the declining benefits are likely to have a much more difficult time. The costs of renting have already risen more in London than almost every other area of the country.

Nevertheless, other critics continue to raise concerns over the child benefits exemption. They argue that because people receiving benefits are exempt from paying taxes, those earning £26,000 in benefits are essentially earning the same income as someone earning £35,000 a year before taxes. Many politicians argue that it is an injustice that a substantial number of working families are unable to make those wages, while others are allowed to earn them through government benefits.

The House of Lords must officially vote on the measures before sending them to Commons for approval.

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Lower and Middle Class May Not Regain Wages for 8 Years

According to new research from the Resolution Foundation, the lower and middle classes are having the most difficult time recovering from the recession. The report evaluated more than 10 million adults and their children. Those covered in the survey didn’t receive a significant amount of financial assistance from the government.

The report found that citizens in this demographic group would not experience a recovery in their wages until 2020. However, wealthy citizens incomes will continue to increase significantly over that time frame.

Last February, the Resolution Foundation issued a similar report on the cost of living increase. Labour leader Ed Miliband warned that an increase in the cost of living continues to place excessive burdens on the middle class, even though the overall economy improves. Miliband states that the Labour Department has failed to address the needs of the middle class in the past.

Spokesman and former Treasury Secretary Byrne will raise the report and the implications of its findings with his successor to Chief Secretary of Treasury, David Laws. Byrne and other members from the Foundation intend to find solutions. The two former and current Treasury Secretaries haven’t spoken since Byrne left his position to take over as the Shadow Secretary of State for Work and Pensions in 2010. Byrne’s last communication to Laws came in the form of a letter that read: “Dear Chief Secretary, I’m afraid to tell you there’s no money left.”

Since Byrne resigned as the head of the Treasury, the economic conditions have decreased significantly. This is another trend that paints a bleak picture for the middle and lower classes. If the UK faces another recession, wage growth may decline even more in the coming years.

In an interview with reporters, Byrne warned that the UK faces the possibility of a lost decade. This was the fate that the United States experienced due to the onset of the Great Recession. New measures will need to be implemented to prevent such an outcome from arising.

Byrne warned that the government’s reform methods fail to create new jobs. Also, changes in welfare packages are only benefiting citizens who are not currently working. New packages are going to need to be implemented if the government intends to improve the conditions of the working class.

According to the study’s author, the middle class did not get to enjoy the financial benefits from the booming economy before the recession. He implied that the wealthy continue to benefit at the expense of the working class even as the economy transitions from recession to stagnation.

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Payday Loans Earning Goodwill Among the Self-Employed

According to the payday loan industry, the practise of borrowing money and paying it back in the short term is earning goodwill. According to statistics released recently from payday loans companies, there is vast revenue growth in the industry as numerous customers buy into the practise, and stocks have risen accordingly.

Owing to strict regulations regarding loans from banks, borrowers have run into difficulties acquiring emergency loans and in a pinch, have turned to payday loans companies. With fewer restrictions (lenders check employment details but generally do not run full credit history checks), payday loans are an attractive alternative to bank loan applications.

Payday loans have proved a crutch for the self-employed or owners of small businesses who use the instant cash, which can be secured within seconds, to pay invoices. They are also used for unexpected payments such as essential home repairs, transport and to keep family finances afloat.
Although short-term loans can be a good way to fill budget gaps, money lenders caution that they can easily spiral into further debt. Normally requiring to be paid back within 31 days, these loans can have high annual interest rates, and if borrowers roll the debt over or top it up the following year, it can be costly. Without smart financial practices, payday loans offer a temporary lifeline that is not always a solution to continuing money problems.

Payday loans are unrestricted in that they’re open to non-property holders, provided that borrowers have a regular account and a regular income. Although the criteria may be more relaxed than they are for secured loans, not every applicant is successful, and loan companies urge borrowers to carefully compare payday loans and investigate the terms and conditions before making an application.

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Inflation Falls On Weak Consumer Demand

In face of weaker demand among consumers, retailers have been forced to cut prices considerably. As a result, inflation has hit a six month low. The inflation rate now rests at 4.2%. This is a staggering drop from the 4.8% rate in November and the 5.2% peak rate the economy faced in September. The Office for National Statistics also reported that the rate of retail inflation dropped from 5.2 to 4.8%.

This was predicted by the Bank of England a long time ago. Economists from the central bank argued that the inflation rate would have to drop as consumer demand fell. Household spending has declined considerably and customers have collectively been forced to cut costs.

The drop in inflation may be difficult for many retailers already struggling to maintain sales projections and healthy profit margins. However, the change in the consumer price index is welcomed by many consumers who have already been struggling to get by with existing prices.

The drop in inflation is especially welcomed by many people who are facing reductions in government benefits over the next year. Many of these people are literally forced to decide between paying rent and buying food to support their families. The last time the inflation rate dropped so considerably was three years ago, when the value added tax dropped in response to the global financial crisis.

According to Chris Williamson, a leading economist with Markit, the inflation rate is likely to continue to decline over the coming months. Williamson said that this is a necessary development as the UK economy struggles to regain its ground.

In addition to making life easier for consumers, a declining rate of inflation may be necessary to rebuild capital and improve the efficiency of financing. A reduction in inflation also suggests that the Bank of England may be able to start a new quantitative easing program in February. That decision will be announced when the BoE publishes its quarterly report.

As the country continues to face the possibility of  a new recession, the UK is looking forward to any positive economic data available. Although a declining rate of inflation isn’t a guarantee that the economy will turn around right away, it offers new hope and places less of a burden on many consumers throughout the country.

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IMF Concerned About The Threat Austerity Poses to Global Economy

As debt ridden countries struggle to reduce their debt burdens, they are turning towards austerity measures. While this seems like a logical way to address the issue, the International Monetary Fund has warned countries that these measures could create serious problems for the global economy.

The IMF has joined forces with the World Bank, the World Trade Organization and nine other organizations have collaborated to address these issues. They have decided that they will create a call to action which will focus to protect the global economy.

The IMF and its allies are concerned about protecting the growth of the global economy and containing social unrest. IMF chief Christine Lagarde has stated that the world is increasingly concerned about rising unemployment. Lagarde and the leaders of the other world organizations are insisting that governments create new policies that will create jobs and promote economic stability for individuals among all classes in society. Addressing other key issues such as disparity of income is also key to keeping global citizens content.

Collectively, the 11 organizations have compiled a report that emphasizes the magnitude of the crisis facing the world. They clarified that the problems facing the world threaten the stability of the world and their ability to bring their societies together to promote global stability. They show greater concern over the economic developments in the Eurozone, which raise the threat of a global recession. They caution that austerity measures may not be an adequate means of addressing the Eurozone’s crisis.

Rising unemployment could create a number of potential social and economic consequences. These include nations placing more limitations on free trade, as they struggle to keep capital and jobs within their own countries.

Due to these concerns, the IMF, WTO, Financial Stability Board, World Health Organization, Organisation for Economic Co-operation and Development, African Development Bank, Asian Development Bank, Inter-American Development Bank, United Nations World Food Programme and International Labour Organisation have outlined the steps countries should take to resolve their crises. In their quest to address these challenges, the 11 organizations warned nations around the globe that they should implement austerity in a way that promotes growth rather than detracts from it.

Developed and developing nations are meeting in Mexico in June for the next G20 meeting. The IMF and the other organizations in the coalition believe that they should have a plan in place to address the economic problems and the need for austerity during that time.

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Government Claims 50p Tax Rate About to Be Withdrawn

The prime minster has said that the 50p tax rate on wealthier citizens can only serve as a temporary measure for bringing in revenue. Cameron insists that it will be withdrawn, even though it created a substantial amount of revenue for the country during the first year it was enacted.

The decision will inevitably create a substantial amount of conflict between the two political ideologies. Although conservative leaders argue that abolishing the tax will be in the best interest of the economy, their liberal counterparts are not so convinced. The Democrats feel that the decision may be implemented solely to protect the interests of the wealthy.

The HMRC is going to issue a report that will show some perspective on the issue. This report is likely to show that the tax on high income earners has created hundreds of millions of pounds. As a result, the government has been determined to keep the tax going until at least 2015. However, the decision not to end the tax prematurely is clearly politically based.

Critics argue that ensuring the tax remains permanent is essential to financial reform. Without ensuring that people with the means to pay more to keep the country running are going to do so, the country is going to have a hard time getting its debt problem figured out.

There are also outcries that the system is going to be self-sustaining and equitable for everyone involved. The government has announced that it is making significant cuts to benefits, which are likely to keep many people from being able to afford a home. Cutting taxes to wealthy citizens at a time when impoverished people are struggling more than ever before may be perceived as a sign that the government has chosen to ignore the interests of the people who need the government’s support the most.

Nonetheless, Cameron’s statement to reporters made a good point. He emphasized that they are going to need to know how much money the country is bringing in before they decide whether or not to continue with the tax. Obviously, if the HMRC report shows that the tax has failed to bring in the revenue it projected, then it will be difficult to argue that the tax serves much of a purpose.

The 50p tax shows a struggle between the classes and the need to balance the needs of everyone involved.

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Housing Benefits Cut to Devastate Nearly 1 Million Customers

The government is continuing with welfare reform cuts, which are creating a number of problems for many citizens. According to the Chartered Institute of Housing, many cuts are expected to force a number of families to decide between paying their rent or eating. About 800,000 families are going to have to make that decision within the next few months.

According to the ACIH, there will actually be many more families living off of benefits than there will be houses that they can afford with the state benefits. Unfortunately, they are going to have even more trouble in the coming months. As a result, many of the people living in these areas are going to be forced to move to more affordable areas. This doesn’t leave many options for them except the impoverished areas near the coast and northern England.

Beginning in January, the government has decided not to pay more than £250 a week for families living in two-bedroom homes. That act of reform would be painful for many families in and of itself. However, the government has gone beyond simply capping the weekly housing allowance. They have also decided to force families to live in housing with the cheapest third of rent in any borough that they live in.

This significantly reduces the options many families have and forces them to live in places that may not be appropriate for their family size. More concerning is that this may make it impossible for some families to find housing. There may not be enough housing options in many areas for these families to find anywhere to live at all.

Even if they relocate, many families will be unable to find housing. For example, if they moved to one community, they would find that there were already 17,000 people applying for housing in 10,000 units. They may need to be on a waiting list for a couple of years like many families in the United States.

There were slightly more low income houses than benefits claimants before this year. However, many families are seriously concerned about their futures as they try to find places to live in the coming year.

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Germany May Ask for a 50% Haircut on Greek Debt

The Greek debt crisis continues to become a major concern for the world economy. According to the International Monetary Fund, the debt to GDP ratio of Greece will probably reach 200% at some point over the next year.

The problem with Greece is becoming a major concern. As Germany starts to look for new ways to help get the debt crisis under control, they have proposed a radical solution. They have suggested that Greece request private creditors to take a 75% haircut on Greek debt. This is likely to have a significant impact on the already struggling banks. However, Germany and other members of the EU are considering that this may be the solution of last resort and may be needed to turn the debt crisis around.

Discussions are currently taking place about the best way to deal with the debt problem. However, there is some skepticism as to how much good a 75% debt haircut would be on private debt. Greece already got creditors to agree to a write-off back in October. They have claimed that the debt problem is still spiraling out of control and debt to GDP is already back to what it was before. This makes it progressively more difficult to get the debt problem under control without real reform.

However, Germany’s Ministry of Finance argues that this is a good start. As the people continue to debate the solutions for the Greek debt crisis, it is clear that Greece is in over its head. As Germany becomes reluctant to continue the bailouts indefinitely, they have concluded that it is probably necessary to start creating something of a structured default. As long as private creditors take a voluntary loss on Greek debt, they feel that the country still has a reasonable chance of recovering.

Whether or not Germany is proceeding correctly remains to be seen. However, it is clear that Greece is running dangerously low on time and they are going to need to come up with a real solution if they have any chance of recovering from the mess they are facing.

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Brazil's Economy Surpasses UK

According to a report from the Centre for Economics and Business Research (CEBR), Brazil has overtaken the UK as the world’s sixth largest economy. This report confirms a prediction by the International Monetary Fund earlier this year that stated that Brazil’s economy would surpass that of the UK.

At first, many people were very skeptical of these claims, even though Brazil’s population is approximately three times the size of the UK’s. However, Brazil’s economy grew by nearly 8% in 2010. The economy was expected to grow substantially in 2011 as well, but the growth forecast was cut in the third quarter. High interest rates were the primary problem, but production also decreased as more businesses became concerned about the crisis in the Eurozone.

Also, Brazil is struggling to maximize its trade balance as businesses are forced to compete with Chinese manufacturers. Although Brazilian manufacturers still sell more goods to China than they import, the cheap prices of Chinese imports still play a substantial impact on their ability to stay competitive.

According to the report, European countries are losing some of their muster. Meanwhile, many Asian countries are expanding their economies substantially. According to CEBR’s CEO, many developing countries are doing well as they produce commodities that the rest of the world depends on.

The debt crisis in the Eurozone will play a major role in the future of the economy in countries throughout Europe, including those outside the Eurozone itself. In fact, the debt crisis is expected to shrink the economy of nations throughout the Eurozone, regardless of whether it is solved or not. However, if the crisis isn’t solved, it may shrink the economy of the Eurozone by a whopping 2% or more.

According to Douglas McWilliams of the CEBR, the world is undergoing a massive economic change. Economic power is being transferred from Western to Eastern countries. Also, industrialized nations that have traditionally dominated the economy are being overtaken by developing countries with a competitive advantage in producing basic commodities.

The CEBR report lists the UK as the seventh country on the list. They now follow the United States, China, Japan, Germany, France and Brazil. According to the 2020 forecast, the UK will surpass France in terms of economic growth, but will drop to the eight country on the list. India and Russia are growing substantially and are expected to rank fourth and fifth respectively in terms of economic size.

 

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