A Happy and Prosperous Year for 2009!!

A year ago I sent the same hackneyed message to my readers in cyberspace not realising that 2008 would be a devastating year for equity and property holders pretty much everywhere. The FTSE 100 index is down over 30 pct and this has led to similar losses in UK personal pension plans. This would be exacerbated if investors held and did not get out in time bank stocks such as Bradford & Bingley, Royal Bank of Scotland and Halifax (HBOS). One of the saddest experiences was to see Alliance and Leicester throwing in the towel and deciding to go for self-immolation with the bid from Banco Santander. The Spanish bank might have built up some favours with the British government but its UK subsidiary Abbey is often cited for poor performance in the personal finance pages of the British press on Saturdays.
However, Banco Santander did act decisively and did not mess about. From what I saw about the demise of Bradford and Bingley, the Spanish bank did help out the British financial authorities by quickly agreeing to acquire the retail deposit and branch side of the former building society.
Our premier Gordon Brown supposedly rescued the world's financial system. However, I don't think he used the breathing space after the collapse of Northern Rock up to the nationalisation of Royal Bank of Scotland to shore up the financial system. You got the impression that Gordon Brown and UK Chancellor Alistair Darling were more concerned about being bamboozled by Richard Branson than mitigating the cost of the Northern Rock bail-out to the taxpayer. As it is the UK Treasury nominally controls over half of the mortgage lending but the banks are only willing to lend on very high deposits.
Brown and Darling should be praised for rescuing RBS and HBOS, who were tellingly both led by non-bankers. Unfortunately, both banks might end up fully nationalised if the terrifying forecasts about their property lending are realised.
The credit crunch has produced some more hilarious moments. A lot of rich people in the United States have taken a hit with the Madoff scandal. Here, in the UK Sir Tom Hunter can't really be a billionaire if some of his retail interests go into administration. A lot of British property companies are looking at the abyss yet again. Lending to them was not obviously sub-prime but in 2009 it will be interesting to see where companies such as British Land might end up.
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The Germans and the IMF have publicly criticised Brown's economic policies. Yet the Bank of England has engineered a fall in sterling and sharply cut interest rates. Spain and Italy must only look with envy. Greece seems to be a failed state. Yet Spanish and Italian banks benefited from not being allowed to invest in esoteric instruments such as SIVs, which have so hit Barclays. Unfortunately, for the European Union when the moment of truth came, the member countries have followed their own rescue policies. The Germans are concerned about picking up the tab for any EU package and they don't seem to be as enthusiastic about the European ideal.
A personal fact finding mission to Deutschland to find out if this actually the case is off the agenda at the moment with the current level of the pound to the
euro.
In the past few years following our current account deficit, European companies picked off British firms in areas such as chemicals, industrial gases and building materials. I supposed these investors wished they had waited and could have picked up UK PLC for less.

Michael Portillo looks at the Basra departure.

In the recent Sunday Times, former Conservative Minister Michael Portillo wrote a very perceptive article about our departure from Basra. He noted that the U.S military were getting a bit miffed about the British Army's supposed skills in counter-insurgency gained from Northern Ireland. Portillo also noted that the UK lacked the stomach for the Iraqi campaign. What was the point of having all our weapons such as nuclear etc?
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However, what was heartening was the number of posts to the article from the United States, which praised the contribution of the British troops on the ground. There was a local post saying that we are such a small country (bankrupt one at that) we should not get involved.
My view is that Prime Minister Gordon Brown, who sees his main job as cutting military expenditure, should have had the courage of his convictions and pulled the troops out of Iraq and Afghanistan, when he got the top job. We are in an impossible
situation. We can't win the wars and we will never get much leverage with the Americans. Commentators are suddenly noting that the British tortured Obama's grandfather in Kenya. Why he is going to support us?
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article5375770.ece

Apparently the U.S military are a bit chippy about British Army.

On the day when British Prime Minister Gordon Brown officially announced the timetable for our withdrawal from Iraq (conveniently a long way away from the UK unemployment figures), perhaps we can take stock of our six year military involvement in the country, which is the cradle of
civilisation. It started with all of the British ambassadors in the region trying to persuade Tony Blair don't do it. It ended with apparent criticism of our military contribution from our U.S allies. I know we are the victims of propaganda and spinning but the government can't hide the fact that Basra seems a bit of a disaster for the British Army.
I suppose the troops were let down by factors such as the lack of helicopters and defenceless transport. It was always an expedition where financial costs were paramount ie in keeping them down. The British government also failed in mobilising support from the public for the troops. It seemed to shy away from emphasising they were fighting for a worthwhile cause. I think the Great British Public are guilty of not supporting our troops.
I thought the UK military's top brass could have done more to have avoided having troops in both Iraq and Afghanistan. They were probably told that Iraq would be six months not six years but they could have done more to avoid being used for political ends.
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What if the Krauts are right about the Brown package?

I remember going to West Germany in the mid 70s when the UK was collapsing with strikes etc. I think I got 11 DMarks to the pound but I am not sure. What struck me how well-organised things were. Public transport worked while railway yards seemed ultra efficient. Then later West Germany carried out the biggest corporate acquisition ever and it has taken years to sort out with write-offs etc. Now, the Germans have the key role in the Eurozone economy. They can literally decide who stays (Spain?), who goes (Italy?). The single currency zone probably only works for countries next to Germany such as Holland.
You get the sense that Merkel does not have much time for Brown but at least we don't suck up to the Russians like the Germans. The Brown financial and economic package has not attracted plaudits in Berlin and the Germans have laughed at the VAT reduction. They remember our PM's lecturing when he was Chancellor and apparently he did not bother to listen to speeches in Europe by taking his headphones off. Yet the package has represented an attempt to fight the credit crunch and the recession. We will have to wait a while to see if it works. Brown will probably call an election before that happens.
www.seachaccountant.co.uk

Roger Wood publishes one of its regular newsletters.

The accountancy firm Roger Wood has issued one of its regular newsletters. It notes the various elements of the temporary change in UK VAT from 17.5 pct to 15 pct. Roger Wood notes that you don't have to pass on the VAT reduction.
Based in Weymouth the firm notes that more firms are likely to face a tax enquiry with the efforts to collect more tax and VAT. Roger Wood also looks at the VAT consequences of housebuilders, who rent out properties they have built. the firm says it can help with "the partial exemption calculations, which are tedious and complex."
Meanwhile, the VAT reduction has been criticised by German Finance Minister Peer Steinbruck, who basically says the recession is irreversible and that we just have to grin and bear it.
To implement the VAT cut has been very fiddly in administrative terms for many companies. I don't get the sense the government appreciated that fact. It will be interesting to see if the reduction has helped retail sales.

What does 2 pct base rate feel like?

Perhaps the UK economy is slipping towards Japanese style deflation but you can't fault the Bank of England for acting. After years of glacial movements in base rates, the central bank has quickly cut base rates by 2.5 percentage points. Obviously, if they fall to zero from the current level of 2 pct then we are in Japanese territory.
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At the height of the Japanese property bubble the Emperor's palace in Tokyo had a valuation equivalent to California. Hopefully, the adjustment in British property values will not have to be so severe. The one problem is the electoral cycle here with the Gordon Brown government trying to limit the impact of the residential property decline, which is ultra important for voters.

Official denials about Euro are not very convincing.

It looks to me that the official denials by the British government about not
joining the Euro are not very convincing. It has been left to officials to poo-poo the idea of jettisoning sterling and joining the single currency. Lord Mandelson has said there are more pressing problems to sort out but the long-term objective is to join the Euro. That is not much of a denial.
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I remember when the single currency was set up there was talk of prices converging. However, the price of a coffee in a cafe is very different in Finland compared with Portugal. Also one attraction for the Club Med countries is that they would swap their weak currencies with a strong one. However, despite the D-Mark being fixed at a relatively high rate, the Club Med countries have been defenceless against German exporters. They have been unable to protect their domestic companies from competitors, which have cut costs and benefited from lower inflation.
It is in the nature of things that central banks are heavily criticised but the Frankfurt-based European Central Bank recently kept interest rates unnecessarily high when it could have supported the U.S Federal Reserve Bank when it was cutting.
This made the dollar weaker than it should have been.

A big dose of inflation will sort it out!

The troubled state of the UK economy has led to a 25 pct fall in the pound, which has been amazing in its speed. Such a fall could lead to importing higher inflation. A big dose of inflation would sort out our debt problems, if our creditors accept being repaid in depreciated pounds.
There has been fevered speculation that British Prime Minister, Gordon Brown, could choose to enter the euro locking in a low rate. Downing Street has denied plans to join the single currency but are there ideas, proposals, projections etc?
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Joining the euro would have quite a few advantages for the UK economy such as lower transaction costs with our EU trade partners. However, it might be preferable to wait and see if countries such as Greece and Portugal survive the current downturn and stay in the single currency.
Having an independent currency can act as a shock absorber if we make a complete horlicks of the economy. However, over the long term devaluation is not a road to prosperity. Sterling might be just too small in an era of mega currencies such as the dollar and the euro.

Pre budget report still not getting good notices.

The pre budget report of British Chancellor Alistair Darling is still not getting good notices. There has been a lot of comment on the future increase in national insurance contributions, which is a tax on work. It also does not help improving employment levels.
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There was also concern at the rise in government borrowings. I suppose we could fall in a debt trap although the general assumption must be that a big dose of inflation will sort it out. This might fall foul of bond vigilantes, foreign investors will not buy our gilts (government bonds) because of the sterling depreciation.

Apparently Labour is closing the gap on the Tories.

Apparently, Labour is closing the gap on the Tories in opinion polls. Perhaps, we will be on for a general election in June 2009. Then, the Gordon Brown administration will retain an element of surprise rather than waiting for 2010. Last time when there were rumours of an early election, the British premier ignored the advice of his younger Cabinet members.
I suppose it will be fought on class lines by Labour on class grounds pointing to the
Old Etonians Cameron and Osborne conveniently ignoring the private/selective education of quite a few of their ministers. It is a shame that Ruth Kelly is departing the political scene. She has had more Labour government portfolios than hot dinners.
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Labour will be campaigning on future tax increases following their (hopefully)
successful rescue of the economy. They will try and not mention spending cuts but will argue that Tory cuts will be more.
The Conservatives will at least have to mop the Lib Dem seats in the south such as Winchester but with a manifesto that will not frighten the children. Both these tasks will be difficult. One problem is the lack of support from certain sectors of the Tory party for Cameron and Osborne and this contrasts with the Labour Party looking more unified and getting behind Brown. Perhaps, the appointment of Lord Mandelson was a master stroke. Miliband has been sidelined into going to places like Syria and into criticising countries such as Russia and Israel.

The British government looks a bit shifty again!!

The British government, under the premiership of Gordon Brown, looks a bit shifty again a last-minute omission in the pre budget report (PBR) to recoup the temporary reduction in VAT from 17.5 pct to 15 pct with a rise to 18.5 pct. Apparently, analysts are finding a £100bn hole in the public finances. They are also homing in the changes not highlighted by British chancellor Alistair Darling such as increased fiscal drag whereby more taxpayers will be sucked into paying the 40 per cent rate.
Perhaps the best strategy for Brits is to get a public sector job with a nice pension and the ability to take time off sick when you want. If that does not appeal then if you got some transferable skills then Australia and New Zealand would like to hear from you.
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I think it is Derbyshire where they pay more for pensions covering retired firemen than for the actual fire service itself. Unless we go bankrupt too quickly, then there might be a moment when we realise that the public sector just has to be reformed. The Gershon review wanted to outsource some civil service jobs to India but
I don't think we need to go that far. Pulling out of Iraq and Afghanistan would help reduce costs a bit. I am still aiming to get on a Quango, so we don't want those cut.

Poor old Alistair Darling gets battered!!

Without actually being there, it looked like British Chancellor Alistair Darling got battered yesterday by his counterpart on the opposition benches, George Osborne. Poor old Darling looked pretty glum when Osborne described him as a gambler. The VAT reduction to 15 pct represents an administrative headache to companies but is unlikely to get the consumer buying. If gas and electricity bills were exempted from VAT, it might not get the "Green" vote but it would make a major difference to low income groups.
The public borrowing figures are alarming and our gilts (government bonds) will have to have some attractions to bond investors, who will be able to choose from a wide pool of countries such as the U.S and Germany. One probable attraction is a relatively high interest rate to offset the currency depreciation.
One reason why the Great British Public got into such a debt mess is that its income was overtaxed. So that to keep an illusion of progress and to buy the good things in life people resorted to borrowing.
The Darling statement had the positive feature of being relatively candid. It paves the way for the forthcoming general election, which is likely to be in June 2009,
and will be fought on a social fairness agenda.
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VAT nightmare for everybody!!

Written before Alistair Darling's pre-budget statement, if the worst-kept secret is carried out, a reduction in British VAT to 15 pct, then there will be quite a bit of administrative angst for UK companies. This compares with the current rate of 17.5 pct. To pay for the reduction, there is talk of quite an increase later.
The British Chancellor has been caught out on his previous forecasts. He did not expect 1 pct growth for 2008 for example or recession in 2009. This shows more the perils of forecasting rather than the competence of Mr Darling. We are living in extraordinary times. Last week saw the humbling of U.S banking giant Citibank and this week is seeing the rescue.
Lower interest rates and a weaker pound might get the British economy going again but they also hit groups like pensioners, who rely on income from banks and building societies. The weaker pound has offset some of the falls in the oil price for petrol purchases.
For a government that has never built a power station, it will be interesting to see if the public works programme succeeds or not. British prime minister Gordon Brown has often spoke about public investment but when you look around in Britain it has not really happened.
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How bad will the UK downturn be?

It was a bit of a shock to have Marks & Spencer carry out a one day sale with 20 per cent off. So how bad will be the downturn in the UK economy? Comparisons range from 1990-91 to 1973-74, when we had the three day week etc. The UK economy has been over-reliant for growth from the City of London, which is now in freefall. We will be paying for New Labour's neglect of manufacturing and for the use of an overvalued exchange rate to keep inflation down with cheap imported goods.
Inflationary pressure has always been high with the government's penchant for increasing things such as vehicle excise and fuel duty. However, the scope for raising these are limited due to opposition by the Great British Public. The drop in oil prices might help produce artificial deflation figures but living in the United Kingdom is still not cheap.
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The textbook theory is that the collapse of the pound should help exports but these will be difficult to achieve with recession in the United States and in Europe. At least it will encourage people to take domestic holidays or go to destinations such as Turkey and South Africa.
The Sun today says that UK premier Gordon Brown should go for a June general election. It is probably sound advice since the higher unemployment gets then it might be more difficult to win.

I wish Gordon Brown was'nt enjoying himself!!

Not long ago British Prime Minister Gordon Brown was fighting off major criticsm of his performance. There were calls within his own Labour Party for a change. However, Brown's opinion poll ratings have gone up sharply. I think the Prime Minister and the Chancellor Alistair Darling did well to rescue the UK banks. However, the banks are not responding to their demands to keep lending at last year's levels.
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However, I wish Gordon Brown was enjoying himself so much!! The more miserable the state of the British economy is, the more happy he looks. I would wonder if the interest rate cuts and the putative tax cuts will work. They would take time to take effect and would possibly be helpful by the end of 2009. It seems that people are talking of a two year recession.
Brown and Darling have talked of bringing forward public sector investment projects.
Yet the government's schools programme has had pitiful results. Projects such as Crossrail seem to fall in the black hole of planning. Apparently, the government deficit could reach £67bn without really trying and this is despite a rise in tax revenues.

What do you prefer? Downturn or recession?

The British economic stats are all gloomy. However, the BBC prefers to call the recession the downturn. Does that make it any better? Today's Independent does a great article on the painful economic situation. One interesting comment in the article was that the BBC's Robert Peston did not help much when he revealed the Northern Rock crisis saying that deposits were safe. Obviously, the depositors took the reverse message and began a run on the Newcastle-based bank. I think the son of a Labour peer had to go with the story. If there was a better deposit protection scheme in place, then the run might have been avoided. I would have lost a little less money as a Northern Rock shareholder as well!!
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The Independent article refers to a couple of suicides over house repossessions. Perhaps these tragic events could have been avoided by better income protection products. Most of these are designed not to pay out. I had one once with the Abbey National until I read in the Daily Telegraph that the venerable organisation, pre Banco Santander, did anything to get out of paying out.

The 90th anniversary of First World War armistice.

For today's blog I am going to touch on a more serious issue. Today is the 90th anniversary of the end of the First World War. Although it is a long time away, it seems only yesterday when my grandad was regaling me with stories from the conflict. He was lucky and did not serve on the frontline but was one of the ground staff of
the air wing of the Army. He used to tell me how he loaded up Lewis machine guns.
The worst episode was when he accidentally burnt down a hangar and he thought he was
going to get shot for that.
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After the Great War my grandad managed to get a job on the railways. To get a bit extra money he joined the Territorial section for railway workers. This meant rather
than missing out on the Second World War he was in France within days of hostilities
breaking out.

Costa fugitives will have to go on the run!!

Apparently, the UK authorities are to make more of an effort in apprehending British criminals, who fled to Spain. This country became the destination of choice when there was no extradition treaty between the two countries. Extradition has been made easier and lets hope the project will be a successful one for SOCA, aka the British FBI, which has been hit by a heavy overtime bill.
The Spanish prisons have been filling up with municipal politicians, who benefited a bit too much from the property boom in the Costas. These coastal districts have not just attracted British criminals but also ones from Italy and Russia. So, the Spanish authorities are probably spoilt for choice over who they want to arrest.
www.searchaccountant.co.uk It will be the Spanish police, which will make the arrest.
http://news.scotsman.com/scotland/On-the-run-four-Scots.4666029.jp

Barack Obama will have to manage expectations.

Barack Obama is an amazing speaker and his message of "change" has struck a chord both in the United States and elsewhere. The senator will now have to manage expectations because the challenges are pretty tough. For instance, the extension of health insurance to all Americans defeated the Clinton administration. The imposition of an NHS style solution would be defeated by the size of the U.S population. Health schemes throughout the world are coming under pressure of increased costs and longevity whatever their funding model.
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The president-elect of the United States will benefit from Democrat majorities in the Sentate and in the House of Representatives. If he brings the same competence to bear as he did for the election campaign, which raised a record amount of money, then Obama could be well-placed to reach his goals. He can make quite a few changes to Bush policies by executive order.

Gordon Brown passes round the hat in the Gulf.

I am not too sure if the Saudis and the Gulf states want to invest in countries like the Ukraine and Hungary. They would prefer domestic infrastructure projects or companies such as Barclays. It must have been a surprise for them to see Gordon Brown coming round with the hat. The Middle East countries want productive investments for their oil wealth. We are wondering what would happen if Qatar tries to take over Sainsbury's. Years ago HM Government blocked the Kuwaities when they tried to build up a major stake in BP.
Western governments much preferred the old investment destinations of Middle East oil wealth such as arms and London casinos. Sarkozy now wants the European Union to repel any boarders such as sovereign funds, if they move for European companies.
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This contrasts with the attitude of Barclays, which has been actively courting these funds. People think it is a shame that the UK government did not set up a sovereign fund similar to Norway endowed by oil revenues.

Tory politicians don't seem to have normal holidays.

It seems that Tory politicians are unable to switch off on holiday. Poor old George Osborne should have been putting his feet up and spending time with his family.
Instead he did not initially come up with the admission that he saw the Russian oligarch Oleg Deripaska quite a few times on his holiday in Corfu.
www.searchaccountant.co.uk
If Osborne was economical with the actualite, then we understand that because that it is what politicians do. Less understandable was discussing with the media what Peter Mandelson said at a private dinner party. I suppose Osborne could not resist it.
Anyway, the £50,000 donation request, which supposedly never happened, is worth a bit less with the decline of the pound. With interest rates poised to come down, sterling is on it own.

Apparently the £37bn package is not fully working.

Stocks are tanking all over the world. In the United Kingdom the £37bn bail out package for the three major banks of Royal Bank of Scotland (RBS), Halifax Bank of Scotland (HBOS) and Lloyds TSB is not fully working. The package has done really well to shore up the three banking groups but has been unable to get Libor down. This would free up lending.
I have just read a Forbes article and it mentioned the words "credit standards" and "weaker borrowers". This will see banks tighten up lending criteria on their clients both in the United Kingdom and in the United States. In the British housing market borrowers need a hefty deposit just to get going. The Halifax will be so much more cautious after suffering a near-death experience. While Northern Rock, despite its nationalised nature, is repossessing 32 homes a week.
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There is talk that the mortgage portfolios of Northern Rock and Bradford and Bingley could be merged, which would help reduce costs. It might help if the Halifax injected a part of its mortgage book as well. This could reduce competition concerns about its merger with Lloyds TSB.
Royal Bank of Scotland has got a massive balance sheet and it will probably take time to bring under control. I wonder if the government knows what it has got into. A smaller institution might be a safer one, which would not bode well for employees.

Fred the Shred walks the plank!!

People will wonder how did a massive, proud organisation like the Royal Bank of Scotland succumb to nationalisation. Buying Dutch bank ABN Amro was in retrospect a very bad idea but it was obvious that Fred the Shred wanted to put one over Barclays,
which set the ball rolling. This year's £12bn rights issue was again in retrospect not enough capital but Fred the Shred should have perhaps gone then. However, he should certainly have been replaced in the negotiations with the UK authorities.

It is thought that the UK government taking control at Royal Bank of Scotland (RBS) and at Halifax Bank of Scotland (HBOS) will put a dent in the SNP's ambitions for Scottish independence. Perhaps, the party will make a bit of a comeback asking for representatives on the respective boards.
wwww.searchaccountant.co.uk
Apparently, Gordon Brown and Alistair Darling will say there will be no state interference but if the state holdings are in place for a long time, then there will be government control.

UK stocks are taking a bit of a battering today.

The FTSE is down 7 per cent this morning and so UK stocks are taking a battering.
Royal Bank of Scotland is down almost 15 per cent to 81 pence. This is despite the UK government bailout plan, which was allegedly leaked by the authorities earlier in the week and which put bank stocks under so much pressure. These stock market falls will affect the plans of many small investors. Ages ago I saved in a long-term investment plan for college education and I think the value has just been
shredded. I suppose I could resume investments but the British stock market is (was) quite dependent on the high dividends paid by the banks. This was especially true with income funds.
Meanwhile, if you need an accountants in Bromley there is the local firm Hammonds (www.hammondsaccountants.co.uk)
There has been some quite positive comment on the UK government bailout plan, which is seen as more comprehensive than the US one. Perhaps Gordon Brown and Alistair Darling should be applauded but they are responsible for the tripartite regulation of the banking sector, which has unnecessarily complicated matters.

At least UK bank shares have recovered a bit today.

Today has seen a new era for the main UK banks with a £50bn government package, which would see their partial nationalisation. We have lost Fred the Shred at Royal Bank of Scotland (RBS). It looks like this particular bank has been singled out by the authorities.
Looking at this issue again, it is not clear that Fred the Shred has gone gone although there are reports naming his replacement. RBS has been making no comment on the fate of the illustrious bank executive. I looked at the corporate website and there was also no mention of the collapsing share price.
There is some discussion that the British government wants dividends suspended by the banks, which would obviously affect their share prices. In any event dividends on the government's preference shares would obviously crowd out the ordinary stock. It would be interesting to see how long the government rescue package would have to go on for.
On a more interesting matter if you are a business client in the Huddersfield area, Latchford Consulting offers a practical and professional service. The contact is Amanda Lord. There is a free initial consultation.

Depression, slump, recession, inflation?

It is sometimes better not to read the newspapers because they are so depressing. One article, which cheered me up was one by the excellent Brian Tora in a recent moneymarketing.co.uk. The article reviewed the financial crisis but concluded that it may be a once in a lifetime crisis, but that we would get through it. Tora says that overborrowing is at the root of the crisis.
In London, the Government is frantically trying to work out what the Germans said about their deposit guarantee while hinting that it might take equity stakes in banks as part of a recapitalisation effort. There has been criticism that the Gordon Brown government has reacted in a piecemeal fashion to the problems of the banks. However, Brown has probably tried hard to get an European Union solution but will have to take local measures on deposit guarantees following in line to the Irish, the Germans, the Scandinavians etc.
Meanwhile, I have never been to Coventry but it has a range of local accountants to help your needs. they include the firm Fox Evans (www.foxevans.co.uk). The firm offers services to a wide range of businesses and individuals.

Derby County has some fantastic supporters.

Derby County has some fantastic supporters. The club, famous for winning the league under manager Brian Clough, has hit some tough times since it was recently relegated from the Premiership. I never saw Derby County then but I did see Clough work his magic on Nottingham Forest. It helped having Shilton between the sticks.
However, this is supposed to be an accountancy blog and in Derby there are some good accountancy firms. For instance, Ashgates offers a free initial consultation and also have offices in Leicester. The firm is also a Sage reseller. Going back to the football motif, Ashgates has over 50 top class footballers on its books.

Goodband Viner Taylor espouse going green.

At Sheffield-based accountants Goodband Viner Taylor, Rachel Walker-Morecroft has espoused the benefit of going green in terms of company cars. For instance, company cars with emissions of 120g/km or less have a benefit-in-kind reduced to 10 pct of list price for petrol versions and to 13 pct of list price for diesel ones.
I remember being amazed how a friend of mine acquired a very nice BMW, which had a very good emissions level. Early on the German auto group had made a car specifically for this business market.
The UK government wants to use vehicle excise duty (VED) to get the whole country green but it was considered heavy-handed and its last attempt was viewed as retrospective taxation.

The Frogs take over British Energy.

In a major move the French group EDF is to acquire a major stake in British Energy. It is being the biggest foreign investment ever by a foreign group in the United Kingdom. The £12.5bn deal has still to be approved by British Energy shareholders
but is supported by the UK government, which has a 36 per cent stake in the nuclear power group.
www.searchaccountants.co.uk
UK firm Centrica will take a 25 pct stake in the four new nuclear power plants, which are planned. However, there is concern over foreign control of such a strategic sector.
I wonder why the City was so keen to sell our power firms. German groups RWE and E.ON, Spanish group Iberdrola and EDF now have a dominant role over supplying us electricity. Let's hope they have our best interests at heart.

I am a bit depressed by the Manchester City result.

Can you really buy success on the football field? Manchester City walloped Pompey six-nil and there was the whole spectacle of Calamity James coming out and missing the ball and the ridiculous little dances by City players as the goals went in. They should have been booked by the referee and they might have been if the referee was the venerable Mike Riley. He did not do much for the Chelsea-Manchester Utd clash although the Blues had enough chances to win it.
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I read the Sunday papers and was flabbergasted to find out that Lloyds TSB has wanted to buy out fellow banking group HBOS for several years. The only figure being put out by Lloyds TSB is £1bn. This is the figure for cost savings but the banking group has not been prepared to announce how many job losses there will be.

Halifax goes down with all hands!!

The considered, precise view on the Halifax (HBOS) rescue by Lloyds TSB can be found on a good story carried by FT.Com http://www.ft.com/cms/s/0/d7fa43e0-8496-11dd-b148-0000779fd18c.html?nclick_check=1. This blog will muse on what was the glory of an UK mortgage bank with a balance sheet of £600bn.

For instance, the share price performance of Halifax was pretty dire and signalled major operational shortcomings. It must have been dire to consider a merger, sorry a takeover by Lloyds TBS, a bank, which has grown by mincing companies. Halifax board members and executives will know that they will not have much of a future in the combined group unless a leopard has changed its spots.
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Founded in 1853 at the Old Cock Inn in the Yorkshire town of Halifax, the institution grew from a building society to a major financial group cemented with the acquisition of Bank of Scotland to form HBOS. I did have the shares from the demutualisation of the building society but had to sell at around £4 due to household necessities. I also had a current account, which paid excellent interest but I was getting disturbed by sales calls from Halifax staff trying to sell insurance etc.

For many years Halifax was in competition with Abbey National, which is now owned by
Banco Santander of Spain. Ironically, Lloyds TSB tried to acquire Abbey National in 2002 and now must be having a wry chuckle with the start of the process to buy the Halifax, which has a market leading 20 per cent of UK housing loans.

Apparently, UK Prime Minister Gordon Brown has been involved in the negotiations since the deal will get a waiver from competition problems. However, I don't know what the European Union will think of that. Yet, speed is required for the transaction to go ahead and I don't think the British government would be interested in nationalising Halifax following its rescue of Northern Rock.

Halifax shares have another poor day.

The shares of British banking group Halifax have had another poor day and that is putting it politely. The stock market can be a pretty good indicator of future operational performance and it might be pretty ugly for the group, which was originally founded in the Old Cock Inn, Halifax, in 1853. The bank has stated that it has a strong capital base but its shares are closing down
18 pct to £1.90 (BBC Website).
I did have the shares ages ago and I had to sell at around £4 and was kicking myself as they soared up to the ten pound level. It is probably too risky to buy the shares at this level not that I am the world's top equity trader.
www.searchaccountants.co.uk
I wish I had the dosh to buy a few as a bet, nothing scientific mind you, but I think the most I can muster up at the moment is a paltry £400. You need over a thousand just to cope with the commission.
In the recent past I did sign up to a Halifax account but the problem was that they kept ringing up (okay twice) in the evening to try and sell me something. I also had a car insurance policy and the problem there was admin in India, where we both did not really understand each other.

Halifax shares have recovered to 16 pct down

The previous blog had the shares of UK mortgage bank Halifax Bank of Scotland (HBOS) down to £2.29 but now they have recovered to, sorry, volatile trading and they
are down 21.6% pct to £2.21. This is not good. Apparently, the stock market does not like the funding structure of the bank, which is very reliant on wholesale finance. The share price performance is telling us that Halifax is in a weak position.
The Bradford and Bingley, my favourite British bank, has also been marked down by just under 15 pct, which is again not good.
www.searchaccountants.co.uk My wife still has some shares in Bradford and Bingley, which was once a proud Northern building society. However, it did raise £400m from investors and is apparently shrinking its lending. I was really unimpressed by B and B venturing into synthetic products.

The Lehman Brothers collapse is very sad.

With another Black Monday, the collapse of U.S investment bank Lehman Brothers is very sad. Consumption in New York and London will be hit by the loss of highly-paid jobs. For instance, New Labour has enjoyed a nice tax take from the City of London, so we will be all affected. There might be some schadenfreude about these guys losing their jobs but there will be ripples affecting everybody.
I suppose one positive aspect is that creative destruction is part of capitalism but is a bit painful to watch. Halifax (HBOS) shares are getting a right kicking today (15/9/08) and I think the fundamentals cannot justify such volatile trading. I did hold Halifax shares years ago but I sold them since I needed the money. There is a City adage of "never catch a falling knife" so I would wait before buying. That is just an uninformed opinion. The City tried to get some bid rumours going with the idea that the Spanish bank BBVA would be interested in the
northern institution. It is going at £2.29 per share at the moment.
www.searchaccountants.co.uk

One of my readers says I go on about football too much.

One of my readers has told me that I go on too much about football in this blog. Well, I am going to try and diversify the topics I cover rather than go on about the golden age of Manchester City and players such as Bell, Lee and Summerbee. I should try and be more considered about British Prime Minister Gordon Brown, who gets sliced up by Matthew Parris in his Saturday column for The Times.
For instance, interesting things are happening over the border with the SNP going steadily towards his goal of independence (Would the passport have a Saltaire?). The party is hoping to get North Sea oil revenues/European Union to finance their socialism in one country. Scotland could make it as an independent country but a lot of businesses, which have substantial interests in England, such as Standard Life might have a tough choice whether to relocate. This is if businesses don't decide to move to Dublin to benefit from lower taxes.
www.searchaccountants.co.uk.
Alex Salmond, SNP leader, is playing a canny game and the latest move towards a local income tax rather than have council tax is very interesting. The Lib-Dems want to cooperate while Labour, which has run parts of Scotland as a rotten borough, is looking lead-footed.

I still can't get over the capitulation to foreign money.

I suppose everyone in the Premiership must be licking their lips, but I still can't get over the capitulation of the game to foreign money. I suppose we will have to get used to foreigners trying to buy their way to success, when only
four teams will be deemed successful. Only Michel Platini seems to stand in the
way.
If Chelsea have another unsuccessful season in trophy terms, the business model of buying as many players as possible will have been viewed as an unworkable
one.
The English football authorities blithely talk about "investment in the game" when agents must be getting ready to gorge
themselves.
I quite like Spurs but I have to get used to a completely new team. The club seems
to have a nervous breakdown like West Ham and Newcastle even before the season has begun. The weight of expectation and funding costs means that a top ten finish is not
good enough.
www.searchaccountants.co.uk

I apologise for wallowing in nostalgia about Man City.

I was reading in yesterday's blog and I realise I was wallowing in nostalgia about the good old days of Manchester City. In the current modern world the club is just a
poker chip to play on the table. Is it really worth £200m? Is Robinho really worth plus £30m? It is a bit late to complain that we have sold out. Those old-fashioned purists are outnumbered by the modern Man City fan, who wants to compete against
Man Utd and the Abu Dhabi finance is the way to do it.

It looks like that Miliband is really going for it!!

It looks like that David Miliband is really going for it with his challenge against UK prime minister Gordon Brown. The Daily Telegraph reports that Miliband has lined up Geordie MP, Alan Milburn to become
Chancellor of Exchequer, which would at least put Alistair Darling out of his misery.
Things are so bad for this government, which likes nothing more than impose taxes
on England, is talking about a possible suspension/deferment of the hated stamp
duty.
I am changing my mind about David Miliband. At least he is going for it. Normally, his lack of Labour Party support would be fatal for the tall, bright, young man. However, maybe a lot of MPs, including Brownites, would be pondering if it is worthwhile voting for a dour Scot, who goes on about African poverty all the time, while raising stealth taxes!! Whatever did happen to my occupational
pension?
As for messes it looks like Northern Rock, the Geordie/Labour bank, could be a real corker. Masssive losses and an emergency capital injection of £3bn does not make pretty reading. I wonder how the expensive talent at Northern Rock are thinking about how to get out of this hole. It could be
a run-off solution, which would not be nice. One local source says that seven thousand jobs are at stake. To rescue them might need a really low break-up bid. But the mortgage book, with growing arrears, looks horrible.
PS. David Miliband did not put up much of a challenge while Northern Rock has been joined by Bradford & Bingley and the Lloyds TSB proposed takeover of HBOS (Halifax).

Is David Miliband going to get sacked?

Dear Reader,
I wonder if British Prime Minister, Gordon Brown, is going to sack David Miliband,
the non-existent Foreign Minister, David Miliband? Well, the skinny metropolitan type, who has a South Shields (Geordie) seat wrote his job application for his
master's job in the Guardian. I met someone who worked at the FO and he said that Miliband did master his brief, which is apparently important. My beef with Miliband is that he skipped to the U.S when a top-level delegation arrived in London from
Saudi Arabia. They might be SoBs but at least they are our SoBs.
www.searchaccountant.co.uk

It is not looking good financially in the United States!

It is not looking good financially in the United States with further banks going under. The U.S is further ahead of us in Great Britain in terms of the subprime crisis. However, the near collapse of the American mortgage lenders Fannie Mae and Freddie Mac must have scared the daylights out of the financial elites in the
Land of the Free.
There has always been debate whether Fannie Mae and Freddie Mac benefitted from a federal guarantee and now we know. However, the U.S financial authorities have
(it appears) been quicker in acting.
www.searchaccountant.co.uk
Financially, the country cannot afford Iraq and Afghanistan. The U.S must pull out of both countries or get other allied countries to pay for the costs. We are in a certain situation similar to the Vietnam War, which led or at least happened at the same time as the near collapse of the American financial system.

Sorry to waste my readers' time navel gazing.

Dear Reader, sorry to waste your time navel-gazing. This concerns the "will he or won't we" over the poor benighted rights issue in UK mortgage bank Bradford and Bingley.
After a long venerable period as the amalgamation of several building societies,
Bradford and Bingley is looking at a troubled future. The £400m rights or capital raising operation will plug the gap for now but being contractually committed to buying uncertain mortgages from U.S group GMAC seems both a waste of time and money.
www.searchaccountant.co.uk
In Bradford there are accountants, who can help individuals and
corporates.
Well, I don't have to think about it until later in the month but in a rash moment
I promised the Missus to cough up the funds for the operation. It is only £184 but
the hols are drawing near and you can't spend the same pound twice. The 184 quid is going either to the bank rescue or to form part of the spending money required for the jolly jaunt in Spain. This last bit makes me very angst-ridden when I contemplate
the performance of sterling against the euro since the start of the New Year.
This has not been good but I am surprised that there has not been more public
comment.
I have looked at the B and B documentation and while not fully understanding the accounts, I can understand the bank has got itself in a right pickle what with
the GMAC deal, which means more self-certified (liar) mortgages on the books.

UK bank Halifax has a flop with its rights issue.

 The UK banking group HBOS (Halifax Bank of Scotland) have experienced a flop with its rights issue or capital raising issue. Just 8 pct of Halifax's shareholders have taken up the rights and the bank's main underwriters Morgan Stanley and Dresdner are looking for other investors right now.
The missus is in the quandary of whether to take up the rights at Bradford and Bingley, a much smaller operation than Halifax, in its £400m capital raising operation.Both Halifax and Bradford and Bingley have been sitting ducks for short-selling due to the long process of raising new money from a rights issue (you have the right to buy shares in the proportion of those you
own).
Royal Bank of Scotland benefited from being first in the queue with its £12bn issue although no one seems to want theScottish banking group's Direct Line. I am a Direct Line customer and feel a bit sad that RBS wants to sell it. This is so to raise more cash following the expensive acquisition of
the majority of Dutch banking group ABN Amro.www.searchaccountant.co.uk

Have Real Madrid got the readies for Ronaldo?

Have the Spanish football club Real Madrid got the readies to buy the Manchester United star Ronaldo? I believe that in the past Real Madrid have benefitted from
the support of the Spanish banks. However, these institutions are in the eye of a storm considering the credit crunch.
www.searchaccountant.co.uk
For instance, savings bank Caja Madrid and commercial bank Banco Popular are pretty
exposed to the collapse of Spanish property group Martinsa-Fadesa. While Real Madrid
has found it difficult to keep up payments on players. For instance, Madrid putting up the money for Anelka from Arsenal was a very tortured process.
I suppose the financial support for Real Madrid from the Spanish banks is an echo when they were the team of General Franco. The thing I noticed about Spanish football fans were that they were either Madrid or Barcelona. You could be in somewhere down south and see an outlet devoted to supporting one of the two clubs
when the local ones were Sevilla FC and Betis. I could never understand that.

It looks pretty bad for share markets at the moment.

It looks pretty bad for share markets at the moment. Apparently, investors are not impressed by the rescue of Fannie Mae and Freddie Mac in the United States. Here, at home in good old Blighty I am worried that my modest portfolio is going to become
even more modest. The Daily Telegraph's Tracy Corrigan writes today that "The British banking system seems in a dreadful mess." She says that Alliance and Leicester is a drop in the ocean for Santander, the second biggest bank in
Europe.

I would recommend that bank shareholders lie down a bit and ponder why did they let those overpaid executives get away with it. There were siren voices all throughout
the past few years.
www.searchaccountant.co.uk
I wonder what the main shareholders are planning to do with "Fred the Shred" at Royal Bank of Scotland. However, you have to hand it to RBS. The Scottish bank got its
capital raising/rights issue off first in the queue and out of the way. Now RBS is in a hurried phase of selling off unwanted assets.

PS. I really like Tracy Corrigan's articles.

The Spanish Armada is coming: AL already captured!

The Spanish Armada is coming!! Only just a few years yet. We don't seem to have the
warriors of the calibre of Drake and Frobisher to fight back. I suppose it is nice to
have an open, transparent market but is it helpful for our economy for Banco Santander to pick up Abbey National and Alliance and Leicester, two British mortgage banks, on the cheap?

In reality, the Financial Services Authority (FSA) must be delighted that
Santander has come in with a rescue bid, just shares and no cash on the table.
If memory serves me correctly, Alliance and Leicester nearly hooked a French group
willing to pay £15 a share. But it all fizzled out unfortunately. The acting
A&L bod is reduced now to talking about "a good fit".

It is all fine and dandy having an open market but what happens if the Russians,
Chinese, foreign sovereign funds start piling in? Would it be good for UK PLC?

I think Banco Santander is a powerful bank and its UK representative performed well
during a Gordon Brown meeting with the main banks when the Santander guy spoke up
for the building societies. It looks like the building societies will have to
huddle together anyway. The Portman deal with the Nationwide showed the way.

As for the Spanish Armada, Telefonica, Iberdrola and Agbar have also acquired sizeable businesses in the United Kingdom. I think only Barclays has returned
the favour with Banco Zaragozano, although Taylor Wimpey is probably
losing its shirt in Spanish property.

St Albans accountants Gilberts looks at capital expenditure.

In its recent newsletter the accountancy firm Gilberts, which is based in the
picturesque English town of St Albans, has warned that "businesses must carefully
plan their capital expenditure programmes if they are to make best use of the new
£50,000 annual capital allowance (AIA)."
office@gilberts.co.uk
Gilberts notes that the maximum AIA entitlement for 2008 is not based on the calendar year but runs from the period April 1st to December 31st and amounts
to £37,000. In addition, "Companies that do not form a group, but are controlled by
the same person or persons, will also share just one AIA."

On a more serious note I am a bit worried that Ronaldo still wants
to play for Real Madrid but I suppose I cannot do anything about it. Why can't he fall for a Lancastrian lass rather than for some glamour model from Spain!!
www.searchaccountant.co.uk
I suppose that's football.

Ronaldo, Housing Market, Zimbabwe and Mark Hughes.

I can't get really excited about the current news in the British newspapers at the moment. Some of the running stories have an element of inevitableness about them.

www.searchaccountant.co.uk

I can't do much about Ronaldo going to Real Madrid. Obviously, I would like to see him diving in a Man Utd shirt but I suppose what concerns the Glazers is that they know Real Madrid is not the best buyer in town. Arsenal took ages to be paid for Anelka while the Beckham deal saw Man Utd factoring the operation with the
Royal Bank of Scotland (I think). £80m is never going to be £80m amd has been denied by Real Madrid president Ramon Calderon.

The British housing market is going down if the lenders can't be persuaded to lend. Chancellor Alistair Darling says he is prepared to bring in the Financial Services Authority (FSA) amid rumours that he is going to be sacked by Prime Minister Gordon Brown. Apparently, Darling and his wife babysit Gordon's kids. Darling should spend more time on his day job and ensure that the British banks do not founder like
Northern Rock.

Zimbabwe is sad but with Mugabe, who had financed the education of South African leader Mbeki, will know that he has nothing to fear from his young charge.There is always the concern that South Africa will eventually go the way of Zimbabwe in terms of economic collapse. If the West averted its eyes with
Rwanda, then we could quite happily ignore Zimbabwe.
A friend of mine recently visited Zimbabwe and said he was really impressed by the can-do spirit of the people and how they helped each other out.

I don't lie awake thinking about Mark Hughes but I think he should improve Manchester City. He should do better than Paul Ince at his old club Blackburn, who upset a few people wearing a Man Utd shirt, when he was contractually still a West Ham player.

Nic Cicutti writes interesting article on housing market.

In Moneymarketing.co.uk, Nic Cicutti writes an interesting article saying that some parts of the media are feeding the sense of crisis about the UK housing market. However, in May the five main house price indices showed overall a 0.6 pct fall. Yet
all media organisations focused on the 2.5 per cent reduction in the Nationwide report, which grabbed the headlines.

I agree with Mr Cicutti that we can be talking ourselves into a crisis. However, the collapse of transactions and the problems of housebuilders show that there could be sufficient pain to come. I read the capital raising documentation of Bradford & Bingley and there was too many "synthetic" this and "synthetic" that.
This is going to impact on the UK mortgage bank's shareholders and borrowers. But let's hope that Mr Cicutti is right. He is very experienced and was writing about the UK housing crash in the early 1990s.

www.searchaccountant.co.uk.

The Spanish property dream revisited!!

Sorry to go on about Brits buying residential properties in Spain. I get twitchy about what do the words "escritura" and "mancomunidad" mean. Then, there is sometimes the lack of land register and the lack of transparency over prices. However, a few years ago with the peseta at 240 to the pound you could sell up in Blighty buy a better property and still have cash over. I remember a few years ago visiting the Costa Brava and being knocked by the coast's beauty. Who would not want to live there?

I am assured that the lunacy on the Spanish roads has got better and the UK health system has gone backwards in comparison with Spain. The UK has funded quite a few of the Spanish infrastructure improvements via European Union transfers. Spain is still a net beneficiary of Community funds but this should change with the increased investment in Eastern Europe.

Spain is a magical place but people should be aware of the problems. The country was always going to struggle with the euro. Inflation is at 4.7 pct and the current account deficit is over 10 pct of GDP. It is likely that Spanish housing and banking sectors will have to take quite a bit of the adjustment. Una cerveza anyone?

Don't get sucked in buying distressed properties, because they will just get more distressed. New buyers should try and rent and then make a measured decision. The possible increase in Eurozone interest rates by the ECB will strengthen the euro but the Spanish and Italian governments are already screaming at the central bank.
www.searchaccountant.co.uk

Northern Rock revisited!!

I have been reading in the Daily Mail extracts of Alex Brummer's book on the collapse of Northern Rock. It was interesting that the British government did not really want to deal with Richard Branson, who it suspected would make pots of money from any acquisition. The nationalisation option has safeguarded Northern Rock but it is becoming a smaller bank and is no longer the flagship institution of the
north-east of England.
www.searchaccountant.co.uk
I still wished I had not bought shares in the Northern Rock. I was dimly aware of the profit warning and I thought the shares were a buy, although they had come down sharply from a recent twelve quid high. However, nobody's fault but mine. I accepted there could be a loss. I don't rate the chances much of Northern Rock shareholders of getting significant compensation. Railtrack shareholders did not do at all well
with the government.
Alex Brummer says the £100bn liability of the Northern Rock rescue hits the government's fiscal rules while New Labour has allowed the economy to be
credit-fuelled.

Spanish property bust hits Brits looking for dolce vita.

I have been reading about the Spanish property bust hitting Brits looking for the
dolce vita (I know it is an Italian phrase). They have been hit by the pound falling against the euro, rising interest rates, illegal building practices and overbuilding.
The Brits have found their main market of selling to other Brits has fallen. The Costa developers have been running on high octane fuel during the last few years.
In the good times there has never been much of a second hand market in the coastal regions since it was quite easy to build new properties.
I saw a mate of mine who lives in Tenerife and he was telling me how cheap his water bills were. I said this situation was unsustainable. Higher water bills are needed to conserve water and I suppose the Sotogrande complex will be
rich enough to water its golf courses. However, I will doubt this will be true
for the rest of the south. I am surprised that the water shortage has not been priced in with the cost of houses and flats.
www.searchaccountant.co.uk
Unfortunately, a lot of people in Spain have been gorging themselves making money from unsuspecting Brits. They have been sold properties without proper planning permission. Then, you have regional governments such as Valencia changing the planning rules retrospectively by getting property owners to pay for infrastructure projects such as roads.
Quite a bit of residential property could be pulled down due to the Coastal Law (Ley de Costas), which is also going to affect quite a few
Spaniards.
www.searchco.co.uk

Gordon Brown takes it on the chin from David Cameron.

Yesterday, apparently Gordon Brown was taking a right pounding from David Cameron at Question Time. The British prime minister, who is going to have to pay British troops a decent wage, was yesterday just reiterating the same points again and again while ignoring the comments of the Tory leader. Apparently, this approach was used
by Mr Brown, when he was Chancellor but does not really work being Prime Minister.
www.searchaccountant.co.uk
I suppose there will be a British general election eventually and Gordon can fight his campaign over previous manifesto lies about being consulted on the European Union consitution, selling part of our gold reserves for a ridiculous price,
wrecking the occupational health system, expanding inequality
etc.
Obviously, if Gordon rang me at 6am my main aim would be to wrangle an invitation to
No 10!!

Bradford and Bingley - AARRGGHH

Having owned up to an interest of 250 shares in UK mortgage bank Bradford and Bingley held by my wife, I think I will share with you, my readers, the painful
consequences of this stake. The shares are trading at around the 67 pence level
after recently reaching over four pounds. Why did'nt I sell in time? One reason the shares were held by my wife and were not for me to sell. The second reason is that as she got the shares for nothing, it made some kiind of sense to hang on.
Although the share price performance is painful, Bradford and Bingley can be complimented for taking steps to avoid a funding problem, which sank
Northern Rock.
www.searchaccountants.co.ukShould B and B shareholders take up the capital raising operation? Investors have to decide in line with their individual circumstances. I hope they do take up the operation, since this would further bolster the capital strength of the mortgage bank, which has been hit by buy-to-let arrears. Long-term, it looks like U.S group
Texas Pacific will decide the future of the UK institution and they are pretty hard-nosed.
Apparently, the City is pretty annoyed by the shambles at Bradford and Bingley. I do get the sense that the whole affair has a lot more to run.

Is foreign aid by Britain a waste of time?

Is the British foreign trade a waste of time? For instance, would it not be more beneficial to open up our markets to African farmers, so that they would get better prices for their products? Apparently, we are subsidising farm production in Malawi, which is just distorting things.
We send aid to India and in return Indian companies come over and buy up firms
such as Tetley Tea. Perhaps we could persuade the companies to do more to counter rural poverty, which is immense in India.
Unhappily, our aid programmes seem to tie in with political/economic objectives such as selling products these countries do not need. www.searchaccountant.co.uk although we are not as brazen as the Chinese selling arms to Zimbabwe.
With New Labour our foreign aid efforts have included some right-on programmes in Afghanistan about gender, which must have perplexed the locals.

How was the credit crunch for you? Part two

In the previous instalment I now realise I was perhaps a little optimistic in saying that the worst will be over this year. The recent share price performances of Royal Bank of Scotland (RBS) and Bradford & Bingley (where the missus has 250 shares) have been terrible. www.searchaccountants.co.uk Hopefully, the banks will weather the storm but it cross-finger time on whether they raised enough money through rights issues.

The rights issues show that the British banks are very worried about the economic outlook and apparently there has been talk of a perfect storm. Alistair Darling seems to fall flat on his face when he suggests tax changes (in reality increases).
Being Gordon Brown's poodle might make sense politically for the Great Leader, but it
is terrible in terms of requiring a UK chancellor to have enough credibility to sway
financial markets.

How was the credit crunch for you?

How was the credit crunch for you? So far, our nice two year mortgage fix could not be renewed on the same terms. So, we have had to go on the standard variable rate
(SVR) and the game plan is to pay off the loan as much as possible. There has been
some financial pain but not too bad. UK fixed mortgage loans often have capital repayment limits so the standard mortgage product does not look too bad, if we can get it down.
For many UK subjects the credit crunch will be a lot more painful. The unemployment claimant count will go up and incomes will be squeezed by rising inflation. Some commentators believe that if it hits 4 pct then the Bank of England might have to increase rather than lower interest rates. That would be pain on a major scale but perhaps it would get the pound up against the euro for the holiday
season.
www.searchaccountants.co.uk
Gordon Brown says he is the man to steer the British economy through these troubled times but his main strategy is to plod until the next general election, win it and then really raise taxes. However, the prime minister seems to have lost the confidence of his own political party.
Labour must have had a pretty good idea about what they were getting into with Gordon but still acclaimed him leader. I suppose the change of view must be the expected P45s at the general election. The dispute over the 10 pence lower tax rate showed up Gordon's lack of flexibility.

Gordon Brown was walloped at question time yesterday.

Yesterday, British Prime Minister Gordon Brown was walloped at question time in the House of Commons by the Conservative leader David Cameron. When asked about the timing of the future Scottish referendum on independence, Brown just could not give a convincing answer.

The premier is facing so much internal flak from his own Labour party. Brown needs an Alistair Campbell figure to do the dirty on his enemies. This allowed Tony Blair
to look untroubled by internal opposition, although Gordon gave him a hard time.
www.searchaccountant.co.uk

Will Boris Johnson make any difference in London?

I wonder if the new Conservative Mayor of London will make any difference?
Boris Johnson has certainly hit the ground running in terms of media impact.
He also benefits from not being Ken Livingstone, who had lots of baggage such as a £28,000 annual bill for taxis. I am looking forward for the replacement of bendy buses. Can we get the old routemasters back?
www.searchaccountant.co.uk
The Labour regime underestimated Boris during the campaign and perhaps it is continuing to underestimate him, although the mop-haired one does not have the massive experience of getting things done in London enjoyed by his predecessor.

Matthew Parris says Gordon Brown could go sooner than expected.

The Times columnist Matthew Parris, and not a fan of our British Prime Minister, predicts that Gordon Brown could go sooner than expected. However, Tory leader David Cameron and his allies should make the running so as to diminish the reactionary,
right-wing section of his party. This section is a minority but is very vocal.

Well, if the general election does not have to take place until 2010, Gordon Brown has plenty of time to recover. He can start adopting popular policies and a Democrat might win the White House. While still Prime Minister, Mr Brown has awesome powers of
patronage. He is very interested in global concerns but I don't think these play very
well domestically. We have already got Bono. I think if he just withdrew the troops from Basra his popularity would recover in a single moment. The fact that Gordon Brown can't make such a move shows us the state of geopolitical issues.
www.searchaccountant.co.uk


PS> with hindsight Gordon Brown is still in office but obviously not governing. It seems to be Peter Mandelson (August 2009)

Barcelona versus Man Utd could be a cracking game!!

FC Barcelona versus Man Utd could be a terrific game with stars including Messi, Henry, Ronaldo and Rooney. Hopefully, the Old Trafford warriors will get a result such a score draw. Barcelona fans have been very
critical of their team's performance but for a one-off game they have got such wonderful players.

The Camp Nou stadium is so big sometimes there is not much atmosphere and viewing from the upper tiers can be a bit of a strain without binoculars. However, tonight should see a full house and lots of noise especially if the Catalans sing the club hymn.
www.searchaccountant.co.uk
Today is also St George's Day (Diada de Sant Jordi), which is also the patron saint for Catalonia, so I expect that it will be a supercharged game. I quite like the Marina, which is opposite the Olympic Village, with its bars and restaurants. Maybe the Man Utd fans will concentrate in the Ramblas.

Bank of England trundles to the rescue.

After the European Central Bank (ECB) poured liquidity into the continental banking sector last August, the Bank of England has decided to trundle to the rescue of the banks with a £50bn package. Those wonderful institutions, full of overpaid executives, will be able to swap mortgage loans and credit card balances for
UK government bills. Apparently, this will encourage the banks to lend to each other.
http://www.bankofengland.co.uk/publications/news/2008/029.htm
One story is that the package would have helped stave off the Northern Rock collapse.
However, this has been denied, I think by Bank of England sources, who said the Newcastle-based institution was far too gone.
People get the feeling that Bank of England governor Mervyn King wanted the commercial banks to suffer a bit of pain and maybe that will still happen. I wonder if the banks will get away with raising dividends.

Mervyn King, Governor of the Bank of England, said “The Bank of England’s Special Liquidity Scheme is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks.”

How did the Gooners let the title slip away?

At one stage Arsenal were storming ahead with the Premiership and then it slipped away with a load of draws. Obviously the Eduardo horror injury did not help, but two draws against Birmingham did not help. When Aston Villa came to town, Man Utd torched them while Villa nearly got a win at the Emirates. Arsenal need another player to shoulder the goal scoring duties with Adebayor.

On the European front Wenger was right to criticise the lack of a penalty in the first tie against Liverpool, which could have made all of the difference. Arsenal
were so unlucky.

I think Wenger would benefit from a few more English players in his line-up, which would help dig out results at clubs such as Bolton, Blackburn etc. This could help
England since the Arsenal manager has brought through talented players and made them
better.

To do well in the Premiership and we are talking about three teams, Arsenal should have gone for momentum by making a better fist of the Carling Cup and the FA Cup.
They might not have won the two competitions but the losses to Spurs and Man Utd
were very damaging.

Gordon Brown got some terrible press this weekend.

British Prime Minister Gordon Brown got some terrible press this weekend and Downing Street blamed ex-ministers. In the Saturday's Times, Matthew Parris really put the boot in saying again that the Prime Minister has no big idea and is not courageous.
Mr Parris again uses the "Wizard of Oz" description for Mr Brown and thinks the UK prime minister could go before the next election.

What is interesting is the number of ministers, both junior and senior, disagreeing with government policy such as the elimination of the 10 per cent income tax band for low earners. They don't seem to care whether the Prime Minister bears a grudge or not.

I think Mr Brown is very talented. He made Prime Minister and he also has a vision.
He wants to turn England into a version of Sweden with its expanded socialist welfare state. Mr Brown wants to dismantle the British armed forces and plans to conduct foreign policy via institutions such as the United Nations and the European Union. Obviously, this would be cheaper than having troops in Iraq, Sierra Leone etc.

Whether he succeeds in his aims we will have to wait and see. Mr Brown needs to win
the next election for his plans to bear fruit.
www.searchaccountants.co.uk

Do people think the Chinese will miss Gordon?

Do people think the Chinese will miss Gordon Brown's absence from the opening ceremony of this year's Olympics? It will probably not help Tibet but it is a shame
that we did not find out before that the British Prime Minster had a burning conviction about the Tibetans.
I think Mr Brown should be devoting his energies in getting our troops out of Basra airport. The Iraqi government does not seem to want to talk to our military and so it
looks like that the troops could come back home.
www.searchaccountants.co.uk
Mr Brown always made his disdain known for Tony Blair's wars and you would have
thought it would be one of the first things he would have resolved.

Mortality expectations - UK life insurers.

UK life insurers are being forced to provide against the upward revisions of mortality expectations. For instance, Investors Chronicle notes that Prudential
set aside £312m in 2007 to meet the changes in mortality.

The British regulatory body Financial Services Authority (FSA) has been quite vocal to the UK life insurers over the pressing need to place more funds in reserve to cover the cost of people living longer.
www.searchaccountant.co.uk

This just covers private sector pensions offered by the companies. UK public sector pensions are another matter and represent a growing problem that Prime Minister Gordon Brown is doing nothing about. Any reform will probably have to start with
the gold-plated pensions of MPs, since they can't keep these if they start cutting the pension entitlements of civil servants.

Yesterday's Olympic Torch thing was a bit of a mess.

Yesterday's Olympic Torch ceremony in London was a bit of a mess. It was interesting
to see the Chinese security detail in blue tracksuits. I suppose we are backing the
Chinese because we are terrified of any problems for the 2012 Games. We are going to
waste a fortune on redundant facilities. I wish Paris had won the Olympics.

We are going to waste a massive amount of money. Let's hope there will be some benefits for east London.
www.searchaccountants.co.uk

I assume non-doms will just leave UK.

I assume non-doms will just leave the United Kingdom rather than messing about with
the HMRC and it means that British Prime Minister Gordon Brown has managed to kill the Golden Goose, which lays the golden eggs. The City of London is already going through a downturn with UBS employees the latest to feel a bit quesy.
One problem making a move against Non-Doms is that they are so mobile. Switzerland looks good, a bit cleaner, a bit less crime. If you are a U.S citizen and already get taxed worldwide by Uncle Sam, you could always bite your lip and go back.

Gordon got a pretty unkind press in yesterday's Sunday Times.

British Prime Minister Gordon Brown got pretty unkind press in yesterday's Sunday Times.
‘Lifeless Gordon Brown’ barbs expose No10 infighting'. One complaint is that
Mr Brown uses obscene language to civil servants and they are not happy
about it. That does not square with his image as a man of the "Manse".

Apparently, his adviser Stephen Carter wants Gordon to change his public speaking
style because it is so boring. I know when Margaret Thatcher became prime minister
she received a lot of coaching to make her less shrill and perhaps Gordon will
benefit from a similar process.

Gordon Brown is to highlight Labour values at Scottish conference.

Taking the fight to the Scottish Nationalist Party (SNP), British Prime Minister Gordon Brown is to highlight the benefit of Labour values at
a conference in Aviemore. These values will help Scotland thrive in a globalised
world. Yet in London the Labour administration justify the increased public expenditure in Scotland as due to need.

I wonder what values are these? One I suppose is the continuation of Labour rule in Scotland and it must be very upsetting to have the
SNP in control by one seat. Another one is that Labour values were betrayed by
Tony Blair. Sorry that was a joke. One value to be protected is support of the Union and the continued presence of Scottish Labour MPs at Westminster.

Meanwhile, with constitutional change in the air the SNP is having its conversation with the people while attacking Labour as being controlled from London.

Does Mervyn King want to support UK banks?

Does Mervyn King want to support UK banks? I don't get the impression he does.
Following the internal audit by the Financial Services Authority (FSA) on the
Northern Rock affair, it transpires that the regulatory body had the impression that the Bank of England would intervene in the interbank market at the crucial time.
The central bank decided not to and Northern Rock found itself bust. As a former
shareholder in the Newcastle-based bank I did not mind taking the hit on the
shares when I sold but I wished the Bank of England had been a bit more proactive
like the European Central Bank (ECB) and the U.S Federal Reserve.

Yesterday, the Bank of England governor was waffling on about hubris. Mervyn King
wants the bankers to pay for their mistakes but this probably will not happen so as
to protect the banking system. He is probably annoyed as the rest of us over Barclays Bank paying one of its staff £21m. However, it is unlikely this will
take place next year.

Simplification of the (British) tax system remains a distant goal.

The St Albans accountants Gilberts considers that UK Chancellor Alistair Darling wants to see a simplification of the tax system but it remains a distant goal.
The HMRC issued 107 Budget Notes, which detailed changes.
If you need a local accountant to guide you through the changes, you can look at
www.searchaccountant.co.uk.
Gilberts says the new regime on income shifting at family companies to counter a reduction in tax will take place in 2009 rather than this year as
originally proposed.

Gordon Brown seems to be assailed on all sides.

British Prime Minister Gordon Brown seems to be assailed on all sides. The press reports that some Labour MPs are getting agitated at the prospect of losing their seats. Apparently, former Home Secretary Charles Clarke has helpfully circulated a list of possible losses. I suppose there has been a gnashing of teeth that Gordon
did not go for a general election in the autumn of 2007.

Then, there is the own goal of not allowing a free vote for the Embryology Bill. If the Prime Minister had allowed one, the legislation would have gone through and Gordon would not have had the possibility of cabinet ministers resigning over the
issue.

There is also concern about future bloodletting amongst Gordon's long-term aides.
There does not seem to be a sense of the Prime Minister trying to manage the
process humanely.

The Alistair Darling budget (part two)

I suppose the Alistair Darling budget has already been blown away with events. Previously, the UK Chancellor made a call for
old-fashioned banking and Northern Rock hit problems. Now, the U.S Federal Reserve
and J.P Morgan have had to rescue Bear Stearns. Perhaps, we should wonder how Darling would cope if more British banks hit problems. There is always the nationalisation option, although Gordon Brown must be wondering if the private sector solution to Northern Rock would have acted as a better precedent. Capacity
could have been taken out of the market, which would have hopefully led to
higher profits and capital generation.

If British banks cannot lend and therefore support the economy, they should carry out rights issues to raise new capital. The bank bosses don't want to do this since
they would lose their jobs but they might have no choice. HBOS has raised £750m at quite a high interest rate but this is quite a paltry sum given the size of the
UK mortgage bank.

Daily Telegraph columnist says Darling budget will be blown away.

The Daily Telegraph columnist Ambrose Evans-Pritchard has warned that yesterday's
budget by UK Chancellor Alistair Darling will be blown away. The columnist notes that
while the Federal Reserve is trying to rescue the mortgage industry in the United States, Darling is predicting 2 pct growth in the British economy during 2008.
However, Evans-Pritchard says that the UK chancellor has little room to manoeuvre
given the gathering storm clouds. The budget deficit is at 3 pct of GDP while Germany is running a balance.

I think economically things could be tasty this year but there is no point in talking up a recession. We should try and muddle through. The key market is housing
and if this stays the same or goes slightly up, we could get close to the 2 pct
growth forecast. However, if we benefitted from global growth in the past, we are
probably defenceless against a global downturn, although the pound is certainly taking the strain with a sharp fall against the euro. Anyway if you need a UK accountant, you can go to www.searchaccountant.co.uk

Evans-Pritchard also notes other global strains and stresses. Italy has posted a negative quarter while the housing bubbles have burst in Spain and Ireland.
Japanese multinationals have been affected by the problems in the US market.

St Albans firm Gilberts publishes Spring newsletter.

The St Albans accountancy firm Gilberts has published its Spring newsletter, which
which highlights various United Kingdom tax changes. For instance, with capital gains tax, the government is ending taper relief, which was originally brought in
by Gordon Brown. Gilberts can advise on strategies for capital gains tax (CGT).
The Labour administration wants to raise more tax from small companies. As previously announced corporation tax is to be raised by 1 percentage point to
21 pct from April 2008 on profits of up to £300,000. In addition, the government is to crack down on income shifting. This follows the Arctic Systems tax case, which HMRC lost but has not stopped it from fighting back.
Gilberts just discusses the changes neutrally. I have added words such as Gordon Brown, Labour and HMRC.

I am not looking forward to Darling's first budget.

I am not looking forward to Alistair Darling's first budget on Wednesday. I hope my
small car is not viewed as a gas guzzler and avoid attracting increased duty.
Apparently, the UK Chancellor needs more of our money and especially that of foreigners. This has stirred a real hornets nest. The City of London is basically
like Wimbledon. We hold the tournament but foreigners go and win it. Our domestic
institutions such as Kleinworts, Smiths and Warburgs sold out long ago.
I read today Anatole Kaletsky's column in the Times, which said that Gordon Brown decided to support the HMRC, which has long wanted to adjust the tax regime for
non-doms. This contrasts with the Treasury, which wanted to leave well alone.
Kaletsky is predicting some kind of climbdown on Wednesday.

TaxAssist Accountants highlights forthcoming tax changes.

TaxAssist is highlighting the forthcoming
UK tax changes such as the elimination of the 10 per cent starting income tax rate. The company notes that this will increase the tax charge for lower
incomes.
On capital gains there will be winners and losers. Although there will be a
rate of 18 per cent, indexation and taper relief will be eliminated from the 2008-09
tax year.
TaxAssist Accountants is an accountancy network, which looks after 24,000 customers. They range from personal individuals, sole traders and limited
companies.
The network notes that HM Revenue and Customs are getting tougher on family-owned companies, which will not be able to allocate profits and dividends amongst family members just to save tax.

Are UK interest rates too high at 5.25 pct?

Are British interest rates too high at 5.25 percent? They do not seem to be
supporting the pound against the euro, which seems to be on its way to 80 pence.
It just makes that French holiday gite much more expensive this summer.
Obviously, the Bank of England is concerned about inflation but lower interest
rates are needed to revive the UK economy. House prices are going down not helped
by lenders tightening their criteria for loans. It looks like the 100 pct mortgage
loan is disappearing fast, which will not help first-time buyers, who are crucial
for the housing market.
The European Central Bank is maintaining rates at 4 percent but expects higher
inflation due to energy prices. Inflation for 2008 should be between 2.6 percent
and 3.2 percent.

Altmann warns on Northern Rock pension gap.

Money Marketing cites pensions campaigner Ros Altmann, who says that the trustees of
the Northern Rock pension scheme must take advantage of the bank's nationalisation
by asking the UK government to fill the estimated £100m deficit. Altmann says any
future sponsor will not match the government in terms of strength.

Credit Suisse suspends traders

Swiss bank Credit Suisse suspends some traders over inflating mortgage backed bond investments by $2.85 billion which will contribute to a reduction of $1 billion
in 2008 Q1 profits.

It seems that even the bluest of blue chip institutions are being badly affected by the global financial crisis. This follows January's news of 500 job cuts at the investment banking division of Credit Suisse.

Bank of England cuts interest rates by quarter point.

The Bank of England has cut interest rates by a quarter of a point today (Thursday, February 7th) to 5.25 pct from 5.5 pct. Will it make a difference to the UK economy? Former Deputy Governor of the Bank of England,
Sir Howard Davies, forecasts that there will be either a slowdown or
recession whatever happens.

Davies is Director of the London School of Economics and has had a wide career. He even supports Manchester City hailing from the great city.

Today (Thursday) the Bank of England said inflation risks had worsened. So why did'nt the bank lift interest rates? I suppose we have got ourselves in a bit of a hole. The U.S Federal Reserve has been ignoring its inflation risks as well by cutting interest rates.

Credit crunch (part 4?) hits United Kingdom.

The financial bigwigs are not sure when the credit crunch will be over but there are fears concerning the British consumer if the tap of easy credit is turned off.
The Daily Telegraph's Jeff Randall had a programme last night on ITV, which he plugged in yesterday's article "Debt juggernaut rolls us into madhouse". Randall
said there could be serious problems for house buyers, who used 100 per cent
mortgages.

The journalist said the banks were partially to blame, showering cheap money on customers, when interest rates hit very low levels between 2003 and 2004.
He noted the increase in credit card bad debts, which rose from the 2002 figure of
£1.1bn to £2.8bn in 2006 (with the assumption of worse to come). However, the
customers have to take the blame, when they abandoned personal responsibility.

Liam Halligan writes perceptive article about King re-appointment.

In yesterday's Sunday Telegraph, former Channel Four economist Liam Halligan has written a perceptive article about the belated re-appointment of Mervyn King as governor of the Bank of England. Halligan describes King as one of the few world-class economists in the United Kingdom and attacks the dithering of British Prime Minister Gordon Brown. The colummist considers Brown Nero-like and cites unnamed sources in Whitehall, who believe the Prime Minister finds decision-making extremely
difficult while others claim that Brown just likes playing cruel
games.

The Prime Minister's long-term adviser, Schools Minister Ed Balls, has said recently
that interest rates were low and were coming down. This reflects a government battle for lower and sooner rates.

I have always had the sensation that UK interest rates have always been too slow to come down and too quick to go up. Compared with the hare of the U.S Federal Reserve, the Bank of England is a bit of a tortoise.

Spanish banking sytem going for a bust?

Yesterday, the Daily Telegraph published a thoughtful article on the Spanish banking system saying that the national market for mortgage-backed securities has shut down.
The major Spanish banks and savings banks are making major borrowings direct from the
European Central Bank (ECB). There is concern about the Spanish property market, which I think is way overpriced. The market for costa properties has stopped functioning and there is going to be a bit of a bust after so many boom years.
However, it is still a great place to live!

Is it goodbye to the Non-Doms?

There was an interesting article in last Saturday's Daily Telegraph with the
title "UK TAKES A GAMBLE AS TAX CHANGES LOOK SET TO DRIVE NON-DOMICILES AWAY".
The article considers that the proposed legislation could have a serious impact
on London as a financial centre (more than Red Ken's drinking?).

I still wish I was a Non-Dom and fly away to Geneva or Monte Carlo despite
their lack of Premier League entertainment. Apparently, there could be a fall
in prices of premium properties in the United Kingdom's capital.

Anything involving HM Revenue and Customs
is going to be overly-complicated and the Telegraph comes up with a couple of examples.

Religion and tax evasion/tax avoidance.

I thought I take a look at religion and the knotty problems of tax evasion and
tax avoidance. Last year AccountancyAge reported that the Roman Catholic leader
Pope Benedict XVI was going to back then Italian prime minister Roman Prodi's campaign against tax evasion. The pontiff was to emphasise taxes benefit the whole of society.

This is probably not the case in the United Kingdom where health expenditure, funded by general taxation, has become heavily-skewed towards Labour Party constituencies.
I can't understand why the Tories don't oppose this.

Back to the Pope, who has resisted Gordon Brown's invitations to make a visit to
Britain, is using an encylical to emphasise that tax evasion is socially unjust.

Is British prime minister Gordon Brown insane?

Is British prime minister Gordon Brown insane? I suppose that it is a leading question but I was spluttering into my cornflakes this morning when I read the
following in the Daily Telegraph:
""Every unemployed person should have a skills check to make sure that Britain raises its skills game to world-class."
Does Gordon believe this guff? What unemployed people need is probably a supply of local low-skilled jobs, possible incentives of lower benefits and improved education
opportunities. None of these are going to happen in today's
United Kingdom.
Most of the new jobs created in Britain have gone to immigrants and unless the
government reverses that policy then unemployment is going to be stubbornly
high.

Matthew Parris has another go at Gordon Brown!

Saturday Times' columnist and former Tory MP, Matthew Parris, has had another go at
British Prime Minister Gordon Brown. In the affair of Peter Hain, elsewhere described as the Cuprinol kid, Parris claims that Brown seems to be franchising out his moral compass to contractors (Electoral Commission etc). The columnist contends that the Prime Minister should have either backed or sacked Hain, who overlooked
£103,000 in donations.
U.S readers might start giggling at the small amount given the massive amounts that
slosh through their democratic system. Anyway quite a few Labour MPs are having to explain themselves for infringing rules they actually brought it such as Harriet Harman, who actually beat Hain amongst others to become deputy leader of the
Labour Party.

Peter Hain walks the plank.

British Labour politician Peter Hain has walked the plank. He resigned from the Cabinet post of Work and Pensions minister. Famously, he was not a details man and
was probably in the wrong job. Hain certainly forgot to inform the authorities of
the various donations to his failed campaign to become deputy leader of the Labour Party. The Neath member of parliament was scuppered by the lack of support from Prime Minister Gordon Brown and by the Electoral Commission referring the case to the
police.
It is amazing the turn around by the UK Chancellor Alistair Darling on the issue of Capital Gains Tax. His original plans were hit by major criticism. There is to be a 18% rate and an ending of taper relief.
If in doubt about Captial Gains tax you can contact an accountant via www.searchaccountant.co.uk

Roger Wood & Co publishes January newsletter.

Dorset based accountancy firm Roger Wood & Co has just published a news letter for January. One of the articles is on the new invoice rules for VAT.http://www.rogerwoodltd.co.uk/newsletter.asp?switch=9559

Gordon Brown struggling with pay reviews.

It is intersting to see Gordon Brown,uk prime minster,is struggling with the pay reviews of the public sector. While trying to persuade his own colleagues in Parliament to be more moderate in their own pay demands.