Which? Appeals To The Office Of Fair Trading Over Extortionate Card Charges

Which? has accused many well known companies from hoteliers to cinemas of charging inflated processing fees on transactions carried out by debit and credit card. Banks charge around ten pence to businesses for facilitating a debit card transaction; however the low budget airline Ryanair charges a five pound each way surcharge on a ticket purchased by debit card. These rip-off charges have been banned in other European countries such as France and Germany while customers in the UK are still being robbed blind.

Previously, the banks have been blamed for these fees but Which? insists that they are not to blame. The fact is the charges do not reflect the real cost incurred by businesses. Which? has submitted an appeal to the Office of Fair Trading, now they must wait for a decision from the OFT to decide whether regulations or even the law need to be changed.

Parents Hit By ‘Child Penalty’ When Applying For Mortgages

Mortgage lenders are giving less generous lending terms to parents with young children than to childless couples. Childless couples can borrow up to 50% more than families with children, even if both families take home the same wages. Mortgage companies argue that the cost of raising children can result in parents not paying off their debts whereas childless couples have fewer outgoings and therefore are more likely to pay back their mortgage.

This kind of client analysis carried out by mortgage companies is a far cry from the practice of fifteen years ago when mortgage companies simply lent a couple a multiple of their combined income – usually three times their salary. These ‘affordability checks’ are all part of mortgage companies’ policy, devised to ensure that mortgages are paid back. A further symptom of this intense client scrutiny is that fewer mortgages are handed out: In the UK around 1500 mortgages are agreed per day as opposed to 4000 fifteen years ago.

House Prices Rise By 0.8% From December

The Halifax House Price Index released this week found that the price of the average home in Britain rose to £164,173 last month. Although this is positive news, Halifax have warned that the 2011 house market is likely to be characterized by consumer caution as the double edged sword of government spending cuts and increasing tax rates will undoubtedly wound consumer confidence.

The prospects of the housing market are inevitably going to reflect the state of the economy at large. The difficult Christmas period is now behind us and there may be a little sunshine just around the corner. Martin Ellis, a Halifax housing economist made a statement that advised that ‘the recent downward trend in prices is causing homeowners to be more reluctant to put their properties on the market. This development should help to relieve downward pressures on prices as long as it is sustained’.

Tough Times Ahead As Food Prices Are Predicted To Soar

The UN Food and Agriculture Organisation has made a statement predicting that food prices will rise to an all time high as supplies of key crops become stretched. In the UK the average shopping bill has increased by 6.1% but this is just a taste of what is to come. One of the underlying problems is the increasing price of corn which is used in animal feed: As the price of feeding livestock goes up so does the cost of meat.

So far British pig farmers have had to bear the brunt of price increases but they are now demanding higher payments from the supermarkets. The National Pig Association warned: ‘Currently there is a shortage of British pork, bacon and sausages. Farmers cannot afford to keep producing it.

It would seem that supermarket prices are unsustainable and they simply have to rise.

Fears Of Double-Dip Recession as UK’s Economy Declines

Data released today has revealed a shocking 0.5 percent decline in UK’s economic growth in the last quarter of 2010, sparking fears of a double-dip recession.

Following four straight quarters of economic growth, today’s figures have come as a huge surprise to economists who had forecast a growth rate of up to 0.6 percent.

The government has highlighted the severe weather during October and December as the reason for the contraction, citing extensive weather related losses in the retail, transport and construction industries.

However, experts have stated that whilst the weather can be considered a factor, the coalition’s spending cuts may also have proved too much for the UK’s increasingly fragile economy.

The UK has seen a 0.5 percent drop in the key services sector as a result of spending cuts, which contributes to more than 75 percent for the economy.

Howard Archer, European and UK economist for IHS Global Insight branded the data as, “a performance far worse than even the most pessimistic of forecasts.”

“This weakness cannot be put down only to the weather,” he claimed,  “It reinforces already serious concern over the economy's ability to grow significantly in the face of the spending cuts and tax hikes that will increasingly bite as 2011 progresses.'

The poor growth rate will now prevent an imminent rate rise, according to analysts, despite the need to offset rising levels of inflation.

Fears of ‘Jobless Generation’ As Youth Unemployment Reaches Record High

The latest employment figures released on Wednesday reveal that the number of young people suffering from the UK’s dwindling job market has reached a record high.

The official figures reveal that almost a million young people between the ages of 16 and 24 are now unemployed, sparking fears of a ‘jobless generation’.

Since 1992 when records began, the youth unemployment rate has risen 20.3 percent, with a particularly sharp rise in the number of 16 and 17 year olds classified as out of work rather than in education or employment.

The slowing economy has been blamed for the lack in job opportunities as well as reluctance by employers to recruit younger workers.  In addition, recent changes to retirement laws are enabling older people to work for longer, leaving fewer vacancies for the younger generation.

Graduates are also finding it increasingly difficult to find work and are being encouraged to undertake voluntary internships alongside their studies.  However, the rising cost of student fees mean than most students cannot afford to work unpaid.

This is compelling evidence of the way in which the last Labour government completely failed a generation of young people,” says Employment minister Chris Grayling.

Ministers claim that the figures have been skewed by the numbers of youth in full-time education seeking part time work.

Interest Rate Hikes Could Cost Households £1800 Per Year

UK Households could find themselves having to pay an extra 1800 per year interest on their debts if interest rates are hiked as predicted.
A study published on Monday by Pricewaterhouse Coopers forecast that the current central bank base rate of 0.5 percent will rise to 5 percent over the next four years, possibly starting as early as June this year.

The news is worrying for UK households who are already struggling from the recent VAT rise, wage cuts and rising costs of petrol, food, clothing and energy.

However, many City analysts believe that a rate rise is necessary in order to curb the escalating levels of inflation as retailers will be forced to lower prices if consumers have less to spend.

Philip Shaw, economist at Investec said that the Bank of England is under pressure to address the inflation issue with both the Consumer Price Index and Retail Price Index way over the government target of 2 percent.

'We were originally forecasting that interest rates wouldn't rise until the back end of 2011 but there is a real risk the Bank of England's monetary policy committee will have to raise rates sooner rather than later to protect its credibility,' Mr Shaw said.

Yet some members of the Coalition and other in the City believe that a sudden hike in interest rates could be extremely damaging to the UK’s economic recovery and put the country as risk of a double-dip recession.

They believe that inflation will automatically drop over the next two years without the Bank of England having to take action.

End To Enforced Retirement As Government Scraps DRA

The end of the UK’s Default Retirement Age will be announced in the House of Commons today, preventing employers from forcing their employers to retire at the age of 65.

The phasing out of the DRA, which currently forces people to stop working at 65, will be revealed in a ministerial statement by Business Minister Ed Davey and will not require legislation.

From the 6 April this year, employers will no longer be able issue compulsory retirement and only those due to retire before 1 October will be forced do so under the DRA.

The new rules mean that by October there should be an additional one million employees aged 65 or over in the nation’s work force.

Whilst the Department of Business claims that the changes will benefit both individuals and the economy, employers fear a greater risk of legal issues such as unfair dismissal claims.

John Cridland, the deputy director general of The Confederation of British Industry told the BBC last month that the scrapping of the DRA could open up a ‘legislative void’.

"In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone," Mr Cridland said.

There are also fears that an ageing workforce will result in less job opportunities for the young.

The government will also be outlining a new Pensions Bill today which will see the state pension age raise to 66 by 2020 for both men and women.

Cameron under pressure to curb fuel prices as protest fears mount

David Cameron came under increasing pressure over the weekend to curb the UK’s mounting fuel prices ahead of threats of protests around the country.

Following a double rise from last week’s VAT increase and hikes in fuel duty, the cost of petrol has soared to almost £1.30 per litre angering motorists across and sparking fears of protests at the pumps.

Petrol station bosses also fear that the increase of 3.5 pence per litre will result in more criminal behaviour as motorists fail to pay after filling up their tanks.

Shortly before the General Election last year, Mr Cameron promised to introduce a ‘fair fuel price stabiliser’ which would see fuel duty drop in response to a rise in oil prices. At this time petrol prices were at a record £1.20 a litre.

Over the weekend Mr Cameron spoke about his pledged stabiliser policy stating, ‘We’re looking at that. It’s not an easy thing to put in place, but I would like to try and find some way of sharing the risk of higher fuel prices with the consumer.’

However, he later seemed to back track on his promise when he told the BBC, ‘I don’t want to raise people’s hopes too far because it is a difficult issue.’

John Redwood, former Tory Cabinet minister has publically implored the Prime Minister to introduce the policy immediately and to cut the price of duty to help struggling households and businesses.

It is thought that the Treasury will commission an independent assessment of the stabiliser proposal before any decision is made.

Protect Yourselves!

“Spear Phishing” is the new term being used to describe the poaching of information from us, with sophisticated criminals targeting your computer, hacking into your personal information by using new kinds of corrupt software.

It is described by analysts as an “ingenious” and “malicious” method of identity theftand it effectively allows criminals to take complete control of your computer. One of the method’s use is a kind of email development that attacks your inbox to provide the intruder with vital pieces of your personal information.

Government employees and contractors have fallen victim to the ruse which only kicked in over the past holidays season, reeking havoc as naive innocents were conned into downloading the self-strengthening programme.

Let this be a lesson to us all. With identity theft becoming more and more sophisticated, we really must do all we can to protect ourselves. Obtaining identity theft protection is a way to create a virtual alarm bell for any unusual activity.

VAT Rate Rise

The VAT rate has risen from 17.5% to 20%. The increase has been catalysed by the government who are aiming to cut its deficit by boosting tax revenues.

At the beginning of the summer, George Osborne (chancellor) commented that the hike should, if all goes to plan, raise £13 billion a year by the end of parliament-an amount which would help patch up the deficit.

Those things that are excluded from the rate hike are food, children’s clothing, newspapers and magazines.

Criticisms of the move are aimed at Osborne and the government and they focus on the fact that shops and retail will be severely affected by the changes. Along with this, they comment that those families with the least money are likely to be hit the hardest.

Among those who criticise the plans are labour leader Ed Miliband who believes that now is not the right time to introduce rate hikes-seeing as there are many other government spending cuts which families are trying to cope with. He described the decision as “wrong tax at the wrong time.”

It’s a dog’s life

“A dog is for life not just for Christmas” the saying goes and there is a lot of truth in that statement. When you acquire a pet it becomes a part of the family very quickly, and the cost of any medical treatment can become very expensive. This is why it is worth taking out pet insurance. The level to which you want to insure your pet is up to you but coverage which provides medical care can save you a lot of money. Most companies will give you an option of accidental or comprehensive cover.

Accidental will provide cover for your pet in the event of accidental injury, including costly items like consultations with your vet, specialist care, hospital stays and prescription medicines.

Fully comprehensive will be packed with reassuring features. It should cover 100% of your veterinary bills in the event of an accidental injury, it also covers you if your pet should suffer an illness.

Credit Card companies challenged by Competition Watchdog

Major credit card companies have been challenged by Canada’s competition watchdog over the rules they force upon retailers.

Canada’s Competition Bureau last week filed for a Competition Tribunal against Visa and MasterCard claiming that the credit card providers’ mutual ‘no-surcharge’ rule, among other policies, is eliminating competition between them.

Under Visa and MasterCard’s current policy, retailers are charged between 1.5 and 3 percent per credit card transaction but are prevented by the ‘no-surcharge’ rule from adding on a surcharge to offset the extra cost.

As a result, many retails are offsetting this cost by adding it to the price of products, clearly disadvantaging the consumer.

Competition Commissioner Melanie Aitken claims that, “Visa and MasterCard's anti-competitive behaviour hurts businesses and consumers alike.”

“Without changes to the rules, merchants will continue to face high costs for credit card acceptance, while consumers, even those who use lower-cost methods of payment like debit or cash, will continue to pay higher prices.”

The Competition Bureau also plans to take action against credit card policies which prevent retailers from encouraging customers to use more cost-effective methods of payment such as cash and debit.

However, MasterCard fears that credit cold holders may end up being penalised by facing higher charges.

It is estimated by the Bureau that Canadian retailers pay around $5 billion per year in hidden credit card costs, one of the highest levels world wide.

Canadians Debt-To-Income Ratio Higher Than Americans

The debt to income ratio of Canadians is now higher than Americans for the first time in over ten years according to information released on Monday.

The ratio of household debt to disposable income has climbed to a high of 148.1 percent, Statistics Canada announced on Monday, a 6.7 per cent rise on last year’s figures.

The Canadian ratio is now higher than that of the United States which is currently at 147.2 percent.
Bank of Canada Governor Mark Carney spoke in Toronto earlier this week about the rising debt amongst Canadians and the danger of borrowers being lured by historically low interest rates.

Mr Carney warned that whilst current low interest rates make borrowing seem relatively cheap, the costs will climb again and people may find themselves in financial difficulty, especially as the debt load of many Canadians is rising faster than their incomes.

Policy makers must now decide how best to safeguard Canada’s economy - reduce spending and risk limiting the country’s recovery or risk the population sinking further into debt.

Mr Carney said, “The responsibility obviously starts with the individual, it extends to the financial institutions, and then we as policy makers need to ensure that a suite of policies are appropriate to ensure sustainable growth.”

Canada’s income level has also fallen 1.5 percent during the last three months.

Banking Reforms Met With Mixed Reviews

Banking reforms proposed by the Australian government over the weekend have been met with mixed reviews.

The reforms, which include banning mortgage exit fees from July 1st 2011 and providing small lenders with new funding avenues, were announced by Federal Treasurer Wayne Swan on Sunday.

Mr Swan has pledged to increase competition in the banking sector to help reduce interest rates and ease the burden for businesses and mortgage holders. In addition, he has empowered the Australian Competition and Consumer Commission to act on price signalling.

He stated that the package would "build up competition in our banking system, which will ensure that interest rates are lower over time".

Consumer group Choice welcomed several aspects of the reforms including the transferability of lenders’ mortgage insurers, mandatory fact sheets for home loan customers and the ban on exit fees. They also approved of the review of ATM fees and the credit card reform legislation.

However, economists fear that the proposed ban on mortgage exit fees could be potentially damaging for smaller lenders.

Shane Oliver, head of investment strategy at AMP Capital Investors warned that if banks are no longer able to charge high exit fees, they will be equally unable to offer low mortgage rates:

'If exit fees are banned for mortgages, it could actually force up mortgage rates for some of these non-bank providers'

The Green party also argued that whilst long overdue, the cuts in ATM fees were only part of the solution to a larger scale banking fee problem which costs many Australian households up to $1000 a year.

Aussie Gains On High Employment Statistics

The Australian dollar made gains yesterday following the release of statistics which show the largest rise in employment since January.

The Australian Bureau of Statistics reported on Thursday that the country’s employment reached 54,600 in November, exceeding the expected increase of 20,000 and reducing the national unemployment rate by a further 0.2 percent.

Following the release of the data at 1130 AEDT, the Australian dollar increased half a US cent trading at 98.40 US cents, up from Wednesday’s close of 97.89 cents.

Adam Carr, senior economist for ICAP said that the positive influence of the employment figures on the economy was clear and may prompt the Reserve Bank of Australia (RBA) to raise the cash rate in next year’s first quarter.

"The RBA gave a fairly neutral signal to us when they met (on Tuesday) and this data today shows why the RBA's pause isn't going to be that long," Mr Carr said.

"The chances of them being on hold until June next year is, I think, effectively zero."

It is estimated that more than 50,000 people joined the workforce in October, creating the second largest employment rise in Australia since 2006.

Analysts hope that these latest statistics signal the continuing rejuvenation of the Australian economy.

Sterling Strengthens On Back Of Manufacturing And Retail Highs.

The Great British pound strengthened against its rival currencies on Tuesday as it was announced that the UK’s manufacturing output had reached a seven month high.

Buoyed by news of higher than expected manufacturing figures and retail sales, the pound sterling climbed 0.95 percent against the euro and reached a two week high of £1.5821 against the US dollar.

UK retail sales grew a healthy 0.7 percent last month, maintaining October’s increase of 0.8 percent. The output of UK manufacturing also climbed, reaching 0.6 percent for October and exceeding the expected increase of 0.4 percent.

The manufacturing output rate is the highest recorded since March this year, prompting optimism for the UK’s economic recovery.

Briain Hilliard of Société Générale said that he expects further gains in November:

"Stronger utility numbers with the colder weather should also give a pick-up in industrial production. It shows the economic recovery is continuing, although of course we need to look at the services side too. The biggest influence on the Bank of England will be the inflation profile and we know that is problematic."

It is thought that the figures are unlikely to prompt the Bank of England to make any changes in interest rates over the coming months.

Meanwhile all eyes are on the performance of the Euro as Ireland’s toughest austerity budget is passed its first parliamentary vote.

Canada Unemployment Reaches Two Year High

Canada’s unemployment has reached its highest rate in almost two years, according to the Labour Force Survey released by government agency Statistics Canada on Friday.

Unemployment rose to 7.6 percent in November, a significant increase from October’s rate of 6.2%. This translates to 1,426,900 million unemployed Canadians, far more than were initially made jobless when the recession hit in 2008.

A huge decline in the number of manufacturing related jobs is thought to one of the major causes of the unemployment rise. Whilst 1 in 5 Canadians had manufacturing related employment three decades ago, that number is now 1 in 10 – the lowest rate since data began in 1976.

The Statistics Canada survey also revealed a decline in the quality of jobs available over the last year with an increase in temporary, part time and poorly paid work.

Ken Georgetti, President of the Canadian Labour Congress said, “We have a problem with both the number of jobs being created and their quality. We have to focus on creating full-time, family-supporting jobs”
He stated that Canadian workers are still being affected by the deep recession of 2008 and that employments rates would be even higher if it were not for the determination of the Canadian people to find work.

The survey’s figures also highlighted an East-West divide in the country.

The employment rate in Ontario and eastern provinces is teetering above the national average whilst in Manitoba and western provinces joblessness is well below average.

Australia's Economy Growth Lower Than Expected

Australia’s economy grew by just 0.2 percent in the September quarter, the Australian Bureau of Statistics announced yesterday.


The country’s gross domestic product (GDP) was measured at 2.7 percent, much lower than the 3.4 percent rise expected by market consensus. The result was also down compared to the 1.1 percent rise of the June quarter.
The Australian dollar immediately fell from 96.08 US cents to 95.65 following the release of the figures at 11.30am (AEDT) on Wednesday, although later regained ground.

The share market also closed flat with a mere 0.05 percent increase in the benchmark SP/ASX200 index and a 0.01 percent increase in the broader All Ordinaries index.
Despite a muted response from the markets, Treasurer Wayne Swan insisted that the GDP figures showed proof of a resilient economy.
'Today's GDP figures are another solid result for our economy in the context of a world economy which is fragile,' he told Canberra reporters.
'There are bumps in the road for our economy but Australia's fundamentals and growth prospects remain strong.' He added, 'we are determined to continue our plans to build a stronger, broader, more competitive economy.’

The Treasurer pointed to several positives in the September quarter including a 0.6 percent increase in household consumption and the creation of 105,000 full time jobs.

The Eurozone still remains unstable

Nouriel Roubini, chairman of Roubini Global Economics more commonly known as ‘Dr. Doom’ does not believe that the €85 Billion Bailout of Ireland is enough to stabilise the Eurozone. 

While many agree that such a small sum is not nearly enough to restore confidence in Europe,  Mr Roubini goes further and suggests that Spain’s current position is extremely unstable and the amount which the Spanish government is projecting as a figure to cut debt is far too small and next year it is likely that the Spanish will be asking for a bailout.

While it is not all gloom in Europe with Italy, Germany and the UK performing better than expected the danger of the debts of Spain and Portugal are very much apparent in the minds of investors.

The value of the Euro continues to decline against both sterling and the dollar. Meanwhile the Dollar goes from strength to strength. It’s position as a safe haven currency has been beneficial while uncertainty over the Korean peninsula continues.