Hammond’s fiscal blunder almost guarantees a hard-landing

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The UK Treasury has imposed its super-cautious view on the Chancellor, but caution holds its own dangers

Philip Hammond has succumbed to the fatal caution of the Treasury.  A rare chance has been wasted. Britain must now face the full storm of the Brexit downturn next year and the year after without any precautionary buffer worth the name. A hard landing is all but guaranteed. If the Chancellor had wished to launch a barrage of investment on the country’s rickety infrastructure and do something to lift productivity from the bottom ranks of the OECD league, there could scarcely have been a better global climate. All the stars are aligned.

Ambrose Evans-Pritchard of the Telegraph


The OBR has fallen prey to Project Fear pessimism

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It tells you quite a lot when the main measure, withheld until the last moments of the chancellor’s speech in order to increase the dramatic impact, appears to be a swap in timing between the Budget and the Autumn Statement. But that is the story of the Chancellor’s supposedly major statement yesterday.

This seems to mean that next year we shall have two budgets. But afterwards we are going to have only one proper Budget, in the autumn, and a spring statement, of much lesser import, in March. I wouldn’t bank on it, though. We have been here before. In the end chancellors cannot resist the urge to meddle and tinker twice a year.

As in recent years, the amount of borrowing that the chancellor says he is going to do is dominated by what the Office for Budget Responsibility (OBR) says is going to happen to the economy. But, as we all know, it hasn’t got much of a clue.

Roger Bootle of the Daily Telegraph


Access to Justice group urges MoJ to “listen to ordinary working people”

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Access to Justice group urges MoJ to remember Theresa May’s pledge to “listen to ordinary working people” when considering whiplash reforms

Access to Justice (A2J), the claimant lawyer lobby group, has called on the Ministry of Justice (MoJ) to remember the pledge made by the Prime Minister when she took office to listen to “ordinary working people” rather than “the powerful” when considering plans to reform whiplash claims.

“We urge ministers to bear this in mind as they assess the evidence during this consultation,” said Andrew Twambley, spokesperson for A2J. The consultation paper outlines plans drawn up by the MoJ to scrap the right to compensation, or put a cap on the amount people can claim for minor whiplash injuries. Capping compensation would see the average pay-out cut from £1,850 to a maximum amount of £425 and compensation would only be paid out if a medical report was provided as proof of injury.

“The rights of ordinary people are more important than cost savings accruing to insurers, and our research has shown that 77% of the public do not trust insurers to hand back any savings made to customers via lower car insurance premiums,” said Twambley.

“Very real concerns have been expressed by a number of organisations that, if these reforms become law, insurers will benefit at the expense of millions of ordinary people who will lose their rights of redress if they have an accident that is not their fault.” He added that although the group welcomed the MoJ consultation, as it gave lawyer and insurers the chance to engage properly with the Government, the timescales for responses were disappointing. The MoJ has decided to close the consultation on 6 January 2017, which, he said, effectively meant that three weeks will be lost due to the Christmas and New Year holidays. Qamar Anwar, managing director of First4Lawyers, said that the proposals were far worse than anyone could have anticipated and that they did nothing other than benefit the insurance industry.

“We sincerely hope that there is a real consultation and that this isn’t a ‘done deal’ as the language of the announcement suggests.

“Last month it seemed that the government had put a brake on reform. We hoped that it would consider a more measured approach that put injured parties at the centre of any changes.

We were wrong. Far from reducing premiums, reforms to date have only increased insurers’ profits and there is no reason to believe that it will be any different this time. The government has no mechanism to monitor and enforce lower premiums. A ban on pre-med offers is welcome, but frankly insurers will not have to make them if the proposals are forced through in their current guise.This is simply a licence for insurers to print cash.” Kennedys partner Ian Davies said that he expected to see a forceful response to the reforms as the consultation paper appeared to go further than was previously proposed.

“In particular, we anticipate an outcry from those who deal with injury claims outside of the whiplash space who will be affected by the proposal to increase the small claims limit for all personal injury claims,” he said. Meanwhile, Nigel Teasdale, the President of the Forum of Insurance Lawyers (FOIL), said that the consultation was a great opportunity for “significant reform”.

“We need to focus on getting the detail right to deliver a workable, effective new process,” he said.

“Several other consultations are in train or pending and this offers a real opportunity for a joined-up approach by the MOJ and other interested parties to achieve comprehensive, cohesive reform.”



Government sells more shares in Lloyds Banking Group

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The government has reduced its stake in Lloyds Banking Group to just below 8%, as it continues to try and return the lender to full private ownership.

It means the taxpayer now owns 7.99% of the bank, down from the 43% share it held following the lender’s bailout at the height of the financial crisis. Sales were suspended in January because of market volatility. But UK Financial Investments (UKFI), which manages the government’s stake, said last month it would resume sales. However, it abandoned plans for a share sale to the public, saying current market volatility meant the move was not sensible.

Instead, the government is now continuing to offload the holding to institutional investors. “Today’s announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back,” Lloyds said in a statement.

The bank received £20.5bn in total from the government during the financial crisis. The government has recouped more than £17bn of that money since UKFI began selling the stake off in 2013.

BBC business




Jeremy Corbyn: Hard Brexit Would Be Damaging

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Pullout from EU single market would be ‘very very damaging’

U.K. will have to negotiate on customs union, Corbyn says

Opposition Labour Party leader Jeremy Corbyn said business leaders and trade unions have expressed concern that Britain is heading for a “hard Brexit” that would be “very very damaging” for the U.K. As Prime Minister Theresa May prepares for negotiations to leave the European Union, Corbyn said his party will campaign for continued access to the bloc’s single market and called on May to set out her plan and a timetable once talks are triggered by the end of March next year. “A hard Brexit where you end up in a tariff war between Britain and Europe, when more than half of our trade is with Europe, would be very very damaging indeed,” Corbyn said in a Bloomberg Television interview at the Confederation of British Industry’s annual conference in London on Monday. “I’ve had plenty of concerns expressed, every business I’ve met, every trade union I’ve met, every group of residents and workers I’ve met are concerned about it.” Corbyn said Britain will have to negotiate membership of the EU customs union, adding that, while his party wants access for British companies to trade, it should not sacrifice the right to re-nationalise companies and intervene in struggling industries such as steel in order to guarantee market access.

“The issue is also about questions of the power of national governments to invest in their own industries and also the power of national governments to take industries, such as rail companies, into public ownership,” Corbyn said. “We don’t wish to join an organisation that restricts us in doing that.”

Human Rights  

The Labour leader said he’s seeking “to be able to trade with the rest of the world, but also have a human-rights and environmentally sustainable agenda on trade policies as well, and I’m not convinced that would be possible.” Corbyn said the vote to leave the EU, like the election of Donald Trump in the U.S., was a cry from the victims of a “failed economic consensus” that needs to be overhauled. “Both Britain’s decision to back Brexit and the election of Donald Trump are an unmistakable rejection of a political establishment and an economic system which hasn’t been working for most people,” Corbyn said in a speech to CBI delegates. “It’s a system that’s delivered ballooning inequality along with falling or stagnating living standards for the majority.” The concerns of those “left behind” by globalisation need to be addressed through greater government intervention and investment in public services. He called on Chancellor of the Exchequer Philip Hammond to reverse cuts to government support for workers and introduce a “real living wage” in Wednesday’s Autumn Statement. Corbyn asked business leaders to be prepared to pay more tax and communicate better with their workers in exchange for government investment in innovation and development if Labour wins power. “Labour will be on the side of the innovators, entrepreneurs and investors that our economy and our workforce need. We will use public intervention to unleash the creativity and potential of entrepreneurial Britain,” Corbyn said. “In return, we ask you to be open to listening to the workforce, in the boardroom as well as the shop floor. Open to investing in Britain, and paying a bit more corporation tax to make this country more productive and fairer.”

By Thomas Penny & Nejra Cehic

November 21, 2016 — 6:22 PM CET




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