NatWest Funding For Lending Scheme

NatWest Bank announce details of the government’s Funding For Lending Scheme and how this can benefit small businesses in the UK. The Funding For Lending Scheme is designed to promote increased lending to small businesses at lower rates of interest.

Please see the NatWest article for more details by following the link on our homepage or accessing the link below:

http://belsizeaccountancy.co.uk/natwest/

NatWest have £2.5 billion available to lend under the Scheme. If you believe your business is eligible for a new loan you should act now as the Scheme is on a first come first served basis. Belsize Accountancy are happy to assist your business in raising finance by providing necessary advice and review of business plans and forecasts.

The Chancellors’ Autumn Statement

Chancellor George Osborne released his Autumn Statement on Thursday. Overall the Statement did not include any significant changes to Budgetary policy and offered no new ideas to tackle the huge Budget deficit in the UK. However, there were a few points of note:

-The UK Growth Forecast was found to be too optimistic and has been downgraded. The UK economy is forecast to shrink by 0.1% this year and to expand by just 1.2% in 2013. Household spending is at a 14 year low.

-George Osborne will be sticking to his fiscal consolidation programme and the fiscal squeeze is likely to last another 6 more years. Austerity measures are likely to continue throughout 2013 and George Osborne will continue to target tax avoidance.

-The Chancellor will place additional taxes on the rich, the unemployed and the squeezed middle.

Proposed tax changes:

-The Personal Allowance will increase to £9,440 from April 2013. This will provide a boost to the lower paid.

-The threshold for the 40% Higher Rate of tax will increase by 1% from 2014. The increase is likely to be below inflation and will result in more people falling into the 40% tax band.

-The Annual Tax Free Allowance for Pensions will be reduced from £50,000 to £40,000 from April 2014. The lifetime limit will fall from £1.5m to £1.25m. This change could have a significant impact on pensioners with defined benefit schemes.

-The inheritance tax nil rate band will increase to £329,000 from 6 April 2015.

-The main rate of Corporation tax will reduce to 21% from April 2014.

-From 1 January 2013 the annual investment allowance (AIA) will increase from £25,000 to £250,000 for two years as the chancellor bids to promote capital spending for businesses.

There are two key changes which will affect UK contractors and small businesses. The increase in the AIA will be significant for businesses that can take advantage of the tax relief against their capital expenditure in 2013 and 2014. Contractors with high income may be affected by the reduction in the pension allowance. For further advice, please contact Belsize Accountancy.

Global Economic Update

The major Western Economies face the prospect of either inflation or deflation due to the impact of low growth, authority, quantitative easing and low interest rates. Major policy holders such as the Federal Reserve, the European Central Bank and the Bank of England appear oblivious to the risk of inflation and have indicated that they may well start up the printing presses again in order to stimulate the economy. The Bank of Japan has followed suit and has also embarked on a significant bout of quantitative easing in order to bring the value of the Yen down and support it’s manufacturers.

This is an unusual situation in that all of the major economies are printing money at the same time. As such, the impact of inflation has not been a significant as we have expected, nor has the QE had an undue affect on an individual countries exchange rate as all the key players are effectively devaluing their currencies at the same time. However, we believe that the impacts of QE are likely to be more prominent over the next couple of years as the money filters through the system.

Under the current environment we therefore believe that it would be sensible to invest in hard assets and gold which are both natural hedges against inflation. Strong companies are also holding onto cash reserves as there limited investment opportunities in the markets and bonds and equities are particularly risky under the current environment. The likelihood of business failures are high and hence there may be opportunities for takeovers in the near future.

China has not had the hard landing many critics had feared. The economy has slowed but there are signs that it may pick up in 2013. Given that the Western economies are particularly risky at this time, businesses and investors are looking to emerging markets for growth. The US is likely to fare better than the UK and Europe due to its strong manufacturing base and the possibility of cheap energy provided by new fracking techniques to extract natural gas from rock fromations. There have already been signs that the US housing market has been picking up although the prospect of the fiscal cliff in 2013 poses a significant risk at this time. Businesses would be advised to wait until early 2013 before embarking on any major projects if they are dependant on the US.