Companies To Provide Mandatory Pension Schemes from 1 October 2012

New legislation requiring UK companies to provide mandatory pension schemes for their employees will commence tomorrow. All companies above a required threshold must provide a company pension scheme for employees for which all new employees will be auto enrolled to the scheme. Auto enrolment is mandatory for all eligible employees although an employee may opt out of the scheme if they choose to do so. 

If your business has not yet set up a company pension scheme, Belsize Accountancy are happy to recommend our preferred providers to our clients. All companies will be required to provide an employee share scheme in the future and are advised to explore this in good time. UK contractors with a sole director will not be affected by the new pension requirements at this time but may find it tax efficient to set up a company pension scheme. Feel free to contact our advisors for details.

Impact Of The Fed’s Money Printing Leads To Rise In Commodity Prices

Last week the Federal Reserve announced its proposal for infinite quantitative easing (QE) in order to stimulate the US labour market. The prospect of further money printing by the US has led to a surge in commodity prices. Gold has risen to a high of $1,771 and looks set to continue as Japan have also announced that they will undertake another round of QE in order to stimulate their flagging economy. 

Virtually every major central bank has already embarked on a programme of QE over the past 12 months and this has led to the dramatic rise in the price of Gold which is often used as a hedge against inflation. Earlier in the month, Mario Draghi announced that the ECB will “do whatever it takes to save the Euro”. This raises the prospect of significant QE within the Eurozone as the ECB will be required to print large sums of money if they are to succeed in bailing out the failed banks in Greece and Spain. 

The Fed’s aggressive policy of QE suggests raises the real prospect of inflation in the US economy. The rise in commodity prices will affect consumers as rising fuel prices will place further pressure on their disposable income. The price of oil however has fallen over the past week due to a rise in exports from Saudi Arabia, the world’s largest oil producer. This will help to alleviate some of the pressure on the flagging global economy. 

It is unclear whether the Fed’s policy of QE will generate the desired stimulus to the economy. The QE programmes in Europe have had little success to date. The US will need to address the “fiscal cliff” anticipated in 2013. This is likely to require significant budget cuts and increased taxation to address the issue. The healthcare and defence sectors are likely to suffer from reductions in government spending. This could send the US economy back into recession. UK exporters and contractors in these sectors would be advised to monitor this closely and reduce their exposure to the US market.

UK State Backed Bank To Promote Lending To Small Businesses

Business Secretary Vince Cable announced today that the UK government will invest £1bn to set up a new state-backed business bank to promote lending to small businesses. It is hoped that the bank will eventually support up to £10bn of new lending for SME’s.

This is good news for small businesses in the UK who have been starved of credit during the recession. We hope that this will open up the market to competition in the banking industry which is currently dominated by 5 major high street banks. 

Many believe that the tightening of credit is restricting new businesses from growing and is stifling the recovery. The proposals for the new government bank could well serve to stimulate the economy and boost employment in the UK. This would be a major success for Vince Cable and the Liberal Democrats as it would enable them to stamp their credentials for promoting UK business.