UK Economic Update

The double dip recession continues to bit in the UK. Retailers have suffered from a wetter than normal summer together with reduced sales during the Olympic Games. Fears over travel congestion led to very few people commuting into Central London during the Games. The West End was described as a ghost town in August and provided further misery to retailers and small businesses in the City Center. Results would have been worse but for an influx of Chinese visitors over the summer generating increased sales of luxury goods. 

A downturn in the Housing market in August provides evidence of further credit tightening by the banks and reduced consumer spending in the UK. The prospect of increased fuel and commodity prices is likely to place greater strain on the disposable income of consumers. Building contractors are having to tender for work at rock bottom prices in order to win new clients in an increasingly competitive environment. 

Economists are predicting that the UK is destined to undergo a period of low growth and low interest rates for several years from now. UK companies will need to consider exporting to emerging markets in order to win new business.

Banks Begin To Offer Reduction In Mortgage Rates

Mortgage rates have dropped over the past couple of months with banks such as HSBC offering interest rates as low as 2.99% with a 20% deposit. Homeowners now have the opportunity to remortgage their property provided they have sufficient income to satisfy the bank’s criteria.  Many homeowners are taking advantage of this under the current economic climate as it is beneficial to pay down your debt or reduce your mortgage interest during this period of low returns on capital. 

Mortgage arrangement fees however are at an all time high and buyers will need to watch out for this. New buyers in particular will find it difficult to raise the required deposit after having factored in the increased arrangement fee and associated costs. 

The UK Housing market continued to slump in August due to low activity during the Olympic Games. House prices fell in all regions except Central London as the recession continues to bite. 

Self employed businessmen and contractors will require up to date accounts and confirmation of earnings over the past 2 years together with a projection in order to apply for most mortgages. Belsize Accountancy are qualified to provide an accountant’s certificate for our clients and provide assistance in liaising with the banks. Feel free to contact us for a quotation.

Proposals For Auto Enrolment into Company Pension Schemes

All employers will be required to automatically enrol staff into the company pension scheme between now and 2018 depending on the size of the company. The new system of Auto-Enrolment (AE) will be effective from October 2012 for large corporations and will apply to all employees earning above a required threshold. 

All employees aged over 22 and earning over £7,475 will be auto-enrolled into the company pension scheme. Employees can ofcourse opt out of the pension scheme if they so desire. The new system will place a greater administrative burden on small businesses who will need to upgrade their payroll systems to comply with the new legislation. Small businesses are advised to act now to prepare for the new changes.