Apple Launches New iPhone 5

The new iPhone 5 was released this week with great success. Over 2 million iPhone’s were ordered within 24 hours of the new smartphone coming on sale. The first day orders are more than double than those received for the iPhone 4S last year. The success of Apple continues and we can expect this to follow through to increased earnings in 2012 despite the economic downturn. The handset is priced at £529 and appears to be recession proof with customers queuing overnight prior to its first day launch.

UK contractors will be able to expense the business proportion of their mobile phone expenses. It may be time to upgrade your phone now.

UK Employment Market For Contractors

The UK employment market is likely to suffer from the post Olympic slump that many have predicted. General recruitment levels have already fallen compared to prior year due to concerns over the uncertainty in the Eurozone.

However, the difficult market conditions have led to an increase in demand for specialist contractors. Contractors in procurement and supply chain management are in high demand as businesses place greater emphasis on managing their costs. Demand for analysts has similarly increased as companies look to examine their overheads. 

Belsize Accountancy recommend that UK contractors operate via a limited company set up where possible as this is often the most tax efficient structure available. Our clients have found that their marginal rate of tax can be significantly lower using the Limited Company route compared to the use of umbrella companies. We would not advise contractors to accept PAYE contracts as this is the least tax efficient method available. Feel free to contact us on 0207 043 0052 if you would like to explore a Limited Company set up.

Federal Reserve Announces Third Round of Quantitative Easing

The US Federal Reserve announced its third round of Quantitative Easing (QE) on Thursday. The move, dubbed as “QE3” differs from previous rounds of QE in that the Fed has indicated it will begin unlimited QE until there is noticeable improvement in the labour market. In addition, the QE will take place via the purchase of mortgage backed securities which is a clear sign that the Fed hope to bring down the high level of mortgage rates in the US and drive up house prices. 

The US economy was particularly weak over the summer due to a combination of the global recession and the recent droughts which will continue to hinder the crop harvest and place upward pressure on food prices. The high rates of unemployment continue in the US and are currently in excess of 8%. 

The aggressive approach by the Fed has not been influenced by the prospect of inflation, commonly associated with QE, which is effectively a form of money printing. This combined with rising food and fuel prices raises significant potential for inflation in the US. The US dollar fell against major currencies shortly after the announcement. Sterling is currently trading at a high of £1.61 against the dollar. 

Further money printing is also expected in the Eurozone following ECB chairman Mario Draghi’s statement that he “will do whatever it takes” to save the Euro. It is difficult to see how the ECB will achieve this without further money printing. 

The news bodes well for those who have invested in gold. The gold price surged to a high of $1.768 per ounce on Friday. Contractors with spare cash and businesses with Euro deposits are currently hedging their exposure to inflation by investing in gold.