So much for your golden years
It has emerged that British expats who rent out their UK homes will be stripped of the right to use the personal allowance, under a tax raid prepared by chancellor George Osborne. Accountants have warned that UK subjects could conceivably be forced to return from overseas retirement if Mr Osborne pushes ahead with plans to force non-residents to pay tax on all their UK income. Retirees drawing a government pension could also be hit by the proposals, which could cut a couple’s income by up to £4,000 a year. Currently, EU nationals and UK expats are entitled to offset income earned in the UK against the £10,000 personal allowance.
BoE revises wage forecasts
All the poorer
The Bank of England has made substantial downward revisions to its wage forecasts for the UK, thereby pushing back prospective interest rate rises. The news is obviously good news for homeowners, but manufacturers could also feel the benefit as the news could undermine sterling. Indeed, sterling has fallen to a two-month low against the US dollar on the news. The change is based on data showing that real wages remain under pressure. Annual earnings growth for the last quarter of this year has been halved from 2.5 per cent to 1.25 per cent. The shock news on wage growth came as accompanying statistics showing that the unemployment rate continues to fall.
Putin check
US shale glut
Any moves by Russia to put the squeeze on global energy markets might not be as effective as the Kremlin hopes. Brent crude prices have hit their lowest level since the end of last year, as burgeoning supply from US shale has effectively bumped-up spare capacity in global oil markets. This apparent ‘oil glut’ has built despite the twin security crises in Iraq and Russia. The demand-side dynamic is also in retreat judging by the latest update from the International Energy Agency (IEA), which has cut its forecast for the rise in global consumption to just 1m barrels a day this year.
El Nino hits Manchuria
"zero harvest"
The spectre of food price inflation is with us again, despite improved output from the Americas. China’s worst drought in half a century is raging across key agricultural regions, decimating harvests in its wake and threatening food security. Part of the area hit by the drought conditions - the north-eastern Manchurian Plain - is known as China's bread-basket. Many farmers operating within the region are now facing "zero harvest," according to the state-run Xinhua New Agency. The agency said the drought is caused by the weather anomaly known as El Nino, which usually triggers drought in northern China while bringing more rains to southern China.
Compensation semantics
HSBC's side-step
In a move designed to sidestep new European Union rules designed to stamp out on excessive bankers bonuses, HSBC has paid £7.1m to a dozen or so of its top bankers under ‘fixed pay allowance arrangements’. The ‘world’s bank’ rewarded Samir Assaf, the head of its investment arm, by way of £1.5m worth of shares, while chief executive Stewart Gulliver was given shares worth £850,000 - that's gratitude for you. Admittedly the payments can be clawed back at a future date in the event of anything resembling sharp practice, but the bonus - by any other name - is bound to reignite the argument over executive compensation at a time when real wages are falling in the UK.
Abe's odyssey
Japanese contraction
In a blow to so-called ‘Abenomics’, the Japanese economy contracted at an annual pace of 6.8 per cent in the second quarter after consumer spending reversed due to a sales tax hike that kicked in from April. Japan's GDP also contracted 1.7 per cent during the April-June period from the previous quarter. That’s the worst result since the March 2011 tsunami and quake disaster in north-eastern Japan, when the economy shrank at an annual rate of 6.9 per cent during the first quarter. Tokyo officials will be hoping that it is just a tax effect, as the result was in stark contrast to the annual 6.1 per cent growth in the first quarter of 2014, which reflected the buying rush to beat the tax rise.
Pot luck
Green revolution
A US federal official has revealed that 105 banks and credit unions are now doing business with legal marijuana sellers, suggesting that the Obama administration’s rules that give financial institutions the go-ahead to provide services to dealers are starting to kick-in. It’s obviously good news for the (legal) fledgling trade in the US, helping to legitimise the business by splicing it with the mainstream financial system. But banking groups said the guidance did little to allay fears of doing business with companies whose products remain illegal under federal law.
