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Poor families 'still losing out' despite tax credit U-turn - live updates

Discussion in 'Market News' started by Lily, Nov 26, 2015.

  1. Lily

    Lily Forum Member

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    All the day’s economic and financial news, including reaction to yesterday’s autumn statement

    10.58am GMT

    George Osborne has already warned that he won’t shy away from “difficult decisions”.

    The chancellor has spent this morning defending criticism of his autumn statement -- and claims that he’s abandoned austerity by committing to spend his £27bn fiscal windfall.

    Related: Osborne: I will continue to take 'difficult decisions' after tax credits U-turn

    Asked by the Today presenter Nick Robinson whether he was admitting he had made a mistake and was apologising or whether he had simply been forced to change tack by critics, the chancellor said that his “central judgment” to move to a lower welfare and higher wage economy was the right one.

    10.48am GMT

    Torsten Bell, the Resolution Foundation’s director, is adamant that George Osborne’s spending review decisions hit the poor but spare the rich.

    That’s because long-term welfare changes are still in force -- so as Universal Credit is rolled out, millions more people will be hit.

    The most damaging changes are to universal credit, the government’s flagship welfare programme which is at serious risk of being undermined. For working households with children on universal credit the average loss with be £1,300 in 2020.

    These changes will also increase the risk of people being trapped in low-paid short-hours work.

    Those hit hardest by the new universal credit rules will be lone parents, disabled people and couples with children who rent their home rather than have a mortgage.

    Currently, the rules allow lone parents £8,800 a year in earnings before their universal credit starts to get reduced. From April that figure will drop to £4,800.

    Related: So, Osborne scrapped tax credit cuts – but what of universal credit?

    10.28am GMT

    The Resolution Foundation are continuing to kick the tires of the autumn statements.

    The think tank is warning that George Osborne has slipped out significant tax rises, on top of the surprise £27bn pick-up in the public finances from the independent Office for Budget Responsibility.

    Matthew Whittaker @resfoundation: Osborne's tax rises amount to £27bn, on top of the £27bn windfall from @OBR_UK forecasts.

    Matthew Whittaker @resfoundation: no change in loss for working families by 2020 as UC kicks in: £650 average for poorest 50% of households.

    Willetts @resfoundation: In old days, politicians promised milk + honey before election and you'd get bad news after; Osborne did opposite.

    David Laws @resfoundation: Osborne has fudged how much he's U-turned by focusing on 2019-20 instead of near-term.

    'He's spending a lot of time + money + capital shooting other people's foxes, rather than developing a strategy': David Laws @resfoundation

    9.55am GMT

    Katie Martin of the Financial Times has a good take on this morning’s Barclays fine.

    Deals over £20 million were commonly referred to within Barclays as “elephant deals” because of their size and the Transaction, which was for an amount of £1.88 billion, was also referred to as an “elephant deal”.

    Barclays and the troublesome 'elephant deal' https://t.co/fUwBNT2rpy

    9.45am GMT

    French bank BNP Paribas also expects the ECB to cut its deposit rate (paid by banks on their ECB deposits) deeper into negative territory.

    Currently, it is minus 0.2% - and BNPP thinks it will be slashed to -0.4% next Thursday.

    BNP Paribas now expects a 20bps cut to ECB deposit rate in Dec Vs prev forecast of 10bps pic.twitter.com/NdzhpcpplV

    9.35am GMT

    Barclays’ shares are actually up this morning, gaining 3p to 224p, despite the bank being shamed for cutting corners on financial crime checks.

    Barclays shareholders clearly spooked by these fines. Shares up only 1.3%. $BARC

    Barclays didn't want to "irritate" big-spending clients by asking too much about where their billions were coming from, FCA says. Cracking

    Barclays' management have agreed to settle the fine from their bonuses, right?... https://t.co/v6XIm8Z0DU

    9.22am GMT

    Is there no end to the misdeeds of Britain’s banks?

    Barclays went to unacceptable lengths to accommodate the clients.

    FCA fines #Barclays £72m for failing to make proper checks on mega-rich clients because 'it did not wish to inconvenience' them

    9.13am GMT

    Kit Juckes, top currency strategist at Societe Generale, says we should expect something pretty serious from the ECB at next Thursday’s meeting.

    Dipping into classical texts, Kit writes:

    “He who exercises no forethought but makes light of his opponents is sure to be captured by them”.

    The quote’s from Sun Tzu’s The Art of War and while I don’t think for a second that Mario Draghi is anyone’s opponent, he is regularly under-estimated.

    It’s not really obvious that such a policy would drive rates (and in particular, longer-dated rates) any lower, but it reinforces the sense that Mr Draghi is committed to further easing next month.

    9.05am GMT

    Mario Draghi hinted strongly in October that he could take more action if needed, to get the eurozone away from deflation.

    So, he risks a backlash if the ECB isn’t decisive next week.

    “It cannot run the risk of disappointing markets, having raised expectations of action.”

    8.48am GMT

    The euro is weakening this morning, as speculation grows that the European Central Bank will announce significant stimulus measures next week.

    The single currency has slipped to just $1.06 this morning, near a seven-month low.

    Forecasters are cutting their year-end and first-quarter euro estimates at the fastest pace since March, when the start of the central bank’s bond-buying program sent the currency tumbling to a 12-year low. Options signal there’s a 70 percent chance the euro will match that low this year, up from 18 percent when the ECB last met in October.

    “He’s going to pull a rabbit out of the hat -- we’re just not sure what that rabbit will be.

    “The euro is going down heavily.”

    #Draghi will pull a rabbit of the hat, say euro watchers, but none knows what it'll be https://t.co/vaS9197ys2 #ecb pic.twitter.com/YD12xBYOzH

    8.37am GMT

    The Resolution Foundation, a UK think tank, has warned that poor British families are still losing out, despite the tax credit reprieve announced in yesterday’s sutumn statement.

    And that’s because of longer-term changes to the UK welfare system, which will bring in the universal credit.

    The attention now turns to the longer term changes to the welfare system the Government has put in train. All the post-2020 welfare cuts announced in the Summer Budget remain in place and will eventually affect millions of families as Universal Credit is rolled out nationally.

    “New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.

    Low-income working families on Universal Credit set to lose £1,300 https://t.co/n6igG9roK3 pic.twitter.com/2PqxDcv2tl

    RF's distributional analysis just out suggests average loss for bottom half is £650 from all changes from Budget + SR, no loss in top half

    8.34am GMT

    George Osborne has been conducting a whistle-stop media tour this morning - and sporting a distractingly high-vis jacket - to discuss yesterday’s spending review.

    There’s a lot of attention on his surprise tax credit u-turn - a sign of weakness, chancellor?

    “I don’t think it’s a weakness, if you are doing this job, to listen to people and listen to the concerns that are made.”

    Spending Review Reaction, @George_Osborne talks to @GMB, #GMB pic.twitter.com/v67Eg2itte

    8.27am GMT

    Good morning, and welcome to our rolling coverage of the financial markets, the economy, the eurozone and business.

    Coming up today, we’ll be mopping up economic reaction to Wednesday’s Autumn Statement and Spending Review.

    Related: OBR admits uncertainty over £27bn windfall behind tax credit U-turn

    It's a #spendingreview #tomorrowspaperstoday montage: https://t.co/eMlZoF01X9 pic.twitter.com/fehi2OKqpU

    Continue reading...
     

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