The Bank of England, who restarted its quantitative easing asset purchases last October, decided earlier this month to halt the scheme having purchased a total of £325 billion in UK government bonds.
Mr Posen said, in an interview which has been published by newswire MNSI, that he felt the latest round of quantitative easing had had less of an impact than the initial £200 billion programme, which was why he dropped his call for additional stimulus.
However, he went on to say that he may have underestimated the weakness of Britain's economy, which fell back into recession in the first three months of this year.
He said: “I had been hopeful in the last few months that after we did an additional £125 billion quantitative easing that was getting close to enough. And now I am debating whether I was premature to think that.
“I personally have had to downgrade my estimate of the bang-per-pound of this last round of QE from what I thought it was going to be and that is one of the major components why I'm less optimistic now than when I started to vote for no change in policy.”
Mr Posen, added that his previous belief that the UK economy may be healthier than official data suggest "may have to be discounted somewhat," citing poor construction output and gloomier business surveys.
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( 3 / 5 )According to reports, four of the top five civil servants at HMRC are expected to leave this summer, in a spate of departures that will strip the department of its most experienced tax professionals.
The departures are said to come at the same times as a reshuffle of HMRC’s management following the announcements earlier this year that the chairman of HMRC’s ten-strong board, Mike Clasper, is set to stand down later this year; and that the director of customer and strategy, Naomi Ferguson, is leaving in July to take up a position as chief executive and commissioner of the New Zealand tax authority.
It has also been suggested that the departures come amid concerns about the fitness of its commissioners, with three of the four leaving, being accountable to parliament for collecting taxes in the name of the Crown.
Those three civil servants are planning to retire, with HMRC saying the retirements were planned as the individuals were at or past the retirement age of 60.
The fourth top tax chief, who is to leave HMRC, is Steve Lamey, who is the director-general for benefits and credit and is said to be leaving to work in the private sector.
Speaking following the news of the departures, Chas Roy-Chowdhury from the Association of Chartered Certified Accountants, has questioned how HMRC will cope with the departures, saying: “It will be terribly sad to see these people go at once.
“How are they going to deal with such a great loss of intellectual property and collective memory?”
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( 3 / 15 )European Union finance ministers have agreed on tougher capital rules for banks, which are intended to make them stricter, eliminating the need for future bailouts by aiming to prevent another financial crisis.
The agreement, which was reached in Brussels yesterday (May 15th 2012) is seen as a victory for George Osborne, as it will allow the Chancellor to implement stricter rules and key policies recommended by the Independent Commission on Banking (ICB) last year, including retail ring-fencing and a ten percent capital buffer, designed to prevent the UK from future financial difficulties.
Under the new agreement, all European Union banks will be required to hold more “top quality capital” broadly meeting new international standards; with the agreement moving the European Union a step closer to being the world’s first large jurisdiction to implement the so-called Basel III capital rules; an internationally agreed blueprint for avoiding another banking crisis.
Michel Barnier, the EU’s financial services commissioner, said of the new rules: “Our overall objective remains to strengthen the resilience of the banking sector in the EU while ensuring that banks continue to finance economic activity and growth.
“The final compromise must contribute to financial stability, the necessary basis for growth and employment.”
Following the agreement yesterday, the new rules are now set to go before the European Parliament, and it is widely expected that the new regulations will come into force in June.
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( 3 / 20 )According to a report whose findings have recently been published, motorists could face a fifty percent rise in fuel tax over the coming years, as the Treasury look to cover a £13 billion hole, caused by the increased use of environmentally friendly vehicles.
The RAC Foundation commissioned report has claimed that the gap in public finances will be caused by the increased use of more fuel-efficient vehicles, which is expected to see fuel duty collected by the Exchequer fall from its current levels of 1.7 percent of GDP to 1.1 percent of GDP by 2029.
During the same period, vehicle exercise duty (VED) is also expected to fall from 0.4 percent of GDP to 0.1 percent of GDP, which will lead to a £13 billion shortfall in motoring tax revenue.
RAC Foundation director, Professor Stephen Glaister, said: “If the Chancellor was faced with a £13 billion shortfall in motoring tax revenue today, he would need to push the rate of fuel duty up from fifty eight pence per litre to eighty seven pence per litre to fill the financial black hole.
“The irony is that while ministers encourage us to buy greener, leaner cars, they are being forced to look at ways of clawing back the money motorists think they will be saving. This isn't scaremongering.
“The Treasury has already announced a review of VED bands to ensure drivers make a fair contribution to the public finances even as cars become more fuel-efficient.”
The lost revenue the Treasury faces is said to be the equivalent to increasing the basic rate of income tax from twenty pence to twenty three point four pence, VAT from twenty percent to twenty two point seven percent; or raising fuel duty by more than fifty percent.
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( 3 / 35 )Sir Mervyn King, the governor of the Bank of England is expected to signal later this week that interest rates will not rise from the record low of 0.5 percent, until late next year at the earliest, as UK growth continues to disappoint.
Last week, the bank signalled that interest rates would remain at 0.5 percent, as the central bank once again uses its quarterly inflation report to cut its forecast for the UK's economic activity and brace for higher-than-expected inflation.
Economists are now expecting the Bank of England’s report, which is due out later this week, to signal that the cut to the interest rates current low – which was made in March 2009 – will remain on hold for many months more, despite inflation being above its official two percent target.
One economist has said: “It is odds-on that the new forecasts contained in the report will be the all too familiar and dispiriting mix of reduced growth but higher inflation expectations.
“We expect it to indicate that interest rates are unlikely to rise from the current level of 0.5 percent until at least late-2013, and very possibly not until 2014.”
Along with expecting the record low level of inflation to stay until late next year, economists also believe that the report will leave the door open for the Bank of England to announce further quantitative easing, either explicitly or by forecasting that inflation will probably fall below the two percent target within two to three years without a change in policy.
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