Former Chancellor Urges European Commission to be Tough On Auditors 
Former Chancellor of the Exchequer in the House of Lords, Lord Lawson, has urged the European Commission to strengthen proposed legislation aimed at reforming the regions auditing industry.

Speaking earlier this week, Lord Lawson said he was very surprised that proposals by Brussels didn’t accept a statutory obligation for regulators and bank auditors to share concerns with each other.

During his time as Chancellor, Lord Lawson introduced legislation to enable bank auditors to share information with regulators in private. He now wants to ensure this interaction takes place, as he claims “lamentably few” discussions were conducted in the run-up to the 2008 economic affairs committee.

Lord Lawson’s remarks came as the Director-General for Internal Market and Services at the Commission, Jonathan Faull, answered questions from the Lords economic affairs committee.

Mr Faull told the committee: “The nature of dialogue between regulator and auditor should be left to their discretion.”

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SME Winding-Up Costs Set To Rise 
The Chartered Institute of Taxation have announced that the cost of winding-up a small business is set to increase from next month, after new legislation restricting tax concessions for voluntary winding up orders was passed.

Under the current tax concession, Extra Statutory Concession 16, company directors are able to wind-up a solvent company without appointing a liquidator. Instead, the directors are able to pass surplus funds to shareholders as capital receipts, rather than dividends.

This usually means that shareholders pay less tax because the money directors distribute is subject to capital gains tax, which is lower than the income tax dividends.

However, in the House of Commons last week, the Enactment of Extra Statutory Concessions Order 2012, was passed.

This new legislation will see the favourable tax treatment for winding-up companies only apply to those whose total distributions are no more than £25,000 – and HMRC said it has made the change to counter tax avoidance.

The new legislation is set to come into effect as of March 1st 2012.

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Quantitative Easing to Increase by £50 Billion 
Despite signs that the country’s financial health may be starting to improve, the Bank of England are expected to announce later this week that it’ll increase quantitative easing.

It’s been suggested that on Thursday, the Monetary Policy Committee is to forecast an increase in its quantitative easing, from £275 billion to £325 billion, in an effort to prevent the first double dip recession in over thirty years.

Reports also suggest that the Bank of England will hold interest rates at the record low of 0.5%.

Many economists had previously thought that the committee would approve a further £75 billion of asset purchases within February; however following services and manufacturing surveys which have suggested the economy has performed better than expected so far in 2012, the estimates have been revised.

It isn’t all good news though, despite the recent upbeat date, many economists have also insisted that it’s too early to call a recovery, after a leading think-tank, last week, warned the economy would shrink by 0.1% during the next twelve months.

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UK Service Sector Grows Reducing Recession Risk 
Figures released from a closely watched survey show that the UK services growth grew at its fastest rate in January, since March 2011.

The Markit/CIPS Services Purchasing Managers’ Index (PMI) rose to 56.0, reducing fears of a new recession following a contraction in the economy during the final quarter of 2011.

Markit’s chief economist, Chris Williamson, said of the results: “The situation is certainly a lot brighter than seen in the final quarter of last year, when the economy contracted 0.2%, and a slide back into recession is now looking increasingly unlikely.

“The economy could well expand at close to trend rate - around 2-2.5% per annum - in the first quarter if business conditions hold up in the next two months.”

The growth in the UK service sector coincides with other data which showsed the UK's manufacturing sector returned to growth in January, with overall activity at its highest level for eight months.

It’s believed that the upbeat report will cast doubt over whether the Bank of England will resume its quantitative easing programme when it announces its latest policy decisions next week.

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UK Faces Two-Year Recession If Euro Fails 
The Institute for Fiscal Studies (IFS) has warned that a Eurozone meltdown would plunge the UK back into a two-year recession and send unemployment soaring above 10 percent.

According to the Green Budget from the think-tank, if Greece, Portugal, Italy and Spain all leave the Euro, the UK economy would shrink by 1.7 percent this year and a further 0.9 percent during 2013; whilst they’re also predicting unemployment would hit 10.7 percent – its highest peak since January 1993.

IFS director Paul Johnson, said: “If the Eurozone does break up, then our forecasts are blown out the water, as is the government’s fiscal strategy.”

A second economic crisis in four years is set to add almost £200billion to the national debt, pushing it up to 90.5% of the GDP, compared with its current forecast peak of 78%.

In further bad news for the economy, the IFS’ Green Budget, which comes ahead of next months official budget statement by the Chancellor George Osborne, also claims that even without a Euro crisis, the UK is forecasted to shrink again in this quarter, resulting in its first technical double-dip recession in thirty-seven years.

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