Economic Update 18th January 2012
HMRC test SME mediation service
A trial of an alternative dispute resolution scheme is underway in the North West and North Wales allowing small businesses to resolve HM Revenue & Customs by using a free mediator.
The catch is that the trained mediator is an HMRC employee. However the pilot does allow SMEs to challenge tax bills without having to go to a tribunal.
Commentators say that the scheme could fill a gap that was left when access to 700 district tax inspectors was withdrawn. District inspectors used to intervene in disputes between businesses and local inspectors before this facility was removed.
It is yet to be decided if the trial will be rolled out nationally.
HMRC has said businesses in the trials regions wanting to take part in the trial can call 01492 523747 “between 9.00am and 4.00pm, Monday to Friday”.
Temp staff could be sacked soon
This month may see the start of a cull of temporary staff as the effects of the new EU Agency Worker directive kick in.
The directive, which came in last October, says that after 12 weeks employees are entitled to the same rights and pay as permanent staff. According to a survey by Association of Professional Staffing Companies (Apsco) a third of employers will start to let temporary staff go to stop them completing 12 weeks service, and acquiring additional rights.
Ann Swain, chief executive of Apsco, said “ .......tens of thousands' of workers would be affected. At a time when unemployment among young people has surpassed one million, any barrier to securing work has to be questioned.”
Truck registrations up
Truck registrations for the year to December were up 24.6% to 42,944 vehicles over 3.5 tonnes. The month on month figures rose by 45.3% to 4,611, bringing some good news for the haulage industry.
The expansion in two-axle rigid sales continued with growth rates going from 30% to 90% across the different weight categories.
The lift in truck sales has been attributed to a range of factors from the introduction of the new London LEZ rules, and vigorous marketing from manufacturers offering good deals, to operators being forced to restock after delaying purchases for a long time.
The construction industry is also said to be replacing its trucks in the expectation of sector growth linked to the promise of more government infrastructure spending.
Van registrations were up 16.7% to 260,153 in 2011. The monthly figures grew by 2.8% in December to 18,415.
The figures come from the SMMT.
Inflation drops to 4.2%
According to the Office for National Statistics December Consumer Prices Index inflation in the UK fell to 4.2% from down from 4.8% in November.
Retail Prices Index inflation was down to 4.8% from 5.2%.
Analyst Chris Williamson of Markit said, "The data therefore add support to the Bank of England's expectation that inflation will drop below its 2% target by the end of the year."
Bank based rate stays at 0.5%
As expected, the base interest rate has been held at 0.5% by the Monetary Policy Committee of the Bank of England. Interest rates have been kept at 0.5% since March 2009.
Inflation is now at 4.2% and may fall further, so analysts think that the Bank of England will consider bringing forward more quantitative easing or QE (printing money) in the first quarter of the year to try and counter the possibility of a double-dip recession.
David Kern, chief economist at the British Chambers of Commerce said that although more QE would be welcomed, such a move “…. will only achieve its full potential to support growth if it is supplemented by effective measures aimed at improving the flow of credit to viable businesses."
End year construction output falls
Construction output fell by 1.2% (-£338m) in the three months to November 2011. New work fell by 1.3% (-£241m) and repair and maintenance fell by 1.0% (-£97m). The figures come from the Office for National Statistics.
UK already in recession?
Think tank the Item Club says that in its view the UK is already in recession, having made the assessment that gross domestic product (GDP) shrank in the last quarter of 2011 and looks set to contract in the first three months of the New Year.
The Item Club also thinks UK GDP is only likely to grow by 0.2% in 2012, even if problems with the euro can be sorted out.
Unemployment is also expected to rise throughout the year to just under 3 million jobless according to the Item Club.
Unemployment up to 8.4%
Unemployment increased by 118,000 in the three months to November taking the total to 2.685 million, according to the Office for National Statistics. The joblessness rate is now at 8.4%, the highest since January 1996.
Youth unemployment rose to 1.043 million, with the unemployment rate for 16-24 year-olds at 22.3%.
Total pay (including bonuses) went up by 1.9% compared to the same time last year. Pay without bonuses also rose by 1.9% on a year earlier.