European unemployment reaches new high

(Reuters) - Unemployment has reached a new high in the euro zone and inflation remains well below the European Central Bank's target, stepping up pressure on EU leaders and the ECB for action to revive the bloc's sickly economy.

Joblessness in the 17-nation currency area rose to 12.2 percent in April, EU statistics office Eurostat said on Friday, marking a new record since the data series began in 1995.

With the euro zone in its longest recession since its creation in 1999, consumer price inflation was far below the ECB's target of just below 2 percent, coming in at 1.4 percent in May, slightly above April's 1.2 percent rate.

That rise may quieten concerns about deflation, but the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are unable to find work, exemplifying southern Europe's 'lost generation'.

Economists and policymakers including Germany's finance minister, Wolfgang Schaeuble, have said the greatest menace to the unity of the euro zone is now social breakdown from the crisis, rather than market-driven factors.

In France, Europe's second largest economy, the number of jobless rose to a record in April, while in Italy, the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

"I've sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there's never anything," said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers' handling of Europe's debt crisis.

Some economists believe the ECB, which meets on June 6, will have to go beyond another interest rate cut and consider a U.S.-style money printing program to breathe life into the economy.

"We do not expect a strong recovery in the euro zone," said Nick Matthews, a senior economist at Nomura International in London. "It puts pressure on the ECB to deliver even more conventional and non conventional measures."

In the past, the euro zone has needed economic growth of around 1.5 percent to create new jobs, according to Carsten Brzeski, an economist at ING. With the Organisation for Economic Cooperation and Development forecasting this week that the euro zone economy would contract by 0.6 percent this year, unemployment is set to worsen long before it turns around.

"We do not see a stabilization in unemployment before the middle of next year," said Frederik Ducrozet, an economist at Economist at Credit Agricole in Paris. "The picture in France is still deteriorating."

5.6 MILLION YOUNG JOBLESS

ECB President Mario Draghi, whose pledge to buy the bonds of governments in trouble helped protect the euro zone from break-up last year, has so far left the onus on governments to reform.

A majority of economists polled by Reuters do not expect the ECB to cut its deposit or main refinancing rates soon, although the OECD this week called for the bank to consider printing money for asset purchases to revive growth.

ECB policymaker Ignazio Visco said on Friday it stood ready to take further action but that monetary policy alone could not solve the euro zone's economic problems.

The Commission, the EU's executive, told governments this week they must focus on reforms to outdated labor and pension systems to regain Europe's lost business dynamism, shifting the policy focus away from debilitating budget cuts towards growth.

EU leaders are expected to put the problem of joblessness at the forefront of a summit in Brussels at the end of June.

European Council President Herman Van Rompuy, who chairs the meetings, said last week youth unemployment was one of the most pressing issues for the 27-nation European Union as a whole.

Ministers from France, Italy and Germany called this week for urgent action to tackle youth unemployment, with Schaeuble describing it as a "battle for Europe's unity" and warning of revolution if Europe's welfare model is abandoned.

In April, 5.6 million people under 25 were unemployed in the European Union, with 3.6 million of those in the euro zone.

Even if governments take on unions and vested interests to enact reforms, they will take time to produce benefits.

Time to shake up banking in the UK

The news that the Co-operative bank could be in serious trouble is just the latest indication that the banking model in the UK needs to be shaken up.

Most of the major UK banks needed state support during the financial crisis and the need to separate wholesale or commercial banking from the retail arm has been strongly suggested.
New players in the UK banking sector such as Metrobank and Virgin Money have been set up to provide an alternative to the established banks and are finding a gap in the market.

Metro Bank was Britain’s first new High Street bank in over 100 years.  They have stores rather than branches. They say that they offer banking focused on the customer through unparalleled levels of service and convenience.  They have what they believe is a unique, customer-focused retail business and are reinventing the rules of retail banking, making every effort to remove all stupid bank rules from their day to day services to offer simpler and more convenient banking to their customers.  

They aim to "exceed the expectations of our customers every day by providing a traditional face to face service in all of our stores with no requirement to book an appointment to discuss your banking needs and card and cheque printers so that you can walk away with everything you need to start using your account immediately".

Virgin Money aims to make everyone better off. Like all Virgin companies, Virgin Money was launched to give customers a better deal. Customers of Virgin Money are presented with lounges that are intended to be about more than money and banking. They are intended to be places where customers can relax and where local communities can come together. Virgin Money's aim is to offer " a wide range of great value financial products that are easy to understand and sort out. In today's busy world our customers tell us it's why they choose to deal with Virgin rather than anyone else."

Like Virgin Money, M&S Bank aims to offer a new style of banking, putting the customer first and providing straightforward financial products with great customer service.

The rapid growth of this new breed of banks, shows how far the larger, multi-national banks have moved away from the needs and demands of retail banking.
Like other financial products, such as insurance, the consumer is confused by the complexity of what is being offered making it difficult to compare products and offerings for even the most financially astute.

Without reverting to a barter system, money remains the oil of the machine that is the economy. Imperfections and complexities in the banking system make the smooth running of the economy more problematic regardless of whether you view this from a capitalist, free market or socialist, state intervention perspective.

The core banking system needs to run smoothly. The UK and other countries are trying to use quantitative easing to promote growth because interest rates have already hit rock bottom. However, the banks are now using this extra money to restore there own strength and are lending on a cautious risk averse basis. Some would say too cautiously.

Should this process be in the hands of the corporations driven by profit motives? If the market is operating properly, new players will enter the market to restrict the ability of the existing banks to manipulate the market and make super profits. To a degree as highlighted above this is happening albeit rather slowly.

The problem remains that the complexity of the current banking system makes it difficult for people to understand and obtain or even know what they actually want.

State intervention is required to ensure that the regulators are meeting the needs of the consumer in this market place. The recent financial crisis suggests that the market itself can not work quickly enough to control banking and the regulators across the world have been lagging dangerously behind.

Unfortunately the current trend in regulation is to gain the necessary expertise by utilising the specialist knowledge within the major entities that participate in the sector. This is a dangerous conflict of interest that is repeated in many sectors. To a degree this is inevitable in a world that is ever more complex.

The Bank of England as the UK central bank needs to take a more active role in the market place to work with the regulator to control the excesses of the banks within the UK banking system and to enable the monetary policy to be more effective as a stimulus for the economy.

There must be a clear distinction between retail banking, which needs to be run with a greater degree of social responsibility to protect the individuals forced to use the banking system on a day to day basis and the voracious appetite of the banks to take risks chasing ever increasing profits.

If this is not achievable, then is it time to look at alternatives such as barter systems?

HMRC recalculates bills for 5 million taxpayers

Some 5.5 million people overpaid or underpaid tax last year, HM Revenue & Customs has admitted. It means they will be clawing back up to £1bn from unsuspecting taxpayers for unpaid tax in the 2012-13 financial year.

But up to 3.5 million will receive an average repayment of between £350 and £500. That means HMRC will be handing back up to £1.75bn.

About 2 million taxpayers will receive surprise demands after the Revenue calculated they underpaid tax in the 2012-13 financial year. They will be asked to make up an average shortfall of between £400 and £500, although the Revenue said it allow the shortfalls to be paid during the 2014-15 tax year.

HMRC began the laborious process of contacting the millions affected on Wednesday after it started its annual PAYE End of Year Reconciliation process for 2012-13. With so many people to contact, some taxpayers won't find out whether they owe money – or are due a refund – until October.

An HMRC spokesperson explained: "Around 85 per cent of pay as you earn taxpayers pay the right tax throughout the year. But if a customer's circumstances have changed over the course of the year – if, for example, they have moved in and out of work, or received new benefits – we need to work out whether they have paid too much or too little tax. This is the normal process that the PAYE system has used for 70 years."

By Simon Read

The Independent

Be flexible – and boost your efficiency

The work-life balance of small business owners is out of kilter, research shows.

Time to tweak how your SME operatesin

• 
  Paul Lawton
• Guardian Professional, Monday 13 May 2013 08.00 BST

Giving staff the opportunity to use their personal devices for work is a good way to show flexibility. Photograph: Alamy

Against the backdrop of a tough economic climate, many small business owners are feeling the strain and working harder than ever. We conducted some research to find out the real pressures that Britain's small businesses are currently facing. Turns out, it's pretty tough out there.

The results revealed that nearly half of small business workers now forgo a work-life balance. Business admin in particular is eating up too much time, with many forced to get jobs done outside of working hours. Worse still, almost a third feel stressed and under pressure and one in five admit that, as a result, customer service, as well as their personal relationships, are suffering.

Small businesses may be the engine of the economy but there's no doubt it's an extremely challenging time to own, run or work in a small and growing organisation. I believe that big businesses have a responsibility to lend better support by listening to the challenges, understanding the issues and offering practical services to give small businesses back some of that valuable time. No one has all of the answers – but there are some simple things your small business can do to regain a sense of balance.

Adopt a remote working culture

The adoption of mobile and the rise of connected devices mean we can stay connected, anytime and anywhere. Consumer devices are infiltrating the four walls of the workplace and, as a result, traditional "business" devices are no longer necessarily seen as an attractive option – employees want one device, one point of contact, and the latest technology.

At O2, we launched a Bring Your Own Device (BYOD) programme in December 2011, which is now used by almost 2,000 employees – 60% of our Slough HQ workforce. This number continues to grow.

Employees are empowered by the ability to access the network via their personal devices. This is helping to improve their productivity, but most importantly work-life balance, by allowing them to shape their own ways of working on the devices they like best. Plus, it saves us money as a business.

The advantages of BYOD initiatives can be hugely favourable for businesses as employees feel supported to work in the way that fits their work style best, which can result in improved business agility, cost savings and enhanced productivity. If we can do it as a big business, think what a difference it'll make to a small growing company – removing the pressure of managing multiple devices and giving staff some flexibility.

If you are considering implementing a BYOD policy, security is a key area to be clear on, so make sure that employees have passwords on their devices. You could also put in place software so that you can remotely wipe anything that is business-related should you need to protect it.

Enlist specialist help

Outsourcing to specialist businesses for help with web design, accounting or recruiting new staff means you can spend more time focusing on the critical needs of your business and what it requires to grow.

To make sure you get the right fit first time, it's important to consider working with other companies of a like-minded culture. When deciding which operations you should outsource, think about the areas that are core to your business and those that aren't.

Another option is to outsource complicated paperwork and contracts, such as health and safety management and employment law, to a specialist HR company. The benefit of this is not only more time, but also peace of mind that you have somewhere to seek advice if you need it.

Ultimately, outsourcing is a great way to reclaim some time, providing you select partners in the right way.

Flexible working practices will only become more prevalent as 2013 progresses as more employees use their own devices for work, so it's worthwhile putting in place systems to help staff get better connected now. Alongside bringing in specialist help, you will be well on your way towards recovering time to concentrate on what you do best: running your business
.

Co-operative Bank rushes to reassure customers after downgrade

Chief executive quits after Moody's downgrades debt to junk status and warns bank might need help to bolster

The Guardian, Friday 10 May 2013 21.11 BST 


The Co-operative Bank is trying to reassure its customers that it would not need a multimillion-pound taxpayer bailout after its debt was downgraded to junk status and its chief executive suddenly quit.

The move by the ratings agency Moody's to take the axe to the Manchester-based bank's credit rating followed weeks of speculation about its financial position after it posted £600m losses in March and then pulled out of a deal to buy 632 branches from Lloyds Banking Group.

Moody's warned that the bank might need "external support" – perhaps from its parent group which owns grocers, pharmacies and funeral homes, or possibly taxpayers – if it could not bolster its financial position. The agency cited concerns about the Co-operative incurring more losses from loans to property companies and the slow integration of the Britannia Building Society, which the Co-operative took over three years ago. 

The City was stunned by the scale of the downgrade – six notches – which will raise the price at which the bank borrows on the financial markets and illustrates the speed at which the agency believes the bank's finances have deteriorated. 

While the Co-operative admitted it needed to raise fresh capital, it took to Twitter to insist that it could plug any shortfall through actions it already had in train to sell off its insurance business and scale back part of its bank. "In light of today's news, we would like to reassure customers and members that we haven't sought nor do we need government support," the Co-operative tweeted. 

The bank has 6.5 million customers and a reputation for customer service and an ethical stance. It has a 1.5% share of the current account market and had been regarded by the government as key challenger in the high street to the dominant big four players, Lloyds, Royal Bank of Scotland, HSBC and Barclays.

Amid questions that Co-operative might decide to pull out of banking altogether, it insisted it would continue to offer banking services even though it is now without a permanent boss after Barry Tootell resigned. Until a successor is found, insider Rod Bulmer will take on the head role at one of the most challenging periods in the bank's history. 

The action by Moody's caused concern in the trade union movement at a time when the heads of Britain's biggest unions were attending the annual general meeting of the union-backed Unity Trust Bank, which is 26.7% owned by the Co-operative. 

Billy Hayes, general secretary of the Communication Workers Union (CWU) and a non-executive director of the Unity Trust Bank, said theT Co-operative's downgrade was a "major worry for the unions and our members". 

Hayes said the unions might call for a public inquiry into what has gone wrong at the Co-operative Bank, where many union members have accounts, and may call for bonuses paid to executives to be clawed back.

Richard Wilcox, managing director at Unity Trust Bank, said that while the Co-operative had been discussed at Unity's scheduled board and annual meeting, "the relationship with Co-op continues to be managed as normal. We work as an independent entity and are not impacted by changes to the credit rating of the Co-operative Bank." 

The Co-operative said it was disappointed about the downgrade from A3 to Ba3 and did not provide any details about any payoff for Tootell, who had been leading the planned takeover of the Lloyds branches. He had replaced Neville Richardson, the former boss of Britannia who was appointed to run the enlarged financial services business after the 2009 merger. Richardson left earlier than expected in 2011 with a final pay cheque of £4.6m. 

The Co-operative's admission that it need to raise capital comes amid an industry-wide review of banking strength by City regulators, led by the new Prudential Regulation Authority, which identified a £25bn capital shortfall.

Individual banks are yet to be told precisely what their portion of this shortfall is but City sourcesD believe the Co-operative could need between £800m and £1bn – a gap that it said it could fill by selling its general insurance arm, selling its life insurance concerns to Royal London and simplifying the bank. 

"We do acknowledge like the rest of our banking sector peers, the need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements and we have a clear plan to drive this forward throughout the coming months," a spokesman said. 

Moody's questioned whether the bank's proposed disposals and scaling back of its businesses would be enough to bolster the bank's closely-watched capital ratio, which at 8.8% is low relative to its peers. The ratings agency said the Co-operative was unlikely to be able to generate enough extra capital from profits and that there was "material uncertainty" over whether the disposal programme underway would be enough.

New business start ups

Most new businesses fail in their first few years.
This is because a great idea is no guarantee of success.

There are various regulatory requirements that you need to consider when starting any business and if you do not have experience you should take expert advice as soon as you can.

Most businesses fail because of a lack of planning and a failure to access specialist support for the various areas that need attention such as finance, marketing, IT and employment law to name but a few.

There are other reasons why start ups fail and lots of opinions as to which factors are the most significant.

Often when it gets tough, people give up, especially if they are faced by a lot if negativity. Learn to treat each no as a step closer to the next yes.

Be clear at the outset what you are selling, who your target market is and how you will access this market. This requires research before rushing in to starting to trade. Having done your research make sure that you are really committed to your business. It will usually take a hard work, particularly in its early days.

Make sure that the problem that your business is looking to solve is big enough to provide a genuine business opportunity, but keep the product as simple as possible. It is likely to be quicker and cheaper to deliver to the customers and easier for them to grasp.

Remember that any business needs customers so you must work out your strategy as to how you will market the business and find customers.

Don't try to reinvent the wheel. There are a lot of people who have built successful businesses. Study their success, try to learn something new every day and if you can, find a mentor.

Do not attempt to promote your business to too wide an audience. You are far more likely to succeed if you focus on a niche or a particular section of the market place. For example, start in a specific geographic area.

Work out what you ultimately aim to achieve with your business and then make a detailed business plan, the core to this should be the financial information with forecasts and projections for profit and cash flow.

Test your assumptions to see how sensitive these forecasts are so that you can still survive in  the start up phase if your assumptions are too optimistic.

Incorporate you plans for marketing, staffing, systems and other key components of your business.
Make sure that you establish a strong team that provides the expertise that you need. This could be using internal or external support. Make sure you get that you get this right and that there is good communication.

There is some useful guidance for start ups on the www.gov.uk website and specifically a guide to writing a business plan at https://www.gov.uk/write-business-plan

Once you start, continue to monitor your business against your plan and allow your plan to evolve as you gain experience but always ensure that your path is heading you towards your ultimate goal.

If you would like further help and support to succeed as a start up, please get in touch.

info@philip-gale.com

Should you have registered with HMRC under the Money Laundering Regulations 2007

The Money Laundering Regulations 2007 came into force in December 2007.All businesses that are covered by the regulations should have already put in place suitable anti-money laundering controls. 

The Money Laundering Regulations apply to a number of different business sectors, including financial and credit businesses, accountants and estate agents.

If your business is covered by the Money Laundering Regulations you should have put in place certain controls to prevent it from being used for money laundering. These include:

• assessing the risk of your business being used by criminals to launder money
• checking the identity of your customers
• checking the identity of 'beneficial owners' of corporate bodies and partnerships
• monitoring your customers' business activities and reporting anything suspicious to the Serious Organised Crime Agency
• making sure you have the necessary management control systems in place
• keeping all documents that relate to financial transactions, the identity of your customers, risk assessment and management procedures and processes
• making sure that your employees are aware of the regulations and have had the necessary training

Every business that's covered by the regulations must be supervised by a supervisory authority. Your business may already be supervised, for example because you belong to a professional body like the Law Society. But if it's not, and your business falls into one of four business sectors, you're likely to have to register with HMRC.

HMRC supervises the following four business sectors:

• Money Service Businesses
• High Value Dealers
• Trust or Company Service Providers
• Accountancy Service Providers

If you have not yet registered, more information is available on the HMRC website (http://www.hmrc.gov.uk/mlr/getstarted/register/who.htm)

HM Revenue & Customs (HMRC) Anti-Money Laundering Compliance Officers will shortly begin a programme of telephoning businesses registered with, and supervised by HMRC under the Money Laundering Regulations (MLR) 2007.

These calls will be in addition to and will complement ongoing HMRC compliance activity. HMRC will be contacting businesses to make sure that up to date information is held about their activities. The calls will also further improve HMRC understanding of customers and to find out whether they need any additional help.

HMRC can ask registered businesses for this information under Regulation 37 of the MLR 2007 and this has proved to be a very cost effective way for both customers and HMRC supervisors to conduct its compliance activity.

During the calls the HMRC officers will confirm their identity and ask businesses for their security information. They will ask for details of business activities, customers and also answer any questions. This will help HMRC decide whether a visit is needed and give businesses the opportunity to clarify any issues they may have.

Source: HM Revenue & Customs website (www.HMRC.gov.uk)