Snippets February 2008
Chinese Exports
China has surged ahead of Germany for the first time to become the world’s top exporter. Figures from the World Trade Organisation show that the country overtook the US at the beginning of the year and has since overtaken Germany as well. China is responsible for 8% of global exports, which is three times Britain’s share.
Sub-Prime problems move East
The sub-prime lending crisis in America has had a knock on effect on Japanese financial institutions. The Bank of Bonsai has had to cut many of its branches and The Origami Bank has folded.
NIC Hit
A re-adjustment of National Insurance contribution levels, which was not even mentioned in the pre-budget report, has become apparent from documents quietly released by the Treasury in the last few weeks. Currently NIC is levied at 11% of earnings up to £34,840. Workers pay at 1% on anything above that. But from next April 6th, the 11% band will apply to earnings up to £40,040 - a 15% increase in the threshold. This means that anyone on £40,040 and above will pay almost £500 a year more in NIC. At the same time the threshold at which NIC starts is being raised from £5,200 to £5,460 - a mere 5%.
The extra £4.5 billion thus raised, will presumably be used to help fund the headline grabbing cut in income tax, which Gordon Brown announced in his last budget as Chancellor. It is of course, a classic stealth tax and appears to be simply robbing Peter to pay Paul, but at the end of the day, middle England has taken another hit.
Too Many Anniversaries
According to the Standard and Poors 500, the bull market celebrated its fifth anniversary on the 9th October, the lowest point in the index having been touched on 9th October 2002. The same applies for
Morgan Stanley Capital International World index which covers the World’s developed markets and troughed on the same day.
However, taking inflation into account the S&P 500 is still well below its peak from 2000. So does that mean we are still trapped in a bear cycle? The UK FTSE 100 did not hit rock bottom until March 2003, so
assuming that shares do not nosedive, we have another few months to wait for that fifth anniversary. Moreover, the FTSE is still 3% below its all time peak, set on the last trading day of 1999. So again it is possible to argue that in spite of the consistent upward trend since 2003, we are still in the bear market.
19th October brought the 20th anniversary of Black Monday, the worst day in the history of World stock markets, when the Dow Jones industrial average fell 22.6% in a day. Just for the record 28th October was the 78th anniversary of the Wall Street Crash, which ushered in the great global Depression. It’s nice to get into November!
Over Taxed
IFA promotion (IFAP) estimates that more than £1billion a year is overpaid in tax which should be reclaimable. The main areas of over payment are failing to reclaim taxes deducted at source from bank and building society accounts, higher rate taxpayers not claiming their 18% tax rebate on pension and gift aid contributions and simple mistakes on tax returns, very often made by the Revenue themselves.
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