Monthly Archives March 2011

How’s the Economy Looking Today?

By looking at 3 aggregated news stories on Google from this day in history the picture appears to reveal a pretty bleak outlook for times ahead and not just for UK consumers but for industry too.

Public sector job losses may not be offset by growth in the private sector as the Government is hoping and despite talk that investment in industry is the way to plough Britain out of the quagmire, industry will still struggle with rising costs in the same way as consumers.

Story 1.

Cash Strapped Companies Risk Insolvency

‘HM Revenues and Customs (HMRC) has revealed that growing numbers of cash strapped companies that have put off paying taxes are at risk of insolvency because they simply haven’t addressed the root causes of the difficulties.’

This story explains how a growing number of business are having to make payment arrangements with HMRC to pay their tax bills.

This arises when business reach the end of their tax year, calculate their tax bill and find out they don’t have enough money in the bank to pay it. Poor planning can be the culprit but so can a reduction in income or an increase in expenses.

So if a growing number of companies are struggling how are they going to be able to afford to employ more people?

Story 2.

Consumers flee high street after rise in VAT

‘Consumers fled the high street in droves last month, according to industry figures released today. They showed that a slump in sales following the government’s VAT hike became entrenched during February.’

This is a real worry in my opinion. Rates are low and mortgage payments are at record lows and yet consumers are starting to curb their spending.

What happens if rates are put up? Even less spending which means less buying from businesses which means businesses suffer which means they can’t employ more people.

With the rising cost of essential energy and fuel purse strings are tightening.

How much is fuel duty? Why is it so heavily taxed? Oh, it’s because everyone needs it. The demand is out of necessity so people & industry will pay whatever the price (to an extent).  But that’s another story…

Story 3.

UK economy growth forecast for 2011 cut by BCC

‘The UK economy will grow by less than expected in 2011 but growth in 2012 will be better than predicted, the British Chambers of Commerce forecasts.

The group downgraded its forecast for UK GDP growth in 2011 to 1.4% from a December forecast of 1.9%’

OK so the numbers are small but the difference means expectation has been downgraded by over 26% which is huge.

The unemployment forecast is up from 2.6 million to 2.65 million which just looks like 0.05 but is actually 50,000 more people expected to lose their jobs.

On the plus side, the forecast for 2012 has gone up! (I wander if this is with or without factoring in the cost of the Olympics?)

Overall though today’s outlook appears pretty bleak.

Still, at least the sun is shining…

More on the ECJ Insurance Ruling

Insurers have until December 21st 2012 to remove gender based pricing.

Will this mean they have to ignore statistics just because they could be considered gender specific?

‘Statistically’ (based on factual evidence) women live longer and young men have more car accidents.

Will these facts have to be ignored?

If you’d like to pick the ruling to pieces and try to find out what the likely impact will be, you can find it here:

http://curia.europa.eu/jcms/jcms/j_6/

Search for Case Ref: C-236/09

When it comes to the provision of healthcare section (12) states: ‘differences between men and women in the provision of healthcare services, which result from the physical differences between men and women, do not relate to comparable situations and therefore, do not constitute discrimination’.

So why are life insurance companies worried?

It also states: ‘Direct discrimination occurs only when one person is treated less favourably, on grounds of sex, than another person in a comparable situation.’

That’s the bit that is probably scaring the car insurance companies.

Put a man and a woman in the same situation on the road and if one is more likely to have an accident than the other, the price of insurance can’t reflect this.

But…

Section (19) states: ‘In some cases, sex is one but not necessarily the only determining factor in the assessment of risks insured. For contracts insuring those types of risks, Member States may decide to permit exemptions from the rule of unisex premiums and benefits, as long as they can ensure that underlying actuarial and statistical data on which the calculations are based, are reliable, regularly up-dated and available to the public.’

So if insurers can prove the statistics, they can still vary the price but they have to make the statistics public.

Great!

So all this really does is stop insurance companies generating one price based on the facts and then adding a bit extra just because of gender.

Sounds like a good thing to me!

Have they been upping prices just because of gender with no supporting facts?