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MPs warn Treasury of underestimating risks to economy

The Treasury Committee has warned the Treasury it may be underestimating risks that the liquidity crisis poses to the UK economy.

In its report on the Budget 2008, the committee says the Treasury may have given “insufficient weight” to the risks of continued financial market turbulence in making its forecasts for economic growth.

John McFall, chairman of the committee, says: “The Treasury’s forecast of economic growth in the next two years is more optimistic than the consensus view.

“Critical to this forecast is the resilience of the UK economy to shocks. Some of the very things that have kept our economy growing over the last decade may start to cause us problems and the 2008 Budget may not have recognised this fully.”

McFall adds: “There are significant downside risks to the economy and therefore potentially to tax receipts.

“As such, the government is going to have to be extremely vigilant in how it manages the public finances, if it wishes to maintain its so far clean record in meeting its own fiscal rules.”


First Direct halts new lending

First Direct has suspended new lending after applications soared to five times their normal volume.The lender says the suspension means it can focus on processing the backlog that has built up in recent weeks. Chris Pilling, chief executive of First Direct, says: “We have seen unprecedented demand for our mortgages since January thanks to our […]

AMI lobbies for individual registration

The Association of Mortgage Intermediaries is campaigning for individual registration to prevent fraudsters entering the broker market.At the Mortgage Product Positioning and Development Conference held in association with Mortgage Strategy last week, Richard Farr, director of AMI, says: “We’re lobbying for individual registration.“All too often you see brokers who have been struck off the register […]

Overhaul banking system, says BoE

The Bank of England is calling for an overhaul of the banking system in light of the liquidity crisis.Paul Tucker, head of markets at the BoE, has called for a revamped regulatory approach to banking that reflects the global nature of modern markets. He also suggests there should be a gradual reduction in interest rates.Tucker […]

Weighing up the benefits of grants

Continuing my theme of grants from last week, I’d like to remind readers of the Financial Services Authority’s requirements when considering the suitability of equity release transactions.


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