BRITAIN'S ECONOMY expanded at its slowest annual rate in more than 12 years in the second quarter, according to this morning's papers.
GORDON BROWN could be forced to revise his economic growth forecast even lower than 2% after new official figures showed the economy is growing at its slowest pace for 12 years, says the Daily Telegraph.
The Office for National Statistics says the economy has grown at the annual rate of 1.5% in the second quarter, not the 1.8% previously thought. The dramatic downgrade means the economy has not been weaker since the first three months of 1993, when the economy was emerging from the last recession.
The Chancellor had not seen the new statistics when he admitted in Washington last Friday that he was likely to revise his forecast for this year from its current 3% to 3.5% level down to between 2% and 2.5%.
HOLDERS OF policies with closed life funds and investors in child trust funds could be among the worst affected by new VAT laws, due to come into effect on January 1, that could cost the insurance industry up to £200m, according to the Guardian.
The new rules stem from a ruling by the European Court of Justice requiring VAT be charged on outsourced insurance services.
The changes are most likely to affect smaller insurers which outsource their processing systems, life funds which have been closed to new business, and products with tax advantages such as child trust funds where the management fee is restricted.
The Association of British Insurers (ABI) yesterday urged the Treasury and Revenue & Customs to delay implementing rules that will force insurers to pay 17.5%VAT on outsourced services, such as claims handling, reports the Times..
Peter Vipond, director of financial regulation and taxation for the ABI, said the £200m annual cost of the new tax would be on top of the £3.6bn tax that insurers already paid every year.
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The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.