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IMF issues warning to Japan

The IMF has issued a warning to Japan over its increase in public spending following the March earthquake.

If Japan is to continue being a “positive force in the region”, it must consolidate its fiscal position by cutting back on the additional spending which has pushed its public debt to new levels.

Japan’s rate of public debt is currently 220 per cent of its GDP – the highest level among advanced economies.

The IMF report predicts “GDP growth is likely to slow to -0.7 per cent this year before rising to 2.9 per cent in 2012.”

“Fiscal consolidation would also benefit Japan’s partners by releasing a pool of savings for other countries to borrow and reducing risks from a disruption in the Japanese government bond market,” says the report.

Given Japan has one of the lowest tax revenues in the world, the IMF recommends reconstruction spending be financed by an a 2-3 per cent increase in the consumption tax, to 8 per cent. This should then be increased further to 15 per cent.

Under existing government proposals, the sales tax will be doubled to 10 per cent by the mid-2010s.


Four big UK banks pass Euro stress test

The UK’s four major banks have all passed the European Banking Authority’s stress tests while eight European banks failed and 16 narrowly passed. Of the 90 European banks that underwent stress testing, five from Spain, two from Austria and one from Greece failed. The EBA says the banks fell below the capital threshold of 5 […]

MP “deeply disappointed” Govt will not publish Rock advice

Treasury select committee member Andy Love says he is deeply disappointed by the Government’s refusal to publish any advice it received from UK Financial Investments on the sale of Northern Rock. Chancellor George Osborne announced the sale the Rock in his Mansion House speech in June based on advice from UKFI, the body responsible for […]

Rathbones adding higher-risk fund

Rathbones is to add a higher-risk third multi-asset fund to its range, to be run by investment director David Coombs. The fund will be a more aggressive, higher-risk offering compared with the group’s existing firm’s multi-asset portfolios. The fund will launch on August 1, with 65 per cent in equities, 15 per cent in alternatives […]


Aifa blasts Consumer Focus pensions switching report

Aifa has attacked a report from the Government-funded Consumer Focus watchdog which criticises IFAs’ use of trail commission and pensions “churn” ahead of the RDR. The report, published today, says trail commission, unnecessary pension switching, excessively high costs and charges and opaque pricing of new and old products will pose “significant problems” post-RDR. However, the […]


Guide: reporting to the Pensions Regulator — what and when?

Johnson Fleming has published a step-by-step guide demonstrating the importance of record keeping and reporting, and how it can ensure you operate a successful scheme. The guide takes you through some key questions you need to ask and identifies the information you need to obtain. The topics include: why you need to keep records and the benefits of doing this; registering your scheme; what information you need to record to ensure you meet the Pensions Regulator’s requirements; and what items need to be recorded and when.


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