Osborne sticking with UK austerity plan
British finance minister George
Osborne said on Sunday that he would stick with his deficit-reduction programme
when he presents a half-yearly fiscal statement on Wednesday. The Chancellor of
the Exchequer declined to comment more specifically on whether he would be able
to meet debt targets, but stressed he did not believe Britain should borrow more or increase spending. At his "Autumn
statement" on Wednesday, Osborne is expected to defend his stringent
economic policies as the only credible way of solving the government's biggest
political problem - its failure to deliver a strong recovery. "It's
clearly taking longer to deal with Britain's debts, it's clearly taking longer
to recover from the financial crisis than anyone would have hoped, but ... to
turn back now ... would be a complete disaster for our country," he said
in a BBC television interview. British media reported on Sunday that Osborne
plans to cap the amount of tax relief high earners receive on their pension
contributions alongside reining in the welfare budget. Osborne declined to
comment on the reports, but did not reject the proposals directly when
questioned in the interview. He also declined to say if the country's
independent fiscal watchdog would show him still on track to eliminate Britain's underlying budget deficit within the next five years, or to have debt
as a share of national income on a downward path by the 2015/16 tax year.
Merkel not ruling out Greek 'haircut'
German Chancellor Angela Merkel has
not ruled out a so-called "haircut", or write-down, on Greek debt in
the next few years, in an interview with a Sunday newspaper, marking an
apparent softening in position.After being vehemently opposed to accepting a
"haircut," Merkel told Bild am Sonntag that it could be considered
from 2014 if Greece's financial situation improves, according to a pre-released
article."If Greece one day again manages with its revenue without getting new debt, then
we must look at and assess the situation. That is not the case before 2014/15
if everything goes according to plan," she told the paper.Opposition
politicians have accused Merkel of playing down the need for a write-down of
Greek debt holdings by public institutions such as other eurozone governments and
the European Central Bank, because of federal elections expected to take place
on September 22.In the Bild interview, Merkel contested that she had refused a
"haircut" due to the looming elections."The current aid
programme for Greece runs until 2014, for the achievement of certain budgetary
goals we have given the Greeks two years more time until 2016," she
said.Many in Germany consider a write-down of Greek debt holdings
inevitable.But on Friday, Finance Minister Wolfgang Schaeuble said speculation
on a "haircut" sent "the wrong incentive" to Greece because
it reduced the pressure on the Athens government to enact structural economic
reforms.Some eurozone states have said they would "not exclude" the
possibility of writing off some debt from 2015 onwards.Merkel also said she
favoured considering tougher sanctions for indebted eurozone states."In
the long term I am definitely of the opinion that we consider how we develop in
our law procedures for states which do not comply with their commitments,"
she said.Merkel also told Bild that she understood the scepticism of many of
her compatriots over Greece but that she saw a determination in Athens to
reorganise the country and that rescuing Greece from economic collapse was in
Germany's best interests.On Friday she secured the vote from German lawmakers
to release €43.7bn in aid to debt-wracked Greece agreed after tortuous talks
between eurozone finance ministers.
UK over-50s ignorant about retirement
Britain's over-50s are in blissful ignorance of how little their pension pots
will pay out and need an urgent financial health check if their retirements are
to be as comfortable as they expect, an industry report said. Workers
approaching retirement in the next 15 years need to see their pension pots grow
by almost 80% to meet their expectations, the National Association of Pension
Funds (NAPF) said on Friday. "Millions of people are within a decade of
their state pension but have still not thought about how long their retirement
might last," Joanne Segars, chief executive of the NAPF, said in a
statement. The burden of managing a pension at retirement has increasingly
fallen on employees, as defined contribution (DC) pensions, rather than
final-salary schemes, become the more dominant form of retirement saving. The
introduction of the government-backed auto-enrolment scheme where people are
required to opt out rather than opt into retirement saving could lead up to 8
million additional workers being signed up for pensions, which will likely be
DC pension memberships. Yet a third of workers aged 52 to 64 remain ignorant
about what their private pension income may provide in retirement, while 59% of
workers have never thought about how many years of retirement they need to
finance, a report by the Institute for Fiscal Studies and supported by the NAPF
said. Women in their 50s are living to an average of 88 - four years longer
than expected - while men are living to 85, overshooting life expectancy by
around two years, when compared with national projections of life expectancy,
the report said. Annuities, which many British retirees buy to ensure a steady
income, are meanwhile becoming more expensive, meaning people will expect their
savings pots to generate a higher annuity income than it actually does. Private
pension firms have also been accused of failing to disclose some of the costs
they levy on customers' investment funds, leaving people unaware that their
pension savings were being eroded by the charges. The NAPF represents 1 300
pension schemes in the UK with 16 million
members and assets of around £900bn.
North Korea plans new rocket launch
North Korea said it
would carry out its second rocket launch of 2012 as its youthful leader Kim
Jong-un flexes his muscles a year after his father's death, in a move that South
Korea and the US swiftly condemned as a provocation.North Korea's state news
agency announced the decision to launch another space satellite on Saturday,
just a day after Kim met a senior delegation from China's Communist Party in
the North Korean capital of Pyongyang.China, under new leadership, is North
Korea's only major political backer and has continually urged peace on the
Korean peninsula, where the North and South remain technically at war after an
armistice, rather than a peace treaty, ended the 1950 - 1953 conflict.No
comment on the planned launch was available from Beijing's foreign ministry.In
Washington, US State Department spokesperson Victoria Nuland condemned the
launch plan as a provocative threat to the Asia-Pacific region that would violate
UN resolutions imposed on Pyongyang after past missile tests."A North
Korean 'satellite' launch would be a highly provocative act that threatens
peace and security in the region," she said in a written statement."North
Korea must abide by its international obligations under UN Security Council
resolutions that clearly articulate what it can and cannot do with respect to
missile technologies," said Pentagon spokesperson George Little.Seoul's
foreign ministry called the move a "grave provocation". Japan's Kyodo news agency
said Prime Minister Yoshihiko Noda had ordered ministries to be on alert for
the launch."North Korea wants to tell China that it is an independent
state by staging the rocket launch and it wants to see if the United States
will drop its hostile policies," said Chang Yong-seok, a senior researcher
at the Institute for Peace Affairs at Seoul National University.North Korea is
banned from conducting missile or nuclear-related activities under UN
resolutions imposed after earlier nuclear and missile tests. The country says
its rockets are used to put satellites into orbit for peaceful purposes, but
that assertion is not widely accepted outside of Pyongyang.Washington and Seoul
believe that the impoverished North is testing long-range missile technology
with the aim of developing an intercontinental ballistic missile capable of
carrying a nuclear warhead.Pyongyang's threats are aimed, in part, at winning
concessions and aid from Washington, analysts say.The failed April rocket
launch took place to celebrate the 100th anniversary of the birth of North
Korea founder Kim Il Sung and the latest test will take place close to the 17
December date of the death of former leader Kim Jong-il.It will also come as
South Korea gears up for a 19 December presidential election in a vote that
pits a supporter of closer engagement with Pyongyang against the daughter of
South Korean dictator Park Chung-hee.The April test was condemned by the UN,
although taking action against the North is hard as China refuses to endorse
further sanctions against Pyongyang.North Korea is already one of the most
heavily sanctioned states on earth thanks to its nuclear programme.Pyongyang
has few tools to pressure the outside world to take it seriously due to its
diplomatic isolation and its puny economy.The state that Kim Jong-un inherited
last December after the death of his father boasts a 1.2 million-member
military, but its population of 23 million, many malnourished, supports an
economy worth just $40bn annually in purchasing power parity terms, the US
Central Intelligence Agency asserts."The North's calculation may be that
they have little to lose by going ahead with it at this point," said Baek
Seung-joo of the Korea Institute for Defence Analyses in Seoul.Baek said the
test planned for December would likely be no more successful in launching a
satellite than the April one that crashed into the sea between China and North
Korea after flying just 120km. "Kim Jong-un may be taking a big gamble
trying to come back from the humiliating failure in April and in the process
trying to raise the morale for the military," Baek said.North Korea's
space agency said on Saturday that it had worked on "improving the
reliability and precision of the satellite and carrier rocket" since
April's launch.
