UK most likely to lose credit rating - papers

Britain more at risk of losing its top-tier credit rating than any other major economy, according to leading agency Fitch.

The warning, which coincides with news that the biggest devaluation in the pound since the 1930s has failed to stem the rising trade deficit, is the latest blow for the UK's economic credibility.

David Riley, Fitch's co-head of global sovereign ratings, says record levels of Government debt meant that unless the next Government makes serious efforts to bring spending under control and reduce that debt, Britain could lose its AAA rating.

"It's clear that the UK's ability to sustain large public fiscal deficits and a level of public debt without driving up interest rates and without putting sterling under significant pressure is much less than in the case of the US," he said. "If there was another significant fiscal stimulus package in the UK, then UK rating would be at risk." Full story...

THE CONTROVERSIAL Alternative Investment Fund Managers (AIFM) directive to regulate hedge funds and private equity firms should be scrapped and started again the European Parliament were told yesterday.

Gerben Everts, head of global regulation for APG Asset Management which manages €230bn (£206bn) of pension fund assets, told a public hearing in Brussels European policy makers needed to "get realistic" about a directive that has "come out of the dark", the Telegraph reports.

He said the "quality of the directive will seriously benefit if Parliament would invite the Commission to temporarily withdraw its proposal... and come forward with a new balanced proposal by the summer."

Starting again would "serve the level playing field, prevent loopholes...and contribute to the effective functioning of the European financial markets," he says. Full story...

MALCOLM MCLEAN, chief executive of the Pensions Advisory Service, has called for a standardized 30% rate of tax relief on pensions, and for people to be better educated over what this actually means, the Financial Times reports.

Mr McLean said he was not too worried about high net worth individuals, but advocated system be reworked for the lower rate payers.

He said: "I am certainly not worried about high net worth individuals but more concerned about issues like anti-forestalling. This sort of jargon puts people off.

"Instead we ought to be increasing tax concessions for lower rate tax payers. There should be a standardized tax relief of 30 per cent."

He added: "Why is tax relief given on pension contributions? To encourage people to save in the first place. I do not believe high net people need that incentive. The whole system needs reworking." Full story...

THE COUNCIL OF MORTGAGE Lenders remains unimpressed by the bank restructuring and expects many borrowers will still struggle for months to get a mortgage.

Ahead of it s annual conference on Friday, the CML said it agrees with the many housing analysts forecasting a period of only modest recovery in prices, which could extend for some years beyond 2010.

"We have stability in the mortgage market but at the risk of stagnation", it said in its the latest monthly newsletter.

Current market conditions are unlikely to excite a rush to enter the property market, and even if opportunities are fully realised in the medium or longer term we are unlikely to see a return to the highly competitive mortgage market we saw before the credit crunch, it concluded. Full story...

A QUARTER OF LOW-PAY households are spending over a quarter of their income repaying debts according to the Resolution Foundation thinktank, the Guardian reports.

Research by the insurance tycoon Clive Cowdery's thinktank, Resolution Foundation, suggests 24% of households with an average of £15,800 at their disposal spend more than a quarter of their monthly income on debt - twice the number from three years ago.

The study suggests nearly a third of low-income households have high loan-to-value mortgages and are in negative equity, making them vulnerable to homelessness if they lose their job.

Resolution Foundation says formal skills assessments for the unemployed through Job Centre Plus should be brought forward from 26 weeks to 13 weeks to speed people back into employment and jobs combined with training. It is also calling for high-street banks to help with debt counselling when low-income households miss their first mortgage payment. Full story...