Tax and benefit changes affecting millions of people have come into force amid a political row over their impact.

Labour are arguing that a child benefit freeze, tax credit changes and the way benefits are linked to inflation will leave many families worse off.

The Treasury said there would be “some losers” but the poorest 80% of households would, on average, be better off with some taken out of income tax.

The changes have come into effect as the new tax year starts.

The parties are at odds over who will lose out the most – with the government denying Labour claims that the changes are “regressive”, hitting the poorest hardest.

http://www.bbc.co.uk/news/uk-politics-12981021

Key Points from the BBC:

1. Chancellor George Osborne has delivered the Budget in the House of Commons
2. Fuel duty to be cut by 1p and expected 4p rise cancelled – all paid for by a £2bn tax on oil companies
3. Further £600 increase in personal tax allowance from April 2012
4. Financial help for 10,000 first-time buyers to get on property ladder
5. Tobacco duty rates up by 2% above inflation from 28 March, and alcohol duty rises – 4p extra on a pint, 15p on a bottle of wine and 54p on a bottle of spirits
6. Forecast for how much UK economy will grow in 2011 downgraded

For live update on the Budget: http://www.bbc.co.uk/news/uk-politics-12759543

TechWatch:

You can’t put a price on many things. The steadfast loyalty of a friend, a Van Gogh masterpiece, a pot noodle…

No, wait. It’s not that you can’t put a price on a pot noodle, it’s that you shouldn’t. Even giving them away free is too expensive.

Snack-food digressions aside, you can apparently put a price on the damage cyber-crime does to the ailing British economy. And that figure is a staggering £27 billion every year.

So consultant firm Detica claims, in research conducted in conjunction with the government’s Office of Cyber-security. £27 billion is lost due to Intellectual Property theft and industrial espionage, the report states.

Cyber-crime hits the government itself for around £2.2 billion, and the citizens of the UK for £3.1 billion, but businesses cop for most of the damage – £21 billion. IP theft represents some £9 billion of that, and espionage £7.6 billion.

The hardest hit industries are the pharmaceutical and biotech sectors, electronics, chemicals and IT.

http://www.techwatch.co.uk/2011/02/17/cyber-crime-costs-uk-economy-27-billion-per-year/

eGov Monitor:

Youth unemployment in Britain is a serious concern as it reached a record high of 965,000 in the last quarter of 2010, according to figures released by the Office for National Statistics (ONS) earlier today.

Number of young people out of work rose by 66,000 in the three months to the end of December 2010, taking the rate up to 20.5%.  The overall unemployment numbers rose by 44,000 to 2.49 Million during the same period.

“This mini-recession in the labour market as a whole is turning into a major crisis for young people,” said Ian Brinkley Director at the Work Foundation.

“Young people’s employment will not recover significantly until employers start hiring them again in significant numbers and that depends on the overall state of the economy. But in the meantime, the government needs to look again at levels of support for young people through temporary employment programmes and encouraging more apprenticeships and paid intern placements.

http://www.egovmonitor.com/node/40775

The Bank of England has once again voted to hold the base rate at 0.5%, meaning we have now faced almost two years in a record-low interest rate environment.

With inflation expected to soar above 4% when next week’s official figures are announced, there has been growing support for a hike sooner rather than later.

Indeed, the minutes from last month’s rate-setting meeting revealed that two of the nine members had voted for a hike.

Source: MSN Money

From the BBC:

The government says it will increase the levy on bank profits to £2.5bn this year – raising an extra £800m.

The change would usually be set out in next month’s Budget.

But BBC business editor Robert Peston said the Chancellor had “concluded that the banks are in better shape than he thought less than two months ago, when he announced that a smaller levy would apply in the current year”.

Source: http://www.bbc.co.uk/news/business-12389416

From the BBC:

The pound has risen to its highest level against the dollar in three months, buoyed by a return to growth in the construction sector in January.

The Markit/CIPS UK Construction Purchasing Managers’ Index rose to 53.7 in January, beating forecasts of 49.9. A reading above 50 indicates growth.

In December, when heavy snow disrupted building work, the index read 49.1.

After the release of the data, sterling rose 0.5% on the day to $1.6232, its strongest since 5 November.

It also strengthened against the euro, rising 0.6% to 1.1741 euros.

More: http://www.bbc.co.uk/news/business-12343459

Great News for Europe from the BBC, come on Britain, time to follow!

The eurozone economy has emerged from recession after growing between July and September, figures have shown.

The 16 nations that use the euro collectively grew 0.4%, after shrinking by 0.2% between April and June.

The French and German economies both grew for a second consecutive quarter, confirming the eurozone’s two largest economies are out of recession.

However, both France and Germany grew by less than expected, a sign of how tentative signs of recovery remain.

The European Union as a whole – which includes non-eurozone countries such as the UK and Sweden – also emerged from recession, growing 0.2% in the third quarter.

Germany’s economy grew by 0.7% in the quarter, while France grew by 0.3%. Both economies and Japan ended year-long contractions in the second quarter of the year, while the US has since joined them after its economy grew in the third quarter.

However, the UK remains in recession, having contracted by 0.4% between July and September.

The UK, Europe’s second largest economy, has now contracted for six consecutive quarters, the first time this has happened since quarterly figures were first recorded in 1955.

Full story – http://news.bbc.co.uk/1/hi/business/8358227.stm

The UK economy has “only just started” along its road to economic recovery, according to Bank of England governor Mervyn King.

In its latest inflation report, the Bank indicated it would be late 2011 before the UK economy recovered to the level it was at before the recession.

Mr King also warned inflation may “rise sharply over the next few months”.

He also said the Bank was “open minded” about extending its programme of pumping money into the economy.

Last week, the Bank extended the programme – a policy of injecting money into the economy through buying bonds from banks and other companies called quantitative easing – by £25bn.

http://news.bbc.co.uk/1/hi/business/8353931.stm

News from the BBC:

A big shake-up of UK banks with taxpayer support will be unveiled on Tuesday, the BBC understands.

Announcements on the future of Lloyds and Royal Bank of Scotland will be made jointly by the banks and the Treasury.

Lloyds is expected to say it will raise more than £20bn from investors in return for staying out of the state-run insurance scheme to cover toxic loans.

Both will also have to set up new banks out of their existing branch networks and sell them within four years.

The creation of the new banks is on the instruction of the European Competition Commissioner Neelie Kroes and is supposed to boost competition.

RBS is also expected to confirm that it will participate in the government’s toxic loan scheme, but on different terms.

The bank, which is 70% state-owned, would buy an insurance policy from the government to cover future losses from some of its more toxic investments.