City’s financial sector to grow by 100,000 new jobs within 10 years, predicts hedge fund.

London’s role as a financial centre is set to be boosted by the economic growth of emerging market countries, according to a top City hedge fund.

“The idea that London is going to full of tumbleweed in 10 years is not credible,” Savvas Savouri, chief economist at Tosca, told the Financial Times – contradicting many bankers’ gloomy predictions about the demise of the City due to the Government’s perceived hostility to the financial sector.

Instead, Mr Savouri predicts that London will attract at least 100,000 new financial jobs in the next 10 years, as the growth of the Bric economies – Brazil, Russia, India and China – works in the City’s advantage.

“There are too many aspirational economies that don’t have infrastructures of their own. We have an affinity with India, with the Gulf, even with China – via Hong Kong. These markets will want a western hub,” he said.

Boris Johnson, mayor of London, last week added his voice to the throng warning of a City exodus due to the introduction of a 50pc tax on top earners’ and one-off levy bank bonuses. They mayor suggested that banks could move 9,000 staff out of London in response. Some hedge funds – such as BlueCrest Capital and Brevan Howard – have already relocated staff to Switzerland.

However, Tosca believes that concerns over taxes and regulation are unwarranted. “Taxes are rising and regulation is being tightened elsewhere too.” Mr Savouri told the FT.

His forecasts are modelled in part on the growth of the Japanese banking sector in London over the last 20 years. A similar per capita representation of Bric economies in the capital would create 180,000 new jobs, he said.

http://www.workfromhomeinuk.com/

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/

Cabinet minister Harriet Harman proposed scrapping the compulsory retirement age. From the Government’s point of view, this change would have two happy effects.

It would cause millions of people to pay taxes for longer and also delay the point at which they ask for state pension promises to be honoured.

As regular readers will know, state pensions in this country are a massive Ponzi scheme which it would be illegal for anyone to operate in the private sector. National Insurance contributions deducted from workers’ pay packets this week are used to pay next week’s state pensions.

The fund has enormous and rising liabilities but no assets. Don’t take my word for it; Nye Bevan – one of the founders of the welfare state – jovially admitted: “The great secret about the National Insurance fund is that there ain’t no fund.”

To be fair to Ms Harman, removing employers’ ability to force employees to retire at the age of 65 can also be seen as an important extension of individual choice. No wonder Lord Mandelson lost no time in pointing out that the proposals are not official government policy.

Perhaps the old spin supremo is missing a trick here. Many voters might appreciate the chance to stay in work for longer, whether or not their employer still welcomes the wisdom that often comes with experience. Whatever his other interests, Lord Mandelson should not forget the grey vote.

The simple fact is that rising numbers of people are being forced by financial reality to work beyond state pension age. Dreams of early retirement are likely to remain just that for many people, as investment returns and interest rates fall while taxes taken out of pay packets and pension funds rise.

According to the Office for National Statistics, only 7.5pc of men aged more than 65 were still working in 1993 but 11pc did so last year; that’s an increase of 46pc. Women have experienced an even sharper increase in working beyond their state pension age of 60.

Just over 8pc did so at the start of this period but 13.4pc do so now; an increase of 65pc. Sadly, that gender gap may reflect the low-paid part-time work many ‘welderly’ – or working older people – find themselves obliged to accept.

Dr Amarendra Swarup of Pension Corporation, the company scheme specialists, said: “The lack of adequate preparation for baby boomers and the highest ever level of youth unemployment risk perpetuating the current pensions crisis for at least the next two generations.”

That’s a dismal prospect. As I may have pointed out in this space before, the only way to be sure you and your family are not personally affected is to save hard. That way, you can afford the luxury of choice about where and when to finish work.

Here and now, it seems unlikely that Ms Harman’s proposals will prove sufficient to keep her in her present job beyond state pension age; she turns 60 in July.

http://www.telegraph.co.uk/finance/personalfinance/comment/iancowie/

Figures from price comparison site moneysupermarket.com show on average people could save more than £4,070 over the next 12 months by reviewing their finances.

It makes sense for people to review their finances on a regular basis and the turn of year is a great trigger to do just that.

Dig out every single financial record you possess, including: savings balances, Peps and Isas, bonds of every colour and shape, insurance plans, both general and life, pensions statements, receipts, income payments and anything else relevant to tax returns.

Do the same with borrowings: mortgages, credit cards and storecards, personal loans, student loans, hire purchase agreements.

Work out how much spare cash you have, over and above money needed to take care of emergencies and bills. If you have debts, use it to repay them. Borrowing rates may be low, but savings rates are lower still.

The more sophisticated may have super-flexible mortgages, or offset plans, which automatically use savings to bring down borrowing costs. The rest of us have to do the same thing manually.

Your savings will be looking pretty battered after a year of eye-wateringly painful interest rate cuts. Minimise the pain by transferring to the best possible rates.

Check out your investment portfolio. Make sure it is achieving what you originally intended it to do. How do you see the next few years panning out? Is the risk profile about right? Are there any real dogs you’d be better off without?

Did you ever have a joined-up strategy in the first place? Too many people are sitting on a mishmash of different Peps and Isas, invested willy-nilly in a myriad of different sectors and countries, equities and bonds, with no logical structure. Others have been contributing for aeons to a single, probably UK-based, unit trust savings plan with no attempt at diversification.

If you fancy seeking professional help, then visit www.telegraph.co.uk/findanifa. Try more than one; the good ones are prepared to travel to worthwhile clients. It’s worth paying a fee to avoid unsuitable, commission-led advice.

Make sure your will is up to date. If your affairs are in any way complicated, consult a good solicitor.

Check list:

Bills

Use direct debits wherever possible to save money. Check statements to ensure you are not building up credit balances. If you are, demand a cheque. It’s your money, not theirs.

Current accounts

Check monthly statements exhaustively. They’re computerised and staff no longer check for obvious errors. Retain lists of bank charges and keep them handy. Watch out for unnecessary credit insurance charges. They’re expensive and rarely worthwhile. Don’t be afraid to transfer to better-paying accounts. The process is getting simpler and faster.

Insurance premiums

Household and motor premiums have soared. Never renew without trawling the market for cheaper quotes. Brokers don’t always mention direct providers, so check them. Use the internet if possible. Don’t assume deals from big broker brands like the AA are alwasy the best.

http://www.telegraph.co.uk/finance/personalfinance/new-year-money-makeover/

More than half of Britons make a New Year’s resolution each year and taking steps to sort out their finances is often near the top of people’s lists.

Here are 10 steps to consider taking during 2010 to improve your financial position.

1. Do a budget

The first step to financial planning is knowing exactly how much you have coming in each month and how much is going out.

Take the time to draw up a budget, remembering to include not only regular bills such as utilities and council tax, but also costs that occur less often, such as having a car serviced.

Once you have a list of all your outgoings look for any areas where you could cut back, and try to make sure you have enough money to set something aside into a savings account each month.

Danny Cox, of financial adviser Hargreaves Lansdown, suggests categorising items as being essential, such as mortgage repayments or food, important but not essential, such as mobile phones and motoring costs, and luxury, such as going out.

2. Repay debt

At the end of October, the latest month for which figures are available, Britons owed £228 billion in unsecured debt, such as credit cards, loans and overdrafts.

Key to getting on top of debt is understanding exactly how much you owe and what interest you are being charged on it. Debts with the highest interest rates should be paid off first.

If you are having trouble keeping up with your minimum repayments contact a debt advice charity, such as Citizens Advice or the Consumer Credit Counselling Service, for help.

3. Start saving

Saving is an important part of financially planning, as it offers you a cushion against unexpected expenses. But recent research showed that four out of 10 people have failed to save any money this year and 20% of people have no savings at all to fall back on.

Despite the current low level of interest rates, it is still important to build up a nest egg. Financial advisers generally suggest people try to have the equivalent of four to six months’ worth of their take home pay in a savings account.

Try to include some money for saving when you draw up a budget, rather than waiting to see what, if anything, is left at the end of the month. Regular savings accounts often reward people who save a set amount each month with higher interest rates.

4. Review your finances regularly

It is important to get into the discipline of reviewing your finances on a regular basis, so it is good to set aside some time at least once a month to check your banks statements and ensure your money is still working hard for you.

Things to look at include making sure you are still getting good rates on your savings accounts, cancelling any direct debits you no longer need, and checking if any insurance policies are coming up for renewal, so that you can search the market for the best deals.

5. Monitor the mortgage market

With the Bank of England base rate currently at a record low, many people who have come to the end of a mortgage deal find they are better off staying on their lender’s standard variable rate, rather than remortgaging to a new deal.

But this situation is likely to change during 2010, as the Monetary Policy Committee is widely expected to start raising interest rates towards the end of the year.

Fixed rate mortgages are currently expensive in relation to swap rates, upon which they are partially based, but the situation is likely to change during the coming 12 months as competition returns to the mortgage market.

Keep an eye on the best buy rates being offered and get ready to remortgage when the time is right.

6. Contribute to a pension

While retirement may seem a long time off, financial advisers suggest people start contributing to a pension as soon as possible, particularly if they are paying into a defined contribution or personal pension.

As a general rule advisers suggest people contribute a percentage of their salary that is equivalent to half their age when they first started a pension. So, if someone starts a pension when they are 20 they should contribute 10pc of their pay, but if they put off starting one until they are 40pc they will need to pay in 20pc, showing the benefits of starting early.

7. Pay less tax

There are some simple steps consumers can take to ensure they pay less tax, or even no tax, on their savings.

Everyone has an annual Isa allowance, enabling them to save money in cash or shares without having to pay income tax on the interest or capital gains tax on any profits.

People born on or before April 5 1960 can currently save up to £10,200 a year into an Isa, £5,100 of which can be held in cash. Other age groups can save up to £7,200 in an Isa, including £3,600 in cash, with the limit rising in line with that for older savers from April 5, 2010.

Those who do not pay income tax can also fill out an R85 form, which means banks and building societies will not automatically deduct income tax of 20pc from their savings.

8. Shop around for insurance products

Consumers can make big savings by shopping around for home, car, travel and other insurance policies. Most of these policies have suffered significant premium increases in the past couple of years, making it important to search the market, rather than just renew policies with your existing providers.

Price comparison website Confused.com claims the average user saved £200 on their motor insurance and £180 on home insurance through the site.

But people who use price comparison websites to find a new provider should read the details of all policies they are offered carefully to ensure they offer sufficient cover and do not included a high excess to reduce premiums.

9. Plan for the future

Take the time to think about any big events or expenses you have coming up and plan towards them. These may include annual events, such as Christmas or a summer holiday, or less regular ones like buying a house or having a baby.

Think about the costs involved and how you will cover them, and work out how much you will need to set aside each month towards them.

By planning in this way and using savings you can save considerable amounts compared with relying on debt to cover these events, and then having to repay the money plus interest.

10. Get clued up on investments

Shares generally produce higher returns over the medium to long term than simply keeping money in a cash savings account, so it is a good idea to consider investing in the stock market.

But equities are also higher risk, so it is important to understand how they work and what level of risk you are happy to take.

Investments range from relatively low risk products which offer some capital protection to higher risk funds that invest in emerging markets.

http://www.telegraph.co.uk/finance/personalfinance/

Middle-class savers are being told there is no point in savings as latest figures show 99 per cent fail to make any money at all.

A painful combination of desperately low interest rates and the erosive effects of rising inflation mean almost all higher rate tax payers miss out on a return on their savings once tax is taken into account.

The Daily Telegraph campaigned for a better deal for savers and the Government promised to take action.

But with the Consumer Prices Index rising to 1.9 per cent, basic rate taxpayers need a rate of 2.375 per cent on their savings before they begin to see a real return, while higher rate tax payers need to earn 3.166 per cent.

Only nine out of 744 variable rate savings accounts pay this higher rate, leaving savers not actually earning any real rate of return on their investment, according to the research by personal finance website Moneynet.

It is a sharp drop on last month when 69 out of 744 variable rate savings accounts paid this higher rate.

Experts accused banks of benefiting at the expense of customers and warned the problem would now get worse for basic rate taxpayers.

Andrew Hagger, of Moneynet, said: “The savings market is looking increasingly desperate for high rate taxpayers and we’ve reached a situation where there’s virtually no incentive to save.

“With inflation forced to climb further, basic rate taxpayers will soon be faced with a similar miserable situation.

“There is unlikely to be any improvement until the Bank Rate starts to increase. But with experts predicting that this may be another six to 12 months down the line, 2010 looks like being another terrible year for savers.”

There are better deals available for savers who are prepared to lock their money into a fixed rate deal.

The Consumer Prices Index, the Government’s preferred measure of inflation, jumped from 1.5 per cent to 1.9 per cent last month, which was more than economists were expecting.

The sharp rise was due to a larger than expected rise in fuel and energy costs.

Separate research by financial information group Moneyfacts.co.uk showed the average no notice account is currently paying interest of just 0.81 per cent.

It means the average return on one of these accounts is now minus 1.25 per cent, once tax and inflation are taken into account, the lowest level since May this year.

Darren Cook, a spokesman for Moneyfacts, said: “Low bank base rates are designed to encourage savers to plough their savings back into the economy, but this serves little or no benefit to those who rely on interest from their hard earned wealth to subsidize their pension.”

http://www.telegraph.co.uk/finance/personalfinance/savings/

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