As the deadline for handing in your tax return looms, HM Revenue and Customs have revealed that online self-assessment tax forms are becoming more and more popular.

All together, there are around nine million people in the self-assessment tax system. But at around 1.8 million, the number of people filling in their tax returns online this year is already a third more than at this time last year.

A spokesman has suggested that one possible explanation for this, is due to the fact that the deadline for the paper versions of the tax returns has been bought forward, which has provided the “impetus” for people to switch to online self-assessment.

The new deadline for paper tax returns is Friday.

Forms will be accepted if they are handed in personally to HM Revenue and Customs before Tuesday 4th November (remember, not all offices have letterboxes!). Therefore, many people will be facing a hefty £100 fine if they miss the deadline.

Self-assessment was first introduced in 1996, but this year is undergoing it biggest change since it began, as forms are being given a considerable face-lift.

For paper tax returns, the deadline for January has been brought forward from the end of  the month. However, the online self-assessment return deadline will be remaining at the 31st January 2009.

There is a current advertisement campaign in order to make people aware of the changes, featuring BBC newsreader Moira Stuart.

HM Revenue and Customs spokesperson has said that from previous years statistics, they had expected around two million people to have filled in their tax returns online by the end of December this year, but that this year, they are expecting to hit that mark within the next couple of weeks instead.

According to figures released by the Commerce Department, the US economy is also now falling, with the annualised rate between July and September declining to 0.3%. This follows a 2.8% increase in the three months prior to this.

Gross Domestic Product (GDP) figures, were better than was expected, but still show that sharpest reduction of the American economy since 2001.

The fact that consumer spending shrank for the first time since 1991, by 3.1% will not help matters, especially as consumer spending is what makes up around two-thirds  of the US economy.

Some of the biggest US companies have also released information about their results for the July to September period, coinciding with this data. This data includes that:

• CBS broadcasters made a loss nearly $12.5 billion (nearly £5.6 billion) this quarter, including a write-down of $14.12 billion-worth of media assets.

• Motorola, who reported a profit of $60 million this time last year, now report losses to be at around $397 million last quarter. This is mostly said to be due to falling mobile phone sales.

• International Paper have done a little better than expected, but are still reporting profits of $149 million, compared with their $217 million profit recorded in the third quarter of last year.

• Eastman Kodak’s profits have actually increased to around $96 million, compared to $37 million this time last year.

• Colgate-Palmolive are reporting profits of almost $500 million between July and September this year, a rise of 19% from last year.

It has been revealed in their GDP data, that US spending on ‘non-durable’ goods, such as paper and food have dropped at its sharpest rate since 1950.

According to the UK standard definition, recession is applied when a country shows negative growth for four consecutive quarters. The US is joining many other major countries, including us, in that it is now half way towards that, as it is showing negative growth for its second consecutive quarter over-all.

According to US rules however, the country may exhibit negative growth for four consecutive quarters, but is not in recession until their National Bureau of Economic Research declares it.

Despite this, the Federal Reserve has shown concerns about the US economy, and has cut its key interest rate from 1.5% to 1% on Wednesday.

Bill Walsh, president of Hennion and Walsh in New Jersey has said that: “consumer spending is about 70% of the GDP and this looks like the lowest it has been in two decades, which goes to show that in the fourth quarter, we are going into recession.”

Accompanying the GDP figures were figures from the Labor Department, which show that there were 479,000 new claims last week for jobless benefits, the same number as the previous week. This again supports the theory that, like ours, the US’ economy is in trouble and it is seeping through to their job market.

The UK’s financial watchdog has reported that the number of people who are losing their homes because they cannot keep up with their mortgage repayments has climbed sharply.  In the second quarter of this year, the number was over 11,000, a 71% increase on the year before.

The Financial Services Authority (FSA) has said that the number of people struggling to clear their home loan arrears has risen even though the Land Registry figures are showing that house prices are still falling in England and Wales. The Bank of England is predicting still more problems for homeowners.

The UK financial watchdog also added that the number of people falling behind on their mortgage repayments over at least three months, has been rising steadily for over a year, and is 16% higher than a year ago.

Some, but not all of these will lead to repossessions, and therefore homeowners are being urged to contact their lenders as soon as they find that they are struggling to make any repayments to their mortgages.

Since the FSA started collating figures at the beginning of 2007, this is the second time it has released statistics of this kind, based on data from 300 different mortgage lenders and administrators.

The Council of Mortgage Lenders has also predicted that in 2008 45,000 homes will be repossessed in the UK, up from 27,100 last year.

This new information backs up what others have been saying about the state of the housing market over recent months – that the number of new home loans has dropped and banks are being  more cautious about who they are lending to due to the credit crisis.

“Significantly fewer” new loans have been given to people who can now only just afford a deposit of 10% of the value of their property. This is compared to a peak in early 2007, where homeowners were able to put down 15% deposits.

People taking out loans who have a blemished credit history between April and July of this year represented 2.1% of new lending; this is compared to 3.4% last year.

In other figures released by the Land Registry, a 2.2% drop in house prices in England and Wales can be seen. This means that the average home is now worth £168,814, an 8% decrease on last year.

Even London is feeling the effects of accelerating annual decreasing house prices. Their prices have fallen by 6.1%, though this is nothing compared to Wales, who have seen the biggest fall of 10.7%.

House prices in the UK are now falling faster than those in the US.

The Bank of England’s Financial Stability Report (FSR) has estimated that around 500,000 homeowners in the UK are now in negative equity due to the 13% fall in property prices in the UK since last October.

It is also believed that this number could rise to 1.2 million if house prices drop a further 15% in the next few months.

The Bank of England has today revealed worrying figures in its latest bi-annual Financial Stability Report (FSR), showing that the world’s financial firms have now lost £1.8 trillion due to the continuing credit crisis.

It has also warned that 1.2 million homeowners could be facing negative equity if house prices continue to fall as sharply as they have been.

The Bank of England’s new estimate on global losses doubles the prediction made in May. This news comes just after it was revealed recently that the UK would be putting £37 billion into Royal Bank of Scotland, HBOS and Lloyds TSB.

The Bank of England is saying that there may be “a need for a fundamental rethink of how to safeguard against systemic risk,” and warning that UK banks could possibly now be looking at stricter measures in order to avoid another credit crisis in the future.

According to the Bank of England’s deputy governor Sir John Gieve, this “fundamental rethink” could mean increasing capital and liquidity requirement and institutions.

According to the FSR, the UK banks expanded too quickly when times were good, and lacked solid foundations to cope when things then turned bad. This is one of the major things that needs to be addressed in the future as part of the “fundamental rethink”.

Mr Gieve has also said “we need to establish restraints on the build-up of risks in the financial system over the cycle with the dangers they bring to the wider economy.”

Some of the measures that are being debated in the FSR include “leverage ratio”. This would peg back the growth in banks’ balance sheets to the size of their capital.

Also, “dynamic provisioning” has been suggested in order to encourage banks to build up their reservations or take insurance out against having to seek further funding injections.

The report also compares 2001’s UK customer lending and customer debts (which were about equal) to the first half of 2008, where the surplus of lending over deposits (“the customer funding gap”) was £700 billion.

In its suggestions, the report has advised banks to strengthen their finances by increasing customer deposits, holding more assets that they should find easy to sell and try to reduce their reliance on the wholesale money markets.

The US Federal Reserve is scheduled to begin a two-day long meeting on Tuesday in order to decide whether or not to reduce interest rates again. It is expected that they will reduce interest rated to 1%, which would put them at their lowest level since 2001.

Analysts also believe that if this course of action is taken, this will lead to further interest rate cuts in European banks.

The Centre for Economics and Business Research (CEBR) has predicted that house prices will now remain lower than the 2007 peak, until 2013.

Other predictions made by the CEBR, mirror those made by Graham Beale, Nationwide Building Society’s chief executive last month. They say that prices will fall by 25% from the 2007 peak to a trough by the end of 2009. This could mean that up to 2.5million homeowners could be left facing negative equity.

If they are correct, the predictions from the CEBR could mean that by the end of 2009, the average home price has dropped to about £157,000, a decrease of approximately £50,000 from last year.

It is also expected that in 2010 housing prices will level off before rising about 20% throughout 2011 to 2012.

The Council of Mortgage Lenders however, have claimed that short-term predictions as to house prices are more pointless now than they used to be, due to the volatility of today’s market. But the group have also joined in the general agreement in the market that prices will continue to fall until the end of next year. Other major lenders are expected to give their predictions in November to December.

The CEBR have suggested that one of the major contributors to the falling property prices could be the banks unwillingness to lend to each other, and therefore potential homeowners even more so.

Ben Read, managing economist at CEBR has suggested that: “Confidence in the housing market has been shattered as lack of mortgage availability has left few sellers chasing even fewer buyers, and expectations of falling prices have become embedded…Now that the financial crisis has turned into an economic crisis with rising unemployment and falling household incomes, we could see house price falls starting to accelerate again.”

He also believes that there would be a slight offset due to “aggressive cuts in interest rates”, which homebuyers should see a little of.

The Bank of England’s Monetary Policy Committee has a meeting planned for next week in order to make the next decision in regards to interest rates. The possibility of co-ordinated moves by central banks is still debated.

Mr Read also suggested that rescue packages for banks would also free up lending, which could help transactions to rise sharply in 2010.

Currently, nearly a third of all UK properties that are on the market have been for more than six months, 12% of those have been on the market since the beginning of the year.

Statistics from property search engine Globrix show this most keenly in Aberystwyth, 70% of properties on the market have been there for more than six month, Merthyr Tydfil at 62% property unsold in six months, Rochdale at 52% and Shrewsbury at 49%.

In the major cities, such as Liverpool, 41% of properties have been unsold for longer than six months, but in Bristol, only 25% of properties have been on the market for longer than six months.

Confirmation that the UK is defiantly in an economic recession came today as it is revealed that between July and September the economy has shrank for the first time in 16 years. If, in the fourth quarter of the year, the economy continues to slow, we will be in an official recession.

According to the Office for National Statistics, output has fallen 0.5%, a drop that was bigger than expected. This has knocked down UK shares, and weakened the pound, which is now at the value of $1.5889. This is the first time it has fallen below $1.60 since 2003.

Chancellor Alistair Darling has said: “it will be a difficult period, but I am absolutely confident we will get through it…We want to help people get through this period, putting more money in their pockets.”

The Chancellor has also said that the UK and other countries in the world need to work together, as they have recently in order to sort out recent problems with the worlds banks. This will ensure that everyone contributes to the effort, and that all countries change in order to control the recession as much as possible and try to lessen the effects it is going to have on global economy.

He has blamed the fall in UK output to the credit crunch, which has led to UK consumers ‘tightening their belts’ and therefore putting less money into the economy in the first place. But has also emphasised that there was a recession in the 70’s, 80s and 90’s, we got through those, and we can get through this one as well.

On the other hand, Deputy governor of the Bank of England’s rate-setting committee (MPC), Charlie Bean has said that this is  a: “Once in a lifetime crisis and possibly the largest financial crisis of its kind in human history”.

The 0.5% fall is the biggest drop in the UK gross domestic product (GDP) since the first quarter of 1990, and raises predictions of further interest rate cuts from the current level of 4.5% to ignite growth. This time last year, GDP was 0.3% higher, which was then the weakest rate of growth since the second quarter of 1992.

Representing three quarters of the UK economy, the service sector has fallen 0.4%, its biggest drop since 1990. Restaurants and hotels have seen the biggest fall. They are down 1.7% compared with a 0.2% increase last quarter.

Manufacturing output has also fallen by 1%, and construction by 0.8% compared to the previous quarter.

Analysts are shocked at the news and have shown that they want dramatic rate cuts.

Calling for a 0.5% cut in rates at the next meeting of the MPC and anticipating that rates will drop by 2.5% by the middle of next year, Business group CBI’s Societe Generale, Brian Hilliard has said:
“It is a very emphatic entry into recession which underlines the need for dramatic rate cuts, which we think the Bank of England will deliver.”

BBC economics editor Hugh Pym has compared this recession to the one in 1990, when over three million people in the UK were unemployed, and predicts that this recession could last a year or more. The biggest difference between this recession and the one in the 1990’s is that interest rates are much lower.

Both the Liberal Democrats and the Conservative party are criticising the current government for allowing the economy to reach this state, and are calling for tax cuts for the poor and more interest rate cuts.

Nick Clegg, leader of the Liberal Democrats has said: “these growth figures show that the credit crunch is hitting the real economy harder and faster than was first feared.”

Following a meeting today between chief executives of UK high street banks, Chancellor Alistair Darling and Business Secretary Lord Mandelson, it has been decided that a forum will be created in an attempt to bring together bank bosses and small business representatives to promote their working together and allow them to “thrash out” their differences.

Many firms have complained about banks recent terms getting worse. Lord Mandelson has said that the forum will hopefully relieve tension on both sides. Smaller businesses have been complaining about being hit with a “double whammy” by some banks as they are asking for more security and higher interest payments on loans, while paying extra charges. “Banks are charging for services that were previously parts of the deal,” said the British Chambers of Commerce (BBC’s) director general David Frost.

“Where there are issues about the availability of lending and the terms of lending, they can thrash these out and tease out the problems…There’s willingness to make sure that we get through these very difficult times. Banks do not want to pull the plug on small business unnecessarily – they want to help where they can, but banks are facing difficulties of their own,” Was how the meeting was summed up by Lord Mandelson.

A Bank of England’s rate-setting Monetary Policy Committee member has said that it could be a few months before firms begin to feel the difference and the benefits of the measures that have been planned to help both banks and small businesses in the credit crisis.

Kate Barker said in an interview that “The banks need to feel that they are in a better position…I wouldn’t necessarily expect that to turn around very quickly…We would certainly hope over the next few months that the actions that have been taken start to feed through to businesses because we certainly realise that small businesses particularly are finding it much more difficult.”

Key to her interview was the message that bank lending policies were “not going to go back to how it was prior to this crisis starting.”

The British Bankers’ Association (BBA) however, have said that some small businesses would inevitably fail because of the recession, telling firms that they would be best to review their plans and get in touch with their banks to see that they put themselves in a strong position in order to last through the current economic crisis.

The BBA has released figures showing that they are continuing so support small businesses. The amount of business loans provided by its members rose by 11% to £44 billion, and overdrafts grew by 3% to £9.2 billion in the year, up until June 2008.

During weekly questioning in Parliament, Prime Minister Gordon Brown is today admitting that it is very likely that Britain will now go into recession, following the recent inflation that is now coming to an end.

Mr Brown is now repeating similar messages to those given by Bank of England governor, Mervyn King, as economic worries have sent the value of the pound coin plunge to the rate of $1.620 its lowest since September 2003.

Mr Brown, who will now be attending a global summit next month in the US, said when addressing MP’s that: “Having taken action on the banking system, we must now take action on the global financial recession.” And also that: “recession in America, France, Italy, Germany, Japan and – because no country can insulate itself from it – Britain too”.

Conservative leader David Cameron has said that the Prime Minister must take on the blame of Britain’s economic problems saying that “He claimed the credit in the boom, why won’t he take responsibility in the bust?”

Earlier this week Mervyn King warned that Britain was entering its first recession in 16 years. He also warned that banking systems in the UK were closer to collapse earlier this month than since the beginning of World War I.

Some of the global signs that we are entering a period of recession include:
• Europe’s banks have taken out short term loans to the amount of $72 billion from the European Central Bank. The European Central Bank has then had to replace commercial banks in order to keep euro zone money markets functioning.

• Oil prices fell below $70 per barrel, and brent crude was down to $67.10 per barrel at one stage.

• Yorkshire Building Society is to take over rival Barnsley Building Society according to the latest deal among the UK’s Building Societies as a result of the international financial crisis.

It has been said that the Bank of England was too slow to act to the UK’s worsening economic situation and has therefore fallen behind the curve.

“The consequences of their relative inactivity so far is that the recession is likely to be deeper and more prolongued than was necessary,” according to former member of the Bank of England’s monetary policy committee member Sushil Wadhwani.

The National Institute of Economic and Social Research (NIESR) has said that Britain is at the verge of its first full year of recession since 1991. They have predicted that the UK’s economy will shrink by 0.9% in 2009, while consumer spending falls by 3.4%, business investments will fall by 3.8% and private housing investments by a huge 17.1%. They have also warned that if the governments £50 billion bank saving scheme does not work, the recession could be even worse.

Mr King, however, is trying to remain optimistic, saying that the government’s financial rescue aid to banks should now lead to a slow resumption of normal lending.

In a true sign that it’s not just the UK that is facing some major economic problems at the moment, with the presidential seat hanging in the balance, it seems economy is high up on the list of campaigner’s priorities.

Democratic presidential candidate Barack Obama is set to meet with four governors of ‘battleground’ states, including Ohio, Michigan, Colorado and Florida to talk over his plans to rescue the US economy. In true political style however, Republican rival John McCain has told voters that he is the one to listen to about the economy. Mr McCain will be spending the day in Pennsylvania, while Mr Obama holds his job summit on the second day of his Florida tour.

Later this week, Mr Obama is set to take a couple of days out of his campaign in order to visit his grandmother, who is said to be seriously ill. Now 85 years old, she played a major role in the Democratic presidential candidate’s upbringing. Mr Obama has a substantial lead in the polls so far over his rival, but his absence is apparently still going to make his staff nervous, as elections are just two weeks away, and the current lead is so far not enough to guarantee victory.

Barack Obama will move his campaign to virginia and Indiana over the next couple of days, two traditionally Republic states, where he is doing well on the polls.

Mr McCain in the mean time is refusing that the current financial crisis is hurting his campaign, after it is reported that one of his senior advisors has said that “If we keep talking about the economic crisis, we’re going to lose.”

In retaliation to that however, Mr McCain has said that his party is going to be “focusing on the economy,” and has told voters. “Listen to me. I’m the candidate, and this campaign is about the economy.”

However, opinion polls so far suggest that voters believe more in Mr Obama’s chances of controlling the economy than Mr McCain’s.

Republican candidate, McCain, is promising that if he is to become President, he will do more to help homeowners defaulting on their mortgages, and that he plans to cut taxes in order to help create jobs. While campaigning in Missouri, he has accused Democratic rival Obama of plotting to increase taxes.

Even former rival Hilary Clinton is helping in Mr Obama’s campaign, by urging a crowd of around 50,000 people to help get Barack Obama into the presidential seat on the day that early voting opened in Florida.

Mr Obama has accused Mr McClain of “ugly” campaigning, and is focusing his campaign on the economy and those in the state that have suffered the effects of the mortgage crisis. 

It has been revealed today, that last month, the UK government borrowed record amounts.

The Office for National Statistics (ONS) data shows that the Public sector net borrowing hit £8.092 billion in September of this year, compared to last year’s £4.775 billion.

The amount that has so far been borrowed in the financial year of 2008 (£37.6 billion) is more than was borrowed throughout the whole of the 2007 financial year.

It was predicted that the government’s borrowing would reach about £10.1 billion this September. However, it is shown that they have in fact borrowed £12.65billion, nearly £4 billion more than in the same period just one year ago.

The cumulative borrowing for April to September this year is the highest it has been since just after World War II, in 1946. Where the government borrowed £21.46 billion last year, it has this year borrowed £37.59 billion.

These figures show what most of us had already guessed – that borrowing is set to rise dramatically in the current financial year.
 
However, the government has said that it will continue to invest money into public works in order to try and prevent a recession.

According to yesterdays figures by Ernst & Young Item’s Club, the UK is already in a recession, and we should expect to see the economy shrink by 1% next year, but then begin to grow again by 1% in 2010.

More figures are due out at the end of this week, and are expected to show that the UK economy has shrunk in its third quarter of the financial year. This would be the first contraction since 1992.

In March 2008, Chancellor Alistair Darling calculated that for the full financial year of 2008-09, the public sector would be borrowing £43 billion. The Item Club now believes that this figure will become something much closer to £60 billion, £27 billion more than the government’s prediction in March.

With this in mind, the Item Club has said that “substantial revisions will be necessary in the Pre-Budget Report.”

With recent data about the housing sector showing that mortgage lending has also fallen to its lowest level for nearly 4 years in September, according to the Council of Mortgage Lenders, and unemployment predicted to continue to rise, it is clear that the governments financial situation is going to face a lot more pressure in the future.

The UK government is already taking steps to try and prevent a recession, announcing last week that it was going to start a Bank Rescue Plan by dropping its interest rated by 0.5%. Now other countries, including Sweden and South Korea are taking similar measures in an attempt to stabilise the markets.