Where does one go for financial advice nowadays? More and more, it seems that decent impartial financial advice isn’t easy to come by – after all, as impartial as people claim to be, quite often you can’t confirm this yourself.

Because of this, the best way to get properly impartial advice is to make as many enquiries as possible yourself. Your bank might tell you that they have a great deal on a loan or a credit card, but you might find that by making enquiries elsewhere, you could get a far better rate or deal on what you want, which is where services like price comparison sites can really play to your advantage.

Just by tapping in a few details and hitting that button, you can view details on a huge number of deals on the product you’re looking for, ranked to be as close as possible to the parameters you set in the first place, and many of which you can apply for directly.

Of course, this is all well and good, but who do you turn to if you don’t know what you want? Well, the advice given to you by your bank can normally steer you in the right direction, just don’t assume that they will be able to offer you the best deal – often they will be able to, due to a special “existing customer rate” or similar (This is often true for loans, as your bank has a greater knowledge over your financial dealings), but quite often it can be worth shopping around – especially in the case of cash ISAs at the moment, where some banks are offering just .05% interest rates and standard savers often offering little over 3% – Which, when you consider that, according to moneysupermarket.com: “A higher rate taxpayer needs an account paying at least 6.17% in order to earn a positive return [on their savings], while someone in the basic taxband needs to be earning at least 4.62%” Means that at the moment, finding the best place for your money is even more important than ever.

There is a lot to be said for carefully considering your financial position, learning about the different options available and then choosing the one most appropriate to you. True enough, this may not be the quickest way, but do you really want to rush into what could be a very important financial decision? moneysupermarket.com can make this decision easier, offering not only detailed price comparison, but a wealth of other information that can help you decide on what product and what type of account is right for you.

The UK’s Yorkshire and Chelsea building societies are said to be in “advanced talks” over a potential merger.

The Chelsea is the fifth and the Yorkshire is the second largest building society in the UK.

If a deal is reached, it would rival the Nationwide as big mutually owned mortgage and savings institution.

In August, Chelsea revealed a half-year loss of £26m after it had assigned £41m to cover to mortgage frauds.

The Chelsea has 35 branches and 700,000 members, while the Yorkshire has almost t three times as many members at 2 million and over four times as many branches, with 143.

The Chelsea building society announced, “the board of Chelsea has been undertaking a detailed review of the society’s activities, operations, financial position and corporate structure”.

“As part of this, Chelsea has considered the potential benefits to members and other stakeholders of a merger and this has culminated in discussions with the Yorkshire.”

The talks of a deal are being seen as a rescue package for Chelsea. New chairman Stuart Bernau has been analysing the business and viability over its independence.

In 2008, it reported a loss of £39m which was the highest recorded loss by a building society. £44m was written off due to huge investments in two failed Icelandic banks.

Another £15m was written off by the Chelsea after buying a mortgage broker in 2007 whose business collapsed during the credit crunch.

Building societies differ from banks and stock-market companies, as they are owned by their members, and struggle to regain reserves if they suffer heavy losses.

The Chelsea went on to reveal that “for a merger to proceed, the boards of both societies would need to be satisfied that it will be in the benefit of each society’s members”.

“The merger would also be subject to approval by each society’s members and the FSA.”

It has yet to be revealed if a merger would provide a windfall to the members of both societies. A spokeswoman for the Chelsea said that such details were yet to be discussed.

Several takeovers of building societies have been made since autumn 2008 in an attempt to save them from problems brought on by the global financial crisis.

In September last year, the Nationwide began its takeover process of both the Cheshire and the Derbyshire, then the Yorkshire made a move for the Barnsley building society, with the Skipton taking control of the Scarborough.

The most important factor when choosing to manage your personal finances effectively is time. A greater time investment will almost always result in a greater financial return.

Therefore the sooner you start to manage your finances, the greater return and financial ease you will feel in the future. Many people fail to plan ahead, which results in struggling to juggle finances at a later point in life.

Money management should focus on four primary questions:

1.       What financial goals would you like to achieve?

2.       When can you expect to achieve them?

3.       What finances do you currently have?

4.       What level of risk would you make to achieve these targets?

Choosing somewhere to live is an essential in everybody’s lives, and therefore, buying a house will be the biggest financial purchase that people will make. The financial investment into a home will affect all your other finances.

Making big decisions on your lifestyle will affect your financial goals. If you consider a luxury holiday to be one of life’s essentials, you will have less money left over for savings and investments.

When do you want to retire? What expenses do you currently have? Deciding what your priorities are will help to determine what money you will have left.

It is worth assessing your current liabilities, as these expenditures and assets could be reduced or sold and free up money for the future.

Calculate how much spare money you have so that you can form an investment plan. Investments can vary dramatically. Some are high risk for higher reward or loss, and some are low risk for a steady growth on investment. It’s up to the individual to decide what level of risk you are prepared to make.

Once these considerations have been made and your plan is in places, it’s important to assess the decisions you’ve made and how they affect you on a day to day basis. You plan may be too restrictive, leaving you with not enough money to live on, or perhaps you could make greater short term sacrifices to benefit you in the long term.

A small amount of time spent on your current finances can be highly rewarding for your future.

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

According to official figures, the UK experienced an unexpected contraction of 0.4% for the third quarter, showing that the UK is still stuck in the recession.

This quarterly contraction is the sixth consecutive contraction, the worst run of figures that UK gross domestic product (GDP) has experienced since records began 54 years ago.

The GDP of a country represents the value of goods and services produced by a country. The figures released may be altered at a later date, as this is just a first estimate.

The Office for National Statistics (ONS), had been expected to show quarterly growth of 0.2%. However, no growth in retail sales for September and a 2.5% fall in industrial output for August had dented people’s positive expectations.

Experts have revealed that one of the main causes of the contraction was an unexpected drop in the services sector, with distribution, catering and hotels generating some of the worst figures.

Nearby countries France and Germany exited the recession earlier this year, and it is generally considered that the UK’s reliance upon the services sector, and more specifically, the finances sector being the main reason.

The UK economy has now experienced a 5.9% contraction since its high point prior to the recession.

The Bank of England is set to re-think its quantitative easing plan after seeing such a poor result in GDP figures. Quantitative easing involves the Bank of England printing money to buy bonds from companies and banks in an effort to encourage positive activity in the economy.

HSBC’s Bronwyn Curtis spoke with the BBC, revealing that “back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme,”

ING’s James Knightly felt that the data was “awful with no positive news” and “clearly suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, although [it] is not a foregone conclusion.”

It is considered by many experts to be disturbing that measures taken by the government and the Bank of England have failed to make a positive impact. However, David Kern, the chief economist with the British Chamers of Commerce believes that “continued intervention - including help for businesses to access finance, and incentives to promote investment - is still needed.”

“Above all else, business confidence must be nurtured, to ensure that recovery is not further delayed.”

Whilst the general financial atmosphere is improving and optimism growing, it is too soon to announce that we are in the process of recovery, according to experts at Ernst and Young Item Club.

The influential professional services firm expects some growth towards the end of 2009, but this growth should begin to struggle, with 1% expected growth for 2010.

They also predicted that customers repaying debt will grow slower than first anticipated and impending tax rises will follow the election.

BT Business research predicted a more optimistic outlook, declaring that small businesses are positive about the forthcoming year.

In September, BT Business conducted a survey of over 7000 small businesses and found that 75% believed their business would see an upturn in 2010, with 61% confident about their business’ prospects.

Professor Peter Spencer, Chief Economist from the Item Club, issued a wake-up-call to all those getting carried away with the optimism of recovery.

He warned, “there could still be substantial pain to come for corporates and consumers.”

“For a sustainable recovery the UK economy needs world trade to pick up and there is still not much sign of that happening.”

One of the factors holding back growth is that the VAT rate will return to 17.5% from its current level of 15% on 1 January, a change which may see consumers making purchases before the New Year.

Several other factors which will hold back growth lie on the horizon. An increase in national insurance contributions, the new 50p tax rate, the termination of the car scrappage scheme, tighter government spending and the return of stamp duty on housing are all due to hit the country.

Judging whether the recovery is happening, on the way or unlikely is difficult to forcast.

Professor Spencer went on to tell the BBC that the recent economic data has been “very mixed,” adding, “the stock market is absolutely rampant, industrial surveys all back in positive territory, but it’s yet to show through in hard data for output and things like that.”

“And when it comes to lagging indicators like unemployment, I’m afraid it’s going to be ‘feel bad’ for quite some time to come.”

On Friday, the official statistics for the Gross Domestic Product (GDP) are released, with many expecting no economic growth at all.

GDP is a measurement of the services and goods produced in a country, and since the first quarter of 2008, the UK GDP has been in negative figures.

The Bank of England has focused on quantitative easing, an act of pushing money into the economy. Professor Spencer feels that this has been of little success, with the little improvement on bank lending, going on to complain that “instead, the banks appear to have used much of the money to rebuild reserves and improve liquidity.”

Official statistics show that one of the main measures of inflation has reached its lowest point since September 2004, another sign of sterling weakening. The annual rate of 1.1% in September was lowered from 1.6% in August by the Consumer Prices Index (CPI).

A separate measure of inflation conducted by the Retail Prices Index (RPI) found that mortgage interest payments and housing costs also dropped, from -1.3% to -1.4%.

The pound also reached its lowest point in the past six months when it fell 0.5% against the Euro to 1.0628 Euros and to a five-month low of 1.5730 US Dollars.

Weak

Duncan Higgins, a senior analyst for Caxton FX, felt that “this is bad news for the pound.”

“The CPI figures will weigh heavily on the UK currency and will continue to discourage investment.”

A report conducted by the Centre for Economics and Business research predicted UK interest rates would not rise above 0.5% until 2011 and fail to meet the 2% mark until 2014; a further damnation to the outlook for the pound.

Meanwhile, the strength of the UK economy was dealt a further blow last week when it was revealed that industrial output dropped in August.

A prediction for the GDP had to be recalculated by the National Institute of Economic and Social Research after the UK economy failed to grow during the June/September quarter.

However, the economy is still very “frail” according to the British Chamber of Commerce (BCC), despite business confidence improving.

In an effort to sustain a stable broader economy and prices, the Bank of England is making efforts to retain 2% CPI inflation. Should the CPI inflation drop below 1%, the governor of the Bank of England must provide a written explanation to the Chancellor, Alistair Darling.

High energy prices a year ago, in comparison to lower energy prices this September are being blamed for the recent fall in inflation. The Office for National Statistics (ONS) reported that electricity, gas, and other fuel bills tumbled by 7.3%. Energy costs have started to level more recently, with little change from August to September.

Jonathan Loynes from Capital Economics predicted that we can expect to see CPI back at the 2% mark by the start of 2010, due to increased energy prices and VAT returning to 17.5%. He does believe that a “huge amount” of unused production capabilities would keep inflation down and “keep alive the threat of a period of outright deflation late next year or beyond.”

In contrast, Keith Wade of Schroders UK forecasted that it “probably will be the low point in inflation.”

One Year Lifespan

HSBC bank says it will be stocking more £5 notes in its cash machines in a pilot scheme to boost the number of people withdrawing from their cash points.

The bank has arranged for 100 of its cash points in the Midlands and south west England to be stocked more heavily with £5s in a Bank of England trial.

All cash machines must have the capacity for all denominations of notes, but in order for them to be as efficient as possible, most only give out £10s and £20s.

The recent figures, produced by the Bank of England, show that there is approximately £1.3 billion worth of £5 notes currently in circulation in the UK. This figure has been steadily growing over the last few years.

However, due to its frequent use, the £5 note only lasts about a year in circulation before it has to be withdrawn because it is too damaged. On the other hand, £50 notes tend to last five years or more.

Why Do We need More?

In February, Bank of England’s chief cashier, Andrew Bailey, said that the most frequently asked question he gets is as to why there are not enough £5 notes in circulation, and why their good quality did not last long.

Mr Bailey, whose signature is printed on every £5 note, says: “We are very keen to get £5 notes into circulation.”

HSBC is now taking part in a pilot scheme to increase its stockings of £5 notes in cash machines. From the beginning of July it started putting about the same amount of £5 notes, in 100 of its 3,000 machines, as was more commonly seen 10 years ago.

A spokesman explained that there is currently a shortage of £5 notes, and that by increasing the number in circulation it hopes that £10 and £20 notes will last longer in circulation.

Service Industry Agrees

Many service industry members have welcomed the move, including London taxi driver Chris Haines, who said that the shortage of £5 notes has become problematic: “A lot of London cabbies have to buy a sandwich to get enough fivers in their hands to give out as change.

“Either that, or they have to queue up in a bank to get the fivers to hand out to people instead of £1 coins.”

On the other hand, a spokeswoman from Barclays says that increasing the number of £5 notes in machines will lead to the number of times they run out of cash at busy times, as stacking them with £5 notes will mean they hold less value and so need to be stocked more regularly. This also brings forth a security issue.

She says that machines inside their branches still stock £5 notes, but there is greater demand for higher value notes. Only a few outside cash points therefore stock £5 notes, based on the demographic area they are in.

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Will More Money Encourage More People?

The minimum wage for apprentices has been risen from £80 to £95 per week after the number of people joining the scheme fell.

The change began on 1 August, and the TUC believe that young women are the most likely to benefit most from them.

Those serving as apprentice that are under the age of 19 or in their first year of their apprenticeship are exempt from the national minimum wage, but the average weekly pay for most apprentices is more than £170 per week.

Female apprentices in hairdressing and childcare are among the lowest paid according to the TUC.

More Needs To Be Done?

According to Brendan Barber, the general secretary of the TUC: “The majority of apprentices are paid well above the minimum rate. But for many trainees, particularly young women, struggling on around £80 a week, an extra £15 will go a long way.

“The next move must be to protect apprentices with the minimum wage, so that employers cannot exploit young trainees by ignoring the minimum pay rate. At a small cost to employers, this would improve the reputation of apprenticeships and encourage more young people to enrol,” he added.

The most recent figures show that the number of young people who began an apprenticeship in England in 2008-09 fell, but the total number in the UK did rise overall.

For 16 to 18 year olds, the number of people choosing apprenticeships fell by 8.3% to reach 81,700. Those between the ages of 19 and 24 taking on apprenticeships fell by a lesser amount of 2% to 68,000.

However, the total number of people going into apprenticeships that are over 25 nearly quadrupled to 46,800 balancing out the other figures.

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A Help Or Hinderance?

A spending watchdog advises that the pay in the public sector should be severely restrained, or preferably frozen in order to rebalance finances in the economy.

Steve Bundred of the Audit Commission said those in the public sector would tolerate modest reductions as they have done well recently.

Chancellor Alistair Darling agrees that payment between public and private sectors needs to be fair. But when a policy to limit public pay rises to 2% last year happened, many people walked out of their jobs.

“At a time when inflation is likely to be between 2% and 3%, a pain-free way of cutting public spending would be to freeze public sector pay or at least impose severe pay restraint,” Mr Bundred said.

“This is especially true if real wages in the private sector are still falling.”

Cuts In Health And Education?

He added that in doing so, £5billion of the £50billion needed that would otherwise come out in tax, would be found, also emphasising that health and education spending shouldn’t be shielded from efficiency savings.

“Don’t believe the shroud-weavers who tell you grannies will die and children will starve if spending is cut. They won’t. Cuts are inevitable and perfectly manageable.”

Mr Darling also commented: “Public sector pay obviously has got to reflect prevailing conditions in particular inflation has come way down.

“Of course we have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze. It has got to be fair to people who work for the public sector just as we have to be fair on the private sector.”

Public sector pay has always been an issue of debate within parliament. The 2% cap in 2008, at a time when living costs were rising harshly were criticised and walkouts ensued.

The Great Debate

Unison general secretary Dave Prentis, said that the government should be focusing on tax evaders and City bonuses, not public sector pay: “Freezing public sector pay during a recession is not the way to steer people through it.

“Let’s be clear, the recession was caused by bankers and speculators and the lack of regulation.

“Low paid public sector workers, who will be helping communities through the recession, shouldn’t be expected to pay.”

Ken Clarke – shadow business secretary, also had something to say about the public sector pay: “When that is put to you by somebody like the head of the Audit Commission, you look t it as an option but you have got to put it alongside other options.

“Look for constraint, you have got to decide whether it is really the best and fairest way of going about it.”

Liberal Democrat Treasurer spokesman Vince Cable also agrees that across-the-board pay freezes in the public sector don’t make a “great deal of sense” due to different contractual obligations.

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