Start-Up Loans Scheme Gets £30m Boost

Thousands more young entrepreneurs could get loans to start their own businesses as the Government announces it is boosting its scheme.

Prime Minister David Cameron said funding for the coalition's Start-Up Loans scheme was being boosted by £30m to £110m over three years.

The age limit for applying was also being raised from 24 to 30 in response to what Downing Street aides said was "high demand".

Number 10 insisted the initiative was on target to issue more than 2,500 loans by March - despite criticism that only a small portion of loans had been finalised since the scheme was formally launched last autumn.

Some 3,000 people are said to have registered an interest in the money and mentoring packages, which are only available in England and being delivered through charities such as The Prince's Trust.

Those whose business plans are deemed "robust" typically receive £2,500, which can be repaid over five years at a relatively low interest rate.

"Start-Up loans are an important part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race," Mr Cameron said.

He said the scheme was a "great way to help this next generation of entrepreneurs get the financial help - and the confidence - to turn that spark of an idea into a growing, thriving business."

James Caan, panellist of the Dragons' Den BBC show and chairman of the company, said: "There has been a major shift in the way business is viewed by the public, and entrepreneurs are now seen as creative and exciting role models".

He added: "I am delighted to see that more and more young people are now looking to set up their own business."

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House Prices Lose Ground In 2012 - Report

House prices edged lower in December, prolonging stagnation in the market, according to new data.

The Nationwide said house prices fell 0.1% in the month, compared to no change in November, and slightly weaker than forecast by economists.

Prices were also 1% lower over the year, reversing the 1% rise recorded in December 2011.

"Given that the UK economy was in recession for much of 2012 a 1% decline in house prices may be seen as a relatively resilient performance," Nationwide chief economist Robert Gardner said.

"However, the fact that prices declined even though employment rose strongly suggests that conditions remain fragile."

Nationwide said below-inflation wage growth, the high cost of housing relative to earnings and an uncertain economic outlook held back demand.

Meanwhile, supply of homes on sale also remained tight, "providing little impetus for prices to move strongly in either direction".

Mr Gardner said prices were likely to remain flat or modestly lower in 2013 as support from low interest rates and the Bank of England's Funding for Lending Scheme would be counterbalanced by a weak economy.

Nationwide said the price of an average home in Britain was £162,262 in December, almost 13% below the peak of £186,044 reached in October 2007.

However, there were some 216,000 first-time buyers last year, up 12% from 2011.

The annual Halifax first-time buyer review said it was the highest annual figure since 2007, but still only around half of the peak reached in 2006 of 402,800.

Raising a suitable deposit amid rising rental costs remain key concerns for many would-be first-time buyers.

The latest housing data comes as a new push is made for breaking up of banks into separate retail and investment entities.

The Institute for Public Policy Research (IPPR) said the Government had been "too timid" in forcing change on the banking sector.

The IPPR said greater conditions should be placed on mortgages to reduce high-risk lending by forcing more conservative loan-to-value or loan-to-income ratios.

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UK Government Bonds Hit 2% Barrier

By Ed Conway, Economics Editor

The interest rate on UK Government debt has risen above the 2% mark for the first time since last spring.

The jump in yields on the benchmark 10-year gilt have risen from just over 1.8% to 2% since the start of 2013, reflecting optimism about Britain's growth prospects.

Although the promise of stronger growth will be welcomed by the Chancellor, the concurrent increase in Britain's borrowing costs will not.

George Osborne frequently cited Britain's record low borrowing rates as proof of the country's solvency and investors' faith in its debt.

However, it has also emerged that the spread between Britain and Germany's government debt yields - another key metric he referred to in previous House of Commons statements - has risen (in Germany's favour) to the highest level since mid-2011.

At the time of the 2011 Autumn Statement Britain was able to borrow more cheaply than Germany.

Today British 10-year bonds have an interest rate 0.554% higher than on German bunds.

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Digital Entertainment Sales Smash £1bn Barrier

Digital sales of music, video and games in 2012 exceeded £1bn for the first time, according to official year-end sales figures.

The Entertainment Retailers Association (ERA) said a final year-end tally of £1.033bn was reached, giving a digital sales boost of 11.4% year-on-year.

ERA director general Kim Bayley said: "Breaching the £1bn barrier is an incredible achievement for the UK's digital entertainment retailers.

"And reflects their huge investment in new and innovative services which means you can buy music, video and games literally at any time of the day and wherever you are."

Traditional disc sales of CDs, DVDs, Blu-ray and games still account for just over three quarters of the entertainment market, despite falling by 17.6% compared with 2011.

ERA represents entertainment retailers, specialists and independents, as well as supermarkets outlets along with internet and download retailers.

It combines data from three separate sources to collate the industry-wide figures.

The biggest digital sector by far remains games, mainly comprising massive multiplayer online games, social gaming and online console transactions.

Topping £552m, it was worth more than digital sales of music and video combined.

The video sector showed most growth at 20.3% but this reflects the relatively undeveloped nature of the market, according the ERA.

Music's digital growth of 15.1% also stood out as it is the most established of the three markets, with 16 albums selling more than 100,000 digital copies in 2012 and more than 3.7bn audio tracks streamed.

The Official Charts Company said Somebody That I Used To Know by Gotye (featuring Kimbra), Call Me Maybe by Carly Rae Jepsen and Titanium by David Guetta (featuring Sia) were the three most-streamed tracks in 2012.

Ms Bayley added: "At the same time I suspect that many people will be surprised to learn just how resilient the physical business still is - with three-quarters of entertainment sales still on disc.

"Downloads offer convenience and portability, but people still seem to value the quality and tangibility of a physical product."

The news of the £1bn digital barrier breakthrough comes amid a drop in total sales of 12% for physical and digital products compared to a year earlier.

Total sales in 2011 were £4.78bn but sagged to £4.21bn last year.

The ERA said combined game sales dropped 17.4% in 2012 and said a factor in the fall was poor release planning which affected retailers.

"The dearth of attractive releases during summer 2012 was clearly a significant factor," Ms Bayley said.

She added: "Suppliers need to do more to rebalance their release schedules and improve the quality of their releases.

"No retailer can afford to pay overheads on a store for 52 weeks of the year if all the key releases are going to be concentrated in the last quarter."

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US Fiscal Cliff Averted As Bill Approved

A "fiscal cliff" of massive tax hikes and drastic spending cuts in the US has been avoided at the 11th hour.

The House of Representatives voted to approve a bill which averts tax increases for the middle classes - and the possibility of sending the country into recession.

The bill - which also stops massive spending cuts - was approved by 257 votes to 167 after being supported earlier by the Senate.

President Barack Obama welcomed the deal and said it was just one step in a broader effort to strengthen the economy.

He said: "Thanks to the votes of Republicans and Democrats in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing tax hikes that could have sent the economy back into recession."

The vote came just hours before financial markets reopen following the New Year holiday. In early trading on Wednesday Asian  markets were up over 2%.

Some House Republicans had wanted to amend the bill to incorporate more spending cuts, but they dropped the idea.

In the end, 172 Democrats and 85 Republicans voted in favour of the bill.

The lights of the Capitol burned late into the night

It marks a political triumph for President Obama, less than two months after he secured re-election while campaigning for higher taxes on the wealthy.

The legislation cleared the Senate hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed a deal.

The spending cuts and drastic tax increases which made up the so-called "fiscal cliff" were due to come into effect at midnight on Monday when George Bush-era tax cuts expired.

The deadline would have triggered tax increases of $536bn (£328bn) and spending cuts of $109bn (£67bn) from domestic and military programmes.

The compromise Senate deal extends the tax cuts for Americans earning under $400,000 (£246,000) - up from the $250,000 (£153,000) level that Democrats had originally sought.

However, the overall Federal tax liability for millions of middle and lower income families will still go up, despite the deal.

A two percentage point temporary cut in the Social Security payroll tax expired with the end of 2012, with neither President Obama nor the Republicans making a significant effort to extend it.

Barack Obama waves as he boards Air Force One

Within minutes of speaking at the White House, President Obama headed back to Hawaii to rejoin his family on holiday.

But his break from the political manoeuvring will be brief.

Another standoff is likely to arrive as early as February, when the new Congress will be asked to agree to raise the $16.4trn federal borrowing limit, so the government can keep paying its bills.

House Republicans are unlikely to agree to raise the debt limit without pushing spending cuts that Democrats and Mr Obama are sure to resist.

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John Lewis Reveals Bumper Christmas Trading

John Lewis has announced double digit sales figures for trading at its stores over the festive period.

The partnership made £684.8m in the five weeks to December 29, up almost 15% on the same period in 2011.

John Lewis said electricals and home technology were up 30.9%, while fashion and beauty climbed 10%.

Meanwhile its home furnishings section only increased by 6.2%.

The firm added that compared with two years ago, total sales were up 25.5% and like-for-like sales grew by 20.1%.

Sales at johnlewis.com broke through the £800m milestone, for the year, during December.

Online sales for the five weeks were up 44.3% on last year and lohnlewis.com now accounts for a quarter of the total firm's business.

Managing director Andy Street said: "I am delighted that John Lewis has delivered record breaking sales figures over the Christmas period and the first five days of clearance (sales).

"In an economic climate which continues to be volatile, to have achieved these results is testimony to the strength of the John Lewis brand and the commitment of all our partners to give outstanding service."

The results come as Boxing Day sales records were smashed after shoppers sent tills into meltdown across Britain's high streets.

Forecasters said more than £50m was estimated to have been taken in one day on London West End's famous shopping destinations of Bond Street, Regent Street and Oxford Street.

Mr Street added: "The success of our online operation and our pre-eminence as an omni-channel retailer cannot be underestimated.

"Above all, our success can be attributed to the inspiring and innovative products we offer our customers coupled with their trust that we will always provide the best quality and value and will always fulfil our "never knowingly undersold" promise."

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French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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Think Tank Warns Of Sluggish 'Groundhog' 2013

A think tank has warned that 2013 could turn out to be a "groundhog year" with a repeat of sluggish growth and crisis in Europe seen in 2012.

The Institute for Public Policy Research (IPPR) said that consumer and business spirits have been so thoroughly dampened by talk of years of austerity ahead that the economy mail fail to grown again this year.

In a gloomy New Year message, IPPR chief economist Tony Dolphin said the Government "still does not have a path back to growth" and appeared to be pinning hopes on "something just turning up".

The Office for Budget Responsibility's forecast of 1.2% GDP growth in 2013 and 2% in 2014 depend on a "very unlikely" readiness for hard-pressed households to drop the habits of the last four years and take on additional debt, he added.

The IPPR is calling on the Government to boost demand in the economy, pump more investment into infrastructure, establish a British Investment Bank and guarantee a minimum wage job in charity or local government for anyone unemployed for more than a year.

Mr Dolphin said: "Policy-makers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better.

"The risk is that 2013 could be groundhog year for the UK economy.

"The latest forecasts suggest growth in 2013 will be weak, but better than in 2012, and that unemployment will rise.

"The risk is that they are too optimistic about growth, but that - unlike in 2012 - they are right about unemployment."

He added: "How this plays out politically will depend to some extent on what happens to unemployment.

"In 2012, the double-dip recession did less damage to the credibility of Government economic policy than it might have done because employment increased and unemployment fell by more than expected.

"The best way to describe the outlook for the UK economy is 'uncertain'."

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Last-Minute Deal Reached On US Fiscal Cliff

The US Senate has approved legislation aimed at averting the so-called fiscal cliff by stopping most tax hikes and across-the-board spending cuts that were due to begin with the New Year.

The legislation was approved with an overwhelming 89-8 vote, and came well after midnight on New Year's Day.

The House of Representatives must still approve the measure, possibly on Tuesday.

President Barack Obama has praised the agreement, saying: "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay."

Without the legislation, economists had warned of a possible new recession and spike in unemployment.

The White House-backed legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 for individuals and $450,000 for couples.

It also blocks spending cuts for two months, extends unemployment benefits for the long-term jobless, prevents a 27% cut in fees for doctors who treat Medicare patients and prevents a spike in milk prices.

Vice President Joe Biden after a Senate Democratic caucus meeting on Monday

The deal would allow the White House and lawmakers time to regroup before plunging quickly into a new round of budget brinkmanship certain to revolve around Republican calls to rein in the cost of the Medicare health programme for the elderly and other government benefit programmes.

Officials also decided at the last minute to use the measure to prevent a $900 pay rise for lawmakers due to take effect this spring.

Vice President Joe Biden, who negotiated the deal with Republican Senate Majority leader Mitch McConnell, was on Capitol Hill to sell it to Democratic senators.

The tax hikes and spending cuts were due to come into force at midnight. But as global markets are closed for New Year's day, lawmakers have time to vote the deal into law.

The White House and Congressional leaders hope to send legislation to Mr Obama within a day or two, meaning consumers shouldn't notice any impact.

Mr Obama had originally campaigned for tax hikes to kick in for those making $250,000 and above and his acceptance of a higher threshold has already angered liberals, though still represents a political victory.

The president said the deal would extend tax credits for clean energy firms and also unemployment insurance for two million people.

Both sides are already gearing up for the next legislative showdown over the need to lift the government's statutory borrowing limit of $16.4trn, which was reached on Monday.

The Treasury will now take extraordinary measures to keep the government afloat for an undisclosed period of time until the ceiling is raised. Republicans are already demanding spending cuts in return.

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French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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