#AceFinanceNews – BRITAIN (London) – June 14 – UK interest rates will start to rise this year and peak at 5pc, far higher than the Bank of England expects, according to Gerard Lyons, Chief Economic Advisor to London Mayor Boris Johnson.
(Mark Carney Delivers Sting in the Tail)
Speaking after Thursday night’s warning from Mark Carney, in which the Bank of England Governor indicated rates could go up “sooner than the markets expect”, Mr Lyons’ words will further fuel speculation the first rate increase since July 2007 will happen later this year.
(Reason Why as Government Gave Tax-Payers Money Away to Increase Borrowing)
Mr Lyons, though, goes further than Mr Carney, arguing that UK rates could peak “at a very high level” – a view at odds with the Bank Governor, who has consistently argued borrowing costs will rise by less than in previous cycles.
(Inevitability of Borrowing Too Much Money and Increasing Debt to GDP Ratio)
“Mark Carney and the Bank of England are indicating rates will peak at 3pc,” Mr Lyons told The Telegraph. “I think that rates, eventually, in four or five years’ time will have to peak at over 5pc."
Speaking in London at the annual Mansion House dinner on Thursday night, Mr Carney acknowledged there was “already great speculation about the exact timing of the first rate hike” from the record low of 0.5pc, adding that the decision was “becoming more balanced”.
#AceFinanceNews – BRUSSELS – June 14 – Switzerland is pushing to be ‘de facto’ accepted in multi-billion EU programmes on science, research and education, but the European Commission says it would be illegal after an anti-migration referendum which put EU-Swiss ties on ice.
On Thursday (12 June), representatives of the Swiss government officially acknowledged that a referendum held in February and seeking to cap migration from EU countries goes against an EU-Swiss agreement on freedom of movement.
They also told the EU commission they want to renegotiate the agreement once the referendum is translated into law.
The agreement is linked to other co-operation areas – such as science and research (Horizon 2020) and the Erasmus exchange programme for students and academics.
The EU already suspended Switzerland’s participation in the two schemes, but Bern wanted to first assess the impact of the February referendum which obliges the Swiss government to impose quotas on EU workers within three years.
The Thursday acknowledgement, according to an EU commission spokeswoman, "confirms the EU’s concerns as expressed in reaction to the vote. It is for the Swiss government to decide how it intends to follow-up on these findings."
So far, Bern has not formally asked to renegotiate the freedom of movement agreement (FMPA).
#AceFinanceNews – BRUSSELS – June 14 – The European Commission is to launch a formal investigation into whether tax breaks used to attract international companies breach the EU’s state aid rules.
The probe, which is likely to target Ireland, Luxembourg and the Netherlands, is set to be announced at a news conference on Wednesday (11 June) by EU competition chief Joaquin Almunia.
Irish broadcaster RTE on Tuesday reported the launch of an investigation into the arrangements of US-based software giant Apple, but EU officials have also been gathering information on tax deals in Luxembourg and the Netherlands since last autumn.
EU countries have promised to crack down on loopholes which have allowed companies such as Amazon, Starbucks and Apple to pay tiny amounts of tax on their European operations.
Last November, the Commission unveiled plans to prevent firms from setting up ‘letter-box’ companies in different countries to reduce their tax bills.
But although combating corporate tax avoidance has climbed the political agenda in recent years as governments look at ways to bolster tax revenues lost during the economic crisis, the EU executive estimates that tax avoidance and evasion in the EU cost about €1 trillion each year.