ECONOMICS | IN BRIEF
IFS hits out at pension plan
Changing employer pension schemes from the current “opt in” system to an auto-enrolment system will result in firms pushing up prices, reducing dividends and – mostly likely, the Institute for Fiscal Studies (IFS) believes – reducing wages. Making the switch between systems is a case of “bad timing” from the government, the respected think-tank said yesterday, because workers have already suffered from falling real wages in the face of high inflation. Workers who still opt out of the new scheme will be the biggest losers, it said, as they will see wages rises decline but see none of the benefit from employer contributions to their pensions.
Brits down on economy
An overwhelming majority of Britons rate the state of the economy as bad, according to new research from Ipsos Mori. Only 13 per cent view the UK’s economic situation as good, while 87 per cent see it as bad. The survey is at its most positive since June 2011, but remains well below Germany’s where around seven in ten rate their economy as being in a good state. However, the UK’s outlook is not the world’s worst – only eight per cent in Japan, six per cent in France and four per cent in Spain rate their economies as good.
Extra £1bn in growth funds
Deputy Prime Minister Nick Clegg will today announce £1bn is available for firms to create jobs through the regional growth fund. A total of 48 firms so far have taken money from the initiative, which now has £2.4bn available. The companies present an investment plan and demonstrate that it will “create new jobs and make a significant impact on their local economy,” before they can access the funds. For every £5 the firm contributes, the government adds an extra £1, with the aim of stimulating extra job creation around the country. Clegg is announcing the scheme at a manufacturing conference today, and will urge the sector to bid for the cash.
China’s PMI lifts Japan’s stocks
Japan’s Nikkei share average rose one per cent yesterday to its highest level in six months, boosted by news that China’s manufacturing sector rose to a four-month high in February, although it remained in contraction territory. The HSBC flash purchasing managers index (PMI), the earliest indicator of China’s industrial activity, rose to 49.7 in February from 48.8 in January. The PMI has been below 50, indicating contraction, for most of the last eight months. The Nikkei closed at 9,555 after two sessions of stiff resistance at 9,500.