Deflation returns to the Eurozone: Consumer prices fell 0.2 percent in February, the first month of negative inflation since September. Bad news and more pressure on the European Central Bank to take decisive action at its March 10 meeting.

With talk of Brexit lowering the value of the pound to that of the Euro, it is a worry if food and prices would take a hike to those on a fixed income. YouGov have published a survery of 80,000 people. Click on the link below. 

Basic income in Europe: what could shape a social-democratic proposal.

While most European countries have forms of minimum income protection, a basic income intended as a universal, unconditional and non-withdrawable intervention for all citizens, has been considered a very ambitious policy proposal. The empirical applications are rare. However, a useful discussion needs to understand this instrument as a development to the current forms of social protection. 

According to An Unconditional Basic Income (UBI) is an income unconditionally granted to all members of a political community on an individual basis, without means test or work requirement. Unlike existing minimum income schemes in european countries, UBI is universal, individual, unconditional, and high enough to ensure an existence in dignity and participation in society. 

This report by the Foundation for European Progressive Studies (FEPS) explains the rational.  

 The latest government U-turn on cruel welfare policies

 The UK government has been forced into another U-turn by agreeing to retain a legally binding commitment to measure and publish the number of children living in low-income families, following pressure from the SNP.

 The key clause forms part of the Tory Welfare Reform and Work Bill which is currently in “ping-pong” between the House of Lords and House of Commons over amendments to the bill before it becomes legislation.

 Amendments to the bill will be considered by the House of Lords today (Monday) including a new clause from the UK government put forward by Lord Freud, Welfare Reform Minister, which would override the government’s previous attempt to remove child poverty reporting commitments.

 In yet another deeply embarrassing climb-down for the Tories, the House of Lords have forced the UK government to think again about this part of the counterintuitive measures in the Welfare Reform and Work Bill.

 The Tories’ attempt to remove the link between poverty and income is as ill-thought out as it was a cruel attempt to characterize poverty as an individual lifestyle choice. Whilst this backtracking is to be welcomed, it’s clear that just measuring and reporting on child poverty isn’t enough.

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We have just had this news from the Child Poverty Action Group

We’ve just heard that the government has responded to our concerns on child poverty measurement by legislating to ensure child poverty statistics are published every year.

This is really welcome. It will stop ministers from deciding not to publish official child poverty statistics in future years.

This success comes after months of hard work – up until now, the Government was only willing to make a legal commitment to publish data on GCSE attainment and family worklessness.

There’s more work still to do. The Government won’t report to Parliament on child poverty figures and it’s very clear that they don’t want to think about poverty in the way you and I do. But it’s an important step towards ensuring that all kids count.

Many people on low incomes are required to have Direct Debits on their accounts if they want certain services. There is no option to opt out. Banks are still levying excessive charges on customers who miss Direct Debit payments, £45 in the case of Santander for one DD collection missed (*3) as an example. 

Missing payments like this cannot be attributed to poor financial management by people, who in fact do brilliant job at surviving on next-to-nothing. People are being forced into agreements and payment arrangements they don’t want, for services they cannot do without.

Many organisations are offering reduced charges to people on benefits which include water companies and electricity and gas providers. We feel that two other areas need addressing, broadband charges and bank charges.

It is time the DWP Select Committee considered this matter. While other companies are ‘pulling on the oars’ and helping the disadvantaged, others in particular multi-national banks, still want to maximise their profits while sinking people into even further financial difficulties as well as threatening the health and well-being of those for whom a steady diet and a steady income is essential.  This is not right, and if banks will not adopt fair policies towards those on benefits then legislation needs to be brought in across the EU to protect the vulnerable. The ABC will be campaigning on this.

There are approximately 25 million people unemployed across Europe and their health and wellbeing is more important than huge and disproportionate banker bonuses for the few. 

Thirteen political parties registered in Great Britain reported accepting over £9 million in donations between 1 October and 31 December 2015, according to new figures published by the Electoral Commission, the independent party funding watchdog.This quarter saw over £3 million more in reported donations than in the third quarter of 2015.The six political parties to report the most in donations were:

• Conservative Party - £5,152,334
• Labour Party - £2,669,241
• Liberal Democrats - £828,657
• UK Independence Party (UKIP) - £196,282
• British National Party - £180,000
• Scottish National Party (SNP) - £54,030

In addition to these donations, during the fourth quarter of 2015, five parties accepted more than £2.2m from public funds.The value of outstanding loans to political parties as at 31 December 2015 stood at £4,697,649, an increase of £109,963 compared to the third quarter of 2015. There were 28 political parties that did not meet the deadline for reporting. Unless they are able to provide a reasonable explanation for why the deadline was missed, the Commission will consider each of these matters in line with its enforcement policy.  

A law to revamp the European Employment Services (EURES) network with an EU-wide database of job seekers and vacancies was approved by Parliament on Thursday. The aim is to help fight unemployment by better matching labour market supply and demand. Updated rules, already agreed with the Council, will also pay more attention to cross-border regions and young people.

The smarter new EURES portal should automatically match CVs with suitable job offers. Also, all vacancies published by public job offices in member states will be available EU-wide on the web portal.

MEPs approved a compromise reached with member states’ representatives in talks late last year by 576 votes to 56, with 21 abstentions. Heinz K. Becker (EPP, AT) who steered the draft legislation through Parliament, said during the debate: "We see high levels of unemployment in some EU countries, yet at the same time there are two million unfilled jobs elsewhere due to a lack of skilled labour. The EURES platform, in the first stage of expansion, should facilitate access to hundreds of vacant jobs. (...) Never before have we seen such a user-friendly way to provide so much support, especially for young job seekers, who now have at their fingertips the possibility to make their CVs available to any employer around Europe."

Automated matching of vacancies and applications will be free of charge for workers; there should be no discrimination based on nationality as regards employment, pay and other working conditions and access for persons with disabilities will be ensured.

Parliament’s negotiators managed to broaden the network by also offering member status to private organisations if they provide support services to both workers and employers and inserted amendments to boost cross-border labour markets.

MPs also inserted amendments to allow publicly-funded traineeships and apprenticeships to be exempted from cross-border publication obligations due to differences in education systems and member states' active labour market policies.

 SNP MP Stewart McDonald has written to Work and Pensions Secretary Iain Duncan Smith about the impact of the UK government’s welfare reforms on people living with HIV in Scotland.
 
The Glasgow South MP has raised concerns about the fluctuating nature of the infection – something which the Work Capability Assessment does not take account of – and whether DWP and Jobcentre staff determining Personal Independence Payment (PIP) claims will receive training on the issues of living with HIV.
 
Stewart McDonald MP said:
 
“It is absolutely vital that DWP staff reassessing claimants for Personal Independence Payment (PIP) benefits have sufficient training in the issues faced by those living with HIV, otherwise people might slip through the safety net that the welfare system is supposed to provide.
 
“The nature of the infection, coupled with the anti-retroviral treatment, means that people living with HIV need support such as welfare benefits at different times and for different reasons - to stay in work, maintain their health or to meet basic living needs.
 
“People living with HIV in Scotland have described poorer mental and physical health symptoms, difficulty paying for energy bills and 36% of those surveyed by HIV Scotland and Hepatitis Scotland said they had been affected by the bedroom tax.
 
“The WCA utterly fails to take account of the real needs of those living with fluctuating conditions and we must take action to ensure that not a single person living with HIV in the UK is forced into poverty or further ill health because of the Tories’ obsession with austerity.
 
"Despite the calls from civic Scotland to devolve full welfare powers, Scotland won't have the full powers to create a social security system that can treat everyone fairly. For now, we have to fight to ensure that the coveted Government White Paper is not only published timely, but has real proposals to create a fair and just society." 
 
George Valiotis, CEO of HIV Scotland said:
 
“Our research has clearly shown that people living with HIV experience uniquely discriminating circumstances when navigating the welfare system.
 
“At HIV Scotland we are pleased to see this letter which uncovers the specific issues highlighted by our work. 
 
“As the Westminster Government continues down the path of welfare reform, it is imperative that the end result does not continue to disadvantage people living with HIV.
 
“We firmly believe it remains possible to create a system which prevents poverty, treats people with dignity and most importantly supports everyone to flourish, and I urge decision makers to take on this challenge.”

George Osborne’s pledge to inflict further austerity has met with a great deal of criticism.
 
Speaking in China, the Chancellor warned that “further reductions in spending” may be coming in his spring Budget.
 
This week the International Monetary Fund (IMF) warned that the Tories are risking economic growth by continuing with low public spending, calls that were echoed by the OECD.
 
In the same week that both the IMF and OECD have criticized the UK Government’s austerity agenda it is amazing that George Osborne talks of even further public spending cuts. Even David Cameron’s mother has complained. 
 
This Chancellor who strangled economic recovery in the last parliament cutting too far and too fast. Now he wants to continue his failed approach at the cost of our economic growth.
 
We need investment in jobs and public services and people particularly the long term unemployed not more cuts. 

From Trading Economics

Since 1998, the United Kingdom has been running consistent trade deficits mainly due to increase in demand of consumer goods, decline in manufacturing, appreciation of the GBP and deterioration in oil and gas production. In 2013, the biggest trade deficits were recorded with Germany, China, and the Netherlands. The biggest trade surpluses were recorded with United States, Ireland and United Arab Emirates.

According to Investopedia

Trade deficit is an economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.

Breaking down 'trade deficit'

Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for example for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it costlier to purchase imports.

The UK’s trade deficit with the European Union in goods has widened to its largest level on record, reflecting sterling's appreciacion against a weakening euro. A cheaper euro has made UK exports less competitive, and reduced demand for them on the continent. reflecting the weakness of the currency bloc and the extension of a quantitative easing scheme by the European Central Bank.

Osborne wants to cut public spending still futher but others argue this policy will make the situation worse.  

Why we are mainly focused on Europe we take a look at other parts of the world. In Australia the country is battling with many of the problems we have here in Europe. This Fabien Society report tells a lot about the problems Australia is facing

Positive Changes to Negative Gearing

The 2015 ‘Inequality in Australia: A nation divided’ report, released by the Australian Council of Social Service, found that Australia’s household wealth is more unequally distributed than household income; households in the top 20% have around 70 times more wealth than households in the bottom 20%, as compared to the top 20% earning 5 times as much income as the bottom 20%. Much of this disparity is caused by property ownership, and in particular, investment property ownership. The report found that ‘the top 20% of the wealth distribution owns 80% of all wealth in investment properties’, but that wealth in owner-occupied homes is ‘more equitably shared than any other wealth’. The report did caution that ‘many people, particularly younger generations, are now finding it harder to enter the housing market. Home ownership rates have declined since 1981, with the declines greatest amongst young people aged 25 to 34’.

There are therefore two structural factors in the property market leading to growing wealth inequality: investment property wealth flowing disproportionally to the richest 1 in 5 households and owner occupied housing increasingly being unaffordable to those who then rely on the rental market for housing, especially young people, who end up renting the investment properties owned by the richest 1 in 5. It is obvious to anyone who sees growing wealth inequality as undesirable that this is a problem that a responsible government would address.

The Labor Opposition are putting this problem on their election-agenda by promising a future Labor government will ‘put the great Australian dream back within reach for the middle and working class’ through changes to negative gearing and a reduction in capital gains discounts from 50 per cent to 25 per cent. Labor’s policy would see negative gearing tax concessions applicable only to new housing. The policy has the three-pronged benefit of 1) increasing housing stocks as property investors would move away from established homes, 2) increasing construction jobs to build the new investment properties and in turn economic growth and 3) making home ownership more obtainable for owner-occupiers who would no longer be competing with tax-payer subsidised property investors. The policy grandparents current negative gearing arrangements so is designed to protect property investors who already use these tax concessions. For this reason, Labor’s policy won’t immediately have a large impact on the budget bottom line, but it will have longer term structural benefits for tax revenues.

Liberal Prime Minister Malcolm Turnbull has somewhat predictably reacted to Labor’s policy announcement with a fear campaign by telling home owners to ‘be afraid of Bill Shorten’, and that house prices will be ‘smashed’ by the ‘very blunt, very crude’ idea. However, as reported in the Sydney Morning Herald, independent modelling of Labor’s policy has found ‘the policy would likely slow the pace of house-price growth and boost new housing construction, making it "potentially the biggest housing affordability policy the country has seen."’ A slower pace of house-growth is a completely different scenario than a price reduction, and should be an outcome welcomed by Australians saving to enter the housing market, and home owners fearing the threat of unsustainable growth resulting in a bursting bubble.

Chris Bowen, Labor's Shadow Treasurer, explained in The Guardian that he and Bill Shorten were driven to propose their negative gearing policy through an 'impulse to fix problems and make things fairer'. Bowen painted a picture of the inequity of the current negative gearing policy by pointing out that ‘Data from the Australian Tax Office tells us surgeons get an average tax benefit that is 100 times that received by cleaners and 16 times that of nurses’. With any tax policy change, there are always winners and losers. Labor is unapologetic that their negative gearing changes are aimed at helping the 20% of Australians who currently have 70 times less wealth than the top 20%. A policy that reduces wealth inequality, after all, in the long run, makes winners of us all.  

EVIDENCE SESSION: In-work progression in Universal Credit

 3.45pm, Monday 29 February 2016, the Thatcher Room, Portcullis House. 

• Inquiry: In-work progression in Universal Credit
• Work and Pensions Committee
• In the second of three evidence sessions in this inquiry the Committee will consider the following areas:

• Evidence from employers on the behavioural effects of Universal Credit;
• Ways of re-designing job roles to aid pay progression;
• New models of vocational training for lower paid employees; and
• Employers’ recommendations for the design of a future DWP in-work service.

Witnesses:

At 3.45pm

 Faye Goldman, Campaign Manager (WorkInclusion), Business in the Community

• David Massey, Senior Manager, UK Commission on Employment and Skills
• David Coutts, Head of Human Resources (Corporate, Policy and Planning), FirstGroup plc

 FURTHER INFORMATION:

 Committee Membership is as follows: 

Frank Field (Labour, Birkenhead) (Chair); Heidi Allen (Conservative, South Cambridgeshire); Mhairi Black (Scottish National Party, Paisley and Renfrewshire South); Ms Karen Buck, (Labour, Westminster North); Neil Coyle (Labour, (Bermondsey & Old Southwark); John Glen (Conservative, Salisbury); Richard Graham (Conservative, Gloucester); Mackinlay (Conservative, South Thanet); Steve McCabe (Labour, Birmingham Selly Oak); Jeremy Quin (Conservative, Horsham); Craig Williams (Conservative, Cardiff North).