BBC News - Election 2015: Tory inheritance tax plan 'about values'

Chancellor George Osborne has said a Conservative plan to remove family homes worth up to £1m from inheritance tax "supports the basic human instinct to provide for your children".

It means more owners of homes in the UK would be able to pass them on to their children without paying tax.

Independent economists say it would "disproportionately" benefit well-off families and drive up property prices.

Labour said the Tories had promised such a move before and did not deliver.

Deputy leader Harriet Harman contrasted the idea with Labour's plan for a "mansion tax", saying "people face a big choice".

"It's becoming clearer and clearer as we get to the election how actually the Tories are helping a few people - and we want everybody to be better off," she told BBC One's Andrew Marr Show.

In other election news:

• Labour has been setting out plans to raise an extra £7.5bn a year through closing tax loopholes and imposing bigger fines on tax avoiders
• Labour has also announced proposals to give victims of sexual offences the right to challenge decisions by police not to prosecute suspects
• The Lib Dems have set out their plans to eliminate the deficit by 2017/18, through raising taxes by an additional £12bn, cutting public spending by £12bn and cutting welfare by £3bn
• The latest BBC poll of polls has Labour on 34%, the Conservatives on 33%, UKIP on 14%, the Lib Dems on 8% and the Greens on 5%
• UKIP leader Nigel Farage told the BBC his party would scrap inheritance taxand says details of how it would be financed would be unveiled in its manifesto on Thursday

Liberal Democrat Chief Secretary to the Treasury Danny Alexander said the Conservatives had "the wrong priorities".

Meanwhile, Paul Johnson, director of the the Institute for Fiscal Studies (IFS) said the debate from all parties around tax in the election campaign had been "deeply depressing".

He told the BBC: "You've had the main parties ruling out whole hosts of relatively straightforward ways of increasing tax, talking about raising tax from some other group, be they the rich or the non-doms or the tax avoiders, but this is all real money and has real effects on the economy - and no sense from anybody about a serious way forward for the tax system."

Of the inheritance tax policy, an IFS note said: "This (and in fact any) IHT cut will also go disproportionately to those towards the top of the income distribution", while Mr Johnson added: "Anything... which increases the tax privilege associated with an asset like housing will drive the price up in the long run."

The £1bn cost of the Conservative policy will be paid for by reducing tax relief on the pension contributions of people earning more than £150,000, says the party, which will make the the policy a key plank of its manifesto.

At present, inheritance tax is payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.

If the Conservatives win the general election, then from April 2017 parents would each be offered a further £175,000 "family home allowance" to enable them to pass property on to children tax-free after their death.

This could be added to the existing £325,000 inheritance tax threshold, bringing the total transferable tax-free allowance from both parents in a married couple or civil partnership to £1m.

The full amount would be transferable even if one spouse had died before the policy came into effect, the Conservatives say, and so would benefit existing widows and widowers.

For properties worth more than £2m, the new allowance would be gradually reduced so that those with homes worth more than £2.35m would not benefit at all.

Analysis, by Carole Walker, Conservative campaign correspondent

David Cameron will be hoping his pledge to take the family home out of inheritance tax will galvanise his campaign in a week which will be critical for his prospects of staying in power.

When George Osborne promised to raise the inheritance tax threshold to £1m back in 2007, he delivered a huge boost to Tory morale and put Gordon Brown off holding a snap election. Subsequent promises to take more people out of the tax have not been delivered. The threshold has been frozen since 2009 and rising property prices have dragged tens of thousands more families into the inheritance tax net.

His opponents are already questioning whether voters will believe this latest promise. The announcement is likely to appeal to middle-class voters, particularly in London and the South East. But it also opens the Conservatives to the charge they are helping the wealthy. David Cameron's team deny this - pointing out that it will be paid for by reducing pension tax relief for high earners and that many ordinary families now have to pay the tax.

It is, however, a marked contrast to the promises from Labour and the Liberal Democrats to impose a "mansion tax" on expensive properties.

Mr Osborne told BBC One's Andrew Marr Show: "Conservatives support the basic human instinct to provide for your children. And we believe that your home that you've worked for and you've saved for should belong to you and your family, not the tax man.

"So we will take family homes out of inheritance tax, we will effectively increase the inheritance tax threshold to £1m, so that only millionaires pay inheritance tax."

It was a message repeated in a speech by Mr Cameron, who said: "You should be able to pass it (your home) onto your children. And with the Conservatives, the tax man will not get his hands on it."

But shadow treasury secretary Chris Leslie, for Labour, said the policy was the latest "panicky promise" from the Conservatives.

He said: "The Tories made a promise on inheritance tax before the last election and they broke it.

"At a time when our NHS is in crisis and most working people are paying more under the Tories, it cannot be a priority to spend £1bn on a policy which the Treasury says would not apply to 90% of estates."

Danny Alexander said: "It is extraordinary that the Tories will go into great detail on a policy that will cut tax for a small number of estates, but steadfastly refuse to give any detail at all on the massive cuts to public services that they desire."

However, when asked whether the Lib Dems would block the proposals if they ended up back in coalition, he declined to say he would, instead saying: "I'm saying I strongly disagree with it. Our priority... is further increases in the income tax personal allowance... we've stopped things in this parliament including cuts to inheritance tax for millionaires."

Bloomberg News - We Traveled Across China and Returned Terrified for the Economy

A worker cuts steel billets at an iron and steel enterprise on June 9, 2014 in Ganyu County, China.

Photographer: ChinaFotoPress/Getty Images

China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country.

What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook.

“China’s metals demand is plummeting,” wrote Kenneth Hoffman, the metals analyst who spent a week traveling across the country, meeting with executives, traders, industry groups and analysts. “Demand is rapidly deteriorating as the government slows its infrastructure building and transforms into a consumer economy.”

The China Steel Profitability Index compiled by Bloomberg Intelligence barely rose in March, a time after the annual Lunar New Year when demand would usually surge, and so far this month has resumed its decline. Steel use this year is down 3.4 percent, after slumping as much as 4 percent in 2014, according to BI. It had steadily risen for more than a decade.

Prices for commodities from iron ore to coal are sinking as China’s leadership tries to steer the economy away from debt-fueled property investment and smokestack industries, embracing services and domestic-led consumption. At the same time, President Xi Jinping is stepping up efforts to combat pollution, further squeezing industry.

Interest Rates

Deteriorating economic data has led traders and analysts to speculate that China’s central bank will act to revive growth. The bank has said it will keep an “appropriate balance between loosening and tightening” of interest rates. It has cut interest rates twice since November and lowered lenders’ reserve-requirement ratios once.

Economists are forecasting 7 percent growth in China for this year, in line with government targets and down from 7.4 percent in 2014, according to the median of 59 estimates compiled by Bloomberg. That’s about half the last decade’s peak rate of 14.2 percent in 2007.

The slowing steel and metals activity suggests the outlook could be grimmer.

“There is a big fear this is going to get worse before it gets better,” Hoffman said in an interview. “It’s as bad as the data looks, if not worse.”

Reuters News - Iran will sign final nuclear deal only if sanctions lifted: Rouhani

Iran's President Hassan Rouhani prepares to depart after the end of a press conference on the sidelines of the 69th United Nations General Assembly in New York September 26, 2014.

REUTERS/ADREES LATIF

(Reuters) - Iran will agree to a final nuclear accord with six major powers only if all sanctions imposed on the country over its disputed nuclear work are lifted, President Hassan Rouhani said in a televised speech on Thursday.

"We will not sign any deal unless all sanctions are lifted on the same day ... We want a win-win deal for all parties involved in the nuclear talks," Rouhani said.

The tentative deal between Iran and the six powers on curbing Iran's nuclear work, reached a last week in the Swiss city of Lausanne, revived hopes of an end to sanctions in

return for limits on the Iranian atomic program.

Iran wants sanctions to be lifted altogether and at once, but the United States made it clear on Monday that sanctions would have to be phased out gradually under the final nuclear pact.

A deadline for reaching the final agreement is June 30 and Iran, the United States,Germany, France, Britain, Russia and China are expected to meet in the coming days to discuss the deal.

(Writing by Parisa Hafezi; Editing by Larry King)

BBC News - CBI says UK economic growth picked up in first quarter

Business lobby group, the Confederation of British Industry (CBI), estimated that the UK's economy expanded by 0.7% in the three months to March, up from 0.6% in the previous quarter.

The UK economy looks set to gain some growth momentum in the current period, CBI said

It also said growth would probably gather some momentum in the current quarter.

The main risk to the UK economy was related to ongoing eurozone worries and Greece's bailout package, it said.

CBI's monthly survey includes 764 private firms from a range of sectors.

It said businesses in the UK would also need to cope with a stronger pound, which was already weighing down weak export growth.

The lobby group's monthly private sector growth indicator showed an overall reading of 18% for the three months to March which was "almost unchanged from the three months to February (19%)".

The percentage reading indicates the number of firms reporting that business performance was up, compared to those reporting it was down.

The survey showed firms expect growth to strengthen in the coming months, with a pick up in business and consumer services, together with the manufacturing sector.

"The outlook for 2015 looks encouraging," said CBI's deputy director general Katja Hall.

"Our surveys show it's been a solid start to the year with the prospect of stronger growth to come.

"The benefits of lower oil prices should be increasingly felt; with cheaper petrol boosting households' incomes and spending power, and cutting costs for many businesses," she said.

Bloomberg News - Dollar Drop Signals World’s Best Forecaster to Start Buying

George Washington appears on the front of a US one dollar bill displayed for a photograph in New York on February 16, 2005.

Daniel Acker/Bloomberg News.

It’s time for investors who bailed on the dollar in the past few weeks to get back in, says the most-accurate currencies forecaster.

The greenback has tumbled 4.3 percent versus the euro since touching a 12-year high last month amid speculation the Federal Reserve will delay raising interest rates, in part because the dollar’s strength is hurting U.S. economic growth. That concern is overblown, according to ING Groep NV, which topped Bloomberg’s rankings of foreign-exchange analysts for the second quarter in a row.

“The market is now pricing in a very subdued pace of the tightening cycle -- we disagree,” Petr Krpata, a foreign-exchange strategist at ING in London, said on April 1 by phone. “We just see the latest correction as a perfect opportunity to get into the trade again.”

Even with the recent reversal, the dollar has rallied between 3.6 percent and 30 percent against all of its major peers since mid-2014 as the Fed’s plans to raise interest rates attracted cash to the U.S., at the same time that central banks from Europe to Japan boosted their stimulus. That momentum halted when Fed officials cut their forecasts for rate increases last month and alluded to the currency’s drag on exports.

Export Effect

ING sees the Fed raising rates this year even after an April 3 report showed the U.S. added the fewest jobs last month since December 2013. That makes buying the dollar versus the euro the best play in currency markets, according to the Amsterdam-based bank, among one of the first to say the currency pair will achieve parity this year for the first time in more than a decade.

“The stronger dollar doesn’t necessarily have to change the U.S. economic prospect,” said Krpata, who helps compile ING’s forecasts along with London-based head of currency strategy, Chris Turner.

Exports account for only 14 percent of the American economy, according to World Bankdata. That’s the least among Group of 10 nations, and compares with 30 percent for Canada, 46 percent for Germany, and over 80 percent for the Netherlands and Belgium.

ING forecasts the dollar, which traded at $1.0924 per euro at 6 a.m. on Tuesday in London, to strengthen to parity by mid-year and reach 95 cents by Dec. 31. That’s more bullish than the median year-end estimate of $1.05 in a Bloomberg survey of 69 strategists and economists. It reached $1.0458 on March 16, the strongest since January 2003.

ECB Stimulus

While monetary authorities worldwide have slashed borrowing costs this year to revive growth, an unprecedented bond-purchasing program by the European Central Bank, amplified by negative interest rates, has made the single currency a prime selling target for investors.

ING topped Bloomberg’s rankings of foreign-exchange analysts for the four quarters ended March 31, after also leading the previous period.

The best forecasters in Bloomberg’s rankings were identified by averaging individual scores on margin of error, timing and directional accuracy across 13 currency pairs during the past four quarters.

Banks had to be ranked in at least eight of the pairs to qualify for the overall placing, with 60 succeeding. ING’s score of 60.98 compares with No. 2 Credit Suisse Group AG’s 60.71.

Rally ‘Done’

Saxo Bank A/S took third place, with a score of 60.58, and was the best forecaster for the euro-dollar pair after being the most bullish on the greenback at the beginning of the year.

Now, Saxo strategists say the rally may be exhausted following nine straight months of gains.

“Most of the move is done,” John Hardy, head of foreign-exchange strategy at Saxo Bank in Hellerup, Denmark, said in a April 4 telephone interview. “There could be some more in it, but increasingly it’s going to become a two-way trade.”

Credit Suisse is in ING’s camp and predicts the dollar will reach parity with the euro by the end of this year. The Zurich-based bank sees the Fed raising rates in June even as the job market cools.

“You need to see a lot of more these negative signs before the whole story changes,” Alvise Marino, an emerging-markets currency strategist at Credit Suisse in New York, said in a phone interview. The dollar will climb as “the main trading partners of the U.S. are all easing.”

Reuters News - Greece sends updated reforms, pledges to pay IMF on time

(Reuters) - Greece sent an updated list of reforms to lenders on Wednesday to try to unlock financial aid and avoid a default but euro zone officials said more work was needed before new funds could be released.

Greece is weeks away from running out of cash but its euro zone and International Monetary Fund lenders have frozen support payments until it implements reforms, with talks bogged down over what measures the leftist-led government must take.

"We sent a new document today to the Brussels Group (of EU/IMF lenders) which is more specific and quantified," a Greek finance ministry official told reporters, noting that labor and pension reform were the main sticking points in negotiations.

Euro zone officials said, however, that institutions representing the lenders - the European Commission, the European Central Bank and the IMF, got the list too late for it to be discussed by euro zone deputy finance ministers at a teleconference on Greece on Wednesday afternoon.

One euro zone official familiar with the content of the call said recent talks on the reforms had made progress but that more work was needed for a deal.

EU officials confirmed the new reform list, published by the Financial Times (bit.ly/1OZy4Ww), was genuine, but noted it still needed more work.

"It still lacks detail and substance in many places," said one EU official, who is familiar with the views of the lenders but is not a policy maker.

The 26-page document states clearly that Greece considers itself an irrevocable member of the single currency area, making clear it had no intention of exiting the euro zone or the European Union.

RELATED COVERAGE

• › Euro zone, Athens closer to Greek reform list, more work needed: euro zone official
• › SLIDESHOW Greece sends updated reforms, pledges to pay IMF on time

It says that the country's financing needs in 2015 are 19 billion euros ($20 billion). It expects to get 1.5 billion euros from selling off state assets, a far cry from the 4 billion envisaged by the agreement with the previous government.

The government pledges to crack down on tax fraud, raise tax on luxuries and review asset sales on a case-by-case basis. It also proposes reintroducing an extra payment for poor pensioners and a gradual hike in the minimum wage and retaining government administration staffing levels.

Discussions on the reforms between Greece and the representatives of the creditors are scheduled to continue next week, officials said.

PAYMENT TEST

A payment to the IMF of about 430 million euros due next week is shaping up to be the next financial test for Greece, which is already resorting to last-ditch measures like borrowing from state entities to tide it through the cash crunch.

In an interview with German daily Der Spiegel, Interior Minister Nikos Voutsis said that if foreign creditors do not send Athens further funds by April 9, the government would first pay salaries and pensions and then come to an agreement with lenders on paying the IMF late.

But Prime Minister Alexis Tsipras's government, which was elected in January on promises to ease the terms of the bailout and cut debt, said the comments did not represent its stance.

"There is no chance that Greece will not meet its obligations to the IMF on April 9," government spokesman Gabriel Sakellaridis told Reuters.

Labour Minister Panos Skourletis said a planned visit by Tsipras to Moscow next week was "to find out whether our historic friendship with Russia can be stretched to other levels", German newspaper Die Zeit reported.

"We'd like to stay on the ship called Europe," Skourletis was quoted as saying. "But if the captain pushes us overboard, we need to try to swim."

But Athens would only reveal what role Russia might play "if nothing works anymore", Skourletis said.

Earlier, Economy Minister George Stathakis said he expected an agreement with lenders next week on a package of reforms submitted by Athens to help unlock remaining bailout funds.

"I think talks will lead to a deal next week. The agreement will close on (Greek Orthodox) Easter week," he told Skai TV.

The list proposed by Athens includes including the leasing of 14 regional airports and the sale of Greece's largest port, Piraeus, to raise 1.5 billion euros this year, although ministers have made conflicting statements on the port sale.

On Wednesday, Stathakis said the government had no plans to sell all of its 67 percent stake in Piraeus Port Authority (OLPr.AT) but would seek a joint venture with investors.

ATHENS | BY RENEE MALTEZOU AND COSTAS PITAS

(Additional reporting by Michelle Martin in Berlin, George Georgiopoulos and Angeliki Koutantou in Athens and Jan Strupczewski in Brussels; Writing by Deepa Babington; Editing by Louise Ireland)

Reuters News - Solid start to second quarter for European stocks, dollar

A general view of the Frankfurt stock exchange March 16, 2015. Germany's DAX was up 1.9 percent at 12,133, a record level on Monday.

REUTERS/RALPH ORLOWSKI

(Reuters) - European stock markets made solid starts to the second quarter on Wednesday as data pointing to a gradual recovery in the euro zone economy gave investors fresh impetus after their blowout first few months of the year.

Europe's benchmark FTSEurofirst 300 .FTEU3 recovered from a early wobble to put London's FTSE .FTSE Germany's DAX .GDAXI and France's CAC .FCHI up 0.5, 0.3 and 0.5 percent higher respectively as core bond markets yields nudged higher.

Crude oil prices LCOc1 CLc1 maintained their decline as an extension of talks betweenIran and world powers on Tehran's nuclear capabilities drove hopes of an agreement that could also ease export sanctions on the OPEC member.

Currency markets were mostly knocking about in recent ranges after a tumultuous few months. The star of Q1, the dollar, edged up to 120.15 versus the yen JPY= and to $1.0750 per euro EUR= after the currency shared by 19 countries made its worst ever start to a year.

"I would be surprised if we had a similar quarter again considering the performances of the dollar and the euro over the last few quarters," said Derek Halpenny, European head of global markets research at Bank of Tokyo Mitsubishi in London.

"With no policy (rate hike) announcement likely in the second quarter from the Federal Reserve, that reduces the scope for significant moves... Also the bulk of global easing that has helped fuel the dollar is probably behind us now."

There were more signs that the European Central Bank's 1 trillion euro stimulus program -- which has driven the huge currency market shifts -- is bearing fruit.

Manufacturing activity across the euro zone accelerated faster than previously thought last month and hit a 10-month high, revised data showed, adding to signs the bloc's economy is recovering.

DELICATE CHINA

Data from China was less robust, bolstering the view that Beijing will have to provide more stimulus to keep growth on track, with some analysts eyeing moves to directly push down the value of the yuan.

The HSBC/Markit China Manufacturing Purchasing Managers' Index (PMI) came in at 49.6, slightly higher than a preliminary "flash" reading of 49.2 but still below the 50-mark which separates contraction from expansion.

An employment subindex contracted for a 17th straight month, falling to its lowest since August 2014.

"The latest data indicate that domestic and foreign demand remains subdued amid weaker market conditions," said Annabel Fiddes, an economist at Markit.

Shares in Shanghai .SSEC gained 1.4 percent on the hope of more stimulus but the rest of Asia was subdued.

Bourses that ended in the red included Japan, South Korea, Australia, Malaysia and Indonesia. Japan's Nikkei sank 0.9 percent after a lackluster Bank of Japan business survey.

After Greece failed on Tuesday to reach an initial deal on reforms with its lenders, Athens was the only bourse in the red in Europe and its government bond yields GR10YT=TWEB inched close at 12 percent.

The rising dollar helped drive nickel CMNI3 to its lowest in 6 years before a bounce, copper CMCU3 slipped and gold XAU= struggled at $1,180 an ounce after ending March with a loss of 2.4 percent.

The Iran talks kept the squeeze on oil markets. Brent crude for May delivery LCOc1, which fell 8 percent over the last week, was down 8 cents at $55.03 a barrel. U.S. crude was 25 cents lower at $47.35.

LONDON | BY MARC JONES