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The World Economy Will Fall In 2021

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Doubts about the implementation of fiscal stimuli hinders the work of central banks and jeopardizes the recovery

Despite the hopeful news about vaccines, the lockdowns and restrictions applied in the West and the United States are fueling fears of a new recession in the world economy.

This could increase pressure on central banks and governments to put aside other concerns and do more to stimulate demand.

Vaccines will not arrive, at the earliest, at the end of the year or the beginning of the next, meanwhile the economic situation continues to deteriorate.

Thus, the latest macro data does not accompany and show a weaker activity .

Thus, the indicators point to a double decline in the economy. This is demonstrated by the European PMIs, falling to 45 points, the exact level that separates growth and contraction, compared to the 50 points of the previous data.

These indicators generate a demand effect for more economic stimuli by politicians despite the fact that the European central banks have taken out the heavy artillery.

And in the case of the European Central Bank (ECB) it is preparing the reload of its pandemic purchasing program for December.

And it is that “while there is a lot of enthusiasm for the progress of vaccine development, it will not be the quick fix that many hope it will be,” said Singapore’s Minister of Trade and Industry, Chan Chun Sing.

“Making enough doses, then distributing and vaccinating a significant population of the world, will take years.”

For its part, the Federal Reserve could focus more of its bond purchases on term securities to lower interest rates.

Doubts about whether it will be enough.But there are concerns that central banks have run out of room to act decisively and that even easier financial conditions will not translate into an economic boost.

The International Monetary Fund warns of high asset prices and this points to a disconnect from the real economy and therefore may pose a threat to financial stability.

“There is an excess of savings and a shortage of investment”, which is the central problem facing developed economies, says Janet Yellen, who will be nominated for Treasury by Joe Biden.

Governments block fiscal policies “Our base scenario is a contraction of 4.1% for the world economy in 2020, followed by a rebound to 4.9% growth in 2021,” they point out from Bloomberg.

The problem is fiscal policy in both the United States and Europe.

A clear example is the disagreement between US lawmakers over how much more to spend as Biden prepares to take office.

President Donald Trump’s Treasury Department cut the Fed’s ability to help some credit markets last week.

In Europe, $ 2 trillion from the European Reconstruction Fund in aid is being held back by a fight over political control , sponsored by Poland and Hungary.

“Exactly at the moment when central banks around the world recognize the centrality of fiscal policy in dealing with the economic consequences of the pandemic, governments are creating difficulties to implement the next stage of their stimulus,” said Gilles Moec , chief economist at AXA.

For the United States, the pace of infections prompted JPMorgan to forecast an economic contraction.

The Advantage of Utilising 3D Printing Technology in Industrial Manufacturing

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The 3D Printing technology comes in handy in most industrial manufacturing processes. Whether it’s on the internet and the ground, you will find details of 3D printing and how companies invest in it because of its several advantages. From the little things such as toys and figurines to the industrially printed bridges, propellers, and rockets, 3D has become a game-changer in the technological and industrial world. Here are some of its advantages.

Enhances Faster Production

To companies that have invested in 3D printing, most processes that lead to a complete production have become unnecessary or redundant. With this type of manufacturing, a program gets installed into the 3D printer and then fed with the right materials to produce the item. You only need a small workforce or another machine to assemble and put the last touches on the product. Before then, it could take tens of processes, human labour, and machines to develop a single product. Besides making things produced on time, companies are now producing items where they are needed. NASA is preparing a major milestone to print its items on the moon, making astronauts have ready tools when they need them. It is also helping doctors in remote areas come up with prosthetic limbs and implants in real-time, on location.

Produces less waste

In most manufacturing processes, the raw material is often more than what is required for the product. Production starts with the larger quantity as it molds the product, leaving the excess material behind. While this material is later reused in the next process, its time consuming and not all can be reused. According to specialists of 3d printers from Konica Minolta, most 3D processes layer down the raw materials, reducing their usage. There is less or no trimming of the finished product, which reduces wastage. It also prevents transferring raw materials to the production site, reducing costs, damages, and other environmental expenses.

More Product designs

Before the arrival of 3D, most companies stuck on one design because it took time to create new ones and adjust machines. With 3D printing, manufacturers now have the freedom of producing as many designs and structures as possible, depending on their products. 3D uses thinner layers of materials and mathematical methods that engineers couldn’t apply to production machines. Products are now customisable, depending on the user, making it possible to produce organ implants that perfectly fit patients, Intrauterine Devices for women with larger or smaller uteruses, and other customised items in the medical and other fields.

Reduces Production Cost

Before introducing the 3D printing service, investors had to provide huge funding to purchase several machines and equipment to produce a single product. It also involved getting enough labour force, materials, and transit for each process, making the total production expensive. Things have changed. Companies can now produce several complex items and parts using the printer and fewer machines to finalise the product. It also requires fewer workers, less power, and less working space. There is also reduced transport for raw materials and finished products since production can be done remotely.

There are several benefits for companies indulging in 3D printing. The above are only a few but greatly highlight what this process can do. With it evolving, we will continue witnessing new product designs and more companies since production will be affordable, fast, and flawless.

THE DEFINITIVE GUIDE: THE SMART WAYS TO DO TAX AS A FREELANCER

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Freelancing seems fascinating and tempts many people. It does not compel you to follow any timetable and allows you to set your schedule. Neither does it fill you with Mondays’ anxiety, nor does it bind you to report to any boss. Studies reveal that most people who leave their well-settled jobs do so because they are unhappy with their bosses and cannot seem to have enough strength to deal with them. Being their boss seems thrilling, and people believe that it boosts their creativity and opens up more gates for them as freelancing helps free their minds. As much as freelancing appears appealing, it has its perils as, generally, it does not give you a guarantee about income. Some months you may earn a substantial amount, while some days might be difficult. While there is no guarantee of making money as a freelancer, some expenses are mandatory, such as taxes. 

Several people find freelancing alluring, and they feel they have the skills of making a career as a freelancer. Still, the aspect of ongoing and indispensable expenses puts a chain in their feet, and they do not venture into it. The fear of handling federal income tax bounds them with their jobs, and they find themselves unable to leave it. Taxes are one form of obligatory expense as citizens. Unless you have a severe condition, there is no way you can prevent it. Several governments have made stringent laws that help them monitor people’s financial situations and collect taxes.

As a citizen, we avail several services from governments. Still, it needs to pay its employees and keep the organizations running, and the government collects taxes from citizens. Several laws charge extra money on late submission. People have to bear numerous other consequences if they try to do any funny business with their taxes. People need a guarantee that they will handle the necessary expenses and not have to worry about taxes. Once they figure out a way, nothing stops them from venturing into freelancing.

Several people do freelancing and keep their jobs parallel so that they can pursue their passion while serving as a full-time worker. Numerous software, such as a freelance tax calculator, help determine your tax and alert you when your tax is due. Paying tax is a civil and ethical duty, and below we are giving a comprehensive guide which will help you in figuring out smart ways to do taxes as a freelancer:

  1.  TAX MANAGEMENT

Smart people figure out their expenses first and have a good list of mandatory payments. They make sure to keep some money separately for necessities and spend on other recreational activities. It gets challenging as a freelancer because you do not have a certain amount coming into your account every month. Yet, bills and additional fees are due every month. An easy way is to determine your tax payments beforehand to have a figure in mind that you need to pay in any case. Managing taxes is crucial. Not everyone has insight into tax payments; you must talk to someone aware of the procedures and give you an overview to easily manage your taxes.

  1. ADVANTAGES AS A FREELANCER

Many freelancers stay in ignorance and miss out on the benefits that they can avail of being a freelancer. Depending on what form of business as a freelancer you are getting into, you can get certain advantages based on your nature of work. When you have a salaried job, the government collects your taxes from your paychecks. Still, when you are self-employed, you can save yourself from some percentage of taxes by filing for ‘Schedule C’ or by getting a ‘Corp Election.’  You must do your research and have a thorough knowledge and proper documentation to avail advantages, and have the appropriate paperwork to avoid any hassle in the future.

  1. TRACK MILEAGE AND EXPENSES

Did you know that mileage that your drove for business is tax-deductible? Many freelancers do not keep an eye on changing laws, and thus, they miss out on the favors that governments have set solely for them. Business mileage is a vast term, and many expenses come into it. As a freelancer, you should have an in-depth insight into it. People do not consider business meetings and going to and from clients as business expenses, which is a huge mistake, as business mileage constitutes all these costs. Having a laptop or other gadgets is a need of time, and as per your work, you may have to invest in additional equipment. You can get all these exempted from taxes through proper documentation.

  1. ORGANIZATION IS THE KEY

Keeping things organized is a skill that comes to some people naturally, while others can learn it. Regardless of what field you are in, if you keep your things and tasks organized, it will help you succeed in public life and your profession. Many people overestimate their capacity and assume that they will save money later in life. During rainy days they face difficulty in managing expenses. As a freelancer, you must organize your taxes and other payments and not leave it for the last day, and it will save you from the hassle.

  1. TIMELY PAYMENTS

More often than not, taxes and other bills give you a few days to pay, and a surcharge applies after the due date. When you can avoid extra payment by making timely payments, there is no reason that you show laziness in paying and end up spending extra money.  Some people decide to pay a lump sum amount annually and consider monthly payments trouble. Experts recommend that they make timely payments for freelancers to neither have high expenses nor any added stress.

CONCLUSION

Tax is an obligation, and as a dutiful citizen, there is no way you want to avoid it. Wise people understand the importance of taxes, and while they may have their reservations about policies and all but they make sure to pay their dues on time. Many people hesitate to barge into freelancing because they assume they will not file taxes on time. And it could be an added pressure on them. Planning and organization save freelancers from any trouble and help in the management of taxes and other payments.

The UK to ban the sales of petrol and diesel cars by 2030

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Bold moves from the PM at a time of national crisis

The head of the UK conservative government has now confirmed that sales of diesel, petrol and hybrid vehicles will be banned from 2030. Mr Boris Johnson has dubbed the move as the ‘Green Industrial Revolution’.

Initially, the UK was aiming for a ban in 2040 but projected to come in for 2035. But the sweeping move that has sent shockwaves across the automotive sector now brings a ban in just nine short years.

It’s all part of the UK’s ambitious aim for carbon neutrality by 2050.

Of course, petrol, diesel and hybrids can still be driven on the road after 2030, but production will stop.

UK motorists can access a car check and find out the current CO2 output of a car they own or plan to buy. This data can help drivers who are conscious of their carbon footprint before moving across to electric or hydrogen-powered vehicles.

Green revolution confirmed

Mr Johnson said: ‘the government will invest more than £2.8 billion into electric vehicles, lacing the land with charging points and creating long-lasting batteries in UK gigafactories.’

The Society of Motor Manufacturers and Traders are said to welcome the move for UK sectors. They will work with the Government for thrashing out the plans that must be pushed to a rapid transition. The benefits are exponential for the British people and the rest of the world. It also supports a struggling automotive sector, including manufacturing and employment.

More comprehensive sections of the car sector are keen for clarity on the future of motoring and law changes that impact markets.

It’s hard to argue with the positive impacts that electric and plug-in hybrid electric vehicles (PHEVs) will hold in the reduction and eventual elimination of CO2.

Some car manufacturers like Bentley already have a third of their customers driving one of their plug-in vehicles. Such brands are behind the 9-year transition goals set out last week.

The focus must now shift from the development of petrol and diesel vehicles to the creation and implementation of a cross-industry approach that focuses on modern infrastructure that brings new customers to the green revolution much sooner than initially expected.

What happens to my current car?

Previously mentioned, the Government looks to cease new car sales of diesel, petrol and hybrid by 2030 and PHEVs by 2035.

Current fleets of cars are likely to remain on the roads although we can expect hefty road tax and insurance premiums after 2030.

The Government wants fossil-free propulsion as quickly as possible.

As a society, we are all well aware of the electric car revolution, but Mr Johnson has hurried us along by halving the cut off date by 10-years.

Why will there be a ban or petrol/diesel cars so quickly?

UK ministers are claiming there are 40,000 premature deaths every year linked to air pollution. Hurried measures are designed to reduce toxic air intake by clearing up Britain’s smog infused towns and cities.

That’s not all – local authorities will have access to a £255m cash fund to focus on reducing emissions locally, encouraging public transport and deploying electric vehicle charging zones across towns and suburbs. These changes are happening much sooner than 2030.

A lack of electric charge points and short battery life are two of the biggest obstacles faced by Government, Councils and car manufacturers.

For large pockets of UK drivers, an electric vehicle remains unaffordable and a most inconvenient way to maintain commutes and to get around. There is a big push for changes in legislation that allows electric scooters to be ridden on the road legally, so they fall in line with electric power bicycles. More on that here.

The motor-industry certainly has its work cut out if it’s going to support the nation to carbon neutrality by 2050.

CarVeto helps UK motorists who want to buy or sell a car. They provide details history checks, and most of their data is free to use with any car registration mark.

UK Taxes: What You Need to Know

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Doing your taxes can be a confusing task for many people, especially if you’re new to it. That’s why so many people hire others to do their taxes for them. No matter which way you decide to go when doing your taxes, the important thing is that they get done.

It’s always a good idea to understand the basic concept of tax, even if you won’t be doing your taxes yourself. The word ‘tax’ refers to money that has to be paid to the government for a variety of reasons. In this post, we’ll be exploring some of the most asked questions about tax.

For home offices in the UK, there are plenty of items you can claim including office cost and travel cost. For work from home, you can claim a proportion of the cost for heating, internet, and Council Tax. Meanwhile, in Australia, tax returns online for work from home employees or those with home offices can claim even improvements in the house that are deemed essential to work.

What are tax rebates?

In certain circumstances, the amount of tax a person has to pay can be reduced after they’ve already paid. This means that some of your tax money will be returned to you. There are various scenarios that could lead to a person possibly earning a tax rebate, such as age, or using a personal vehicle to travel for your employer. If you think that you qualify for a tax rebate, you should try to get your claim in as soon as possible. To learn more about tax rebates, visit QuickRebates.

Why are taxes important?

Simply put, taxes help make your life more convenient. The government uses tax money to strengthen certain areas of a city in various ways. Tax money is used to improve infrastructure and roads, as well as improve public schools and medical facilities. Your tax money is therefore used to improve your lifestyle. Tax matters more than we think, so even though it may be a hassle and an inconvenience, it would be more of an inconvenience if the government didn’t have the funds it needs. Your tax money isn’t just disappearing into a void – it’s being used to improve your quality of life, every day.

Who has to pay taxes?

Generally, everyone who deserves some form of income will need to pay taxes. There is usually a minimum income required for you to have to pay taxes, so if you earn less than that you might be exempt from paying tax. Many people think that income tax only refers to money earned from a job, but that’s not true. Income tax is the main type of tax, and refers to all forms of income, not just income obtained through employment.

What types of taxes are there?

While income tax is the most common tax and the one that will cost you the most, you probably encounter various other forms of taxation on a daily basis. For instance, consumption tax is charged on nearly everything we buy. You may also need to pay property taxes. On top of that, there are various lesser-known forms of taxes, such as travel tax. Knowing whether you need to pay taxes on a certain thing and what type of tax you’ll need to pay can be quite confusing, especially when it comes to things like personal loans and taxes. Don’t be afraid to ask for help if you’re unsure or have any questions.

Britain’s Disappearing HGV Drivers

Now more than ever, British businesses have come to rely on an efficient supply chain. The pandemic may have put a dent in consumer spending, but certain goods are still a necessity.

And what forms the backbone of an efficient supply chain? Heavy Goods Vehicle Drivers (HGV) play a pivotal role in the economy and the functioning of society.

Yet, Britain’s HGV Driver numbers are in decline.

The Crux of the Matter

An aging workforce, low unemployment, and problems attracting skilled younger people to the Heavy-Duty Goods transport (HGV) sector are just some of the factors attributed to the decline in HGV drivers.

The findings published by the Freight Transport Association (FTA), now known as Logistics UK, last year estimates the number of HGV drivers was down by 5% year on year from 2017.

This translates to 59 000 shortages as 64% of storage and transport businesses face severe skills shortages. But it’s not just Britain facing a decline in numbers. The report indicates a 21% HGV driver shortage across Europe.

The Pressure is On

With seasonal demand set to increase over the next two months, fleet managers look set to have their work cut out for themcreating a reliable commercial fleet. Time constraints, seasonal pressure, backlogs, and shortage of skilled HGV drivers all add to the pressure.

“A breakdown should be the least of their worries,” says a representative from Fleetcover – the fleet insurance specialists. “We get the tight margins and high turnover, in short, all the dynamics involved in running a logistics business.”

Where to From Here?

Perhaps more tellingly is the age demographics within the HGV industry, where some 60% of drivers are aged 44 and older, with only 19% under the age of 35. Exacerbating the situation is the lack of young people considering HGV driving as a career option to fill the gap by those leaving the industry.

Managing director at Paragon Software Systems, William Salter, asked logistic professionals how best to plug the HGV industry’s skill gaps. And this is what they came up with.  

●          Address the poor public image of the sector. The industry needs to present itself as innovative and technology-driven to make it more appealing to the younger generation.

●          Make logistics financially rewarding. Wages in the logistics industry are simply not good enough to attract younger applicants. 

●          Create an appealing career path. A framework for the industry needs to be created, which recognises industry standards and qualifications.

●          Improve working conditions. Long hours, inflexibility, loneliness, and low pay were all key factors in the decline of ‘new blood’ into the HGV sector. These issues, along with a lack of quality driver facilities, need to be addressed to make the role more appealing to a younger audience. More alarmingly is the stress and risk factors associated with the job.  

●          Engagement with the education sector. Engage with Educational facilities to increase the visibility of the range of jobs on offer.

Hope on the Horizon

So, what is the solution? According to industry insiders, increased wages and an overhaul of the HGV industry’s image would go a long way to solving the problem.

Why online gambling has the potential to be a great side hustle

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Having an extra source of revenue, such as a side income, is something that many people want to have. It can provide relief to worrying about stretching your salary throughout the month. Some people supplement their income by doing freelance work online, others pick up a few online classes and teach a skill. Others have opted for a different route and kill two birds with one stone by gambling online and making money at the same time. Online casinos have skyrocketed in popularity over the last few years, more so this year because of the COVID-19 pandemic. Over the last few years online casinos have evolved with the times; offering thousands of games, providing players the opportunity to experience a live casino from home with live table games and they are available across multiple platforms such as desktop computers, laptops, smartphones and smartwatches. Online gambling has never been so accessible, but how can they be a great side hustle?   

Free sign-up bonuses

Many, if not all, online casinos offer welcome bonuses for new and returning players. This can be in the form of free spins for slot games or free money to be used on the site. Some casinos have also started to provide a cashback incentive as a welcome bonus, meaning even if you lose, you will still be earning some money back.

This effectively means that players are making money before even playing any games, and gives players the opportunity to learn how different games work. The best kind of sign-up bonus is the no deposit welcome bonus. It is important to read through all of the terms and conditions before registering or depositing money though. I usually check this website to find the best bonuses that are currently available.

Most online casinos have requirements that need to be met before players can withdraw any winnings received using the welcome bonuses. It would not be profitable to waste time and money if you aren’t able to cash out the hard-earned winnings.

Portability

Online casinos have come a long way since dial up modems and having to be confined to a desk, plugged into a power source. Advancements in technology have allowed online casinos to be accessed over a variety of platforms. Of course, its nothing new for smartphone players to be utilize online casinos, however it is relatively new that those players are able to experience the exact same level of quality without needing to sacrifice anything in return for increased mobility. Now even you need to get something from the supermarket, it possible to continue earning money while on the go, without needing to stop and then resume when getting home. This portability offers players the ability to participate in time consuming games of poker without being interrupted, not even by intermittent internet as smartphones use stable mobile data.

Relaxed and enjoyable

A lot of people don’t gamble online or visit physical casinos just to make money. More often than not, it is done simply for enjoyment as clicking a button or pulling a lever for a slot to spin is something anyone can do. This means that even players with limited knowledge about casinos and the games can make money. However, it is worth researching which slot games pay out more often and which have the highest payback percentage, so that when you do win it’s worth it.

This information can be found easily with a simple internet search. To make it more profitable, consider learning about table games as those require skill, therefore your ability to win won’t just be based on luck. Online casinos also give players the ability to gamble in a quiet, comfortable and relaxed environment. This allows players to be relaxed when playing, increasing the level of enjoyment and immersion.

By using welcome bonuses, players can learn how to play the many different games available on online casinos, without needing to use their own money. Welcome bonuses also start players off with a profit, then can be increased. Technological advancements have allowed players to gamble using their smartphones, which has had a huge influence in the efficiency of making money by not needing to stop playing because of day-to-day interruptions. Online casino games such as slots are simple and easy to use, providing a relaxed and enjoyable gaming experience for those who are new to gambling.

5 Must Know Facts About Buying Property in Gloucestershire

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Have you been thinking about buying a property in Gloucestershire? Maybe you’re moving English county for work, perhaps you’re moving to start a new business or to get away from the hustle and bustle of the city, or maybe, just maybe, you’re looking at holiday homes in Gloucestershire to earn rental income. Regardless of your motives, buying a property in Gloucestershire is a significant investment. If you’ve been talking to estate agents in Gloucestershire, here are the five most important facts about properties for sale in Gloucestershire that you need to know!

The average price of property is not very high

As per the UK House Price Index, the average cost of buying a property in Gloucestershire is  £199,986. Compared to prime cities like London or metropolitan cities like Leeds and Manchester, this average price is seemingly low. In Gloucestershire, you can buy a detached home for around  £331,000 and a semi-detached property for approximately £218,000. If you’re looking for property that is slightly more budget-friendly, you can find homes for about £161,000 while you can buy flats for a lesser price amount to approximately £118,000.

The best places to buy property

Without a doubt, five places in Gloucestershire are the best areas to purchase real estate. If you’ve been in touch with the local estate agents, be sure to ask them to show you prime properties in these five areas. The first place is called Quedgeley, which is a few miles from the city centre. This area is well-connected, and it is also very close to the Sharpness Canal and the River Severn. Another great spot is Barnwood, which was initially a small village. Barnwood is known for its green spaces, gorgeous views and relatively affordable housing. The third place on the list is called Tuffley. Tuffley has one of the best schools in the county! It is also known for its gorgeous green spaces and a whole lot of retail therapy. Fourth is Longlevens, which is a great family-friendly area. With schools, leisure centres, shops and more, this place has it all. Lastly, Hucclecote is a small village in the county. With outstanding community feels, local shops and many pubs, this place is loved by the locals. Also, the average price of property in Hucclecote is on the higher side, which is why it is most sought after.

The county is vast

While Gloucestershire seems like a small county with a few villages and districts, that is not the case. Gloucestershire spans over 1,025 square miles! So, whether you’re looking for a property in the heart of the county or a place far away from human civilisation, you’ll find it all in Gloucestershire. If you’re thinking about buy to let in Gloucestershire to earn a rental income by leasing to vacationers, then you must consider looking at places that are on the outskirts; properties that are away from the main town, ones that have great views and most importantly, properties that are private and secluded. Better still, why not contact the letting agents in Gloucestershire to get acquainted with the area?

The schools here are good

Gloucestershire is a great school district! With outstanding primary schools and secondary schools, you should not think twice before moving to Gloucestershire with your family. Kingsholm Church of England Primary School and St Peter’s Catholic Primary School are great primary schools while Sir Thomas Rich’s School and Denmark Road High School are great secondary schools. The Crypt School is an internationally famous Boys’ Grammar School, which also happens to be located in Gloucestershire. So, if Gloucestershire is where you want to settle with your family and kids, then schooling is the last thing you need to be worried about!

The crime rate is very low

One must always consider the crime rate and level of safety before buying property in any area. Gloucestershire is a very safe county with a relatively low crime rate. Most crimes that are committed in Gloucestershire are just anti-social behaviour crimes – these account to approximately 38 per cent of the crimes in the county. The levels of vehicle crime and burglary are very low in Gloucestershire.

There is a lot to do and see in Gloucestershire. From the infamous cheese markets to the oldest medieval library in Britain, from historic Roman remains to the tallest window in the world, Gloucestershire has many popular tourist attractions. So, whether you’re thinking about moving to Gloucestershire with your family or whether you’re interested in buying a property in this county to earn some rental income, an investment in Gloucestershire is a great idea.

Opposite Trend In The Stock Market

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The shares of Banco Sabadell, which celebrated the merger with BBVA before being announced, correct today on the stock market when the breakdown took place.

Sabadell has set a first price at 0.33 euros, which represented a fall of 18%. However, as the session progresses, these falls have moderated to around 10%, to 0.35 euros.

For its part, BBVA shares that started the day down, rose 2.6% to 3.86 euros and are the most bullish of the Spanish selective.

Opposite trend in the Stock Market: Sabadell plummets 10% and BBVA rises 2.5%.The banks have not reached any agreement for their merger

The rest of the sector shows a mixed trend. On the one hand, Bankinter and Bankia accompany Sabadell on the side of the falls – although in no case do they reach 1% – while Santander and CaixaBank advance positions.

The Sabadell share had already corrected since it touched 0.45 euros last week. Onur Genç’s statements indicating that they would not buy the Catalan entity at any price punished the price, which yesterday deepened the correction with a decrease of 5%.

Nothing to do with the meteoric rise on Monday 16. Although the negotiations were announced at the close of the market, the entity advanced 24.6%, followed by 6.75% the following day.

In the case of BBVA, the reaction was twofold, to the extent that on Monday the 16th the entity announced the sale of the subsidiary in the US for 9,700 million.

It rose 15.25% that day, but on the following day it corrected 4.4%. However, it has regained ground and closed on Wednesday at levels not recorded since February, when the pandemic began to sink the world stock markets.

Does Madrid Benefit From The Capital Effect

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The low taxation of the Community of Madrid on its transferred taxes has once again sparked controversy these days.

Many politicians accuse the autonomy governed by Isabel Díaz Ayuso of taking advantage of the capital effect to allow themselves to lower taxes, something that other communities cannot do because they lack sufficient muscle.

They are not, like Madrid, fiscally doped, say their detractors. The debate has jumped from downward tax competition to centralism and the centrifugal power of Madrid to attract wealth from other autonomies, which in turn has allowed it to have more resources and exploit its fiscal privileges to have a more lax tax policy, according to critics with the leader of the PP.

It is evident that the economic traction of Madrid is marked by the capital effect. Last year he gave the sorpasso to Catalonia as the first economic engine of Spain.

In recent years, it has shown more dynamism, has attracted more companies, created more jobs and has grown more than the rest. But does the Community of Madrid collect more for having the headquarters of large companies?

Does it affect your accounts that more than half a million government officials are concentrated in your territory, generally with high qualifications and better paid than the private sector average?

Nobody debates that the capital effect, the fact of bringing together the decision centers, gives Madrid an invigorating extra.

There is no economic statistic that does not appear first or, at least, on the podium of the territories with the best evolution.

The political tension in Catalonia has favored him to be better portrayed in the rankings. Although the pro-independence pulse has harmed Catalonia more than it benefited Madrid.

A study by Andrés Rodríguez-Pose and Daniel Hardy, researchers in Economic Geography at the London School of Economics concludes that “Madrid, although not without problems, has managed to create a more malleable society, which has allowed the creation of a more economically dynamic, more open and more internationally connected ”.

But one thing is the Madrid economy and another is its public finances. Ángel de la Fuente, one of the leading experts in Spain in economic financing , argues that the Madrid institution does not benefit from the capital effect.

“It is true that the fact of being the capital means that it has more company headquarters and more qualified jobs. But that does not give better financing to the autonomous community, nor more room to raise or lower taxes ”.

De la Fuente directs the Foundation for Applied Economics Studies (Fedea), from where he periodically publishes reports on community financing.

He explains that the fact that large companies settle in Madrid does not offer great advantages, because the corporate tax goes directly to the state coffers (something that does not happen in the provincial territories).

The personal income tax of its workers goes to the autonomy where they work. For example, employees of a large company based in Madrid, but assigned to factories or businesses throughout Spain, will pay personal income tax wherever they reside, regardless of the company’s registered office.

VAT and excise duties are distributed based on criteria that combine relevant consumption and equity.

This expert admits that large companies have better paid workers at their headquarters. A circumstance similar to what happens due to the fact that the central government, its ministries and all the large public bodies are in Madrid.

The highest paid public employees and civil servants are in the capital and on average earn more than the private sector. They pay more personal income tax, consume more (VAT) and develop more wealth.

“This does not guarantee better regional financing either,” says De la Fuente. The financing system is complex, not very transparent and generates inequalities, but it seeks to guarantee certain equity.

All the communities contribute 75% of their regulatory collection to the common stock market (calculated as if they did not affect taxes), and although they keep 25%, which could favor Madrid,

De la Fuente provides data: If 100 is the average financing per capita adjusted among all the communities —which take into account aspects such as the school-age population, the degree of aging of the population, geographic dispersion

Madrid would be the territory with the highest fiscal capacity with an index of 132.9, but the reality is that its final financing per adjusted inhabitant stood at 100.7, practically the average.

This expert recalls that the figures are calculated with a model that measures the income that communities would receive without having legislated to lower or raise taxes.

But whenever a territorial debate is opened, different sensitivities and disparity of criteria arise. Francisco Pérez, director of the Valencian Institute for Economic Research (IVIE), thinks the opposite of De la Fuente.

“There is undoubtedly a capital effect from which Madrid benefits,” he explains by phone. Pérez uses a recent study published by the IVIE entitled Madrid: capital, knowledge economy and tax competition to defend his position.

The 196-page document analyzes in detail “the advantages that Madrid obtains in its economic development due to its status as the country’s capital and how these can act to the detriment of equality between regions”.

Pérez insists that the dynamism of Madrid, the leading role of its private sector and the role that the public sector has played in the last decade allow the region to play with a certain advantage.

Remember the importance of the General State Administration being concentrated in Madrid, unlike what happens in Germany or the EU. He gives as an example that more than 60% of State contracts are for Madrid companies, which makes the State Administration a magnet to attract firms to the capital.

The authors of this study, led by Francisco Pérez, analyze the effect of tax competition that, in their opinion, the Community has developed in recent years.

“Madrid stands out as the autonomy that has most used its regulatory capacity in certain taxes to introduce tax benefits, especially in personal income tax, wealth tax and inheritance and gift tax, especially in the last two taxes,” the document states , which calculates in more than 4,100 million the resources that this autonomy has stopped collecting last year due to the tax cuts.

“These tax cuts are easier to assimilate by regional budgets thanks to the dynamism and levels of income and wealth in Madrid,” explains Pérez.

This tax strategy involves “tax competition for the tax bases of other communities, by influencing tax bases such as property, which are more mobile, especially those of taxpayers with higher levels of income and assets.”

Diego Martínez, professor of Economics at the Pablo de Olavide University in Seville, does not see a clear answer to this debate.

“There is not enough academic evidence to clearly determine that the Community of Madrid has better financing than the rest due to the capital effect,” he says. And remember that in the work on fiscal balances, the incidence method (the one advocated by most academics, but which is reviled in Catalonia) barely shows a positive balance for Madrid

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