According to source, Prime Minister David Cameron said on Wednesday his government’s decision to hike VAT sales tax to help tackle Britain’s budget deficit could be described as “regressive”.

The Conservative-Liberal Democrat coalition has argued that its programme of public spending cuts and tax hikes is meant to avoid unfairly hurting the poor. But opposition Labour politicians and some analysts disagree. The coalition has raised VAT to 20 percent from 17.5 percent this year as part of efforts to reduce a budget deficit running close to 10 percent of national output. The measure is expected to raise around 13 billion pounds ($20.13 billion) a year by the end of the current parliament in 2015. “If you measure the nature of this tax by how people spend, it does affect relatively better-off people a bit more than relatively less well-off people for the very simple reason that VAT isn’t applied to food or children’s clothes,” Conservative leader Cameron said during a question and answer session with the public in central England. “But if you look at income … then, yes, it is regressive.

So it depends whether you are looking at expenditure or if you’re looking at income.” Conservative finance minister George Osborne said on Tuesday the VAT hike, which came into force this week, was the least damaging option available compared with other tax changes such as higher income or payroll taxes. The coalition faces a difficult year forcing through its austerity measures and selling them to voters. Economists expect planned departmental spending cuts averaging a fifth over four years and tax hikes to hamper Britain’s economic recovery. Hundreds of thousands of public sector jobs are expected to go in the deficit reduction drive.

Tensions in the coalition have already started to show with some in the centre-left Lib Dems voicing concerns that the austerity drive will hit the poor hardest. The Lib Dem’s opinion poll rating has slumped since the May election and the party angered some of its supporters by signing up in government to higher university tuition fees despite saying prior to the election that it wanted to abolish them. A by-election for a vacant parliamentary seat on Jan. 13 will provide some indication of how voters feel about Britain’s first coalition government since World War Two.

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LONDON – U.K. economists apologize to queen for failing to predict credit crisis.

A British newspaper reported Sunday that a group of eminent economists have apologized to Queen Elizabeth II for failing to predict the financial crisis.

The Observer newspaper reported that a letter has been sent to the queen after she demanded, during a visit to the London School of Economics last November, to know why nobody had anticipated the credit crunch.

According to the newspaper, the letter says that “financial wizards” who believed that their plans to manage risky debts and protect the financial system were infallible but were guilty of “wishful thinking combined with hubris.”

Signatories to the three-page letter include Tim Besley, a member of the Bank of England’s monetary policy committee and historian Peter Hennessy.

The newspaper said the content was discussed during a seminar with a group of leading economists in June, including Nick MacPherson, a permanent secretary at Britain’s Treasury, and Goldman Sachs chief economist Jim O’Neill.

“In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole,” the newspaper quoted the letter as saying.

Buckingham Palace declined to comment on the correspondence, but said the queen often discusses current issues with experts. In March, Mervyn King became the first Bank of England governor to be invited for private talks at the palace.

“The Queen always displays an interest in current issues and is kept abreast of current issues. Obviously the recession is very topical,” Buckingham Palace said in a statement.

Luis Garicano, a professor at the London School of Economics, said he had discussed the origins of the crisis with the queen during her visit. He said she had asked: “Why did nobody notice it?”

The London School of Economics was not immediately available for comment, or to provide a copy of the letter.

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LONDON – Bank of England Governor Mervyn King accused British Prime Minister David Cameron and finance minister George Osborne of a “lack of depth,” the Guardian newspaper stated on its website on Sunday.

The Guardian is one of a number of publications globally to have had early access to some 250,000 U.S. diplomatic cables obtained by whistleblowing website WikiLeaks.

The newspaper also said the cables contained criticism of British military operations in Afghanistan and U.S. shock at what the newspaper called the “rude behavior” of royal family member Prince Andrew when overseas.

Governor King’s comments were reportedly made to the U.S. ambassador, but the timing and further details were not immediately available. However, the most recent of the leaked cables were said to be from February, when Cameron and Osborne were still in opposition.

Cameron took office in May. Ironically, Bank of England policymaker Adam Posen criticized King last week, saying he had strayed into politics by endorsing the Conservative-led coalition’s austerity plan shortly after the May election.

U.S. ambassador Louis Susman, who had briefed Cameron on the leaks last week, condemned their publication.

“However, I am confident that our uniquely productive relationship with the United Kingdom will remain close and strong, focused on promoting our shared goals and values,” he explained in a statement.

The Guardian, which will release additional details of the cables over coming days, said U.S. commanders, Afghan president Hamid Karzai and local authorities in Helmand had criticized the British military for failure to impose protection around the town of Sangin in southern Afghanistan.

Britain has more than 9,500 troops in Afghanistan, the second biggest contingent after the United States. Britain has lost 345 troopers in the conflict — around a third of them from the Sangin region.

British troops handed responsibility for the area over to U.S. troops earlier this year.

Prince Andrew, the royal whose behavior is in the spotlight, is the second son of Queen Elizabeth. Aged 50, he served as a helicopter pilot with the Royal Navy throughout the the 80′s Falklands Battle.

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Travel to Europe and see yourself, as its doomed like USA was in 2007-2008, as Europe is right in that situation now, so when Americans short the Euro, like Europeans did to USA, what will happen to the Euro on top of everything else?

Europe has major problems, especially with threats from terrorists as well, such as the threat to France on 10-02-10 when I was in Paris combined with a lack of good security, could cause a major fall on the Euro Currency if that God for Bid happen in any country. If a terrorist attacked europe in 2011, would add a 10-20 point drop alone., look at USA 9-11 hit on our markets!

I am writing from the USA, with a recent tour of Europe in 10-2010 spending 30 days with my wife in Italy, France, Spain and Amsterdam and noticed that the economies in those countries, were like the USA’s economy, once our recession first hit.

I will say this, I believe what Obama is doing what he has to . as he had a major deficit on his hands from Bush, spending money is good, as you need to spend money and print money to save your ecomony and create jobs.

So with UK and Europe not doing that in their own countries and removing jobs, their only making their recovery 3 times longer now, till 2015-2020 UK. Especially UK and Cameron, with his ” Queen “ like dictatorship on Skynews.com clips, this will cause both currencies to fall 20-40% next 16 months or more, each one.

Prime Minister David Cameron disregards the students and speaks to the ole folk british who sip coffee in their mansion in parliament and they cut jobs and don’t cut their checks.

On all my posts I write about, I own shares on the given issue and this is my opinion, from countless hours of research daily, on www.cnbc.com www.skynews.com and related Europe UK markets and viable online news sites.

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For everybody that follows the eurozone stock symbol FXE, it is a disaster and FXE might hit $119.00 or reduce within 45-60 days. There have been riots in several countries in the past few months and a starting recession increasing since the USA first did in 07-08, which can be bad for Europe.

The Eurozone has a wide loss of jobs in most country and growing protests concerning the lack of money from the hard working pension people in Europe and students. Countries that have went bankrupt and needed funds are Ireland and Greece for the time being, as Spain and Portugal will soon be in line asking for money within 30-60 days is my opinion.

Then the issue remains, americans are not obtaining the correct details about Europe now on American TV, so we expect Eurozone foreign currency is going to be alright, I think it will fall off the exchange in 2 years.

On all my posts I write about, I own shares on the given issue and this is my opinion, from countless hours of research daily.

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