Tax Cheats: HMRC Publishes Names and Photos

The names and photographs of last year's top tax cheats have been made public as part of the Government's efforts to crack down on evasion.

The 32 criminals have been sentenced to a combined 155 years and 10 months behind bars, HM Revenue and Customs (HMRC) said.

The move to publish their details is designed to shame tax cheats.

The Government invested £917m in tackling tax evasion, avoidance and fraud in 2011-12, with an additional £77m planned over the next two years.

"Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don't," said Exchequer Secretary to the Treasury David Gauke.

"We hope that publishing these pictures will help get across that it always makes sense to declare all your income, and tax dodgers are simply storing up trouble for the future."

The Government hopes its crackdown will raise an additional £7bn each year by 2014-15.

Among those whose details were published was a criminal gang that has been jailed for one of the biggest alcohol-smuggling frauds ever uncovered in the UK.

The scam was worth £50m a year in unpaid duty and VAT, and allowed the gang members to spend vast amounts of money on luxury cars and properties throughout Europe.

The Prime Minister has made tackling tax avoidance a key issue of the UK's presidency of the G8 group, amid mounting concerns over the tax policies of big international firms in the country.

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Pensioners Take Up Second Career In Retirement

By Becky Johnson, Sky News Correspondent

As nearly 10 million people in Britain are now over 65, increasing numbers of pensioners are taking up a second career after they retire.

One in three 45 to 65-year-olds now plan to carry on working into retirement, according to a report by investment group Standard Life.

Sam Almond is 86 and lives in Altrincham, Cheshire, with his wife Hazel. After he retired from his job as the owner of a manufacturing company he began writing books about the financial markets.

His success as an author spurred him on to write a self-help book, Spinach For Breakfast, about the secrets to living longer.

He believes the key to staying young is keeping busy. Every day he gets up at 4.30am to allow time to do some exercise, eat a healthy breakfast and be at his desk for 8am.

The latest census shows the number of people over the age of 65 in England and Wales has increased by 10% over the last decade.

According to the Department for Work and Pensions life expectancy for men is expected to reach 91 by the year 2050, compared with 87 today.

One reason more people over retirement age are continuing to work is to top up their income.

The National Association for Pension Funds says nine in 10 people believe the state pension will not be enough for them in retirement.

Universities Minister David Willetts told Sky News: "One thing that we've done is transform the regime for older workers by abolishing compulsory retirement ages so that companies can keep staff for longer.

"But there may some people, who've paid off the mortgage and the kids have left home, who want to make a career change.

"We notice increasingly mature students who may have had one career but who are now thinking of getting a new qualification and starting a second career.

"I believe the more people that are out there seeking work, the more jobs get created. And if you look at the record of the last two years, despite the austerity, there have been more than one million extra jobs created in the private sector so we can create the jobs as people come forward who want to do them."

Julie Kertesz, 77, took up stand-up comedy a year ago. She says it's something she fell into by accident after realising she could make people laugh.

Originally from Hungary she has lived and worked around the world, mainly as a chemist.

She retired aged 60 but says she continued to pursue her interests in writing and photography.

She then tried public speaking and has now performed her stand-up routine in more than 50 venues across the UK.

She told Sky News: "The young people who listen to me are surprised and they like it, they say I'd like my grandmother to be like that or my grandfather.

"Don't die before you die - do things and live completely, change things because that is when you live … Even at 70 or 80 you can do wonderful things."

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Google Does Not 'Fix' Searches: US Regulators

Google does not unfairly favour its own services above others in search results, according to US regulators.

The Federal Trade Commission (FTC) said it could find no evidence to back claims the search engine giant "fixed" its searches.

The 19-month investigation, which amounted to nine million pages of documents, ended in agreement that Google will change some of its practices.

The search engine has said it will stop "scraping" (using snippets of) reviews and other data from rivals' websites for its own products.

Websites will now be allowed to opt out of being "scraped" without being demoted in searches.

Google has also said it will allow greater access to its Motorola patents and will use a neutral third-party to try to resolve disputes before opting for an injunction.

These patents are deemed to be "essential" for rival mobile devices such as Apple iPhones and iPads.

However, the agreement has largely been interpreted as a mild rebuke, rather than the slap that many of the search engine's rivals had been hoping for.

Making an announcement at a news conference, the FTC chairman, Jon Leibovitz, said that Google was "unquestionably one of America's great companies".

Google patents are important for mobile devices such as iPhones

He said: "Many of Google's competitors wanted the commission to go further and regulate the intricacies of Google's search engine algorithm.

"Today, the commission has voted to close this investigation unanimously. Although some evidence suggested Google was trying to eliminate competition, Google's primary reason for changing its look and feel or algorithm was to improve search results."

Google posted a triumphant response in a blog, detailing the agreement and saying: "The conclusion is clear: Google's services are good for users and good for competition."

But Beth Wilkonon, a lawyer hired by the FTC to help steer the investigation, said: "Undoubtedly, Google took aggressive actions to gain advantage over rival search providers. However, the FTC's mission is to protect competition, and not individual competitors."

The European Commission is investigating Google over allegations of anti-competitive search practices and is due to report back later this year.

The FTC announcement came as the US State Department hit out at Google for being "unhelpful" after its executive chairman, Eric Schmidt, made a trip to North Korea.

State Department spokeswoman Victoria Nuland said: "We don't think the timing of this is particularly helpful." She said that Mr Schmidt had been made aware of US concerns about the trip.

She cited North Korea's launch of a long-range rocket in December, which raised tensions in the region.

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Mortgages: Millions 'Struggle With Payments'

By Enda Brady, Sky News Correspondent

Nearly eight million people in Britain are struggling to keep up with mortgage or rent payments each month, according to the charity Shelter.

A total of 1.4 million have already fallen behind, with almost a million people resorting to high-interest so-called 'pay day' loans to make ends meet.

"It's shocking to think that so many families will be starting the New Year with a huge weight hanging over them, trapped in a daily struggle to keep their home," said the charity's chief executive Campbell Robb.

"Payday loans may seem like a quick fix, but the huge interest charges mean things can quickly spiral out of control.

"It's vital that anyone who's having difficulty paying their rent or mortgage gets advice now. Don't wait until things reach breaking point later in the year - it could leave your family's home at risk."

Mother-of-two Mandy Buxton from West Sussex found it impossible to balance the books over the past couple of years and opted to take out payday loans to get by.

It is a decision she now bitterly regrets, as she faces up to having to leave her rented property.

"I got to the point where after I had paid off the loan I had 50p left and that had to last me the month," she told Sky News.

"I realised I couldn't carry on the way I was so I had to say to my boss that I wouldn't be coming back to work because I didn't have the money to get there and back.

"If you have to take a few days off work because one of your children is ill or there is a problem it puts you in a situation where you just can't pay the bills."

But with interest rates at an historic low, how will people cope in the next few years if and when rates go back to where they were before the recession began in 2008?

Mortgage expert Paula John says many people will eventually start moving towards fixed rate mortgages.

"For hundreds of thousands of families it's only the very low mortgage rates that have been keeping the wolves from the door," she told Sky News.

"Many UK households have really been struggling over the past few years and if rates were to go up it would be a real concern.

"I think people are more financially aware now than they were a few years back and what we will see is a mass movement towards fixed rate mortgages."

Shelter say they are seeing a rise in demand for their services and point out that people are finding "there is little left of the housing safety net that was once there to help them get back on their feet".

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US Fiscal Cliff: Markets Rally After Late Deal

Global markets have rallied in response to a deal in the United States to avert its so-called fiscal cliff.

The market boost came after US Democrats and Republicans finally agreed a deal that will stop hundreds of billions of dollars in automatic tax increases and spending cuts that risked plunging the world's biggest economy into recession.

Stocks around the world started 2013 with hefty gains as investors welcomed the vote in the House of Representatives.

London's FTSE 100 was up 2.2% at the close, after earlier busting through the 6,000-point mark for the first time since July 2011.

Key European markets were up between 2.19% to 3.81%, while in Asia Hong Kong's Hang Seng index shot up 2.9% at the close - its highest finish since June 1, 2011.

In New York, the Dow Jones Industrial Average ended 2.4% higher.

The lights of the Capitol burned late into the night as the deal went on

"Investors are trading with a sense of relief after lawmakers in Washington agreed on a compromise to avoid the fiscal cliff that has been the dominant theme in equity markets since the presidential elections back in November," Mike McCudden, head of derivatives at stockbroker Interactive Investor, said.

The fiscal cliff deal is likely to remain the focus of attention in financial markets, as US institutions open for trading.

Mr Obama welcomed the agreement and said it was just one step in a broader effort to strengthen the economy.

He said: "Thanks to the votes of Republicans and Democrats in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing tax hikes that could have sent the economy back into recession."

Some House Republicans had wanted to amend the bill to incorporate more spending cuts but dropped the idea.

Mr Obama headed to Hawaii for a break after the deal was brokered

In the end, 172 Democrats and 85 Republicans voted in favour of the bill, which marks a triumph for the president less than two months after he secured re-election while campaigning for higher taxes on the wealthy.

The legislation cleared the Senate hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed the deal.

The fiscal cliff deadline would have triggered tax increases of $536bn (£328bn) and spending cuts of $109bn (£67bn) from domestic and military programmes.

The compromise Senate deal extends the tax cuts for Americans earning under $400,000 (£246,000) - up from the $250,000 (£153,000) level that Democrats had originally sought.

But longer-term fiscal problems remain and Mr Obama will likely face more battles with the Republican-dominated House of Representatives.

"Cynics will point out that another argument has been booked in for two months' time, when the debt ceiling comes up for debate, IG market analyst Chris Beauchamp said.

"And Republicans will be looking to make progress on the spending cuts that haven't featured in the New Year deal."

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Start-Up Loans Scheme Gets £30m Boost

Thousands more young entrepreneurs could get loans to start their own businesses as the Government announces it is boosting its scheme.

Prime Minister David Cameron said funding for the coalition's Start-Up Loans scheme was being boosted by £30m to £110m over three years.

The age limit for applying was also being raised from 24 to 30 in response to what Downing Street aides said was "high demand".

Number 10 insisted the initiative was on target to issue more than 2,500 loans by March - despite criticism that only a small portion of loans had been finalised since the scheme was formally launched last autumn.

Some 3,000 people are said to have registered an interest in the money and mentoring packages, which are only available in England and being delivered through charities such as The Prince's Trust.

Those whose business plans are deemed "robust" typically receive £2,500, which can be repaid over five years at a relatively low interest rate.

"Start-Up loans are an important part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race," Mr Cameron said.

He said the scheme was a "great way to help this next generation of entrepreneurs get the financial help - and the confidence - to turn that spark of an idea into a growing, thriving business."

James Caan, panellist of the Dragons' Den BBC show and chairman of the company, said: "There has been a major shift in the way business is viewed by the public, and entrepreneurs are now seen as creative and exciting role models".

He added: "I am delighted to see that more and more young people are now looking to set up their own business."

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Think Tank Warns Of Sluggish 'Groundhog' 2013

A think tank has warned that 2013 could turn out to be a "groundhog year" with a repeat of sluggish growth and crisis in Europe seen in 2012.

The Institute for Public Policy Research (IPPR) said that consumer and business spirits have been so thoroughly dampened by talk of years of austerity ahead that the economy mail fail to grown again this year.

In a gloomy New Year message, IPPR chief economist Tony Dolphin said the Government "still does not have a path back to growth" and appeared to be pinning hopes on "something just turning up".

The Office for Budget Responsibility's forecast of 1.2% GDP growth in 2013 and 2% in 2014 depend on a "very unlikely" readiness for hard-pressed households to drop the habits of the last four years and take on additional debt, he added.

The IPPR is calling on the Government to boost demand in the economy, pump more investment into infrastructure, establish a British Investment Bank and guarantee a minimum wage job in charity or local government for anyone unemployed for more than a year.

Mr Dolphin said: "Policy-makers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better.

"The risk is that 2013 could be groundhog year for the UK economy.

"The latest forecasts suggest growth in 2013 will be weak, but better than in 2012, and that unemployment will rise.

"The risk is that they are too optimistic about growth, but that - unlike in 2012 - they are right about unemployment."

He added: "How this plays out politically will depend to some extent on what happens to unemployment.

"In 2012, the double-dip recession did less damage to the credibility of Government economic policy than it might have done because employment increased and unemployment fell by more than expected.

"The best way to describe the outlook for the UK economy is 'uncertain'."

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Last-Minute Fiscal Deal Faces House Test

House Speaker John Boehner has reportedly presented fellow Republicans two options to overcome the impasse on the Senate-approved bill to avert the so-called fiscal cliff.

Citing a senior House Republican aide, The Wall Street Journal reports that Mr Boehner briefed his party members on the proposals during a closed-door meeting Tuesday afternoon.

The aide said one option included adding a spending cut package to the Senate version of the bill, which was approved with an overwhelming 89-8 vote well after midnight on New Year's Day.

Republicans are said to be conducting a quick count to determine if the amendment to the bill would garner the votes needed to pass it through the House before it is sent back to the Senate for approval.

The second option would be to leave the bill alone and allow the House to vote it up or down as it stands. 

But the fallback option does not appear to bode well for the bill's passing, with some Republican leaders expressing concern over the legislation in its current form.

The number two ranking Republican in the House, Eric Cantor, voiced opposition to the Senate-approved bill earlier Tuesday.

Vice President Joe Biden after a Senate Democratic caucus meeting on Monday

"I do not support the bill. We are looking, though, for the best path forward," Mr Cantor declared following a meeting with his party's rank and file.

The legislation is aimed at averting the looming cliff by stopping most tax hikes and across-the-board spending cuts that had been due to begin with the New Year.

Rejection by the Republican-controlled House would mean that any fiscal deal would have to start all over when a new Congress, with dozens of new members, is seated on Thursday.

The largely tax-focused legislation under discussion on Tuesday was only part of the grand deal President Barack Obama had hoped to make to address the country's chronic deficit spending.

Economists, who had warned that the combination of higher taxes and deep spending cuts taking effect at the start of the year would spin the country back into recession, were warning that even a limited agreement could still dent economic growth.

The deal under consideration Tuesday tackled one of the most sensitive issues - higher taxes.

The measure would be the first significant bipartisan tax increase since 1990. It would prevent taxes from going up on the poor and middle class but would raise rates on households making more than $450,000 (£277,000) a year.

It also would also put off for two months more than $100bn (£62bn) in automatic spending cuts that were set to hit the Pentagon and domestic programmes starting this week.

It would also extend unemployment benefits for the long-term unemployed.

The measure cleared the Democrat-controlled Senate hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed a deal.

Mr Obama has praised the agreement, saying: "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay."

Meanwhile, both sides are gearing up for the next legislative showdown over the need to lift the government's statutory borrowing limit of $16.4trn (£10.1trn), which was reached on Monday.

The Treasury will now take extraordinary measures to keep the government afloat for an undisclosed period of time until the ceiling is raised. Republicans are already demanding spending cuts in return.

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Think Tank Warns Of Sluggish 'Groundhog' 2013

A think tank has warned that 2013 could turn out to be a "groundhog year" with a repeat of sluggish growth and crisis in Europe seen in 2012.

The Institute for Public Policy Research (IPPR) said that consumer and business spirits have been so thoroughly dampened by talk of years of austerity ahead that the economy mail fail to grown again this year.

In a gloomy New Year message, IPPR chief economist Tony Dolphin said the Government "still does not have a path back to growth" and appeared to be pinning hopes on "something just turning up".

The Office for Budget Responsibility's forecast of 1.2% GDP growth in 2013 and 2% in 2014 depend on a "very unlikely" readiness for hard-pressed households to drop the habits of the last four years and take on additional debt, he added.

The IPPR is calling on the Government to boost demand in the economy, pump more investment into infrastructure, establish a British Investment Bank and guarantee a minimum wage job in charity or local government for anyone unemployed for more than a year.

Mr Dolphin said: "Policy-makers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better.

"The risk is that 2013 could be groundhog year for the UK economy.

"The latest forecasts suggest growth in 2013 will be weak, but better than in 2012, and that unemployment will rise.

"The risk is that they are too optimistic about growth, but that - unlike in 2012 - they are right about unemployment."

He added: "How this plays out politically will depend to some extent on what happens to unemployment.

"In 2012, the double-dip recession did less damage to the credibility of Government economic policy than it might have done because employment increased and unemployment fell by more than expected.

"The best way to describe the outlook for the UK economy is 'uncertain'."

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Last-Minute Deal Reached On US Fiscal Cliff

The White House and Congressional Republicans are said to have reached a deal at the eleventh hour to avert the so-called fiscal cliff, according to a Democratic aide.

It means that automatic tax rises and spending cuts, which economists thought could plunge the US back in to recession, have been briefly averted.

Senior Congressional aides say the pact would raise taxes on the richest Americans - those earning over $450,000 a year - but exempt everyone else, and will put off $109bn in budget cuts across the government for two months.

Vice President Joe Biden, who negotiated the deal with Republican Senate Majority leader Mitch McConnell, was on Capitol Hill to sell it to Democratic senators, a White House source added.

The tax hikes and spending cuts were due to come into force at midnight. But as global markets, sure to be rocked by a failure to head off the fiscal cliff, are closed for New Year's day, lawmakers have time to vote the deal into law.

A Senate vote was expected overnight on Monday while the House of Representatives was expected to follow suit today after a display of dramatic New Year's Eve brinkmanship.

Mr Obama had originally campaigned for tax hikes to kick in for those making $250,000 and above and his acceptance of a higher threshold has already angered liberals, though still represents a political victory.

The president said it would extend tax credits for clean energy firms and also unemployment insurance for two million people due to expire later Monday.

It was also expected to include an end to a temporary 2% cut to payroll taxes for social security retirement savings and Medicare health care programmes for seniors and changes to inheritance and investment taxes.

Signs that a deal could be close cheered investors as US markets rose before closing for the year. The Dow Jones Industrial Average closed up 166.03 points (1.28%) at 13,104.14.

Both sides were on Monday already gearing up for the next legislative showdown over the need to lift the government's statutory borrowing limit of $16.4trn, which was reached on Monday.

The Treasury will now take extraordinary measures to keep the government afloat for an undisclosed period of time until the ceiling is raised. Republicans are already demanding spending cuts in return.

More follows ...

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French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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Fiscal Cliff: Differences Remain As Deadline Looms

Leaders in the US Senate are attempting to strike a last-minute deal to avoid huge tax hikes and spending cuts set for January 1.

Economists warn the $500bn in fiscal pain due to hit in the New Year could send the country back into recession, and destabilise the global economy in the process.

But despite feverish work behind closed doors by aides to both leaders in the Democrat-controlled Senate on Saturday a deal palatable to both sides is still elusive.

US Senate Majority Leader Harry Reid said has made a counteroffer to a Republican proposal put forward on Saturday but admitted "serious differences" remain.

The two sides have reportedly moved closer on tax increases while Republicans have indicated they could withdraw a contentious proposal to slow the growth of social security retirement benefits.

Senate Republican leader Mitch McConnell said he has asked Vice President Joe Biden to become involved in a last-minute effort to reach an agreement.

He added that there was no single issue blocking an agreement but that "the sticking point appears to be a willingness, an interest, or courage to close the deal".

"I'm willing to get this done, but I need a dance partner," Mr McConnell said.

Both the Senate and the House of Representatives would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks.

Barack Obama, who called congressional leaders to the White House on Friday, addressed the crisis once more as he appeared on NBC's Sunday morning talk show Meet the Press.

Mitch McConnell and Harry Reid still heading in different directions

The President said Republicans were unwilling to see tax rates raised for the richest taxpayers.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way," Mr Obama said.

"But the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected.

"That seems to be their only overriding, unifying theme," he added.

If a comprmise can be found, the two parties will then decide whether to put it to the vote on New Year's Eve in the Senate and then the Republican-controlled House of Representatives.

President Obama has pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought.

"I was modestly optimistic yesterday, but we don't yet see an agreement," the President told NBC in the interview recorded on Saturday. "And now the pressure's on Congress to produce."

At least one senior Republican said he was optimistic of a deal, and a "political victory" for Mr Obama.

Senator Lindsey Graham told Fox News that the odds are "exceedingly good" a deal can be done.

"I don't think people want to go over the cliff," he said.

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

Mr Obama originally insisted on letting the tax cuts expire on households earning more than $250k (£154k) but later upped that threshold to $400k (£246k).

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut America's soaring deficit.

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Fiscal Cliff: Obama 'Optimistic' After Talks

Barack Obama has called for "immediate action" to avoid the so-called fiscal cliff after urgent talks with Congressional leaders.

He urged politicians to agree a deal, saying: "The hour for immediate action is here. It is now."

He said he remained "optimistic" that an agreement could be reached to avoid millions of families being hit with big tax increases and spending cuts.

Mr Obama described the hour-long meeting with Congressional leaders as "good and constructive".

He referred to "dysfunction in Washington" and said the American public was "not going to have any patience for a politically self-inflicted wound to our economy".

Surprisingly, after weeks of post-election gridlock, Senate leaders said they hope to reach a compromise that could be presented to lawmakers by Sunday -  little more than 24 hours before the year-end deadline.

Majority leader Harry Reid and Republican leader Mitch McConnell gave a relatively upbeat assessment after what Mr McConnell called a "good" meeting with Mr Obama.

House Speaker John Boehner arrives at the White House for the talks

"I am hopeful and optimistic" of reaching a deal, Mr McConnell said.

Mr Reid promised he would be "going to do everything I can" to make a deal happen, but added: "Whatever we come up with is going to be imperfect."

House Speaker John Boehner appears for the moment to have ceded the struggle to the Senate, saying he would put any agreed bill before his chamber and let the vote proceed. 

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut the US's soaring deficit.

It followed their inability to reach an agreement in 2011.

If Congress cannot agree a deal to rein in government spending, Mr Obama said Congress should allow a vote on a basic package that would keep tax cuts for middle-class Americans while extending unemployment benefits for the long-term unemployed.

The stock market was down again on Friday as the wrangling continued in Washington.

Experts say if the looming tax increases and spending cuts are not scaled back, the recovering but fragile US economy could slip back into recession.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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