The chancellor promised reform of the tax system, making it simple, fair and predictable.

There are clear simplifications in the 2012 Budget.
Small businesses will be able from 2013 to use a 'cash basis' for calculating their tax, which will greatly simplify their tax return.
In the future, they will only need to count up what they have received and paid, and not worry about complicated accounting concepts such "accruals" and "prepayments".
That should cut their accountancy bills too.
The age-related personal allowance which benefits pensioners is to be frozen, and then abolished.
The nasty clawbacks applied to pensioners who earn slightly more than the current thresholds will also disappear.
On a wider canvas, increasing personal allowances simplifies the overall tax and benefits system.
By allowing people to retain more of their earnings before tax, it reduces the merry-go-round of first paying tax on a low income, then claiming benefits to make up the difference.
That has to be a good thing.
It is not all good news. The budget also introduces new fiscal tangles.
One is the new taper for child benefit - those with earnings between £50,000 and £60,000 will see the child benefit clawed back through the tax system, causing high marginal rates of tax for those individuals and a good deal of complexity.
Another tangle is the new restriction on reliefs for high earners.
This is a novel way of squeezing more tax out of the very wealthy by limiting the tax reliefs they can claim to a maximum of 25% of taxable income.
This will not affect the vast majority of people because reliefs can be claimed up to £50,000 in any event.
But it will seriously affect sole traders or partners who have made losses. Currently, trading losses in one year can be offset against the profits of an earlier year, or against other income of the same or the previous tax year, or carried forwards, without limit.
This is not a tax dodge - it simply allows a person to pay tax on their overall income, taking one year with another. There are extensive anti-avoidance provisions to prevent abuse.
The new rules will delay a person from getting tax relief, and may prevent it altogether. If a person cannot use loss relief to offset against other income, they can only carry forward the extra losses. If the business subsequently fails, the losses can never be claimed.
How can this be helpful to small businesses, struggling with the recession?
Of even greater concern is that this cap on tax reliefs apparently applies to charitable donations, which can currently be offset without limit against your taxable income.
The government has promised more work on this area, but when the chancellor spoke, charitable donations were expressly mentioned as within this new restriction.
This means that a rich person who planned to give away half his £10m of earnings, would now be restricted to only £2.5m with the attendant tax relief.
In the past the government has praised the US culture of philanthropy; this new announcement will cause serious damage to many charities by reducing the amount they can expect from large UK-based donors.
For the first time, the government is going to tell you how much tax and National Insurance Contributions (NIC) you pay.
Every year around 20 million tax payers will get an individual statement setting out their contribution to the chancellor's funds.
The figures will not be complete - they will only cover income tax and NICs, so they will be paying VAT, stamp duty, airline passenger duty, fuel and alcohol duties on top - but they will be interesting.
Once you can see clearly how much tax you have paid, I am prepared to bet that tax cutting will move up the political agenda.
Just in time for the next election.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.


Officials at the referendum count in Glasgow have said they are investigating 10 cases of suspected electoral fraud at polling stations.

It is thought to be related to possible cases of personation, where people pretend to be someone else and cast a vote, then the real person turns up.
The 10 suspect votes were cast at a variety of different polling stations across the city.
Glasgow City Council said police had been called earlier on Thursday.
Each ballot paper has an individual number attached to it, so officials will now have to sort through the ballots and attempt to find these 10 papers.
They will then be removed, and kept separately from the more than 486,000 ballot papers being counted in Glasgow.
Colin Edgar, head of communication at Glasgow City Council, said the search for the ten ballot papers "will not delay the count".
Police Scotland said any crime committed would be appropriately investigated.
A spokesman added: "Police Scotland takes the safety and security of the independence referendum extremely seriously and is working with partner agencies including local authorities to ensure the integrity of the ballot."


The pig industry has expressed its frustration at a delay in getting final approval for the export of £10m a year worth of Northern Ireland pork to China

Provisional approval was granted at the end of November, but there is still no sign of a conclusion to the process.
Producers say they need it at a time when pig prices have taken a slump.
The Department of Agriculture has said it is waiting for the Chinese authorities to make the final decision.
After two years where the pig price was at break-even, it took a sharp dip before Christmas.
Hugh McReynolds, who runs a pig farm near Sion Mills in County Tyrone, says he is losing £5,000 a week.
Mr McReynolds said he is now losing £10 on every pig he produces.
Lower prices are due to cheap imports from the euro zone due to currency differentials.
There is also a glut of pig meat in Europe due to a Russian ban on EU food, part of a sanctions row over Ukraine.
Mr McReynolds said the China deal would provide some relief to pig producers.
He said the industry's expectations "haven't been managed at all" and there was "extreme frustration" over the red tape involved.
Two processing plants had some work to complete before final approval.
That was done and the evidence sent to China in late January.
But by the time it arrived, it had run into the holiday period there associated with Chinese new year.
That is thought to have slowed the approval process.
Agriculture Minister Michelle O'Neill said her officials were working through the Northern Ireland Executive's office in Beijing to close the deal.


When Ramla Tyrow walked on to the stage to collect her diploma, she shared that joy with one of the most important people in her life - her mum.

Ramla, 21, came to the UK in 1999 with her family to seek a better life and escape from the decades of civil war in Somalia.
"My mum moved us here to give us a better future. Somalia wasn't a very child-friendly place then," Ramla told the BBC.
"Just after the ceremony, my mum told me how unbelievably proud she was that I was the first person in her family to graduate from university."
The heart-warming moment showing Ramla's mother, Fardowsa, crying on her daughter's shoulder has been shared thousands of times on Twitter.
The tweet is captioned: "Mama you ran from a civil war so I could be safe and get the education you didn't.
"Today you cried when you saw me in my robe. Did it for you."
Ramla attended Middlesex University in north-west London and obtained her degree in Psychology and Counselling.
"The day was really hectic but it was amazing," she said.
"I couldn't have been more happy with my results. I worked extra hard.
"I went to dinner last night with friends to celebrate and will do so with family on Sunday."
The 21-year-old, who lives in east London, has already starred in the YouTube show BKChat LDN, a panel-led chat show exploring "relationships, society and the future of our generation".
Speaking of her plans for the future, Ramla said: "I want to grow, become my own person, be creative and just be myself."
By Lamia Estatie, UGC and Social News team


Pop star Justin Bieber has used the lyrics of his new album, Purpose, to apologise for his errant behaviour over the few years.

"Talking to my conscience, I made a few mistakes," he sings on the song No Pressure. "I did it to myself, I'm the only one to blame."
Elsewhere, he asks for understanding from the public, saying: "Don't forget I'm human. Don't forget I'm real."
The album follows a period where the star frequently fell foul of the law.
In the most serious incident, the 21-year-old pled guilty to careless driving and resisting arrest after being stopped by police in Miami.
His other scrapes included egging his neighbours' house, urinating into a mop bucket in a restaurant, fighting with Orlando Bloom, and abandoning a monkey in Germany.
The former teen star previously posted a mea culpa on YouTube, admitting his behaviour had been "arrogant" and "conceited".
But his new album continues the apology - with the first four tracks titles almost reading as a dialogue between the singer and his fans: Mark My Words. I'll Show You. What Do You Mean? Sorry.
Bieber has undergone a brand overhaul in the past year, putting his teenpop past behind him and co-writing two global hit singles with achingly cool dance producers Skrillex and Diplo.
Their collaboration continues on Purpose which, at its best, is a crisp, minimal, house record about a young man coming to terms with adulthood.
On I'll Show You, he addresses the hysteria surrounding his every move, singing: "My life is a movie and everyone's watching - so let's get to the good part and past all the nonsense."
"Life's not easy," he continues, "and I'm not made out of steel... I gotta learn things the hard way."
Certainly, his career rehabilitation has not gone entirely smoothly. Two weeks ago, he stormed off stage in Norway after screaming fans interfered with his attempts to mop up some spilled water.
"I'm trying to wipe the floor! Give me a second, yo!" he insisted, before giving up in irritation. "Never mind, I'm done. I'm not doing the show."
On Purpose's title track, he admits "sometimes I'm weak" - while expressing how his faith helped him at his lowest ebb. "I let you in with all that I am," he sings. "You've given me purpose."
Elsewhere, the album veers into more traditional pop territory, with Ed Sheeran contributing Love Yourself - an arch and funny kiss-off to a no-good girlfriend.
"My mama don't like you - and she likes everyone," smirks Bieber over a staccato guitar line. "If you like the way you look that much, you should go and love yourself."
Throughout, the star's phrasing and harmonies are perfectly judged - but when Skrillex and Diplo take a break from the controls, the album has a tendency to slip into sludgy, formulaic R&B.
New single The Feeling - featuring rising star Halsey - is an exception, with a soaring, self-aware chorus: "Am I in love with you, or am I  in love with the feeling?"
Overall, the record, which is released globally on Friday 13 November, looks set to cement Bieber's comeback after a period where his star was on the wane.


A bear cub named Snowy was killed in a possible hit-and-run accident near Grand Teton National Park in Wyoming.

Snowy was thought to be the lone cub this year of a well-known grizzly bear named 399, who was seen trying to heal the injured cub after the accident.
Grizzly bears are federally protected as a threatened species.
People took to social media with anger and sadness upon learning about the fate of Snowy the cub, so named for his white-blond fur on his face.
Mother 399, who is 20 years old and unlikely to have any more cubs, was was well-known to visitors and photographers because for many years she played by the side of the road.
In past mating seasons, she has given birth to triplets.
According to National Geographic, more than 100 large animals are typically killed on Grand Teton's roads each year in Wyoming.
"399's cub, known as Snowy or Spirit by the bear watchers of Grand Teton, was adored for its antics and notably white face and will be sorely missed," the Wyoming Wildlife Advocates group wrote on its Facebook page.
A release from a park official urged people to obey speed limits and be careful around dusk and dawn when animals are more likely to be out.
Park spokesman Andrew White said Snowy probably belonged to 399, but officials are doing a DNA test to be sure.
The US Fish and Wildlife Service plans to remove grizzly bears from the threatened species list.
There are 600 to 1,000 grizzlies in Yellowstone and the Grand Teton National Parks, National Geographic estimates.


Yemeni security forces opened fire on anti-government protesters gathered in the capital, Sanaa, eyewitnesses say.

Hundreds of thousands took part in the demonstrations to reiterate calls for President Ali Abdullah Saleh to step down. Doctors said dozens were injured.
Many women took part in the protests, angry at President Saleh's comments last week that their behaviour was against Islam.
More than 100 people have died in two months of protests against Mr Saleh.
The Yemeni leader, who has been in power for more than three decades, has said he is willing to hand over power, but only to "safe hands".
An opposition delegation, led by former Foreign Minister Mohammed Basindwa, is meanwhile in Saudi Arabia for talks with Gulf Arab mediators.
In Sanaa, authorities opened fire with live ammunition and tear gas, witnesses said.
"We neared the Sanaa Trade Centre when police confronted us with tear gas, and suddenly opened heavy gunfire on us from all directions," Sabry Mohammed, a protester, told Reuters news agency.
"A state of terror set in among the demonstrators, and some of them fled into side streets," he added.
Mohammed al-Abahi, the head doctor at the protesters' field hospital, told the Associated Press that at least 30 people were wounded, including two hit by bullets.
There were also reports of clashes between demonstrators and security forces in the southern city of Damar, in which several people were wounded.
Protests were also reported in other cities, including Taiz, Aden and al-Hudaida.


An MP has claimed some Conservatives make lurid hand gestures towards Labour women during debates in the Commons.

Sarah Champion said there was an "insidious" sexist culture in which "some Tories are very good at gesticulating about female assets".
Ms Champion became a Labour MP a year ago after winning a by-election in Rotherham.
She formerly worked as an arts administrator and chief executive of a children's hospice.
Ms Champion did not rule out the possibility that male Labour MPs also engaged in sexist behaviour in the chamber, but said she had not witnessed it.
The Conservative Party declined to comment.
In an interview with BBC Radio Sheffield, Ms Champion said female MPs from her party were often taunted while speaking in the Commons chamber.
She said: "I think it is utterly appalling. It's deliberately trying to degrade people, it's sexist and people ought to be pulled for it."
Interviewer Rony Robinson asked, for clarity, whether she was saying that "MPs opposite you, you're standing up making a speech about something, and they are using their hands to imitate breasts and bottoms?".
She replied: "Yes".
She said she had not reported the problem to Commons Speaker John Bercow, adding: "You have to pretty much ignore it.
"If you see it and you can catch someone's eye then telling them what you think about them, but then you end up in a slagging match which I don't think is helpful.
"It's so insidious, it's so part of the culture there, it's overlooked rather than ignored I'd say."
Ms Champion is not the first female MP to complain about the behaviour of their male colleagues in the Commons chamber.
In 2004, a study by researchers from Birkbeck College found "shocking" levels of sexist abuse, with male MPs of all parties pretending to juggle imaginary breasts and jeering "melons" as women made Commons speeches.
Some 83 MPs gave their answers in 100 hours of taped interviews for the study "Whose Secretary are You, minister".


Reformist and moderate media in Iran are hailing their side's successes in partial results for elections to the parliament and the Assembly of Experts, which elects the country's supreme leader.

But hardline papers are keen to pour cold water on the celebrations, insisting that conservatives will still have majorities in both bodies.
Some also accuse reformists and moderates of being in league with Western enemies of Iran's system of clerical rule.
"The greatest achievement of the elections is the reformists' return to the system," Ehsan Kiani writes in reformist daily Mardom Salari, in a piece headlined "Tehran's Spring".
He says that for the first time since the protests against the disputed presidential election of 2009 - which led to the house arrest of top reformist leaders - reformists will again be part of "the legal framework".
But the hardline paper Keyhan dismisses reports of reformists' gains as a "big lie" and warns that "Iran is not just Tehran", arguing that more conservatives than reformists have made it to the new parliament from across Iran.
In the government-run paper Iran, Azar Mansuri writes that reformists and moderates are not in any case seeking dominance in the new parliament, but are willing to work together with conservatives in a spirit of "pluralism, competence and rationality".
"The sweetness of this victory has made Iranians happy and boosted the people's hope for the continuation of calm and for an economic boom in the country," he adds.
Several papers across the political spectrum suggest that with the vote now over, it is time to focus on bread and butter issues.
The people are now keen for "political slogans and election campaigns to be put away and for the officials to pay attention to the country's fundamental issues such as the economy," conservative Hemayat says.
Ali Qanbari, in the reformist Arman, urges the new parliament and the government of moderate Hassan Rouhani to work together to help open up the economy, secure investment and promote growth.
But some in the hard-line media have lashed out at what they see as links between the West and the moderate-reformist camp.
"Some American and European authorities are beating a hollow drum of 'change in the Islamic Republic's behaviour'," Hossein Shariatmadari writes in Keyhan.
In the same daily, Abbas Haji-Najjari alleges the "direct involvement of foreigners and anti-revolutionary figures" in support of reformists and moderates
On the newly popular social media app Telegram, conservatives even launched a "No to the UK" channel, which accused reformists of enjoying the support of Britain and the BBC.
But in general, Telegram, which is not yet filtered in Iran, has been dominated by the jubilation of reformists and moderates, who have been widely sharing pictures of the arrested reformist leaders Mr Hossein Mousavi and Mehdi Karroubi.
In the wider region, media hostile to Iran are dismissive of the vote's impact.
In Sunni-dominated Kuwait, Al-Watan describes the vote as a "farce" and "a desperate attempt by the rival gangs of the regime to save their rule from the crushing crises that threaten the whole regime".
The Lebanese paper Al-Mustaqbal, which is critical of Iran's ally, Syria, says that despite the reformists' successes, the high turnout still bolsters the hard-line Supreme Leader Ali Khamenei by demonstrating continued public support for the regime.
But in Jordan, Al-Dustur wonders whether, with reformists and moderates making gains, Tehran might change its policies in the region and the vote could lead to "a shift from revolution to state".
BBC Monitoring reports and analyses news from TV, radio, web and print media around the world. You can follow BBC Monitoring  on Twitter and Facebook.


Scottish co-operative society Scotmid has warned that it faces a challenging year ahead as a result of higher wage bills and the Brexit vote.

The warning came as it reported a small rise in turnover and flat profits for the six months to 30 July.
It said it expected "general market uncertainties" to continue until the shape of the UK's terms of exit from the EU became clear.
It also warned that the National Living Wage was having an impact on costs.
Trading profit of Â£2m for the half was in line with the same period last year, while turnover was up by Â£4m to Â£185m.
In a trading statement, Scotmid said it had been a "positive" performance against the background of a sluggish Scottish retail market and "a period of considerable uncertainty".
Chief executive John Brodie said: "At the year-end we highlighted the specific challenge of the NLW (National Living Wage) in the context of an unfavourable Scottish retail market.
"The society has delivered a positive initial response to this challenge by accelerating continuous improvement initiatives while maintaining focus on the development of our core business to deliver a solid first-half result.
"However, the last six months has seen the magnification of general market uncertainties both in the lead up to, and after,  the result of the Brexit referendum and we anticipate that the uncertainty will continue until the shape of the UK's terms of exit become clear.
"Consequently, we expect the second half of 2016 to be equally or more challenging with the full cost impact of the NLW.
"This will also continue into 2017 when we face further cost increases including the apprenticeship levy."
Scotmid operates about 350 retail outlets across Scotland, Northern Ireland and the north of England. Its businesses include Scotmid Food, Semichem, funeral services and a property division.


Police believe dog walkers and joggers may help them find the killer of a man who was murdered in a "despicable" house fire in East Dunbartonshire.

Cameron Logan, 23, died in the blaze in Achray Place, Milngavie, on New Year's day. His girlfriend, Rebecca Williams, 24, remains in a critical condition.
Mr Logan's parents were also injured but have been released from hospital.
Police want to trace people who were running or walking dogs in the area when the deliberate blaze was set.
Det Ch Insp Paul Livingstone, from Police Scotland's Major Investigation Teams, said: "We are looking to trace a dog walker and two joggers that were seen after officers reviewed CCTV in the surrounding area around the time of the fire.
"It's crucial that we speak to these people seen on CCTV as they may have seen something important, even unwittingly, that could really help with this investigation.
"They may have seen the dark-coloured car that reportedly had its engine running in the lay-by on Craigton Road or they may have seen other people out walking, driving, cycling or running - anything that could help us find who is responsible for this fatal fire."
The detective said he wanted to trace two other dog walkers who were believed to have been in the surrounding area at the time of the fire.
He said: "One man was seen in the Craigton Wood area around the time the fire was discovered and is described as being 5ft 11in, of medium build and wearing a grey hooded top with black trousers. He was walking a brown Pitbull dog on a lead.
"Another man wearing a dark top was seen walking along Craigton Road on to the West Highland Way with two Springer Spaniels."
Det Ch Insp Livingstone said any contribution from potential witnesses "could be important to our investigation".
He added: "I would also appeal to any local residents with private CCTV cameras or motorists with dashcams who were in the area that morning to contact our inquiry team.
"It is absolutely crucial that we leave no stone unturned and view any footage that could potentially help us trace the person responsible for this despicable crime.
"A family is grieving for the son that they have lost and a young girl lies in critical condition in hospital. Please, if you have any information, no matter how small, please get in contact, as this person responsible must be caught."
The house on Achray Place is owned by Mr Logan's parents, David and Cathy, both 54.
Police said that Mr Logan and Ms Williams had been out celebrating Hogmanay and had returned to the house in the early hours of Sunday morning when the fire broke out.
Mr Logan snr and his wife both went back into the house with a neighbour to rescue Ms Williams.
Their son's body was discovered inside the house at about 07:30. The family dog, Gomez, also died in the fire.
Ms Williams, who is known as Bex, is a journalist with Global Radio. She remains in a critical condition in hospital.
Mr Logan's parents were treated for smoke inhalation and later released from hospital.
Officers are treating the case as murder and attempted murder.


As the start of the Six Nations nears, the respective coaches spent as much time talking about who wouldn't feature in the opening weekend as would.

The duration of Ireland fly-half Johnny Sexton's absence was a theme for coach Joe Schmidt, while England counterpart Eddie Jones' - sporting a shiner of his own - updated the media on his host of walking wounded.
Scotland's Vern Cotter rued the absence of props WP Nel and Alasdair Dickinson, while Wales' Rob Howley is without first-choice forwards Luke Charteris and Taulupe Faletau.
Media playback is not supported on this device
v Scotland, Edinburgh, Sat, 14:25 GMT, BBC One
Henderson & O'Brien in Ireland team
Sexton will miss Saturday's meeting with Scotland with a tight calf, but Schmidt raised the prospect that the 63-cap Leinster fly-half could also miss Ireland's second match against Italy on 11 February.
"Realistically, Johnny is an outside chance for Italy. He's probably played about 82 minutes in the last eight test matches," said Schmidt.
"In the three Six Nations I have been involved in, Johnny has dominated the number 10 position so we're still hopeful that he can come back in and do that for us."
Paddy Jackson, who deputised for Sexton in Ireland's autumn Test win over Australia, has been given another chance to stake his claim, while flanker Sean O'Brien is fit again at openside.
v France, Twickenham, Sat, 16:50 GMT
Daly starts on wing ahead of Nowell
Before taking on the England role, Jones had suggested that flanker Chris Robshaw was short of international class.
But, with Robshaw out for the tournament with a shoulder injury, Jones admits Maro Itoje, who has been switched to six from the second row, has a tough task to match up to the Harlequin in the opening match against France.
"Itoje has got big shoes to fill," said Jones. "Chris Robshaw has been one of our integral players with his work-rate but Maro has trained well in that position and we believe he can make a really good fist of it.
Prop Joe Marler, meanwhile, has claimed that drinking two pints of milk a day is behind his rapid recovery from a leg fracture that was expected to rule him out of the team's first two fixtures.
"Your mum always says milk is really good for you and you don't really believe it until you need it because you've got a broken leg, so I just drank loads of it," he said.
"I drank two pints a day and it's something I'll keep doing because it's really tasty."
Media playback is not supported on this device
v Ireland, Edinburgh, Sat, 14:25 GMT, BBC One
Strauss in Scotland team to play Ireland
Cotter is keen to keep his Scotland players' feet on the ground after winning four out of five of their matches since last year's Six Nations and coming within a point of Australia in their solitary defeat.
"Can we win the whole thing? I think the trap is every year that Scotland get talked up," said the New Zealander.
"We are realistic. We know which teams are ranked ahead of us, we know what the rugby hierarchy is at the moment. It's up to us to change that."
Hooker Fraser Brown will make only his fourth start ahead of 102-cap Ross Ford and Cotter says that the Glasgow man's defensive skills swung selection.
"Fraser is very good defensively and close around ruck time. We know Ireland go to one-pass or two-pass plays and we need to be robust around that area."
Media playback is not supported on this device
v Italy, Rome, Sun 14:00 GMT
Webb returns as Wales make five changes
With Wales' opening match followed six days later by defending champions England's visit to Cardiff, interim head coach Howley has put his side through two full-contact training matches to get them match ready.
Welshman Nigel Owens, who took charge of the 2015 World Cup final, officiated the 50-minute, 15-a-side matches and Howley believes the approach has worked.
"There has been a lot of energy and enthusiasm over the past two weeks, and we are excited going into Sunday," he said.
Wales XV to face the Azzurri have collected a total of 677 caps and Howley believes that experience is crucial.
"The side that's been selected has about a 70% winning ratio in the Six Nations. They know what winning looks and smells like in the Six Nations," he said.
v England, Twickenham, Sat, 16:50 GMT
Serin included in France XV
France coach Guy Noves will give 22-year-old Bordeaux scrum-half Baptiste Serin his Six Nations debut and only third start in the team against England on Saturday.
"We're convinced we can count on him in the future but we want to try him out in a difficult situation." said Noves.
"If we trust him, he has to show his qualities in the toughest situations. To only play in the lesser matches, that doesn't seem smart to me."
Maxime Machenaud drops to the bench despite starting in each of France's three autumn Tests.
Media playback is not supported on this device
v Wales, Rome, Sun 14:00 GMT
O'Shea makes Italy changes
Former Harlequins head coach Conor O'Shea, who took charge in June, wants his Italy side to build on their first-ever win over South Africa in November.
Italy have not beaten Wales since a 23-20 success in Rome in 2007.
"We want a great, great performance this weekend to make everyone understand that we are on the right track," said O'Shea.
"It is possible to change our history. Sport is very strange and can very quickly change."


Glasgow head coach Gregor Townsend was frustrated his team failed to hit their best form as they lost 16-11 to Connacht in their Pro 12 semi-final.

An improved second-half performance was not enough as the champions' bid for back-to-back titles ended in Galway.
"We are disappointed we didn't play our best game when it was required," Townsend told BBC Scotland.
"When it comes to a semi-final or final you have to play very well to win and we didn't do that today."
Fly-half Finn Russell was taken to hospital after suffering a "facial and head injury" in the opening minute, receiving oxygen during lengthy on-field treatment.
The 23-year-old stayed there on Saturday night and will remain in hospital on Sunday night for observation.
"It's a nasty looking injury," Townsend told BBC Scotland. "Our thoughts are with Finn and we hope he makes a quick recovery."
Connacht maintained the 100% record of home teams in Pro12 semi-finals as a converted try from wing Niyi Adeolokun and three penalties from AJ MacGinty sealed their passage to an all-Irish final against Leinster next Saturday at Murrayfield.
"In attack we just didn't have the control or the patience to hold onto the ball, to go through that extra phase in the first half," Townsend noted.
"We rushed things a little and weren't as fluent as we can be but in the second half we showed what we can do and came right back into the game but it's a pity we couldn't sustain that."
Veteran winger Sean Lamont said it was "a season's work gone down the drain."
"Credit to the boys, they dug in to the end, but I just think we were on the wrong side of the penalty count and weren't quite clinical enough," said the 35-year-old.
"For the boys that are leaving us it would have been nice to finish on a high but unfortunately we were just a little bit short.
"To lose a couple of guys [Russell and Fagerson] so early it does shift things but I think the guys that came on did a great job. These things happen, it's rugby unfortunately, it's the nature of the sport."
"Glasgow will be disappointed with how they played this game for the full 80 minutes.  We only really saw what they can do for 10 minutes at the start of the second half.
"Leone Nakarawa was probably their best player and that is what they are losing.  He has been outstanding, and a joy to watch.
"If Glasgow had defended their title after the season they have had, losing so many players to the World Cup and the Six Nations, it would have been an incredible achievement.
"Ultimately it was the game two weeks ago which cost Glasgow a home semi-final.  You saw the influence the crowd had again, and in a tight game, home advantage makes a big difference.
"Glasgow did remarkably well to get into this position but they just couldn't get over the line.
"Connacht have only lost once at The Sportsground all season and have played some great rugby.  You saw the character and resilience and team spirit they showed at the end.
"Leinster will be favourites in the final because of their tradition and history but I would love it if Connacht won it. Their attacking play has been fantastic and it would be great for them to win it for the first time."


North Korea's leader Kim Jong-un has said the country will soon conduct tests of nuclear warheads as well as the ballistic missiles to carry them.

He said the tests would "enhance the reliance" of the North's nuclear attack capability, state media reported.
The North has issued a series of increasingly bellicose threats in the wake of sanctions imposed after nuclear and missile tests earlier this year.
Many analysts doubt the North's ability to put nuclear weapons on missiles.
However last week, Mr Kim also claimed his scientists had developed nuclear warheads small enough to fit on ballistic missiles. The claims were accompanied by pictures of the leader standing alongside what state media said was a miniaturised nuclear warhead.
South Korea's defence ministry was sceptical about the claim, saying it thought the North had "not yet secured miniaturised nuclear warheads".
Kim Jong-un's latest comments came as he was overseeing a simulation for the kind of re-entry technology needed to bring a nuclear-armed ballistic missile back into the atmosphere, the KCNA news agency reported.
North Korea's missile programme
How advanced is North's nuclear programme?
Will carrots or sticks change North Korea?
What is the Kaesong Industrial Complex?
In January,  the North conducted its fourth nuclear test, which it claimed was of a powerful hydrogen bomb. This was followed in February by the launch of a satellite using banned missile technology. Both were in contravention of existing UN sanctions.
In the past week, US and South Korean forces have been holding their largest ever annual joint military exercises, known as Key Resolve and Foal Eagle.
The drills routinely generate tension, but this year Pyongyang threatened to launch a "pre-emptive nuclear strike of justice" against the US and South Korea.
Some analysts believe that the latest string of threats will add to speculation that the North could be preparing for yet another nuclear test.


Scottish rower Katherine Grainger won the Olympians' Olympian award at the 2016 Team GB ball in London.

Grainger, 41, won silver in the double sculls at this year's Rio Olympics - the fifth Olympic medal of her career.
The ball at Battersea Evolution was hosted by double Olympic bronze-winning diver Tom Daley and Strictly Come Dancing co-host Claudia Winkleman.
The GB women's hockey team, who claimed gold in Rio, won the Great Britain's Choice award.
Grainger took a two-year break from rowing after winning Olympic gold at London 2012, following silver medals at Sydney, Athens and Beijing.
But after a selection ordeal where her place was only confirmed six weeks beforehand, she won silver with Victoria Thornley in Brazil.


Her broad smile said it all - this was not just a historic afternoon for the Queen, but the so-called Sport of Kings with which she is so intrinsically connected.

Sixty years after enjoying a first Royal Ascot winner as an owner, in the year of her coronation, she crowned a Ladies' Day where leading ladies made it an extraordinary afternoon.
Her filly Estimate just held on in a pulsating running of the 207th Gold Cup that saw the monarch break free of her regal sobriety to show the sheer enjoyment of winning.
As the four-year-old saw off the Irish challenge of Simenon and the French raider Top Trip, she clapped alongside her racing manager John Warren in the royal box.
Horse: Estimate - A four-year-old filly bred in Ireland by the Aga Khan. Has won four of her seven races. Career earnings: About £280.000
Owner: The Queen, 87, has about 40 horses in training on the Flat and over the jumps
Trainer: Sir Michael Stoute, 67. Royal Ascot wins: 66. Has won the Derby at Epsom five times. Arrived in Britain from his native Barbados just before 20th birthday
Jockey: Ryan Moore, 29, champion jockey in 2006, 2008, 2009. Father Gary is a trainer, and brother Jamie a jump jockey
Winnings: A prize of £198,485 goes to the Gold Cup winner. A small percentage goes to both the jockey and the trainer
Presentation: The Queen traditionally presents three trophies at Royal Ascot - the Royal Hunt Cup, the Gold Cup and the Queen's Vase. The Duke of York stepped in this time
Seeing the Queen close up after this triumph made me double check her age. She is 87, but had a spring in her step which defied those years.
The Queen has presented the Gold Cup to the winning owner down the decades, but this time it was finally her turn to collect the trophy as she became the first reigning monarch to win it.
The Duke of Edinburgh of course, who presented her with the Queen's Vase last year when Estimate won that race, was missing this time as he recovers from a stomach operation.
And so it was their son, the Duke of York, Prince Andrew, who did the presentation honours and following a small bow of his head, they shared a warm exchange.
Even jockey Ryan Moore, not known for grand celebrations, looked chuffed after his second Royal Ascot success on Estimate, who was first in the Queen's Vase 12 months ago in Diamond Jubilee year.
"She won well, and to do it for the Queen is fantastic. To win the Gold Cup in her colours is exceptional," said the three-time champion jockey.
Like the odd female, Estimate is not entirely straightforward. She can occasionally be a "pain in the bum" according to her trainer Sir Michael Stoute.
"The girl who rides her every day, Michelle, and Kerry the head lass and Kirstie who led her up have put a lot of hard work in to get her relaxed," said the Newmarket trainer.
"It's a special thrill to win this race for The Queen, and it will have given her enormous pleasure - she really loves the game and it's a great recreation for her. She told me it was a very big thrill and thanked everybody involved.
"This rates as highly as anything, and I know the pleasure it will have given the Queen because she has such a love for her breeding programme, and that's why it will have given her a bigger thrill to win with a filly, rather than a colt.
"This win is very high on my list, because it's been done for a lady who, never mind being the Queen, loves racing, is a great supporter of racing and is so good for British racing."
The Gold Cup had been preceded by another hugely popular, and emotional, win for a filly as Riposte - ridden by Tom Queally - triumphed for Lady Cecil, the widow of Royal Ascot's leading all-time trainer Sir Henry Cecil, who died aged 70 nine days earlier.
Her voice cracking with emotion following the Ribblesdale Stakes, she said: "First of all, that was for Henry, the Prince (Khalid Abdullah, the owner of Riposte) and all of the staff at Warren Place - for Team Cecil.
"I don't really have the words to say what I am feeling right now. I think people will probably have a good idea. Henry was just adored by so many people. People who had never met him just loved him."
Joining the Queen and Lady Cecil in this highly charged day of thrilling female victories was the Ireland-based trainer Joanna Morgan.
In 1978, she was the first professional woman jockey to ride at Royal Ascot when partnering Gallowshill Boy in the Queen's Vase.
Total number of winners: 22
First victory: Choir Boy (1953 Royal Hunt Cup)
Most recent winners: Free Agent (2008 Chesham Stakes), Blueprint (1999 Duke of Edinburgh Stakes)
2012 runners: Carlton House (2nd, Prince of Wales's Stakes), Momentary (12th, Ribblesdale Stakes) Estimate (1st, Queen's Vase)
Thirty-five years on, she secured her first victory at the meeting as a trainer when 20-1 shot Roca Tumu obliged in the Britannia Stakes.
"It is a dream to win here - what you work every day for," said Morgan
"My first runner here as a trainer came third in the Queen's Vase about 25 years ago. I have had several runners since but not got any closer until today."
So where did 20 June, 2013, stand in the rich tapestry of this world-famous meeting where top thoroughbred action mixes with high fashion?
"This is a seriously historical day in our [racing] world," said Newmarket trainer John Gosden, a close friend of Sir Henry, who won the Tercentenary Stakes on Thursday with the Abdullah-owned favourite Remote.
From the top-hatted toffs in the Royal Enclosure to the cheaper, cheekier Silver Ring, there was an air of celebration among the crowd of 61,954.
Estimate was the well-backed favourite after all. Only the bookies were hurting, and even some of them were smiling on the inside.
Ascot's chief executive Charles Barnett reckoned there were "some of the greatest scenes ever seen in the long history of the Royal meeting".
Ireland's champion National Hunt trainer Willie Mullins, who narrowly missed out on winning jump racing's Gold Cup at Cheltenham in March with runner-up Sir Des Champs, had to settle for second again as Simenon was denied by a neck.
"I wasn't too disappointed to be second - maybe for the first time in my life," said Mullins, who called it the "perfect race".
"This is a fantastic result for racing. The stands just erupted about the furlong-marker and then everyone rushed back to the back of the stands to see the winner come in - it was a fantastic atmosphere."
Racing needed this - the last two months have seen a stream of damaging headlines after a major doping scandal and a corruption case which saw jockey Eddie Ahern banned for 10 years.
With Estimate and the Queen taking racing onto front pages and the top of news bulletins for positive reasons, it is hard to over-estimate the value of Her Majesty's contribution.
There was an extra zip in the feelgood post-race singsong for punters around the Ascot bandstand as the sun shone on a day when thunderstorms were expected.
The Queen's winning horse Estimate is the first filly to win the Gold Cup at Royal Ascot since Indian Queen in 1991.
It was hard, however, not to look to the heavens and think of Lady Cecil when the band played You'll Never Walk Alone.
Earlier, Riposte's jockey Queally had said: "It has been a tough, tough week and I know that a lot of people are struggling, emotionally as well as everything else."
Known by many simply as Jane, Sir Henry's former secretary has shown a regal dignity in her time of grief.
"Keeping busy is what is keeping us all going - if we had nothing to do, then I think we would all fall to bits," she had said.
Her husband's funeral is on Monday. He would have loved all this - a script fit for Ascot's king, with his Lady, and the Queen, at the centre.


Myanmar has rescued two migrant boats holding more than 200 people in its waters near the border with Bangladesh.

It was Myanmar's first such rescue. It has faced strong criticism for not doing enough to aid those stranded at sea and stem the migrant crisis.
Most stranded migrants are Rohingya fleeing persecution in Myanmar; others are economic migrants from Bangladesh.
More than 3,000 have landed in neighbouring Malaysia, Thailand and Indonesia, which have offered aid.
Myanmar, also known as Burma, said these migrants were rescued on Friday morning.
Photos posted on the information ministry's Facebook page showed scores of bare-chested men crammed in the hull of at least one boat.
The posts referred to the migrants as "Bengalis" - Myanmar's term for illegal Bangladeshi migrants - and said the boats were in Bangladeshi waters off Myanmar's Rakhine state, waiting for more to arrive in smaller vessels.
The government has promised humanitarian assistance to those who have suffered at sea.
But ministers have stressed that only verified Myanmar citizens will be allowed to stay. Myanmar insists that these latest stranded migrants are not.
The BBC's Jonah Fisher in Yangon said that for several weeks it was clear that at least five traffickers' boats were in limbo just off the Burmese coast, unwilling to cross the Andaman Sea - but equally reluctant to let their victims go for free.
The rescue came after Myanmar officials met Malaysian and Indonesian foreign ministers, and the US Deputy Secretary of State Antony Blinken, on Thursday to discuss the situation.
Malaysia also began searching for migrant boats on Friday, a day after Prime Minister Najib Razak announced that they would conduct rescue missions.
A US military spokesman told the Associated Press news agency that it was prepared to assist in patrols in the area.
Malaysia and Indonesia have agreed to stop towing boats out to sea and will provide temporary shelter to those who have landed.
Thailand only said it would stop rejecting boats.
Are you or is someone you know affected by the issues in this story? Email your experiences to haveyoursay@bbc.co.uk
You can message us on WhatsApp 07525 900971.


A police dog claimed to have fatally injured a terrier in a unprovoked attack has been accused of biting a member of the public two days earlier, it has emerged.

Falco, a black German shepherd, was taken off active duty after a Yorkshire terrier named Barbie was bitten.
Lincolnshire Police has referred both incidents to the Independent Police Complaints Commission.
Falco's licence has been removed while investigations takes place.
More on this and other stories from across Lincolnshire on our Live page
A spokesperson for the commission said: "The IPCC is investigating two complaints relating to the same Lincolnshire Police dog.
"The IPCC received two complaint referrals from the force, one relating to the dog biting a member of the public in the Moulton Marsh area on 27 February, and another incident where it is alleged to have bitten another dog near Fishtoft on 29 February."
Lincolnshire Police said Falco's operational licence had been suspended pending the outcome of any investigation.
The force said this was normal practice and "not a pre-judgement of the circumstances".
The incident involving Barbie happened on a private lane while Falco was with handler Mick Judge. The three-year-old terrier had to put down because of the extent of her injuries.
Police are yet to comment on the circumstances of the incident involving the member of the public.
Barbie's owner Charles Giermak said the attack on his dog could have been avoided if Falco had been muzzled.


Ex-Doctor Who actor Christopher Eccleston has joined politicians and celebrities urging people to register to vote ahead of the midnight deadline.

People should "trust their instincts" and "believe in the process", he said.
People can register online or visit their local town hall offices to fill in a paper form, although it is too late post a paper registration form.
The Electoral Commission said 1.8m applications to register have been made in the past five weeks, mostly online.
Of those who have signed up since 16 March, 569,771 of those were 16 to 24-year-olds.
The 120,000 people on 19 April was the most in a single day so far. There were 110,000 applications on 16 April, the day the BBC aired the debate with opposition leaders.
The majority of those website visits were made after host David Dimbleby mentioned registration at the close of the programme.
The day with the next highest number of online applications was 30 March, which was the start of the official general election campaign period and the dissolution of Parliament.
Has the number of voters fallen?
On Friday, the Office for National Statistics (ONS) published figures for the number of people registered to vote in parliamentary elections.
It turns out that as of December 2014, there were 45,325,100 people registered to vote in the UK, which was down 1.8% on the previous year.
There are two reasons why this figure may not give the full picture.
Read Anthony Reuben's full blog
Despite this, it is estimated there could still be as many as 7.5 million unregistered voters among the 45 million people eligible to vote.
Electoral Commission chairwoman Jenny Watson said: "It takes just a few minutes to apply to register online, so do it now.
"We don't want anyone to miss out, but if you miss the deadline on 20 April and then try to vote you will be turned away from the polling station on election day. Make sure this doesn't happen to you."
Politicians including Nigel Farage and Natalie Bennett have been reminding their Twitter followers to register in time.
Ed Miliband tweeted: "Your vote on 7 May can help change Britain. But you need to make sure you're registered before midnight tonight."
Comedian Russell Brand has questioned the value of having a vote, arguing that it changes little in a political system dominated by like-minded elites and urging people to use other means - including direct action - to try and get things done.
This view has been challenged by other public figures, including actor Michael Sheen, satirist Armando Iannucci and comedian and Labour activist Eddie Izzard, who have urged people to register to make their voice heard.
Christopher Eccleston, who played the title role in Doctor Who's comeback series in 2005, said first-time voters must "trust their own instincts and listen to their own heart".
"There are people that are worth voting for" he told BBC Radio 5Live's Afternoon Edition. "I've been disappointed by all the parties through a 51-year old life but I still believe in the process. I still have hope."
Campaign groups have been working to persuade ethnic minorities, disabled people and young people to register.
Rachael Harrington, from Voting Counts, said too often young people did not see the link between party politics and issues affecting their lives and even those who "did not agree with the system" should register and cast a vote.
"Go and speak to your local candidates," she urged.
"If you decide you don't agree with them, just go and spoil your ballot or blank vote. Just staying at home makes you another statistic of people who don't care."
Professor Ed Fieldhouse from the University of Manchester, told BBC Radio 5Live Breakfast that young people had traditionally been among the hardest to reach, with the older and better off more likely to register.
"You do find there is a connection with social class," he said.
"People who are unemployed or in disadvantaged economic positions are less likely to turn out to vote."
The UK general election takes place on 7 May. Local government elections are taking place across England - excluding London - on the same day. A number of mayoral elections are also taking place.
As registration records are managed on a constituency basis, it will not be known how many people signed up to vote until after the election.
The last general election in 2010 saw a voter turnout of 65.1% across the UK, an increase on the two previous elections in 2005 and 2001 when turnout was 61.4% and 59.4% respectively.
The 2001 election was the first time since World War Two that turnout had fallen below 70%.
Subscribe to the BBC Election 2015 newsletter to get a round-up of the day's campaign news sent to your inbox every weekday afternoon.


Sir Tony Robinson has led tributes to British actress Patsy Byrne, best known for playing Nursie in Blackadder, who has died aged 80.

Sir Tony played dim-witted sidekick Baldrick in the show and cast Byrne in his Maid Marion and Her Merry Men series.
He told BBC Radio 5 Live she had been like a mother to "her boys" on the Blackadder set.
"Patsy was just a real confident centre of all the scenes," he said.
"She had unerring skill to make the daftest, silliest thing sound absolutely real and absolutely plausible," he added.
"I was so fond of her as a person and so in awe of her capabilities that when I decided I wanted to introduce a mother to Maid Marion, my first choice was Patsy.
"I was thrilled that she took it. Even though she has done such grand work she came down to Minehead and rolled her sleeves up and was just one of the lads, as she always was, and did a great performance."
Broadcaster and actor Stephen Fry, who played Lord Melchett alongside Byrne, tweeted: "Oh lord no! I've just heard that Patsy Byrne, darling Nursie has died. Hope St Bernard has welcomed her to eternal rest. Adorable woman."
Blackadder producer John Lloyd also paid tribute to Byrne, saying she and Miranda Richardson, who played Queen Elizabeth I, were a "fantastic double act".
Byrne played Nursie - the kind but dim-witted nursemaid to Elizabeth I - in the second series of BBC comedy Blackadder in 1986.
"It's ironic that she will be remembered for that lovable, slightly idiotic person with that ludicrous drawl, but she was a proper actress. With the RSC, she played Chekhov opposite Rex Harrison, was incredibly well spoken, but she would put up with our little ways," he told 5 Live.
"The rehearsals on Blackadder were interminable, with us changing our minds all the time and she was always on top of it and she never complained. We had famous actors walk out of rehearsals because it was such a nightmare and shambles. But with Patsy there was never a peep of complaint."
Byrne died on Tuesday at Denville Hall, a retirement home for actors, in Hillingdon, north-west London.
The Kent-born actress joined the Royal Shakespeare Company after drama school and took on TV and theatre roles.
Her other roles included the ITV sitcom Watching and the classic police series Z Cars. She also made appearances in Holby City and I, Claudius, and played Mrs Nubbles in the BBC's 1979 adaption of The Old Curiosity Shop.
Byrne's death came just over a week after Rik Mayall, who shared screen time with her as Lord Flashheart in Blackadder, died suddenly at his home in London.
Blackadder ran for four series between 1983 and 1989 - with writing credits shared between Rowan Atkinson, Richard Curtis and Ben Elton. The comedy followed the exploits of Atkinson's Blackadder character through various historical periods.


When Philae first sent back images of its landing location on Comet 67P, researchers could see it was in a dark ditch.

The Sun was obscured by a high wall, limiting the amount of light that could reach the robot's solar panels.
Scientists knew they only had a short amount of time - about 60 hours - to gather data before the lander's battery ran flat.
But the calculations also indicated that Philae's mission might not be over for good when the voltages did eventually flat-line.
67P is currently moving in towards the Sun, and engineers suggested that the intensity of light falling on Philae could be sufficient in time to re-boot the machine. And so it has proved.
The plucky robot that enthralled the world is back.
The sense of relief in the mission team must be immense. Many people had worried that the very low temperatures endured by the lander on the icy comet could have done irreparable damage to its electronic circuitry.
The fact that both its computer and transmitter have fired up to contact home indicates that the engineering has stood up remarkably well in what must have been really quite challenging conditions these past seven months.
Scientists must now hope they can get enough power into Philae to carry out the full range of experiments.
One ambition not fulfilled before the robot went to sleep in November was to try to drill into 67P, to examine its chemical make-up.
An attempt was made last year, but it did not appear to work. Either the tool picked up nothing, or for some reason the gathered sample did not make it into the on-board laboratories.
Either way, a second bid to drill the surface will now become a priority.
But some experiments will be more power-hungry than others, and drilling is one of these.
Engineers must establish what they can, and cannot, accomplish with the revitalised Philae.
The robot could yet turn out to be one of the biggest good-luck stories in the history of space exploration.
Had Philae landed precisely where it was targeted back in November, it would have been sitting on an open plain. Solar generation conditions would have been perfect from the outset.
But even if it had succeeded, death would have come relatively soon. Indeed, the pre-landing analysis was that Philae would succumb to overheating on the plain after perhaps a couple of months.
As it was, the robot bounced into its shaded ditch and went into hibernation. And that long slumber means it has now come back to life at a far more interesting time on Comet 67P - just as it nears perihelion, the closest point to the Sun.
If you had to pick a time to have a robot on the surface, it would be right now.  67P's ices are being energised, and are throwing huge jets of gas and dust into space.
A fully recovered Philae promises a scientific extravaganza beyond what anyone dared believe was possible when it first touched down.


A baby who died 74 minutes after birth has become the UK's youngest organ donor.

The parents of Hope Lee had known for months she would have a short lifespan due to a deadly brain and skull condition.
Emma and Andrew Lee, from Newmarket, agreed Hope's kidneys would be made available for transplant.
Mr Lee said: "There's an adult lady out there who is doing very well, so a lot of good has come out of it."
Hope was born at Addenbrooke's Hospital, Cambridge, last week ahead of her twin brother Josh, as first reported in the Cambridge News.
Her parents found out she had a condition called anencephaly in the 13th week of pregnancy and they rejected having her terminated.
Mr Lee said: "It was a very sad time, but our whole family are signed-up for organ donation.
"We had time to plan everything we wanted to do and the hospital was able to put into action the transplant of the kidneys and some liver cells were taken as well."
Source: NHS Organ Donation
Hope's father said if they had not planned it in advance, they might not have been able to go through with the organ donation plan after Hope was born.
"Just before she died she bent her fingers around my finger and I broke down," he said.
"Seventy four minutes isn't long, but it has given us a chance for a bit of closure."
Sally Johnson, NHS Blood and Transplant director, said: "It is exceptionally rare for very young babies to become organ donors.
"We are very grateful to Emma and Andrew for making such a courageous decision and to offer a chance of life to others at a time of personal loss."
Teddy Houlston of Cardiff was the previous youngest organ donor in the UK after he died about 100 minutes after his birth in in 2014.


A brewery is calling on cider drinkers to supply their own apples in return for a bottle of booze.

Castle Rock Brewery, in Nottingham, has started a small scale experiment to make the drink but needs the raw ingredient.
The first batch was made with apples from allotments and is expected to be between 4.5% and 7% alcohol.
For the second round, the brewer is offering a bottle of the fruity beverage for every sack of apples.
Colin Wilde, managing director of Castle Rock, said: "Our hope is we will be able to thank anyone who gave us apples, not only with a bottle but we would hope to be able to invite them to a party in the Spring."
The firm said it would accept any variety but the fruit had to be fresh and unbruised.
The brewery has been making real ales and running pubs in Nottingham since 1998 but this is the first time it has made a cider.


Barclays is set to appoint former JP Morgan banker James "Jes" Staley as its new chief executive.

It is understood the Barclays board has approved the appointment of Mr Staley and that a formal announcement will be made in the next fortnight.
Barclays' previous chief executive, Antony Jenkins, was fired from the bank in July after falling out with board members.
Mr Staley currently works for US hedge fund Blue Mountain Capital Management.
BBC business editor Kamal Ahmed told the Today programme that previously "there had been big tensions within the bank" between the retail and investment divisions.
He added that investors were unhappy with the change of focus of the bank towards retail banking under Mr Jenkins.
The board of Barclays has agreed the appointment of Mr Staley and the bank is now waiting for regulatory approval before making an official announcement.
Our editor added that with the troubles faced by the banking sector, including the taxpayer-funded bailout of Royal Bank of Scotland, some people within the City are concerned that London is losing its position as global banking centre. The appointment of Mr Staley might be seen as trying to resurrect that position.
Shares in Barclays were 2.8% lower at 249.20p in mid-morning trade following the news.
James Staley, 59, is a former chief executive of JP Morgan Chase's investment bank. He spent more than 30 years of his career there before joining hedge fund BlueMountain Capital Management in 2013.
A longstanding lieutenant of JP Morgan chief executive Jamie Dimon, Mr Staley was at one point thought to be in line to take over as chief executive of the US bank.
It appears that it is not the first time that Mr Staley has been lined up to take the chief executive role at Barclays, following the resignation of Bob Diamond in the wake of the Libor rate-rigging scandal.
Three years ago, US business news broadcaster CNBC reported Mr Staley was, in fact, a finalist for the top job at the bank in August 2012, - alongside his colleague Bill Winters. Both eventually lost out to insider Antony Jenkins.
In 2015, Mr Staley was elected to the board of Swiss bank UBS to serve on the bank's risk committee.
Underscoring the bank's renewed focus on investment banking, at the weekend Barclays' executive chairman John McFarlane was reported as saying European investment banks should consider merging to create a regional champion to compete with US rivals, highlighting the anxieties of senior bankers in Europe about their sector's future.
"If you did want to create an investment banking champion for Europe, you would have to combine the investment banking arms of the main players, but you would have to swallow really hard and you would need political support," Mr McFarlane told the Financial Times.
In July, Barclays bank reported a 25% rise in statutory pre-tax profits to Â£3.1bn for the six months to the end of June. During the period, the bank also set aside Â£850m to compensate customers - including cover for further claims for mis-sold payment protection insurance (PPI).
Those close to the process of hiring James Staley insist he is no "Bob Diamond Mark II" and that the investment bank will still have to find savings.
The pre-2008 era is definitely over, my sources say.
Mr Staley's job will be to smooth relations between the two arms of the bank.
I am told he will retain the strategy mapped out by Mr McFarlane: cut costs by simplifying the bank's structure, re-invigorate the investment bank and jettison underperforming businesses.
At a time when most European banks are withdrawing from the investment banking sector, Barclays sees an opportunity - expanding trans-Atlantic global banking and its African operations.
It will be Mr Staley's job to realise it.
Read Kamal's blog here.


Several concerts were held over the weekend in Nigeria's main city, Lagos.

2 May 2016 Last updated at 17:20 BST
The concerts were aimed at helping Africa's most populous country to revive its jazz industry.
Nigeria has produced some of Africa's best jazz musicians in the past.
Grammy award-winning saxophonist Kirk Whalum told the BBC that US and Nigerian music influence each other to make today's jazz music.


Newport County boss Graham Westley says the club are in "desperate need" of some new defenders to turn their poor form around.

The Exiles are five points adrift at the bottom of League Two and have lost their last seven league matches.
Monday's 2-1 defeat by Wycombe Wanderers meant they have conceded 12 goals in their last four league games.
"We've has a run of results that I can't ever remember having as a manager," Westley told BBC Radio Wales.
"It's never as easy as you think or as fans hope to bring new lads through the door. I've said we are in desperate need of some defenders at the club."
With Joss Labadie sidelined with a knee injury, Westley has been forced to be creative with his team selection during the busy festive period.
"I've got Jennison [Myrie-Williams] playing at left back who is not a natural defender and Jazzi [Barnum-Bobb] who is an attacking full back but he's not a defensive one," he continued.
"We've got a pairing at centre-half that isn't an ideal pairing right now with the captain [Scot Bennett] being out."
Rhys Healey played his final game for the Exiles in the defeat by the Chairboys before returning to Cardiff City as his loan spell had ended.
"He will have learned a lot, he had a phase where things were going well for him. He got a bit of interest and there was a bit of a rumour going round that others were interested and I think he lost his way," Westley said.
"That's a lesson for him. Hopefully it'll happen to him again in his career where things are going in the right direction. You've got to respect your team at that time."


Tottenham and Kenyan midfielder Victor Wanyama was honoured in Tanzania on Saturday by having a street named after him in Dar es Salaam.

But the gesture looks to have been short-lived as local websites showed a picture of the street sign being taken away the following day.
A statement from the local Ubungo council said procedures to rename a street had not been observed.
There has been no reaction so far from Wanyama, who turned 26 on Sunday.
The footballer was in Tanzania on holiday and had attended a local tournament in the suburb of Ubungo.
Tottenham signed Wanyama from Southampton last July for $11m on a five-year deal.
BBC Africa football correspondent Stanley Kwenda says that Wanyama is the poster boy of East African football, and that in the absence of a strong national football team from the region he is the face of the game there.
Read more:
I am not a bad guy, says ex-Senegal star El Hadji Diouf


Ashraf Ghani was sworn in as president in September 2014 following months of bitter argument over who won the election.
He replaced Hamid Karzai, who led the country for twelve years after the Taliban were overthrown in 2001.
President Ghani heads a government of national unity with Abdullah Abdullah, the runner-up in the disputed election. Speaking at the inauguration ceremony, Dr Abdullah said the former rivals were now one team and would work together.
The long delay in forming a new government paralysed the economy and encouraged the Taliban.
Mr Ghani's first act after being sworn in was to sign a decree creating the post of chief executive. Mr Abdullah was sworn in to that job. The specially created post carries powers similar to those of a prime minister.
Both foreign backers and Afghans hoped that Mr Ghani and Mr Abdullah can put aside their acrimonious election rivalry and work to improve life in a country that has suffered war and poverty for decades.


Six US prisoners are being rewarded for saving a prison officer who had suffered a suspected heart attack.

Polk County Sheriff Johnny Moats said the Georgia prisoners, who all have committed minor crimes, would each have their sentences shortened by 25%.
The work crew had been cutting grass at a public cemetery when the corrections officer who was guarding them collapsed in the heat.
The six men used the guard's phone to call police and began performing CPR.
"When that happened, in my opinion, it wasn't about who is in jail and who wasn't," inmate Greg Williams told 11alive.com.
"It was about a man going down and we had to help him," he continued.
The work crew ran to the lone officer after he fell to the ground and removed his bullet-proof vest to perform CPR.
Rather than take his pistol and run off, they used his mobile phone to call for an ambulance.
"None of my guys ran," the officer told WKYC. "None of them did anything they shouldn't have done."
The family of the officer, who does not wish to be identified, bought a lunch of pizza and cupcakes for his incarcerated rescuers the next day.
Sheriff Moats said that "anytime we have a trustee or inmate crew that goes beyond normal duties, we cut them some extra time off".
The inmates' reaction also "really speaks a lot about my officers too, how they treat these inmates", he added. "They treat them like people. Like family."
Their actions come in stark contrast to two other Georgia convicts who were arraigned on Wednesday on charges of murdering two prison guards while being transported between prisons.
Prosecutors say they intend to seek the death penalty for Donnie Rowe and Ricky Dubose, who were captured in Tennessee after a three-day manhunt.


Manchester City manager Pep Guardiola says his side's 3-1 Champions League victory over Barcelona is a landmark win for the club, but admits they did not do it playing the way he favours.

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City had not beaten Barca in five previous attempts in Europe and Guardiola said after the Group C game on Tuesday: "It is a good step to say that once in our lives we played against the best team in the world and we beat them.
"We competed with Barcelona, but for now we did it in a different way. We played more long balls because we are still not ready to keep the ball and play like they do.
"They have been playing that way for 25 years. For us, it is three or four months that we have been trying to play in a different style."
City staged a thrilling comeback after Lionel Messi's 90th Champions League goal put the visitors 1-0 up in the first 20 minutes.
The win, courtesy of two goals from Ilkay Gundogan and Kevin de Bruyne's free-kick, leaves City second in the group behind Barca, needing one more win from their two remaining games to progress to the last 16.
Guardiola, who won the Champions League twice as Barca manager, had seen his side lose 4-0 at the Nou Camp last month in the reverse fixture after goalkeeper Claudio Bravo was sent off.
But the 45-year-old Spaniard said that when it was "11 v 11" in the first game, his side performed much better than for the 38 minutes on Tuesday night.
"They were 1-0 up and we were really in trouble. They had a chance to score their second and if they had, then the game was done - finished," said Guardiola.
"Our equaliser changed absolutely everything for our mood. We also realised our build-up was too complicated, because they were playing a high-pressing game against us.
"We did not feel comfortable and we changed the way we played. We tried to play a little bit more direct."
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Guardiola, 45, took charge of City in the summer with the brief of conquering Europe and he feels that, psychologically, they have taken a big step in the right direction.
City progressed to the semi-final of the Champions League last season under previous manager Manuel Pellegrini.
"If you talk about the whole performance then, for the first 38 minutes, we were still not able to compete with the best clubs in the world," said Guardiola.
"But, in the second half, it was different. I saw my players were upbeat - they knew they had gone through their bad moment. That sureness Barca had in the first half, we were able to turn that around.
"Now they will realise that they have beaten the best team. Future generations will see that and know they have to do that again. That is a process.
"It was the same with the group of players with Joe Hart and Vincent Kompany who won the title twice in five or six years together. The players arriving at the club now understand they have to do that, or try to do that too."
Barcelona coach Luis Enrique was full of praise for City's pressing game, which forced several uncharacteristic errors from the Catalans, including the home side's equaliser just before half-time.
"Until City's first goal it had been one of the best 40 minutes we had played on a stage like this against a top quality rival," Enrique said afterwards.
"From then on we had a bad time. We couldn't control the game in the same way, because of the errors we made and also because of pressure from the opponents.
"City played very well and pressed aggressively to provoke more errors from us than we did from them, and they took advantage of them."
BBC Radio 5 live pundit Ally McCoist:"The one thing that would be a tragedy would be if City don't take the confidence from this.
"Manchester City were fantastic in the second half. It would not have been a shock to me had City scored again. They were in many ways playing Barcelona at their own game, which is a very dangerous thing to do.
"The confidence that the players and the manager should take from this performance is invaluable."
The Sun
The Daily Telegraph
Manchester Evening News
Daily Star
The Times
Andy Greary: One game does not make a season. Pundits and fans overreacting to City's win. Pep equals overrated.
Anthony: Pep Guardiola got his tactics spot on tonight. Messi and co couldn't handle City in the second half.
Jamie: Forget Messi, De Bruyne is the world's best.
Kris Jefferson: What a signing Gundogan is looking. If he stays fit he will be the perfect Toure replacement!
Fasy: If this was a knockout round, Barca would have won 5-3 on aggregate. Well done City but no need for so much hype. Still lots of work to do to become a top Champions League team but heading in the right direction.
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A group of MPs and peers says migrants should be expected to learn English before coming to the UK, or attend language classes when they arrive.

The cross-party group said speaking English was "the key to full participation in our society and  economy".
They also said ministers should consider letting different parts of the UK set their own immigration policy.
The government said it was spending Â£20m on English language provision.
Last month a report by Dame Louise Casey warned of "worrying" levels of segregation in some areas and called for more English classes for isolated groups.
The report by the All Party Parliamentary Group on Social Integration urges the government to go further, saying all immigrants should have either learnt English before coming to the UK or be required to sign up to classes when they arrive.
The group said integration should begin upon arrival in the UK and described speaking English as a "prerequisite for meaningful engagement with most British people".
The government has promised new migration controls once the UK leaves the EU but has not yet set out a detailed model.
According to the cross-party group, "substantial" immigration powers should be devolved to the UK's nations and regions, with devolved governments or city regions setting quotas.
4.1m
population increase 2001-11
50%+
of the increase is due to immigration
2.8m people in Britain are Muslim - the biggest religious group after Christians
70-85% of the populations in some wards in Blackburn, Birmingham, Burnley and Bradford are Muslim
511 schools in 43 areas take more than 50% pupils from Pakistani or Bangladeshi backgrounds
27% of births in 2014 were to mothers born outside the UK
It said replacing the current "one-size fits all" approach would lead to a "more positive" public debate about immigration.
Addressing the "economic and cultural needs" of an area would "have a positive knock-on effect on the public debate on immigration", the report said, adding that this "could instil confidence among members of the public that the immigration system works for their area, and give incentives for politicians to actively make the case for immigration in their area".
Pointing to a similar model in use in Canada, where provincial governments can set region-specific requirements for immigrants, it said visas could be issued specifically for certain regions or certain sectors.
The report also called for a new national strategy to integrate immigrants, including "awareness of the host country's laws, traditions and culture" and access to the labour market, and for councils to set up local integration action plans.
Net migration is well above the government's target of below 100,000, and ministers have said they will reduce it after the UK leaves the EU and is no longer subject to freedom of movement rules.
Labour MP Chuka Umunna, who chairs the all-party group, said a "meaningful" integration programme would be needed when the rules are changed after Brexit.
He said: "It's clear that immigration has impacted on different communities in different ways and the pace of change has alarmed many.
"The government has a duty to address the lack of integration of immigrants if it is to address this. Failing to do so has left a vacuum for extremists and peddlers of hate to exploit."
The Home Office said it was not planning to introduce local visa arrangements, but the department said it had made funding available for more English lessons.
A government spokesman said: "Our country has long been home to lots of different cultures and communities, but all of us have to be part of one society - British society."
He said Â£140m was available through a "controlling migration fund" to help councils manage the impact of immigration.
He added: "However, we must also recognise that uncontrolled, mass immigration makes it difficult to maintain social cohesion and puts pressure on public services.
"Our priority is to build an immigration system that works for everyone in the UK and delivers the control we need."


The eurozone's unemployment rate has continued to fall, dropping to a near eight-year low in February.

Figures from the Eurostat agency showed the jobless rate fell from 9.6% in January to 9.5% - the lowest since May 2009.
The lowest unemployment rates were in the Czech Republic (3.4%) and Germany (3.9%), while the highest were in Greece (23.1%) and Spain (18%).
France, the second-biggest economy in the eurozone, was stuck at 10%.
At the height of the financial crisis, unemployment in the eurozone peaked at 12.1%.
Separate survey data suggested strong growth among eurozone manufacturers.
IHS Markit's final manufacturing Purchasing Managers' Index (PMI) for the eurozone rose to 56.2 in March, from 55.4 in February. Any reading above 50 shows growth.
However, Chris Williamson, chief business economist at IHS Markit, said high demand was bringing problems.
"Eurozone manufacturing is clearly enjoying a sweet spell as we move into spring, but it is also suffering growing pains in the form of supply delays and rising costs," he said.
"The survey is also signalling the highest incidence of supplier delivery delays for nearly six years, underscoring how suppliers are struggling to meet surging demand."
On Friday, official figures showed inflation slowed by more than expected in March.
Prices in the eurozone were 1.5% higher than a year ago, down sharply on the 2% rate seen in February.


A fifth consultation on the future of secondary education in Haverfordwest, Pembrokeshire, begins on Monday.

Pembrokeshire council proposes closing Sir Thomas Picton and Tasker Milward schools to establish an 11-19 school from September 2018.
The new school would initially use both sites.
Previous plans to create an 11-16 school, with a sixth form at Pembrokeshire College, were met with protests from students.
The latest consultation will supersede one preliminary and three statutory consultations.
An education spokesman from Pembrokeshire council said the council was "duty bound" to comply with the Welsh Government's School Organisation Code which states they must hold a fresh consultation when "a new option emerges".
The latest plans also include designating Johnston and Neyland primary schools as feeder schools to Milford Haven School, where as previously they were feeder schools for Haverfordwest.
The deadline for consultation responses is 28 February.
There will also be a public meeting on 1 February at County Hall from 18:00 GMT.


Residents of two Hebridean islands are being told to "come back in a year" if they want to see a dentist.

The islands of Islay and Jura have been left with only one part-time dentist since the retirement of the only full-time dentist one year ago.
The remaining dentist cannot treat all the islanders and has had to prioritise children and people who are in pain.
NHS Highland said dental services on Islay met "all the necessary infection control requirements".
There have been 16 expressions of interest in the job but no-one has taken up the position.
It is thought that the poor state of dental facilities on the island - provided from a portable cabin in the car park of Bowmore Hospital - has been a factor in recruitment issues.
"The waiting room is your car," said local resident and retired GP Pat McGran.
"The receptionist has to come out and get you. A man and wife team took on the job in 1998 on the understanding that facilities would be upgraded but that never happened.
"Facilities are not just not attractive and the Community Health Partnership has told us there's no funding to upgrade them."
Islanders who want a check-up now have to take the ferry to Tarbert or Lochgilpead.
A dental practice in Paisley has even started advertising in the local paper, despite being a five-hour journey away.
A spokesperson for NHS Highland said: "Dental services on Islay are provided from a well-resourced facility that meets all the necessary infection control requirements.
"At the same time however we do recognise that the actual building itself is not ideal and we have been investigating the possibility of providing these services from within the hospital building."
Earlier this month, the BBC reported how health officials in the Highlands were advertising on billboards and buses in Leeds and Liverpool to try to fill dozens of vacancies in remote GP practices.
Adverts promoted the stunning scenery and career-enhancing challenges of rural life.  Islay is one of the areas trying to attract GPs.


A man with mental health problems exacerbated by cannabis use has been given two life sentences for brutally killing his aunt and grandmother.

Christopher Whelan, 21, drowned his aunt Julie Hill in the bath at her Derbyshire home on 25 February and strangled his grandmother Rose Hill.
He admitted manslaughter on the grounds of diminished responsibility.
Whelan, from Sheffield, will serve a minimum term of 15 years before he can be considered for release.
His mother - who is the sister of Julie Hill and daughter of Rose Hill - said the sentence "has been just".
"I can't stop loving him, he's my son, but he has done a terrible thing," she said.
"I do know he loves his nan and he loves his aunty Julie. My mum has been like a second mum to him. She has loved him and he has loved her."
She said her son "definitely seemed to become worse" since using cannabis.
"Let this be a warning to any other young men who might be dabbling with it," she added.
On Friday the court heard that Liam Parker, 22, found his mother Julie's body at her home in Station Road, Shirebrook, and took his own life two months later.
The prosecution claimed Whelan's actions resulted in this third death, but have since withdrawn this "following further enquiries by the police".
Sentencing Whelan, Mrs Justice Carr said: "The last minutes of these women's lives must have been both terrifying, bewildering and agonising.
"These were savage and brutal attacks even before the killings."
Nottingham Crown Court heard Whelan had suffered from intrusive violent thoughts for many years, but had not acted upon them before the killings.
Two forensic psychiatrists told the court that he was suffering from a medical condition that substantially impaired his judgment and ability to exercise self-control.
The defence psychiatrist thought he had autism, but the prosecution psychiatrist disagreed with this, and thought he had anxiety and obsessive compulsive disorder.
His aunt had been growing cannabis at her home as she believed it alleviated her depression, and she used to give her nephew some in return for helping to grow it.
The judge told Whelan: "Your consumption of cannabis has deteriorated your mental health and exacerbated your violent thoughts.
"You had obsessional thoughts regarding violence which you felt compelled to act on."
Whelan told one of the psychiatrists he had travelled to his aunt's house in Shirebrook intending to rob her for money.
He attacked his 75-year-old grandmother after forcing her to sit on a chair in the cellar with a sock in her mouth.
He used at least two weapons - including an axe, and a sharp knife to cut her wrist - before strangling her with his hands.
The court heard he attacked his 51-year-old aunt in the bathroom - leaving her with a missing tooth and multiple bruises and lacerations - then held her down in the bathwater.
Whelan claimed he thought Satan was talking to him during the attacks.
He later told one of the psychiatrists: "I went in there for money but he [Satan] went in there for violence."
He phoned police to tell them what he had done and was charged with murder on 29 February.
His guilty pleas to manslaughter were accepted because of his mental health problems.
An inquest is due to be held into the death of Liam Parker, who died on 20 April.


The man accused of killing nine people at a community college in Oregon left behind a manifesto detailing his grievances, US media report.

Chris Harper Mercer opened fire on Thursday inside a classroom at Umpqua Community College and then killed himself when police arrived.
A police source told the Associated Press that Mercer complained in the document about not having a girlfriend.
He also wrote that everyone else was "crazy" and that he was the sane one.
Mercer is also said to have written that other mass killers "were denied everything they deserved and wanted" before going on to say he did not believe anything could "make me realise I had so much going for me", People magazine reported, quoting a source close to the investigation.
Meanwhile President Barack Obama announced on Monday that he would travel to Roseburg, Oregon, on Friday to visit survivors and relatives of the victims.
The 26-year-old Mercer lived with his mother, Laurel Margaret Harper, in an apartment a few miles from the college.
Police have interviewed Ms Harper and she told them that Mercer had been suffering from mental problems.
Ms Harper, a nurse, posted on websites over past several years about the difficulties of having a son with Asperger's syndrome, a form of autism that she also suffered from.
She wrote that her son used to bang his head against the wall and that she also attempted to counsel other parents whose children had similar difficulties, the New York Times reported.
Ms Harper also wrote about her son's knowledge of firearms, saying he was her main source of information about guns and revealing they kept Kalashnikov and Armalite semi-automatic rifles and a Glock handgun in the house.
Police recovered a total of 14 firearms and spare ammunition magazines that had been bought legally by Mercer or a relative. Mercer had six guns with him when he began his attack and the rest were found at his home, the newspaper reported.
Mercer had been discharged from the US Army in 2008 after failing to complete basic training. According to online postings, he had been in search of a girlfriend.
In a dating profile apparently belonging to Mercer on the Spiritual Passions website under the username Ironcross45, the non-smoking teetotaller described himself as "shy at first, but [I] warm up quickly, better in small groups".
Survivors had previously suggested that Mercer had left a message for police.
Summer Smith, the mother of one of the survivors, said Mercer singled out her son, Matthew, and decided not to kill him.
"The shooter asked him to give the police something, and that if he did, he would live," Ms Smith told CNN on Monday.
Ms Smith said Matthew was handed an envelope, with what appeared to be a thumb-size computer hard drive inside.
He then was forced to watch as Mercer shot and killed his classmates, Ms Smith said.
"Matthew said that he froze. He didn't make a single move. He was afraid to look away," she told CNN.


(Close): Wall Street shares rose on Thursday, and the S&P 500 closed at a new record high following a weaker dollar, which promises more profits for multinational companies.

Also positive were weekly jobless claims, which fell to a seasonally adjusted 264,000, near a 15-year low.
The S&P 500 index gained 22.59 points to 2,121.07, while the Nasdaq rose 69.10 points to 5,050.80.
The Dow Jones rose 191.75 points, or 1.06%, to 18,252.24,
There were no losers on the Dow Jones. On The S&P, Kohl's Corp dipped 13% after reporting quarterly revenue and same-store sales figures that failed to meet analysts' expectations.
Analysts cited cheap US and European money amid record-low interest rates and a bond-buying programme in Europe.


A custody sergeant used excessive force that could have put a suspect's life in danger, a police disciplinary hearing has been told.

Sgt Stephen Chilton is seen using an unapproved neck lock to restrain a youth in a cell in CCTV footage from a Nottinghamshire Police custody suite.
An expert witness said the technique was justified because the suspect tried to attack the sergeant.
Sgt Chilton denies gross misconduct and the hearing continues.
His actions at Bridewell custody suite carried the risk of serious injury or even death, the hearing was told.
The date of the allegation was 9 January 2014.
It is the first time Nottinghamshire Police has held a misconduct hearing in public.


Brazilian president Michel Temer was booed as the 2016 Paralympic Games opened in Rio de Janeiro to a backdrop of colour and music.

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Thousands of performers were involved either side of the two-hour procession of competing countries at the Maracana.
Competition begins on Thursday, when Great Britain's Dame Sarah Storey can become the most successful female Paralympian.
Storey goes for gold in the C5 pursuit (qualifying: 15:19 BST, finals: 21:12).
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The opening ceremony began with American Aaron "Wheelz" Fotheringham, in a wheelchair, jumping from a massive ramp from the Maracana stands and performing a back flip through a giant ring.
The Brazilian national anthem was played on the piano by Carlos Martin, whose right hand is severely disabled, before the parade of athletes, with the loudest cheer of the night reserved for competitors from the host nation.
Each nation carried a piece of a jigsaw, which bore the name of their country on one side and faces of competing athletes on the other.
Once completed, the jigsaw was adorned by the faces of every competitor at the 2016 Games. All of the faces came together to form a beating heart, which began beating in time to the music.
One of the most striking parts of the ceremony was when bright lights temporarily 'blinded' the crowd to try to show spectators the reality Paralympic athletes face, forcing them to rely on other senses such as hearing.
Rio 2016 organising committee president Carlos Nuzman was booed during his speech, as was President Temer a short while later.
The South American country has been beset by political unrest and, just 24 hours earlier, former Brazilian president Dilma Rousseff left her official residence for the last time following her impeachment and removal from office.
Nuzman did manage to finish his speech, which spoke of building a "new world, more accessible to all and with no obstacles". Temer's role was brief as he officially opened the Games and handed over to more performers.
Finally the flame was lit in driving rain and in front of a cheering crowd by influential official Marcia Malsar.
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Funding
The biggest concern for the Games was around a shortfall in funding, with the struggling Brazilian economy and low ticket sales meaning Rio's organising committee had not raised enough money to fund the event.
Rio's mayor Eduardo Paes had to secure an additional £36m of funding and £24m in sponsorship from state-run companies, meaning the Paralympics will go ahead, but with cuts to the workforce and transport services as well as the closure of some media centres.
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Tickets
Ticket sales have improved, with 1.6 million sold of the 2.5 million available, after only 12% had been bought just three weeks ago.
The London 2012 Paralympics sold a record 2.7 million tickets.
Prince Harry has made a donation to the #FillTheSeats initiative, which is working with Paralympics organisers to buy 10,000 tickets for local children.
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Russian doping
There was also the ongoing saga of whether Russian athletes would be able to compete, after a report commissioned by the World Anti-Doping Association found evidence of widespread doping across Russian sport.
Unlike the Olympics, which allowed individual sport federations to decide if Russians could compete at Rio 2016, the International Paralympic Committee (IPC) has applied a blanket ban, which Russian officials unsuccessfully appealed against.
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Athlete classifications
And concerns have been raised about whether the system used to determine the classifications athletes compete in is being manipulated to boost medal chances.
British T37 200m sprinter Bethany Woodward, who has cerebral palsy and will not be competing in Rio, has criticised the British Paralympic Association (BPA), saying "they've brought in people who are not like me in terms of disability".
BPA boss Tim Hollingsworth said no advantage was being sought for Britain's 264 athletes in Rio.
The IPC says the system is always under review, while UK Athletics said it will look at classifications after Rio, standard practice for the body after every Games.
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China are the Paralympics superpower, having topped the medal table at London 2012 with 231 medals, 95 of which were gold.
Russia came second four years ago, with 36 gold medals, but will not be in Rio because of their ban, giving Great Britain, third in 2012 with 34 golds, a great chance of moving up a place.
Among the global stars in Rio are Brazilian swimmer Daniel Dias, American swimmer Elizabeth Marks, Australia's Olympic and Paralympic table tennis player Melissa Tapper and the Netherlands' 'Blade Babe' Marlou van Rhijn.