A further 90 billion pounds boost needed to keep the UK economy afloat- and that’s just for this week

Estimates from a leading Bank of England policymaker over the weekend that the UK government will be obliged to spend up to 90 billion pounds to prevent the unemployment crisis from permanently damaging the economy was not exactly what anyone wanted to hear this weekend, as further frighteningly significant figures were being bandied about as to the plunging state of the country’s economy. The investment will be needed to help to create up to three quarter of a million jobs in the public sector.

Whether these 90 billion pounds is part of the 180 billion pounds that a group of economists from the private sector announced that the UK economy will add to their debt levels remains unclear. What is for sure is that these figures are bound to add cold fear in the hearts of the UK public who are being asked to cope with figures that are slowly but surely becoming beyond comprehension/ Their prediction, which needs to be taken seriously, comes after an official report released earlier this week showed a record nine billion pounds increase in public borrowing in February..
On a positive note, the pound posted its biggest weekly gain against the dollar in seven weeks on the announcement that Federal Reserve has committed printing cash to buy Treasuries.

The Fed’s plan followed the Bank of England’s announcement this month that it would buy gilts and the Bank of Japan’s decision to purchase government bonds.

The Dunfermline, Scotland’s largest building society, is to receive a 60 million pound government cash injection, making it the first to be rescued by the government.

The UK’s 12th largest building society, Dunfermline has been struggling with losses from commercial and residential property loans.

Signs of the considerable and continuing struggles in the building industry and its peripherals are the news that up to 1,100 jobs may be at risk at the UK’s largest removal company, Pickfords, struggling in the wake of the collapse in the housing market. The job losses are expected to come as part of a restructuring plan designed to save the business. Pickford’s operating losses for 2007 was seven million pounds, on sales of 83 million.

One of the UK’s leading holiday camp operators, Park Resorts, are to hire a specialist restructuring firm to provide suggestions on how to help the business through a sticky patch. One of the options that they are looking at is write off loans in exchange for equity.

On the FTSE, commodities headed for the biggest weekly advance in two months, while the insurance and banking sectors also did well

In mining, Xstrata rose by 5.1 percent to 455 pence, while diversified mining company Anglo American Plc, climbed an impressive 5.9 percent to 1,291 pence. BG Group Plc, the U.K.’s third-largest natural-gas producer, increased 4 percent to 1,087 pence.

Commodities climbed this week up an average of 8.2 percent, with copper up 8 percent, and the price of crude oil rising by 11 percent.

Insurance companies also did very well with Legal & General climbing 12 percent to 42.8 pence, after an advance of 22 percent on Friday. . Prudential Plc was in second place among the climbers, rising 17 percent to 332.75 pence. U.K.’s largest insurer, Aviva, rose by a relatively modest 8.8 percent to close 238 pence

This week saw the FTSE 100 Index’s second consecutive advance, thanks largely to the mining and energy companies as well as insurers having rallied for a second day on Friday. Other key factors in this “mini-revival” can be the US Federal reserve’s announcement that said they will snap up $300 billion of government bonds as well as the Bank of England showing willingness to purchase corporate debt from the banks to bolster financial markets.

The FTSE 100 gained 0.7 percent (25.92 to 3,842.85) on Friday, completing an overall rise of 2.4 percent for the week, The FTSE 250 index rose by 1.49% or 93.35 points to 6351.92

The pound held near its highest level in a month against the U.S. currency 3.3 percent higher in the week at $1.4462 as of late yesterday in London, from $1.4506 on March 19, the biggest gain since the five days ending Jan. 30. The British currency strengthened against the Euro, paring its weekly loss to 1.6 percent.

Pound/US dollar 1.4462

Pound/Euro 1.0633

Pound/Japanese Yen 139.40

Pound/Swiss Franc 1.6319

US stocks fell on Friday as the financial sector lost 12.9 per cent in two days, on news from the Federal Deposit Insurance Corporation that banks had made a heavier loss in the fourth quarter than originally reported, d not helped by a drop in US commodity prices. The Dow Jones fell 122.42 points to close at 7278.32 on Friday. The Nasdaq also dropped by 26.21 points to 1457.27.

The dollar has put in its worst performance for close to a quarter century in the last seven days, after the Federal Reserve stunned the market by announcing that it was set to adopt a quantitative approach to monetary policy.

The big news from Europe was that German car maker, Daimler announced that they were to increase its share capital by ten per cent (195 billion Euros), a move meant to clear the way for Abu Dhabi’s Aabar Investments PJSC to make a major investment in the company.

Aabar are listed on the Abu Dhabi Securities Exchange.

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Tags: Alastair Darling, Bank, Banking, British Economy, Global Credit Crisis, Gordon Brown, UK Banks, UK Recession