Beer barometer on the decrease

April 29th, 2009 by admin | Filed under Daily News, Recession, UK Banks.

In a move reminiscent of the that famous British World War Two classic ” A Bridge too Far” will the imposition of a 50% tax band on salaries of £150,000 and over prove to be the last straw for an already disillusioned British public signalling the end of their eleven plus years stay in power at the earliest possible opportunity. Whilst the opposition parties continue to make a lot of noise, as any financial analyst will tell you, Chancellor Darling had absolutely no alternative but to apparently “soak the wealthy” in his desperate need to earn tax income.

Rumours are rife in fact that the 50% tax band is just the beginning, and as long as the Labour Government remains in control of the tax strings, they will continue to pull them even tighter around the throats of these who are in the upper income bracket, despite that fact that Alistair Darling has insisted that 50% is as high as he will go.

According to Treasury estimates, a mere 300,000 people will become liable to pay a large percentage of their income at the 50% tax band from next year onwards. However, continuing to display their perennial yet apparently unfounded optimism, Darling’s crew estimate that more than three quarters of a million UK citizens could find themselves in the comfortable situation over the next ten years. Immediately although accountants believe the figure will rise to around 750,000 people over the next decade. There is a kind of perverse argument around that as more people find themselves in this upper income bracket, they will leave the country to settle in places where the tax system is more compassionate. Whilst this is possible in today’s global economic climate, the chances are that the majority will have created a situation for themselves where their UK business is immovable and they will have no option but to pay the higher taxes.

There is little doubt that the introduction of the 50% income tax band has become a bit of a hot potato not only among the rich and famous, but within the party itself. The comparatively unsubstantial income that the tax increases will bring may not for the serious backfire at the next general election.

A sign of the times in the UK is the news that in the last twelve months, sales of beer by the pint has fallen by over eight percent, equivalent to 150 million pints. At the same time it would appear that a trend is developing among the UK public to purchase beers and spirits at their local supermarket and drink along in their own home or with a few friends. It would appear that the British pub, so long a centre of traditional culture is on the way out. The government will need to be concerned about the fact simply because the levels of taxation for beers and spirits sold remain a serious source of income for them

Alistair Darling is expected to announce next month that the UK’s bigger banks will be required to maintain higher capital levels than what has been regarded previously as the industry average. This is being done in an obvious move to prevent or at least curtail future financial crises. The banks that are expected to fall under Chancellor Alistair Darling scrutiny are expected to include HSBC, Lloyds Banking Group, Royal Bank of Scotland and Barclays.

In anticipation shares in the banks took a drop yesterday, with d Royal Bank of Scotland falling by more than 4% ( 1.6 pence to 32.7), Barclays (2pence to 232) and Lloyds Banking Group (4.9 pence to 95.6).

Oil prices were under pressure, with BP reporting a considerable profit drop due to the rapid decrease in crude oil prices. The company announced that they will be making cutbacks to shore up their finances for the future which looks like being tricky not just for BP, but for all of the major oil companies.

The retail sector took a short step backwards after a few encouraging days. Home Retail Group was among the hardest hit, 4.6 per cent (11 pence to 270) in lieu of its full-year results due today.

Despite the recent increases imposed in the UK budget, tobacco stocks were on a slow climb. Imperial Tobacco crept up 1.8 per cent (28 pence to 1552) while British American Tobacco rose 0.8 per cent (15 pence to 1597).

Chocolates were in demand with Cadbury up 0.3 per cent to (3 pence to 508) in anticipation of announcements due Thursday, possibly that Cadbury’s US partner Hershey are a possible candidate for taker by industry giant Nestlé.

On the day, swine flu was the talk of the exchange causing the FTSE 100 to close down 70.61 points, at 4,096.4 points. The FTSE 250 index dropped by124 points to close at 7,155.18.
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On the money markets, Sterling rose slightly against the dollar and the Euro as well as holding its own against the Japanese Yen and the Swiss Franc:
Pound/US dollar 1.4706
Pound/Euro 1.1143
Pound/Japanese Yen 142.65
Pound/Swiss Franc 1.6796

Wall Street shares had a steady day on trading with the Dow Jones Average dropping a mere 8.05points to close at 8016.95. Nasdaq fell 5.5 points on the day to close at 1673.81

Apart from swine flu, the main topic of conversation on the street was what will be with Chrysler. For certain to take place is the separation between car firms Daimler and Chrysler. Daimler seemed almost relieved when they announced the German carmaker has relinquished their 19.9% stake in the troubled US firm, and will also forgive repayment of the loans extended to Chrysler, already written off in the company’s 2008 financial statements.

Tomorrow marks the deadline where Chrysler needs to announce their restructure plans that will allow them a multi-billion dollar loan from the Government as well as to avoid entering bankruptcy protection.

Plans mooted include that the United Auto Workers’ union will acquire 55% of Chrysler with Italian giant, Fiat eventually acquiring 35% of the Detroit based The remaining stock will be split between Chrysler’s secured lenders and the US federal government.

Following in the footsteps of many of their global investment banking colleagues Deutsche Bank announced yesterday that they had returned into profit in the first three months of 2009, after a disastrous last quarter of 2008.

Better trading for many of Deutsche’s most important debt businesses helped it lift net income to €1.2billion compared with a net loss of €141million in the same period of 2008.