The government says it intends to take the East Coast rail service, run by National Express, into state ownership. The troubled rail franchise, which is expected to have lost £20m in the first half of the year, is suffering from falling passenger numbers.

Ministers have refused National Express’s requests for its contract with the government to be renegotiated. The Department for Transport said that all East Coast services would continue and that tickets would be honoured Tesco may launch a bid for Northern Rock as the Government attempts to sell off the nationalised lender before the General Election, according to reports. The supermarket chain has shown “provisional” interest in buying the bank which was nationalised as the credit crisis brought the financial system within hours of collapse, the Times reported.
The paper reports Gordon Brown wants Northern Rock returned to the private sector at a substantial profit before an election. Virgin, which tried to buy Northern Rock at the time, has expressed interest but it is understood that the Treasury is not in talks with any potential bidder.

A Tesco spokesman said the report was “pure speculation”.

A Treasury spokesman: “Any decision will be taken in the best interests of financial stability and of the taxpayer. “Our only focus is our discussions with the European Commission around the restructuring of Northern Rock and the implementation of Northern Rock’s new mortgage lending.”

The Government favours a sale rather than a flotation because it would be quicker, the paper reports. Last week MPs said an under-prepared Treasury was “caught flat-footed” by the run on mortgage lender Northern Rock in September 2007. The Public Accounts Committee (PAC) attacked the department’s lack of readiness to deal with a failing bank despite warning signs emerging as early as 2004.

Northern Rock – the first UK bank victim of the credit crunch – was propped up by almost £27 billion in emergency loans from the Bank of England and eventually nationalised in February 2008.

MUSIC and books retailer HMV Group has seen profits soar over the past year despite the recession, it announced today. The retailer reported an 11.5 per cent rise in annual profit, a result which has been helped in part by the demise of the firm’s smaller rivals. The 88-year-old firm, which runs the famous UK high street music, DVD and video games shops, as well as Waterstone’s bookstores, this morning posted profit before tax and one-off items of GBP 63 million for the year ended April 25.
Sales from continuing operations rose 4.4 percent to GBP 1.96bn.

HMV has benefited from the collapse of rivals Woolworths and Zavvi which, after years of struggling with competition from the internet and supermarkets, succumbed at the start of the recession. “We are working hard to maximise both the market share opportunity that has arisen from the withdrawal of competitors, and the investments that have been made over the last two years to improve performance,” an HMV spokesman said. The results were driven by increased sales of games, music and films at the HMV store, with Waterstone’s seeing a drop in sales of 3.6 per cent to GBP 548.3m.

BEFORE the credit crisis of 2007/08, Lloyds TSB was rated the sixth safest banking group in the world. That all changed when it was forced to save HBOS from the knacker’s yard, taking on all of the former building society’s toxic waste. Now renamed Lloyds Banking Group, and 43pc owned by the UK government, Lloyds will report the lowest credit losses of all Europe’s largest capitalised banks by 2011 and will be able to act commercially despite being part-owned by the government.

Favourable broker comment also got Barclays going. It jumped 11.55p to 279.65p after long-term bear SocGen suddenly turned positive in the wake of the [pounds sterling]8bn sale of its Barclays Global Investors arm to Blackrock. It upgraded to hold from sell and raised its 2010 target price to 260p from 36p.

Although SocGen continues to adopt a cautious stance on the bank sector, its top pick is Barclays. It says that while not all of its problems have been addressed, evidence suggests a solid foundation for future independent growth has emerged.

It was frisky financials that helped the Footsie close 53.02 points higher at 4294.03 on hopes that the worst of the crisis is over.

Car insurer Admiral accelerated 271/2p to 8831/2p after Credit Suisse upgraded to outperform from neutral A reassuring trading statement lifted media group Informa 191/4p to 231p. It continues to trade in line with ‘management expectations despite very challenging trading conditions’. Broker Singer Capital Markets says that while the group is lacking a catalyst and remains in debt-pay-down mode, the valuation has become much more appealing.

News that Hargreaves Lansdown is trading ahead of expectations left the close 9p higher at 210p. The investment group said revenues for the 11 months to end-May 2009 are 10pc ahead of revenues for the same period last year. It now expects the full-year outcome to be slightly ahead of top end expectations, currently at [pounds sterling]69.1m.
Insurer Gable Holdings firmed 1/2p to 81/2p on pleasing annual results. Pretax profits rose to [pounds sterling]910,000 from [pounds sterling]510,000 and net insurance margins jumped to 22.5pc from 16.5pc. It recently announced a new contract with a French insurance broker.

Better-than-expected annual results attracted buyers to marketing software company Portrait Software, 33/4p up at 111/2p. It reported a strong second-half of the year and a good start to the current year including a big contract win from Dell Computers.

SDI, the automated warehousing systems specialist, added 5/8p to 51/2p on news of a confirmed order book of [pounds sterling]29m and a pipeline of potential orders of [pounds sterling]21m for the current year.

London equities held reasonably firm on Tuesday, helped by more optimistic data from the UK housing market and support from the resource stocks in line with firmer commodities markets As trading closed, the FTSE 100 had reversed its gain from Monday losing 44.82 points to finish the say’s trading on 4,249.21
The FTSE 250 dropped for the first time in three days, by 62.65 points to close on Sterling’s day was weak against the leading currencies.

Pound/US dollar 1.6436
Pound/Euro 1.711
Pound/Japanese Yen 159.1014
Pound/Swiss Franc 1.7841

US equities rallied on Monday as upgrades in the consumer sector and improving energy stocks helped lift stocks later in the day after an early collapse.
On Wall Street, the Dow Jones finished the day dropping most id its previous day’s gains, down 82.38 points to 8447, while the NASDAQ lost 9.02 points to close on 1835.04.

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Tags: British Economy, Credit Crunch, East Coast rail service, Employment, Financial News, National Express, Northern Rock, Retail, Tesco, UK Recession

To be fair to UK Chancellor Alistair Darling it was fairly obvious that he was uncomfortable imposing a top tax rate of 50% on the country’s top earners, With a national net debt close to three quarters of a trillion pounds and not getting any smaller, Darling was hopeful that the successful and the famous would play their part in reducing the deficit. With all the fuss that Darling’s tax band increase has caused, it is worth taking into account that if everyone who is still earning lots of cash and pays up willingly, all that will trickle into the Government’s fast depleting coffers will be around two billion pounds annually. Just about enough to pay two weeks interest on the national debt!

And that is on the assumption that everyone pays up, or is around to do so. So far indications that the new tax band will succeed in driving some of the UK’s finest entrepreneurial talents to other shares, where the tax rates may be kinder. The UK treasury might have been labouring under the misconception that loyalty to the flag would entice some of the UK’s wealthy to set their personal welfare and desire to get even richer aside, if just for a while, and remain in the rain soaked, recession haunted British Isles and repay some of the country’s debts that they might even have been part of incurring. But that doesn’t appear to be the nature of the beast, and in today’s world of mobility and split second communication technology , it is possible to run a business in the UK from anywhere in the World.

Is yet to be seen that some of the threats issued will actually take place, but if they do some of the best-known figures in commerce and industry will be taking leave of the British Isles till this unpopular taxation rate becomes history. It is possible to argue the moral applications of their, what can be seen as, desertion in times when the country needs them, or at least their tax income. However as long as Greta Britain remains great, there is nothing that anyone, even Alistair Darling, can do to stop them.

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Tags: Alastair Darling, British Economy, Credit Crunch, Financial News, Tax

For at least the next twelve months, more than six million UK families will be living in a state of fear and financial uncertainty. According to recent research, homeowners, many of them already ridiculously exposed due to paying well above the true market price in an effort to get on the property ladder now face the real risk that unemployment or illness will cause them to fall behind on their mortgage payments and they will face eviction. And it won’t take much for them to find themselves in such a position
Statistics now show that more than sixty percent of the working population are living on a day to day basis with this fear, and are increasingly fretful, largely due to increasing silence from both the banks and the government on policy regarding repossessions. Many of the public feel that the government has paid too much attention on bailing out the banks and insurance companies, and not on providing some form of “safety net” for home owners.

While the feeling is that the credit crisis has bottomed out and the only way from here is up, for much financial security is still a long way away. In the meantime, with more than 40% of mortgage payments dependant on joint incomes, there are many families juggling their incomes on a very fine balance.

And their fears are not without foundation, with the Council of Mortgage Lenders currently estimating that more than 75,000 UK homes will bill repossessed in 2009, adding more than 300,000 people to the list of homeless.

Understandably this fear can cause tremendous repercussions within the family, and many consumer societies are simply requesting some form of official statement clearly laying out the criteria under which a family will be evicted from their home and what steps can be taken to prevent this from happening.

This scenario is too real for too many people, with information from the
Financial Services Authority (FSA) showing that the number of mortgages in arrears rose by 31 per cent in 2008 and that two and half million mortgages holders will see their property fall into negative equity in 2009.

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Tags: Budget, Debt, Economics, Economy, Money Management, Mortgage, Mortgages, Recession

40% of UK’s financial services firms have reported that they are accumulatively liable to lay off around 15,000 staff during the coming quarter according to a recent survey conducted by the Confederation of British Industry (CBI). In the last quarter of 2008, the number of people employed in the financial services industry fell making it the fourth consecutive quarter that the numbers have been reduced.

The financial sector has been particularly hard hit during the financial downturn and has been cutting jobs at levels unknown since1993.

Transport has also been hard hot and with Jarvis the rail maintenance group announcing their intention to lay off 450 people, things don’t appear to be getting any better. Jarvis, who also issued a profits warning, stated that that a decline in business through Network Rail as well as the general downturn in freight container business were the principal factors in their decision to lay off people.

The government-backed operator Network Rail announced on Tuesday that they are to embark on a five year, £35 billion railway improvements programme. However it remains unclear when the project will begin and until it does Jarvis stand be limited in their operational capacity

US based car manufacture, General Motors; currently in President Obama’s bad books have remained undeterred. According to reports, company officials have approached the UK government requesting a £600m aid package to help Vauxhall their British brand to stay afloat

Company representatives confirmed that they were currently in discussions with the UK government, but have yet to get down to the “nitty gritty” as far as finance was concerned.

General Motors UK’s operations as well as others in have cut back on launching new models of late as well as introducing other cost saving methods.

Cost saving seems to be too late for Visteon UK, whose auto parts production unit announced that they will file for bankruptcy, making their entire workforce of around 600 redundant. The company, who were part of the Ford Motor group up until 2000, announced that since they became an autonomous body they had made accumulative losses of £669m. The Company operated three plants across the UK, situated in Basildon, Belfast and Enfield.

On the home front, it was reported that property owners have been pushing up their entity values, to record levels of just over eight billion pounds during the last three months of 2008.

The sum is the highest capital injection since gland records began in 1970; the 5.887 billion injected in the third quarter of 2008 fades in comparison. When property values were shooting thorough the roof in the boom years it was considered sound practice to refinance properties to free up capital. When the downturn began, too many people found themselves with negative equities. However the encouraging trend to increase equities appears to be gaining momentum.

Om a more negative note, key David Blanchflower Bank of England executive announced in a recent statement that the UK was still to bear the full brunt of rising unemployment.

On the stock market, the FTSE 250 index rose by 1.04% or 66.31 points to 6.440.20 while the FTSE 100 took a short drop finishing the session down 1.02 per cent, or 40.14 points, at 3,886

The pound continued to show modest gains against the euro and dollar on Wednesday Estimates were that, although results indicated an improvement and that the significant actions of the UK treasury were beginning to take effect, there was still a long way to go.

Pound/US dollar 1.4358

Pound/Euro 1.0835

Pound/Japanese Yen 141.68

Pound/Swiss Franc 1.6378

Wall Street shares continued to rise and fall on a daily basis. Yesterday shares were up.

The Dow Jones Average rose 86.9 to close at 7608.92. Nasdaq trickled upward 26.79 points to 1528.59

The big news from Silicon Value in California was that Google the internet giant are about to move into the start-up business. To be more exact, the company, who currently turnover around $10 billion a year, have set aside a paltry $100m in its first year to compete against the top venture capital firms for some of investment opportunities afforded by the many start-up businesses in the region. Google’s new financing arm is to be known as Google Ventures.

In Asia the Japanese yen continued its four-week slump against the dollar with economists announcing that business sentiment has fallen to its lowest level for more than 30 years.

With expectations that the European Central Bank will cut interest rates tomorrow, the Euro is liable to also follow suit.

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Tags: Banking, British Economy, British Pound, Budget, Credit Crunch, Economics, Employment, Financial News

With global leaders converging on London or tomorrow’s eagerly awaited G2O conference, despite Prime Minister Brown’s hopes for a major breakthrough in solving the World’s financial problems, it looks increasingly like it will be a difficult if not impossible goal to achieve.

Already there are cracks showing with French President Nicolas Sarkozy causing problems, initially threatening to shun the conference only later to state that he and the French party would attend, but would strongly emphasise that their demands for stricter financial regulation be met.

It appears that the need to strengthen financial regulation will be one of the core issues at the conference, with France putting the heat on, and even threatening to walk out of the conference if agreements are not reached on this issue.

UK Prime Minister Gordon Brown and US President Barack Obama have been the principal sponsors of the conference, and both of them have not missed a chance to stress its importance and their hopes that it will generate the results needed to stimulate much needed global financial recovery.

The countries who go to make up the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, the US and the EU. These countries control 80% of global financial wealth.

What may emerge is a serious conflict of interest between the British and North American camp and the European faction. President Sarkozy has not been slow in attaching blame for the global financial meltdown on the US and UK

More supportive of the G20 conference has been German Chancellor Angela Merkel who has been reported as saying that the chances of reaching some form of agreement, or at least a statement of intent, were high.

Brown and Obama remain confident that the participants in the G20 conference will rise to the challenge and he will have the full backing of

President Obama, who said before setting off on his first official visit to Europe since he became president that the G20 must give a “strong message of unity”,

In the meantime, Gordon Brown continued to show faith in his belief that the results of the conference will show that global problems require global solutions. With an obvious message to President Sarkozy brown went on to add that “the conference will mark defeat those who say protectionism is an option.”

In anticipation of the expected public demonstrations that the conference is expected to cause, London police have created a sterile environment around the Excel centre, in Canning Town where the World leaders will meet. In the meantime, it is not expected that the police will be called on to break up disturbances inside the hall.

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Tags: Alastair Darling, British Economy, Credit Crunch, Current Account, Economics, Financial News, The G20 conference

Ostensibly to gather support and unify global efforts to get to grips with the global economic crisis but more likely in a move to get away from the increasingly angry UK taxpayer, Prime Minister Gordon Brown hit the Copacabana beach in Brazil today.

He will meet there with President Luiz Inacio Lula da Silva whose country is also suffering deeply from the effects of the World economic crisis. Brown arrived in Brazil from New York, where he met UN Secretary General Ban Ki-moon. At their meeting, the Prime Minister stressed the importance of the next month’s G20 summit in London. He voiced his intentions to take positive action by saying “doing nothing is no longer an option” and that the G20 must take action to protect jobs and help the world’s poorest countries.

In a later statement, Brown also reiterated his support for statements made by counselor for trade and economic policy of the British Embassy in Beijing Duncan Sparkes relating to the need to expand China’s role in international financial institutions. The issue will be discussed at the G20 summit

Despite the fact that they are accepted as being the world’s third largest economy, China enjoys a disproportionately limited role in global international financial institutions.

Back in the UK, Bank of England policymaker Andrew Sentence expressed his opinion that Great Britain needs to ensure that the fiscal deficit is being incurred to buy her out of the current crisis is sustainable, even in the medium term. Not to do so, would risk damaging business confidence.

Mr. Sentence went on to add that there may well be a case for some well-targeted fiscal measures to help companies with cash-flow problems.

The implications of refusing to return bonuses that most members of the UK felt were unjustified hit home very strongly to Sir Fred Goodwin. Sir Fred’s home in Edinburgh came under attack early Wednesday morning by characters unknown. Windows were smashed and one of Sir Fred’s luxury Mercedes cars was also damaged. A late e-mail announced that other bankers. Who make huge losses for the now largely state owned banks and expect to paid bonuses for doing so may receive the same treatment.

In another embarrassing ( but probably unlinked) moment for the UK banking system, for the first time since 2002, the U.K. failed to find sufficient takers buyers for the one and three quarter billion pounds of government that they had put up for sale. The government only managed to sell around 80% of their target, and although they waited around for a while to see if Sir Fred would gobble up the balance, he failed to show. Rumour had it that he was out looking for a glazier.

In a sign of the times, the world’s largest listed hedge fund firm, Man Group announced that funds being held under management by the company have fallen 11 percent since end-December 2008, as markets continued to decline.

The firm said net client outflows for the three months to March are estimated at $3.2 billion, with both private investors and institutions pulling out assets.

Man Group’s chief executive, Peter Clarke announced “Many investors, particularly institutions, have sought liquidity regardless of performance and reduced their exposure to all asset classes

Under pressure to reduce costs, HSBC are expected to announce their intentions to cut out more than 1,000 jobs in the U.K. as well as reducing office space across the country. The cuts will come in addition to the 500 UK based posts axed as recently U.K. jobs in November 2008.

On the FTSE, there was a lot of buzz around that Britain’s largest energy supplier, Centrica Plc were about to raise their offer to purchase the Venture Production Plc. Their initial bid for more than a billion pounds was rejected. After they were rejected, Centrica also saw their stock fall by 2.6 percent (6.25 pence to 236.75).

Proving the fact that doing the right thing doesn’t always make for profit was the news that GlaxoSmithKline Plc, the world’s second largest drug maker, would make 500 patents as well as another approximately 300 pending available to further the development of medicines for “neglected diseases.” The company’s shares immediately fell by 1.2 percent (12.5 pence to 1,004)

Doing better is Britain’s third-largest supermarket chain J Sainsbury Plc who’s trading statement about to be published is expected to show considerable sales and profits. In anticipation, their shares climbed 3.2 percent (10.25 pence to 330.75)

Legal & General Group Plc (LGEN LN): The 173-year-old U.K. insurer is due to announce earnings. The shares dropped 2.1 pence, or 4.68 percent, to 42.8 pence.

On the day, FTSE 100 Index fell a modest 1.1 percent (41.35 points to 3,911.46.) The FTSE 250 did proportionately better, dropping only 0.15% (9.71 points to 6,361.40)

On the money markets, the Pound rose slightly against the dollar and trimmed downward against the Euro.

Pound/US dollar 1.4565

Pound/Euro 1.0709
Pound/Japanese Yen 143.18

Pound/Swiss Franc 1.6365

On the global currency stage, the dollar took a mild tumble against the Euro. This came after US Treasury secretary Tim Geithner was heard to suggest that the US were considering a proposal made by the Chinese to curtail global reliance on the dollar as its reserve currency.

Wall Street shares took another step forward as nothing seems capable of breaking the optimistic mood that has prevailed there since the beginning of the week.

The Dow Jones Average climbed 89.84 points to close at 7749.81. Nasdaq also rose 12.43 points to 1528.95

Crude oil dropped more than $1 a barrel after a US government report revealed that stocks had climbed to their highest levels 1993, largely due to a consistent fall in demand.

On speculation that a weaker dollar was on its way demand precious metal as an alternative investment, increased. Both Gold and Silver climbed in value on the days trading.

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Tags: Economics, Financial News, Gordon Brown, Money Management, Stocks and shares, UK Recession

Governor of the Bank of England, Mervyn King was left with some egg on his chin yesterday when February’s inflation figures were announced yesterday. Instead of the expected inflation rate of 2.6%, representing a decrease of 0.4% from January, it was disclosed that the rate for the month had instead risen to 3.2%. This meant not only a rise of 0.2% but a disparagement of 0.6% from the Bank’s target.

It was estimated that the increase was largely driven by increases in food costs, due to the weak pound, according to figures provided by the Office for National Statistics (ONS).

It appears to be “back to the drawing board” for Dr. King and his crew, who appeared to leading the country to a period of consistent deflation, which was scheduled to reach 2% by April 2009. That target seems unlikely to be met, and Bank of England will be obliged to explain to his colleagues at the Treasury, as well as the British public as to what went wrong.

Without taking too much time to apologise and explain what went wrong with his deflation plan, Mervyn King instead cautioned Chancellor Alistair Darling that he should seriously curtail any plans that he had to instigate a second fiscal stimulus when announcing next month’s Budget.

The Bank of England governor warned that the current fiscal position in the UK is not one that could allow for another round of similar significant round of fiscal expansion.

On the FTSE yesterday, the mood of euphoria that had engaged Wall Street over the last 24 hours was not echoed. There were some rising stars; however banks and commodities, who had led the charge yesterday, appeared to be consolidating.

The highest flier on the day was the Innovation Group Plc whose shares shot through the roof, rising by a 72 percent (3.11 pence to 7.41). Innovation develop software for the insurance sector and may be on line for takeover, through a US based private-equity fund.

After news on their agreement to refinance their 215 million-pound banking facilities with Royal Bank of Scotland Group Plc. Broke, the Davenham Group saw their shares rise by 28 percent (3.25 pence to 15)

One of the U.K. -largest distributor of newspapers and magazines John Menzies Plc announced that they had successfully renegotiated contracts to distribute leading newspapers and magazines in the U.K. This good news sent their shares surging 27 percent (14.75 pence to 56)

Ukraine based iron ore producer Ferrexpo Plc were reportedly on the verge of announcing positive earnings for 2008, pushing their stock up 11.4 percent (6.75 pence to 66 pence)

The U.K.’s second-biggest water company, Severn Trent Plc are also scheduled to report their 2008 earnings figures. In anticipation, their shares rose 1.1 percent (11 pence to 1,025 pence).

SABMiller Plc the world’s second largest brewers enjoyed a conservative hike in their share value of 3.2 percent (31.5 pence to 1,030) on positive reports from their brokers.

Bank shares dropped almost five percent on average yesterday, after jumping by more than ten percent on Monday, on the news of the financial bailout from the US.

On the day, the FTSE 100 dropped 1.1 percent (41.35 to 3,911.46), having risen by 2.9 percent on Monday. The FTSE250 held its own closing at 6,403.55

As a result of a surprise rise in UK inflation last month, the pound was driven to a new high against the dollar on Tuesday

In New York, the pound climbed to $1.4690, an increase of 0.9% and did even better against the Euro and the Yen, rising by an average of 1.5%

Pound/US dollar 1.469

Pound/Euro 1.018

Pound/Japanese Yen 142.79

Pound/Swiss Franc 1.6571

Wall Street shares also took an understandable step backwards after the carnival atmosphere on Monday. The Dow Jones Average dropped 115.57 to close at 7660.29. Nasdaq also fell 37.785 points to 1517.99

In a report released on Monday, the e World Trade Organisation predicted that global demand for manufactured goods will plummet by almost ten per cent in 2009, representing the largest drop since World War Two.

Report explained that the dramatic trade slump was amplified as a result of a shortage of finance and growing protectionism.

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Tags: Bank of England, British Economy, British Pound, Inflation, Interest Rates, Recession, UK Banks, UK Recession

Reports have it that LDV; the Midlands based light van maker will be forced to close down in “days rather than weeks” unless they receive a £30 million loan from the UK government loan. Company management at LDV insists that there are no funds available to keep the business afloat.

LDV who have failed to show a profit since 2004have been competing against Ford’s Transit van since their founding and have come out bruised and battered every year. Like a Rocky Bilbao of the van world they have always come back for more punishment, but with the news that the number of new vans registered in 2008 down more than forty percent to 4,580 in 2008, it looks like the knock- out punch is not far way. .

LDV’s original parent, Leyland DAF, an Anglo-Dutch joint venture, was bought over by US Investment Company Sun Capital, only to be sold on to Gaz of Russia in 2006 for some £50 million.

The company employs around 850 people at their Birmingham plant, where production has been suspended since December 2008, after van sales crashed following a slump in the construction industry. Unfortunately the company’s hopes that a sudden and dramatic increase in demand for LDV vans has not transpired and they now seem unlikely to ever resume production.

Another rumour that looks likely to be proved to be fact is the Vodafone Plc, the world’s largest mobile-phone company, seems likely to cut hundreds of jobs in their U.K. outlets. The move is designed to reduce costs and protect earnings during the current economic slowdown. Until an official announcement is made, Vodafone shares remained less unchanged at 26.2 pence.

Vodafone have not enjoyed a good year, their shares declining 22 percent in 2008.

Signs are that even the defence industry is suffering as part of the recession. Another British standard, Rolls-Royce who is the world’s second largest aircraft engines producer saw their shares drop 5.4 per cent (14 pence to 278 pence.) BAE Systems Plc, UK and Europe’s largest defense company also had a stock fall of 3.7 percent (13 pence to 390 pence.)

Britain’s largest state-controlled bank Royal Bank of Scotland, is reputed to be about to slash their running costs, principally by cutting back on investment banking operations. The bank also plans split its trading operations into two units over the next three to five years. One autonomous unit will cover the bank’s U.K. and other “core” businesses, whilst the other will control operations that are in the periphery of the RBOS s operation. A sign that this rumour may bear some credence was that the bank’s shares rallied 9.8 percent (two pence to 21.2.)

The world’s largest silver producer Fresnel Plc reported an 11 percent drop in full-year profit in 2008. The drop to $128 million was caused by increased production costs and losses on foreign exchange. The FTSE was unforgiving and Fresnillo’s shares dropped 5.6 percent (23 pence to 390)

Europe’s largest travel company TUI Travel Plc saw their shares fall 3.5 percent, (8.25 pence to 228) On the news that the company’s shipping line Hapag-Lloyd shipping line, is proving hard to sell and may need to be revalued.

On the up were Prudential Plc, U.K.’s second-largest insurer who gained 1.3 percent ( 3.75 pence to 288.75) Another insurer showing a slight rise were the Friends Provident Plc, who added 1.6 pence, or 2.2 percent, to 75.2.

Material supplier to restaurants and offices, Bunzl Plc, announced yesterday that their full-year profit had risen by nine percent in 2008 due to successful acquisitions in Brazil, the U.K. and Spain. On the news Bunzl shares rose by 1.1 percent, ( six pence to 544) .

The FTSE 250 index dropped by 1.42% or 83.93 points to 5,835.41 while the FTSE 100 finished the session down 0.77 per cent, or 29.74 points at 3,820.99

The pound rose to the highest level in more than a week against the dollar as speculation the U.S. government will take larger stakes in banks to shore up the financial system.

Pound/US dollar 1.4536

Pound/Euro 1.370

Pound/Japanese Yen 139.23

Pound/Swiss Franc 1.6833

Wall Street shares had a very poor day, caused by continued uncertainty around the banks. The Dow Jones Average dropped 226 points to close at 8149.03. Nasdaq fell 53.51 to 1387.22.

Gold’s rally appeared to be slowing down on Monday surging above the $1,000 per ounce level on Friday, dipping to $991.

Asian stocks fell sharply on Tuesday amid renewed fears over the health of the global financial sector and after US stocks hit a near 12-year low.

Japan’s Nikkei index closed down 1.46%, the Hong Kong index closed down 2.9% and the Shanghai index fell 4.3%.

Most Asian indexes had risen on Monday on hopes the US government was to increase its stake in Citigroup.

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Tags: British Economy, Credit Crunch, Employment, Finance, Financial News, LDV, Recession, Unemployment

The need to adopt a unified global solution to overcome the ever unraveling worldwide financial crisis was the common message passed on by leaders of the major European economies at a meeting held in Berlin over the weekend, attended by UK Prime Minister Gordon Brown. .

German Chancellor Angela Merkel who hosted the meeting reiterated the fact that the World faced an “extraordinary international crisis”. Gordon Brown, in his speech, once again warned against reverting to protectionism whilst combating difficult economic climate.

The meeting, held in Berlin, was a precursor to the next meeting of the group of major developed and developing countries in London on 2 April, The group, known as the G20 are a form of European think tank. Whose goal is correct the current wrongs within the European and global financial system?

A key player in G20 will be Nicolas Sarkozy. The French President who stated that the group stands to bear a “historical responsibility” in their drive to reform global finance.

“We have to succeed, because If we fail there will be no safety net,” said the President.

Gordon Brown stressed that there was a need to create an economy that is based on the “soundest principles”, saying the world needed a “global new deal”.

Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties.

Brown said leaders had agreed that the IMF needed access to at least $500bn (£348bn).

The subject of bankers bonuses was one of the “hot potatoes” at the meeting, with a consensus was reached that as well as greater supervision of all financial markets and instruments the need to reassess the issue of pay at finance firms was of great importance. The fact was acknowledged that 

Bankers’ bonuses have been inordinately high despite the bank’s poor profit performance.

Also over the weekend, Prime Minister Brown, in an uncharacteristic nostalgic mood, called for a return to more prudent lending by British banks

“We do want to see the reinvention of the traditional savings and mortgage bank in Britain, for loans to be made on prudent and careful terms, not just to people with large deposits, but to first-time buyers and those on middle and modest incomes,” said Gordon Brown referring to the banks erratic lending policies that were the principal causes of their profit meltdown

 ”We need to ensure that the U.K. banking system that emerges over the coming months is refocused on providing strong competitive banking for domestically focused businesses, including start-ups and entrepreneurs, as well as mortgages for those who want to buy a home,” Brown continued his comments in his interview published in  a leading UK tabloid. 

Looking forward, the Bank of England are expected this week to unveil plans to invest no less than one hundred billion pounds on assets designed to stimulate the flagging UK  economy.

In a similar mode, Alistair Darling, UK Chancellor of the Exchequer has insisted that the state owned Northern Rock Plc building society should expand their lending portfolio by fourteen billion pounds within the next few months.  The move, expected to be the first in a series, will be part of Brown and Darling’s seemingly unceasing efforts to kick start the UK economy.

The move to increase mortgage availability in the U.K. comes after many months of turmoil with an almost total freeze in credit for home owners. Northern Rock effectively ceased to issue new mortgages after its “hostile” nationalisation” twelve months ago.

As a sign that things remain less than rosy, Northern Rock  announced  that they  expects to report a loss of eight hundred  million pounds for the second half of 2008,  an increase of two hundred million from  the first half, largely due to increases in mortgage arrears.

In the US, chairman of the Federal Reserve Ben Bernanke is expected to face tough questions from the floor of the Congress on whether US Government policy makers are contemplating the option of nationalising the US banking system. Experts predict that Bernanke is likely to reply by stressing that that the US government is prepared to take whatever steps necessary to revive the economy. One of them may be a shift towards buying US Treasuries in an effort to lower long-term interest rates.

Continuing uncertainty caused shares to tumble on both sides of the Atlantic, with Bank of America Corp. falling more than 35 percent last week, and Citigroup Inc. declining by almost 45 percent to $1.95.  In the event of nationalisation, Bank of America and Citigroup are the most likely candidates, among the larger banks if even for a short time.

Bank of America CEO Kenneth Lewis said in a statement.

 ”We see no reason why a company that is profitable, with strong levels of capital and liquidity, and that continues to lend actively should be considered for nationalization,”

Both Bank of America and Citigroup have received billions of dollars in financial aid from the government.

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Tags: Angela Merkel, British Economy, Economics, Economy, Financial News, Gordon Brown, UK Banks, UK Recession

European bankers and finance ministers must have been laughing into their fettuccine at the recent G-7 conference in Rome. And what brought tears of laughter into their eyes? A statement made to the press by U.K’s. Chancellor of the Exchequer Alistair Darling saying that British banks are “best run” when in private hands and it would be better if they never came under state ownership.

The statement came as a reply to questions from the press in anticipation of an expected announcement from the Lloyds Banking Group regarding the fortunes of their recently acquired HBOS Plc, who have lost 10 billion pounds during trading in 2008.

Meanwhile indications remain strong that the light at the end of the tunnel remains the size of a pin head came as the Royal Bank of Scotland announced that they were about to embark on a massive efficiency drive that could see up to 20,000 jobs being cut worldwide, with more than two thousand in the UK.

RBOS, 68% taxpayer owned, is also due to officially report losses of up to £28billion, which makes for the biggest loss in UK corporate history, when it announces trading results for 2008 towards the end of February 26.

All in all it hasn’t been a great week for Government leaders with Prime Minister Gordon Brown’s already tarnished reputation as a financial guru being placed under further stress with a warning from leading UK businessman that the government will needs to borrow at least a further £100 billion to prevent the economy from spinning totally out of control.

This series of warnings expect to be further compounded when a report the Office of National Statistics is released towards the end of this week. The report is expected to state that tax revenues for 2008 will show a with a £65 billion deficit for 2008. With falls in comparative revenue especially low in November and December 2008, the picture for 2009 looks especially grim.

Economic outlooks predict that in order to keep pace with revenue deficits and injections of capital to keep state owned enterprises afloat, the UK Government will need to borrow close to £150 billion in 2009, almost £30 billion more than predicted by Chancellor Alistair Darling, with the same shortfall in tax revenue expectations occurring in 2010.

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Tags: Alastair Darling, Bank, Banking, British Economy, Economics, Economy, Financial News, Gordon Brown, Recession, UK Banks