It came as no big surprise to anybody when the Bank of England (BOE) announced that they will be holding interest rates at their record low of 0.5%, and for the twelfth consecutive month.

The BOE’s decision gained a consensus of approval by UK economists, who pronounced, individually and collectively that rises in the cost of borrowing could set the UK’s fragile economic recovery back into the red.

The announcement that the bank will be standing firm on the amount of money that will be pumped into quantitative easing program (QE) programme was also met with a similar apathy.

BOE governor Mervyn King has long since made clear his opinion on increasing interest rates raising QE quotas, and all the rest of the UK’s financial programs by simply stating that that it was “far too soon” to make any changes to the status quo.

Sterling has now dropped in value for six consecutive trading days, with the bulk of opinion on the Pound’s increasingly weak position being because of speculation that the forthcoming general election is liable to see a hung parliament which translates to a government that will be too weak to mend the UK’s financial problems. Since the beginning of 2010, the pound has dropped by seven percent against the dollar, reaching a ten month low of $1.4783 on March the 2nd. The pound closed on Thursday on $1.5051 while the Euro was stabilising at 1.1078.

Financial Service Institute (FSA) chairman Lord Turner has voiced his opinion that that the size of banks was also not the main reason behind the economic turmoil, and even some of the UK’s smaller financial institutions could have been pronounced equally guilty of “over-exuberant lending” and taking “risky short-term wholesale deposits, Turner explained “Everyone was seduced by the long boom and were often led astray in the past by complicated mathematical rules. The Bank’s regulators were the ones who failed to notice the inherent weakness in that position.”

The FSA chairman also went on to explain that when the time comes to add up the cost of bailing out the financial services industry at the height of the global financial crisis may in the end turn out to be a lot less than first predicted.

“It is quite possible that the total overt costs of the UK’s big bank rescues may not exceed five-ten per cent of GDP," Turner predicted in a recent interview "and perhaps considerably less as indeed was the case in the Swedish banking crisis of the 1990s.” He summed up.

Recent research is pointing to a situation that increasingly adds weight to the theory that the UK’s property rental sector is heading towards a similar model of the mainland European countries of increasingly longer tenancy agreements.

According to one of the UKs largest letting agencies, during the last year and a half, a fairly dramatic increase in demand for rented accommodation has been observed, with potential tenants being especially interested in properties with long term tenure periods.

Reasons given for this new phenomena in property rental appears to be largely causes by increasing difficulties of young families to raise the new and higher deposit levels required to be granted a mortgage, while around a third confessed that they were unsure that the conditions were ripe to put their toe in the still turbulent waters of the UK property market. With almost 40 percent of potential first-time home buyers opting to remain tenants in the meantime, because of the current tough mortgage-lending criteria and 14% of those questioned said they preferred life as a tenant to that of a homeowner.

Home ownership in the UK has fallen by three percent since 2003 with the trend likely to continue. Several of the UK’s leading property management companies now believe that the UK Government now needs to ensure that renting a home offers the stability levels that are currently only afforded to home owners.

British Airways, once again under strike threat have dug in by saying that more than one thousand of the staff have volunteered to work as cabin crew if indeed the threatened strike goes ahead.

As a further back up, BA announced that they also intended to hire no less than 23 fully crewed planes from a leading European owned charter company. The company’s role will be to help run flights from Heathrow Airport should the strike threats eventually materialise.

The Society of Motor Manufacturers and Traders (SMMT) recently announced that new car sales in the UK increased by 26.4% in February compared with the same month in 2009, with the main push in demand coming because of the Government’s scrappage scheme.

Launched in May of last year in an effort to boost the ailing car industry, the £400 million initiative, which allowed owners of cars at least 10 years old would be offered a £2,000 discount off the price of a new vehicle, with half of the grant being provided by the UK Government and the other £1,000 coming from the lucky carmaker. Figures from the SMMT show that almost 20 percent of new car sales in February came a result of the scheme, which is due to be wound up by the end of March.

On the stock market, Barclays Plc’s Asian partner, the China Development Bank announced that they will be reviewing their “ties” with the bank, U.K.’s second-biggest. The announcement caused shares in Barclays to rise one percent, to 333.1 pence.

The U.K.’s third-largest supermarket owner J Sainsbury Plc has announced plans to expand their activities into non-food products. They will be marketing electronics, entertainment and sports equipment among others through their Web site. Despite the excitement, Sainsbury shares 0.2 percent, to close on 335.4 pence.

Michael Page International Plc, the U.K.’s second- largest recruitment company announced a drop in full-year pretax profit of no less than 85 percent to £21.1 million pounds. Despite the reversal, their shares climbed 6 1.7 percent, to close on 395 pence.

The benchmark FTSE 100 Index fell 0.1 percent, to close on Thursday at 5,527.16.

On Wall Street, for the Dow Jones Industrial Average the only way was up, this time rising 47.38 points to close on 10,444.14. The NASDAQ Composite also held its own, rising 11 points to close on 2,292.31.

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Tags: Bank of England, Barclays, BOE, British airways, Dow Jones, Financial Service Institute, FTSE, general election, Heathrow Airport, Interest Rates, Lord Turner, Mervyn King, Michael Page International Plc, NASDAQ, quantitative easing, Sainsbury, SMMT, Society of Motor Manufacturers and Traders, UK government, Wall Street

Chancellor of the Exchequer Alistair Darling now appears likely to give Lloyds the go ahead to test the seriousness of its ambitious £25 billion refinancing plan. Darling’s tacit agreement will be looked upon by city watchers as a definite indication that the chancellor could be prepared to release the bank from its obligations to the government’s toxic asset insurance scheme. It would appear that Darling has concluded that Lloyds’ plan to bring in more private capital is in the public interest. However it would appear that his final decision will only be positive when he is convinced that the market is ready for such a bold initiative. Darling is expected to announce his decision to the Lloyds at the early part of next week. The move will mean that the bank can then begin to appoint underwriters and test the market. Only then will Darling make the final decision and may even withdraw approval for the plan if he concludes the move carries to many risks for the already under siege UK taxpayer.

As expected, the European Union (EU) has approved plans for nationalized bank Northern Rock to be split into two parts, a move that is expected to pave the way for a partial sale of the bank.

One half of the bank, known as the "good" bank, would trade as retail bank holding deposits including some of the Rock’s existing mortgages, as well as lending money to consumers only.

The toxic side of the bank will remain in government hands, whose unenviable task it would be to attempt to salvage as much as the taxpayer’s money tied up there. The chancellor has ruled out the possibility of completing the sale of Northern Rock before the general election, in spite of winning approval from Brussels.

Meanwhile Spanish banking giants Santander continue to clean up on the UK high street. The bank announced that profits during the first nine months of the year for its UK banks have risen by more than a third.

Abbey, Alliance & Leicester and Bradford & Bingley banks, owned by Santander announced a £1.2 billion profit, up 38% from the same period in 2008.

Debt laden bus and rail operator National Express has wound up their discussions with rival Stagecoach regarding a possible merger. Instead they will press ahead with their plans to mount a rights issue to re-finance the company. Yesterday’s announcement follows weeks of speculation over a possible tie-up between the groups that would have created a transport giant with an estimated worth of £1.7 billion.

Oil and gas supply group BG, announced on Wednesday that their post-tax profits for the third quarter had fallen 39 per cent to £474 million from last year’s £777 million. A spokesman for the company said that the fall in gas and oil prices had been partially offset by advance sales of liquefied natural gas at advantageous prices. Although natural gas has rallied since early September, it had not done as well as crude oil during continued signs of economic recovery.

Sterling continued to rise in value yesterday against the dollar, while rising slightly against the Euro.

• Pound/US dollar 1.6393
• Pound/Euro 1.1131
• Pound/Japanese Yen 148.0908
• Pound/Swiss Franc 1.6804

London’s FTSE 100 dropped 2.32% or 120.55 points to close on 5080.42. The FTSE 250 plummeted a further 3.19% percent yesterday, down 291.78 points to close on 8849.50

For the first time in half a year, sales of new homes in the US fell as buyers opted for bargains on existing and foreclosed houses. Unexpectedly new home sales fell by 3.6 per cent from August to September, defying economists’ expectations that they would increase. Compared with a year ago, sales of new homes were down by 7.8 per cent, according to commerce department figures

On Wall Street, the Dow Jones Industrial Average closed down 1.21% after news that the annual rate of US new home sales had fallen unexpectedly in September.

At close of trading Wednesday it had fallen 119.48 points to 9762.69. The NASDAQ Composite index also took a tumble down 56.48 points to 2059.61.

It was announced on Wednesday that new orders for durable goods rebounded in September after slumping the prior month, offering another sign that manufacturing activity is stirring in the US

European shares also fell fairly sharply yesterday, largely due to disappointing company results and negative US economic data.

Norway has become the first European country to raise its interest rates since the beginning of the global financial crisis. The country’s central bank raised the cost of borrowing from 1.25% to 1.5% in a move that was widely expected. A spokesman for the bank stated that the increase was necessary due to increases in inflation and recent unemployment figures that were considerably lower than previously projected.

Oil prices dropped by more than $2 a barrel on Wednesday, as the latest US weekly inventories data continued to show supply outstripping demand. All in all the expected recovery in the dollar weighed on investor sentiment towards the commodities market.

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Tags: Abbey, Alastair Darling, Alliance & Leicester, Bank, Banking, BG, Bradford & Bingley, British Economy, British Pound, Chancellor of the Exchequer, Currency, Current Account, Darling, Dow Jones, Economy, Employment, Financial News, FTSE, gas, llo, Lloyds, Lloyds Banking Group, Money, Money Markets, Mortgage, NASDAQ, National Express, Northern Rock, Oil, Recession, Retail, Santander, Savings, Stagecoach, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unemployment, Wall Street

In an increasing trend that takes economics back to the eighteenth century, it appears that manufactures of goods that can be described as innovative or even slightly out of the mould are finding it more difficult to find bank financing to support research and development than companies whose product ranges are more conservative.

This disturbing piece of news comes as a result of a survey published by EEF, the UK manufacturers’ organisation. Based on a survey taken from more than 200 British companies, the EEF discovered that a lack of understanding in the financial sector of why certain manufacturing sectors needed to invest considerable sums of money in research and development, that in turn fostered innovation in product design as well as production methods.

The report divulges that around 40% of UK companies find it difficult, if not impossible, to be awarded finance, with the situation worsening over the last twelve months. The reasons given for this new slant in bank thinking, according to the EEF, are that many of the innovations that have been carried out during the financial downturn could be deemed as intangible. That means that the companies involved did not invest in tangible assets such as machinery and raw materials, but instead invested capital in improving their existing framework in such areas as systems management, sales and marketing and improved logistics. These are areas that in the eyes of banker should be financed by the company internally. The only way that the banks were interested in lending money to improve stability within a company or to finance research and development were if the owners or directors were prepared to personally guarantee any loans.

The EEF report wound up by recommending that the UK government’s mechanisms for supporting innovation be concentrated into a single entity, that would combine such schemes as regional venture capital funding, enterprise capital funds, innovation investment funds and research and development grants with considerably less dependence on commercial banks.

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Tags: Bank, Banking, British Economy, Credit Crunch, Debt, Economics, Economy, EEF, Financial News, Innovation, Money, Recession, UK Banks, UK companies, UK Economy, UK government, UK manufacturers’ organisation, UK Recession

A leading and influential economic group has predicted that the UK economy did not grow in the third quarter of the year. Contrary to expectations as well as many other financial analysts’ forecasts, the National Institute of Economic and Social Research (NIESR) have suggested that gross domestic product (GDP) remained unchanged from July to September 2009. The majority of UK economists have predicted there would be growth in the three-month period, which would end the UK recession, while the NIESR stated that the reason why the UK economy’s failed to register any growth during the quarter was due to weak industrial production in August, especially in the oil industry. The official GDP figures for the third quarter are due to be released on 23 October.

According to market sources, the number of banks who are now prepared to lend for real estate investment has almost doubled over the past six months largely due to improvements and confidence as well as favourable funding conditions.

There are now more than twenty banking bodies reportedly prepared to lend more than £20 million at a time for real estate investments, while there are at least six banks willing to finance property deals of over £100 million. Apparently German banks continue to dominate the real estate investment funding sector, having ample access to funding whilst enjoying the benefits from devalued sterling. The growing numbers of lenders continue to indicate that the property market was opening up to increased activity after reaching a low point in the first half of 2009.

In a fairly drastic cost cutting move, British Airways (BA) have announced their plans to cut 1,700 jobs as well as plans to introduce a two-year pay freeze for cabin crew BA posted heavy losses for their 2008/2009 financial year and forecasts for 2009/2010 predict that their loss making will continue as global airlines continue to struggle. On the announcement, BA stock climbed 3.2 percent to 217 pence. Meanwhile stocks in Europe’s second largest discount airline EasyJet Plc, climbed by 2.4 percent, to 378.9 pence, as the company prepared to report their September passenger statistics.

The makers of Imperial Leather soap and Carex hand wash PZ Cussons announced that they were “cautiously optimistic” on its 2010 outlook as reported strong trading over the past three months. The company said turnover was in line with forecasts for the third quarter and that profits had increased in comparison with the corresponding period of last year.

London equity markets were stronger on Tuesday, despite some late caution as investors awaited details of US earnings season and the surprise announcement from Australia that they will be raising their interest rates

The FTSE 100 rose by 2.26 percent on yesterday’s trading, or 113.65 points to close on 5137.98. The FTSE 250 also continued to move steadily upwards, soaring 218.70 points to finish back over the 9,000 hurdle at 9201.23.

The pound seems to have a permanent stance below $1.60 mark, whilst remaining weak against the rest of the principal currencies.

• Pound/US dollar 1.5898
• Pound/Euro 1.10812
• Pound/Japanese Yen 141.2395
• Pound/Swiss Franc 1.6351

The Dow Jones index continued to recover from last week’s setbacks, rising yesterday by 131.5 points at 9,731.25. The NASDAQ index also followed suit jumping 35.42 points to finish on 2,103.57.

Australia became the first of the World’s leading industrialised nations n to raise interest rates, with its central bank increasing the official cash rate from 3 to 3.25 per cent. Glenn Stevens, governor of the Reserve Bank of Australia, said economic conditions in Australia had been “stronger than expected”, while measures of confidence had recovered allowing the country to rates from their 49-year low “emergency” rate.

The price of gold has hit a new all-time high of $1,043.77 an ounce after a decline in the dollar boosted the attractiveness of metals to investors. According to analysts, continuing concerns of higher inflation in the US as its economy recovers was an increased factor in lowering the price of the dollar, further boosting the price of gold

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Tags: BA, Bank, Banking, British airways, British Economy, British Pound, Carex, Credit Crunch, Currency, Dow Jones, EasyJet Plc, Economy, Financial News, FTSE, GDP, Glenn Stevens, Gold, gross domestic product, Imperial Leather, Investments, Money, Money Markets, NASDAQ, National Institute of Economic and Social Research, NIESR, property market, PZ Cussons, Recession, Reserve Bank of Australia, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK Recession

Due to a combination of changing UK demographics and the dramatic financial downturn, it now appears that more than two-thirds of the baby boomers of the UK retirees are facing a future that will entail working past what was always the pre-determined retiral age (65 for men and 60 for women). And, the truth be told, no one is too unhappy about it. As the situation appears at the moment, many should-be retirees will either continue to work full or part-time and even some who have officially retired have decided to return to their workplace where, to their considerable surprise, they are being welcomed with open arms.

The reason for this shift is that UK employers are beginning to realize that the country is in the middle of an unprecedented demographic shift, with the numbers of young work age people dwindling, as the older people in the community are living longer and healthier lives and have gathered a life-time experience in the work place; experience which, for many years, might have been needlessly jettisoned. Nowadays, as Britain starts to see the beginning of its economic recovery, they might be sorely needed.

This fact has not gone unnoticed among those who were facing their retirement age with financial worries hanging over their heads, that of decreasing property values and decimated pension funds. The realization that people can now expect to live until at least 75 makes the idea of retiring at 65 seem a little premature. In the Britain of the 21st century people are marrying later and bringing children into the world in their thirties, which means that by the time their children become financially independent, retirement is already coming at them fairly fast, with no real time to accumulate the hundreds of thousands of pounds that they will need to supplement their state pension.

Currently the default retirement age (DRA) is becoming an increasing bone of much contention for workers and employees alike. As a result of pressure, the Government has brought forward to next year a review of the legislation which compels employers to forcibly retire people at the age of 65.

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Tags: baby boomers, British Economy, Credit Crunch, default retirement age, DRA, economic recovery, Economy, employees, Employment, Recession, retirement, UK Economy, UK employers, UK government, UK pensioners

Recent suggestions are that UK banks and building societies will come under increasing pressure to reduce their fixed mortgage rates after government bond markets began to increase rapidly. Analysts in the bond market have recommended that, as a result of the rise in the price of government bonds which is causing an attendant and converse relationship to yields, lower mortgage rates should automatically follow.

The feeling running high among UK mortgage brokers is that the banks and building societies are simply holding tight from reducing interest rates for as long as possible, in order to earn some extra profit on the backs of the hard-pressed British home owners who are carrying equity on their property. These large financial bodies are manipulating swap rates, used to set fixed-rate mortgages, and which currently account for about half of the mortgages held in the UK.

Swap rates define the cost incurred when a bank or building society alters or "swaps" from a floating interest rate to a fixed rate. Two years of fixed swap rates fell recently by 1.95 percent to a low of 0.785 percent, taking a plunge of nearly half a percentage point since the beginning of August – the lowest level since records began in 1985 – while five-year gilt yields fell to 2.43 percent. As government bond yields have fallen, it would follow that the swap rates should also have dropped, in line with them. This event is taking too long to happen, mortgage analysts claim, while adding that the banks have also shown a determined reluctance to pass over reduced borrowing costs to potential customers, as long as demand for mortgages outstrips supply.

Five-year swap rates also fell to 3.33 per cent, close to a drop of 0.5 percent. These falls were driven by forecasts that official interest rates would remain at historic lows of 0.5 per cent and speculation that the Bank of England might even introduce negative interest rates on commercial bank deposits.

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Tags: Bank of England, British Economy, British Pound, building societies, Credit, Debt, Economy, Financial News, government bonds, home owners, Interest Rates, Loans, Money, Money Management, mortgage brokers, mortgage rates, Mortgages, Swap rates, UK Banks, UK Economy, UK government

The British pound continues to fall sharply against the dollar as foreign exchange traders predict that the UK economy will continue to lag behind that of the US and the 16-nation Eurozone.

UK short-term bond yields have hit all-time lows as analysts begin to predict that the Bank of England may go as far as to introduce negative interest rates on its deposits in an attempt to encourage lending to the wider economy.

On that piece of stunning news, Two-year gilt yields, which have an inverse relationship with price, fell to 0.83 per cent – the lowest level since records began. Commercial banks have begun to transfer cash deposits at the Bank of England into gilts. Mervyn King, governor of the BoE has strongly hinted that he is considering charging banks for holding deposits at the central bank because he fears the quantitative easing initiative is being undermined by commercial bank’s lake of desire to circulate money into the economy through increased lending.

According to information issued by the Office for National Statistics (ONS) one in six UK families have at least one unemployed, making for the highest rate since 1999. The number of households where at least one person is unemployed reached 3.3 million in the second quarter of 2009, a rise of almost a quarter of a million from the previous year, with the north-east of England being the hardest hit.

Lord Mandelson has once again displayed his desire to put the UK taxpayer’s money where his mouth is, by announcing that he is willing to invest heavily to ensure commit taxpayers’ money to, in exchange the long-term survival of Vauxhall, about to be sold off by General Motors, the American car group who are in liquidation.

The Business Secretary has again reiterated his pledge of financial help, around £500 million to any one of the three parties interested in buying the UK branch, and save its 5,500 jobs.

The minister is insistent that the party that receives taxpayer funds will be the one that produces a business plan protecting most of the Vauxhall workforce for the long term.

On the FTSE yesterday, it was reported that the U.K.’s mortgage lender, Lloyds Banking Group Plc may have no option but to write off £500 million on loans made to Admiral Taverns Ltd. The news did not inspire the market and their stock fell 0.1 percent, to 107.8 pence.

The FTSE 100 had a flat day’s trading, falling 26.22 points to 4,890.58, while the FTSE 250 took a sudden reverse, dropping 77.60 points to close on 8,783.21

Sterling continued to weaken on Wednesday’s trading, on reports that it was being hindered by poor financial results in the UK.

• Pound/US dollar 1.6228
• Pound/Euro 1.1391
• Pound/Japanese Yen 151.8732
• Pound/Swiss Franc 1.7324

In the US, the latest indications that the state of the world’s largest economy is growing increasingly positive came with the news that sales of durable goods and new home sales both soared last month, Durable goods orders were lifted by the popularity of the government’s "cash for clunkers" car scrappage scheme, helping US car orders to rise 0.9%, in July.

At the same time, the annual rate of sales of new US homes rose 9.6% last month, the biggest rise in sales of new houses since September last year.

On Wall Street, markets drifted from the morning’s highs during the afternoon, with the Dow Jones Industrial Average and the NASDAQ Composite index both gaining a further 0.3 per cent to 9,539.29 and 2,024.23, respectively.

The Bank of Japan announced on Wednesday that the volume of their exports rose by 2.3 per cent in July from June as stronger demand from Asia and replenishment of inventories boosted manufacturers.

The data suggest that Japan may enjoy another quarter of respectable economic growth from July to September, after last week’s report that output rose at an annualized rate of 3.7 per cent in the April-June quarter

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Tags: Admiral Taverns Ltd, Bank of England, Bank of Japan, Banking, British Economy, British Pound, cash for clunkers, Dow Jones, Durable goods, Economy, Financial News, FTSE, General Motors, Global Credit Crisis, Lloyds, Loans, Lord Mandelson, Mervyn King, Money, Money Markets, NASDAQ, Office for National Statistics, Recession, Sterling, Stock Markets, UK Banks, UK Economy, UK Recession, Vauxhall, Wall Street

Although your bank manager will tell you that he or she is your friend, and that they have your best interest at heart when they cut your overdraft or credit card levels, don’t believe them. The truth is that banks thrive on people who are in financial trouble and know exactly how to play on your weakened situations to continue to feed their insatiable drive for profit.

More so, that when you go to them on your knees asking for just a little more leeway, they will already have made sure that you will find it difficult if not impossible to find alternative finance elsewhere, and will take full advantage by providing you with additional finance at horrendously high interest rates.

The UK public must surely have learned one expensive and painful lesson from the current financial crisis and that is to keep the credit under control, and to try to do so by achieving and maintaining a credit rating that is as pure and white as the first snows of winter.

And believe it or not, despite prodigious efforts by the FSA to prevent this from happening, lenders, be they banks, building societies or credit card companies, are pooling their efforts to make sure that people who have fallen into debt in the past will find it very difficult to improve their credit rating.

There is, and always has been, a great anomaly about how finance providers look upon a potential client. If someone has money, why should they need to borrow it? Yet in many cases it is sensible to borrow money, particularly for a mortgage, or to buy a new car or even some major household appliance. Banks carry out tens of thousands of transactions every month, although secured loans are much less attractive to them than unsecured loans, where they can make more than twice the interest.

The sad truth of the matter is that if people are in severe financial trouble the last place they should set foot in is a bank, building society or credit card company, except to ask for an extended agreement on the same terms. Under no circumstances should they agree to accept a new refinancing agreement which will certainly be on prohibitive terms.

Only time will cure most people’s problems, and eventually better times will come. In the meantime it is everyone’s interest to keep the head down, draw in the belt even tighter, and repair each credit status. Learning to be less credit dependent will be a challenge for all of us, but it will be justified by never having to bend your knees to your bank manager again.

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Tags: bank manager, Banking, Building Society, Credit, Credit Card, Credit Crunch, credit rating, Current Account, Debt, extended agreement, Finance, finance providers, financial trouble, FSA, Interest Rates, Loans, Money, Money Management, Mortgage, Mortgages, negative equity, Savings, UK Banks, UK Credit Cards, unsecured loans

It’s a well known fact, that for the good or the bad, what- ever the new trend that emanates from the United States eventually makes it to our shores. And the next best thing making its way to us low cost, privately owned rental housing. And it may be just what the British home seeker is looking for. Despite the fact that property prices have dropped by around 15% in the last two years, for many couples the hope of ever owning a property of their own is looking increasingly remote. Also many of the baby boomers who are interested in down- sizing are afraid to do so because they cannot guarantee themselves that they will find a suitable property to replace the one that they may be selling.

In the US these have become common problems, and are being dealt with through the launch of rental homes projects that are of a high standard , can be produced relatively cheaply through utilizing the most modern methods of mass production.

The projects are rising throughout the US as a result of the Obama government’s call for greater institutional investment in the residential market.

One of the first bodies to rise to the call were the Aviva insurance group, who are about to launch an investment fund , funded by up to £1 billion to construct build to rent residential property. The property management will be handled in partnership with CB Richard Ellis, a well known international property consultancy firm who are currently very active in similar projects in the UK as well as the US.

Already one venture in the UK is under scrutiny by the partners. The plan is to build 100 units in residential blocks, which will be situated in a yet to be named town in the south-east England. All that is known is the units will be situated near the large transport centers in an area where property prices are particularly high.

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Tags: Aviva insurance, Credit Crunch, Debt, Economics, Financial News, Money, Mortgage, Mortgages, Obama, Property Prices, rental housing, Richard Ellis

A recent worrying trend that has begun to raise it head no doubt as result of the ongoing financial downturn is company directors pledging their share equity in companies as loan security, not necessarily for loans pertaining to their business. In December 2008 , a co-founder of Carphone Warehouse, David Ross, , resigned his post as deputy chairman of the company when he was obliged to admit that he had used his equity to guarantee personal loans on commercial property without his partner’s knowledge.

Yesterday, the city brokerage Icap also revealed that their chief executive Michael Spencer had pledged more than 90 per cent of his company shareholding in the company as security for a loan. Spencer who founded and acts as managing partner for Icap made his announcement as an FSA imposed deadline draws nearer.

It was also announced that towards the end of 2008, that Spencer, had also pledged shares in stockbroker Numis,, where he acts as non-executive chairman and is a major shareholder, as collateral for a loan with HSBC.

The FSA recently announced an amnesty on such undeclared loans giving executives, till the 23rd January 2003 to come clean on any similar arrangements.

On the FTSE, equipment hire group Speedy Hire saw their shares plummet by almost fifty percent to 48.25 pence after issuing a profit warning, based on predictions that revenues for the fourth quarter would be much lower than a year earlier. Forecasts are that Speedy Hire’s pre-tax profits for the year will run around 36 million pounds, a fall of 25% from 2007. . The company said uncertainty in the credit markets had affected confidence in the construction market

Leisure group JD Wetherspoon has announced that it will be cancelling its dividend as well as halting short term expansion plans. These measures are being taken in an attempt to conserve capital holdings, largely due to difficulties in raising funds. A company representative admitted that, as a result of the continuing turmoil in the banking system, refinancing “cannot be taken for granted”.

Britain’s largest real estate investment trust, Land Securities (LAND.L), has announced their intention sell off certain assets as part of a cash-raising initiative. Rental revenues are considerably down as more and more clients are closing down their businesses. Retail clients who have gone into liquidation currently make up around five percent of the company’s annual turnover, a rise from three percent in September.

In banking circles, newly formed Lloyds Banking Group was seen to attempt to strengthen their efforts to fight off government ownership. Their efforts not to follow the Royal Bank of Scotland into government ownership, was strengthened by bond holders injecting capital.

Lloyds, currently 43.4 per cent owned by the taxpayer, will pay state owned banking group GBP 480 million ponds this year

Financial analysts said the deal was good for both Lloyds and its bond holders, while the markets showed their disagreements. Shares in the bank closed 34 per cent down at 65p. Small potatoes when compared to RBOS but still a cause for worry

In the United States, trade was slack with most of the interest focused on the Presidential inauguration. One interesting development was the announcement that Mexican tycoon e Carlos Slim Helu is to invest about £170 ($250m) in the New York Times Company.

Rumours have it that the telecommunications tycoon is poised to shore up the publisher’s ailing finances, with the company’s board expected to meet Wednesday to approve the deal. The terms of the deal would see Slim issued with preferred shares in the company in return for his investment.

Slim, the third richest man on the planet with a wealth of $49bn from telecommunications, retail, construction, banking, insurance, among others, bought a 6.4% stake in the New York Times Company in September 2008 for (£73m) $128m. The New York Times Company publishes the New York Times, the Boston Globe and a string of local newspapers,

As European markets opened, Britain’s FTSE 250 Index fell -64.96 (-1.06%) to 6,077.10o while the FTSE 100 FTSE 100 Index fell -31.06 (-0.76%) to 4,060.34
whilst, Germany’s DAX rose 1.12percent and France’s CAC-40 was up 1.1 percent.

U.S. stock futures suggested a weaker open on Wall Street. Dow futures were down 38 points, or 0.5 percent, at 8,205 and S&P500 futures fell 3.8, or 0.5 percent, to 844.80.

In Asia, financial issues sank. Sumitomo Mitsui Financial Group Inc. fell 3.8 percent, and Mizuho Financial Group Inc. dived 6.2 percent.

Shares of Toyota Motor Corp. bucked the trend, rising 2.3 percent as investors waited for the automaker to name a new leader, which it did after market close.

Akio Toyoda, the 52-year-old grandson of Toyota’s founder, was named to lead the company through its biggest crisis in history, which led to a 4-percent fall in global vehicles sales last year.

Sterling was stable against other major currencies early Tuesday with rates as follows

Pound/US dollar 1.37617
Pound/Euro 1.06785

Pound/Japanese Yen 123.466

Oil prices fell to near $34 a barrel Tuesday in Asia as traders sold the expiring front-month Nymex contract due to a lack of space at a key U.S. storage facility.

On the Asian front Japan’s Nikkei 225 stock average lost 2.3 percent to 8,065.79, paring losses in the afternoon after dipping under the key 8,000-level during the morning session.

Natural resource companies were among the hardest-hit after overnight declines in commodity prices. Australia’s BHP Billiton Ltd. plunged 4.7 percent, and Nippon Oil Corp., Japan’s biggest oil distributor, retreated 4.1 percent

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Tags: Bank, Banking, British Economy, British Pound, Carlos Slim Helu, Carphone Warehouse, David Ross, HSBC, JD Wetherspoon, Land Securities, Lloyds Banking Group, Money, Recession, Retail, Royal Bank of Scotland, Sumitomo Mitsui Financial Group