Economists have warned that a rise in interest rates is likely before the end of the year in the event that the current spike in factory output prices continues. High petrol prices have caused manufacturers to absorb rising energy and raw materials prices, with the main being transferred to consumers, stoking fears of a rise in inflation. A five percent rise in year-on-year retail prices in March out-paced analyst expectations, causing them to refigure the probability that the Bank of England will raise rates earlier.

The Halifax Building Society, Group has released its house price index, showing that house prices rose by 1.1 percent in March, partially reversing the 1.6 percent decline in February. The average price for the first quarter of 2010 finished 0.6 percent higher than the same period in 2009. A spokesman for Halifax pointed out that the return of stamp duty on lower-priced homes as well at the severe weather had combined to create a negative effect on house prices in the first two months of the year.

The Society of Motor Manufacturers and Traders (SMMT) have revealed as increase in new car sales by 26.6 percent during March. March is typically a strong month for new car sales, regularly accounting for a fifth of annual sales in the UK due to the new registration plate. The SMMT predicts that the end of the government scrappage scheme will result in a nine per cent fall in total sales for the year. A spokesman for the SMMT, also pointed out that the UK motor industry has enjoyed a better than anticipated first quarter of 2010 while the coming months likely to remain challenging with registrations of new cars expected to dip. In a related statement, the SMMT recently revealed that the number of vehicles in the UK are at an all time low.

The remaining British motorists pulling will be helping to take part in another record breaking attempt from this week onwards, how much it costs too fill their tank. A spokesman for the AA has speculated that petrol prices are about to hit (and pass) the 120 pence a liter mark, with the previous high being 119.7 pence high seen in July 2008, when crude oil was coasting more than $147.00 a barrel..

Industry sources have rushed to point out that the increase is partly a result of soaring wholesale costs, with the price of oil hitting an 18-month high of $85 a barrel, a third less than it cost during the previous high, although the pound was much stronger them and the effects of Chancellor Alistair Darling’s latest duty rise in last month’s Budget of 1 pence a liter.

In April, 2009, petrol cost 92.44 pence a liter.

Postal operator UK Mail has announced that revenues of £388 million for the financial year up to March 31 despite a drop in demand for their services caused by the financial crisis. After the announcement UK Mail’s share price rose 21.5 pence to 333.5 pence, up 28 percent over the past year.

The number of passengers that flew with budget airline EasyJet has increased by 13.5% on a year-on-year basis. EasyJet flew 3.96 million passengers in March 2010, 13.5 percent more than the 3.49 million carried in March 2009 with rival budget airline Ryanair also reporting a 13 percent rise to 5.3 million for the same period. A spokesman for EasyJet projected that the company had benefited from the British Airways strike, as well recently increased its number of flights across Europe.

Marks & Spencer have reported a 5.1 percent fourth-quarter sales increase at the retailer, ahead of becoming non-executive chairman in May. The figures, reported by outgoing executive chairman Sir Stuart Rose, have surpassed analysts’ expectations with sales driven by strong performance in the group’s formalwear and knitwear divisions. Rose in a somewhat controversial final report called for "greater clarity on economic policy and how this will impact our customers individually" after the election.

Hamley’s, the UK historic toy retailer, took their first step in an ambitious drive into India, with the opening of their first store in Mumbai. The company’s £22 million expansion into Asia’s third-biggest economy will see 20 outlets open across the country in seven years. A spokesman for Hamley’s announced that India was a key part of Hamley’s effort to expand into emerging markets, as they were attracted to the growing population and the potential of a previously restricted retail sector.

Kraft Foods has thrown its support behind a national chain of Cadbury-branded cafés that will offer afternoon teas and a wide range if chocolate products service in a move to compete with the high street coffee shop chains.

Cadbury had been in discussions about the outlets long before Kraft made its hostile bid last September and signed off the deal at the end of January – just before the US company took control of the confectioner.

The US food-maker, who took over Cadburys this year, has now endorsed a 20-year licence to a group of retail entrepreneurs to set up and manage the high street chain, to be called Cadbury Cocoa House.

The group could open as many as 60 cafés in locations around the UK in the next three to five years, and has already begun to negotiate with landlords for the first sites in London, which could be running before the end of 2010.

Following a £13 million ($20 million) management buyout the British arm of Reader’s Digest was pulled out of bankruptcy on Friday, The news means that Reader’s Digest Association Ltd. will now continue to be published under its well-known name.

The U.K. subsidiary of Reader’s Digest took shelter in administration, a form of bankruptcy protection, on Feb. 17 because it had been unable to gain agreement on a plan to close a pension deficit. That decision paved the way for the U.S. parent company to emerge from Chapter 11 reorganization.

Analysts have confirmed that since the start of 2007, the pound has dropped about 25 percent on a trade-weighted basis, making exporters’ goods less expensive overseas. Bank of England policy makers are counting on sterling’s weakness to aid the recovery and reduce domestic spending at a time when the nation faces a record budget deficit.

The pound continues to retain its level above $1.50, closing at $1.5372, while falling back in value ever so slightly against the Euro at 1,1403.

U.K. stocks rose again before the close on Friday, making for the benchmark FTSE 100 Index’s sixth straight weekly gain, the longest stretch of such gains since 2005. The gains were on increased confidence, as the European Union agreed to a contingency rescue package to help Greece cut its budget deficit.

The FTSE 100 advanced 58.28, to 5,770.98, extending this week’s gain to 0.5 percent.

US stock prices dramatically reversed Thursday’s negative start

At the closing bell, the Dow Jones Industrial Average was up 70 points at 10,927.07 while the NASDAQ Composite was 18 points higher at 2,454.05.

Greek bonds have plunged this week on renewed concern that the country won’t succeed in cutting its budget deficit, the European Union’s largest. Leaders of the nations who share the euro last month endorsed a Franco-German proposal to help Greece with a mix of International Monetary Fund and bilateral loans at market interest rates that would be triggered only if Greece runs out of fund-raising options.

China on Saturday announced a rare deficit in its politically sensitive trade balance for March, the first in six years, bolstering Beijing’s argument that the value of its currency only has a limited impact on international trade flows.

News of the $7.2 billion deficit comes at a fortuitous time for Beijing, which is under pressure particularly from the US to allow the renminbi or the Chinese yuan to appreciate.

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Tags: Alistair Darling, Bank, Bank of England, Banking, British Economy, Cadbury, Credit Crunch, Currency, Dow Jones, EasyJet, Economics, Economy, Financial News, FTSE, Halifax building society, Hamley's, Interest Rates, International Monetary Fund, Kraft Foods, Marks & Spencer, Money, NASDAQ, petrol prices, Reader's Digest, Recession, Ryanair, Sir Stuart Rose, Society of Motor Manufacturers and Traders, Stock Markets, UK Banks, UK Economy, UK government, UK Mail, UK Recession

Records from the Registry Trust show that the value of County Court Judgments (CCJs) against businesses in England and Wales increased five percent to nearly £ 900 million pounds last year. The number of judgments against businesses increased by nine percent on 2008 to a record 207,100, the fifth year-on-year increase in a row. A spokesman for the Registry Trust said the figures reflected the worsening economy.

U.S. food group Kraft Foods the new owner of confectioner Cadbury, has told 3,600 Cadbury staff that they face a three-year pay freeze unless they leave the company’s final salary pension scheme. Kraft has discovered a clause in Cadbury’s pension trust deed preventing it from changing members’ benefits in any way deemed "unfair or materially detrimental". Kraft is not forbidden from closing the scheme, but if they decided to do so would have to pay the full costs involved. Cadbury’s pension deficit was reported to be around £258 million.

U.K. owner of train tracks and stations Network Rail Ltd have won a court order preventing four days of strikes that would have disrupted journeys for millions of travelers returning from their Easter break. A High Court judge ruled against the National Union of Rail, Maritime and Transport Workers (RMT). Network Rail’s lawyer argued that the RMT hadn’t polled its members accurately, with some workplaces returning more votes than the number of registered members. The union announced their intentions to hold another ballot. Network Rail, the state-owned operator of the U.K.’s rail infrastructure, carries about three and a half million passengers every day. Britain was facing its first national shutdown since 1994 after the RMT voted last month to strike in a dispute over job cuts and working terms after negotiations broke down. The strike was planned due to begin on the 6th of April.

Recent data released by one of the UK’s leading credit card payment acceptance processors shows payments made on credit and debit cards were up 7.1% in February compared to the same month last year. The increase follows on recent figures that show credit and debit card spending was up 3.6% in January 2010 in comparison the same month last year, while February 2010 showed an increase over the previous year, on a month-by-month basis, spending on debit and credit cards declined slightly by 2.5% from January, in line with expectations. The index is based on spending on all credit and debit cards across a wide range of retail sectors.

Marks & Spencer have posted another quarter of sales growth since the turn of the year. M&S’s statement showed a like-for-like sales increase that far outshone the previous quarter’s 0.8% rise with a 1.8% increase. Institutional and private investors have remained cautious on M&S due to economic uncertainty over the last few years, and while the previous quarter saw the first growth in two years, fear were that the Januarys snow may have hampered trading, although Marks and Spencer had managed to keep most of its stores open. M&S’s annual trading results due to be released in May are expected to show annual profits of £625 million, up from £604.4 million the previous year.

The children’s clothing and equipment retailer Mothercare grew total sales by 3.3 per cent in its fourth quarter, but did suffer a decline in UK like-for-like sales because of extreme weather conditions during January. Mothercare, which operates in 1,115 stores, announced in a recent trading update that the adverse weather in the 11 weeks to March 27 forced it to extend its winter sale, while managing to reverse some of the loss of turnover, through implement tight cost controls. Total UK sales in the quarter fell 0.9 per cent and like-for-like sales – sales in stores trading for at least a year, as well as sales in its online divisions – were down 1.6 per cent, weaker than analyst had anticipated.

The UK’s largest mobile phone companies may be forced to cut the price of their calls following new proposals unveiled by Ofcom, the UK telecoms regulator. The watchdog is proposing deep cuts in termination rates on the 02, Orange/T-Mobile, Vodafone and 3UK networks as it works to set the rules on mobile termination rates. By doing so, Ofcom stepped back from an initial proposal last year that could have seen consumers face higher monthly bills if telecoms companies had to cut or scrap charges for connecting calls to their networks. Mobile termination rates are the fees are paid by fixed-line and mobile operators when their customers make calls to people on other networks. The reform is a highly contentious issue among the bigger mobile operators, mainly because they earn more than £2 billion a year from the fees. Ofcom have set a price ceiling on the wholesale fees that mobile operators can levy on each other, as well as fixed-line phone companies led by BT Group

Recent data shows a rise to 57.2 in the UK’s Manufacturing Purchasing Managers Index in March. This positive figure confirms that the sector is continuing to expand and is an improvement on previous forecasts, which had called for a more modest increase February’s reading of 56.6, with expectations that it would be around the 56.8 mark. This improvement in the UK manufacturing sector follows both Germany and the Eurozone’s stronger reading in their March readings. All three economies posted their best numbers since the beginning of the recession. Expansion in the sector comes after a rebound in both consumer demand and export sales.

On the money markets, before the Easter break set in, the pound was beginning to show signs of benefitting from this positive data, despite hitting resistance levels against both the Euro and the US dollar, while the continuing uncertainty over European support for its weakest link pushed the euro as low as $1.3502 on Friday, its weakest level in over two weeks.

The pound fell back slightly, while remaining above the $1.50 mark at $1.5187, whilst and gaining against the Euro to close on 1.1269.

The FTSE was closed for the holiday weekend.

The US government did announce on Friday that the recovering economy had created 162,000 jobs in March last month, whilst the unemployment rate remained unchanged at 9.7 per cent. Temporary hiring by the US government for the public sector only accounted for some 48,000 new jobs in March, meaning the private sector has begun to create new job openings.

China has offered to accelerate free trade agreement talks with India in a bid to balance a burgeoning trade relationship between two of Asia’s largest economies that is heavily skewed in Beijing’s favour. Chinese officials expect trade between the two to rise to $60 billion, (£39.5 billion) in 2010, as the world’s two fast-growing large economies surge forward in their recovery from the global financial crisis. Indian officials described the trade deficit that last year was about $16 billion in Beijing’s favour as “politically unsustainable”, and continue to identify it as a point of friction in a relationship key to Asia’s peace and stability.

Commodities prices ended the week at the highest level since late 2008, with oil hitting $85 a barrel, bolstered by signs of strong manufacturing growth particularly in China and India

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Tags: 02, 3UK, Bank, Banking, British Economy, British Pound, Cadbury, County Court Judgments, Credit Crunch, Currency, Debt, Economics, Economy, Employment, Financial News, FTSE, Kraft Foods, Maritime and Transport Workers, Marks & Spencer, Money, Mothercare, National Union of Rail, Network Rail Ltd, Ofcom, Orange, Recession, Registry Trust, Retail, T-Mobile, UK Banks, UK business, UK Economy, UK government, UK Recession, Vodafone

That would make for very good news if only the Royal Bank of Scotland (RBS) hadn’t succeeded in making a loss of £24.3 billion shortfall in 2008. For 2009 RBS has announced losses for 2009 of just £3.6 billion after losing their struggle to recover billions of pounds of bad loans. Considering that city analysts had expected losses of around five billion, this is not a bad result for the bank whose Chief executive Stephen Hester said had "exceeded all the principal milestones" set for the first year of their turnaround plan.

Hester went on to add that t the group’s core business saw profits rise from £4.4 billion in 2008 to £8.3 billion last year, while bad debt increased to £13.9 billion from £7.7 billion in 2008. On an optimistic note, RBS announced positive signs of a peaking in the number of "toxic loans" being held by the bank, with the fourth quarter looking better for corporate clients.

Hester also revealed that in discussions with the Government about altering its lending commitments to "reflect the economic circumstances" over the next year, that they were very open to increasing its lending levels to

customers. However, strained economic environment still remained a factor that had caused many of the bank’s customers to reduce their borrowings.

As part of its bailout terms, the firm agreed to make an extra £25 billion available to customers in loans with £9 billion being allocated for mortgages and the remaining £16 billion for business lending.

Mr Hester summed up by saying that 2009 was "a year of substantial progress" for the bank.

On the controversial subject of bonuses, Hester requested that RBS should not be singled out and that the financial community as well as the UK public should recognise that that important staff would leave if pay was not competitive. Alistair Darling obviously agrees, because he has cleared the payment of £1.32 billion in bonuses to staff at the bank.

The announcement came just a few days after Stephen Hester opted not to take his £1.6 million bonus, with the CEO apparently still waiting to see if any of his colleagues at the bank will follow suit.

Also subject to change will be Northern Rock’s 100% savings deposit guarantee that is now to be lifted on the 24th May.

From that date, the UK government has decided that their deposits guarantee will no longer apply. The day has obviously been timed to specifically allow, savers exactly 12 weeks to decide what to do about any money that they have on deposit with the north east based building society, As was the case before the Rock began to crumble, savers who still have deposits worth up to £50,000 will be covered by the Financial Services Compensation Scheme. However those holding larger amounts will no longer enjoy the government’s protection. .

The decision may have come as result of complaints by other banks and building societies that the 100% guarantee has given an unfair advantage to the bank, with an increasing large number of deposit holders happy to deposit large amounts there, despite lower interest rates due to the 100% protection.

Leaders of the leading British unions have described a “still fragile” the labour market , despite the fact that recently released figures showed that unemployment surprisingly fell by 7,000 in the quarter to November 2009 to just below 2.5 million. Correspondingly e the number of people claiming jobseeker’s allowance was also around 15,000 lower in December at 1.6 million. However, the union leaders claim, thousands of job losses have only been announced in recent weeks, raising fears that unemployment will start to climb in the flat period that typically occurs in the run-up to a general election.

The TUC said it will be looking for a number of key signs in today’s figures, including a fall of more than 30,000 in unemployment and a reduction in the number of “involuntary” temporary workers. According to the TUC, the number of people taking temporary or part-time jobs because they can’t find permanent work has risen considerably. .

Operating profits at British Gas soared by 58% last year to £595 million, compared with £379 million in 2008. Its parent company Centrica said the figures beat the previous high of £573 million in 2007.

British Gas announced earlier this month it was reducing its gas prices by seven percent.

The U.K.’s second- largest department-store retailer Debenhams Plc, who recently acquired the Denmark based Magasin du Nord retail chain, are considering acquiring similar companies in the future. A spokesman for Debenhams stated that the company would like to become less reliant on the difficult home market. According to the British Retail Consortium Retail sales in the UK rose at the slowest pace in 15 years last month with London-based Debenhams, who operate 142 stores in the UK, obviously feeling the pinch. Until January’s acquisition of the six-store chain for £12.3 million pounds Debenhams’s overseas presence had been restricted to 11 stores in neighboring Ireland and about 50 franchised outlets.

On the foreign exchanges, the pound continued to fall, reaching $1.5266, whilst reaching .1245 against the Euro.

U.K. stocks dropped after a report showed confidence among U.S. consumers fell in February to the lowest level since April 2009. In London, the FTSE 100 dropped 64.69 points to close on 5278.83.

Overall, the FTSE 100 has gained around five percent since early February. as U.K. companies continue to confound the experts and expectations grow that the strengthening global economic recovery will signal further economic growth.

Confidence among U.S. consumers fell more than anticipated in February to the lowest level since April 2009 as the outlook for jobs diminished, a report showed today.

Federal Reserve chairman Ben Bernanke said there was a "nascent economic recovery" in a testimony before Congress.

US stocks jumped more than 1%, led by banks, as some had feared that the cost of borrowing would start rising soon.

Although the US economy is growing, some worries remain about its strength because unemployment remains high, meaning that the "Fed "has begun to gradually undo some of the emergency measures that they had implemented during the financial crisis.

The Dow Jones Industrial Average rose 47 points to close on 10,321.03 while the NASDAQ Composite also recovered by 25 points to close on 2,234.22

Ben Bernanke is taking a very close look at the role of Wall Street firms in helping Greece to cover up the extent of their financial troubles, with Goldman Sachs apparently under closer scrutiny than most.

Bernanke hinted that both the Fed and the US financial watchdog were "looking into a number of questions" related to banks’ arrangements with Greece, whilst stopping short on the question of whether an official inquiry was under way

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Tags: Alistair Darling, Bank, Banking, Ben Bernanke, British Economy, British Gas, British Pound, Centrica, Currency, Debenhams Plc, Dow Jones, Economics, Economy, Employment, Financial News, Financial Services Compensation Scheme, FTSE, Goldman Sachs, jobseeker’s allowance, Magasin du Nord, Money, Money Markets, NASDAQ, Northern Rock, RBS, Recession, Retail, Stephen Hester, Stock Markets, Stocks and shares, TUC, UK Banks, UK Economy, UK government, UK Recession, US economy

Pension funds in the western world have made am almost one trillion pound ($1.5 trillion) recovery in the first half of 2009. Whilst commendable, this figure represents less than a third of what these funds have lost in market value last year. These figures were released by the Organisation for Economic Co-operation and Development (OECD) who have been tracking the progress of pension funds since the outset of the global economic turndown. According to the OECD who is based in Paris, the recovery in pension fund performance has continued through September 30, 2009, on the back of strong equity returns. However it will take some time before the losses that occurred during 2008 are fully recouped. Most pension funds staged a partial recovery in the first half of 2009, generating investment returns of 3.5 percent in nominal terms. Membership of OECD is made up from mostly financially developed industrialized economies

The cost of car insurance appears to be dramatically on the rise, according to a recent survey from the Automobile Association (AA) in the third quarter of 2009, insuring a car rose at its fastest pace in 15 years, driven by a spate of rising personal injury claims and exacerbated by fraud. Statistics issued by the AA show that the average quoted premium for comprehensive motor cover rose 5.6 percent to £821 pounds during the three months to September 30, and by 14 percent from 2008.

As news filters through to the market that Virgin Money has applied for a banking license through the FSA (Financial Services Authority) it now appears more than likely that Virgin Money will make an offer for part or all of the Northern Rock business, with many analysts claiming that an informal agreement has already been struck with the UK government, and all that is required is tie up a few loose ends before the deal can be officially announced. Speculation in banking circles point to the fact that the UK government will need to request a high asking price for Northern Rock. Any sale at a "knock down" price is bound to infuriate taxpayers whose money was used to keep the Rock from sinking. On the other hand, Branson’s company is not liable to pay an inflated price for the bank. This could lead to an impasse that could see the operation stay with the UK government for the foreseeable future. Analysts state that selling Northern Rock would be in the best interests of both the government and UK taxpayers, but only in the medium to longer term. With an election looming, questions remain whether Gordon Brown’s government could allow themselves such a luxury.

Discount retailer, Matalan is reputed to be weighing up a £1.5 billion offer, after a number of companies expressed their interest in acquiring the business which remains privately owned. Among the parties interested are private equity group CVC. Matalan were taken private by John Hargreaves, their founder and controlling more than three years ago with indications having it that Hargreaves is neither interested in entering into an auction to sell his company or at any price.

The employee owned department store chain John Lewis, has seen online sales of its clothing range, take tremendous steps forwards since the company re- launched their updated website last month. With the launch came the release of a wide range of new fashion brands exclusive to the company. A leading executive from John Lewis Direct announced the company’s satisfaction with results achieved till now, that far surpassed their predictions. In general, sales of clothing online from the company were about three times higher than last year.

Mobile phone company Orange are due to begin marketing the iPhone to UK customers in Early November, a move that is bound to mark strong competition with O2 as the Xmas run up gets under way. Orange’s announcement last month that it had become the first UK network breaks O2’s exclusive hold on marketing the iPhone device, caused shock waves in the industry. The iPhone is expected to be launched by Orange on 10 November, just one day after O2’s two-year exclusive contract with Apple ends. Carphone Warehouse, which was the only independent retailer able to stock the iPhone when O2 had it to itself, is also expected to sell the phone on behalf of Orange. The iPhone is seen as the best touchscreen phone in the market, and has won a clutch of industry awards.

In the money markets, Sterling was back on a rise against the leading currencies with the notable exception of the Swiss franc.

• Pound/US dollar 1.6322
• Pound/Euro 1.10979
• Pound/Japanese Yen 150.2587
• Pound/Swiss Franc 1.6629

The FTSE 100 suffered a late reaction to the news that the UK economy was still in recession, falling 50.83 points to close on 5191.74 on Monday. The FTSE 250 was also down by 137.55 points to 9186.10.

The world’s largest construction equipment maker Caterpillar, has announced their intention to permanently cut 2,500 jobs in the US. The news was a contradiction to predictions that economic recovery was on its way for the construction industry in general and Caterpillar in particular, with the company undertaking to reinstate 550 workers that they had previously laid off. During the downturn, Caterpillar has cut about 34,000 jobs globally.

On Wall Street, the Dow Jones also continued to decline, down a further 104.22 points to 9867.96. At the same time, the NASDAQ Composite index appeared to be on a never ending but steady decline, yesterday down a further 12.62 points to close on 2141.85

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Tags: AA, Automobile Association, Bank, Banking, British Economy, British Pound, car insurance, Caterpillar, Currency, CVC, Dow Jones, Economics, Economy, Employment, Financial News, Financial Services Authority, FSA, FTSE, Gordon Brown, iPhone, John Hargreaves, John Lewis, Matalan, Mobile phone, Money, Money Markets, NASDAQ, Northern Rock, O2, OECD, Orange, Organisation for Economic Co-operation and Development, Pensions, Recession, Retail, Stock Markets, UK Banks, UK Economy, UK government, UK Recession, Virgin Money, Wall Street

Millions of members of the UK community of retirees are looking at the dim prospect of receiving a pension hike of less than ten pounds a month when the new rates kick-in in April 2010 The reason for the minimal increase is that UK inflation on which pension rises are calculated. Is considerably less than the minimum of 2.5%. government pledge to annually increase the state pension.

Instead, recently released figures from the Office for National Statistics show that UK retail prices index registered actually recorded a fall of 1.4% for the year ending September 2008. This means that both state and public sector pensions, both of which are calculated according to September inflation, will reach only the minimum figure of 2.5%.

A spokesman for the charity, Age Concern rushed to state that at £97.65 a week the basic state pension was seriously inadequate to guarantee the UK elderly a reasonable standard of living. Thy went on to insist that the current pension system is in need of urgent reform that will ensure older people can live off their pensions without having to apply for benefit top ups.

A monthly study has shown that living costs for pensioners are rising at a rate much higher than those for younger people, with the elderly spend a disproportionate amount on energy bills and food.

This daunting piece of news for UK retirees is only the latest in a line of unexpected pitfalls they will have to bear. Recent studies have shown that not only are many Britons are dramatically reshaping their retirement plans to match a new reality. A reality that depicts those who were due to retire in the near future, are putting off their retirement for as long as possible as the reality hits home that those who are retiring today will need to live off less than what represents half of the UK national average wage.

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Tags: Age Concern, British Economy, British Pound, Credit Crunch, Debt, Economy, Financial News, Government, Inflation, Interest Rates, Money, Money Management, Office for National Statistics, pensioners, Recession, Retail, retirees, Savings, state pensions, UK Economy, UK elderly, UK government, UK inflation

Despite the fact that the UK has officially been in recession for more than six month, till now it has managed to retain her highly important triple-A credit rating. As a general election begins to loom increasing larger on the horizon, a growing political consensus has begun to emerge on the need to cut public spending in order to ensure that The country’s financial credibility remains unscathed as the economy recovers gains momentum.

The rating agency Moody’s predicted on Wednesday that a downgrade was unlikely despite the fact that Britain’s budget deficit will soon have risen to be the highest among the World’s advanced economies.

The Bank of England will this week refrain from expanding its £175 billion stimulus package, as signs that the economy is emerging from recession, continue to gain ground and may have stopped contracting during the third quarter.

Although the UK equities market continues to recover, it was reported that it is doing so at too slow a pace to make sufficient inroads the aggregate shortfall of UK pension schemes which is currently approaching the £200 billion. According to data released by the Pension Protection Fund (PPF) from their 7800 Index, the total deficit of pension schemes with shortfalls stood at £194.6 billion at the end of August, up from £179 billion a month earlier. The PPF said that 85 per cent of all UK schemes were in deficit.

Boosted by higher production of cars and pharmaceuticals, U.K. manufacturing figures for July increased three times as much as had been forecasted, making for the highest increase in 18 months. According to figures released by the Office for National Statistics, production output rose 0.9 percent from the previous month, higher than the 0.3 percent increase that economists had predicted.

Shares in Sports Direct rose by 11.5 per cent to close on 129.85 pence after the company raised their full-year profit targets in the wake of a strong start to trading in the period. Sports Direct, controlled by Mike Ashley, owner of Newcastle United football club, said annual underlying earnings would be around £150 million, up from its previous forecasts of £140 million.

The unhealthy state of the UK construction was again in evidence with news that equipment hire company Ashtead’s underlying first-quarter pre-tax profit has fallen by 75 percent and would have been even worse as cost cutting efforts helped to maintain margins.

Ashtead, which rents industrial equipment from diggers to small tools in the UK as well as in the United States, softened the blow by stating that the company has typically made losses in the second half and that the board still expects full-year results to meet its previous expectations.

Underlying pre-tax profit for the fiscal first quarter ended July 31 fell to £8.8 million from £35.9 million in 2008, on rental revenue down 19 percent at £221.6 million. The company’s net debt fell to £873 million from £1.036 billion at the end of April.

Dow Jones & Co., have announced that they are to launch a new index that will cover small to medium sized U.K. companies designed to serve as a benchmark for their Newswires expanded small cap coverage.

Designed to measure the performance of small cap stocks, the Dow Jones U.K. Smaller Companies index will 188 companies listed in London. They will include stocks from the junior Alternative Investment Market and stocks listed in other indexes such as the FTSE 250 and FTSE Small Cap.

In a week of fairly frenzied takeover activity, the FTSE 100 index has risen above the 5,000 points mark, the highest it has been since October 2008.

The index closed up 57 points at 5004.30. Meanwhile the FTSE 250 continued its inexorable climb on Wednesday, up 101.72 points to close on 9,137.05.

The pound continued to rise against the dollar, whilst weakening further against the Euro and the Swiss Franc.

• Pound/US dollar 1.6547
• Pound/Euro 1.1373
• Pound/Japanese Yen 152.3058
• Pound/Swiss Franc 1.7238

Oil prices have risen again as a weak US dollar made the commodity cheaper against the other leading currencies.

Light sweet crude for October delivery rose 41 cents to $71.51 a barrel as OPEC oil ministers prepared to meet for a summit in Vienna.

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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

The baby boomers are retiring, and some of them, who placed all of their eggs in one basket, are retiring hurt.

The UK financial turn-down has altered the paths of most people’s lives in the country, but probably none more so, than baby boomers. This significant group of people, born in the five years after World War Two ended drove the UK economy forward in the seventies, eighties and nineties to reach the highest levels of prosperity and stability the Great Britain has ever known.

Encouraged by Margaret Thatcher, people were encouraged to acquire their own properties, mostly for a nest egg when retirement time came around, and with hopefully a little left over to provide for the children and grandchildren when the time came to depart this astral plane.

Unfortunately the property boom of the first decade of the 21st century shattered their plans. Many of them were hoping to downgrade a little, and while they could have earned a fabulous profit on the property they had bought in the seventies or eighties, they found it impossible to buy smaller properties at a representative value, because they were being snapped up by younger couples who would pay any price to get their feet on the bottom rung of the property ladder.

And when the bubble finally burst, many of them found them living in properties that were far too big for their needs, with all the attendant costs, and the nest egg that they had hoped to enjoy shrinking in value by an average of around £10,000 a year. Overall estimates are that properties owned by baby boomers have fallen in value by almost £30 billion in the last twelve months.

Surveys have shown the population sector that has placed too much reliance on their property asset to fund their retirement come from the East Midlands. However those hailing from the South and particularly London have spread their retirement portfolio.

Even more worrying is the fact that out or the entire UK population above the age of 25, have begun to look into alternative pension arrangements or investment opportunities.

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Tags: baby boomers, British Economy, Credit Crunch, East Midlands, Economics, Economy, Financial News, Margaret Thatcher, Money, Mortgage, Mortgages, property, Recession, UK Recession, World War Two

There are a very large number of UK employees who have been contributing to a private pension scheme partially funded by their employers, which they are assuming will provide them with either a very tasty lump sum, or a monthly stipend that will considerably boost their state pension. However people who are due to retire within the next five years are in for a not too pleasant surprise when they discover that the value of their pension has been eroded due to the economic ravages that the equities market has experienced in the last 24 months.

Some worrying information has emerged that the UK’s largest private sector retirement fund ,the BT Group Pension Scheme was reported to have only sufficient funds on hand to pay about 57 per cent of their pension obligations in the event, albeit unlikely, that the telecommunications company were to become insolvent. A spokesman for the company did hasten to announce that they are now taking every step possible to return this figure to a healthier level, as well as considerably cutting back on its future investments in equities for the future.

Huge companies, such as BT, who are faced with the awesome responsibility of handling huge pension funds consistently, took refuge in the FTSE as a hedge against inflation. The shift in investment strategy that they will now be making is significant and they will now have to find ways to make safer short term investments to keep their pensions funds at a higher level.

A spokesman for the British Telecom Pension Scheme (BTPS) announced their target is cut to 33 per cent of the fund’s equities portfolio and instead acquire assets which are low yielding and safer such as bonds that will move in line with liabilities.

The statement of investment principles applying to company managed pension funds explained the investment shift, noting: “The trustee acknowledges that, in particular, the level of investment in risky assets might, over the short to medium-term, influence the volatility of the funding level of the scheme, and hence may influence the volatility of the employer balancing contribution rate.”

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Tags: Company Pension, Minister for Pensions, Pension Scheme, Pensions, Private Pension

…a malfunctioning pension scheme
Something that was hovering in the air for a long time, and has been swept under the carpet a little as a result of the ongoing credit crunch is the fact that most UK citizens can afford to become old or worse still, to retire.

A recent report issued jointly by the Help the Aged and Age Concern charities has discovered that around two thirds of the baby boomers are no looking at a normal retirement as at best a forlorn hope, and have come to grips with the reality that their “golden years” will be a lot tougher than they worked for and in the majority of cases also deserved.

Families who have always been savers are seeing their nest eggs deflated by low interest rates, property prices devaluing at a pace and intensity that they may never recover from for at least the next decade or so. To make matters worse, their pension scheme has been knocked very hard by the decline in stock market share values, on which their pension plans were based.

Worrying but typical statistics that are coming out of the crisis, as unemployment begins to sore, is that percentage wise, the number of people in their fifties upwards who are being laid off is very high.

According to official figures released by the Office for National Statistics unemployment among people aged 50 or above has risen by 47% within the last twelve months, with the chances of these people returning to the job market looking extremely bleak for the foreseeable future. This means either retraining which takes time or money or digging into the already rapidly devaluing family next egg.

Those fortunate to stay in work face an uncertain future, especially those without a well funded pension plan. They will be forced to live the rest of their lives walking a financial tight rope, in fear of redundancy and hoping that they can continue to work for as long as possible, even well into the years when they should have been sitting in the park, feeding the pigeons.
While the pension shortfall problem exists all over the Western World, financial analysts state that it is especially acute in the UK.

A recent report from the National Institute of Economic and Social Research found that accumulated wealth, pension levels and assets if realized will still be too low on average to allow a quality of life equivalent to current standards for most UK retirees, and there is little that can be done to change the situation for most people who will reach retiral age over the next two decades.

For those of us who are in that trap it appears that the only solution appears to work longer. If the UK government would raise the retirement age to 70 for men and 65 for women it would be realistic and would allow an increase in retirement income by around 30%, most financial analysts estimate.

For those people who see that retirement is still a long way off, the news is that setting money aside for pensions should begin as early as possible, no matter how far off it seems.

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Tags: Pensions, Savings, Tax, Taxpayers, UK government, Unemployment