Freezing Britain has to weigh up the costs.

January 8th, 2010 by tom | Filed under Central banks, Daily News, Energy Prices, Exchage Rate, Recession, Stocks and shares, UK Banks.

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While the UK and with it almost all of Western Europe and the West Coast of the US are caught in the grip of the longest running and most severe cold spell that it has seen for close to thirty years without a break in the foreseeable future, many analyst are now scratching their heads and asking themselves "what will this do to the price of oil?"

Since the weather began to turn incredibly difficult about a week ago the price of oil has risen steadily from the around $78 to $82 within the space of one week, the highest price it has been all of 2009, and to those of you who may have forgotten, sat on a low of $32 a barrel towards the end of December 2008. With the news that the major economies, and especially China, were starting to build up stockpiles of oil, hopes were that prices would begin to fall and settle around the ideal figure of between $68 to $72 a barrel.

Analysts fear that if the span weather persists, and predictions are that at least in the UK it could continue to the end of January, and the increase in demand could push the price up oil even further, as stocks diminish. Meanwhile leading bodies in UK industry bodies have asked head- teachers to minimize snow-linked school closures to reduce levels of absence from the workplace. Although 61 percent of 200 companies surveyed by the British Chambers of Commerce said less than one in 10 employees was absent, the Federation of Small Businesses warned that childcare-related absences following school closures would become a serious problem. The cold snap looks likely to cost the economy close to £700 million pounds a day, meaning total financial damage of £14.5 billion pounds if, as expected. The bad weather lasts a further three weeks.

As expected UK interest rates will remain unchanged at 0.5%, meaning that the cost of borrowing has remained at a record low since March 2009. Economist are not expecting to see a rates increase s in the near term, despite expectations that the UK will finally have exited recession in the last quarter of 2009.

Formula 1 boss, Bernie Ecclestone is looking to buy a Saab, not the car but the company, and intends to do so in partnership with the Luxembourg-based private investment company, Genii Capital, which recently invested in Renault’s Formula 1 team.

Ecclestone’s dramatic announcement came shortly after the deadline for expressions of interest in the company closed without any public bids.

As well as Ecclestone’s offer, a second bid s also emerged, from the Dutch sports car maker, Spyker Cars.

U.S. food giant Kraft has received a ticking off from the principal shareholder Warren Buffett who has also thrown a spanner in the works of their proposed transaction. The Buffett-owned holding company Berkshire Hathaway who Hold 9.4% of Kraft’s stock announced that they will be voting against it is the proposal to issue up to 370 million shares to facilitate the Cadbury deal.

A spokesman for Kraft reacted to Buffet’s statement by saying that "Mr. Buffett is our largest investor and one of the most respected investors in the world. We take his opinion very seriously. We agree Kraft shares are deeply undervalued. We would not do anything to hurt shareholder value and we intend to remain disciplined in this process." Shares fell 7 pence, or 0.9 percent, to 772 pence on trading.

In their annual Christmas trading statement, Majestic Wine announced a rise in sales of 11.7 percent between Nov. 3 and Jan. 4 in the UK, with champagne sales regaining their seasonal appeal over Christmas. While champagne sales grew 11 percent, fine wine sales climbed 30 percent and online trading rose by 20 percent.

Family-owned brewer Fuller Smith & Turner also managed to increase its profits, sales and dividend in the six months to September, largely bucking the trend prevalent in the brewery sector. With members of the controlling families owning more than half of the company equity and 60 percent of the voting rights, executive chairman Michael Turner pronounced the effect that company’s long-term, risk-averse strategy was paying dividends.

The FTSE 100 brought in the New Year and new decade by closing above 5,500 for the first time since the start of September 2008 – before the Lehman Brothers collapse, coming after a 22% rise over the whole of 2009 and a 53% rally from the low last March. The FTSE 100 closed on Tuesday on 5522.5.

Britain’s currency weakened possibly due to U.K. Business Secretary Peter Mandelson hints that the pound’s devaluation aided the economy in the recession.

Dollar 1,5967
Euro 1.1126

The U.K.’s largest home builder by market value Persimmon Plc has announced that they completed the sale of 8,976 new homes in 2009 with a total value of around £1.4 billion pounds. On the news their shares gained 1.2 percent, to 469 pence. Wolseley Plc, the world’s largest supplier of heating and plumbing gear seemed to be moving in a positive direction, with their shares added 4.7 percent, to 1,361 pence.

The Vodafone Group PLC expects to be able to offer Google Inc.’s Nexus One smart phone to its U.K. customers in the next few weeks, with their rivals reported to be already in advanced talks with the Internet giant about the device.

Vodafone, the world’s biggest mobile operator, is also in early discussions with Google about supporting the phone in France, Germany and Spain, a Vodafone spokesman told Dow Jones Newswires Wednesday, and hopes to offer it across the rest of Europe through the course of 2010.

JD Sports Fashion Plc, the U.K.’s second- largest sportswear chain said sales at stores rose 6.6 percent in the five weeks up to the Ist of January .2010. On the news their shares jumped 6.2 percent, to 550 pence.

Marks & Spencer Group on Wednesday reported a small increase in third-quarter sales, despite not slashing prices in the run-up to Christmas, as customers snapped up cashmere sweaters and clothing for kids. But the company cautioned that trading will remain challenging this year.

Group sales at the iconic British retailer rose 2.6% in the three months to Dec. 26. In the U.K. same-store sales rose 0.8%, with general merchandise up 1.2% and food up 0.4%. Underlying sales returned to growth for the first time in two years.

Still, the results missed the consensus forecast for a 1.2% increase in same-store sales, partly because this year’s trading period excluded the first day of the company’s post-Christmas sales, when it typically sees a surge in revenue. Online sales increased 32% and international sales climbed 6%

Britain’s Home Delivery Network said it would buy DHL’s UK parcel delivery operations, DHL Domestic, from Deutsche Post DHL (DPWGn.DE), growing its market share in a sector profiting from a boom in online shopping.

With many of the UK s leading retailers, among them John Lewis and Next reporting significant online growth, companies such as Home Delivery Network have felt the impact.

The parcel delivery company, headquartered in Merseyside, northwest England, said the combined businesses would have annual revenues of more than £600 million pounds, delivering over 180 million parcels a year, with a combined market share of 17 percent.

Britain’s currency recovered slightly over the last two days

Dollar 1,5992
Euro 1.1198

The FTSE100 finished trading on Thursday in a fairly static position at 5526.72 barely moving on the week’s trading.

On Wall Street, the Dow Jones Industrial Average closed on Thursday up a further 24 points to 10,607 while the NASDAQ also dropped 8 points to 2,300.71.

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