Government may cut unemployment rates by exercising an alternative to redundancy

A scheme developed by the Confederation for British Industry (CBI) as an “alternative to redundancy” could stem job losses as UK unemployment figures hurtle headlong heads towards three million.

The CBI is urging the government to adopt their plan that is aimed mainly at companies that are feeling the effects of long term cash flow problems and may have difficulty in meeting their wage bill.

According the scheme, employees who were due to be made redundant , instead would take a form of unpaid holiday for up to six months, during which time they would be paid a weekly allowance, amounting to double of what the officially unemployed would receive with the payment co-funded by government and employers. During their unpaid leave, employees would be allowed to seek alternative employment and the company could exercise their option take them back when the six months ended or even earlier if business or cash flow improved.

Prime Minister Gordon Brown will be carrying a not too optimistic message with him when he attends the G8 summit to be held in Italy later this week. The message will state that excitement over the fledgling recovery of the global economy may have been premature. In a recent interview, Brown stated that the summit to be held in the picturesque setting of ’Aquila should be “a second wake-up call for the world economy According to a recent report that paints a cautious picture of the economic outlook, UK banks continue to increase investing in managing risk even as they look to make drastic cost cutting efforts.

The report also states that the majority of UK financial services companies do not expect to return to a growth situation for at least another nine months to a year, and are dug into a form of survival mode. Any investments being made are in risk controlling apparatus, whilst the one- time favourites, information technology and supply chain management are being put on the back burner for the foreseeable future.

Despite the introduction of the UK smoking ban, tax hikes and the overall state of the economy, bingo and casino operators Rank Group, remains optimistic about future. The company has stated their intention to convert some of their provincial casinos and bingo halls into modern leisure complexes, capable of competing against cinemas, pubs and restaurants. Some projects already under way include a new five million pound Mecca Bingo centre in Beeston and a Casino in Dundee.

French based water and environmental services company Veolia seem likely to put its UK water division up for sale to raise money to reduce debt.
Veolia who supply water to more than 3.3 million customers in the South East of England reportedly hope to raise around 400 million pounds million for a 48 percent stake in the group.

On the FTSE yesterday food makers proved the resilient forces with persistent talk of takeover interest in Cadbury saw their shares rise 1.8 percent to 527 pence, while SSL International also rose by 3.1 percent to 526 pence.

Manufactures of consumer goods were the investor’s favourites, as the commodity market continued to lose pace. Reckitt Benckiser was the day’s top performer, gaining 2.5 per cent to 2757 pence. The tobacco giants did well with Imperial Tobacco rising 1.5 per cent higher at 291 pence and British American Tobacco also rose by 1.8 per cent to close on 1741 pence.

The FTSE 100 Index dropped 41.37 points on the day’s trading close on 4,194.91. Also down was the FTSE 250, this time by 56.63 points as it closed on 7.320.35.

Sterling made a minor recovery against the leading currencies.

Pound/US dollar 1.6248
Pound/Euro 1.1632
Pound/Japanese Yen 154.8935
Pound/Swiss Franc 1.7649

Following its tie-up with Merrill Lynch, the Bank of America has become the world’s largest wealth manager overtaking UBS in the private banking league tables
BOA currently oversees more than $1,500 billion in assets, most of them in the US, underlining the scale the bank acquired from the Merrill Lynch merger.
A late rally on Wall Street turned US equities positive on Monday following the previous session’s heavy falls.

The index closed at the end of the day up a token 4.15 points to 8284.89, while the NASDAQ closed again down for the day, this time by 18.13 points on 1778.39

Oil prices are hovering at a five-week low of about $64 a barrel, amid fears that the global recovery looks like taking longer than thought a few weeks ago.
US crude fell $2.27 dollars to $64.46 a barrel in afternoon trade on Monday, after having dipped to $63.85, the lowest intraday price recorded since 28 May.
Brent crude oil also declined by $1.27 a barrel to $64.34

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Tags: Bank of America, British Economy, CBI, Financial News, G8 summit, Gordon Brown, Rank Group, UK unemployment figures