No matter what, I’m going down with you, Darling tells Gordon

Economist doesn’t often agree with U.K. Prime Minister Gordon Brown’s every decision, but on Friday there was a consensus that to keep Chancellor of the Exchequer Alistair Darling at the treasury was a wise one.

As part of a sweeping cabinet reshuffle brought about by revelations of expenses system abuse by those who are supposed to be leading the country out of recession, there had been strong speculation that Brown would replace Darling who has held down the post for two years, during which time the recession really took hold.
While changes at the treasury team still look likely, it seems that Darling is unlikely to be shuffled, as there may be no one else willing to take the job!

Another example of the “let them eat cake” theory adapted by big business in the UK is the disclosure that annual salaries of the country’s top executives rose by seven percent in 2008 last year to reach an average of £2.6 million. To the average British citizen, whose salary at best stayed the same, and whose cost of living rose as fast as his savings dissolved, this news will be especially galling.

Iceland agreed to take a $5.44 billion loan from the U.K. and the Netherlands to repay Icesave claims, bringing to a close a seven-month dispute and helping the island draw the next tranche of an international bailout.
The Atlantic island must pay back the loan over 15 years, according to a joint government statement sent by e-mail today. The U.K. will lend 2.35 billion pounds ($3.76 billion), the Treasury said, and the Dutch 1.2 billion euros (1.68 billion). It will be interest-only for the first seven years.

Thousands of U.K. and Dutch depositors risked losing their life savings after Landsbanki Islands hf, which offered the high-interest Icesave online accounts, collapsed with the rest of Iceland’s debt-reliant banking system in October, dragging the island’s currency down with it. The island is now relying on its IMF-led bailout to avert bankruptcy.

The FTSE 100 added 1.18 percent to 4,438.56 while the FTSE 250 gained 1.14 percent to 7,747.33.
Miner Rio Tinto added 10.33 percent to make it the session’s best performer on the 100, while Vedanta Resources (LSE: VED) was up 9.31 percent, Eurasian Natural Resources (LSE: ENRC) gained 7.31 percent and BHP was 6.8 percent higher.

ANOTHER DAY of political uncertainty helped to push sterling to a one-week low against the dollar, a two-week low against the euro and the yield on 10-year gilts 8 basis points up to 3.92 per cent – the highest since February.

The high drama in Westminster again left sterling gyrating as wildly as some ministerial careers. Sterling fell to $1.5959, compared with a seven-month high of $1.67 seen as recently as Wednesday. The pound was also hit later in the day by a sharp surge in the dollar in the wake of better-than-expected US jobs data

New York markets were slightly higher in early afternoon trade as the Dow Jones Industrial Average added 0.47 percent to 8,791.13 while at the same time, the Nasdaq Composite was up 0.09 percent to 1,851.66

Crude oil, grains, and most metals prices were all lower, but only after the price of crude oil went above $70 for the first time this year.

While markets in the Asia-Pacific region were mixed, more saw gains than suffered declines.
In Tokyo, the Nikkei 225 was up 1.02 percent to 9,768.01 while the Topix index added 0.61 percent to 916.56 and the Mothers market was 0.11 percent higher to 398.65.

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Tags: Alastair Darling, British Economy, Gordon Brown, Recession, Stocks and shares