Recent figures have shown that insurers paid out £650 million from 335,000 claims, with most of them were caused by the wintry weather in the UK this year. According to the Association of British Insurers (ABI), the biggest chunk of the payout was to motorists whose vehicles were damaged vehicles on the slippery roads during January, which was the eighth coldest month on record and the UK’s worst since 1987. The ABI went on to confirm most of the £650 million claims were from 18 December to 13 January when the number of homes, vehicles and businesses all experience damages as a result of the winter weather. Specifically, £395 million was paid out to motorists from 268,400 motor insurance claims.

A new round of tougher stress tests have been ordered by regulators for the UK banks to make sure that if a forecasted "double dip" in the UK economy should occur , they will be able to withstand it in better shape than they did in the " first dip." The banks will be required to prove that their "tier core one capital ratio" would be capable of remaining above the minimum four percent level even if the economy contracted an additional 2.3 percent. These figures were part of a projection provided by the Financial Services Authority said in their annual Financial Risk Outlook.

Official statistics revealed on Thursday that UK industrial output fell 0.9% in January, making for the first drop in five months. The news out a damper on speculation of continued expansion of industrial output, and put further strain on the pound which is still hovering around the $1.50 mark.

The British Property Federation (BPF) has warned against possible abuse of insolvency practices in Britain’s frail real estate market as profitable tenants seek to renegotiate leases signed in better economic times.

The industry body, representing blue chip landlords such as Land Securities and British Land, has condemned the trend. A spokesperson for the BPF explained their standpoint as follows. "Landlords are caught between rock and a hard place when it comes to bailing out occupiers at the expense of their shareholders or facing the prospect of empty space and the costs that come with it,"

BPF has called for tightening of insolvency rules that she said unfairly penalised property company shareholders, among them under fire pension funds, for badly negotiating leases.

Sterling continued to be in the doldrums, with the pound closing yesterday up slightly on $1.5123 while falling against the Euro to €1.1011.

On the FTSE, the star of the show was undoubtedly the Tullett Prebon Company. Tullett Prebon are an interdealer broker, whose shares rose by 25.7% as speculation mounted that the company was in the throes of talks regarding a possible sale of the company to with the Bank of China being marked as potential bidders.

UK equities continued to rally in midweek, despite the weaker-than-forecast manufacturing data. Investors appeared to be focusing their efforts on the financial and mining sectors.

The FTSE 100 index took on 23.0 points to close on 5617. 26 it’s highest level since June 2008, closing at 5,617.26.

The US government announced that they had recorded a budget deficit of $221 billion (£147.6 billion) in February, making for their largest monthly deficit in s history.

Figures from the US treasury now show that the United States total deficit since the beginning of the fiscal year which began in October 2009 now stands at $651.6 billion, putting it well on track to beat last year’s record annual budget deficit of $1.4 trillion, with Treasury Secretary Timothy Geithner calling the deficit "unsustainable".

On the Wall Street the Dow Jones Industrial Average dropped back a little, down 21 points to close on 10,566.95. The NASDAQ Composite was still climbing, rising just 9 points to close on 2,356.27

China’s exports jumped by 46% in February compared with a year ago, raising hopes of a strong recovery in global trade.

The increase was higher than analysts’ expectations of a rise of between 35% and 40%.

It is likely to increase pressure on the Chinese government to raise the value of the yuan, which the US in particular complains is undervalued.

China’s imports also rose strongly, increasing by 44.7% last month

Microsoft founder Bill Gates must have been feeling a little dizzy yesterday after it was announced that he had been knocked down from one of his many pedestals, This one was to second place in Forbes magazine’s billionaire’s list, and not by his close friend US investor Warren Buffet who was in third, but by Mexican telecom giant Carlos Slim, which made for the first time since 1994 that an American has not led the who has got the most cash rankings. Mr Slam’s fortune rose by $18.5 billion (£12.4 billion) from last year to $53.5 billion. The Gates fortune now totals $53 billion, while investment guru Buffet has fallen on hard times, now worth only $43 billion.

2009 was all in all a tough year for billionaires with 332 of them being reduced to being mere multi-millionaires, while around two hundred news ones being accepted to the club, according to the Forbes list.

In the UK, the sixth Duke of Westminster Gerald Grosvenor remained the wealthiest Briton with a net worth of $12 billion as he improved his finances by $1 billion despite the UK property slump. The improving health of the global economy meant that 55 countries were represented in the Forbes, among them China. In fact if you take in Hong Kong, the Chinese now account for 89 of the world’s billionaires, second only to the United States with 403 billionaires.

One or two of them must come from the Chinese automotive industry, which increase capacity at an alarming rate in order to meet demand. Changan Automobile, the 4th largest domestic producer by sales (and a strategic partner of Ford) announced 2009 total revenues up by 88.4%, with an almost two-thirds increase in total units sold. Announcing the figures, the company also said that they expect liberal government policies will continue to support industry growth at the present pace for the foreseeable and that facility expansion will likely continue. Changan is not alone in ramping up capacity, with the Chery Company announcing the launch of a new factory in Mongolia despite the fact that their new facilities in Wuhu and Dalian have not yet been completed. Chery are best known for their range of compact cars.

Signals from Beijing do seem to indicate that the automotive industry will continue to receive special support even as tightening measures are implemented broadly. In a newspaper interview yesterday, a spokesperson for the Ministry of Industry reaffirmed the Chinese government’s commitment to provide subsidies for green automotive technology to help achieved the official target of half a million green cars before 2013.

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Tags: Association of British Insurers, Bank, Bank of China, Banking, Bill Gates, British Economy, British Land, British Property Federation, Carlos Slim, Credit Crunch, Dow Jones, Economics, Economy, Financial News, FTSE, Insurance, Land Securities, Microsoft, Money, NASDAQ, Recession, Retail, Tullett Prebon Company, UK Banks, UK Economy, UK Recession, US Government, US Treasury, Wall Street, Warren Buffet

In an interview held over the weekend, chancellor of the Exchequer Alistair Darling predicted that should the Labour Party be re-elected in this year’s anticipated elections they will be prepared to tightly rein in spending and curb Government borrowing. The treasury chief warned that the UK has little option but reduce the massive budget deficit entailing making the toughest public spending cuts seen in 20 years.

Darling’s comments signaled a change in direction or a possible split in Labour’s election strategy as until recently Gordon Brown’s has pinned the bulk of his preliminary electoral campaign and its possible success on the need to support economic recovery, instead of reducing the country’s current £178-billion-pound deficit. The International Monetary Fund has forecast that the UK’s GDP deficit will peak this year at 13.2 percent.

To the chagrin of many, city bankers look likely to suffer minimal impact from the bonus super tax imposed on them by the government last month.

Most banks who were available for comment hinted they are preparing to absorb if not all at least part of the cost of 50 per cent tax by inflating their bonus pools, and are prepared to run the risk of irritating the government and even their own shareholders in order to keep their staff happy. The banks are unofficially conceding that dividends are likely to be hit by their capitulation, and they are already under pressure as regulators have pressurized banks to increase their capital holdings, which will have a consequent effect on their profit margins.

Meanwhile, the Association of British Insurers (ABI) has written a letter to the remuneration committee chairmen of the UK’s top 350 companies warning boards against paying big bonuses and keeping directors safe from tax increases. ABI are concerned that investors will lose out amid fears that banks will absorb the supertax on bonuses at the expense of dividends. Last year was marked by a number of cases of shareholders rebelling against companies’ plans.

With Christmas trading a fading memory, it has been reported that city analysts are taking a close look at Tesco and attempting to determine how much the extra £100 million pounds’ worth of loyalty vouchers given to customers affected their Christmas trading. Fears are that by Tesco’s inflating their Clubcard loyalty scheme they could have "artificially" inflated their UK sales figures for the period, with estimates that the extra vouchers could have added around 1.5% the supermarket chain’s UK turnover for the Christmas , which is due to be released on Tuesday.

The Crown Estate, owner of the UK’s coastal seabeds, have granted development rights to energy companies that will herald the largest wind energy project ever seen in the world.

The announcement has the potential to see an additional 32 GigaWatts (GW) of clean electricity feeding into the UK grid, on top of 8 GW from previous rounds. 32 GW will mean enough offshore wind energy to supply nearly all the homes in the UK, with projection that investment in UK offshore wind overall could be worth £75 billion and support up to 70,000 jobs by the year 2020.

A total of nine development zones, with a capacity of just over 25 GW, have been allocated to Ten European Companies following a competitive tender.

Plans are currently under approval by the UK Government to construct what will be the fastest railway in Europe. The multi billion pound project would see trains travelling from London to the West Midlands at 250 mph from a new station to be constructed in the capital.

Construction is scheduled to begin in 2017, and the first trains should toll out of London 2025, carrying more than a thousand passengers at a time. The project is expected to cost as much as £60 billion.

Taking a short term view, the UK is currently investigating a variety of options on how to deal with increasing stocks of swine flu vaccines, with the British public showing a lack of interest in taking advantage of the free injection. The department of health is looking at either renegotiating existing contracts with the drug companies, such as GlaxoSmithKline and Baxter International to reduce the consignments. Other last attractive options are to sell the vaccines on to other countries or simply give them away. France and Germany also intend to cancel millions of doses of the H1N1 vaccines because of oversupply.

All of the five UK mobile networks are now reported to be in talks with Google over plans to market their new Nexus One mobile phone. Vodafone are the first operator to officially announce that had sealed a deal to offer the device, while no official launch date has been set as yet. The remaining four UK mobile phone operators. While it is expected that the big four will be providing support and service for the Nexus One, Google will be marketing their new baby exclusively online.

A little reminder that the internet doesn’t yet rule all of the World came with the news that UK greeting cards company Clinton have reported a rise in sales of 3.5 percent on last year for the weeks approaching Christmas, with like-for-like sales in the 22 weeks to Jan. 2 rising. However this upturn in sales appeared to be a drop in the ocean as the company continues to experience difficult trading conditions and has closed 12 of their stores in the last six months.

The pound stuttered slightly above the dollar in pre-weekend trading, while sliding backwards against the Euro.

• Dollar 1.6025
• Euro 1.1116

As brokers set off home for the weekend in their snow ploughs and sleds, the FTSE 100 edged just 7.52 points higher to 5,534.24. For the week the index was up 2.4 per cent, making for the third straight weekly gain.

In the US official figures have shown the unemployment rate holding steady at 10% despite the fact that employers unexpectedly cut 85,000 jobs in December. The US Labor Department had initially estimated that 11,000 jobs were cut in November, but now says that the economy had in fact added 4,000 jobs.

Since the recession began in 2007, 7.2 million jobs have been lost in the US, with 4.2 million of them in 2009 alone.

The Dow Jones Industrial Average closed for the weekend still on the up, eleven points to 10,618 while the NASDAQ also jumped 17 points to close on 2,3170.71.

General Motors (GM) reluctantly advised that they have begun "winding down" process for Saab, whilst continuing efforts to find a buyer for their Swedish car-making subsidiary.

GM intends to organize an "orderly" winding down at Saab, which they expects to take several months. The US group also confirmed that they are continuing to evaluate the several proposals they had received to acquire Saab, including the one from Formula One boss Bernie Ecclestone.

With the news that the exports had risen by 17.7% in December, China now claims to have overtaken Germany to become the world’s largest exporter.

December’s remarkable rise ends a 13-month decline in trade as a result of the global downturn.

Total Chinese exports for 2009 were £7.5 trillion, which marked a downturn in foreign of 13.9%, as the global economic downturn led to a fall in demand.

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Tags: Alastair Darling, Association of British Insurers, Bank, Banking, Baxter International, Bernie Ecclestone, British Economy, British Pound, budget cuts, Clinton Cards, Currency, Dow Jones, Economy, Financial News, FTSE, GDP, General Motors, GlaxoSmithKline, Google, Gordon Brown, H1N1, International Monetary Fund, Labour party, Money, Money Markets, NASDAQ, Nexus One, Recession, Retail, Saab, Stock Markets, Stocks and shares, super tax, swine flu, Tesco, The Crown Estate, UK Banks, UK Economy, UK government, UK Recession, US labor Department, Vodafone

According to a survey for the Confederation of British Industry (CBI), UK companies will be relying much less on banks for credit in the future, instead pinning their hopes funding from bonds and equities.

The survey showed that half of the companies will be looking to decrease financing from bank debt after the recession winds down. More than forty percent of the companies who took part in the survey said that they could see no change in bank funding.

The new Supreme Court is expected to rule on Wednesday on whether overdraft charges can be assessed for fairness under the Unfair Terms in Consumer Contract regulations. If the Supreme Court rules in favour of consumers, banks could be forced to pay out hundreds of millions of pounds if the overdraft charges levied were ruled to be unfair, and the public could seek to recoup losses through charges on current accounts and ATM withdrawals.

The British Bankers’ Association announced that the number of home purchase loans approved by banks in October was almost double that of a year ago, with 42,238 mortgage applications being approved. The figure was slightly higher than the 42,073 loans approved in September, while they almost double what they were from the same period on 2008. Net mortgage lending rose by £3.1 billion pounds in October, the same figure as in September.

Up to their knees in this week were the Association of British Insurers (ABI), who have received between 500 and 1,000 claims relating to recent flooding in Cumbria and southern Scotland where claims totaling up to £100 million have been recorded. At least 1,500 homes were affected by the floods, six bridges are reported to have collapsed and 5,000 households were left without power. The ABI announced that it was difficult to ascertain how many more claims could be expected. Insurers have said they might have to reconsider current arrangements, whereby all homes in the UK are offered flood insurance

Britain’s biggest mortgage lender, Lloyds Banking Group Plc is scheduled to publish results of a debt exchange. Meanwhile it was reported that the banking group is in talks with Execution Ltd. and a deal may result in the creation of a joint venture. Shares in Lloyds dropped 2 percent to 88.15 pence

Following its successful merger with Spain’s Iberia Lineas Aereas de Espana SA, British Airways Plc could revive plans for a tie-up with Australia’s Qantas Airways Ltd. Chief Executive Officer Willie Walsh has suggested that the Iberia model would allow Qantas to retain a separate brand and home base.

British Airways has agreed to combine with Iberia to boost its network amid a slump in international travel that contributed to a record first-half loss. The carrier abandoned merger talks with Qantas last year after the airlines failed to agree on who would control the new company. Shares in BA gained 1.6 pence, or 0.8 percent, to 202.6 pence.

Rumours abound that Nestle SA has thrown their cap into the ring in the who will buy Cadburys circus. The company is said to be weighing options would challenge Kraft Foods Inc.’s offer as well as a potential move by Hershey Co.

Cadburys are seemingly expecting a friendly bid from Hershey Co. if it can arrange the financing, with the company’s controlling trust supposed to be in favour of a $17 billion bid for Cadbury. The only thing that is certain is that Cadbury’s stock keeps on rising, up 1.2 percent to 800.5 pence.

Marks & Spencer Group Plc’s incoming chief executive officer Marc Bolland, has announced that he will focus on growth on foreign markets especially China, when he takes the reins next year. The markets remained indifferent, as shares dropped or 0.1 percent, to 380 pence.

The pound rose against the dollar, while falling against the Euro and the yen on continued concerns regarding the U.K. budget deficit.

• Pound/US dollar 1.6581
• Pound/Euro 1.1077
• Pound/Japanese Yen 146.6185
• Pound/Swiss Franc 1.6718

The FTSE 100 Index jumped by 82.55 points to 5,323.98, while the FTSE 250 rose by 14 points to close on 9,181.

In the US, the National Association of Realtors announced that sales of previously-owned US homes jumped by 10.1% in October as buyers rushed to take advantage of tax credits, which have now been extended.

Sales hit a seasonally adjusted annual rate of 6.1 million, up from a revised 5.54 million in September. First-time buyer tax credits had been due to expire at the end of November, but have been extended until 30 April.

The jump in October home sales was the biggest in almost three years.

The Dow Jones average took a turn for the better after the weekend, up 93 points to 10411.5 The NASDAQ rose seventeen points to finish up on 2163.73

Computer hardware giant Hewlett-Packard (HP) has announced a rise of 18% in profits for the third quarter, despite that the fact that their sales had fallen for the period. A spokesman for HP revealed that the company’s major cost-cutting initiatives had been the driving force in the £1.4 billion profit earned during the period. The firm has cut 6,700 jobs this year to trim costs.

The price of gold has hit a new all-time high, boosted by continued concerns about the weakening dollar.

Gold hit a record of $1,173.50 an ounce, up almost 2% from Friday close.

The expectation that US interest rates will remain low has put pressure on the dollar, making both gold and oil more attractive as an investment.

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Tags: ABI, Association of British Insurers, ATM withdrawals, Bank, Banking, British Airways Plc, British Bankers Association, British Economy, British Pound, Cadburys, CBI, Confederation of British Industry, Credit, Currency, Dow Jones, Economy, Execution Ltd, Financial News, FTSE, Gold, Hershey Co, Hewlett-Packard, HP, Iberia Lineas Aereas de Espana, Interest Rates, Kraft Foods, Lloyds Banking Group Plc, Marc Bolland, Marks & Spencer Group Plc, Money, Money Markets, NASDAQ, National Association of Realtors, Nestle SA, Oil, Qantas Airways Ltd, Stock Markets, Stocks and shares, Supreme Court, UK Banks, UK companies, UK Economy, UK government, UK Recession

Insurance companies in the UK are fearful that they risk under-capitalisation and will be forced to raise at least a further £50 billion in equity if legislation being debated by the European council is passed: rules that will lead to a dramatic increase in premium rates.

Leading figures in the UK industry, as well as representatives of the Association of British Insurers (ABI) trade body, have written a strong letter to UK Chancellor of the Exchequer warning that the extreme measures proposed could destabilise the industry, not only in the UK, but across all of Europe.

The letter urged Mr. Darling to intervene and to approach his colleagues at the European Commission over the threat, explaining that their new and unwelcome legislation might cause irreparable damage to the industry and its customers.

ABI director-general Stephen Haddrill explained in his letter to Alastair Darling that the new proposals require that insurance companies in the UK alone would need to increase their working capital and their reserves by £30 billion in order to reach a £70 billion minimum figure. Insurance companies and associations throughout Europe who are legislated by the European Commission would be required to raise similar amounts.

Haddrill went on to explain in his letter that in the UK, the impact of abiding by such legislation is like the equivalent of raising fresh equity capital that equals the industry’s total current market capitalization that is now more than £50 billion. If the legislation is passed, fears are that the insurance industry will be unable to raise the additional equity and this ultimately could lead to the collapse of the insurance industry, a situation that is untenable.

The new rules, laid out in the Commission’s “Solvency II” directive, are scheduled to come into force in 2012, with implementation standards due to be set by the end of 2010. The directive’s intention is to improve transparency in the insurance industry, as well as establishing standardised capital requirements for the insurance industry across the European Union.

However insurers in the UK and across mainland Europe are convinced that the regulators are inclined to place insurance companies in the same category as banks, even though the insurance industry has weathered the financial downturn fairly well.

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Tags: Alastair Darling, Association of British Insurers, British Economy, Chancellor of the Exchequer, Economics, Economy, European Commission, Financial News, Insurance, Insurance companies, Insurance premiums, Money, Stephen Haddrill, UK Economy, UK government

To fire off one of the greatest clichés of all time, desperate times call for desperate measures, or at least innovative ones. And the latest insurance scheme to be offered from next month to UK employees certainly falls into that category. The new scheme will allow workers to insure themselves against the possibility of having their salary cut and, in the event that the insurer meets all the terms of the policy, should the unthinkable happen, the insurance policy will make up the shortfall for a pre-agreed period. The policy also covers a holder who has been made redundant and succeeds in finding a job, but at a lower salary.

Unlike redundancy insurance, the policy only swings into action once the holder has found new employment, when it will pay out the difference between what the holder was being paid at his previous job and what he is being paid now. A spokesman for the insurance company behind the scheme pointed out that primarily among the principal benefits of the policy was that it allowed employees who had been made redundant to take a job on a lower salary that might offer retraining and a key to a second profession.

Employees who decide to take up the option, pay a premium that is calculated to cover what can be just a minor percentage of the salary gap up to the full amount. Under the terms of the policy, the holder can only be paid out if he was dismissed from his job.

The Association of British Insurers praised the new insurance scheme, stating that its launch demonstrated that the UK insurance industry continued its efforts to meet the demands of consumers, in spite of the ongoing market conditions.

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Tags: Association of British Insurers, British Economy, Credit Crunch, Economy, Employment, Insurance, Money, Recession, redundancy, redundancy insurance, UK Recession