Iceland’s president has refused to sign a controversial bill to repay £3.1 billion previously promised to the UK and the Netherlands. The news came after Iceland’s President Olafur Ragnar Grimsson announced a change of a heart following public protest and instead the country will now hold a referendum on the bill, which was designed to compensate governments forced to bail out their savers with Icesave accounts following Iceland’s banking crisis.

Legislation to repay the money was approved by Iceland’s parliament in December, but the approval of the president is also required before it can be passed into law.

Things must be getting strained again between Alistair Darling and Gordon Brown who were reported to have contradicted each other once again and in public. The contradiction was on that hot potato over how to handle public spending. Darling was reported to have argued that revenue from stronger than expected growth should be used to cut borrowing in a bid to allay the concerns of bond market investors, while Brown was said to be of the view that strong recovery may help to sustain spending, warding off fears of significant cuts to public services. Government officials hastened to deny a split between Brown and the chancellor. But they would, wouldn’t they.

Kraft have announced that they expect to increase the cash proportion in their offer to Cadbury in an attempt to make their bid more attractive to shareholders. The cash will come from the sale of its North American pizza business, strangely enough bought by erstwhile takeover bid competitors, Nestle who paid over £2 billion for a slice (of the company) .Meanwhile and contrary to recent speculation, Nestle have announced that they do not intend to table a takeover bid for Cadbury,. The company having been linked to a possible offer following Kraft Food’s hostile bid for Cadbury that was announced in December.

As part of their new strategic review, the English Premier League is looking to increase its international reach by inviting companies to become an official technology partner, aimed at tapping global opportunities more successfully. With current sponsorship making up just five per cent of the Premier League’s one billion pounds annual turnover, from sponsors that including Nike, Lucozade, Wrigley, and EA Sports, Topps Merlin and Sporting iD and title sponsors Barclays Bank.

One of the companies brave enough to raise their prices to match the return of VAT to its previous 17.5 per cent rate are Apple, who have increased the prices of many products on the Apple Store, including Macs. On 1 Jan 2010 the VAT level in the UK returned to 17.5 per cent, up from the reduced rate of 15 per cent (VAT is the UK term for sales tax). The UK government temporarily reduced the rate of VAT during 2009 to add some life into the UK economy, and it was thought that many of the UK’s leading retailers would continue to subsidise the increase, at least for January.

However Apple’s move seems likely to prompt some discussion surrounding the pricing of Apple products in general, which has steadily increased in the UK over the last two years.

Encouraging evidence of better retail conditions with record sales over the Christmas and New Year period were provided by the John Lewis employee-owned department store and chain. The company reported sales strongly ahead of the last two years that in the five weeks to January 2. John Lewis’s performance offers hope to retailers as they begin to release figures on their trading in the crucial festive period on Tuesday. John Lewis said total sales rose 15.8 per cent in the five weeks to January 2, compared with the same period a year earlier, while sales based on stores open at least a year were up 12.7 per cent.

On the stock exchange, shares in partly-nationalised Royal Bank of Scotland rose 9.9%, helped by analyst’s predictions that the bank is liable to "outperform" in 2010.

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 chairman of the US Federal Reserve Ben Bernanke has blamed poor financial regulation for the financial crisis and defended the record of America’s central bank, whilst calling for urgent improvements to financial oversight to prevent a repeat of an economic storm that he said could ultimately prove to be "the worst in history".

In a recent speech, Mr Bernanke argued that low interest rates in the first five years of the new millennium were "appropriate" for the time and had not caused the "bubble" in US house prices. His reaction came after the Fed has recently come under criticism by certain US economists who argue that it kept rates too low for too long, encouraging an artificial property boom. The subsequent crash led to a surge in repossessions, leaving lenders with huge losses, causing a financial contagion that spread around the world.

On Wall Street, the Dow Jones Industrial Average closed on Tuesday up 144 points to 10,572, while the NASDAQ also rose 39 points to 2,308.71.

According to expert analysts, the US public pension system faces a higher-than-expected shortfall of more than $2,000 billion that will increase pressure on many states’ strained finances and crimp economic growth. Recent estimates of aggregate funding requirement of the US pension system have ranged between $400 billion and $500 billion, however recent speculation has concluded that public funds would need to find more than $2,000 billion to meet future pension obligation

Commodities prices are set to rise further this year as the global economy expands faster, according to an International Monetary Fund forecast, following the biggest annual price increase for raw materials in nearly four decades in 2009

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Tags: Alistair Darling, Apple, Apple Store, Bank, Banking, Barclays Bank, British Economy, British Pound, Cadbury, Credit Crunch, Currency, Dow Jones, EA Sports, Economy, English Premier League, Financial News, FTSE, Gordon Brown, House Prices, International Monetary Fund, John Lewis, Kraft, Lehman Brothers, Lucozade, Money, Money Markets, NASDAQ, Nestle, Nike, North American pizza, Olafur Ragnar Grimsson, Peter Mandelson, Recession, Retail, Royal Bank of Scotland, Sporting iD, Stock Markets, Stocks and shares, Topps Merlin, UK Banks, UK Economy, UK government, UK Recession, US Federal Reserve, Wall Street, Wrigley

The Treasury is looking at introducing tougher requirements on bankers’ pay disclosure than those proposed last week by Sir David Walker.

Alistair Darling, the chancellor, announced a formal consultation exercise on Monday on whether legislation should go further than the Walker review, which proposed that banks should disclose the numbers of employees earning above £1 million.

Treasury officials said there was a case for greater disclosure, for example starting at £750,000 and having narrower bands.

The news came as the chairman of the Financial Reporting Council; Sir David Hogg signalled that his review of broader corporate governance at UK listed companies, published on Tuesday, would be more far-reaching than Sir David’s recommendations on bank boards.

U.K. house prices rose for a fourth month in November as the shortage of homes for sale sustained the property market, according to industry sources.

The average cost of a home in England and Wales climbed 0.2 percent from October to 156,700 pounds, meaning that prices are down 11 percent from the 2007 peak. While U.K. mortgage data due today may show loan approvals at the highest level in 19 months in October, rising unemployment may curb house price increases next year. According to Bank of England Governor Mervyn King, the economy’s recovery from the longest recession on record isn’t “particularly strong.”

Dubai World, the investment company whose $59 billion of liabilities caused stock markets across the World some anxiety will ask all creditors for a “standstill” agreement as it negotiates to extend maturities according to Dubai’s Department of Finance. Reports are that the plan will not be acceptable to most investors and would be considered a default. Dubai, the second-biggest of seven states that make up the United Arab Emirates (UAE)., and its state-owned companies borrowed $80 billion to fund an economic boom and diversify its economy. The global credit crisis and a decline in property prices hurt companies like Dubai World as they struggled to raise loans and forced the emirate to turn for help to Abu Dhabi, UAE capital who hold 8 percent of the world’s oil reserves.

Barclays Bank will book a gain close to £1 billion more than expected on the sale of its asset management arm to BlackRock thanks to a 62 per cent rise in the US fund manager’s shares since the deal was struck. The UK bank on Tuesday completed the £9.1 billion sale of Barclays Global Investors (BGI) to BlackRock, which becomes the world’s biggest asset manager with more than $3,000 billion .Barclays has taken a 19.9 per cent stake in BlackRock as part of the cash-and-shares deal. The sale price was £6.2 billion higher than the value of BGI in the accounts of Barclays, and £900 million more than estimated when the deal was agreed in June.

Thomas Cook will refinance their £1.65 billion loan facilities by next summer but has no plans to use a rights issue, according to a leading company representative. The tour operator’s current facilities are due to expire in May 2011. The company has predicted that 2010 would be a tough trading year, and the refinancing plans were announced as Thomas Cook revealed that net debt had more than doubled from £292 million in 2008 to £675 million. Explanations were that the additional debt had come from completing its share buy-back programme, acquisitions and the need for increased working capital arising from late holiday bookings.

British Airways Plc has announced that they are to conduct a series of feasibility studies and tests to see if their planes can run on bio-fuels. The airline will run the trials in conjunction with Rolls-Royce. On that piece of good news for the environment, shares in BA shares gained 0.6 pence percent, to 193.8, while Rolls-Royce rose 0.9 pence to 476.4.

Cadbury Plc Chief Executive Officer’s Todd Stitzer has signaled his support for a possible bid by U.S. candy maker Hershey Co. in preference to the hostile bid from Kraft. Meanwhile JPMorgan Chase & Co. and Bank of America Corp. are being lined up to provide Hershey a further $7 billion in finance. Cadbury’s shares later advanced 3 pence to 806.

Drinks manufacturer C&C saw its share price jump almost 9 per cent yesterday on the back of an announcement that it is to acquire the British cider assets of Constellation Brands owners of the Gaymer Cider Company, the UK’s second largest cider manufacturer, for £45 million.

The transaction is expected to be completed by mid-January 2010, and will broaden C&C’s existing cider offering beyond Bulmers and Magners to include brands such as Blackthorn, Olde English as well as Gaymers.

Under the terms of the deal C&C will also acquire a cider production facility in Shepton Mallet, Somerset, and a distribution warehouse in Bristol. As well as strengthening its position in the UK cider market, the acquisition is expected to shift C&C’s focus away from on-trade sales towards the faster-growing off-trade distribution channel.

On the Foreign Currency exchanges, the Pound rose against the dollar, yen and Swiss Franc whilst falling slightly against the Euro,

• Pound/US dollar 1.6605
• Pound/Euro 1.1002
• Pound/Japanese Yen 144.5284
• Pound/Swiss Franc 1.6589

Fears of a further fall in share value on the FTSE 100 were dispelled as shares continued to recover, closing in Wednesday on 5312.77, up 67 points from the weekend.

US shares headed higher on Tuesday after a flurry of economic data pointed to a rebound in the economy Better reports on construction and housing suggested there was something to look forward to.

The housing figures, from the National Association of Realtors, provided the best hopes for growth, showing sales agreements 3.7% up on the month and 32% higher than this time last year.

The Dow Jones index closed up 126.66 points, or 1.2%, on Tuesday to reach 10,471.50 points, while the NASDAQ also rose, closing the day on 2175.8.

Australia’s central bank lifted interest rates for a third consecutive month on Tuesday amid signs that inflationary pressures were building in an economy expected to return to “trend” growth of 3.25 per cent next year. The 25 basis point rise to 3.75 per cent matches increases in the last two months and is part of the Reserve Bank of Australia’s strategy of weaning the economy off historically low interest rates. The benchmark rate fell to a 49-year low of 3 per cent earlier this year.

The continuing weakness of the US dollar has pushed up demand for gold to another record level. Gold struck £722.69 an ounce on the London Bullion Market, after striking historic peaks over recent weeks. The dollar index fell 0.8% against a number of currencies as early fears regarding the Dubai debt crisis continued to wane across international markets. Demand for gold has been fueled by moves by central banks to diversify assets.

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Tags: Alastair Darling, Bank of America Corp, Bank of England, Banking, Barclays Bank, Barclays Global Investors, BlackRock, Blackthorn, British Airways Plc, British Economy, British Pound, Bullion Market, Bulmers, C&C, Cadbury Plc, Dow Jones, Dubai World, Economy, Financial News, Gaymer Cider, JPMorgan Chase & Co., Magners, Mervyn King, Money, NASDAQ, National Association of Realtors, Olde English, Recession, Reserve Bank of Australia, Rolls-Royce, Shepton Mallet, Sir David Hogg, Sir David Walker, Stock Markets, Stocks and shares, Thomas Cook, Todd Stitzer, UAE, UK Banks, UK Economy, UK government, UK Recession, United Arab Emirates

Despite the recession that has gripped the UK for almost twelve months, and the less than buoyant year that preceded it, statistic produced by England’s Premier League football clubs show that despite it all, there will always be a place in their budget to follow their favorite club. Figures recently produced show that attendances are actually on the up since the start of the season, providing further evidence that the recession does not necessarily apply to soccer.

The first few weeks of the season has witnessed clubs managing to fill their stadiums to an average of 90 per cent stadium capacity, in line with previous seasons, while have actually succeeded in drawing larger crowds than season 2008/2009.

The increased attendance rates may largely be driven by the decision of most of the Premier League clubs to reduce season ticket prices, as a gesture to their loyal supporters. Reductions in income from this source have been more than offset by other revenue streams with the principal source of income for many clubs these days coming through sponsorship and global TV rights. Recent £20 million pound annual shirt sponsorship deals won by both Liverpool and Manchester United during the summer were achieved despite many of the large companies walking away from sponsorship deals. AIG, long term shirt sponsors for Manchester United were forced to wind up their shirt sponsorship deal at the end of this season, only to be rapidly replaced by American insurance giant Aon. Another sign of better times ahead was the recent agreement by Barclays Bank to continue to sponsor the Premier League until at least the end of the 2012/13 season.

The top Premier League clubs also draw considerable revenue taking part in the UEFA Champions League, where they can earn between £23 million to £46 million from the association’s broadcasting and marketing revenue pool depending on how far the go in the Champions League or Europa League.

The Premier League also succeeded in securing a 4 per cent increase in its UK broadcast rights value when it got British Sky Broadcasting to pay £1.6 billion for the rights to five out of six TV packages for the three years to 2012-13 with an increase in the value of its overseas rights for these seasons still being negotiated.

With these kinds of figures flying around it is little wonder that the leading Premier League clubs can afford to subsidize ticket prices and enjoy that special atmosphere of having a full stadium.

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Tags: AIG, Aon, Bank, Barclays, Barclays Bank, British Economy, Champions League, Credit Crunch, Economy, Europa League, Financial News, Liverpool, Manchester United, Money, Premier League, Premier League clubs, Premier League football, Recession, Retail, sponsorship, TV rights, UEFA, UEFA Champions League, UK Banks, UK Economy

All that money that went to prop up the UK banking system had to come from somewhere and it looks like public will be paying for it through a severely disabled health service. A recent report from the NHS Confederation predicts that health service will face the most severe and sustained financial shortfall in its history beginning in 2011
The report, to be published today will warn that limited government funding increases are likely be increasingly outstripped by rising costs within the health service, leaving the NHS to cope with budget reductions running between eight to ten billion pounds between 2011 and 2014. Something to look forward to! Confidence is returning to the domestic and commercial property markets, according to recent reports stating that the collapse in commercial property which began in mid 2007 has bottomed out and 2009 has already witnessed an increase in transactions as well as renewed investor interest.

On the domestic front, figures from the Royal Institution of Chartered Surveyors revealed that house prices fell in May at the slowest annual pace since November 2007, adding strength to other indicators that the UK housing market might be stabilising

On the business front, the UK’s second largest travel agency Thomas Cook, looks live they will be themselves seeking a safe haven together with Rewe, its main competitor based in Germany. The move came after the collapse of the Thomas Cook’s largest shareholder on Tuesday. The shareholder, Arcandor, who own 53% of Thomas Cook stock, filed for insolvency, in one of Europe’s largest corporate failures outwith the banking sector.

Lloyds Banking Group announced their plan to close up to 400 bank branches in England. The closures will likely include the 164 Cheltenham & Gloucester outlets which will disappear from the high streets in November. As a result of the closures, designed to improve efficiency and profitability, Lloyds will also cut 1,660 jobs before the end of the year. The FTSE liked the idea and the Lloyds’ shares rose by 3.1 percent to 63 pence.

Also on the up was Barclays Plc whose shares rose by 2.2 percent to 290 pence on speculation that US based investment banker BlackRock Inc. has valued Barclays’ fund business at $13 billion, and are on the verge of making a cash/stock offer.

On the day, FTSE 100 dropped less than a point to close on 4,404.79 while the FTSE 250 rose a conservative four points to close on 7,691.65
The pound advanced yesterday as UK housing data provided a further sign that the worst of the economic slowdown might be over.

Pound/US dollar 1.6344
Pound/Euro 1.1606
Pound/Japanese Yen 159.9017
Pound/Swiss Franc 1.7609

In the US, ten of the largest US banks made a firm declaration that they are ready and willing to repay some $68 billion of the government bail-out money they have received indicating a significant indication of how rapidly the financial crisis is easing.
Whilst welcoming the move, President Barack Obama suggested restraint stating that it shouldn’t be taken for granted that “our financial troubles are over”.

On the news the Dow Jones remained constant falling only 1.43 points to 8763.09, while the NASDAQ climbed 17.73 points to close on 1860.13

The Chrysler saga seems to be finally over after the US Supreme Court rejected a plea to block the sale of assets of the bankrupt company to Italian giant Fiat. The US government strongly in favour of the sale issued a statement applauding the decision.

On a more sinister note, crude oil for July continued their steady increase, rising by 1.9 percent to close on $69.40 on the New York Mercantile Exchange.

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Tags: Barclays Bank, British Economy, Financial News, Lloyds Banking Group, LloydsTSB, NHS, Thomas Cook Group Plc

The minor upturn that U.K. stocks had been experiencing over the last three days suffered a minor reverse yesterday. The fall was hastened by the announcement that the U.K.’s second later water utility company Severn Trent Plc announced that their income forecast for 2009 will be much lower than previously forecast.

Shares in Severn Trent dropped by 3.5 percent on this news, with rival utility suppliers falling under a similar spotlight. Those whose shares took a downturn included United Utilities Group Plc and Pennon Group Plc, both whose shares declined by more than 2.5 percent.

Reasons given for the downturn included falling commercial and domestic consumption.

Other stock values that fell on the U.K. stock market yesterday included:

AstraZeneca Plc who dropped by 3.9 percent (115 pence to 2,832) after the US drug maker was asked to strengthen warnings about potential side effects on its antipsychotic medicine Seroquel.

Property group Workspace who as their name suggests specialize in renting space to small businesses, announced the launch of an almost £90 million share issue on Tuesday. It was expected that the share issue would spark off a wave of cash calls as cash strapped property companies attempt to bolster their balance sheets.

Workspace announced that the five-for-one issue was fully underwritten and would allow the extension of a key August 2010 credit facility to November 2012.

Under terms of the deal, new shares will be offered to shareholders at 10 pence per share on the basis of five new ordinary shares for each existing share.

Workspace shares, which have fallen by 88 percent in the past 12 months, were trading 7.7 percent lower at 30 pence.

The star of the show yesterday on the FTSE was Barclays Bank whose shares rocketed by a massive 73 per cent yesterday. This dramatic surge in value came after the bank took the unprecedented steps in an open letter of reassuring investors and shareholders that the bunk would remain both well funded and profitable for the foreseeable future.

Chief executive John Varley and chairman Marcus Agius jointly announced that Barclays was on track to exceed 2008 market forecasts of GBP 5.3 billion and added that the bank had no need for government assistance.

Barclay’s shares immediately raised 37.5p to 88.7p by the close.

Other banks also rallied with Lloyds Banking Group up 32 per cent, (15.9p, to 65.2p), Royal Bank of Scotland rose 20 per cent, (2.4p to 14.5p) and HSBC also rose by around 20 per cent (25.5p to 541p.)

On the industrial front Charter International Plc rose by 5 percent (16.5 pence to 348.25.) Charter, Europe’s largest manufacturer of welding equipment announced that its annual profit was higher than previous estimates, largely due to cutting overheads, particularly work force at ESAB, their welding and cutting unit

The FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 The FTSE 100 finished the session 3.9 per cent, or 156.5 points, higher at 4,209.

Sterling continued to hold firm against the leading currencies:

Pound/US dollar 1.4267

Pound/Euro 1.0776

Pound/Japanese Yen 127.38
Wall Street shares advanced on Mondays trading largely on the announcement that pharmaceutical giant Pfizer planned acquisition of Wyeth, for a tidy $68 billion. The fact that a deal of this size can still go through even in the worst of recessions appeared to reassure investors and set trades rolling. Overall there was a mixed bag of news from companies. Downbeat comments from Caterpillar about the health of its business and warnings of substantial job cuts from Home Depot threw a wet blanket on earlier optimism.

The Dow Jones Industrial Average rose 38.47, or 0.48 per cent, to close at 8,116.03.

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Tags: AstraZeneca Plc, Barclays Bank, British Pound, Credit, Credit Crunch, Economics, Economy, Financial News, FTSE, Recession, Severn Trent Plc, UK Recession