In one of the classic understatements of the year so far, new finance minister George Osborne has just announced his findings that the British economy is in a dire state and there will be difficult times ahead. Osborne’s revelation came as the government sat down to take action on tackling the record budget deficit. Osborne took up the role of Chancellor after the center-right Conservatives joined with the center-left Liberal Democrats to form the country’s first coalition government for more than half a century, as the Labour Government wound up 13 years rule.

Britain has barely limped out of the worst recession since World War Two, and the new government is under pressure to show their pre-election promises to reduce spending and raise taxes to cut a budget deficit running at more than 11 percent of GDP were not hollow. The coalition already pledged to significantly accelerate the reduction of the deficit in the next five years, cutting £6 billion pounds ($8.75 billion) from non-frontline public services during the current financial year. George Osborne is expected to unveil his emergency Budget on June 22 as the new coalition Government attempts to overcome the appalling state of the economy inherited from Labour.

Meanwhile on the home front, news from the Council of Mortgage Lenders (CML) is that mortgage borrowing by house buyers is on the increase, with the number of loans made to home buyers rising by 25% between February and March, to reach 45,000. First-time buyer borrowing rebounded faster than that by existing home owners, according to CML who also went on to warn that mortgage rationing might continue indefinitely unless the new government helped lenders raise finance.

The latest news on the small business front has shown decrease in UK business insolvencies last month. On a year to year basis, it was shown that

the total number of insolvencies fell by 15.1% in April compared with the same month last year, 2,274 in April 2009 down to 1,818 in April 2010.

Businesses that fell into the medium sized category were found to have suffered the most in April. Companies employing between fifty to hundred workers being the most vulnerable.

In a move that may indicate a thawing of hostilities between internet giant Google and the printed media – particularly Rupert Murdoch’s News Corp, Eric Schmidt, chief executive of Google, announced that Google were holding talks with Murdoch and other newspaper proprietors regarding running subscription services for their online sites. Murdoch has repeatedly criticized Google for undermining newspapers by allowing internet users too much access to their valuable news content. Late last year Murdoch went far as threatening to sue Google for including headlines from News International in its search results. Staring from June, the Times and Sunday Times are set to erect a pay wall limiting access to their online news sites to paying customers. The papers will also withdraw their articles from Google’s search engine

With annual results due to be issued before the weekend, mobile phone company Vodafone are expected to announce a 150 percent increase in profits, with analysts expecting pre-tax profits of around £10.4 billion for the year to the end of March. Vodafone’s profits for 2009 were just £4.1 billion, largely due to one of impairment of £5.9 billion pounds of impairment charges.

Reports are that the Spanish bank Santander are believed to have emerged as likely winners of the tender to take over the 318 Williams & Glyn-branded Royal Bank of Scotland (RBS) branches across England and Wales. Santander has apparently outbid Virgin, Spanish rival BBVA and Blackstone, with only National Australian Bank’s Clydesdale Bank arm still in the running. RBS is expected to make around £2 billion pounds from the successful completion of the sale.

Meanwhile credit card firm American Express has reportedly become the latest contender to enter into bidding for the payment processing arm of Royal Bank of Scotland. The partially state owned bank has been forced to sell of this division under European Commission rules governing state aid. The move by American Express, which has joined forces with private equity house Permira to table a bid in the £2.5 billion pound auction for RBS’s Global Merchant Services division, has been welcomed by RBS. Previously the bank had stated concerns over stand alone private equity buyers having sufficient experience to manage the business. With experience of processing payments of millions of customers in 130 countries, American Express could fit the bill and help RBS in their drive to expand in emerging markets,

Property development and investment giant, British Land, appears likely to take over the mantle as being the largest company in the field in the UK, leaving their bigger rival, Land Securities in their wake, when both companies announce full year results this week. British Land is expected to reveal that its net value of assets has increased by more than 20 percent over the past year to 490 pence a share, while Land Securities will announce that their shares have risen 16 percent increase in its net asset value over 690 pence a share.

Coming back down to earth with a thump will be British Airways who are widely expected to report losses of more than £600 million pounds when they reports their results on Friday. It is expected that results for the 12 months to the end of March will mark the airline’s worst ever financial performance, over a period in which it suffered from the effects of recession, strikes and bad weather. There are suggestions from senior staff that the company will not be able to survive any further blows. Analysts attending the shareholder’s conference will be keen to hear how chief executive Willie Walsh intends to explain the losses as well as the company’s ongoing dispute with cabin crews.

Pharmaceutical retailer and wholesaler Alliance Boots are expected to join the one billion pounds club on Monday. Alliance Boots, who returned to private ownership in 2007, are expected to announce a trading profit over the one billion pound by exceeding the 11.6 percent growth in 2009, when their profit was £953 million. By passing the one billion pound profit barrier Alliance Boots will become only the third retailer to do so in the history of UK retailing.

The euro has plummeted against the US dollar, falling below $1.22 for the first time since April 2006. The eurozone’s single currency fell more than 1.7% in afternoon trading in New York, to $1.216, before rallying.

The decline came after Germany announced plans to ban naked short-selling of shares from midnight local time on Tuesday. The single currency dropped by more than 2% against the yen on the news. Forex traders fear that the austerity measures being put in place in many eurozone countries will hit growth.

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Tags: Alliance Boots, American Express, Bank, Banking, BBVA, Blackstone, British airways, British Economy, British Land, Clydesdale, Council of Mortgage Lenders, Currency, Economics, Economy, Eric Schmidt, Financial News, George Osborne, Google, Government, Land Securities, Money, Money Management, Mortgages, News Corp, Recession, Retail, Royal Bank of Scotland, Santander, UK Banks, UK Economy, UK government, UK Recession, Vodafone, Willie Walsh

The Royal Bank of Scotland (RBS) has reported receiving five offers for their Williams & Glyn’s branch network. RBS were ordered to sell these branches as part of a European Commission state aid ruling in 2009, the business is valued at around £2 billion.

By Tuesday night’s deadline, speculations were that Santander, Virgin Money, National Australia Bank, BBVA and JC Flowers had all submitted bids, with Santander is widely believed to be the favourite bidder, with an offer potentially worth at least £2 billion. Santander recently completed the rebranding their UK operations under their own name

However, with Virgin now being backed by Wilbur Ross, the US billionaire, offering pledges on jobs their offer has to be taken seriously, with elections in a month’s time.

The UK government holds a 70 per cent equity stake in RBS, giving politicians and the public far greater influence over its fate.

The chief executive of U.S. telecommunications company Verizon Communications has said that there is "no compelling reason" for the U.S. Company to merge with British mobile network operator Vodafone. The two companies are continuing talks regarding their strategic options. Vodafone owns 45 percent of Verizon Wireless with Verizon holding the remaining 55 percent. However, there has been some conflict recently; with Vodafone pressuring Verizon to resume paying dividends since the U.S. Company blocked payments in order to reduce its debt burden. Shares in Vodafone dropped 2 pence to 149.6 pence on the statement.

Recent figures released by the Society of Motor Manufacturers and Traders (SMMT) show that the number of cars on the UK roads has decreased for the first time since records began in 1904. The country’s total car fleet has declined by 0.7 percent in 2009. According to the SMMT factors that had to be taken into account for decline are the recession, the government car scrappage scheme, and new Driver and Vehicle Licensing Agency (DVLA) regulations which remove the details of unlicensed vehicles from the database.

Kraft Foods came under attack in a report from a committee of U.K. lawmakers in a report critical of moves the American company made after its hostile $17.5 billion (£12 billion) takeover of Cadbury, the beloved British chocolate maker. The report by the U.K.’s Business Select Committee accuses Kraft of acting "irresponsibly and unwisely" after reneging on a promise to keep a Cadbury factory in Somerdale open, instead planning to move the plant’s production to Poland, resulting in the loss of 400 jobs. Meanwhile, British union leaders have called for a "Cadbury law" to protect British businesses from aggressive foreign takeovers.

ESPN, the Disney-owned sports television channel, has acquired the rights to deliver Premier League football highlights on UK mobile phones until 2013, supplanting British Sky Broadcasting, which has held the rights since 2007-08. The move strengthens ESPN’s position as a competitor to BSkyB and underlines the US broadcaster’s determination to expand its share of the UK sports market. For the three football seasons from August onwards, ESPN will deliver in-match, post-match and highlights from all 380 Barclays Premier League matches, Purchase of the mobile rights is the latest in a series of additions to ESPN’s sports portfolio.

Research conducted on behalf of the Association of Convenience Stores (ACS), representing an association of 33,500 small shopkeepers, indicates that 85 percent of the public oppose a liberalisation of trading laws that, if passed would allow large retail chains to open for longer on Sundays. The ACS stated that the current regulations assisted small retailers by encouraging local shopping in small stores. Large retailers including Topshop and House of Fraser have recently been lobbying the Business Secretary Lord Mandelson with requests to relax the existing laws.

The pound fell continues to recover if ever so slightly closing on $1.5273, whilst also gaining against the Euro to close on 1.1441

The U.K.’s FTSE 100 Index retreated from a 21-month high after a sell-off in commodity production shares .The benchmark Index lost 67.65 points to 5,712.7.

Former Federal Reserve governor Alan Greenspan has defended his record at a congressional hearing into the financial crisis. In a statement, Mr Greenspan denied that his policy of maintaining low interest rates had been a major factor in the crisis. Consistently low interest rates have been blamed for the expansion in the sub-prime mortgage market which led to the credit crunch. However, Greenspan voiced his opinion that the way the banks repackaged their loans was a major contributing factor to the crisis.

Stocks rallied yesterday after U.S. jobs increased by the most in three years, boosting optimism about the strength of a recovery in the world’s largest economy. Since March last year, the gauge has rebound more than 60 percent.

The Dow Jones closed up 45.87 points to 10943.39, while the NASDAQ index rose 9.15 points to close on 2440.31

As part of a global tie-up of the brands German carmaker Daimler announced that they are to give Renault and Nissan a 3.1% stake in its business, with Daimler taking a 3.1% stakes in both Renault and Nissan, in exchange. Renault and Nissan have held a trading alliance for more than a decade.

The deal will allow the companies to share technology and development costs while remain separate trading entities. According to a spokesman for Nissan, one of the key areas of co-operation will be in the development of electric cars and light commercial vehicles.

European financial markets continue to feel the pressures over the state of Greece’s debt-ridden economy. Banking stocks in particular, not only in Greece but in most of the other leading European countries, have seen sharp falls. Meanwhile it has been reported that the Greek government’s cost of borrowing has risen to record levels, reflecting investors’ concerns that Greece might not be pay back the loans due to the poor state of the country’s public finances.

The Athens Composite share index fell by 3.1%, with banks down 6.4% on average.

All major European markets also suffered, and banks in France and Germany were especially hit due to their exposure to Greece’s borrowing.

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Tags: Alan Greenspan, Association of Convenience Stores, Bank, Banking, Barclays, BBVA, British Economy, British Sky Broadcasting, BskyB, Cadbury, Credit Crunch, Daimler, Dow Jones, Driver and Vehicle Licensing Agency, Economics, Economy, Employment, ESPN, Financial News, FTSE, House of Fraser, JC Flowers, Kraft Foods, Money, Money Markets, NASDAQ, National Australia Bank, Nissan, Recession, Renault, Retail, Royal Bank of Scotland, Santander, Society of Motor Manufacturers and Traders, Stocks and shares, Topshop, UK Banks, UK Economy, UK government, UK Recession, Verizon Communications, Virgin Money, Vodafone, Wilbur Ross, Williams and Glyn