The UK economy continues its recovery from recession, with the news that the UK gross domestic profit (GDP) rose by 0.2% in the first three months of 2010, according to information provided by the Office for National Statistics, The figure was lower than the 0.4% growth predicted by many economists, but like the last quarter of 2009 may still be revised. Initial figures for that period, when the UK moved out of recession were originally estimated at 0.1%, were later revised to 0.4%. The ONS estimated that bad weather at the beginning of the year may have had an impact on output, particularly in the retail and industrial sectors. Meanwhile it was reported that manufacturing output grew by 0.7% over the quarter, while the utilities sector output also rose by 2.5%.

It has been confirmed that UK Government borrowing hit a record high of £163.4 billion in 2009, whilst remaining lower than the £166.5 billion initially predicted by Chancellor Alistair Darling in his 2009 Budget.

Despite that fact the figure still makes for s the biggest annual borrowing figure for a UK Government in peacetime.

In March alone, the figures from the Office for National Statistics (ONS) showed total borrowing of £23.5 billion.

For the first time, bonus rates on save as you earn (SAYE) schemes are to be cut to zero percent next month. The news has fostered concerns that some employees could shun participation in SAYE plans because there will be less incentive to save.

A £1 billion profits boost looks to be on its way for the Lloyds Banking Group brought about a block in rises of the pensionable salary of its staff. This vital cost saving is expected to play a significant part in returning Lloyds to profit in 2010. The move will also increase the likelihood that the government will be in a position sell its 41 percent stake in the bank in the near future.

As part of their new chief executive Adam Crozier’s expansion plans, Broadcaster ITV is reported to be considering an acquisition of its rival Five Industry sources predict that Crozier will implement expansion plans as soon as possible, before the general consolidation in the sector. If the deal goes through it would give ITV a 53 percent share in the television advertising market.

Two of the UKs largest property investment trusts are to merge to create the sixth-biggest listed property company in the UK with a combined market capitalisation of more than £1.6 billion The F&C Commercial Property Trust (FCPT), are to be merged with the UK Commercial Property Trust (UKCPT) that is owned by the Phoenix Group.

The new company will have a market capitalisation of about £1.6 billion and a property portfolio with net assets of £1.5 billion.

British newspaper and stationery retailer WH Smith has announced a four percent drop in like-for-like sales for the six months to the end of February. WH have spent £35 million in the first half of the year repurchasing shares in a buy-back scheme that has seen their share price rise by ten percent and pre-tax profit rise two percent to £62 million A spokesperson for the group announced that they have decided against extending the buy-back programme, choosing instead to invest in acquisitions and to return cash to shareholders at the end of year. On the news shares in WH Smith closed down 9.5 pence at 505 pence.

Lord Kirkham, founder and chairman of furniture retailer DFS stands to make in excess of £300 million pounds from the sale of his company to private equity firm Advent International, who have purchased the company for £500 million Kirkham will, he will hold on to DFS Properties, which owns approximately one third of the group’s store estate.

Homebuilders were among the biggest gainers in London after the US Commerce Department reported that new home sales in the United States were up by 27 percent in March, the biggest monthly percentage gain in almost half a century. Taylor Wimpey who sells around a third of its properties in the US showed close to a 10% gain on the stock exchange, Barratt Developments was up 4.52 percent, Persimmon 3.81 percent and Bovis Homes 3.45 percent.

The travel and leisure sector also finished the session and the week on a high. Travel returning to normal after the recent closures of airports and airspace in Europe due to ash in the air from the volcanic eruption in Iceland having its effects.

Cruise ship operator Carnival led gains in the sector as it added 5.87 percent, while shares in hotels operator InterContinental Hotels Group rose up by 4.37 percent. British Airways gained 3.86 percent as fears of a protracted grounding were put to the side.

The pound closed against the dollar down .030 on 1.5358 while the Euro closed up to 1.1488

U.K. stocks advanced the most in three weeks before the weekend. Despite a smaller-than-forecast increase in British gross domestic product, prospects for global economic growth remained strong the benchmark FTSE 100 Index rose 58.32 to 5,723.65 on Friday the highest rise since April 1. The increase pared this week’s retreat to 0.4 percent.

Overall The FTSE 100 remains 5.7 percent higher for 2010.

In his weekly radio and Web address, President Barack Obama said on Saturday taxpayer-funded bailouts of the auto industry that he approved had paid off, in what amounted to a rejection of conservative arguments against such government help.

President Obama continues to apply pressure for an overhaul of U.S. financial regulations, saying the promising news from the auto industry had not reduced the need for Wall Street changes.

Government bailouts of Wall Street continue to come under heavy criticism from conservatives who feel the government is spending too much money and that big firms should be allowed to fail.

General Motors Co and Chrysler both reported progress this week in their government-financed turnarounds. However the Obama administration still forecasts some loss on the taxpayer bailout of both companies to help them recover from the economic slump and a steep drop in auto sales.

The Dow Jones Industrial Average closed for the weekend up 70 points to 11,204.29 while the NASDAQ Composite was up 21 points on 2,530.10

Reports are that Greece’s talks with the IMF on emergency loans to finance its debt are going well. The Greek finance minister George Papaconstantinou predicted that Greece would not face problems funding its debts. To tackle the crisis, which has undermined the Euro, Greece has called for emergency funding from the IMF as well as its Eurozone partners. The Eurozone nations are expected to provide emergency loans of up to €30 billion (£26 billion) in the first year, with a further €10 billion coming from the International Monetary Fund (IMF). Greece will need some of the money as soon as the 19th May, when it needs to make a debt payment of $11.3 billion.

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Tags: 2009 Budget, Adam Crozier, Advent International, Alistair Darling, Bank, Banking, Barratt Developments, Bovis Homes, British airways, British Economy, Carnival, Chrysler, Credit Crunch, DFS, Economics, Economy, Eurozone, F&C Commercial Property Trust, Financial News, FTSE, General Motors, George Papaconstantinou, InterContinental Hotels Group, ITV, Lloyds Banking Group, Lord Kirkham, Money, Money Markets, Mortgage, NASDAQ, Office for National Statistics, Phoenix Group, SAYE, Stock Markets, Taylor Wimpey, UK Banks, UK Commercial Property Trust, UK Economy, UK government, UK Recession, Wall Street, WH Smith

An increase in July of more than 75% in the number of home purchase loans approved by British banks, made for the most encouraging figures since February 2008, while net mortgage lending growth remained as its weakest level since the year 2000.

The British Bankers’ Association announced 38,181 mortgage applications were approved in July in comparison to 35,564 in June and up from 22,248 in July when demand for properties in the UK were are at an all time low. In addition, average loan values rose from 136,400 pounds in June to 139,700 pounds.

This month’s statistics add further proof that the housing market may be entering into a period of continued stability; however analysts hastened to temper enthusiasm by pointing oath that mortgage approvals remained below the average and were indicative of falling property prices.

Bovis Homes recently reported that they have moved into a positive cash situation, and for the first time in two years, yet another sign that of recovery in the UK’s hard pressed domestic construction industry.

The group’s who were holding a net debt package of £8 million at the end of June, are now in funds to the tune of £7 million.

It appears that the Royal Bank of Scotland have hit a stumbling block with the proposed sale of their retail and commercial assets in China to their preferred bidder, Standard Chartered. The company had entered exclusive talks with the RBS last month to acquire assets in China, India and Malaysia, and were excited at the prospect of closing the deal "within a matter of weeks " However reports now have it Standard Chartered and now a lot less enthusiastic about the deal than they were, which now appears to have been put on hold.

British steel-maker Corus announced recently that they intend to kick start production at its Llanwern works in Wales. Their decision was prompted by a revival in the demand for steel, as the global economic downturn eases and generates a rise in the price of steel. Corus, Europe’s second-biggest steel concern, are to restart production at their hot rolling mill, shut down in January due to lack of demand.

Reactivating the plant will not mean that 500 or more jobs cut by Corus at the time when they put the plant in mothballs will automatically be restored, as the company claims that their operating costs have since risen.

Home improvement chain Focus DIY has reached an agreement with their creditors, particularly their landlords, which will save them from administration.

An overwhelming majority of the company’s creditors voted in favour of the company’s proposal to enter into a Company Voluntary Arrangement (CVA).

Under the terms of the CVA, an increasingly popular insolvency process, Focus will be able to reduce annual overheads by £8.6 million by shedding leases on 38 stores where the company has ceased to operate, and in return Focus has offered their landlords partial compensation. In addition the landlords of the company’s 180 stores have agreed to accept monthly rather than quarterly rent payments until 2011.

Focus, acquired by Cerberus, the US private equity group, has been carrying a heavy debt burden which has been exacerbated by a marked reduction in consumer spending.

On the FTSE, optimism lifted shares in Diageo, producers of Smirnoff vodka and brewers of Guinness beer up 0.9 per cent to 971½ pence, in anticipation that results due to be issued on Wednesday will show that the company’s sales have taken a turn for the better. Demand is expected to be on the increase among US wholesalers with Diageo looking to increase their market share.

Shares in National Express rose to their highest level since January, gaining 3.5 per cent to 395 pence, as speculation increases that that any break-up bid could value the transport group at as much as 450 pence a share.

Shares in the Royal Bank of Scotland rose by 3.9 per cent to 54 pence, fired by speculation that the bank may try to buy back some of the seventy percent stake held by the UK government.

Profit taking weighed on car insurers Admiral Group, whose shares dropped by 2.6 per cent to close on 1044 pence, after the company released first-half results that exactly matched analysts’ expectations. The company’s stock has gained 20 per cent recently.

Increased US consumer confidence and housing data helped the FTSE 100 reverse to close up 20.57 points, at a new 10-month high of 4,916.8, at its highest level for the year. The FTSE 250 rose by a further 28.92 points to close on 8,860.81

Sterling continued to weaken on Tuesday’s trading, remaining in a 10-week trough against the Euro,

• Pound/US dollar 1.6329
• Pound/Euro 1.1429
• Pound/Japanese Yen 153.6205
• Pound/Swiss Franc 1.7364

The Obama administration is bracing for a political backlash on Tuesday when it issues national debt numbers showing federal debt rising by $9,000 billion over the next decade, a figure significantly higher than forecasts made earlier. In addition the both the White House and Congress have warned that US budget deficit will soar to almost $1.6 trillion (£978bn) this year, the highest on record,.

Fuelled by President Obama’s $787 billion stimulus package and reduced tax revenues due to the recession, this year’s deficit compares with $455 billion for 2008.

The White House also expects that US unemployment will pass a 10% figure during 2009, before slowly beginning to decline in 2010.

US stocks once again rose to record heights for the year on Tuesday as encouraging economic data was enough to keep the rally going as well as optimism sparked by Ben Bernanke staying on for a second term as chairman of the Federal Reserve.

The Dow Jones Industrial Average and the NASDAQ Composite index both gained 0.3 per cent to 9,539.29 and 2,024.23, respectively.

Commodities markets ticked lower on Tuesday as investors paused for breath following the recent run higher in anticipation for a swift and sustained world economic rebound.

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