According to a leading economist the UK should be classed with Greece and Spain, as countries carrying severe debt problems Not in agreement and understandably so are the UK Treasury sources who rebuked the suggestions that the UK was gradually becoming one of the poor relations of Europe by confirming that all of the three major credit-rating agencies had reaffirmed the UK’s triple A credit status.

Meanwhile Chancellor of the Exchequer Alistair Darling is the man faced with balancing the demands of investors and rating companies who fear that Britain’s top-level credit rating could be at risk, with the hopes of the UK public as well as some of his colleagues for an easing of taxation in the coming budget. Darling has already put the dampers on a lot of people’s hopes that this year’s budget will not be too populist, in a move to win votes for the general election that is due to follow a few months later

“People in the U.K. will want the budget to be realistic,” Darling was quoted as saying. “No one is looking for giveaways; that’s not the mood.” He summed up. Darling said voters realize the need to reduce Britain’s record budget deficit having already vowed to more than halve the £176 billion-pound deficit by 2014 starting next year.

Britain’s budget shortfall, which the Treasury estimates at about 12 percent of gross domestic product this year, is the biggest among the Group of 20 nations.

Dividends paid out shareholders by UK companies were honed back by to the tune of £10 billion in 2009, according to recent research.

Total dividends paid out by British listed companies amounted to £56.9 billion last year, down 15 per cent on 2008. The figures would have been considerably worse for investors if it not had been for the contribution of just five leading UK companies, with almost fifty percent of all dividends paid out coming from them. The e British business heroes were by BP, Shell, HSBC, Vodafone and GlaxoSmithKline. A sign of the shifting sands in the UK trading picture is that as recently as 2007, these companies accounted for 35 percent of the total dividend payout.

All the UK banks combined cut their dividends by half, adding up to around £6 billion less in dividends than in 2008. Performing particularly poorly was the high-street sector whose dividend payouts fell by 62 per cent.

At the recent meeting of the Group of Seven finance ministers’ tacit agreement was reached to draw up as set of common rules designed to force banks to pay for possible failures similar to the current one, which led to taxpayers being forced to take on trillions of dollars in liabilities.

The ministers said the world’s most advanced economies should adopt common rules as long as other major countries also agree. Apparently the G-7 is moving closer to an agreement on a bank insurance levy, one of a range of options proposed by the U.K. in November.

Already Sweden has taken the first step forward by creating a fund financed by their banks to help safeguard its financial system. In terms of the agreement, Swedish banks are required to make annual payments to the fund. The Swedish government injected 15 billion kronor (£1.2 billion) into the fund when it was set up, as well adding funds that had previously held in Sweden’s deposit guarantee fund.

According to government estimates, interest from the funds deposited by banks and on the money in the fund means it will swell to 150 billion kronor, or 2.5 percent of Sweden’s gross domestic product, by 2023.

U.K. stocks rose for first time in four days, led by a rebound in mining companies. The FTSE 100 Index increased 50.2 points to 5,111.84 at close of business in London.

The pound dropped to its lowest level in more than eight months against the dollar as growing concerns over the UK’s fiscal situation began to weigh on the currency. Sterling closed at 1.5701 and at 1.1388 against the Euro. The Euro has lost a lot of its attractions recently and was down to an eight-month low of 1.3583 against the dollar.

On Wall Street things were looking up. The Dow Jones Industrial Average finished up 74 points at 10058.64. The NASDAQ gained 15 points to close on 2,150.87.

Honda has added close to half a million cars to its existing global safety recall list. The problem this time is over airbag inflation problems mostly affecting cars sold in North America, with others Japan, Mexico, Taiwan and Australia due for recall. There was also further bad news for e Japanese carmakers Toyota after they were forced to recalled nearly half a million hybrid cars over faulty brakes, and millions of other models will need to be brought back to dealerships worldwide, suffering from accelerator and floor mat problems.

General Motors’ (GM) Opel unit has announced their plans to will invest 11 billion Euros (£9.7 billion) in introducing new product ranges over the next five years. Opel’s investment plan to breaking even within two years, a move that will entail cutting 8,300 jobs across Europe as well as the closure of at least one company plant in Antwerp, Belgium. Opel are trying to persuade

European governments to provide them with billions of Euros in loans to help the company’s plan to return to profitability.

India has announced that its economy is looking at growth levels by 7.2% in the year to the end of March. Government stimulus measures helped to maintain strong growth during the global downturn, but attention is now turning towards cooling rising prices, raising the chance that state support could soon be withdrawn. Many financial analysts also expect the government to raise interest rates earlier than expected. Strong growth in manufacturing in India is helping to compensate for falling agricultural output.

Oil prices rose and base metals moved higher as commodity markets managed a partial recovery after a sharp sell-off in the previous week US crude oil prices traded above the $71 a barrel.

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Tags: Alistair Darling, Bank, Banking, BP, British Economy, Credit Crunch, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, G-7, General Motors, GlaxoSmithKline, Honda, HSBC, Money, Money Markets, NASDAQ, Recession, Retail, Shell, Stock Markets, Toyota, UK Banks, UK Economy, UK government, UK Recession, UK treasury, Vodafone, Wall Street

The U.K.’s second- biggest bank Barclays Plc have announced that they are to acquire Standard Life Plc’s banking assets for a sum of £226 million pounds, In a move designed to expand their UK based savings and mortgage operations, Barclays will receive a major boost in turnover through Standard Life Bank Plc, who currently hold around £ 5.5 billion in deposits as we’ll as £8.8 billion in mortgages. A spokesman for Barclays announced the bank’s intention to continue to explore opportunities in the U.K. retail long term savings and investments industry, working in conjunction with Standard Life, who are the U.K.’s third-biggest insurer.

The bank is seeking to increase revenue at its consumer and corporate-banking division, whilst reducing their reliance on investment banking. The acquisition follows that of the Portuguese credit-card business of Citibank International Plc made last month. Barclays continue to seek more acquisitions in Europe.

Production of new cars in the UK fell by 16.1 percent for the year in September, making for the smallest decline for 12 months, according to figures issued by the Society of Motor Manufacturers and Traders. 119,616 cars were made in Britain last month, making for an annual total of 694,769, down by 41.2 percent on the same period in 2008. Sales have been boosted by the government’s car scrappage scheme, which allows motorists to trade in cars that are more than 10 years old in return for a 2,000 pound subsidy on a new vehicle.

Oil giant BP has reported third-quarter profits of £2 billion ($4.98 billion) well ahead of analyst’s expectations

BP’s results, boosted by higher than expected cost cuts, was still down by

50% from last year. This is largely due to the fact that oil is currently trading at about $80 a barrel, about half of where it was this time last year. The announcement sent BP’s share price up by almost 4%.

The British Standards Institute (BSI) the national standards body are reportedly deep in the process of developing a voluntary standard of ‘kitemarks’ that will be issued to retail and wholesale financial services firms.

The BSI have been consulting with members of the industry in order to set out a common methodology and good practice standard, which can be implemented alongside existing regulations, with the goal of reducing risks of compliance failures whilst offering greater reassurance to management that regulatory requirements are being met. The British Bankers’ Association (BBA) are apparently offering their whole hearted support for the scheme, with their chief executive quoted as saying that the initiative should improve efficiencies between and amongst compliance teams across the financial service industry .

Sterling continued to rise in value yesterday against the dollar, while falling against the Euro.

• Pound/US dollar 1.6351
• Pound/Euro 1.1043
• Pound/Japanese Yen 149.0922
• Pound/Swiss Franc 1.6709

Shares in the Anglo-Dutch publishing group Reed Elsevier, were very much in demand on Tuesday, rising 3.3 per cent to 473 pence after the market deduced that concerns over the trading performance of, it’s content archive service division, Lexis-Nexis, had been exaggerated.

Banks didn’t have such a good day on the FTSE, especially the partially nationalised ones. Royal Bank of Scotland were down 8.1 per cent to 40.8 pence while Lloyds Banking Group, also fell 6.1 per cent to 83.8 pence. The reason for their downfall was investor fears regarding the disposals that both banks will be obliged to make in order to satisfy European Commission rules on state aid.

The FTSE 100 made a minor recovery on trading Tuesday, up just 9.23 points to close on 5200.97. The FTSE 250 continued to lose value, yesterday down 44.82 points to close on 9141.28.

Fears about future job prospects was stated as the principal reason why US consumer confidence fell unexpectedly in October. The Important Consumer Confidence Index from the Conference Board business organisation slipped to 47.7 in October from a revised 53.4 in September. Analysts were caught unawares by the decrease, with expectations that the index would remain unchanged or might even rise slightly.

On Wall Street, the Dow Jones hiccupped a little into forward gear, up a mere 14.21 points to 9882.18. The NASDAQ Composite index was still dropping yesterday, a further 25.76 points to 2116.09.

According to the European Central Bank, lending to companies operating in the eurozone fell in September at an annual rate of 0.3%, compared with a modest annual growth of 0.1% in August. The fall is a source of concern for the Eurozone countries is it comes when European governments continue to bolster their economies by increased lending at very low, subsidised interest rates.

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Tags: Bank, Banking, Barclays, Barclays Plc, BBA, BP, British Economy, British Pound, British Standards Institute, BSI, car scrappage scheme, Citibank International Plc, Conference Board, corporate-banking, Currency, Dow Jones, Economy, European Central Bank, European government, Financial News, FTSE, Important Consumer Confidence Index, Lloyds Banking Group, Money, Money Markets, NASDAQ, Recession, Reed Elsevier, Royal Bank of Scotland, Society of Motor Manufacturers and Traders, Standard Life Bank Plc, Standard Life Plc, Stocks and shares, The British Bankers’ Association, UK Banks, UK Economy, UK government, UK Recession, Wall Street

A recent report from the Bank of England has revealed that the total amount of personal debt in the UK is lower than it has been for more than 16 years, and probably even more, as that was when records first began.

Factors such as rising unemployment and the economic downturn have caused UK consumers to become increasingly reluctant to increase their levels of personal debt, indicated by borrowing falling by £600 million in July, taking the total personal debt in the UK to a little below £1.5 trillion. Which is still a considerable sum of money.

At the same time, current low interest rates means that the amount of equity outstanding on mortgages is decreasing by £400 million a month at current levels, meaning that many home-owners are managing to repay more of their outstanding mortgage, reducing their deficit.

The manufacturing sector, also doing their best to draw in their horns, complain of increasing price rises from their banks, despite the abundance of Government packages to increase liquidity in the banking system and interest rates being at an all time low. According to the Engineering Employers Federation (EEF), credit terms remain "very tight" for manufacturers. A fact that they claim could hold back an early recovery from the recession, and certainly not in line with the US, Japan and even France and Germany.

Britain retail sectors, living in hope of a good Christmas season, are going to need it, if recent forecasts are correct. The forecast, from a leading firm of accountants and business advisers, forecast that the worst effects of the recession for the retail sector will not be felt until next year. Fears that rising unemployment will hit the high street hard and as many as 5,000 companies will be forced to close their doors throughout the UK.

Some good news for the UK economy is the announcement that British Petroleum (BP) has discovered a massive oil field while drilling of the Gulf of Mexico.

BP, currently the largest producer of oil and gas in that area, have till now produced more than 400,000 barrels of oil a day, with their latest discovery expected to increase that figure considerably. The company had to dig deep, not just in their pockets, but also through the Earth’s core to get to the fast reservoir of crude, reaching a depth of 35,055 feet making it one of the deepest wells drilled in the World.

On the news, BP shares jumped 3.8% to 538 pence, making it star of the show on the FTSE 100 yesterday.

It wasn’t really a major achievement as equities continued to be under pressure on the FTSE yesterday, however late trading did push it back to a reasonable condition. The k index ended just 2 points lower at 4,817.55, following losses of 89 points during the previous session.

Meanwhile the FTSE 250 continued to slide, yesterday dropping a further 99.75 points to close on 8,519.93

Sterling made a minor recovery against the major currencies on Wednesday’s trading.

• Pound/US dollar 1.6272
• Pound/Euro 1.1409
• Pound/Japanese Yen 149.9756
• Pound/Swiss Franc 1.7249

In the US, once again Federal Reserve policy-makers are showing increased confidence that the downturn in the US economy is due to officially come to an end. At a recent meeting, chaired by recently re-appointed Fed Chairman Ben Bernanke a more upbeat tone emanated, hinged with an uncertainty about how quickly the economy would grow in 2010. Fears remain that unemployment, which is set to move above 10% this year, may impact on consumer behaviour.

On Wall Street, US stocks were up and down on Wednesday affected by the release of data on job losses, with the release of the Challenger jobs report, which showed that the pace of US job losses has slowed, later offset by data released by the

This was quickly counterbalanced by payroll giant Automatic Data Processing (ADP) stating that employers in the private sector had cut by more than 50,000 the jobs expected in July than the expected 250,000.

On Wall Street, the markets returned to relative stability, with the Dow Jones Industrial Average dropping by 29.93 points to close on 9280.6 while the NASDAQ Composite index stabilised, falling a mere 1.82 points to close on 1967.07

European Union finance ministers have taken up the gauntlet and will press for clearly defined restrictions on bonus pay for bankers in the future. The issue will be at the focus of talks to be held with their US and other G20 counterparts later this month.

Anders Borg, finance minister of Sweden, which holds the EU’s rotating presidency, speaking on Wednesday after a meeting of the EU’s 27 finance ministers designed to set out common positions on bankers’ pay as well as the other hot potato of financial market regulation. Other issues on the table will be how to draw back from the fiscal, monetary and other emergency measures adopted this year to prevent a deep global recession, with financial stability returning.

Gold prices surged to a near three-month high on Wednesday as investors turned to the precious metal after a weak opening in equity markets in New York.

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Tags: Automatic Data Processing, Bank of England, Banking, Ben Bernanke, BP, British Economy, British Petroleum, British Pound, Credit Crunch, Currency, Debt, Dow Jones, Economy, Employment, Engineering Employers Federation, Federal Reserve, Financial News, FTSE, Interest Rates, Money, Money Markets, Mortgage, Mortgages, NASDAQ, personal debt, Recession, Stock Markets, Stocks and shares, UK consumers, UK Economy, UK government, UK Recession, Unemployment, US economy, Wall Street

According to data released by the Halifax Building Society, property prices increased by more than one percent. Halifax, one of the UK’s leading building societies also reduced their forecast reduced how far they reckoned property values would fall in the remaining part of 2009. Their updated prediction is that house prices will fall by just seven percent in 2009.

Halifax stated hat prices had fallen by 0.8 per cent during the first seven months of 2009, with average house prices at £159,623 in July compared with £160,861 in December 2008. July house prices were 12.1 per cent lower than the same period in 2008, with the annual rate of change showing an improvement for the third consecutive month.

On a more sober note a recent report released by the Royal Institution of Chartered Surveyors has reiterated their well known standpoint that there is little chance of a quick return to a housing boom, despite the fact that UK prices may well rise in 2010, while standing firm on their forecast of a price fall of 10-15% this year amid a “considerable shift” in the market. Tight credit and job losses are the principal causes for limited transactions in 2009 and if they continue may still cause prices to slip back in 2010.

Despite their expected £4 billion loss in the first half of 2009, shares in Lloyds Banking Group surged by 11% due to mounting bad debts at HBOS. The only reason that analysts could come up with were that most of the bad news that the bank could dish up was now out in the open, and investors now had a clearer picture to build on.

Lloyds Banking Group, of which 43% is owned by UK taxpayers, announced that although they were still sitting on £13 billion of toxic loans and investments, such charges for bad loans would be smaller in the future.

Meanwhile it seems increasingly likely that the sale of the healthy parts of Northern Rock will be held off until after the general election. Alistair Darling, UK chancellor said he was in “no hurry” to offload the bank he nationalised in February 2008 after they announced reasonable half-year losses of around £700 million. The chancellor remains adamant that the rescue operation could still reap a profit for the taxpayer.

A recent study also shows that the pension-plan shortfalls of the U.K.’s top publicly traded companies more than doubled to an unprecedented 96 billion pounds in June.
The deficit of these companies all of whom are listed on the FTSE-100 Index with a 41 billion-pound shortfall in the same period last year, The signs are that employers are cutting back on pension benefits after the global financial crisis eroded profits and stock prices. Europe’s second-largest oil company, BP Plc, announced in June their intention to close its final salary pension plan to new U.K. workers, while Barclays Plc are asking their 18,000 employees to surrender similar benefits that the bank now claim to have become too costly.

Insurance group Legal & General have announced that they have succeeded in “considerably reducing” their losses in the first six months of the year, as well increasing their capital surplus. L&G claimed that the cuts were brought about by reduced workforce headcount, and closing down activities in less profitable business areas.
Despite the fact, the insurance group halved its interim dividend as it pressed ahead with a programme to save costs, causing their shares to drop in value by 5.6 per cent to 62 pence. , For the half year, Legal & General’s showed pre-tax losses decreased by 81 per cent to £74 million on revenues that slid 6 per cent to £3.1 billion.

Industry tycoon Rupert Murdoch’s News Corp announced losses of £2 billion in the financial year to the end of June. A year which Murdoch claimed to have been “their most difficult in recent history”.

The loss, largely due to $8.9 billion in write-downs already announced, compares with a $5.4 billion profit a year earlier.
Revenues at the media giant, owners BSkyB, 20th Century Fox and the Sun newspapers among many others, were down 7.8%.

It appears that ITV is set to sell Friends Reunited to DC Thomson, the Dundee-based publisher, for £25 million, less than four years after the company bought the social network for £170 million, a sum that included £50 million in performance-related bonuses.

The FTSE 100 reversed early gains to close down 24.24 points at 4,647.13.
Meanwhile the FTSE 250 continued to gain, climbing a further 23.57 points to close on 8,266.08

The pound continued its rise against the dollar as well as all the other major currencies on Wednesdays trading.

Pound/US dollar 1.7009
Pound/Euro 1.1799
Pound/Japanese Yen 161.1997
Pound/Swiss Franc 1.8028

As a result of ongoing controversies, the US Senate looks likely to push through their $2 billion extension of the “cash for clunkers” car subsidy programme before it breaks up for its August recess on Friday.

In a change of position from Monday, when senators from both parties expressed reluctance to follow the House of Representatives in extending the highly popular scheme the extension could be passed by the end of the week

Yesterday on Wall Street, the Dow Jones lost a lot of its previous days falling 39.22 points to 9280.97. The NASDAQ also crept back a little, down 18.26 points to close below the 2,000 mark on 1993.05

In the face of the global economic slump computer firm Cisco Systems have announced a fall in its quarterly profits by 46%, $1.1 billion compared with $2 billion for the same period a year earlier. Analysts, who had expected an even steeper decline, also were encouraged as was the company who announced that the quarter may have seen the last of the recession-related downturn.

Following the latest US weekly inventories data, US crude oil prices fell to $71.97 a barrel, after hitting a high of $74.89 in the previous session.
US crude stocks have risen to 1.7 million barrels.

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Tags: Alastair Darling, Barclays, BP, British Economy, Economics, Economy, Employment, Financial News, Halifax, Halifax International, Legal & General, Lloyds, Lloyds Banking Group Plc, Mortgage, Mortgages, News Corp, Recession, UK Banks

Chancellor of the Exchequer Alistair Darling is doing all that he can to create an atmosphere of ” business as usual “. One of his measures announced yesterday is to allow interest rates to remain at the current and unprecedented low levels.
Darling announced to leaders of UK commerce and industry at a conference on Wednesday that interest rates were “low and likely to remain low” for the meantime. The Bank of England, as cut borrowing costs 4.5 percentage points since October.
On the oil market, Royal Dutch Shell reported a sharp fall in first quarter profits followed rival energy group BP who announced a similar fate on Tuesday of this week. The only good news was that the loss was less than analysts had forecast, a net profit after tax of £3.3 billion, down by 50% from the same quarter in 2008.

After a long battle bravely fought and eventually lost, LDV the midlands based light van maker announced that they will have no option but to enter administration on May 6th. LDV regretted that administration would result in several thousand job losses, but they had given all hope of receiving a further bailout from the government, and understand that chances of selling the business as a going concern was now impossible.

The UK private equity company’s 3i’s have annoyed some of their major investors by announcing their intention of launching a rights issue, for up to £700million. The announcement comes after members of 3i’s board were briefed last week by their new chief executive Michael Queen who plans to use the funds to partially reduce the company’s £2billion debt burden. However investors have suggested that 3i could probably cut back on the debt through using existing cash flow as well as disposing of some of their investment portfolio. .
U.K. stocks advanced yesterday on positive trading, encouraged by recoveries from both the banks and metal producers.
The U.K.’s third-largest bank, Barclays, and Lloyds both rose by more than 8 percent, making up for what they had lost in the previous two days trading. Royal Bank of Scotland Group Plc also jumped by thirteen percent in the wake of positive profit forecasts.
Kazakhstan’s largest copper producer, Kazakhmys increased their shale value by 5.9 percent (21 pence to 511). Vedanta, who holds the largest share of copper production in India, gained 5.7 percent (53 pence to 985.5)
Global education service provider BPP Holdings Plc were the star of the day on the exchange as their shores rose 58 percent (213 pence to 578) on the announcement that the company had received a firm offer from Apollo Global for 620 pence a share.
.
Building giant Taylor Wimpey Plc rose by 8.5 percent, (3.5 pence, to 44.5.) on estimates that the company is not liable to announce any capital raising measure when it announces preliminary results tomorrow.
Up and coming Scottish based manufacturer of semiconductors Wolfsan Microelectronics Plc (also jumped yesterday, up 12 percent (13.5 pence, to 125) the company announced that their cash position as well as their order book was strong.

On the day the FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 while the FTSE 100 finished the session up 93.19 points, higher at 4,189.59
Sterling fell slightly against the dollar and the Euro and recovered against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4807

Pound/Euro 1.1145

Pound/Japanese Yen 127.58

Pound/Swiss Franc 1.6425

Wall Street rose despite news that the US economy continues to contract led by the biggest export fall for 40 years in the first quarter of 2009,
The US GDP contracted at a rate of 6.1% annually during the quarter, improving slightly on the 6.3% fall in the last quarter of 2008.
The Dow Jones Average jumped up 168.8 to close at 8185.73. NASDAQ rose 38.13 points to close at over the 1700 mark, at 1711.95

Japan, reputedly the World’s second powerful economy who has been particularly hit hard by the global downturn, reported that their industrial output has risen in March for the first time in six months. Production rose by 1.6% in March following months of dramatic decline.
Shares in Asia were broadly higher on Wednesday thanks to some encouraging signs about company profits and the dissipation of worries about the effect of swine flu on the world economy.
Crude oil prices on Wednesday rose above the $50-a-barrel mark as traders shrugged off a bearish increase in US crude stockpiles and instead focused on a large drop in petrol inventories ahead of the driving season.

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Tags: 3i, Alastair Darling, Bank of England, Barclays, BP, LDV, Lloyds, Royal Dutch Shell