Despite the fact that the UK has officially been in recession for more than six month, till now it has managed to retain her highly important triple-A credit rating. As a general election begins to loom increasing larger on the horizon, a growing political consensus has begun to emerge on the need to cut public spending in order to ensure that The country’s financial credibility remains unscathed as the economy recovers gains momentum.

The rating agency Moody’s predicted on Wednesday that a downgrade was unlikely despite the fact that Britain’s budget deficit will soon have risen to be the highest among the World’s advanced economies.

The Bank of England will this week refrain from expanding its £175 billion stimulus package, as signs that the economy is emerging from recession, continue to gain ground and may have stopped contracting during the third quarter.

Although the UK equities market continues to recover, it was reported that it is doing so at too slow a pace to make sufficient inroads the aggregate shortfall of UK pension schemes which is currently approaching the £200 billion. According to data released by the Pension Protection Fund (PPF) from their 7800 Index, the total deficit of pension schemes with shortfalls stood at £194.6 billion at the end of August, up from £179 billion a month earlier. The PPF said that 85 per cent of all UK schemes were in deficit.

Boosted by higher production of cars and pharmaceuticals, U.K. manufacturing figures for July increased three times as much as had been forecasted, making for the highest increase in 18 months. According to figures released by the Office for National Statistics, production output rose 0.9 percent from the previous month, higher than the 0.3 percent increase that economists had predicted.

Shares in Sports Direct rose by 11.5 per cent to close on 129.85 pence after the company raised their full-year profit targets in the wake of a strong start to trading in the period. Sports Direct, controlled by Mike Ashley, owner of Newcastle United football club, said annual underlying earnings would be around £150 million, up from its previous forecasts of £140 million.

The unhealthy state of the UK construction was again in evidence with news that equipment hire company Ashtead’s underlying first-quarter pre-tax profit has fallen by 75 percent and would have been even worse as cost cutting efforts helped to maintain margins.

Ashtead, which rents industrial equipment from diggers to small tools in the UK as well as in the United States, softened the blow by stating that the company has typically made losses in the second half and that the board still expects full-year results to meet its previous expectations.

Underlying pre-tax profit for the fiscal first quarter ended July 31 fell to £8.8 million from £35.9 million in 2008, on rental revenue down 19 percent at £221.6 million. The company’s net debt fell to £873 million from £1.036 billion at the end of April.

Dow Jones & Co., have announced that they are to launch a new index that will cover small to medium sized U.K. companies designed to serve as a benchmark for their Newswires expanded small cap coverage.

Designed to measure the performance of small cap stocks, the Dow Jones U.K. Smaller Companies index will 188 companies listed in London. They will include stocks from the junior Alternative Investment Market and stocks listed in other indexes such as the FTSE 250 and FTSE Small Cap.

In a week of fairly frenzied takeover activity, the FTSE 100 index has risen above the 5,000 points mark, the highest it has been since October 2008.

The index closed up 57 points at 5004.30. Meanwhile the FTSE 250 continued its inexorable climb on Wednesday, up 101.72 points to close on 9,137.05.

The pound continued to rise against the dollar, whilst weakening further against the Euro and the Swiss Franc.

• Pound/US dollar 1.6547
• Pound/Euro 1.1373
• Pound/Japanese Yen 152.3058
• Pound/Swiss Franc 1.7238

Oil prices have risen again as a weak US dollar made the commodity cheaper against the other leading currencies.

Light sweet crude for October delivery rose 41 cents to $71.51 a barrel as OPEC oil ministers prepared to meet for a summit in Vienna.

financial

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Tags: Alternative Investment Market, Ashtead, Bank of England, Banking, British Economy, British Pound, credit rating, Currency, Dow Jones, Economy, Employment, Financial News, FTSE, general election, Money Markets, Newcastle United, Office for National Statistics, Pension Protection Fund, PPF, public spending, Recession, Sports Direct, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK pension, UK Recession

Although your bank manager will tell you that he or she is your friend, and that they have your best interest at heart when they cut your overdraft or credit card levels, don’t believe them. The truth is that banks thrive on people who are in financial trouble and know exactly how to play on your weakened situations to continue to feed their insatiable drive for profit.

More so, that when you go to them on your knees asking for just a little more leeway, they will already have made sure that you will find it difficult if not impossible to find alternative finance elsewhere, and will take full advantage by providing you with additional finance at horrendously high interest rates.

The UK public must surely have learned one expensive and painful lesson from the current financial crisis and that is to keep the credit under control, and to try to do so by achieving and maintaining a credit rating that is as pure and white as the first snows of winter.

And believe it or not, despite prodigious efforts by the FSA to prevent this from happening, lenders, be they banks, building societies or credit card companies, are pooling their efforts to make sure that people who have fallen into debt in the past will find it very difficult to improve their credit rating.

There is, and always has been, a great anomaly about how finance providers look upon a potential client. If someone has money, why should they need to borrow it? Yet in many cases it is sensible to borrow money, particularly for a mortgage, or to buy a new car or even some major household appliance. Banks carry out tens of thousands of transactions every month, although secured loans are much less attractive to them than unsecured loans, where they can make more than twice the interest.

The sad truth of the matter is that if people are in severe financial trouble the last place they should set foot in is a bank, building society or credit card company, except to ask for an extended agreement on the same terms. Under no circumstances should they agree to accept a new refinancing agreement which will certainly be on prohibitive terms.

Only time will cure most people’s problems, and eventually better times will come. In the meantime it is everyone’s interest to keep the head down, draw in the belt even tighter, and repair each credit status. Learning to be less credit dependent will be a challenge for all of us, but it will be justified by never having to bend your knees to your bank manager again.

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Tags: bank manager, Banking, Building Society, Credit, Credit Card, Credit Crunch, credit rating, Current Account, Debt, extended agreement, Finance, finance providers, financial trouble, FSA, Interest Rates, Loans, Money, Money Management, Mortgage, Mortgages, negative equity, Savings, UK Banks, UK Credit Cards, unsecured loans