Figures released yesterday confirmed that the UK economy grew by 0.1% in the last quarter of 2009, meaning that the recession is finally over, but later and which much less impact than the US or the Eurozone economies. Britain’s economy had been in recession for eighteen months, the longest period since quarterly figures were first recorded in 1955.

The news was widely anticipated with signs such as last week’s UK unemployment figures that fell for the first time in 18 months.

Analysts now predict that no matter which party wins this year’s election when it happens, the loser will be the pound/ Reasons given are that neither David Cameron or Gordon Brown will be able to muster sufficient support in parliament to control the UK’s budget deficit, which is the largest in the in the Group of 20.

Strategists have pruned back their forecasts on the sterling versus dollar pair by as much as 2 percent this month, to the lowest level since June 2009, with Sterling liable to be weighed down by possibility of the first parliamentary stalemate in more than a generation and growth levels that lag far behind Britain’s rival industrialized economies. Add that to a fiscal shortfall that has ballooned to almost 13 percent of gross domestic product and the picture for the pound looks less than rosy.

Previous precedents do not bode well for the pound, as when the last time a U.K. election failed to produce a clear winner in 1974, Sterling fell in value by 28 percent in the next two years, with the government’s failure to fund its deficit leading to the International Monetary Fund stepping in to bail-out the economy.

The UK’s so-called ‘Big Six’ group of energy suppliers is on course for a profits windfall due to the extremely cold weather conditions experienced in the UK during December and early January. Consumers were forced to turn up their thermostats when the country experienced the coldest weather conditions for decades with the daily demand for gas hitting an all-time high on Jan. 7th of 454 million cubic meters. Analysts predict that accumulative profits for the big six (Centrica, EDF, E.ON, Scottish and Southern Energy, ScottishPower and RWE npower) could easily reach an additional £100 million for the period.

The Chelsea and Yorkshire building societies are expected to finalise details of a merger this week. Doing so will mean the creation of the second biggest society in Britain, after the Nationwide. Yorkshire Building Society members are liable to give their thumbs up for the merger, following the lead of the Chelsea Building Society who gave their support to the deal on Friday. A successful deal would mean the consolidated company would have combined assets of £35 billion pounds, around three million members and 180 branch offices around the UK.

On the news that Barclays plans to defer bonuses for top executives including Chief Executive Officer John Varley for up to three years, stock in the company 4.1 percent, to 271.35 pence.

Pilots at British Airways pilots have been warned by the labor unions representing the cabin crews not to become strike breakers if an employment dispute leads to a work stoppage. News that caused BA’s stock to decline 0.8 percent, to 207.9 pence.

Prudential Plc, the U.K.’s largest insurer have announced plans to cut back expansion in developed markets to focus on growth in developing Asian countries, such as Malaysia, Vietnam and Indonesia. Shares in Prudential shares dropped 0.4 percent to 605.5 pence.

Sterling rose slightly against the dollar and the Europe in early week trading. The pound closed at 1.6144 against the dollar, with the Euro being traded at 1.146

Shares in the FTSE 100 took a minor downturn, despite the news that the recession was over in the UK. It closed on Tuesday down 26 points to 5,276.85.

A calmer mood prevailed in markets on Monday and Tuesday after a three day downturn that knocked 5 per cent of its values. Reports coming out of Washington over the weekend suggesting that Ben Bernanke looks like being reappointed chairman of the Federal Reserve for another four-year term settled the markets which had closed at fresh a 15-month high as recently as last Tuesday.

The Dow Jones rose by 84 points, to close at 10255.28, while the NASDAQ recovered 14 points, to finish at 2210.53.

According to the National Association of Realtors (NAR) sales of previously-owned US homes fell 16.7% in December, after having risen in the three months from September to November as first-time buyers took advantage of tax credits. However the decline in December came as no surprise as most buyers had rushed to complete deals before the original 30 November deadline. The first-time buyer tax credit has since been extended until 30 April, causing the NAR to predict that there was likely to be another surge in sales in the spring. December sales fell to a seasonally-adjusted annual rate of 5.45 million from 6.54 million in November, 15% higher than in the comparable period in December 2008.

Computer giant Apple have announced a 50% increase in profits after seeing a bumper Christmas period, with sales of iPhones doubled from a year ago.

Net income rose to $3.38 billion (£2.08 billion) in the three months to 26 December, from the $2.26 billion in the same period in 2008. A spokesman for Apple announced that they had succeeded in selling 8.7 million iPhones in the quarter. Sales of Macs also rose 33%, although iPod sales fell by 8%.

General Motors (GM) has confirmed that Saab is to be eventually acquired by Dutch luxury carmaker Spyker.

GM has been trying to sell Sweden’s Saab since January 2009 although recently they announced that they would begin the procedure of winding down the company while still continuing their search to find a buyer.

Wind-down activities have now been suspended, "pending the close of the transaction".

Saab lost £255 million in 2008, and has not made a profit since 2001.

In the commodities market, gold took advantage of the relative stability in the dollar, to rise to $1,097 an ounce. Oil also rose by 0.5 percent to $74.92 a barrel.

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Tags: Apple, Banking, Barclays, British airways, British Economy, British Pound, Centrica, Chelsea Building Society, Credit Crunch, David Cameron, Dow Jones, E.ON, Economics, Economy, EdF, Federal Reserve, Financial News, FTSE, General Motors, Gordon Brown, International Monetary Fund, iPhone, John Varley, Money, NASDAQ, National Association of Realtors, Nationwide, Prudential Plc, Recession, RWE npower, Saab, Scottish and Southern Energy, ScottishPower, Spyker, UK Banks, UK Economy, UK government, UK Recession, Yorkshire Building Society

According to Boris Johnston, London is the best city in the world to do business, Boris, the current Mayor of London Johnson who during his visit to New York, enjoyed the privilege of ringing both the opening bell at NASDAQ and the closing bell at the New York Stock Exchange, stated the case to leading American high tech and industrial concerns to locate in London. He emphasized that London remains the top global destination for digital innovation.

In a series of financial services and business meetings today, Mayor Johnson reminded New Yorkers to remember the greatness of London’s past, and to prove to the world that both New York and London are as confident as ever of their dominant roles in World business.

London’s newspaper publishing community were reportedly in a state of shock with the announcement that the Evening Standard was to become a free sheet. The move by the paper’s Russian owner Alexander Lebedev, was described by industry analysts as “more of a gamble than a calculated risk” when the news broke on Friday. Lebedev recently acquired the Evening Standard from the Daily Mail & General Trust. (DMGT).Lebedev decision makes the Standard one of the first leading titles in Europe to drop its cover price and rely entirely on advertising. Forecasts are that the move will see the paper’s current circulation of 250,000 rises to close to 600,000. The move comes after News International, part of Rupert Murdoch’s News Corp, announced that they will be ceasing to publish its free sheet, The London Paper. News International has been involved in distribution battle with a rival free sheet, London Lite, which is still owned by DMGT. DMGT, who have retained a 24.9 per cent stake in the Standard, are liable to close down the London Lite.

French utility Electricite de France announced on Friday that as part of a plan to reduce debt by at least 5 billion Euros, they are considering options for selling its U.K. electricity distribution business. EDF Energy is the largest electricity distribution network operator in the U.K., serving London as well as the South-East of England.

Shares in Domino’s Pizza rose as much as 5 percent to an all-time high of 307 pence after Britain’s biggest pizza delivery chain announced that it is on track to beat market expectations for the year following sales growth of 10.8 percent in the third quarter.

The FTSE 100 maintain a moderate collapse, after a long run of constant increases. On Friday it dropped 4.31 points to close on 4993.01.

Before weekend, the FTSE 250 continued to drop, below the 9,000 points barrier drop, down 49.85 points to close on 8906.62.

Despite a minor increase against the dollar, the pound remained below the $1.60 mark as trading closed down for the weekend, as it continued to stutter against the leading currencies.

• Pound/US dollar 1.5969
• Pound/Euro 1.109081
• Pound/Japanese Yen 143.2797
• Pound/Swiss Franc 1.6473

In spite of aggressive measures to stimulate the economy, the US unemployment rate climbed to 9.8 per cent in September, making for a fresh 26-year high. Official figures released on Friday showed that non-farm payrolls dropped by 263,000, making it the 21st consecutive month that the US economy has shed jobs. The data were worse than economists predicted, with a 175,000 drop in payrolls, following a decline of 201,000 jobs in August.

These figures go a long way in re-iterating recent statements from World Bank president Robert Zoellick that US economic power is declining as a result of the financial crisis. Until recently regarded as the world’s largest and most dynamic economy, The US has been in the grips of a bitter recession for almost two years, while emerging economies like China and Brazil have grown. Zoellick predicts that a long-term rebalancing of the world economy may well be under way..

Despite hints of a recovery the Dow Jones index continued to adjust downwards, closing 21.61 points down at 9,387.67. The NASDAQ index fared slightly better, falling only 9.37 points to 2,048.11.

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Tags: Alexander Lebedev, Banking, Boris Johnston, British Economy, British Pound, Credit Crunch, Currency, DMGT, Domino's Pizza, Dow Jones, Economics, EdF, Electricite de France, Employment, Evening Standard, Financial News, FTSE, Money, Money Markets, NASDAQ, New York Stock Exchange, News Corp, Recession, Robert Zoellick, Rupert Murdoch, Stock Markets, The Daily Mail & General Trust, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US economy, World Bank

According to Royal Bank of Scotland its chief executive, Stephen Hester UK Taxpayers will lose out if the bank unable to pay bonuses, in what some could construe as a veiled threat o what could happen if the intense public scrutiny faced by the bailed-out bank is not eased and bonus hungry staff continue to seek greener pastures.

When the bank released their half year profits, an uninspiring increase in profits of £15 million was offset by “poor” net attributable loss to shareholders of £1.1 million.
Hester, whose £9 million pay deal only delivers if the shares reach 70 pence within three years, said the bank had suffered a “damaging but not yet destructive” exodus of staff. He said some guaranteed bonuses were being paid, but that they complied with the demand by the Financial Services Authority of being for no longer than 12 months.

Meanwhile Spanish bank, Santander has shown RBOS the meaning of profit, with an increase of 41 per cent in the first half of this year, totaling £790 million for their UK businesses.
Santander, who owns Abbey, Alliance & Leicester and part of Bradford & Bingley, reported revenues had also increased by 20 per cent, aided by increased cost savings, as also increased their deposits by 66 per cent, following the integration of Alliance & Leicester and Bradford & Bingley.

Santander’s gross mortgage lending through its UK brands totalled £10.8 billion in the first six months of the year, giving it a 16 per cent share of the market. António Horta-Osório, chief executive of Abbey, announced that the first half of the year has been a very good one for the bank.

Company liquidations and individual insolvencies in England and Wales soared to record levels in the second quarter as the economy was throttled by recession and the global credit crisis, data from the government’s Insolvency Service showed Friday.

There were 33,073 individual insolvencies in the second quarter on a non seasonally adjusted basis, the highest level since records began in 1960. That compared with 30,253 in the first quarter of this year

Company failures remained at a 16-year high in the second quarter, but figures on Friday revealed a marked slowdown in the rate of firms falling victim to recession. The Government’s Insolvency Service recorded a 39 percent rise in liquidations in England and Wales.

The Office of Fair Trading has approved Centrica’s bid to buy a 20 percent stake in British Energy from EDF. The £2.3 billion deal will allow Centrica a share in both electricity as well as future profits from four soon-to-be-built nuclear power plants, in addition to claiming 20 percent of British Energy’s un-contracted power output. The OFT granted the approval after concluding that a Centrica-EDF tie-up would be unlikely to create volatility in energy prices,

BAA Aviation has announced that they will be raising their annual cost cuts target by £14 million to £30 million as it continues to identify acquisition opportunities during the economic downturn. The aircraft-servicing company continued to outperform the market despite posting a two percent drop in half-year revenues to £550 million and a similar fall in pre-exceptional operating profits to £50.6 million.

Pre-tax profits declined from £46.7 million pounds to £25.8 million pounds after taking £12.6 million of exceptional charges into account, partly for restructuring. The company’s debt dropped from £554 million to 449 million, while the dividend remained static at 2.3 pence.

Health and beauty retailer Superdrug reported a pre-tax loss of £7.4 million pounds in 2008, compared with a profit of £21.6 million in 2008 For the year to December 27 2008, revenue at the AS Watson-owned group declined marginally by two percent to £1.07 billion.

Signet the jewellery group, has announced that its outlook on both sides of the Atlantic remains “uncertain” after it reported a four percent drop in total sales. The group said like-for-like sales in the UK declined by 4.2 percent in the six months to August 1, with H Samuel falling by 2.2 percent and Ernest Jones down 6.5 percent

Shares in Smith & Nephew edged 0.8 per cent higher at 474 pence on renewed speculation it might become a takeover candidate for US giant Biomet. The speculation follows a period of underperformance for S&N stock, which has slipped 14 per cent from its 2009 high as the weakening economy led patients to delay hip surgery.

Shares in sporting goods retailer, Sports Direct lost 2.5 per cent to close 89 pence on news that the Competition Commission are liable to examine its purchase of 31 stores from rival JJB Sports. If the commission arrives at the conclusion that competition was lessened by the sale. It could bar trading at five overlapping stores, or even place an embargo on the entire sale.

In the banking sector Royal Bank of Scotland fell for the first session in eight, losing 12.1 per cent to 47 pence after it provided a downbeat outlook statement with wider underlying losses than analysts had expected. Lloyds Banking Group, whose more optimistic view of 2010 led its stock to surge this week, took a minor retreat on Friday falling 2.6 per cent. However Barclays continued to remain supreme, gaining 3.1 per cent to close on 365 pence.

The UK’s FTSE 100 index finished for the weekend up 41 points, or 0.9%, at 4,731.56 – its highest close since early October. The FTSE 100 has rebounded 34 percent since March 3 Meanwhile the FTSE 250 continued to climb, rising on Friday by a further 43.91 points to close on 8,421.46

The pound continued to wobble against the other major currencies on Friday.
Pound/US dollar 1.6717
Pound/Euro 1.1761
Pound/Japanese Yen 162.2643
Pound/Swiss Franc 1.8033

Leading US and UK shares closed at their highest levels since last year after better-than-expected US jobless data boosted investor confidence. On the news, the Dow Jones index jumped 114 points, to close for the weekend at 9,370.07, its highest level since November of last year. The NASDAQ also did better, up 27.09 points to close at 2000.25

US President Barack Obama said over the weekend that the fact that the US economy lost only 247,000 jobs in July meant “the worst [of the recession] may be behind us”.
The unemployment rate fell to 9.4%, down from 9.5% in the previous month, the first drop since April 2008.

After reporting a rare loss in the first three months of the year, US financier Warren Buffett’s investment firm has reported a jump in profits.
Between April and June, Berkshire Hathaway made a profit of £2 billion up 15% on the same period a year ago, although revenues fell slightly too around £20.5 billion
In the first quarter, the company made a loss of around £1 billion.

According to official figures, German exports have risen by 7% in June, the fastest pace in nearly three years. In the latest sign of recovery in Europe’s economy, exports for the period totalled 67.4 billion Euros (£57.8 billion) which, while imports of 56.4 billion Euros, brought the country’s trade surplus to 11 billion Euros. These figures are the latest positive signal from the export-focused economy. At the same time, France reported that its trade deficit widened to 4 billion Euros in June, from 3.137 billion Euros for May.

Joining the ever increasing chorus that recovery is just around the corner were the European based Organisation for Economic Co-operation and Development,

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Tags: Abbey, Alliance and Leicester, BAA, Bank, Banking, Barack Obama, Barclays, Bradford & Bingley, Centrica, EdF, Financial News, Financial Services Authority, JJB Sports, Royal Bank of Scotland, Smith & Nephew, Superdrug, UK Banks

There was little or no news around as the FTSE closed its doors for their annual spring holiday. There was much anticipation that tomorrow will see a continuation of the steady recovery that has now gone on for the last few weeks, especially on the announcement that the US treasury look set to purchase around one trillion dollars of healthy ( at least for the time being) assets from the banks. Experts have it that this will create the final major push that will eventually extricate the American as well as the global economy from the severest recession seen in more than sixty years.

It was just like the French to spoil a holiday, and this they almost did with the announcement that their state-controlled utility body EDF is considering disposing of its electricity distribution business in the UK, in a move to reduce its heavy debt burdens. Seemingly the matter was raised at the company’s recent board meeting, when the proposition of disposing of the network, which is the largest in the UK, was mooted. The apparent reason is that EDF are finding themselves temporarily strapped for cash, after a series of acquisitions, the most recent being the €15bn purchase of British Energy.

Overall EDF are reported to be planning to offload assets worth around €5bn in disposals, to reduce their debts that currently amount to almost €25bn.
The recently bankrupt Chrysler group has hastened to announce that their UK operation was in a healthy position despite their US parent group having called for Chapter 11 protection on Friday.

The UK offshoot, based in Milton Keynes and with a work force of around seventy, announced that they were in close contact with the company’s dealerships around the UK as well as any customers who have been in contact concerned about outstanding warranties and the availability of spare parts. In 2008, Chrysler UK sold over 13,000 vehicles.
Sterling rose slightly against the dollar yet slipped back against the Euro, whilst holding its own against the Japanese Yen and the Swiss Franc:

· Pound/US dollar 1.504
· Pound/Euro 1.1204
· Pound/Japanese Yen 148.43
· Pound/Swiss Franc 1.6919

On Wall Street shares enjoyed another relatively buoyant day with the Dow Jones Average rising another 214.33 points to close at 8426.74. The Nasdaq also rose by 44.36 points to finish the day at 1763.56.

Stateside yesterday, President Obama announced a proposal that will effectively outlaw certain loopholes designed to allow offshore tax-avoidance. The move is expected to affect US corporations with overseas divisions. Obama’s proposal is intended to disallow certain tax deductions for firms whose profits are earned in countries with lower tax bands than that of the US.

The US Treasury will be employing almost one thousand additional federal agents to enforce the new legislation, which is likely to bring an additional £140billion laws, ($210bn) in tax revenue over the next ten years

In overnight trading in Asia, encouraging signs continued. Shares in the Taipei exchange closed at the highest levels since September 2008, buoyed by investor confidence of closer ties with Beijing Yesterday advance left the benchmark up 38 per cent since the beginning of 2009.

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Tags: British Economy, EdF, Energy Prices, Financial News, FTSE, Recession, UK Banks, US Treasury

Most of the financially pressed UK public will not be falling to their knees in gratitude at the news that British Gas, Scottish and Southern Energy, and Eon have finally cut at least some of their prices which rumour has it was only agreed to after considerable political pressure. All in all, the ‘big six’ UK energy suppliers – British Gas, EdF, Eon, Npower, Scottish and Southern Energy and Scottish Power – have reportedly been threatened with a windfall tax if they did not do more to help their customers, especially those in the lower income bracket.

The lack of gratitude displayed by British consumers may be largely due to the fact that the reductions in energy costs range from four to ten per cent, not a lot when you consider that energy prices in the UK have raised by an estimated fifty percent in the last twelve months. During that time, energy companies were blaming oil price increases as the principal factor. However, now that oil has dropped to around a third of what it was costing when these price increases were forced upon the majority of UK households, already struggling to make ends meet , the pittance offered in the way of price adjustments is no less than insulting. And to make the insult even more stinging, most of the new price tariffs are not due to come into effect till the spring. After one of the longest and coldest winters and most profitable for energy companies in living memory

With the UK becoming increasingly aware of the benefits of green energy, energy companies are calling upon the public to become silent partners in their move to push the British consumer to be less dependent on fuel driven energy scources. Gradual increases in fuel bills will be used to

Subsidise the installation of solar panels and wind turbines to create power as well as to allow the appropriation of wood-burning boilers for hundreds of thousands of homes instead of coal or gas driven.

However, there are several citizen protection bodies that claim that the public should not be asked to subsidize these investments and instead that UK energy companies should finance this form of expansion from the considerable profits they have earned over the last few years, while the public have been forced to stretch themselves to the limit to make ends meet.

This new Government driven ‘Renewable Heating Incentive’, package, unveiled before the weekend by Energy and Climate Secretary Ed Miliband, as part of an energy package designed to reduce costs in the long term for the British public. The programme includes grants for domestic windmills and solar panels, as well as plans to insulate seven million UK homes. The sting in the package is that a levy imposed on fossil fuel energy suppliers will be passed on to the UK public in their energy bills.

The Government insists that in the long term the package will cut energy waste and reduce fuel bills for millions. However in the short term the public is once again been not asked but forced to pay the bill for progress.

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Tags: British Gas, E.ON, EdF, Fuel Costs, Fuel Package, Npower, Scottish and Southern Energy, Scottish Power