Iceland’s president has refused to sign a controversial bill to repay £3.1 billion previously promised to the UK and the Netherlands. The news came after Iceland’s President Olafur Ragnar Grimsson announced a change of a heart following public protest and instead the country will now hold a referendum on the bill, which was designed to compensate governments forced to bail out their savers with Icesave accounts following Iceland’s banking crisis.

Legislation to repay the money was approved by Iceland’s parliament in December, but the approval of the president is also required before it can be passed into law.

Things must be getting strained again between Alistair Darling and Gordon Brown who were reported to have contradicted each other once again and in public. The contradiction was on that hot potato over how to handle public spending. Darling was reported to have argued that revenue from stronger than expected growth should be used to cut borrowing in a bid to allay the concerns of bond market investors, while Brown was said to be of the view that strong recovery may help to sustain spending, warding off fears of significant cuts to public services. Government officials hastened to deny a split between Brown and the chancellor. But they would, wouldn’t they.

Kraft have announced that they expect to increase the cash proportion in their offer to Cadbury in an attempt to make their bid more attractive to shareholders. The cash will come from the sale of its North American pizza business, strangely enough bought by erstwhile takeover bid competitors, Nestle who paid over £2 billion for a slice (of the company) .Meanwhile and contrary to recent speculation, Nestle have announced that they do not intend to table a takeover bid for Cadbury,. The company having been linked to a possible offer following Kraft Food’s hostile bid for Cadbury that was announced in December.

As part of their new strategic review, the English Premier League is looking to increase its international reach by inviting companies to become an official technology partner, aimed at tapping global opportunities more successfully. With current sponsorship making up just five per cent of the Premier League’s one billion pounds annual turnover, from sponsors that including Nike, Lucozade, Wrigley, and EA Sports, Topps Merlin and Sporting iD and title sponsors Barclays Bank.

One of the companies brave enough to raise their prices to match the return of VAT to its previous 17.5 per cent rate are Apple, who have increased the prices of many products on the Apple Store, including Macs. On 1 Jan 2010 the VAT level in the UK returned to 17.5 per cent, up from the reduced rate of 15 per cent (VAT is the UK term for sales tax). The UK government temporarily reduced the rate of VAT during 2009 to add some life into the UK economy, and it was thought that many of the UK’s leading retailers would continue to subsidise the increase, at least for January.

However Apple’s move seems likely to prompt some discussion surrounding the pricing of Apple products in general, which has steadily increased in the UK over the last two years.

Encouraging evidence of better retail conditions with record sales over the Christmas and New Year period were provided by the John Lewis employee-owned department store and chain. The company reported sales strongly ahead of the last two years that in the five weeks to January 2. John Lewis’s performance offers hope to retailers as they begin to release figures on their trading in the crucial festive period on Tuesday. John Lewis said total sales rose 15.8 per cent in the five weeks to January 2, compared with the same period a year earlier, while sales based on stores open at least a year were up 12.7 per cent.

On the stock exchange, shares in partly-nationalised Royal Bank of Scotland rose 9.9%, helped by analyst’s predictions that the bank is liable to "outperform" in 2010.

The FTSE 100 brought in the New Year and new decade by closing above 5,500 for the first time since the start of September 2008 – before the Lehman Brothers collapse, coming after a 22% rise over the whole of 2009 and a 53% rally from the low last March. The FTSE 100 closed on Tuesday on 5522.5.

Britain’s currency weakened possibly due to U.K. Business Secretary Peter Mandelson hints that the pound’s devaluation aided the economy in the recession.

• Dollar 1,5967
• Euro 1.1126

The chairman of the US Federal Reserve Ben Bernanke has blamed poor financial regulation for the financial crisis and defended the record of America’s central bank, whilst calling for urgent improvements to financial oversight to prevent a repeat of an economic storm that he said could ultimately prove to be "the worst in history".

In a recent speech, Mr Bernanke argued that low interest rates in the first five years of the new millennium were "appropriate" for the time and had not caused the "bubble" in US house prices. His reaction came after the Fed has recently come under criticism by certain US economists who argue that it kept rates too low for too long, encouraging an artificial property boom. The subsequent crash led to a surge in repossessions, leaving lenders with huge losses, causing a financial contagion that spread around the world.

On Wall Street, the Dow Jones Industrial Average closed on Tuesday up 144 points to 10,572, while the NASDAQ also rose 39 points to 2,308.71.

According to expert analysts, the US public pension system faces a higher-than-expected shortfall of more than $2,000 billion that will increase pressure on many states’ strained finances and crimp economic growth. Recent estimates of aggregate funding requirement of the US pension system have ranged between $400 billion and $500 billion, however recent speculation has concluded that public funds would need to find more than $2,000 billion to meet future pension obligation

Commodities prices are set to rise further this year as the global economy expands faster, according to an International Monetary Fund forecast, following the biggest annual price increase for raw materials in nearly four decades in 2009

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Tags: Alistair Darling, Apple, Apple Store, Bank, Banking, Barclays Bank, British Economy, British Pound, Cadbury, Credit Crunch, Currency, Dow Jones, EA Sports, Economy, English Premier League, Financial News, FTSE, Gordon Brown, House Prices, International Monetary Fund, John Lewis, Kraft, Lehman Brothers, Lucozade, Money, Money Markets, NASDAQ, Nestle, Nike, North American pizza, Olafur Ragnar Grimsson, Peter Mandelson, Recession, Retail, Royal Bank of Scotland, Sporting iD, Stock Markets, Stocks and shares, Topps Merlin, UK Banks, UK Economy, UK government, UK Recession, US Federal Reserve, Wall Street, Wrigley

As part of the Digital Britain programme outlined in a report presented yesterday by Culture Secretary Ben Bradshaw to the UK Parliament, every British home with a fixed-line phone will be hooked to broadband internet within the next two years. That’s the good news, but the bad news is that a small fixed levy of 50 pence per month to spread the cost of providing the service to the peripheries of the country.

Another example of the “good news, bad news” was presented by the Culture Secretary Bradshaw during the same report, but this time the bad news applies only to the BBC.

Part of Bradshaw’s vision for Digital Britain is that a percentage of the revenue gained from license fees will no longer be for the exclusive use of the BBC. Instead a percentage will also be allocated to the ITV to pay for regional news; with 3.5% of the annual fee looking like it could be going to the ITV as well as other public service broadcasters from the year 2013.

The heavily indebted pub group Punch Taverns announced that they will be to coming to terms with the problem through the launch of a £375 million share placing, with proceeds from the placing to be set aside to meet a critical £215 million bond repayment due early 2010.

With the English Premier League currently on hold, the drama seems to have moved from the football field and into the boardroom. The Premier League’s management has increased the pressure on cash strapped Setanta, who look like being default to meet a £10 million payment on Friday as part of its existing license agreement. The Premier League have passed the ball back to Setanta by emphasizing that if the payment is not met, then the contract will be terminated. To rub a little more salt in the wound, the Premier League have announced that they will be issuing a tender to cover the group’s 46 football matches promised for season 2009/2010, stating that whilst they “would like to provide Setanta with as much time as possible to rearrange its finances” the start of the season was now less two months away and they needed to ensure that these matches would be covered.

The UK’s largest retailer, Tesco pointed out that strong growth in Asia and the US has helped them to offset a steadier rate of growth at home, whilst pointing out some tentative improvement on their UK performance compared with their previous quarter’s results.

Matalan, the discount retail chain have seen sales and profits increase as bargain-hunting British shoppers beat a path to their door.
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A spokesman for the company announced that sales for the financial year to February 28 had risen by two percent to £1.04 billion, while profits had increased to £102 million.
As the global economic downturn, the trend for discount retailers such as Matalan to outperform the high street appears to be gaining momentum.

Yesterday was a better day on the Stock Exchange. The FTSE 100 rose, but just by a smidgeon, 2.56 points to finish on 4,328. 57, a big improvement on Monday’s free fall. The FTSE 250 continued to drop but not as much as in previous days’ trading. The day’s trading closed with the FTSE 250, down just 9.92 points on 7,483.60

Sterling rose slightly against the dollar, Euro and Swiss Franc, while losing ground slightly against the Japanese Yen.

Pound/US dollar 1.6398
Pound/Euro 1.1852
Pound/Japanese Yen 158.1283
Pound/Swiss Franc 1.7856

In the US, the Federal Reserve announced yesterday that industrial production had fallen by 1.1% in May from April, a figure which was considerably higher than had been hoped for.

On Wall Street share prices continued their fall, with signs that profit taking was the cause, rather than lack of confidence. The Dow Jones dropped 107.46 points to close on 8504.67, while the NASDAQ dropped another 20.2 points to close below the 1800 mark on 1796.18

The number of new US house starts in May rose considerably when compared to April’s record low, according to a spokesman from the Commerce Department.
Housing starts rose to a seasonally adjusted annual rate of 532,000 units in May, up from April’s figure of 454,000, making for an increase of 17.2% on the month, while still down 45.2% from May last year.

Commodities prices were mixed on Tuesday with oil rising above $71 a barrel at one point as a weaker dollar lured investors back into the energy market after a sharp sell-off on Monday.

The European Central Bank (ECB) has issued a warning that Eurozone banks face additional losses of more than $283 billion in 2009 and 2010 as continental Europe’s severe recession continues and even intensifies, placing tremendous strains on the financial sector,.
As part of a report issued by the ECB on Monday proclaimed that the fates of the eurozone economy and its banks have become increasingly interlinked,” with banks losses expected to be focused on their loan exposures.

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Tags: BBC TV’s, Ben Bradshaw, British Economy, Digital Britain, English Premier League, Financial News, ITV, Matalan, Punch Taverns, Setanta, Tesco