It came as no big surprise to anybody when the Bank of England (BOE) announced that they will be holding interest rates at their record low of 0.5%, and for the twelfth consecutive month.

The BOE’s decision gained a consensus of approval by UK economists, who pronounced, individually and collectively that rises in the cost of borrowing could set the UK’s fragile economic recovery back into the red.

The announcement that the bank will be standing firm on the amount of money that will be pumped into quantitative easing program (QE) programme was also met with a similar apathy.

BOE governor Mervyn King has long since made clear his opinion on increasing interest rates raising QE quotas, and all the rest of the UK’s financial programs by simply stating that that it was “far too soon” to make any changes to the status quo.

Sterling has now dropped in value for six consecutive trading days, with the bulk of opinion on the Pound’s increasingly weak position being because of speculation that the forthcoming general election is liable to see a hung parliament which translates to a government that will be too weak to mend the UK’s financial problems. Since the beginning of 2010, the pound has dropped by seven percent against the dollar, reaching a ten month low of $1.4783 on March the 2nd. The pound closed on Thursday on $1.5051 while the Euro was stabilising at 1.1078.

Financial Service Institute (FSA) chairman Lord Turner has voiced his opinion that that the size of banks was also not the main reason behind the economic turmoil, and even some of the UK’s smaller financial institutions could have been pronounced equally guilty of “over-exuberant lending” and taking “risky short-term wholesale deposits, Turner explained “Everyone was seduced by the long boom and were often led astray in the past by complicated mathematical rules. The Bank’s regulators were the ones who failed to notice the inherent weakness in that position.”

The FSA chairman also went on to explain that when the time comes to add up the cost of bailing out the financial services industry at the height of the global financial crisis may in the end turn out to be a lot less than first predicted.

“It is quite possible that the total overt costs of the UK’s big bank rescues may not exceed five-ten per cent of GDP," Turner predicted in a recent interview "and perhaps considerably less as indeed was the case in the Swedish banking crisis of the 1990s.” He summed up.

Recent research is pointing to a situation that increasingly adds weight to the theory that the UK’s property rental sector is heading towards a similar model of the mainland European countries of increasingly longer tenancy agreements.

According to one of the UKs largest letting agencies, during the last year and a half, a fairly dramatic increase in demand for rented accommodation has been observed, with potential tenants being especially interested in properties with long term tenure periods.

Reasons given for this new phenomena in property rental appears to be largely causes by increasing difficulties of young families to raise the new and higher deposit levels required to be granted a mortgage, while around a third confessed that they were unsure that the conditions were ripe to put their toe in the still turbulent waters of the UK property market. With almost 40 percent of potential first-time home buyers opting to remain tenants in the meantime, because of the current tough mortgage-lending criteria and 14% of those questioned said they preferred life as a tenant to that of a homeowner.

Home ownership in the UK has fallen by three percent since 2003 with the trend likely to continue. Several of the UK’s leading property management companies now believe that the UK Government now needs to ensure that renting a home offers the stability levels that are currently only afforded to home owners.

British Airways, once again under strike threat have dug in by saying that more than one thousand of the staff have volunteered to work as cabin crew if indeed the threatened strike goes ahead.

As a further back up, BA announced that they also intended to hire no less than 23 fully crewed planes from a leading European owned charter company. The company’s role will be to help run flights from Heathrow Airport should the strike threats eventually materialise.

The Society of Motor Manufacturers and Traders (SMMT) recently announced that new car sales in the UK increased by 26.4% in February compared with the same month in 2009, with the main push in demand coming because of the Government’s scrappage scheme.

Launched in May of last year in an effort to boost the ailing car industry, the £400 million initiative, which allowed owners of cars at least 10 years old would be offered a £2,000 discount off the price of a new vehicle, with half of the grant being provided by the UK Government and the other £1,000 coming from the lucky carmaker. Figures from the SMMT show that almost 20 percent of new car sales in February came a result of the scheme, which is due to be wound up by the end of March.

On the stock market, Barclays Plc’s Asian partner, the China Development Bank announced that they will be reviewing their “ties” with the bank, U.K.’s second-biggest. The announcement caused shares in Barclays to rise one percent, to 333.1 pence.

The U.K.’s third-largest supermarket owner J Sainsbury Plc has announced plans to expand their activities into non-food products. They will be marketing electronics, entertainment and sports equipment among others through their Web site. Despite the excitement, Sainsbury shares 0.2 percent, to close on 335.4 pence.

Michael Page International Plc, the U.K.’s second- largest recruitment company announced a drop in full-year pretax profit of no less than 85 percent to £21.1 million pounds. Despite the reversal, their shares climbed 6 1.7 percent, to close on 395 pence.

The benchmark FTSE 100 Index fell 0.1 percent, to close on Thursday at 5,527.16.

On Wall Street, for the Dow Jones Industrial Average the only way was up, this time rising 47.38 points to close on 10,444.14. The NASDAQ Composite also held its own, rising 11 points to close on 2,292.31.

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Tags: Bank of England, Barclays, BOE, British airways, Dow Jones, Financial Service Institute, FTSE, general election, Heathrow Airport, Interest Rates, Lord Turner, Mervyn King, Michael Page International Plc, NASDAQ, quantitative easing, Sainsbury, SMMT, Society of Motor Manufacturers and Traders, UK government, Wall Street

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.

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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