It now appears that the global economy is recovering at a much faster pace than many expected it would. However it appears that making up the rear, and probably by a distance, will be the UK economy that just can’t seem to shake itself out of the doldrums.

According to the Organisation for Economic Co-operation and Development (OECD) the UK economy is even liable to contact by 4.7% this year, a scenario which is much worse than predicted by the UK Treasury who called the rate of decline at 3.5% decline.

The OECD predicts that both the US and the Eurozone to officially call and end top their recessions by the end of the third quarter, encouraged by a series of positive financial indicators in recent months.

.Meanwhile UK financial analysts explain that the UK stodgy economy has been brought about by the fall in the growth for 2009, which has been driven entirely driven by to terribly negative downturns in fourth-quarter 2008 and first-quarter 2009, while forecasts for the UK in the third and fourth quarters of 2009 are, in fact, slightly better than were originally predicted. However they are not sufficient to pull the UK out of the recession.

Meanwhile UK Chancellor, Alastair Darling, forever thinking one move ahead, fears that Germany and France, having returned to a position of economic growth, will begin to reduce their stimulus spending.

Darling is determined to push the G20 nations to take whatever measures necessary to combat unemployment. He expects them to take similar measures to Britain’s £5 billion jobs package, as he is concerned that if the stimulus package is pulled away too soon, the return to growth might fizzle out.

Chancellor Darling is due to attend a meeting of G20 finance ministers in London on Friday and Saturday, prior to a global recovery debate to be held in Pittsburgh in three weeks, where he and Prime Minister Gordon Brown will be in attendance

Recent reports have shown that the service sector expanded at a faster rate in August than expected, adding further hope that the economy is recovering, albeit slowly.

This piece of positive news was offset by a warning from the financially embattled West Yorkshire Welcome Financial Services that the company may have to shed a further 500 jobs as it continues its battle for survival.

Yorkshire based Cattles, who own the company, are burdened by debts of over £2.4 billion and are under scrutiny due to accounting irregularities, have announce plans to close 30 of its 180 Welcome branches as well as reducing the number of employees in their s sales and support teams.

Cattles have already closed its Welcome Car Finance car loans business cutting more than 1,000 jobs.

The company said it remains in negotiations with key creditors about a deal that would give it breathing space on the repayment of its debt

Deutsche Telekom have made no secret that they are interested in offloading their UK mobile phone unit T-Mobile UK, and have begun talks with the UK’s Vodafone, France Telecom, and Telefónica of Spain in hope of completing a rapid sale. One of the possibilities being discussed is a possible merger between T-Mobile UK and France Telecom’s Orange UK, a possibility suggested by Telecom. Representatives of Deutsche Telekom are seemingly hopeful that significant progress can be made by mid to late-October.

Electrical goods retailer DSG International were so anxious to withdraw from the Polish market that they sold off their interest there for a nominal €1, just three months after retreating from Hungary leaving a single Euro note there also. DSG have enjoyed considerably more success in the Nordic region however that is partially offsetting a continued weak performance in the UK and Ireland, where DSG operations Curries, PC World and Dixons electric goods retailing chains. Shares in DSG rose by 0.59 pence to 27.58 pence on the news.

Gains on London equity markets faded by the close on Thursday as falling oil and drug stocks offset gains for miners and financial stocks.

The FTSE 100 index ended a further 20.80 points lower at 4,796.75. Meanwhile the FTSE 250 made up for most of Wednesday’s reverses, rising 84.87 points to close on 8,604.80

The pound climbed to its highest level for a week on Thursday after a survey of the UK services sector raised some hopes that the country’s economy could return to growth in the third quarter.

• Pound/US dollar 1.6322
• Pound/Euro 1.1454
• Pound/Japanese Yen 151.1341
• Pound/Swiss Franc 1.7338

On Wall Street, the markets continued to be relatively stable, with the Dow Jones Industrial Average rising 11.86 points to close on 9292.53 while the NASDAQ Composite index rose a mere 5.94 points to close on 1973.01

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Tags: Alastair Darling, Banking, British Economy, British Pound, Cattles, Curries, Deutsche Telekom, Dixons, DSG, Economy, Employment, Financial News, financial recovery, France Telecom, FTSE, Global Economy, Gordon Brown, Money Markets, NASDAQ, OECD, Organisation for Economic Co-operation and Development, PC World, Recession, T-Mobile UK, Telefónica, UK Banks, UK Economy, UK government, UK Recession, UK treasury, Unemployment, Vodafone, Wall Street

If the UK public needed any further proof that the recklessness driven by greed of the people that they trusted to run their banking system had driven their country to the verge of bankruptcy lies in the discoveries in a recent report that Great Britain, once the jewel in the crown of European commerce, now holds the highest percentage of toxic assets of financially distressed companies in all of western Europe.

In the days of the financial boom, and even before- hand , the British economy was substantially influenced by its financial sector, which made a tremendous contribution to growth in the United Kingdom. The British Chancellor of the Exchequer, Alistair Darling, was heard to say on more than one occasion that “London has risen to the challenge of the global economy and has become the world’s leading financial centre.”

In those halcyon days before the collapse of the financial system, London was indeed the Camelot of the European financial system , home to the highly influential London Stock Exchange, as well as the cream of the UK’s most important banks such as Barclays, Lloyds, the Royal Bank of Scotland Group and HSBC as well as several hundred international banks.

As the extent of the financial collapse began to hit home, it has come to light that the UK banks now currently hold just under a quarter of all the distressed assets in Europe. In terms of percentages, the UK banks were holding as security 24 percent of the assets all distressed companies in 2009, while Germany has 14 per cent, Italy 12 per cent and France just 6 per cent.

Those in the know were not surprised to discover the extent of the UK’s banks coverage, given the greater leverage that the British banks rushed to take on during the bubble years of private equity.

The European manufacturing sector has been the worst hit in recent years, with statistics showing that in July 2009, 41 per cent of distressed companies came from this sector manufacturing.

In the last few years, the UK accounted for 34 per cent of leveraged buyout (or LBO), or highly-leveraged transaction (HLT). This recipe for financial disaster for UK banks occurs when the assets of an acquired company are used as collateral for the borrowed capital, sometimes combined with the assets of the acquiring company.

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Tags: Alastair Darling, Alistair Darling, Bank, Bank of England, Banking, bankruptcy, Barclays, British Economy, British Pound, Credit Crunch, Currency, Debt, Economics, Economy, Finance, Financial News, Global Economy, HSBC, Lloyds, London Stock Exchange, Money, Money Management, Money Markets, Recession, Royal Bank of Scotland, Royal Bank of Scotland Group, Stock Markets, Stocks and shares, UK Banks, UK Recession

The world’s carmakers are queuing up for government handouts as customers have put the brakes on spending.

James Bond marque Aston Martin is planning 600 job losses at the firm’s Gaydon, Warwickshire, and factory. Aston Martin is also cutting costs by extending the Christmas shut down for two more weeks.

Aston Martin chief executive, Ulrich Bez said: “Like other premium car brands, Aston Martin has been forced to take action to respond to the unprecedented downturn in the global economy. These are regrettable but necessary measures in the extraordinary market conditions we all now face.”

Former Aston Martin owner Ford has also hinted luxury Swedish carmaker Volvo could be for sale and a share Ford owns in Mazda, the Japanese brand is open to offers as well.

Both announcements heralded details of plunging sales figures for November.

Sales were down 20% in the UK in September and October and November’s figures are due later this week. The industry would show no surprise at a continuing drop in sales as credit has dried up.

Later today, Ford, General Motors and Chrysler are returning to the US government with an improved financial strategy to beg for a $25 billion aid package.

The US car giants are not the only big names seeking government aid. Volvo and Saab, which is owned by General Motors, have asked the Swedish government for financial help.

Latest figures also show car sales are dropping through the floor in Belgium, Italy, Sweden and France.

Worst hit is Spain, with sales down 50% – the worst figures since 1993 – and where the government is already budgeting for an €800m package to help the car industry amid fears 50,000 jobs could go.

In Japan car sales fell 18% and were down 8.6% in South Korea.

The tumbling sales figures in Europe make grim reading for UK car makers as the bulk of the cars made here are exported to Europe.

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Tags: Economic Crisis, Global Economy, Job Losses, Spending

As expected, the tightening of non essential spending in the west has led to the Chinese government to declare that its growth rate has fallen to below 10% for the first time in several years….all the way down to 9.9%. Some predict it could fall further to (wait for it) 8% next year!

This isn’t a surprise and it’s not a huge shock. China has very different fundamental to Western economies. For a start, it has a lot of savings. This will provide the economy a nice buffer against any downturn. Second, it doesn’t need to raise capital. The banks in China never got involved in many of the high risk games of their western counterparts. Even though the Chinese people are going through a stock market bust that has seen over 65% wiped off the value of Chinese shares and a property bust in once popular property markets like Shanghai and Beijing, the savings are still there…roughly $1.3tr in USD alone.

Secondly, the needle of the internal Chinese consumption engine is still in the red…their growth rate, though slower, is still electrifying. That being said, steel and other heavy industries are showing weakness form declining consumer demand at home and textiles and toys are showing weakness from declining demand abroad, particularly in the west. Recently, China closed 10,000 factories in a single city, but their government driven infrastructure projects continue as before…at a blistering pace.

It wouldn’t surprise me one bit to see China held up as a shining example to the West after the crunch has run its course. The hard working, saving, family orientated (and obedient…!) Chinese will be a model for us all. It’s only a matter of time before a politician tells us to “take a leaf out of Chinas book”.

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Tags: China, Economic Growth, Economy, Global Economy, Property Markets