UK Prime Minister Gordon Brown received a polite warning yesterday from international leaders who attended a conference in central London that Britain’s tax regime and infrastructure must be improved if the country is to continue attracting investment. Brown and business secretary, Lord Mandelson stressed that the UK still remained a competitive place to do business despite the turmoil caused by the recession.

Following in the footsteps of his opposite numbers at Barclays and Royal Bank of Scotland is Eric Daniels, chief executive of the taxpayer-supported Lloyds Banking Group. Daniels has joined them in waiving his right to a bonus for 2009 of around £2.25 million. Lloyds Banking Group have announced that they would pay 2009 bonuses to those who were entitled to them, whilst emphasising that these awards would be paid in shares and subject to clawback.

Criticism has been rained on the government’s planned 50 pence monthly tax on telephone lines designed to subsidise the cost of superfast broadband has come from all places, by a Labour-dominated group of MPs.

The Commons Business Committee said the new tax, which is expected to raise £175 million per year, would hit poorer families who were less likely to pay for faster broadband. The committee went on to add that the “regressive” tax would “place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge”.

The UK’s largest airports operator of airports BAA, announced on Monday that their pre-tax losses for 2009 had widened, partly because of losses of £277.3 million from the sale of Gatwick Airport, London’s second-largest. The £1.5 billion sale of the airport to Global Infrastructure Partners (GIP) took place just before the end of the financial year. GIP is an infrastructure fund backed by Credit Suisse and General Electric. Competition authorities had ordered a sale to meet concerns about BAA’s market dominance.

The loss on the sale helped inflate losses at BAA owned by a consortium led by Spanish group by Spanish group Ferrovial, from £324.2 million to £821.9 million. Total revenue for the year to December at the group’s London airports, including Gatwick, rose from £2.3 billion to £2.4 billion. Figures for the group excluded BAA’s other airports around the country at Glasgow, Edinburgh, Aberdeen and Southampton

The prospect of a strike is again raising its head for British Airway’s cabin crew. Their proposed strike action looks likely to cause travel chaos for hundreds of thousands of air passengers across the UK. The vote in favour of industrial action by the 12,000 member BA cabin crew comes as a reaction to ongoing disputes over pay and working conditions.

The cabin crew’s union Unite had already decided on a walkout in December, but that BA strike threat was defused by an eleventh-hour High Court ruling.

Meanwhile a strike by around four thousand German airline Lufthansa pilots has been suspended, with union officials agreeing to resume negotiations on disputes covering job security and pay issues.

The action, scheduled to run for four days, was suspended after less than 24 hours, and caused delays and cancellations for passengers. According to the pilot’s union, there will be no further action until at least March 9, the union said.

According to a company spokesman, electronics giant Samsung will introduce its 3D-enabled TVs to the UK within the coming month. No less than twenty different 3D-capable products, with Blu-ray players and the required 3D glasses are expected to be included in the range. To keep pace with demand, TV shows with 3D content will be making their debut in or around the same time, to a partnership with DreamWorks. The rapidly approaching 2010 soccer World Cup will also be broadcast in 3D.

Sterling fell on Tuesday after Mervyn King, governor of the Bank of England, said he could not rule out the possibility of further quantitative easing. Speaking before the Treasury select committee King confessed his concern over scant evidence of a pick-up in UK trade in spite of the weakness of the pound. The pound, which had risen to a high of $1.5575 ahead of the Bank’s statement, fell more than a cent to $1.5441, whilst rising to 1.1415 against the Euro.

The FTSE 100 turned negative on Tuesday following King’s gloomy assessment of the UK economy. The index closing 0.7 per cent lower at 5,315.09.

The US Senate on Monday voted to move forward on a $15 billion jobs bill.

The 62-30 vote in favour of ended months of gridlock in Congress, and is expected to pave the way for a jobs bill to clear the Senate, just as other critical employment benefits are set to expire.

The scaled-back measure is expected to create 250,000 jobs through an array of tax credits and payroll tax exemptions to stimulate hiring. The bill frees businesses from payroll taxes on workers who are hired after more than 60 days of unemployment and gives them a tax credit of $1,000 for new hires that they keep for more than a year.

A number of retail giants reporting positive earnings surprises were not enough to offset Tuesday’s poor macro data, as investors grow concerned that last week’s rally overshot.

Consumer confidence index dropped dramatically to 46.0 in February versus 56.5 in January, the lowest level since last April.

The Dow Jones Industrial Average dropped 126.41 points to 10,276.97 while the NASDAQ Composite also crept back by a significant 34 points to close on 2,209.6.

Chinese premier Wen Jiabao has announced his concern regarding the stability of his country’s investments in US bonds.

China disposed of $34 billion (£21.5 billion) of US government bonds in December 2009, raising fears that Beijing is losing confidence in American economic policy.

US treasury figures show that China is once again no longer the largest overseas holder of US treasury bonds. Beijing ended the year sitting on $755. Billion worth of US government debt, compared to Japan’s $768 billion.

Oil prices retreated below $80 a barrel Tuesday as r sluggish US crude demand justified a 14 percent rally over the last three weeks.

Benchmark crude for April delivery was down 34 cents to $79.97 a barrel, later rising 25 cents to settle at $80.31 on Monday.

Oil had jumped from $69.59 a barrel in early February due to optimism that the global economy will rebound strongly from recession last year. Yet growing inventories of crude, gasoline and diesel fuel suggest demand in the US remains weak.

Some analysts expect crude demand in the US and Japan will gradually follow overall economic growth and lift prices, with crude expected to trade at between $85 and $95 a barrel for most of 2010.

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Tags: 3D TV, 3D-enabled TV, BAA, Bank, Bank of England, Banking, Barclays, British airways, British Economy, Commons Business Committee, Credit Suisse, Currency, Dow Jones, DreamWorks, Ferrovial, foreign investment, FTSE, Gatwick Airport, General Electric, Global Infrastructure Partners, Gordon Brown, Lloyds Banking Group, Lord Mandelson, Lufthansa, Mervyn King, Money, NASDAQ, Recession, Royal Bank of Scotland, Samsung, UK Banks, UK government, UK Recession, Wen Jiabao

Rumours have it that Bank of England governor Mervyn King may have had some serious explaining to do Chancellor Alasdair Darling as to why the consumer prices index went shooting up to 3.5% added to the worst ever January figures on record with a first time deficit for the traditionally high income month. The deficit was a staggering £4.3 billion, largely due to higher government spending and considerably reduced tax receipts. Estimates were for a £2.6 billion surplus for the month. Income tax receipts were down a massive 20% on January 2009, while corporation tax receipts were 6% lower. The only plus was the 3% upturn on VAT receipts rose by 3% due to the rate hike. However total tax receipts for January still dropped by 9%.

It would appear that Royal Bank of Scotland Chief Executive Stephen Hester has decided to decline his 2009 bonus. According to reports, the bonus was to be around £1.6 million pounds, paid out under terms already announced by the bank. The terms were that the bonus payout would not be in cash, and deferred for three years.

Pressure has increased on both Hester and Eric Daniels, CEO of the Lloyds Banking Group, after top bosses at Barclays turned down their multi-million pound bonus payouts last week, despite the bank announcing bumper profits.

The ever optimistic Gordon Brown announced that the Government was continuing in their determination to invest in measures that will promote growth and preserve jobs in the industries of the future, adding weight to his backing of Chancellor Alistair Darling over his decision to delay spending cuts until next year.

Mr Brown, speaking at the Policy Network conference told the audience: "I say to the British people, this is not the time to put the economy at risk. This is the time to make sure that growth and jobs are secured. 2010 must be the year of growth. It must not be the year when the economy dips back into recession. Instead of admitting the mistakes of private banks and institutions in causing the recession, the well-financed right-wing are not only trying to blame governments for the crisis but trying to use legitimate concerns about deficits to scare people into accepting a bleak and austere picture of the future for the majority, and then to use what’s happening as a pretext for public services to be marginalised at precisely the moment they should become smarter and more personalised. "He summed up

Also on Brown and Darling’s side is UK Business Secretary, Peter Mandelson, who has told his senior colleagues that he intends to backs plans for a state-run investment bank that would use public funds and private capital to back small business and large-scale UK infrastructure projects. The new bank would be modelled on the KfW Bank in Germany, which provides funding for banks to loan to small businesses as well as capital for major projects. Apparently Mandelson has met senior KfW executives to discuss if such a bank could be feasible in the UK. Plans for such a bank are now being surveyed by a Treasury team. Hopefully some form of announcement of the formation of such a bank will be announced in the forthcoming Budget.

Overall Lord Mandelson has been increasingly seen and heard on the public stage these days. The UK Business Secretary was reported to have severely criticised monetarist economists for their involvement in getting Britain into its present economic "pickle". Mandelson has voiced his support for economists who have warned how "reckless" early spending cuts could hamper Britain’s fragile recovery. Mandelson’s comments come as Labour seeks to take advantage of the support for delaying spending cuts until 2011.

Also on the downward slope was mortgage lending with the council of mortgage lenders revealing that gross mortgage lending in January 2010 fell to its lowest level in ten years. Reasons given were that property buyers have been deterred by the end of the stamp duty holiday. Gross mortgages totalled £9.1 billion pounds in January, down almost a third from December 2009. These figures are despite a recent increase in mortgage availability, adding concern that poor market conditions would continue or even worsen as the government withdraws monetary support for banks between 2011 and 2014.

The trend for online purchases in the UK fell to its lowest level last month, according to recent figures. Electrical goods, clothes and holidays were the online sectors that recorded the biggest drop in sales, with monthly growth for January of just five percent compared with 19 percent for the same period in 2009.

On the business front, there appears to be increased optimism regarding lending. Research has shown that the number of private companies that anticipate finance to become more readily available has increased, with around 44 percent under the impression that finance would be more accessible this year, compared with eight percent with the same view in last year’s survey. However, despite rising confidence in the availability of finance, fewer businesses said their lender was more supportive than this time last year.

It now looks like BAA will be looking to sell off Glasgow Airport after new figures revealed it is lagging behind Edinburgh in customer traffic. The Glasgow branch has found it difficult to win new airlines who want to use the airport, and have lost a lot of passenger traffic, apparently around half a million a year after the collapse of Scottish airline Flyglobespan. Meanwhile a spokesman for Scotland’s capital has reported that Edinburgh has managed to fill the gap with new routes and extra flights added by air carriers in January, including Ryanair and Jet2. Their entry on the scene has already replaced the 400,000 Flyglobespan passengers a year that were passing through the airport. .

Sterling enjoyed mix fortunes on Fridays trading. It closed up 0.012 against the dollar at $1.54692 while falling to 1.1374 against the Euro.

Overall, the FTSE 100 added a further 51 points to 5,358.175, before the close of business on Friday.

In US forex trading, the dollar hit a nine-month high against the euro of $1.3477, whilst also rising against a basket of currencies. The rise came after the US Federal Reserve’s surprise increase in interest rates for emergency bank loans, to 0.75%, from 0.5%. Analysts saw the move as a sign that the Fed could soon raise its other key lending rate.

US stocks fell in early trading as investors feared any further rate rises could slow the economic recovery.

The Dow Jones Industrial Average was up another 9.45 points to 10,402.35 while the NASDAQ Composite also crept up another 2.16 points to 2,243.87 on Friday’s trading.

US consumer prices rose by less than expected in January, easing concerns about growing inflationary pressures. According to the Labor Department, prices increased by 0.2% last month, with analysts forecasting a rise of 0.3%.

The rise was largely driven by energy prices, which rose for the ninth consecutive month. Over the last 12 months, US energy costs have risen by close to 20 percent. Excluding food and energy, prices fell by 0.1% in January – the first monthly drop since December 1982.

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Tags: Alasdair Darling, BAA, Bank, Bank of England, Banking, Barclays, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economics, Economy, Employment, Financial News, Flyglobespan, FTSE, Glasgow Airport, Gordon Brown, KfW Bank, Labor Department, Lloyds Banking Group, Mervyn King, Money, Money Markets, NASDAQ, Peter Mandelson, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, US forex

Blame can be attached to UK Prime Minister Gordon Brown for many of the nation’s financial woes, rightly or not. On one fact, however, there is a consensus. That he had the foresight to keep the UK out of the euro. The recent financial crisis has shown that the structural weakness of the eurozone, which already seems to be crumbling, with the Greek tragedy exposing the weakness of a system of "mutual guarantees" by 16 different fiscal regimes. Opponents of the UK joining the single currency are basking in the light of their wisdom, but the smiles may soon be wiped from their faces, as it looks like Britain may be pulled into the crisis indirectly. This may happen if the International Monetary Fund (IMF) gets involved although the UK will be nowhere near the front line of a rescue package, unlike the Germans and the French.

Rumors that the problems that Greece, Spain, Portugal and Italy are experiencing– will lead to a break-up of the European currency is far-fetched. Above anything else, the single currency is a Franco-German political project with huge symbolic investment for postwar, post-Iron Curtain Europe.

The problem for Greece and the other Mediterranean counties is that their membership of the single currency means that they cannot devalue its way out of difficulty.

The UK Secretary of State for Business, Lord Mandelson has predicted that a decision on government funding to help rescue the car manufacturer Vauxhall could be completed within weeks. GM.UL is said to be looking for an investment of £2.9 billion pounds from European governments to facilitate a return to growth. Mandelson confirmed that the government is prepared to play a part in the rescue plans and that negotiations have started over what conditions could be imposed in return for government support

Difficult though it may be to accept, a recent survey on the banking sector has revealed that 57 percent of UK bankers and financiers received a bonus increase during 2009. The poll, which took in close to seven hundred financial professionals indicates that the Chancellor’s "super tax" on bankers’ bonuses had caused little effect on lavish remuneration packages.

More than a third of the bankers in the poll saw their bonuses either decrease or at least remain static. However those who fell into the this category did not cite the super tax to be the primary reason for the absence of an increase, preferring to cast the blame, and rightly so, on the performance of their companies with half of those who did miss out on a bonus were reported to be less than satisfied.

Prominent UK property developers the Shaftesbury Group have announced a major upturn in demand for property in the West End of London, with the Christmas and New Year period especially brisk. Shaftesbury announced a significant increase in new tenant agreements approved at rates at or above recent property values for the company’s various assets. While many UK property companies still struggling to honour their various banking covenants, the overall picture denotes that the UK property tide has turned, the company reports.

Lloyds Banking Group (LBG) is looking to sell or spin off major assets from the failing £70 billion pound property. The bank is establishing a review process, which currently in its early stages. The process will seek to reduce the amount of regulatory capital tied up in keeping the assets on Lloyds’ balance sheet, with the strategy expected to be finalised by Easter. At the same time, Lloyds plan to step up their sale of HBOS Integrated Finance, an investment business with stakes in about 60 companies.

Meanwhile the Royal Bank of Scotland (RBS), remain sitting on losses of several hundred million pounds after being forced to take back ownership of £1.8 billion in German properties bought at the market’s peak by a fund run by Morgan Stanley. In one of the largest paper losses on property for a UK bank, RBS has taken control of a portfolio of 28 German properties, after lending about €1.9 billion to acquire the portfolio in 2007. RBS are to follow the trend set by LBG to hold on to the properties until they return at least some of the losses..

Mobile telecommunications operator O2 believes that its purchase of Jajah, an Israeli voice over internet protocol (VoIP) company, will help the firm out- perform rival mobile operators and the current VoIP market leader Skype. A spokesman for Telefonica Europe, O2’s parent company, said that the company will use Jajah to attack the international calling card market, currently worth £100 million pounds a month in the UK, rather than to slash mobile call costs.

Fashion chain New Look are giving a lot of indications that they will become the third company in as many days to scrap a planned stock market flotation. The writing seems to be on the wall for New Look’s float, when they called off a proposed £1.7 billion initial public offering (IPO) on Friday, blaming a lack of appetite among potential investors. New Look had planned to raise a total of £650 million pounds from their IPO, using the money to cut debt as well as fund an expansion programme in the UK and overseas.

As the FTSE 100 was switched off for the weekend UK, stocks had receded a little The 100 Index was down 10.03 points to 5,142.45

The pound rose slightly against the dollar, closing at 1.5702 while jumping to 1.1522 against the struggling Euro.

President Barack Obama has signed a law increasing the limit on how much the US government can borrow.

The debt limit was raised to $14.3 trillion (£9.1 trillion) from $12.4 trillion, which will allow the government to function for the rest of the year.

Correspondingly Mr Obama also approved legislation that requires new spending to be offset with cuts elsewhere. The legislation will seek to address the record US budget deficit, which is predicted to reach $1.56 trillion in 2010.

The "pay-as-you-go" or "paygo" rule was in place in the 1990s – the last time there was a federal budget surplus.

On Wall Street things were still looking up. The Dow Jones Industrial Average finished for the weekend up 41 points at 10099.14. The NASDAQ gained 33 points to close on 2,183.53.

According to the US Commerce Department, retail sales rose at a higher rate than expected in January, boosting hopes that strong economic recovery will continue. Sales grew 0.5% month-on-month, while December’s figure was revised to a 0.1% fall from a first estimate of a 0.3% fall.

Sales were up by 4.7%, Compared with January 2009.

According to preliminary figures released on Friday, Germany’s recovery from recession faltered in the final quarter of 2009, failing to show any signs of growth at all in the last quarter of the year. France did better, reporting a 0.6% rise in GDP for the same three-month period which was higher than forecast. The figures released also showed that the economy in the Eurozone also grew 0.1% in the same quarter.

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Tags: Bank, Banking, Barack Obama, British Economy, British Pound, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, Gordon Brown, HBOS Integrated Finance, International Monetary Fund, Jajah, Lloyds Banking Group, Lord Mandelson, Money, Morgan Stanley, NASDAQ, New Look, O2, Recession, Royal Bank of Scotland, Shaftesbury Group, Skype, Telefonica, UK Banks, UK Economy, UK government, UK Recession, Vauxhall, Wall Street

While the UK economy snapped back into growth in the fourth quarter of 2009, it did so at a rate considerably less than economists’ forecast. It was thanks to the service industries and manufacturing sector, which expanded just enough to pull Britain out of its longest recession on record. According to figures released by the Office for National Statistics, gross domestic product (GDP) rose by a mere 0.1% from the third quarter. The weakness of the recovery will pose a challenge to Bank of England officials who are due to sit next week to consider week whether the economy is strong enough to begin winding down the Government’s emergency stimulus measures. Prime Minister Gordon Brown’ is regarded as being especially anxious to see and end his government’s propping up of the economy, as delaying it may hamper his efforts to win an election due by June of this year. Much of Brown’s campaigns have been based on promises to curb the budget deficit.

Brown is putting up his case that he is better placed that Conservative leader David Cameron to cut the ballooning budget deficit without hurting the economic recovery. Splits in the Labour Party are beginning to show as election day draws closer with Chancellor of the Exchequer Alistair Darling announcing that it would be “absolutely mad” to withdraw stimulus measures now.

The Bank of England’s £200-billion pound asset-purchase facility, designed to keep borrowing costs low and help pull the economy out of the recession also expired this week.

Meanwhile it was announced that the UK economy shrank 4.8% in 2009, making for the biggest annual drop since records began in 1949. It was also reviled that the in the fourth quarter the economy contracted 3.2% compared to records from 2008.

The fourth quarter data, the first to be released by a Group of Seven nation, means Britain is the last member country to exit the recession that was sparked by the worst financial crisis since the Great Depression. The US Government was expected to release GDP data for the fourth quarter on late January 29.

The news that the Lloyds Banking Group has succeeded in placing of £2.5 billion pounds of mortgages with investors, has raised new hopes that securitisation markets are beginning to open for banks. A £4 billion issue last September by Lloyds recorded a first attempt by a bank to tap the securitisation markets since the onset of the credit crisis. However Friday’s issue was the first to cause any form of reaction interest among U.S. investors to purchase prime residential mortgage securities

There are strong signs of recovery popping up London’s financial services industry, which took a severe pounding during the credit crunch. Recruitment is already on the up, and a recent survey showed that more than 80 percent of hiring managers are expecting recruitment volumes to rise in 2010. Only five percent of those responding to the survey named handling redundancies as a key personnel challenge for the year ahead, will close to half of those interviewed pointed to the threat of competitors poaching staff as a problem. The main problem for 2010, according to close to two thirds taking part, would, be salaries and particularly of discretionary bonuses. Remuneration has become a major hot potato in the financial industry, as the sector has emerged from the crisis under increased public and regulatory scrutiny.

Irene Rosenfeld, chief executive of Kraft has predicted that Cadbury has a positive future under the ownership of the US conglomerate, whilst adding fears of job losses at the UK company are "greatly overstated" and.

In her first interview since the takeover was agreed by the Cadbury board earlier this month, Rosenfeld announced that Kraft would not be looking for any mergers and acquisitions activity in the "near term" following the purchase of the UK confectionary company. "We acquired Cadbury because we believe it is a fabulous business and it is our intention to protect those assets," Ms. Rosenfeld pointed out. "It is our intention to invest in the business; in fact, if anything, the opportunities for the business will be greater as a result of the combination than perhaps they might have been on a standalone basis, given some of the competitive pressures." She continued.

Speculation is growing that the planned sale of the discount fashion chain Matalan is unlikely to raise the sum in excess of £1.5 billion pounds targeted by the company’s owner John Hargreaves. American private equity firms TPG, Advent International among others are expected to make offers in time for next Friday’s deadline. Analysts fear that the parties involved are wary of paying too high a price for Matalan. A clause in the deal specifying a "break price" of between £1.2 to £1.25 billion pounds, has been inserted by Hargreaves, entitling him to refuse any bids below this figure

Expectations are that the release of British Airways’ results for the three months to the end of December 2009 will expose further heavy losses at the airline. BA is expected to reveal a loss of £151 million for the third quarter of the financial year, making for total losses up to the end of March to £602 million, up almost fifty percent from 2008, which was BA’s previous record loss. The threat of pre Christmas strikes and severe weather conditions are two factors among many that have contributed to the company’s already poor situation.

Carphone Warehouse subsidiary TalkTalk have announced the launch of a new television and mobile phone service. The launch is yet another sign of the telecoms group desire to step up its challenge to their sector rivals. Charles Dunstone, chief executive of Carphone Warehouse, outlined the plans for the new division on Friday as the company also released details of the demerger of its telecoms and retail interests. TalkTalk, due to gain a stock market listing in March, have identified TV and mobile services as potentially strong sources of growth. Carphone Warehouse’s broadband rivals already offer TV services, and the market is rapidly expanding.

UK Coal’s already stagnating share price was sent even lower as the mining and property group announced that were liable to increase by £100 million pounds in 2009. UK Coal has announced that they expect production in 2010 to be roughly seven million tonnes, compared with 7.9 million tonnes last year. The company faced severe technical and geological problems in its underground mines in the second half of 2008. The troubled company’s shares fell 4.5 pence to 61.5 pence.

The pound posted a weekly advance against the euro after the U.K. economy exited recession in the fourth quarter and Bank of England policymaker. Expectations are that the U.K. currency will continue to gain value as the government’s propping up of the economy may not be extended, with the decision to be announced when the Bank of England meets to decide on interest rates on Feb. 4. Sterling also posted a monthly gain against the Euro, when closing for the weekend at 1.532.

The pound strengthened 1.3 percent in the week, its strongest level in five months. It advanced 2.3 percent in the January. The U.K. currency dropped 0.7 percent to $1.5993 for a monthly decline of 0.8 percent.

The pound rose 8.5 percent against the euro in the first month of 2010, the biggest monthly gain since the single European currency was launched in 1999.

The US economy grew by an annual rate of 5.7% between October and December, official figures have shown.

The number, which is a first estimate, is a big rise from the previous quarter’s growth rate of 2.2%.

It suggests the country’s economy is growing at its fastest pace for six years and confirms the US economy has left its year-long recession behind.

But even with the rebound, gross domestic product (GDP) shrank by 2.4% across 2009 as a whole, making for the worst annual performance since 1946.

On the news, the Dow Jones fell again this time by 53.13 points, 135 points, to close on Friday at 10067.33, while the NASDAQ lost another 31 points, to finish for the weekend on 2147.35

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Tags: Advent International, Bank of England, Banking, British airways, British Economy, Cadbury, Carphone Warehouse, Charles Dunstone, David Cameron, Dow Jones, Economics, Economy, Financial News, GDP, Gordon Brown, Irene Rosenfeld, John Hargreaves, Labour party, Lloyds Banking Group, Matalan, Money, NASDAQ, Office for National Statistics, Recession, Retail, Stock Markets, Stocks and shares, TalkTalk, TPG, UK Banks, UK Coal, UK Economy, UK government, UK Recession

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

City minister Lord Myners, in a recent speech played down suggestions that Britain might follow in US President Barack Obama’s footsteps in introducing radical reforms to the UK banking system.

Myners stated that the UK had already taken sufficient measures to address the problems in its banking industry.

"President Obama came out with a solution to the idiosyncratic problems that he sees in the American banking system, based particularly around the investment banking" pointed out Milner "It’s worth remembering that proprietary trading, hedge funds, private equity, these were not at the heart of the difficulties that Northern Rock, or Royal Bank of Scotland or HBOS experienced." He summed up.

Alistair Darling, UK chancellor, was also reported to be against duplicating Obama’s moves to split commercial and investment banks.

Meanwhile U.K. Prime Minister Gordon Brown is expected to announce details of the release of £125 million pounds of venture capital aimed towards "low-carbon" businesses. The move is aimed to support his argument that the government should continue spending to bolster the UK economy.

The first slice of money from the Innovation Investment Fund will be released on Jan. 26th, according to an announcement on the prime minister’s official Web site.

“On Tuesday our new innovation investment fund will show our commitment to the industries and the technologies that will create the skilled jobs of the future,” Brown promised. “What is increasingly clear is that determined and active government can and does make a difference.” He continued

Public sector borrowing for December in the UK was lower than forecast,, However the government’s hopes of meeting its deficit target for the fiscal year still remain dependent on January’s tax receipts. However tax income for January, which is a key month for self-assessment, capital gains and corporation tax income, is expected to be down. This is due to reduced income and capital gains for 2008-09, when the UK economy was in the midst of recession. On a positive note UK financial analysts have pointed to the fact that recent receipts were stronger than predicted, with December’s income only 0.4 percent down on the previous year, favourable when compared with the average of 8.1 percent decline for 2009.

The Royal Bank of Scotland (RBS) plans to sell its U.S. trading business for $2 billion to JPMorgan could be in doubt following President Obama’s recent ban on banks trading on their own account. RBS has been urgently trying to complete the sale of their a 50 per cent stake in RBS Sempra Commodities, by the end of next week which would have been bound to create a much more positive view of their annual results due to be released by Feb. 25th. On the news of the positive standoff, RBS, saw their shares fall 0.64 pence to 34.68 pence

Northern Rock and the Post Office have announced cuts to their mortgage rates believed to be in response to Skipton Building Society’s shock increase to its standard variable rate, which rose from 3.5 per cent to 4.95 per cent. A spokesman for the Skipton quoted "exceptional circumstances" had forced them to renege on promises that their lending rate would not rise more than three per cent above the Bank of England base rate.

The first two British banks to come under state control are looking increasingly likely to be merged, in a controversial change of direction by the EU in Brussels. The EU is apparently on the verge of approving the state aid package that Bradford & Bingley received from British taxpayers, opening the door for their buy-to-let mortgage book to be merged with Northern Rock’s so-called ‘toxic bank’. The merger, which UK government officials have been working on for several months, comes in the wake of public pressure to remove some of Northern Rock’s taxpayer-funded benefits, including the customer savings guarantees held in the "good of non toxic "part of the bank.

British Airways has issued some fairly heavy threats to their cabin crew who are threatening strike action. If they do so they stand to lose some of the traditional perks of the job, and on a permanent basis. These include the ability to book standby flights for themselves and nominated friends or family at a 90% discount , as well as the standard of hotels that crew are put up in overnight while they are away would be substantially reduced.

The airline says a strike would have serious financial implications leaving them with no option but to cut staff benefits.

British Telecom, in a move to woo broadband customers from rival operators, has unveiled an aggressive pricing strategy. The fixed-line telephone company is to offer consumers high-speed broadband based on optical fibre for £20 pounds, eight pounds cheaper than a comparable service offered by Virgin Media. An executive at BT’s retail unit, announced that the company goal is to attract "customers to come back to BT for all their services." BT’s optical fibre broadband will be predominantly based in towns and cities, and is expected to be capable of servicing more than 40 percent of UK homes by mid-2012.

According to BSkyB their High Definition marketing campaign was a Christmas marketing hit will full details due to be revealed in their forthcoming half year results due to be released this week. The results are expected to show that capitalising on the stay at home ethos typical of a recession was a shrewd move, with Sky offering a free HD box for customers who signed up for their film channels. City analysts are expecting the company to produce strong results, with turnover up by an estimated £2.8 billion, and a customer base up by around 300,000 new HD subscribers.

The fast food chain McDonalds are looking to create 5,000 new jobs in the UK in 2010 after seeing an 11 percent rise in sales over 2009. McDonalds currently operate close to 1200 outlets in the UK. The new jobs would come from the opening of up to 15 new branches in 2010 and the extension of opening hours in existing outlets. The UK jobs being created would take McDonald’s workforce to 85,000 in this country. A spokesman for the company announced that McDonald’s had increased UK like-for-like sales by 30 percent over the last four years.

Triumph, the UK motorcycle maker have announced an amazing upsurge in interest in their product with new bike sales for Triumph were up 26 per cent in 2009, at 7,450. This means that the company outperformed industry leader, the Japanese Kawasaki company for the first time since the early 1980s. Triumph has now captured 13 per cent of the British market and in the past year witnessed their global market share rise from 3.3 per cent to 4.4 per cent. Turnover in 2009 increased seven per cent to £304 million.

Sterling fell slightly against the dollar and the Europe before the weekend. The pound closed at 1.6118 against the dollar, with the Euro being traded at 1.1404

Shares in the FTSE 100 recovered some of their earlier falls closing on

Friday down by 0.6% at 5,302.99, Fears that the US President’s sweeping reforms would affect UK banks were seeing to recede.

In the US stock markets tumbled for a second consecutive day, over continued concern over President Obama’s plan to revamp the US banking industry.

The Dow Jones plunged by 216 points, to close at 10172.98, while the NASDAQ fell by 60 points, to finish at 2205.29.

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Tags: Alistair Darling, Bank of England, Barack Obama, Bradford & Bingley, British airways, British Telecom, BskyB, Dow Jones, FTSE, Gordon Brown, HBos, Innovation Investment Fund, JPMorgan, Kawasaki, Lord Myners, McDonalds, NASDAQ, Northern Rock, Post Office, RBS Sempra Commodities, Royal Bank of Scotland, Skipton Building Society, UK Economy, UK government, Virgin Media

In an interview held over the weekend, chancellor of the Exchequer Alistair Darling predicted that should the Labour Party be re-elected in this year’s anticipated elections they will be prepared to tightly rein in spending and curb Government borrowing. The treasury chief warned that the UK has little option but reduce the massive budget deficit entailing making the toughest public spending cuts seen in 20 years.

Darling’s comments signaled a change in direction or a possible split in Labour’s election strategy as until recently Gordon Brown’s has pinned the bulk of his preliminary electoral campaign and its possible success on the need to support economic recovery, instead of reducing the country’s current £178-billion-pound deficit. The International Monetary Fund has forecast that the UK’s GDP deficit will peak this year at 13.2 percent.

To the chagrin of many, city bankers look likely to suffer minimal impact from the bonus super tax imposed on them by the government last month.

Most banks who were available for comment hinted they are preparing to absorb if not all at least part of the cost of 50 per cent tax by inflating their bonus pools, and are prepared to run the risk of irritating the government and even their own shareholders in order to keep their staff happy. The banks are unofficially conceding that dividends are likely to be hit by their capitulation, and they are already under pressure as regulators have pressurized banks to increase their capital holdings, which will have a consequent effect on their profit margins.

Meanwhile, the Association of British Insurers (ABI) has written a letter to the remuneration committee chairmen of the UK’s top 350 companies warning boards against paying big bonuses and keeping directors safe from tax increases. ABI are concerned that investors will lose out amid fears that banks will absorb the supertax on bonuses at the expense of dividends. Last year was marked by a number of cases of shareholders rebelling against companies’ plans.

With Christmas trading a fading memory, it has been reported that city analysts are taking a close look at Tesco and attempting to determine how much the extra £100 million pounds’ worth of loyalty vouchers given to customers affected their Christmas trading. Fears are that by Tesco’s inflating their Clubcard loyalty scheme they could have "artificially" inflated their UK sales figures for the period, with estimates that the extra vouchers could have added around 1.5% the supermarket chain’s UK turnover for the Christmas , which is due to be released on Tuesday.

The Crown Estate, owner of the UK’s coastal seabeds, have granted development rights to energy companies that will herald the largest wind energy project ever seen in the world.

The announcement has the potential to see an additional 32 GigaWatts (GW) of clean electricity feeding into the UK grid, on top of 8 GW from previous rounds. 32 GW will mean enough offshore wind energy to supply nearly all the homes in the UK, with projection that investment in UK offshore wind overall could be worth £75 billion and support up to 70,000 jobs by the year 2020.

A total of nine development zones, with a capacity of just over 25 GW, have been allocated to Ten European Companies following a competitive tender.

Plans are currently under approval by the UK Government to construct what will be the fastest railway in Europe. The multi billion pound project would see trains travelling from London to the West Midlands at 250 mph from a new station to be constructed in the capital.

Construction is scheduled to begin in 2017, and the first trains should toll out of London 2025, carrying more than a thousand passengers at a time. The project is expected to cost as much as £60 billion.

Taking a short term view, the UK is currently investigating a variety of options on how to deal with increasing stocks of swine flu vaccines, with the British public showing a lack of interest in taking advantage of the free injection. The department of health is looking at either renegotiating existing contracts with the drug companies, such as GlaxoSmithKline and Baxter International to reduce the consignments. Other last attractive options are to sell the vaccines on to other countries or simply give them away. France and Germany also intend to cancel millions of doses of the H1N1 vaccines because of oversupply.

All of the five UK mobile networks are now reported to be in talks with Google over plans to market their new Nexus One mobile phone. Vodafone are the first operator to officially announce that had sealed a deal to offer the device, while no official launch date has been set as yet. The remaining four UK mobile phone operators. While it is expected that the big four will be providing support and service for the Nexus One, Google will be marketing their new baby exclusively online.

A little reminder that the internet doesn’t yet rule all of the World came with the news that UK greeting cards company Clinton have reported a rise in sales of 3.5 percent on last year for the weeks approaching Christmas, with like-for-like sales in the 22 weeks to Jan. 2 rising. However this upturn in sales appeared to be a drop in the ocean as the company continues to experience difficult trading conditions and has closed 12 of their stores in the last six months.

The pound stuttered slightly above the dollar in pre-weekend trading, while sliding backwards against the Euro.

• Dollar 1.6025
• Euro 1.1116

As brokers set off home for the weekend in their snow ploughs and sleds, the FTSE 100 edged just 7.52 points higher to 5,534.24. For the week the index was up 2.4 per cent, making for the third straight weekly gain.

In the US official figures have shown the unemployment rate holding steady at 10% despite the fact that employers unexpectedly cut 85,000 jobs in December. The US Labor Department had initially estimated that 11,000 jobs were cut in November, but now says that the economy had in fact added 4,000 jobs.

Since the recession began in 2007, 7.2 million jobs have been lost in the US, with 4.2 million of them in 2009 alone.

The Dow Jones Industrial Average closed for the weekend still on the up, eleven points to 10,618 while the NASDAQ also jumped 17 points to close on 2,3170.71.

General Motors (GM) reluctantly advised that they have begun "winding down" process for Saab, whilst continuing efforts to find a buyer for their Swedish car-making subsidiary.

GM intends to organize an "orderly" winding down at Saab, which they expects to take several months. The US group also confirmed that they are continuing to evaluate the several proposals they had received to acquire Saab, including the one from Formula One boss Bernie Ecclestone.

With the news that the exports had risen by 17.7% in December, China now claims to have overtaken Germany to become the world’s largest exporter.

December’s remarkable rise ends a 13-month decline in trade as a result of the global downturn.

Total Chinese exports for 2009 were £7.5 trillion, which marked a downturn in foreign of 13.9%, as the global economic downturn led to a fall in demand.

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Tags: Alastair Darling, Association of British Insurers, Bank, Banking, Baxter International, Bernie Ecclestone, British Economy, British Pound, budget cuts, Clinton Cards, Currency, Dow Jones, Economy, Financial News, FTSE, GDP, General Motors, GlaxoSmithKline, Google, Gordon Brown, H1N1, International Monetary Fund, Labour party, Money, Money Markets, NASDAQ, Nexus One, Recession, Retail, Saab, Stock Markets, Stocks and shares, super tax, swine flu, Tesco, The Crown Estate, UK Banks, UK Economy, UK government, UK Recession, US labor Department, Vodafone

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

The UK in the first decade of the new century recorded the lowest economic growth of the postwar period and the worst returns for stock market investors since the 1930s. Information provided by the Office of National Statistics points out that gross domestic product, on average, rose by only 1.7 per cent annually in real terms throughout the so-called noughties, making them Britain’s weakest period of economic expansion of any since the war years. The manufacturing sector was particularly hard hit with output actually contracting over the decade by 1.2 per cent annually.

Meanwhile, the British stock market suffered its weakest performance of any decade since the Great Depression, with prices on the FTSE All Share Index recording negative returns, averaging minus 1.8 per cent per year. The particularly sharp contraction in the real economy as a result of the financial crisis of the past 18 months continues to fuel pessimistic assessments of the UK’s prospects for the new decade.

In his New Year message, that well know optimist Prime Minister Gordon Brown is expected to give an upbeat assessment of Britain’s economic prospects for the forthcoming 12 months. Under pressure amid Labour Party concerns that they are destined to lose the next election, Brown is expected to take a gamble on a positive prediction that UK unemployment will have decreased by the end of 2010, with more smaller businesses starting up during the period, His gamble is calculated by details of latest forecast from the Chartered Institute of Personnel and Development (CIPD) stating that UK unemployment will peak at 2.8 million in 2010, and would continue to rise for the first six months of the new year, despite the recovery in the UK economy. .

Earlier this year, the CIPD had said it expected unemployment to peak at 3.2 million as a result of the recession. The total number of UK unemployed in currently stands at 2.49 million, 7.9% of the population, with around a quarter of these job losses happening in 2009.

UK homeowners pumped almost £5 billion into their home equities during the third quarter of 2009, according to recent figures issued by the Bank of England. Analysts pointed out that the trend of homeowners repaying mortgage debt would continue to restrain consumer spending, as they took advantage of record low interest rates to reduce mortgage debts. This development is in healthy contrast to much of the previous decade when homeowners had continuously drawn on equity from their homes to fund durable purchases.

Pressure is being applied to the UK government to make some changes to the Sunday trading laws in time for Christmas next year. Boxing Day falls on a Sunday in 2010, and shopping centres are lobbying to relax the law that restricts outlets of more than 3,000 square foot to just six hours of trading during this peak trading day. According to surveys, the number of shoppers soared by 17.9 percent last Sunday against a year ago, making it the highest increase in UK consumer traffic on record for a December 27.

Waitrose, the John Lewis-owned supermarket, reported an increase of 13.5 percent for the week before Christmas compared to the same period last year, making it their most successful Christmas on record. Total sales jumped 20.5 percent to reach £134.6 million s in the week to December 26, compared with £111.7 million for the same period in 2008.

Sterling remained below the $1.60 level on early week trading, even falling a little, whilst while remaining static against the Euro

• Dollar 1.5924
• Euro 1.1089

London stocks pushed higher on Tuesday, the first day back from the Christmas break, following the lead set in global equity markets in the previous session.

With US stocks failing to add much momentum, London’s FTSE 100 stayed at the same level for much of the session, adding 35 points or 0.7 per cent by the close to 5,437.61, extending its winning run to five days.

This was the index’s highest level in 15 months and took it above the point at which it stood on September 12, 2008, when Lehman Brothers collapsed.

Shares in US airlines fell on Monday following the alleged bomb attack on a US plane bound for Detroit, fueled by fears that renewed security concerns could further depress demand for air travel. Airport security measures have been tightened following the security incident on Christmas Day.

On Wall Street, the Dow Jones Industrial Average returned from the Christmas break in buoyant mood, climbing 36 points to close on 10,521.1 while the NASDAQ Composite jumped just three points to 2,288.46. Retailers had initially lifted the market after data from the International Council of Shopping Centers and Goldman Sachs showed like-for-like sales across the sector were up 2.3 per cent last week from the same period a year ago

US house prices rose in October for the fifth month in a row, according to a leading index.

Prices were 0.4% higher than they were in September on a seasonally-adjusted basis, according to a recently published index.

Confidence among US consumers has shown a larger-than-expected rise; with improved optimism over the jobs market saw consumer confidence hit a three-month high in December

Oil prices have climbed to more than $79 a barrel, reaching the highest levels for five weeks. During Monday’s trading in London, US crude touched $79.12 a barrel before falling back later to $78.77.

Heating oil futures led the gains, while London Brent crude rose by more than a dollar to $77.32 a barrel.

Prices rose following forecasts of colder weather in the United States, and the expectation of increased consumption and falling reserves.

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, British stock market, Chartered Institute of Personnel and Development, CIPD, Council of Shopping Centers, Credit Crunch, Currency, Dow Jones, Economic Growth, Economics, Economy, Employment, Financial News, FTSE, Goldman Sachs, Gordon Brown, Heating oil, House Prices, John Lewis, London Brent crude, Manufacturing, Money, Money Management, NASDAQ, Noughties, Office of National Statistics, Recession, Savings, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, UK unemployment, Waitrose, Wall Street

U.K. Prime Minister Gordon Brown said Monday that his government has identified billions of pounds in additional efficiency savings in the public sector to help pare the country’s record deficit. Mr. Brown said the government can deliver £12 billion ($19.7 billion) in efficiency savings over the next four years, an increase on the target £9 billion that the Treasury had identified in April. Brown’s announcement comes ahead of Wednesday’s Pre-Budget Report, which will map out some measures to cut the budget deficit. Among the measures that have been considered is a tax on bankers’ bonuses and even on the banks themselves. However the issue of a windfall tax on banks or bonuses presents Brown and Chancellor Darling with a serious dilemma as they leave no stone unturned to raise cash without damaging the economy’s return to growth. Eroding banks’ profits to raise fiscal income might weaken these institutions just as the government is trying to provide increased more capital behind them to cover lending to Britain’s credit-starved companies.

Manufacturing output in the UK between September and October was unchanged against expectations for a 0.4 per cent increase. UK house prices rose 1.4 per cent month on month in November – stronger than forecast. The two pieces of news appeared to cancel each other out and sterling and gilts seemed little affected.

U.K. Chancellor of the Exchequer Alistair Darling is expected on Wednesday to announce a cut in taxes on the use of electric vehicles as company cars as part of efforts to present an environmentally friendly pre-budget report. A U.K. treasury spokesman predicted that from 2012, companies and employees would be exempted from paying taxes on company cars if they were electric vehicles.

Shares in UK government majority owned Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, dropped after Chancellor of the Exchequer Alistair Darling refused to rule out a tax on excessive bonus payments. Royal Bank of Scotland retreated 4.7 percent to 33 pence and Lloyds Banking tumbled 4.1 percent to 53.69 pence.

Andrew Bailey, executive director for banking services at the BOE, has stated the bank’s fears that U.K. consumers are hoarding cash due to their lack of confidence in the banking system. Another factor that strengthens the banks theories are the negligible interest that they would earn even if they did invest their money with a financial institution. In a speech made in Washington D.C., Bailey highlighted the ironic connection between the declining need for cash in everyday life and the sharply increasing demand for banknotes during the financial crisis and ensuing recession.

According to a recent report issued by the Engineering Employers Federation, U.K. factory production will begin growing again next year as exports rebound, Production is expected to grow 0.9 percent in 2010 after it had shrunk by 10.4 percent in 2009. The report went on to add that increasing signals point to the fact that the U.K. is emerging from the longest recession on record. The British Chambers of Commerce pointed out that although the recovery has started the Bank of England will probably be required to maintain its bond purchase plan at £200 billion pounds ($331 billion) while it assesses the strength of signs of a rebound.

Shares in travel companies are on the rise, with the Thomas Cook Group and TUI Travel leading the way. Thomas Cook, Europe’s second-biggest tour operator, jumped 1.9 percent to 221.2 pence, while TUI Travel, Europe’s largest tour operator, rose 1.5 percent to 250.5 pence.

Shares in the U.K. waste recycling company Shanks Group Plc surged forward 43 percent to 128.5 pence after the company revealed that they had received a possible bid offer from an unidentified private equity group. Washington-based private equity firm Carlyle Group, have been reported to be in talks to buy the British waste-disposal company Shanks for about £535 million ($875 million) for some time.

Sterling lost ground on Tuesday as disappointing economic data and concerns over the UK government’s pre-Budget report weighed on the currency,

• Pound/US dollar 1.6292
• Pound/Euro 1.1040

London equities continued to weaken on Tuesday, with renewed concern about the financial problems in Dubai. Banks especially were hard while talks continued between Dubai World and the creditors to restructure debt at the holding company. It is expected that a group of banks, including the Royal Bank of Scotland, Standard Chartered, HSBC, Lloyds Banking Group as well as two from the United Arab Emirates (UAE) will form a steering committee to be appointed to represent creditors. At the end of the day’s trading, the FTSE 100 had tumbled 1.5 per cent to close on 5,230.5,

According to Federal Reserve Chairman Ben Bernanke the US economy is improving, although it is still too early to say that the recovery will last.

Unemployment could stay "elevated", although inflation is likely to remain subdued, while interest rates were likely to stay low for "an extended period",

Following Bernanke’s comments, the dollar lost a lot of the recent gains it had made against the euro.

On close of trading, the Dow Jones Industrial Average had dropped 104.82 points to 10,285.292 and the NASDAQ was also down 19,65 points to to 2,169.96

President Obama has said that money not spent under the £425 billion ($700 billion) US bank bail-out package could be used to cut the US deficit and boost jobs. The cost of the "Troubled Asset Relief Program" (Tarp) had turned out to be "much cheaper than expected". Reports say the cost of the Tarp will be £120 billion below the Treasury estimate. Back in August, the Obama administration had estimated that the rescue package would be £200 billion.

Crude oil dropped for a fourth day, trading below $75 a barrel, as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates.

The China Association of Automobile Manufacturers announced that Chinese car sales and production both exceeded 12 million between January and November, with expectations that car sales and output will to top 13 million for the full year.

Production of new cars has never topped the 10 million cars in one year mark in the past with state incentives having boosted car sales. The Chinese government has reiterated their plans to continue economic stimulus measures into 2010, Despite the downturn and falling sales at most global car makers, demand for cars in China continues to boom.

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