City Minister Lord Myners said he recognized the need for state-backed banks to compete in the global market, as he signaled the government would not block them from paying large bonuses to staff. Lord Myners told the Scottish affairs committee on Wednesday it was important the Royal Bank of Scotland was able to recruit and motivate employees. His comments came a day after the bank’s chief executive Stephen Hester revealed recruitment posted its biggest problem as RBS was being forced to compete on bonuses.

The number of businesses that went bust in 2009 increased by 18 per cent, but the economic outlook is slightly brighter for 2010. Recent information shows hat from the middle of 2009 onwards, the rate of business failures started to slow down compared to 2008 and early 2009, with a 7.7 per cent year-on-year decrease. This has to be good news for the economy as a whole. Business failures last year were not as extreme as 2008. The number of firms going bust in the fourth quarter of 2009 increased by almost a quarter compared to 2007, still an improvement on 2008, where the year-on-year increase was almost a third.

U.K. manufacturing unexpectedly stalled for a second month in November, a sign the economy is struggling to shake off the longest recession on record.

Factory output stayed unchanged from October, the Office for National Statistics said today in London. Economists predicted an increase of 0.2 percent, according to the median of 25 forecasts in a recent survey.

Bank of England policy makers last week pledged to spend the rest of their £200-billion bond-purchase program as they tried to cement an economic recovery.

Home Retail Group Plc sank 6.2 percent to 265.8 pence, the biggest decline since September, after a company spokesman announced that growth in the industry will be “hard to come by.”

Meanwhile HMV Group Plc slid 8 percent to 84.4 pence, the sharpest drop since December 2008, after saying holiday sales at stores open at least a year were hurt by the performance of its Waterstone’s bookstore chain.

The pound has been little changed against the dollar on recent days, and traded at 1.6245, up 0.5 percent on the day. The Euro was up to 1.262

The FTSE 100 Index added 24.72, or 0.5 percent, to 5,498.20. The FTSE 100 has extended its surge since March last year to 57 percent after central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy

Stateside President Barack Obama has ordered Wall Street banks to repay $117 billion (£72 billion) to taxpayers after criticizing banks for their "massive profits and obscene bonuses" culture. The tax is to recoup money US taxpayers are expected to lose from bailing out the banks during the financial crisis. The move follows populist anger at banks, seen as being responsible for causing the recent economic crisis. President Barack Obama will announce a sweeping new levy on about 50 financial institutions that will raise an estimated $90 billion to reduce the federal debt.

US stocks struggled to push higher on Thursday after an unexpected drop in retail sales gave investors reason for caution.

The Dow Jones Industrial Average had gained 0.1 per cent to 10,690.90 and the NASDAQ Composite was also 0.1 per cent higher at 2,310.58.

The market had opened lower after the latest commerce department figures showed retail sales, excluding cars, had fallen 0.2 per cent in December, with analysts forecasting a 0.3 percent increase

According to figures from the US Commerce Department, sales at US retailers saw an unexpected fall in December, casting uncertainty over the recovery of the US economy. Retail sales fell by 0.3% compared with November. Concerns over job security are expected to continue to restrict spending, with unemployment still at 10%. December’s figures end a tough year for US retailers, with total sales for 2009 down 6.2% on the previous year.

On the other hand, the tech industry’s earnings season got off to a flying start on Thursday with Intel reporting demand for its microprocessors boosted fourth-quarter revenues to $10.6 billion, well ahead of analysts’ forecasts of $10.2 billion. The world’s largest chip maker also reported earnings per share a third higher than Wall Street expected, at 40 cents rather than 30 cents.

Compared with a year ago, when orders collapsed in the teeth of the recession, Intel’s profits were 875 per cent higher at $2.3 billion.

Oil prices traded below $80 a barrel on Thursday, consolidating after recent losses triggered by a sharp increase in US crude and oil products inventories The recession has put a dent in future North Sea oil and gas production, with companies tapping fewer new oil reserves in 2009 than in previous years of operations there. Only eight oil and gas fields – expected to produce a combined total of 140 million barrels over their lifetime – began production in 2009, according to industry consultants.

That compares with an average of 600 million barrels of new reserves brought on stream each year between 2004 and 2008.

Production at the North Sea’s old fields has been declining since the start of the last decade increasing UK dependence on foreign oil.

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Tags: Bank of England, Banking, Barack Obama, British Economy, British Pound, Currency, Dow Jones, economic recovery, Economy, Financial News, FTSE, HMV Group Plc, Home Retail Group Plc, Intel, Lord Myners, Money, NASDAQ, North Sea oil, Office for National Statistics, Oil prices, RBS, Recession, Retail, Royal Bank of Scotland, Scottish affairs committee, Stephen Hester, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, US Commerce Department, Wall Street, Waterstone's

Key figures in the UK banking world announced their dismay and subsequent anger after Alistair Darling confirmed plans for his 50 per cent "supertax" on banks’ bonus pools. The reaction from one leading UK going as far as went as far as describing the measure as an "assault on the prudent and the profitable". Bob Diamond, the president of Barclays continued to voice his displeasure by implying that that bankers and institutions were "mobile and they might desert London’s financial centre. The one-off tax will be imposed on banks rather than individuals, and will also apply to building societies

Similar moves to tax bonuses on bankers are also being considered by both Germany and France, with the German banks even considering the imposition of self-discipline on pay while France is in favor of matching the U.K.’s planned one-off tax on bank bonuses, and is likely to slap such a levy on bonuses to be paid out in 2010 for the past year.

According to a report released last week, London could be pushed into third place as a global financial centre by Shanghai within the next ten years.

Global business leaders apparently are becoming increasingly convinced that the West is facing accelerated competition from the East, with more than 90% of company owners and managers in Shanghai and Mumbai are confident in their economic outlook for 2010, compared to 22% of business leaders in London and 35% in New York.

Meanwhile to add to the U.K.’s banking system’s woes, comes the news that the Financial Services Authority intend strengthening their rules governing the amount as well as the quality of capital that banks in the U.K. need to hold against potential losses as part of an effort to implement changes to European Union rules. Their proposals are expected to result in a £33 billion, or 5%, increase in the total amount of capital held by banks, with the bulk of this required to be held by the start of 2011.

On the FTSE before the weekend, shares in Barclays Plc , climbed 4.6 percent, to 290.75 pence, possibly on news that the bank is about to eliminate around 150 jobs from its retail and commercial banking operations in India. With the news that British Airways Plc have decided to retain p full ownership of its OpenSkies subsidiary, their shares rose 1.1 percent, to close on 202.3 pence.

The U.K.’s largest CD retailer HMV Group Plc posted a loss after tax of £17.8 million in the six months period ending Oct. 24, an improvement on the loss of £19.8 million pounds in the year-earlier period. Despite the relatively positive news their stock dropped 0.2 percent to 106.6 pence.

Independent News & Media Plc, publisher of The Independent Newspaper is looking to reduce their holding in APN News & Media Ltd. One the news their shares advanced 0.2 cent to 10 cents.

As the Cadbury takeover sage continues, news that rift has opened up between Hershey’s management and the Hershey Trust over whether to trump Kraft’s hostile bid for the company. The Trust, a philanthropic body that controls Hershey, is pressing the management to go ahead with an offer while the board argues that a bid financed by extra debt could put the company’s investment grade rating at risk. Cadbury chief executive Todd Stitzer has let it be known that he considers Hershey a better cultural fit than Kraft. On Monday morning, Cadbury is expected to make a formal rejection of that Kraft offer but is unlikely to make any official statements regarding their talks with Hershey, as a formal bid has yet to table. However the company is expected to release an interim update of their trading figures.

Sterling lost ground against the dollar before the markets closed for the weekend whilst rising slightly against the Euro.

• Pound/US dollar 1.6221
• Pound/Euro 1.1081

The FTSE 100 Index rose 17.2 points to close on 5,261.57. The index has shown a 50 percent recovery since March and looks to be heading for its biggest annual gain since 1997.

The US House of Representatives has approved the most sweeping changes to the country’s financial sector since the Great Depression of the 1930s. The 223 to 202 vote is a victory for President Obama who has made financial reform one of his main goals. The bill aims to create a new agency to monitor consumer banking transactions and give the government powers to break up companies that threaten the economy. The US Senate will have to pass the bill before the president can sign it. The legislation would give regulators the power to dismantle the companies in a way which ensures shareholders and unsecured creditors, not taxpayers, bear the losses. It also hopes to strengthen the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes. Plans to regulate the vast $600 trillion market in products called derivatives are also included.

On close of trading Friday, the Dow Jones Industrial Average had risen 186 points to 10,471.5 and the NASDAQ was also up around twenty points to 2,190.31

Kenneth Feinberg, the White House "pay czar" has extended limits on the pay of executives at four US firms who were given government bailout money.

Under the restrictions, employees will not be able to earn more than $500,000 (£307,770) per year.

The companies involved are Citigroup, AIG, General Motors and GMAC, with the rule applying to the 26th to 100th highest paid staff. The top 25 at each firm had their pay limited in October. Free of any such pay restrictions are the

Bank of America who succeeded in repaying their "bailout "money as recently as this week, while Chrysler and Chrysler Financial were exempted because total pay for their second-tier executives is already under the magic $500,000 barrier.

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Tags: AIG, Alastair Darling, Bank, Bank of America, Banking, Barclays Plc, Bob Diamond, British Airways Plc, British Economy, British Pound, Cadbury, Citigroup, Currency, Dow Jones, Economics, Economy, Financial News, Financial Services Authority, FTSE, General Motors, GMAC, Hershey Trust, HMV Group Plc, Independent News & Media Plc, Kraft Foods, Money, Money Markets, NASDAQ, OpenSkies, Recession, Stock Markets, Stocks and shares, supertax, UK Banking, UK Banks, UK Economy, UK Recession

Chancellor Alistair Darling will say in his pre-Budget report that the economy performed worse in 2009 than he first predicted, Treasury sources have said.

Darling is expected to say that the UK economy shrank by 4.75% this year – more than the 3.5% originally forecast in the Budget in March.

The adjustment follows the economy’s unexpectedly poor performance in the first three months of the year. The chancellor looks likely to stick to 2010 forecasts of growth between 1-1.5%, despite the emergence of Dubai’s financial problems which now raises fresh fears that UK banks could face more write-downs on bad debts, and chimes with warnings earlier this week from the International Monetary Fund, who said that global banks had only worked through half their toxic assets since the banking crisis broke two years ago. Investors had been hoping the British financial sector had worked through much its toxic debt, which included exposure to America’s sub-prime mortgage market.

Despite this week’s setbacks, economic analysts continue to predict that the UK economy should emerge from recession by the end of the year, with the Northern Ireland and Scotland facing a more challenging recovery. The prediction came as revised gross domestic product (GDP) figures showed the UK recession was shallower than previously thought between July and September. Revised estimates from the Office for National Statistics (ONS) showed a 0.3% fall in UK output in the third quarter, compared with the 0.4% slide originally stated. While UK business confidence surveys on the "mainland" bear out signs of recovery, Northern Ireland business activity continued to fall in October, albeit at the slowest rate since the start of 2008. The reasons apparently are local margins remaining under pressure, is that the manufacturing sector in the province is still reporting a lack of demand and heavy competition in difficult markets. The combination of these factors looks like meaning Northern Ireland will likely lag the UK recovery. Scotland’s growth will continue to lag behind the rest of the UK’s, according to a leading economic think tank. Similar sources also announced that they had observed some "disturbing weaknesses" in the Scottish economy and predicted growth of -4.9% this year and 0.7% in 2010. Job cuts are expected to continue, with the unemployment rate reaching as high as 8% in 2010. The only prescription for growth for both Northern Ireland and Scotland would be to switch to a more export-led economy, exploiting global markets

Jaguar Land Rover had seen its sales rise 23% in the second quarter after its new models were well-received.

Owner Tata Motors said new products such as the upgraded Range Rover, Range Rover Sport and Discovery 4 had had successful launches.

Although Jaguar Land Rover made a net loss of £60 million in the July-September quarter, it was much less than the £240 million loss it made a year earlier.

India’s Tata Motors made a net profit of £2.8 million in the third quarter of, 2008, compared with a loss of £127,000 for the same period last year.

Borders U.K., the bookstore chain once owned by U.S.- based Borders Group Inc., has called in administrators after failing to find a buyer for its stores. A total of 1,150 employees are affected, according to the statement.

“All stores currently remain open for business as normal whilst the administrators undertake a review of the company’s affairs and seek a purchaser for all or some of the company’s stores in which there has already been interest,” Philip Duffy, principal administrator announced in a statement.

U.K. media have reported that HMV Group Plc’s Waterstone’s books chain is considering buying some of the stores. A spokesman for HMV declined to comment on this when contacted by Bloomberg News earlier.

The steep advertising downturn pushed U.K. publisher Daily Mail & General Trust PLC’s into a net loss for its full fiscal year, as management focused on cutting costs and its £1.05 billion ($1.76 billion) debt pile, but the company said there are signs that trading conditions are improving.

Daily Mail, which publishes the Daily Mail and its sister Sunday paper and the Metro free-sheet, posted a net loss of £303.4 million for the 12 months ended Oct. 4, compared to zero net profit a year earlier.

According to brokers, Thursday’s activity on the FTSE was very similar to when Lehman Brothers collapsed, warning that Dubai’s problems could be the catalyst for the market to fall further. RBS, which is 70 per owned by the UK taxpayer, fell 7.8 per cent, wiping off £1.73 billion of its market value. Barclays lost 8 per cent, cutting its capitalisation by £2.65 billion. HSBC fell 4.8 per cent losing £6.2 billion of its value and Lloyds Banking Group lost 5.6 per cent, wiping off £1.5 billion.

All in all around £44 billion was wiped off London’s biggest companies amid growing fears the UK financial sector could be heavily exposed to Dubai World, the state-owned conglomerate which yesterday asked for a standstill on its £36 billion debt pile. The FTSE 100 tumbled 170.68 points or more than 3 per cent to 5194.1 in its biggest one-day percentage fall since the market plunged to six-year lows in March. Encouragingly enough, the exchange recovered well on Friday, closing on 5245.73.

The pound declined against the dollar after a drop in stocks across the world prompted investors to sell U.K. assets and on speculation the government will downgrade its forecast for the economy. Sterling slipped to the weakest level since Nov. 3 against the U.S. currency as the MSCI World Index declined for a second day after Dubai’s attempt to reschedule its debt continued to rattle investors.

• Pound/US dollar 1.6553
• Pound/Euro 1.10996
• Pound/Japanese Yen 142.7188
• Pound/Swiss Franc 1.6565

US shares have fallen on worries about Dubai’s debt problems, with the Dow Jones ending down 154 points, or 1.5%, at 10,309.92, in a shorter trading day.

It was the first chance for markets in the US to react to news that state-owned Dubai World had asked for more time to repay its debts.

US markets were closed for a holiday on Thursday when other world markets suffered steep losses.

The Dow Jones average dropped 154.58 points on Friday’s trading to close on 10309.92 The NASDAQ lost 37.61 points to close on 2138.44

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Tags: Alastair Darling, Bank, Banking, Barclays, Borders Group Inc, British Economy, British Pound, Daily Mail, Discovery 4, Dow Jones, Dubai World, Economy, Financial News, FTSE, General Trust PLC, HMV Group Plc, International Monetary Fund, Jaguar Land Rover, Lehman Brothers, Lloyds Banking Group, Money, MSCI World Index, NASDAQ, Office for National Statistics, Philip Duffy, pre-Budget report, Range Rover, Range Rover Sport, RBS, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, Tata Motors, UK Banks, UK Economy, UK government, UK Recession, Waterstone's