According to a leading economist the UK should be classed with Greece and Spain, as countries carrying severe debt problems Not in agreement and understandably so are the UK Treasury sources who rebuked the suggestions that the UK was gradually becoming one of the poor relations of Europe by confirming that all of the three major credit-rating agencies had reaffirmed the UK’s triple A credit status.

Meanwhile Chancellor of the Exchequer Alistair Darling is the man faced with balancing the demands of investors and rating companies who fear that Britain’s top-level credit rating could be at risk, with the hopes of the UK public as well as some of his colleagues for an easing of taxation in the coming budget. Darling has already put the dampers on a lot of people’s hopes that this year’s budget will not be too populist, in a move to win votes for the general election that is due to follow a few months later

“People in the U.K. will want the budget to be realistic,” Darling was quoted as saying. “No one is looking for giveaways; that’s not the mood.” He summed up. Darling said voters realize the need to reduce Britain’s record budget deficit having already vowed to more than halve the £176 billion-pound deficit by 2014 starting next year.

Britain’s budget shortfall, which the Treasury estimates at about 12 percent of gross domestic product this year, is the biggest among the Group of 20 nations.

Dividends paid out shareholders by UK companies were honed back by to the tune of £10 billion in 2009, according to recent research.

Total dividends paid out by British listed companies amounted to £56.9 billion last year, down 15 per cent on 2008. The figures would have been considerably worse for investors if it not had been for the contribution of just five leading UK companies, with almost fifty percent of all dividends paid out coming from them. The e British business heroes were by BP, Shell, HSBC, Vodafone and GlaxoSmithKline. A sign of the shifting sands in the UK trading picture is that as recently as 2007, these companies accounted for 35 percent of the total dividend payout.

All the UK banks combined cut their dividends by half, adding up to around £6 billion less in dividends than in 2008. Performing particularly poorly was the high-street sector whose dividend payouts fell by 62 per cent.

At the recent meeting of the Group of Seven finance ministers’ tacit agreement was reached to draw up as set of common rules designed to force banks to pay for possible failures similar to the current one, which led to taxpayers being forced to take on trillions of dollars in liabilities.

The ministers said the world’s most advanced economies should adopt common rules as long as other major countries also agree. Apparently the G-7 is moving closer to an agreement on a bank insurance levy, one of a range of options proposed by the U.K. in November.

Already Sweden has taken the first step forward by creating a fund financed by their banks to help safeguard its financial system. In terms of the agreement, Swedish banks are required to make annual payments to the fund. The Swedish government injected 15 billion kronor (£1.2 billion) into the fund when it was set up, as well adding funds that had previously held in Sweden’s deposit guarantee fund.

According to government estimates, interest from the funds deposited by banks and on the money in the fund means it will swell to 150 billion kronor, or 2.5 percent of Sweden’s gross domestic product, by 2023.

U.K. stocks rose for first time in four days, led by a rebound in mining companies. The FTSE 100 Index increased 50.2 points to 5,111.84 at close of business in London.

The pound dropped to its lowest level in more than eight months against the dollar as growing concerns over the UK’s fiscal situation began to weigh on the currency. Sterling closed at 1.5701 and at 1.1388 against the Euro. The Euro has lost a lot of its attractions recently and was down to an eight-month low of 1.3583 against the dollar.

On Wall Street things were looking up. The Dow Jones Industrial Average finished up 74 points at 10058.64. The NASDAQ gained 15 points to close on 2,150.87.

Honda has added close to half a million cars to its existing global safety recall list. The problem this time is over airbag inflation problems mostly affecting cars sold in North America, with others Japan, Mexico, Taiwan and Australia due for recall. There was also further bad news for e Japanese carmakers Toyota after they were forced to recalled nearly half a million hybrid cars over faulty brakes, and millions of other models will need to be brought back to dealerships worldwide, suffering from accelerator and floor mat problems.

General Motors’ (GM) Opel unit has announced their plans to will invest 11 billion Euros (£9.7 billion) in introducing new product ranges over the next five years. Opel’s investment plan to breaking even within two years, a move that will entail cutting 8,300 jobs across Europe as well as the closure of at least one company plant in Antwerp, Belgium. Opel are trying to persuade

European governments to provide them with billions of Euros in loans to help the company’s plan to return to profitability.

India has announced that its economy is looking at growth levels by 7.2% in the year to the end of March. Government stimulus measures helped to maintain strong growth during the global downturn, but attention is now turning towards cooling rising prices, raising the chance that state support could soon be withdrawn. Many financial analysts also expect the government to raise interest rates earlier than expected. Strong growth in manufacturing in India is helping to compensate for falling agricultural output.

Oil prices rose and base metals moved higher as commodity markets managed a partial recovery after a sharp sell-off in the previous week US crude oil prices traded above the $71 a barrel.

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Tags: Alistair Darling, Bank, Banking, BP, British Economy, Credit Crunch, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, G-7, General Motors, GlaxoSmithKline, Honda, HSBC, Money, Money Markets, NASDAQ, Recession, Retail, Shell, Stock Markets, Toyota, UK Banks, UK Economy, UK government, UK Recession, UK treasury, Vodafone, Wall Street

In a move believed to be to block Italian auto giant Fiat from acquiring the European brands of bankrupt General Motors, Opel and more importantly for the UK, Vauxhall Motors is to be acquired by Magna. The huge Canadian car auto parts maker

GM made the bold decision on who could buy Opel/Vauxhall also under pressure from the German government who have undertaken to invest several billion Euro to support the firm and its more than 25,000 German workers, Action was frantic over the weekend as Business Secretary Peter Mandelson announced that he will be seeking an early meeting with representatives of Magna who already employs around 75,000people worldwide, including in their plants in Austria.

Mr. Mandelson emphasized that Magna had made it clear that should they be successful in their bid to acquire Opel/Vauxhall, they would remain committed to continued production by Vauxhall in the U.K. Mandelson also went on to add “Now I will be seeking to reinforce their commitment and to make it into a cast-iron guarantee.” It appears obvious that the UK government will need to finance their commitment in line with their counterparts in Germany who are expected to provide around one billion pounds in interim financing for Opel, an undertaking that largely paved the way for a takeover by Magna along with two Russian partners.

UK Union officials as well as MPs have already expressed certain uneasiness around the possibility that the rescue could see German jobs safeguarded ahead of those in the UK.
To probe that there is still life in the car industry, Japan’s second- largest carmaker Honda Motor Company have announced plans to resume production at its U.K. plant after a four-month shut-down.

What set the production lines rolling was not an increase in demand for Honda cars, but the undertaking from workers at the Honda factory, situated in Swindon, southern England, to accept a three percent pay cut to be held until spring of next year. Honda’s UK Managers have caught on to the idea, also agreeing to take a five percent cut in pay.

The plant reopens on a single daily shift basis, understandable when you consider that car sales in the U.K. have plunged by 24 percent in the last twelve months. Mobile phone operator, Orange have reportedly made an unsuccessful offer to acquire for T-Mobile’s British operations. T-Mobile’s are the UK’s fourth-largest mobile communications network, are instead expected to launch a restructuring of the business in attempt to add some life to the company’s fortunes which have been far form healthy of late.

Vodafone are also reported to have expressed an interest in acquiring is also T-Mobile UK. Rumours have it that they would be interested in trading their Turkish franchises with Deutsche Telekom which may be more appealing to them, as DT already control Greek operator OTE.

On Friday the FTSE 100 Index rose 30.40 points to 4,417.94 while the FTSE 250 closed on 7,572.00 Sterling took a step forward against the dollar on Friday, maintaining its rise above the $1.60 mark. It also increased it steady rise against the rest of the major currencies.

· Pound/US dollar 1.6205
· Pound/Euro 1.1466
· Pound/Japanese Yen 155.1385
· Pound/Swiss Franc 1.7428

As has been widely forecast, the last icon of the American industry, General Motors will file for bankruptcy protection later on Monday, officially marking the most significant failure of any industrial company in the history of US commerce.

Unconfirmed reports have it that a majority of bondholders have agreed to a compromise that will give them a minimum ten percent stake in a new, smaller, leaner and hopefully more efficient GM that will arise from the ashes.

The Dow Jones closed for the weekend still moving upwards, 96.53 points to 8500.22, while the NASDAQ stuttered a further 15.1 points recovered to close on 1751.79

Crude oil prices continue to rise, hitting a new six-month high, as US stockpiles continue to be exhausted, on demand by an economy that is definitely showing signs of recovery.
Light crude climbed $1.23 to close Friday trading at $66.31 a barrel.

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Tags: British Economy, Employment, Financial News, Honda, Mandelson, Mobile phone, Vauxhall