With an earlier than expected rise in inflation, which soared to 2.9% in December, interest rates could be rising sooner than expected in 2010.

The reading for the consumer prices index (CPI) came in well above the expected 2.4% figure making for the largest ever rise in inflation over a single month, according to figures issued by the Office for National Statistics (ONS) Reasons given were reduced s discounting from retailers in the run-up to Christmas and fuel prices remaining unchanged compared with sharp falls a year earlier.

The Bank of England had already expressed fears that inflation would rise this year, but this high figure will curtail the bank’s efforts to store up inflationary pressures while kick-starting the economy out of recession.

The Bank’s target for CPI inflation for 2010 is 2% and the jump to 2.9% puts its policymakers in a delicate position. While higher than expected inflation would force them to raise rates before the economy has properly recovered.

The head of the International Monetary Fund head has again warned that the global economy could yet experience another downturn, known in financial circles as a double dip recession.

Managing Director Dominique Strauss-Kahn said countries should rush to exit from stimulus packages that have bolstered growth through huge amounts of government spending and that it is too early for policy makers to withdraw stimulus that’s driving the global recovery.

“The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a recent speech. "While a plan to withdraw emergency measures “should be designed today” it should not yet be “implemented” because world economies are still dependent on government support and private demand remains weak" Strauss-Kahn has previously voiced his opinion that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than $2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the U.S. housing market. Separately, Germany and France raised their growth forecasts for the year. Strauss-Kahn went on to add that China and Asian economies are leading the recovery.

British Airways cabin crew is to vote again on possible strike action, according to a recent announcement from the Unite union.

A spokesman for Unite predicted that a fresh ballot of its members would be held in the near future. The move came after recent talks with BA failed to find a resolution to a long-running dispute. BA announced in reply that they were "saddened but not surprised" by the decision, whilst promising to make every effort to allow talks to continue. If talks fail, a strike could begin as early as March if cabin crew vote in favour of industrial action.

BA had already planned a 12-day strike for Christmas last year which was blocked by a court injunction.

The long protracted takeover of Cadbury by US food company Kraft now appears to be going forward after the Cadbury board approved a new increased bid. Cadburys will now advise their shareholders to accept a new offer of 840 pence a share – valuing the company at £11.5 billion ($18.9 billion). Shareholders will also receive a dividend of 10 pence a share.

The additional cash represents a 90 per cent premium to the Cadbury share price before the deal was announced and a 50 per cent premium to Cadbury’s undisturbed share price of 568 pence before Kraft approached Cadbury in late August

Spokespersons from both Cadbury and Kraft jointly announced that details of the agreement were still being finalising and would make a statement later.

Many city pundits were surprised that the deal eventually went through so smoothly after months of animosity between the two companies.

It is expected that Kraft’s final offer consisting of 500 pence in cash, with the rest made of Kraft shares made the deal much sweeter for Cadbury shareholders. To finance the takeover Kraft will require borrowing around £7 billion ($11.5 billion)

Shares in Cadbury topped the FTSE 100 on Tuesday.

Sterling was among the few currencies to rise against the dollar and the Euro on Tuesday after UK inflation jumped in December, increasing the possibility of monetary tightening and increases in interest rates being brought forward. The pound closed at 1.636 against the dollar, with the Euro being traded at 1.1459

The FTSE 100 index rose 41.6 points to 5,496.9, while the FTSE 250 index added 33.4 points to 9,571.6.

In the US, Citigroup announced losses of $7.6 billion for the last quarter of 2009, large due to their efforts to repay US government bail-out funds, and coming after three consecutive profitable quarters. Citigroup’s ’s loss was in line with Wall Street analysts’ expectations and would amounted to a loss of $1.4 billion, had it not been for its repayment of the $20 billion in funds it received from the troubled asset relief programme. For the same period of a year ago, Citigroup reported a loss of $17.3 billion. In 2009 as a whole, Citigroup made a loss of $1.6 billion on $80.3 billion turnover.

The Dow Jones Industrial Average rose sharply on early trading after being closed on Monday for Martin Luther King Day. The index rose 115 points to close on 10,725.43. The NASDAQ Composite was also on the up, 32 points to 2320.4

Computer giant IBM has announced that after cost-cutting work helped to increase its earnings by 9% in the last three months of 2009.

They have raised their profit target for 2010. IBM made a net profit of $4.8 billion (£2.9 billion) for the fourth quarter, up from $4.4 billion from the same period in 2008, with turnover for the quarter increased by 1% to $27.2 billion

Crude prices fell to a three week low on Tuesday, with prices averaging around $77.00 a barrel. Traders pointed out the implications in the oil market of the bankruptcy of Japan Airlines, as the Tokyo-based carrier made extensive use of oil derivatives to hedge its cost and the bankruptcy is likely to force investment banks to unwind the hedges.

financial

• AIG results update AIG will soon be a domestic insurer if the planned...
• Inflation and Consumer Debt: Truth and Myth Personal finance writers frequently comment on how inflation will affect...
• Holiday Budgeting: Making Tough Choices In A Recovering Economy. Recently the news has been buzzing that the Great Recession...

Tags: Bank, Bank of England, Banking, British airways, British Economy, British Pound, Cadbury, Citigroup, consumer prices index, Crude oil, Currency, Dominique Strauss-Kahn, Dow Jones, Economics, Economy, Financial News, FTSE, IBM, Inflation, Interest Rates, International Monetary Fund, Japan Airlines, Kraft, Money, Money Management, Money Markets, NASDAQ, Office for National Statistics, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unite, US Government

It appears likely that the UK government will not agree to underwrite the Lloyds Banking Group’s proposed rights issue. This development, if it transpires, could potentially stall the partially state-owned bank’s efforts to raise sufficient capital to allow them not to participate in the government backed toxic asset insurance programme. In the long term, the government is expected to participate in the planned rights issue, although chancellor Alistair Darling, chancellor is keeping tight lipped on the subject, for the meantime. Analysts have predicted that Darling would not be interested the government would not be willing to underwrite the rights issue, so as not to be seen to be making a commitment to buy any shares that remained unsold. However the feeling in the markets is that Darling and co has to be seen to be backing the issue, in order not to send out a negative impression

Britain’s largest pub owner Punch Taverns, have announced a £406 million annual loss, largely attributed to the writing down the value of its recession-hit property portfolio by 11 per cent. A spokesman for the company also stated that trading was not showing significant signs of improvement for the first seven weeks of its new financial year, a fact that should have a negative effect on the company’s future. On the announcement., shares in Punch plummeted by 16.6 per cent to close at 96.65p.Punch owns more than 7,500 pubs, that are principally leased to semi-independent publicans who are obliged to buy all their beers through Punch as well as paying them rent.

Shares in National Express plunged more than 30 per cent on Friday after the Spanish-led consortium bidding for the bus and rail operator withdrew its £765m takeover offer. The Cosmen family, who already own an 18.5 per cent stake in National Express, along with the private equity firm CVC, had been due to make a formal offer.

The rise in UK unemployment slowed in the three months to August, showing signs that the job losses may be slowing down as the economy continues to show signs of recovery. The number of people out of work rose 88,000 to 2.47 million, compared with the previous three months, while the unemployment rate remained unchanged at 7.9 per cent of the total UK workforce. This figure contrasts well with 9.8 per cent in the US and the 9.1 per cent average in the European Union member countries.

The Pound continued it steady improvement against the major currencies.

• Pound/US dollar 1.6332
• Pound/Euro 1.10956
• Pound/Japanese Yen 149.048
• Pound/Swiss Franc 1.665

Two of the major Wall Street banks have announced profits for the third quarter that was above market analyst’s expectations.

Goldman Sachs’ announced profits for the period of £1.96billion, four times what they earned for the same period in 2008.

Profits for the Citigroup also grew. However their potential profits were of were dented by the poor results of their high street banking operation, reaching only £65 million for the quarter.

US stock markets hit fresh 2009 highs on Wednesday, with the Dow Jones Industrial Average reclaiming the 10,000 mark, after a smaller-than-expected decline in retail sales and strong earnings at a leading bank.

Financial, industrial and materials stocks boosted the market while the telecoms sector was a laggard.

The Dow Jones index continued to consolidate itself above the 10,000 points standard, up 47.08 points to 10062.94 while the Nasdaq Composite index rose 1.5 per cent to 2,172.2

Internet super –power Google has reported its highest quarterly profit, providing further indications that the online advertising market is in a healthy situation. Google reported a £1billion net profit for the third quarter, a rise of 27% for the same period in 2008.

Also on the up are US computer hardware giant IBM, who reported profits for the same period of around £2 billion, an improvement of 14% on last year.

US crude prices reached their highest levels for the year while gold extended its record-breaking run, passing the $75-a-barrel mark at one point during the day’s trading. This news came after analysts predicted that crude prices appeared ready to ready to increase after remaining consistent for the last six months. Forecasts are that demands for leading up to Christmas, will push oil prices up.

Meanwhile the price of gold reached a record $1,070.40 ounce later slipping back to $1,069.

financial

• 450 Random Useless Facts [/caption] Most American car horns honk in the key of...
• Venezuela Devalues Its Currency Here's an interesting article by Dominic Frisby about Venezuela's devaluation,...
• How should I invite my ex to see our son walk at his graduation.? My ex has been in prison for the past 6...

Tags: Alastair Darling, Banking, British Economy, British Pound, Citigroup, Cosmen family, Credit Crunch, Currency, CVC, Dow Jones, Economy, Employment, Financial News, Gold, Goldman Sachs, Google, IBM, Lloyds, Lloyds Banking Group, Money, Money Markets, NASDAQ, National Express, Punch Taverns, Recession, Retail, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, UK unemployment, US stock market, Wall Street

It appears that post-recession Britain has set its sights on being a leader in energy power in Europe. The feeling was strengthened in a statement released by the Department for Energy and Climate Change announcing that interested parties are now invited to bid for access to the Marine Renewables Proving Fund, the formation of which was originally announced in July of this year. The UK government has invited marine-energy firms to bid for a share of the £22 million fund, intended to stimulate the development of clean green renewable energy technology in the UK.

According to energy and climate change minister Lord Hunt, the scope for generating wave and tidal energy around the UK’s shores is massive. The government intends to work closely with local developers to further the goals of the necessary technologies.

"The Proving Fund will help marine projects get off the drawing board and into the water, taking them a vital step closer to full-scale commercial viability." Lord Hunt pointed out.

The fund is due to be overseen by the Carbon Trust, a unit formed in 2003 to act as the UK government’s climate-change advisory body. To date, the Carbon Trust has assessed around 60 different marine-energy harvesting devices and earmarked over £12 million in funding for the sector.

Earlier this month, the Carbon Trust announced that they intend to fund two marine-energy companies, Pelamis Wave Power and Marine Current Turbines, as part of its existing Marine Energy Accelerator initiative. The Pelamis Wave Energy Converter is UK-funded and developed by a UK company. It has been likened by the Carbon Trust to a vast sea-snake.

The Carbon Trust remain confident that the wave-power industry could eventually create up to 16,000 green jobs and £2 billion in annual revenue when it reaches its peak in the middle of the 21st century In the meantime, the Department for Business Innovation and Skills have announced plans to create about 1,500 graduate placements to help support the marine-energy industry.

Technology companies, among them IBM and Cisco are reported to be targeting the renewable energy market. They have already announced their plans to aid utility providers to update their electricity grids. This will be necessary to cope with the intermittent nature of power generated by wave sources.

In the same area of activity, it was announced that Aquamarine Power, a wave energy developer, has succeeded in raising £10 million from UK and Irish-based investors.

The investment interest in Aquamarine Power was generated following the announcement in August that a full scale demonstrator of Aquamarine’s Oyster wave energy converter has now been successfully deployed. It is situated in the company’s testing berth at the European Marine Energy Centre in the Orkney Islands.

Work is currently underway to connect Oyster to sub-sea pipelines which will deliver high pressure water to an onshore turbine. The company expects the system to begin generating power to allow offshore testing later this year.

financial

• India's growth meme fires 2010 ENERGY Kirit Parikh report released today, recommends freer market pricing...
• Daylight saving time [/caption] Daylight saving time (DST; also summer time in British...
• 2000 Oil Barrels Eliminated By Solar Power The technology began on these tropical islands, and currently it...

Tags: Aquamarine Power, Carbon Trust, Cisco, Department for Business Innovation and Skills, Department for Energy and Climate Change, Economy, European Marine Energy Centre, IBM, Lord Hunt, Marine Current Turbines, Marine Renewables Proving Fund, marine-energy, Oyster, Pelamis Wave Power, post-recession Britain, renewable energy, sea-snake, tidal energy, UK government