The last two years have been tough for UK retailers, especially those whose economic survival is based around them being on the High Street. An excess of selling space as well as having to cope with spiraling costs have had a serious negative impact on the retail industry and forecasts are that a number of well known retail chains could go out of business.

Recent statistics show that retail sales per square foot have fallen to around £355 pounds in 2009, down ten percent from their 2007 peak.
Encouraged by the seemingly never ending spending boom, the retail industry added more than 50 million square feet of selling space over the past decade.

The UK’s largest private company Ineos is set to announce on Thursday that it has secured vital agreement from creditors to reset the terms of its $10.3 billion debt burden.
Ineos, one of the world’s biggest chemicals companies, have been in long-running talks with hundreds of creditors about securing additional breathing space under the terms of its debt, after an unprecedented fall in demand and limited market visibility that began last year.

The success or failure of Ineos’s negotiations will be closely observed by a number of other companies in a similar situation who need time as they struggle against the downturn and require to renegotiate large and complex debt structures, involving a variety of different investors,.

The sale of Gatwick, the second-largest UK airport, by Spain’s Ferrovial has been hit by the apparent withdrawal of the last bidder from the contest.

The bidder, a consortium led by Manchester Airport Group and Borealis, the Canadian infrastructure fund, have apparently refused to raise its final bid to meet Ferrovial’s asking price of about £1.4 billion, leaving a gap of at least £100 million to the price being sought by BAA, the UK airports group that is the UK subsidiary of Ferrovial.

Global Infrastructure Partners, pulled out of the bidding in May, when its bid of about £1.36 billion was rejected by Ferrovial. Both groups apparently are interested in acquiring Gatwick, regarded as being one of the most attractive airport assets on the world market. However both now are increasingly reluctant to meet the target price set by BAA, possibly due to recent deterioration in the airport’s traffic performance.

London equity markets fought their way higher, building on the gains of the previous three sessions, although yesterday’s rise was less dramatic, up just 15.38 points to 4361.84. On the other hand, the FTSE 250 stuttered on Thursday after a few days of steady increases. On the day it fell 18, 22 points to close on 7,554.11

Sterling lost ground on Thursday against all the major European currencies.

Pound/US dollar 1.6392
Pound/Euro 1.16
Pound/Japanese Yen 153.6779
Pound/Swiss Franc 1.7618

Stateside, JPMorgan Chase became the second major US bank to report a major profit upsurge for the second quarter. Net profit totalled $2.72 billion (£1.6 billion), making for an increase of 36% on the same period last year. Revenues at the company rose 41% to a record $27.7 billion, impressive but still less than the $3.44 billion that rival Goldman Sachs reported.

The prospect of a bankruptcy and not profits is hanging over the US mid-market lender CIT as hopes of rescue plan led by the government were becoming increasingly remote. A spokesman for CIT announced “There is no appreciable likelihood of additional government support being provided over the near term,” CIT has battled a liquidity crisis and will be required to pay $1 billion of debt that matures next month

On Wall Street, the Dow Jones continued to rise, on the day by 95.61 points to 8711. 82 while the NASDAQ maintained a similar pace, closing up 22.13 points to 1885.03.

Internet search engine Google has seen better-than-expected quarterly results even as revenue growth slowed following the economic downturn.

Google reported net income reach $1.48 billion (£900 million) in the second quarter, compared to $1.25 billion for the previous year. Revenue rose by three percent for the period at $5.52 billion with more than half of that figure emanating from outside the US shores. Analysts reacted broadly positively to the company’s results, particularly their marked decrease in running costs.

China’s economy grew at an annual rate of 7.9% in the second quarter, an increase from 6.1% in the first quarter, thanks to the Chinese government’s substantial stimulus package.

The country’s rapid economic expansion is certainly bucking the global economic trend while most nations in the West continue to experience recession. Expectations in Beijing are that China will achieve 8% growth for 2009, compared to a predicted contraction of between 1% and 1.5% in the US. However, the Chinese government hastened to warn that significant economic challenges have to be overcome for them to achieve their goal.

Russia’s economy shrank 10.1 per cent in the first half of this year, a spokesman for the finance ministry announced this week, its worst decline since the early 1990s.
The credit crunch, falling commodity prices and a gradual devaluation of the state currency, the ruble, have combined to decimate a decade years of rapid economic growth. There are some positive signs however that the pace of economic decline is slowing as industrial production contracted at its slowest pace in six months.

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