According to a report by the Confederation of British Industry, the UK economy won’t start growing again until 2010. It also seems likely that in order to keep the recovery on track, the Bank of England may need to expand its money-printing plan.

CBI predicts that the UK’s gross domestic product will fall 0.3 percent in the second quarter of 2009 and 0.1 percent in the third, before flat lining during the final three months of the year.

A slower recovery than planned is bad news for Prime Minister Gordon Brown’s government. Lack of growth means reduced tax revenues, increasing the already exaggerated budget deficit.

British van maker LDV, which fell into administration last week, may get a reprieve if a takeover bid from telecoms entrepreneur John Caudwell proves successful. Caudwell, on the lookout for fresh challenges after selling his mobile phone retailer business Phones 4U, has reportedly requested review LDV’s current financial situation. LDV’S administrators PricewaterhouseCoopers hastened to point out that Caudwell’s interest in LDV is at a very early stage and he is yet to sign a non-disclosure agreement. LDV, based in Birmingham, central England, was placed in administration on June 8, and if the company does close down, most of its 850 employees will be made redundant.

Expectations are that the UK’s largest retailer Tesco will report a pick-up in underlying UK sales growth when it reports it last quarter returns today.
Tesco, who account for a total of almost one third of British supermarket turnover, has been reportedly been losing share of the market over the last few months.
Tesco’s downturn in sales is reported to be due to customers switching to their discount brands range, which while boosting sales in terms of volumes has affected their turnover figures.

On the stock exchange, materials stocks dragged the FTSE down as commodity prices dropped.

Gold mining giants Randgold Resources lost 2.4 per cent to 4068 pence after a downgrade in valuation.

The oil exploration company Heritage Oil announced their successful launch of fundraising effort in anticipation of a proposed merger with Turkish contemporaries, Genel.
Heritage’s stock jumped eight per cent to 546 pence after Heritage had sold 25.4 million new shares at 520 pence.

Yesterday was stormy on the Stock Exchange, which fell by more than 2.5 percent. The FTSE 100 dropped like a stone, 115.94 points to finish on 4,326. 01 while the FTSE 250 fared a lot worse and for the second trading day in a row, down 197.84 close on 7,493.52

Sterling took a drop against the dollar as well as the yen, while recovering slightly against the Euro and the Swiss Franc
Pound/US dollar 1.6313
Pound/Euro 1.1826
Pound/Japanese Yen 159.6003
Pound/Swiss Franc 1.7816

The dollar started the week on a firm footing, helped on Monday by positive statements emanating from the weekend’s meeting of the Group of Eight leading industrialised nations.
Alexei Kudrin, Russian finance minister, announced that his country recognized there was “no alternative” to the dollar as a reserve currency and that Russia had confidence the currency was in “good shape”. News that released the pressure that had been felt on the US currency recently.

On Wall Street took a very major tumble. The Dow Jones dropped 187.13 points to close on 8612.13, while the NASDAQ dropped 42.42 points to close on 1816.38

German luxury carmaker Porsche is in advanced talks about selling a 25% stake to the Qatar Investment Authority. Porsche struggling under debt of more than nine billion Euro is in merger talks with Volkswagen.

The only ray of sunshine on a difficult day was the news that oil prices continued to fall and sharply, since last week’s eight-month high of $72.68 a barrel.
US light crude fell to $69.86 and London Brent to $69.52, down more than a dollar on the day.

Analysts reckon that the stronger dollar and the stock market downturn yesterday were factors that pushed the oil prices down.

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Tags: British Economy, Credit Crunch, Economics, Economy, Financial News, FTSE, LDV, Tesco, UK Recession

Chancellor of the Exchequer Alistair Darling is doing all that he can to create an atmosphere of ” business as usual “/ One of his measures announced yesterday is to allow interest rates to remain at the current and unprecedented low levels. Darling announced to leaders of UK commerce and industry at a conference on Wednesday that interest rates were “low and likely to remain low” for the meantime. The Bank of England, as cut borrowing costs 4.5 percentage points since October.

On the oil market, Royal Dutch Shell reported a sharp fall in first quarter profits followed rival energy group BP who announced a similar fate on Tuesday of this week. The only good news was that the loss was less than analysts had forecast, a net profit after tax of £3.3 billion, down by 50% from the same quarter in 2008.

After a long battle bravely fought and eventually lost, LDV the midlands based light van maker announced that they will have no option but to enter administration on May 6th. LDV regretted that administration would result in several thousand job losses, but they had given all hope of receiving a further bailout from the government, and understand that chances of selling the business as a going concern was now impossible.

The UK private equity company’s 3i’s have annoyed some of their major investors by announcing their intention of launching a rights issue, for up to £700million. The announcement comes after members of 3i’s board were briefed last week by their new chief executive Michael Queen who plans to use the funds to partially reduce the company’s £2billion debt burden. However investors have suggested that 3i could probably cut back on the debt through using existing cash flow as well as disposing of some of their investment portfolio.

U.K. stocks advanced yesterday on positive trading, encouraged by recoveries from both the banks and metal producers. The U.K.’s third-largest bank, Barclays, and Lloyds both rose by more than 8 percent, making up for what they had lost in the previous two days trading. Royal Bank of Scotland Group Plc also jumped by thirteen percent in the wake of positive profit forecasts. Kazakhstan’s largest copper producer, Kazakhmys increased their shale value by 5.9 percent (21 pence to 511). Vedanta, who holds the largest share of copper production in India, gained 5.7 percent (53 pence to 985.5) Global education service provider BPP Holdings Plc were the star of the day on the exchange as their shores rose 58 percent (213 pence to 578) on the announcement that the company had received a firm offer from Apollo Global for 620 pence a share.

Building giant Taylor Wimpey Plc rose by 8.5 percent, (3.5 pence, to 44.5.) on estimates that the company is not liable to announce any capital raising measure when it announces preliminary results tomorrow. Up and coming Scottish based manufacturer of semiconductors Wolfsan Microelectronics Plc (also jumped yesterday, up 12 percent (13.5 pence, to 125) the company announced that their cash position as well as their order book was strong.

On the day the FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 while the FTSE 100 finished the session up 93.19 points, higher at 4,189.59 Sterling fell slightly against the dollar and the Euro and recovered against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4807

Pound/Euro 1.1145

Pound/Japanese Yen 127.58

Pound/Swiss Franc 1.6425

Wall Street rose despite news that the US economy continues to contract led by the biggest export fall for 40 years in the first quarter of 2009, The US GDP contracted at a rate of 6.1% annually during the quarter, improving slightly on the 6.3% fall in the last quarter of 2008. The Dow Jones Average jumped up 168.8 to close at 8185.73. NASDAQ rose 38.13 points to close at over the 1700 mark, at 1711.95

Japan, reputedly the World’s second powerful economy who has been particularly hit hard by the global downturn, reported that their industrial output has risen in March for the first time in six months. Production rose by 1.6% in March following months of dramatic decline.
Shares in Asia were broadly higher on Wednesday thanks to some encouraging signs about company profits and the dissipation of worries about the effect of swine flu on the world economy.

Crude oil prices on Wednesday rose above the $50-a-barrel mark as traders shrugged off a bearish increase in US crude stockpiles and instead focused on a large drop in petrol inventories ahead of the driving season.

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Tags: Alastair Darling, Bank, British Economy, Financial News, Kazakhmys, LDV, Royal Bank of Scotland, Royal Dutch Shell

In a move that was as dramatic as it was unexpected, the UK government made a sudden turnaround on their declaration that they will not be sinking any more funds into LDV, the stricken Midlands light van manufacturing plant. In a move that is both controversial and hopefully one that will set a welcome precedent, the UK treasury announced that they will be providing LDV with a £5 million short term loan that will allow Weststar, that Malaysian based car manufacturer to rescue the company and keep their 850 staff in work.
While the Treasury would have us thing differently, LDV may not bet the last company in need of emergency funding according to recent reports. The reports confirm that the majority of small and medium U.K. manufacturing firms continue to experience an ongoing decline in orders and output for the three months of 2009.
The first quarter was also very bad for Easyjet, the “people’s airline.” Easyjet have announced that its losses for the six months up to the end of March 2009 was more than two and half times what it had been in the same period of 2007/2008 (£129.8million compared to £48.4million)
The company remained optimistic for the future, stating that the increases in fuel costs that they had had to absorb as well as the Easter rush falling out of the period, had exaggerated the losses.

Someone who has yet to see the interior of an Easyjet is Guy Whittaker, till very recently finance director at the Royal Bank of Scotland, who will be handing in his keys any time now. Whittaker, one of last remaining executive directors from the good old days when Sir Fred Goodwin was at the helm, has to pay his share of the price for some of the glaring blunders made. Whilst not exactly falling on his sword, Guy will be leaving quietly and without a bonus.

As the FTSE returned from holiday, mining shares were the first to shake of the cobwebs. The world’s largest mining company, BHP Billiton rose by 3.4 percent to close at 1,483 pence with Rio Tinto Group, the world’s third largest also climbing 5.3 percent to 3,002 pence. On a good day for copper, rises were recorded for the fourth consecutive day, on forecasts that global demand and growth look like continuing. Other metal commodities also did well

There seemed to be an aura of confidence around the construction industry in general, as global building giant Wolseley saw their shares rise by 9.8 percent to close at 1,342 pence. Balfour Beatty Plc, still the UK’s Britain’s largest builders increased their share value by 2.3 percent to close at 350 pence as the U.K. construction index jumped to its highest level since Autumn 2008.

The FTSE 100 Index jumped 108.33, to 4,351.55 its highest level since January. The FTSE 250 closed up 55.52 points to close at 7,892.35

Sterling hit a four-month high against the dollar, at one point reaching $1.5161 before closing on $1.5087, as well as climbed strongly against the euro and the Swiss franc.

· Pound/US dollar 1.5087
· Pound/Euro 1.131
· Pound/Japanese Yen 143.84
· Pound/Swiss Franc 1.7049
On Wall Street, share trading was very subdued. . The Dow Jones Average dropped 16 points only to close at 8410.65 while Nasdaq did proportionately less well, closing down 9.44 points to 1754.12
Recent prophecies that consumer demand in the US might be entering a stabilization phase were reiterated by Fed Chairman Ben Bernanke on Tuesday continuing on his assertors that the recession is likely to end toward the end of 2009.
His words were backed up by recent reports that the U.S. service industry turnover will continuing to shrink, did so at a much reduced rate in April.
All eyes in Europe seem to be on Fiat SpA (F.MI) whose shares continue to rise on the back of their ambitious moves to acquire both Chrysler in the Us as well as all of GM’S Europe car manifesting units, including Vauxhall, Opel and Saab. If everything falls into place, Fiat will be looking to turn-over around about EUR80 billion in Europe alone.
On the commodities market, Crude oil was trading for around $54.00 a barrel, while gold reached $900 and Copper $210.50.

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Tags: Alastair Darling, Bank, Banking, British Economy, Credit Crunch, Economics, Financial News, FTSE, LDV, Recession, UK Banks

Chancellor of the Exchequer Alistair Darling is doing all that he can to create an atmosphere of ” business as usual “. One of his measures announced yesterday is to allow interest rates to remain at the current and unprecedented low levels.
Darling announced to leaders of UK commerce and industry at a conference on Wednesday that interest rates were “low and likely to remain low” for the meantime. The Bank of England, as cut borrowing costs 4.5 percentage points since October.
On the oil market, Royal Dutch Shell reported a sharp fall in first quarter profits followed rival energy group BP who announced a similar fate on Tuesday of this week. The only good news was that the loss was less than analysts had forecast, a net profit after tax of £3.3 billion, down by 50% from the same quarter in 2008.

After a long battle bravely fought and eventually lost, LDV the midlands based light van maker announced that they will have no option but to enter administration on May 6th. LDV regretted that administration would result in several thousand job losses, but they had given all hope of receiving a further bailout from the government, and understand that chances of selling the business as a going concern was now impossible.

The UK private equity company’s 3i’s have annoyed some of their major investors by announcing their intention of launching a rights issue, for up to £700million. The announcement comes after members of 3i’s board were briefed last week by their new chief executive Michael Queen who plans to use the funds to partially reduce the company’s £2billion debt burden. However investors have suggested that 3i could probably cut back on the debt through using existing cash flow as well as disposing of some of their investment portfolio. .
U.K. stocks advanced yesterday on positive trading, encouraged by recoveries from both the banks and metal producers.
The U.K.’s third-largest bank, Barclays, and Lloyds both rose by more than 8 percent, making up for what they had lost in the previous two days trading. Royal Bank of Scotland Group Plc also jumped by thirteen percent in the wake of positive profit forecasts.
Kazakhstan’s largest copper producer, Kazakhmys increased their shale value by 5.9 percent (21 pence to 511). Vedanta, who holds the largest share of copper production in India, gained 5.7 percent (53 pence to 985.5)
Global education service provider BPP Holdings Plc were the star of the day on the exchange as their shores rose 58 percent (213 pence to 578) on the announcement that the company had received a firm offer from Apollo Global for 620 pence a share.
.
Building giant Taylor Wimpey Plc rose by 8.5 percent, (3.5 pence, to 44.5.) on estimates that the company is not liable to announce any capital raising measure when it announces preliminary results tomorrow.
Up and coming Scottish based manufacturer of semiconductors Wolfsan Microelectronics Plc (also jumped yesterday, up 12 percent (13.5 pence, to 125) the company announced that their cash position as well as their order book was strong.

On the day the FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 while the FTSE 100 finished the session up 93.19 points, higher at 4,189.59
Sterling fell slightly against the dollar and the Euro and recovered against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4807

Pound/Euro 1.1145

Pound/Japanese Yen 127.58

Pound/Swiss Franc 1.6425

Wall Street rose despite news that the US economy continues to contract led by the biggest export fall for 40 years in the first quarter of 2009,
The US GDP contracted at a rate of 6.1% annually during the quarter, improving slightly on the 6.3% fall in the last quarter of 2008.
The Dow Jones Average jumped up 168.8 to close at 8185.73. NASDAQ rose 38.13 points to close at over the 1700 mark, at 1711.95

Japan, reputedly the World’s second powerful economy who has been particularly hit hard by the global downturn, reported that their industrial output has risen in March for the first time in six months. Production rose by 1.6% in March following months of dramatic decline.
Shares in Asia were broadly higher on Wednesday thanks to some encouraging signs about company profits and the dissipation of worries about the effect of swine flu on the world economy.
Crude oil prices on Wednesday rose above the $50-a-barrel mark as traders shrugged off a bearish increase in US crude stockpiles and instead focused on a large drop in petrol inventories ahead of the driving season.

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Tags: 3i, Alastair Darling, Bank of England, Barclays, BP, LDV, Lloyds, Royal Dutch Shell

Official data due to be released today is expected to show the annual rate of consumer price inflation reaching 2.6 percent in February, down 0.4 percent from the previous month and standing at the lowest rate for almost a year.—Inflation rates are expected to continue to fall and even more sharply over the coming months with the effects of considerable reductions in energy prices kicking in as well as the government’s efforts to boost the economy as well as easing deflation.

If predictions on the inflation rates prove to be factual, they would amount to the first negative reading since March. Despite government efforts to the contrary, it appears that it is only a matter of time before consumer price inflation moves into negative mode.

Bad news for the 5.5 million UK households where one tenth or more of income goes on gas and electricity bills is that the Fuel Poverty Bill has been thrown out of parliament. For those who live in “fuel poverty”, the news will be especially irksome, simply because the vote fell because there was not a sufficient number of MPs present in the Commons on Friday afternoon when the vote was to take place. Of those present, 89 voted in favour and only two against. However the vote needed a minimum of 100 “ayes”, out of a possible 648. Not too much to ask for on such a sensitive subject, but apparently not on a Friday afternoon!

Another possible victim of failing to read the small print is the British Airports Authority. (BAA). Apparently the BAA could be forced into liquidation or even worse be nationalised, if the company fails to receive “full value” offers for their forced sale of the Gatwick and Stansted Airports According to terms of the contract issued by the Monopoly’s Commission, BAA will be disallowed for accepting offers that represent less than 85 percent of either of the airports’ regulated value. In the current economic climate, the company feel that is difficult to be and bids will be much lower than the more than one billion pounds that the company will require for their assets, and the airports will have no option but to reject the offers and at the same time cease to operate the airports. A scenario that doesn’t bear thinking about. In the event that such a scenario does come to pass, the UK government might have no option but to intervene to prevent the BAA from going into administration.

Birmingham-based van maker LDV, in danger of closing, apparently has a serious suitor. The Indian car manufacturer, Mahindra & Mahindra has emerged as one of two groups competing to take over the company, with a third offer, apparently from the US also emerging. The moves came after the UK government contacted the management at Mahindra & Mahindra as well as another Asian-based company over the weekend to rescue LDV and save the workforce from unemployment. A spokesman for the Department for Business announced that further talks, due to commence this week, will hopefully see a new owner in place at LDV in the very near future. .

The FTSE started the week in a buoyant mood, reacting strongly in anticipation of the announcement from the US government of their bold plan to expand the financial rescue package, designed to revive the global economy.

Banks reacted strongly to the news with Lloyds Banking Group Plc jumping 11 percent and the RBoS following suit with a modest 4.2 percent jump. Barclays Plc also saw their shares take a major step forward, 16 percent up, not just as a result of the euphoria in the US but also fueled by speculation that a firm offer is to be forthcoming shortly for their iShares unit.

Copper surged to a four-month high in London, pacing a rally in industrial metals, after imports surged into China and on speculation the U.S. Treasury plan will spur growth and boost demand for commodities. Lead climbed to the highest since November.

Shares in the world’s third-largest platinum producer, Lonmin Plc also displayed increased confidence in the global commodities marking jumping 12 percent (180 pence 1,530 pence)

The following stocks also showed an upturn on yesterdays trading. Shares in the Daily Mail rose by 3.4 percent (8 pence to 241.75). The publisher announced that they expect to exceed their targets on revenue as well as reducing costs, providing positive full-year results to be announced shortly.

The U.K. repair-service provider, Homeserve Plc also shone on the day with their shares climbing 9.1 percent (85 pence to 1,020.)

The FTSE 100 finished the session up 3.9 per cent, or 156.5 points, higher at 4,209.The FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 while

The pound also advanced versus the euro as the FTSE 100 Index climbed more than 2 percent, led by Barclays Plc and Lloyds Banking Group Plc, boosting demand for riskier assets.

The pound rose as much as 1.1 percent to $1.4626, the highest level since Feb. 23, and was at $1.4588 by 11:13 a.m. in London. The pound also strengthened against the Euro, in a day that cautious optimism appeared to raising its head on the markets.

Pound/US dollar 1.4626

Pound/Euro 1.0187

Pound/Japanese Yen 144.91

Pound/Swiss Franc 1.6580

News of the US government’s plans to buy up to $1 trillion of toxic assets has helped the Dow Jones record the fifth largest rise in its history pushing the index up a mammoth 6.84% (497.48 points ) to close at 7775.6. The NASDAQ shared in the celebrations rising 98.5 points to 1555.7.

The programme, known as Public-Private Investment, has undertaken to take up all of the “toxic” mortgages and securities that have prevented the banks from issuing fresh loans to consumers. The US Treasury as well as the private sector will both make contributions to the programme, which is hoped will generate between $500 billion to eventually $1 trillion of new business.

Despite the euphoria, there was still some scepticism over the initiative with certain leading financial analysts warning that the programme’s success would largely depend on whether the leading banks would be prepared to take a short term loss on their “toxic” assets or wait till the US economy begins to recover.

On the news, US bank shares went only one way but up with Citigroup leading the field with a 20 per cent jump followed closely by the Bank of America who gained 17 per cent.

Global markets that opened on Monday were also equally upbeat, with Asian stocks rising to a two-month high on Monday

Japan’s benchmark Nikkei stock average closed at its highest level in nearly two months, gaining 3.4 per cent higher to end at 8,215.53 – its first close about 8,000 since early February. The Hang Seng index in Hong Kong hit a five-week high, closing up 4.8 percent, while the Australian market rose by 2.4 per cent.

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Tags: Bank, Bank of America, British Economy, British Pound, Interest Rates, LDV, Money, Money Management, Money Markets, Recession, UK Banks, UK Recession

Reports have it that LDV; the Midlands based light van maker will be forced to close down in “days rather than weeks” unless they receive a £30 million loan from the UK government loan. Company management at LDV insists that there are no funds available to keep the business afloat.

LDV who have failed to show a profit since 2004have been competing against Ford’s Transit van since their founding and have come out bruised and battered every year. Like a Rocky Bilbao of the van world they have always come back for more punishment, but with the news that the number of new vans registered in 2008 down more than forty percent to 4,580 in 2008, it looks like the knock- out punch is not far way. .

LDV’s original parent, Leyland DAF, an Anglo-Dutch joint venture, was bought over by US Investment Company Sun Capital, only to be sold on to Gaz of Russia in 2006 for some £50 million.

The company employs around 850 people at their Birmingham plant, where production has been suspended since December 2008, after van sales crashed following a slump in the construction industry. Unfortunately the company’s hopes that a sudden and dramatic increase in demand for LDV vans has not transpired and they now seem unlikely to ever resume production.

Another rumour that looks likely to be proved to be fact is the Vodafone Plc, the world’s largest mobile-phone company, seems likely to cut hundreds of jobs in their U.K. outlets. The move is designed to reduce costs and protect earnings during the current economic slowdown. Until an official announcement is made, Vodafone shares remained less unchanged at 26.2 pence.

Vodafone have not enjoyed a good year, their shares declining 22 percent in 2008.

Signs are that even the defence industry is suffering as part of the recession. Another British standard, Rolls-Royce who is the world’s second largest aircraft engines producer saw their shares drop 5.4 per cent (14 pence to 278 pence.) BAE Systems Plc, UK and Europe’s largest defense company also had a stock fall of 3.7 percent (13 pence to 390 pence.)

Britain’s largest state-controlled bank Royal Bank of Scotland, is reputed to be about to slash their running costs, principally by cutting back on investment banking operations. The bank also plans split its trading operations into two units over the next three to five years. One autonomous unit will cover the bank’s U.K. and other “core” businesses, whilst the other will control operations that are in the periphery of the RBOS s operation. A sign that this rumour may bear some credence was that the bank’s shares rallied 9.8 percent (two pence to 21.2.)

The world’s largest silver producer Fresnel Plc reported an 11 percent drop in full-year profit in 2008. The drop to $128 million was caused by increased production costs and losses on foreign exchange. The FTSE was unforgiving and Fresnillo’s shares dropped 5.6 percent (23 pence to 390)

Europe’s largest travel company TUI Travel Plc saw their shares fall 3.5 percent, (8.25 pence to 228) On the news that the company’s shipping line Hapag-Lloyd shipping line, is proving hard to sell and may need to be revalued.

On the up were Prudential Plc, U.K.’s second-largest insurer who gained 1.3 percent ( 3.75 pence to 288.75) Another insurer showing a slight rise were the Friends Provident Plc, who added 1.6 pence, or 2.2 percent, to 75.2.

Material supplier to restaurants and offices, Bunzl Plc, announced yesterday that their full-year profit had risen by nine percent in 2008 due to successful acquisitions in Brazil, the U.K. and Spain. On the news Bunzl shares rose by 1.1 percent, ( six pence to 544) .

The FTSE 250 index dropped by 1.42% or 83.93 points to 5,835.41 while the FTSE 100 finished the session down 0.77 per cent, or 29.74 points at 3,820.99

The pound rose to the highest level in more than a week against the dollar as speculation the U.S. government will take larger stakes in banks to shore up the financial system.

Pound/US dollar 1.4536

Pound/Euro 1.370

Pound/Japanese Yen 139.23

Pound/Swiss Franc 1.6833

Wall Street shares had a very poor day, caused by continued uncertainty around the banks. The Dow Jones Average dropped 226 points to close at 8149.03. Nasdaq fell 53.51 to 1387.22.

Gold’s rally appeared to be slowing down on Monday surging above the $1,000 per ounce level on Friday, dipping to $991.

Asian stocks fell sharply on Tuesday amid renewed fears over the health of the global financial sector and after US stocks hit a near 12-year low.

Japan’s Nikkei index closed down 1.46%, the Hong Kong index closed down 2.9% and the Shanghai index fell 4.3%.

Most Asian indexes had risen on Monday on hopes the US government was to increase its stake in Citigroup.

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Tags: British Economy, Credit Crunch, Employment, Finance, Financial News, LDV, Recession, Unemployment