Chancellor Alistair Darling, possibly with an eye to future job prospects, is expected to blow his own horn in the coming days, by claiming that the Labour government’s investment in jobs programmes are responsible for saving no less than £12 billion during the recession. Darling backed up his claims by stating that in the 2009 budget, the government’s prediction for unemployment was as high as 2.09 million by the end of 2009 and reaching close to 2.5 million in 2010. By the end of December of last year they had already revised, their estimates down to one and three quarters of a million by end 2009 and less than two million for 2010. The reduced number of benefit claimants, if maintained, will save £10 billion over the next five years according to the stressed Chancellor’s figures.

There is much speculation afoot that the UK government are about to introduce important legislation regarding the use of credit cards. The new legislation will prohibit credit card companies from using a method of calculating interest known as the "adverse order of payments method. The adverse order of payments is where credit card companies force customers to pay off the debts on their account holding the lowest rates of interest before higher interest rate debt is reduced. Figures show that currently there are close to ten million people in the UK holding credit card debts with multiple interest rates. The practice is said to cost credit card holders an average of around £250 pounds in the first year they hold the card.

Business Secretary Lord Mandelson has announced that the UK government will be offering a £270 million loan to GM designed to safeguard five thousand Vauxhall jobs in the UK. The money, which will go to Vauxhall’s parent company GM Europe, will guarantee production at the car maker’s plants in Luton and Ellesmere Port. According to a statement from Lord Mandelson, the outline deal followed "highly complex" talks between the Government and bosses in the US.

Lord Mandelson stressed in his statement: "I always said the Government would stand foursquare behind Vauxhall. With this announcement, we have kept our word." Unite boss Tony Woodley who represent the Vauxhall workers chipped in by saying that the loan is great news for British industry.

Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc improved on the increase in value of their U.S. bank shares. RBS soared 5 percent to 42.57 pence. U.S. banks yesterday closed at the highest since November 2008, led by Citigroup Inc. Lloyds climbed 3.4 percent to 58.47 pence. The bank is close to agreeing a joint venture to sell a number of the less than worthwhile assets assembled by HBOS.

BSkyB, the U.K.’s biggest pay-television provider, surged the most in almost eight months on a report that Rupert Murdoch’s News Corp. may bid for the shares that the y currently do not hold in the company. On the news BSkyB rose 5 percent to 598 pence, the biggest gain since July 30. News Corp, which already owns 39 percent of the pay-TV company, may be planning to pay 735 pence a share for the stake it doesn’t already own.

The Pound was still seen to be struggling again the main currencies, although the currency did rise slightly before the weekend. The pound was on $1.5183 while remaining almost on par with the Euro on €1.1033

As the markets closed for the weekend U.K. stocks gained, extending a second weekly increase for the benchmark FTSE 100 Index, largely on the back of increases in financial share values.

The FTSE 100 increased 0.2 percent to 5,625.65, bringing its weekly gain to 0.5 percent. The FTSE 100 has climbed to near the highest level since June 2008, lifted by optimism that the global economic recovery and higher earnings will support the 12-month rally in equities.

Former executives of the now defunct Lehman Brothers firm as well as the senior executives of their erstwhile auditor, Ernst & Young headed home for a weekend of self contemplation as they were severely censured in a recent report for some serious professional lapses that led to the firm’s collapse.

The report also went on to say that Lehman trading on knowing they were insolvent for a number of weeks before eventually declaring themselves bankrupt. Lehman’s bankruptcy is generally recognized as being the catalyst that sparked of the global financial meltdown. The collapse of the 158-year-old investment bank in September 2008 was the world’s largest bankruptcy at that time.

The report made for some heavy and disturbing reading, accusing the Lehman Brothers’ management of "actionable balance sheet manipulation" and using accounting tricks to hide debts. In their defence, Ernst & Young said that its last audit of Lehman was "fairly presented" according to accounting rules. As Lehman Brothers wobbled on the edge of collapse, a determined effort from Wall Street, the City of London, and the US and UK governments did all that they could to prevent the banks’ fearing the chain reaction that Lehman’s failure would set off around the globe.

Whether the long awaited report had an effect on Wall Street trading remains to be seen, but share trading was certainly restrained on Friday before the markets closed. The Dow Jones was up 12. 85 points to 10624.49 while the NASDAQ dropped less than a point to 2367.66

After weeks of crisis, it looks like the Eurozone region are on the verge of agreeing to support a multibillion-euro bailout for Greece as part of a package to shore up the Euro, the zone’s single currency.

Despite huge resistance, Germany, who were against the bailout, have bowed to pressure from fellow members of the 16 strong Eurozone members who expect to draw up the rescue package in the early days of this week. At the same time, the Eurozone members, at Germany’s behest, will introduce new legislation to enforce greater fiscal discipline among its members.

According to a senior European commission official, the Euro member states have agreed to provide a series of loans or loan guarantees to Greece in the likely event that Athens finds itself unable to refinance its soaring debt and requests help from the EU. Speculation has it that the initial aid to Greece could reach as high as €25 billion (£22.6 billion), with estimates that the total extent of Greece’s financial problems could see them needing up to €55 billion in loans by the end of 2010. Despite the fact that Germany were the most reluctant to come to the rescue of a fiscal delinquent in the current crisis, they have played the pivotal role in organising the rescue package, in their role as the EU’s traditional paymaster,

According to a report by the International Energy Agency (IEA),

China’s demand for oil jumped by an "astonishing" 28% in January compared with the January 2009. The IEA went on to point out that added that the estimated global demand for oil in 2010 would be driven by rising demand from emerging markets, with half of all growth coming from Asia while demand in developed countries is likely to fall by 0.3%.

The IEA has increased its global oil demand forecast for 2010 by 1.8% to 86.6 million barrels a day.

Oil prices were above $83 a barrel on Friday, the highest in two months.

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Tags: Alistair Darling, Bank of England, Banking, British Economy, British Pound, BskyB, Citigroup Inc, Dow Jones, Economics, Economy, Ernst & Young, Financial News, FTSE, GM Europe, HBos, International Energy Agency, Labour government, Lehman Brothers, Lloyds Banking Group Plc, Lord Mandelson, Money, Money Management, NASDAQ, News Corp, Oil prices, Recession, Royal Bank of Scotland Group Plc, Rupert Murdoch, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Vauxhall, Wall Street

UK public opinion is reported to be swinging the way of large scale cuts in the public service sector, according to recent reports. The sector, costing taxpayer’s record amounts of money each year. Is now employing more people than ever before. Unions who represent public sector employees are anticipating having a have a fight on their hands, if as expected, the Conservative party wins the next election and inherits an economy still struggling to pull itself out of recession.

According to statistics issued by the Office for National Statistics before the weekend, business investment in the UK fell 0.6% sequentially in the third quarter, significantly less than the 3% initially estimated. British private and public sector manufacturing investment has reportedly fallen 9.4% since the second quarter and by almost 30 % since the third quarter of 2008.

According to a recent report by the Bank of England the “probability of default by U.K. real estate companies has increased significantly” as households continue to face a weakening labor market paired with tightening credit conditions.

Amid concerns that the government’s 50% banking bonus tax could seriously damage future business levels, stock markets around the world have been focusing upon the city of London investment markets. The UK government went as far as issuing a report, released on Friday, clarifying who is liable to fall under the scope of the banking tax.

With reports in circulation that UK banks, and especially those whose activities are centered on in London continue to consider their position regarding the banking bonus tax, which has been mooted as a one-off charge, is making people in the banking world a little hot under the collar.

The Confederation of British Industry (CBI) has raised its 2010 economic growth forecast, whilst predicting that the Bank of England may place their bond-purchase plan on hold as soon as February as policy makers prepare to raise interest rates.

The CBI also predict that gross domestic product in the UK will increase 1.2 percent in 2010 after contracting 4.5 percent in 2009, up from their previously forecast expansion of 0.9 percent. The group also predicts the bank will raise the benchmark interest rate from 0.5 percent in the second quarter to reach 2 percent by the end of the year.

The recovery will be aided by companies rebuilding stocks to meet a rebound in world growth and as exporters benefit from a weaker pound, down almost a quarter since the start of 2007, making British goods cheaper to buy abroad.

Google, smart boys that they are, succeeded in not paying a penny in corporation tax on the £1.6 billion advertising revenues that it earned in Britain in 2008. The company, which enjoys an estimated 90% market share of UK internet searches, last year, used a cross-border network of subsidiary companies to keep the taxman at bay. Their smoothly interwoven international corporate structure enabled Google to avoid paying what could otherwise have been a corporation tax bill in the UK of as much as £450 million, according to recently filed accounts for subsidiary company Google UK Limited. The accounts show none of the search engine’s advertising revenues from British customers were accounted for in the business, despite operations in London and Manchester While much of the costs linked to the running of Google’s British operations are recognised for tax purposes in the UK. Revenues from customers in Britain, however, are diverted to another Google company in Ireland, where the corporation tax rate is between 10% and 25%, while UK corporation tax is levied at between 28 and 30%

The British Pound has begun to recover and bounced back to a high of 1.6251 on Friday following the rise in risk appetite. Analysts predict that Sterling may continue to recover as a recent Bank of England Financial Stability report said the U.K. financial system has become “significantly more stable”. This was credited to the unprecedented steps taken on by the government.

• Dollar 1.6152
• Euro 1.1262

Things were pretty brisk on the FTSE 100 approaching the weekend, with

nursing homes group Care UK drawing a lot of attention. The company has been reportedly been considering whether to accept a £275 million pound bid from Bridgepoint which will take them private. Care that runs 60 nursing homes, GP practices and NHS walk-in centres in the UK saw their shares rise 10.5 pence to 430.5 pence on Friday.

Overall U.K. stocks were on a minor downward spiral, with banks leading the way. Lloyds Banking Group Plc and Barclays Plc were are ever leading the way, as the European Central Bank (ECB) increased their estimate of the value of write downs by 13 percent. Lloyds, the 43 percent government-owned bank, lost 4.7 percent to 48.7 pence, to its lowest since July. Barclays, the U.K.’s second biggest bank, slid 3.5 percent to 264.25 pence.

Ryanair surged 5.8 percent to 3.282 Euros after the carrier said it will generate surplus cash for shareholders between 2012 and 2015 after they had suspended their talks with Boeing regarding future aircraft acquisitions.

Also on the up was Aggreko Plc, the world’s biggest provider of mobile power-supply gear. Their shares rallied 7.9 percent after announcing that trading in the fourth quarter was better than it estimated.

The benchmark FTSE 100 Index dropped 20.8, or 0.4 percent, to 5,196.81. The FTSE 100 fell 1.2 percent this week. The gauge has still rebounded 48 percent since March and is heading for its biggest annual gain since 1997 as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy.

On close of trading, the Dow Jones Industrial Average was up to 10, 328.61 while the NASDAQ was stable on 2,211.69

GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".

GM had been in talks with the Dutch specialty car maker Spyker over a sale. Talks with Sweden’s Koenigsegg also fell through earlier this year.

GM has been trying to sell Saab as part of its turnaround plans since January. Dutch luxury car maker Spyker has submitted a new offer to General Motors (GM) for its Swedish car brand Saab.

Spyker has submitted a new 11-point proposal to GM, addressing the issues that ended talks.

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Tags: Aggreko Plc, Bank, Bank of England, Banking, Barclays Plc, Bridgepoint, British Economy, British Pound, Care UK, CBI, Confederation of British Industry, Credit Crunch, Currency, Dow Jones, Economics, Economy, European Central Bank, Financial News, FTSE, General Motors, Google, Koenigsegg, Lloyds Banking Group Plc, Money, Money Markets, NASDAQ, NHS, Office for National Statistics, Recession, Ryanair, Saab, Spyker, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession

U.K. Prime Minister Gordon Brown said Monday that his government has identified billions of pounds in additional efficiency savings in the public sector to help pare the country’s record deficit. Mr. Brown said the government can deliver £12 billion ($19.7 billion) in efficiency savings over the next four years, an increase on the target £9 billion that the Treasury had identified in April. Brown’s announcement comes ahead of Wednesday’s Pre-Budget Report, which will map out some measures to cut the budget deficit. Among the measures that have been considered is a tax on bankers’ bonuses and even on the banks themselves. However the issue of a windfall tax on banks or bonuses presents Brown and Chancellor Darling with a serious dilemma as they leave no stone unturned to raise cash without damaging the economy’s return to growth. Eroding banks’ profits to raise fiscal income might weaken these institutions just as the government is trying to provide increased more capital behind them to cover lending to Britain’s credit-starved companies.

Manufacturing output in the UK between September and October was unchanged against expectations for a 0.4 per cent increase. UK house prices rose 1.4 per cent month on month in November – stronger than forecast. The two pieces of news appeared to cancel each other out and sterling and gilts seemed little affected.

U.K. Chancellor of the Exchequer Alistair Darling is expected on Wednesday to announce a cut in taxes on the use of electric vehicles as company cars as part of efforts to present an environmentally friendly pre-budget report. A U.K. treasury spokesman predicted that from 2012, companies and employees would be exempted from paying taxes on company cars if they were electric vehicles.

Shares in UK government majority owned Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, dropped after Chancellor of the Exchequer Alistair Darling refused to rule out a tax on excessive bonus payments. Royal Bank of Scotland retreated 4.7 percent to 33 pence and Lloyds Banking tumbled 4.1 percent to 53.69 pence.

Andrew Bailey, executive director for banking services at the BOE, has stated the bank’s fears that U.K. consumers are hoarding cash due to their lack of confidence in the banking system. Another factor that strengthens the banks theories are the negligible interest that they would earn even if they did invest their money with a financial institution. In a speech made in Washington D.C., Bailey highlighted the ironic connection between the declining need for cash in everyday life and the sharply increasing demand for banknotes during the financial crisis and ensuing recession.

According to a recent report issued by the Engineering Employers Federation, U.K. factory production will begin growing again next year as exports rebound, Production is expected to grow 0.9 percent in 2010 after it had shrunk by 10.4 percent in 2009. The report went on to add that increasing signals point to the fact that the U.K. is emerging from the longest recession on record. The British Chambers of Commerce pointed out that although the recovery has started the Bank of England will probably be required to maintain its bond purchase plan at £200 billion pounds ($331 billion) while it assesses the strength of signs of a rebound.

Shares in travel companies are on the rise, with the Thomas Cook Group and TUI Travel leading the way. Thomas Cook, Europe’s second-biggest tour operator, jumped 1.9 percent to 221.2 pence, while TUI Travel, Europe’s largest tour operator, rose 1.5 percent to 250.5 pence.

Shares in the U.K. waste recycling company Shanks Group Plc surged forward 43 percent to 128.5 pence after the company revealed that they had received a possible bid offer from an unidentified private equity group. Washington-based private equity firm Carlyle Group, have been reported to be in talks to buy the British waste-disposal company Shanks for about £535 million ($875 million) for some time.

Sterling lost ground on Tuesday as disappointing economic data and concerns over the UK government’s pre-Budget report weighed on the currency,

• Pound/US dollar 1.6292
• Pound/Euro 1.1040

London equities continued to weaken on Tuesday, with renewed concern about the financial problems in Dubai. Banks especially were hard while talks continued between Dubai World and the creditors to restructure debt at the holding company. It is expected that a group of banks, including the Royal Bank of Scotland, Standard Chartered, HSBC, Lloyds Banking Group as well as two from the United Arab Emirates (UAE) will form a steering committee to be appointed to represent creditors. At the end of the day’s trading, the FTSE 100 had tumbled 1.5 per cent to close on 5,230.5,

According to Federal Reserve Chairman Ben Bernanke the US economy is improving, although it is still too early to say that the recovery will last.

Unemployment could stay "elevated", although inflation is likely to remain subdued, while interest rates were likely to stay low for "an extended period",

Following Bernanke’s comments, the dollar lost a lot of the recent gains it had made against the euro.

On close of trading, the Dow Jones Industrial Average had dropped 104.82 points to 10,285.292 and the NASDAQ was also down 19,65 points to to 2,169.96

President Obama has said that money not spent under the £425 billion ($700 billion) US bank bail-out package could be used to cut the US deficit and boost jobs. The cost of the "Troubled Asset Relief Program" (Tarp) had turned out to be "much cheaper than expected". Reports say the cost of the Tarp will be £120 billion below the Treasury estimate. Back in August, the Obama administration had estimated that the rescue package would be £200 billion.

Crude oil dropped for a fourth day, trading below $75 a barrel, as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates.

The China Association of Automobile Manufacturers announced that Chinese car sales and production both exceeded 12 million between January and November, with expectations that car sales and output will to top 13 million for the full year.

Production of new cars has never topped the 10 million cars in one year mark in the past with state incentives having boosted car sales. The Chinese government has reiterated their plans to continue economic stimulus measures into 2010, Despite the downturn and falling sales at most global car makers, demand for cars in China continues to boom.

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Tags: Alastair Darling, Asset Relief Program, Bank, Banking, Ben Bernanke, British Economy, British Pound, Chancellor of the Exchequer, Credit Crunch, Crude oil, Currency, Dow Jones, Dubai World, Economics, Economy, Employment, Engineering Employers Federation, Financial News, Gordon Brown, HSBC, Lloyds Banking Group Plc, Money, Money Markets, NASDAQ, pre-Budget report, Recession, Royal Bank of Scotland Group Plc, Shanks Group Plc, Standard Chartered, Stock Markets, Stocks and shares, Thomas Cook Group, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US economy

According to a survey for the Confederation of British Industry (CBI), UK companies will be relying much less on banks for credit in the future, instead pinning their hopes funding from bonds and equities.

The survey showed that half of the companies will be looking to decrease financing from bank debt after the recession winds down. More than forty percent of the companies who took part in the survey said that they could see no change in bank funding.

The new Supreme Court is expected to rule on Wednesday on whether overdraft charges can be assessed for fairness under the Unfair Terms in Consumer Contract regulations. If the Supreme Court rules in favour of consumers, banks could be forced to pay out hundreds of millions of pounds if the overdraft charges levied were ruled to be unfair, and the public could seek to recoup losses through charges on current accounts and ATM withdrawals.

The British Bankers’ Association announced that the number of home purchase loans approved by banks in October was almost double that of a year ago, with 42,238 mortgage applications being approved. The figure was slightly higher than the 42,073 loans approved in September, while they almost double what they were from the same period on 2008. Net mortgage lending rose by £3.1 billion pounds in October, the same figure as in September.

Up to their knees in this week were the Association of British Insurers (ABI), who have received between 500 and 1,000 claims relating to recent flooding in Cumbria and southern Scotland where claims totaling up to £100 million have been recorded. At least 1,500 homes were affected by the floods, six bridges are reported to have collapsed and 5,000 households were left without power. The ABI announced that it was difficult to ascertain how many more claims could be expected. Insurers have said they might have to reconsider current arrangements, whereby all homes in the UK are offered flood insurance

Britain’s biggest mortgage lender, Lloyds Banking Group Plc is scheduled to publish results of a debt exchange. Meanwhile it was reported that the banking group is in talks with Execution Ltd. and a deal may result in the creation of a joint venture. Shares in Lloyds dropped 2 percent to 88.15 pence

Following its successful merger with Spain’s Iberia Lineas Aereas de Espana SA, British Airways Plc could revive plans for a tie-up with Australia’s Qantas Airways Ltd. Chief Executive Officer Willie Walsh has suggested that the Iberia model would allow Qantas to retain a separate brand and home base.

British Airways has agreed to combine with Iberia to boost its network amid a slump in international travel that contributed to a record first-half loss. The carrier abandoned merger talks with Qantas last year after the airlines failed to agree on who would control the new company. Shares in BA gained 1.6 pence, or 0.8 percent, to 202.6 pence.

Rumours abound that Nestle SA has thrown their cap into the ring in the who will buy Cadburys circus. The company is said to be weighing options would challenge Kraft Foods Inc.’s offer as well as a potential move by Hershey Co.

Cadburys are seemingly expecting a friendly bid from Hershey Co. if it can arrange the financing, with the company’s controlling trust supposed to be in favour of a $17 billion bid for Cadbury. The only thing that is certain is that Cadbury’s stock keeps on rising, up 1.2 percent to 800.5 pence.

Marks & Spencer Group Plc’s incoming chief executive officer Marc Bolland, has announced that he will focus on growth on foreign markets especially China, when he takes the reins next year. The markets remained indifferent, as shares dropped or 0.1 percent, to 380 pence.

The pound rose against the dollar, while falling against the Euro and the yen on continued concerns regarding the U.K. budget deficit.

• Pound/US dollar 1.6581
• Pound/Euro 1.1077
• Pound/Japanese Yen 146.6185
• Pound/Swiss Franc 1.6718

The FTSE 100 Index jumped by 82.55 points to 5,323.98, while the FTSE 250 rose by 14 points to close on 9,181.

In the US, the National Association of Realtors announced that sales of previously-owned US homes jumped by 10.1% in October as buyers rushed to take advantage of tax credits, which have now been extended.

Sales hit a seasonally adjusted annual rate of 6.1 million, up from a revised 5.54 million in September. First-time buyer tax credits had been due to expire at the end of November, but have been extended until 30 April.

The jump in October home sales was the biggest in almost three years.

The Dow Jones average took a turn for the better after the weekend, up 93 points to 10411.5 The NASDAQ rose seventeen points to finish up on 2163.73

Computer hardware giant Hewlett-Packard (HP) has announced a rise of 18% in profits for the third quarter, despite that the fact that their sales had fallen for the period. A spokesman for HP revealed that the company’s major cost-cutting initiatives had been the driving force in the £1.4 billion profit earned during the period. The firm has cut 6,700 jobs this year to trim costs.

The price of gold has hit a new all-time high, boosted by continued concerns about the weakening dollar.

Gold hit a record of $1,173.50 an ounce, up almost 2% from Friday close.

The expectation that US interest rates will remain low has put pressure on the dollar, making both gold and oil more attractive as an investment.

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Tags: ABI, Association of British Insurers, ATM withdrawals, Bank, Banking, British Airways Plc, British Bankers Association, British Economy, British Pound, Cadburys, CBI, Confederation of British Industry, Credit, Currency, Dow Jones, Economy, Execution Ltd, Financial News, FTSE, Gold, Hershey Co, Hewlett-Packard, HP, Iberia Lineas Aereas de Espana, Interest Rates, Kraft Foods, Lloyds Banking Group Plc, Marc Bolland, Marks & Spencer Group Plc, Money, Money Markets, NASDAQ, National Association of Realtors, Nestle SA, Oil, Qantas Airways Ltd, Stock Markets, Stocks and shares, Supreme Court, UK Banks, UK companies, UK Economy, UK government, UK Recession

After the traumas it has gone through over the last year or so, it appears that the Lloyds Banking Group Plc, still the U.K.’s biggest mortgage lender is making strides to relive itself of some of the stigmas attached to it as the UK banking industry almost imploded in autumn of last year. The bank has reached an agreement with the U.K. government to guarantee half the risk on a portfolio of its existing short-term loans to companies, The billion pound deal will be dependent on Lloyds agreeing to increase their business lending.

As far as the high street us concerned, Lloyd’s Halifax building society unit is currently review the licensing agreements they currently hold, entailing running some 300 outlets situated in real-estate agents, lawyers and financial consultants. They have already implemented a decision to shut down 26 of the situated in independent banks. Lloyds are also reported to be interested in selling off their branches of Lloyds, TSB and the Cheltenham & Gloucester Plc in Scotland. Lloyds Banking Group is considering more job losses as the bank plans to close more than 300 “agency” counters run by its Halifax subsidiary in the offices of estate agents, solicitors or financial advisers.

The 43% state controlled banking giant has already paid off 7,500 people in 2009 so far. On the up side, Lloyds recently announced it was reviewing its decision to close down its 160 Cheltenham & Gloucester (C&G) branches,

Less than cheery forecasts from insolvency specialists are beginning to emerge that a second wave of corporate restructurings are due to break this month as bankers and investment houses begin to face problematic customers. .

September has always been regarded as the second important crunch date in the year for companies and lenders, as companies involved in retailing and distribution draw heavily on working capital to stock up in anticipation of what might not be the greatest of Christmas seasons.

On a difficult day for the FTSE, Lloyds bank’ stock rose 6.3 percent, to 111.34 pence on news of their reorganisation plans.

Shares in the U.K.’s largest self- storage operator Safestore Holdings Plc also rose by 8.3 percent, to 131 pence, in anticipation of improved third-quarter earnings.

RSA Insurance fell 4.8 per cent to 124 pence following reports that the company was considering a £1 billion rights issue to reduce their debt burden

The FTSE 100 closed at a low, having been under pressure all day after market strategists recommended clients to cut their allocation of UK equities.

The FTSE returned from it August Bank holiday break to find itself not in the best of shape. The FTSE 100 dropped to 89.20 points close on 4819.70 while the FTSE 250 fared even worse, dropping 2.24 % or 197.83 points to close on 8,619.68

Sterling also continued to struggle against the major currencies

• Pound/US dollar 1.6126
• Pound/Euro 1.1349
• Pound/Japanese Yen 149.5807
• Pound/Swiss Franc 1.7207

It would appear that scrapping incentives has not had too much of an effect with new cars sales generally on the increase around the world in August according to some preliminary data. Car sales in Japan rose for the first time in more than a year, while several auto manufacturing groups in Asia and Europe reported higher sales volumes than for the comparable month last year.

On Wall Street, markets continue to struggle due to continued uncertainty in the Chinese economy. The Dow Jones Industrial Average plummeted by 185.68 points to close on 9310.6 while the NASDAQ Composite index dropped below the 2,000 mark yet again, down 40.17 points to close on 1968.89.

For the first time since February 2008, US manufacturing output grew according to the Institute of Supply Management’s purchasing managers. Their index rose to 52.9 points last month, up from 48.9 in July.

Any number above 50 indicates an expansion in manufacturing output, making for another significant sign of recovery in the US economy.

In a long anticipated move, the internet phone company Skype has been sold off by online auction site owners in a transaction worth about £1.2 billion

Skype will now be owned by a group of private investors, including Netscape co-founder Marc Andreessen and private equity firms, in partnership with EBay who will retain a 35% stake in the firm, which it has been trying to sell for some time. The deal values Skype at $2.75bn. EBay bought Skype for $2.6bn in 2005.

Unemployment levels Euro 16 countries was reported to have hit a 10-year high in July, as despite declarations to the opposite, the impact of the recession continues to be felt.

The number of unemployed across the eurozone region in July was reported to have reached more than 15.1 million, making for a seasonally-adjusted rate of 9.5%. The unemployment figures were the worst in terms of monthly percentage since May 1999 and compares unfavourably with the numbers of unemployed with all the 27 member states of the European Union which was a total of 21.8 million, or 9%.

Crude oil prices have fallen this week as news out of China continued to raise doubts about its petroleum demand, with prices falling below the $70 a barrel mark again.

Economic concerns have hit China where the benchmark Shanghai Composite index fell 6.7 per cent in its worst one-day decline since June 2008, halting the ongoing increase in crude oil prices, which have risen steadily in 2009, after falling as low as $33 a barrel.

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Tags: Banking, British Economy, British Pound, C&G, Cheltenham & Gloucester, Currency, Current Account, Dow Jones, Ebay, Economy, Employment, Financial News, FTSE, Halifax building society, Lloyds, Lloyds Banking Group Plc, Marc Andreessen, Money Management, Mortgage, NASDAQ, Netscape, Recession, Retail, RSA, Safestore Holdings, Skype, U.K. government, UK Banks, UK Economy, UK Recession, Unemployment, US economy, Wall Street

According to data released by the Halifax Building Society, property prices increased by more than one percent. Halifax, one of the UK’s leading building societies also reduced their forecast reduced how far they reckoned property values would fall in the remaining part of 2009. Their updated prediction is that house prices will fall by just seven percent in 2009.

Halifax stated hat prices had fallen by 0.8 per cent during the first seven months of 2009, with average house prices at £159,623 in July compared with £160,861 in December 2008. July house prices were 12.1 per cent lower than the same period in 2008, with the annual rate of change showing an improvement for the third consecutive month.

On a more sober note a recent report released by the Royal Institution of Chartered Surveyors has reiterated their well known standpoint that there is little chance of a quick return to a housing boom, despite the fact that UK prices may well rise in 2010, while standing firm on their forecast of a price fall of 10-15% this year amid a “considerable shift” in the market. Tight credit and job losses are the principal causes for limited transactions in 2009 and if they continue may still cause prices to slip back in 2010.

Despite their expected £4 billion loss in the first half of 2009, shares in Lloyds Banking Group surged by 11% due to mounting bad debts at HBOS. The only reason that analysts could come up with were that most of the bad news that the bank could dish up was now out in the open, and investors now had a clearer picture to build on.

Lloyds Banking Group, of which 43% is owned by UK taxpayers, announced that although they were still sitting on £13 billion of toxic loans and investments, such charges for bad loans would be smaller in the future.

Meanwhile it seems increasingly likely that the sale of the healthy parts of Northern Rock will be held off until after the general election. Alistair Darling, UK chancellor said he was in “no hurry” to offload the bank he nationalised in February 2008 after they announced reasonable half-year losses of around £700 million. The chancellor remains adamant that the rescue operation could still reap a profit for the taxpayer.

A recent study also shows that the pension-plan shortfalls of the U.K.’s top publicly traded companies more than doubled to an unprecedented 96 billion pounds in June.
The deficit of these companies all of whom are listed on the FTSE-100 Index with a 41 billion-pound shortfall in the same period last year, The signs are that employers are cutting back on pension benefits after the global financial crisis eroded profits and stock prices. Europe’s second-largest oil company, BP Plc, announced in June their intention to close its final salary pension plan to new U.K. workers, while Barclays Plc are asking their 18,000 employees to surrender similar benefits that the bank now claim to have become too costly.

Insurance group Legal & General have announced that they have succeeded in “considerably reducing” their losses in the first six months of the year, as well increasing their capital surplus. L&G claimed that the cuts were brought about by reduced workforce headcount, and closing down activities in less profitable business areas.
Despite the fact, the insurance group halved its interim dividend as it pressed ahead with a programme to save costs, causing their shares to drop in value by 5.6 per cent to 62 pence. , For the half year, Legal & General’s showed pre-tax losses decreased by 81 per cent to £74 million on revenues that slid 6 per cent to £3.1 billion.

Industry tycoon Rupert Murdoch’s News Corp announced losses of £2 billion in the financial year to the end of June. A year which Murdoch claimed to have been “their most difficult in recent history”.

The loss, largely due to $8.9 billion in write-downs already announced, compares with a $5.4 billion profit a year earlier.
Revenues at the media giant, owners BSkyB, 20th Century Fox and the Sun newspapers among many others, were down 7.8%.

It appears that ITV is set to sell Friends Reunited to DC Thomson, the Dundee-based publisher, for £25 million, less than four years after the company bought the social network for £170 million, a sum that included £50 million in performance-related bonuses.

The FTSE 100 reversed early gains to close down 24.24 points at 4,647.13.
Meanwhile the FTSE 250 continued to gain, climbing a further 23.57 points to close on 8,266.08

The pound continued its rise against the dollar as well as all the other major currencies on Wednesdays trading.

Pound/US dollar 1.7009
Pound/Euro 1.1799
Pound/Japanese Yen 161.1997
Pound/Swiss Franc 1.8028

As a result of ongoing controversies, the US Senate looks likely to push through their $2 billion extension of the “cash for clunkers” car subsidy programme before it breaks up for its August recess on Friday.

In a change of position from Monday, when senators from both parties expressed reluctance to follow the House of Representatives in extending the highly popular scheme the extension could be passed by the end of the week

Yesterday on Wall Street, the Dow Jones lost a lot of its previous days falling 39.22 points to 9280.97. The NASDAQ also crept back a little, down 18.26 points to close below the 2,000 mark on 1993.05

In the face of the global economic slump computer firm Cisco Systems have announced a fall in its quarterly profits by 46%, $1.1 billion compared with $2 billion for the same period a year earlier. Analysts, who had expected an even steeper decline, also were encouraged as was the company who announced that the quarter may have seen the last of the recession-related downturn.

Following the latest US weekly inventories data, US crude oil prices fell to $71.97 a barrel, after hitting a high of $74.89 in the previous session.
US crude stocks have risen to 1.7 million barrels.

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Tags: Alastair Darling, Barclays, BP, British Economy, Economics, Economy, Employment, Financial News, Halifax, Halifax International, Legal & General, Lloyds, Lloyds Banking Group Plc, Mortgage, Mortgages, News Corp, Recession, UK Banks

U.K. Financial Investments Ltd (UKFI) , the company established to manage the government’s stakes in the Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, announced in their annual report that it appears increasingly likely that their holdings in the banks will be realised through a series of several transactions that would take place “over a period of years”.

Also in the report UKFI disclosed their shares in the bank are currently worth 10.9 billion pounds less than what they paid for them according to current market value.
UKFI are taking the long term view and hope to move shares in placements, either to institutional investors, money managers and individual investors, or through the use of convertible bonds.

Acting UKFI Chairman Glen Moreno admitted in the report that “selling the shares for the moment would be a challenging prospect,”. “The amounts involved are very large, and a successful disposal of our holdings will require professionalism and patience,” he continued.

Total UKFI investment, funded by the UK taxpayer, in the two banks is around 60 billion pounds, representing 43 percent of Lloyds and 70 percent of RBS after they intervened to save the banks from collapse late last year. The U.K. has also agreed to insure 585 billion pounds of toxic and other assets held by the two banks.

Deutsche Telekom AG hold the second largest share block, valued at eight billion pounds when purchased in 2000 and obviously worse considerably less today.
In order to dispose of these shares UKFI it will need to win investor confidence, the organization’s report said., whilst stressing that it was “unlikely to be to the taxpayer’s advantage” to reveal its sales strategy.

Every U.K. household was forces to invest £3,000 pounds in UKFI when it was formed and currently their shares are worth less than £2,500.

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Tags: Deutsche Telekom AG, Glen Moreno, Lloyds Banking Group Plc, Royal Bank of Scotland, UKFI

At a recent banking conference held in Chicago , Bank of England’s executive director for financial stability, Andrew Haldane, made a statement that strengthened what many financial analysts and members of the public had felt to be true and for a long time. That the superior performance of the financial services sector in the years leading up to the point where the bubble burst and the credit crisis began was almost entirely due to luck rather than skill.

Haldane also want on to add that in his opinion, as the falsely created boom continued to rage on, without an end to sense and sensibility in sight, banks began to take more and more irrational links not to just to make profits and earn bonuses, but to show their counterparts in rival banks just how smart they really were. Something likes two idiots revving up their powerful cars at a set of traffic lights, making too much noise and burning up loads of fuel. Fuel that was eventually paid for by the UK taxpayer.

Today now that the dust has settled, and the banks have returned to a certain level of sanity, job cuts seem to be continuing at a frightening pace, To date there have been more than 55,000 people made redundant, with further financial firms expected.

Lloyds Banking Group Plc have announced a further 2,000 reductions yesterday, bringing their job cuts since April to more than 6,000. The Confederation of British Industry has estimated that U.K. financial services companies may axe another 13,000 positions in the third quarter of 2009.

What may be the saddest part of this saga is that the people who are now being shown the door are probably the young and the talented. Those who, under normal circumstances, would be expected to form the foundation of the next generation of UK bankers.

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Tags: Bank of England, Lloyds, Lloyds Banking Group Plc, UK taxpayer