Government ministers will use this week’s Labour party conference to claim government action helped pull the country back from the economic abyss, while their Tory counterparts will as surely use their own conference next week to blame the government for the downturn’s depth.

According to the Confederation of British Industry (CBI) employers’ organisation, after the general election, public spending should be cut harder and faster than the government intends. The next government should aim to balance their books by 2015-16, which is two years earlier than the plan set out in this year’s Labour Party Budget. The feeling at the CBI is that while it was essential an incoming government laid out a “clear and credible” plan to get the budget back into balance, the organisation remains undecided whether the process of cutting spending should start next year, according to the opposition Conservative party’s proposals.

According to internal company data, Opel’s U.K. and Spanish car plants are more efficient than two of its three German factories. Figures for December show the Russelheim plant in Germany took almost 10 hours more to assemble a car than the Ellesmere Port factory in Britain and 14 hours more than in Zaragoza, Spain. These figures are likely be used by those demanding the European Commission “take a tough stand” on the sale of General Motors’s Opel unit to Magna International Inc. Job losses are expected to be heavier outside Germany under that proposal, which is being brokered by the German government.

The proposed UK government six pound telephone line tax due to be implemented by the end of 2010 has apparently raised some eyebrows in the business community. The proposal, aimed to partly fund the investment required for a new UK national broadband network. Has met with a surprising response from British business who claim that six pound per telephone line would prove insufficient and could hold back the UK broadband sector for some time to come. Government thinking is apparently that many consumers are already upset about the need to pay six pound every year, although they have no current access to broadband, and the government is trying to keep the cost per family down, but to what effect.

UK-based domestic insurance group HomeServe has sold its loss-making emergency repair services unit for £11 million. HomeServe Emergency Services (HES) was acquired by Midlands-based LDC, the private equity arm of Lloyds Banking Group. The division posted a loss for the first half of this year, and HomeServe was reportedly keen to sell it off, reducing its valuation by £97 million to make the sale. HES, who employ 2,400 people at offices in Norwich, Nottingham, and Beverley, is made up of three trading businesses, including HomeServe Glass and Locks, who provide and emergency glazing and locksmith service; HomeServe, Chem-Dry, who provide emergency restoration of water damage and accidental damage; and HomeServe Content Services, who have developed a software designed to assist insurance firms validate contents insurance claims.

The FTSE 100 registered its sharpest gain in three weeks on Monday, as it jumped 83.50 points to close on 5,165.70 The FTSE 250 reversed most of last week’s fall, up 108.96 points to 9169.40.

The pound continued to enjoy mixed fortunes against the major currencies.

• • Pound/US dollar 1.5879
• • Pound/Euro 1.10867
• • Pound/Japanese Yen 142.4182
• • Pound/Swiss Franc 1.64

Photocopier giant Xerox, already the world’s biggest supplier of digital printer and document management services, has unveiled a takeover deal which takes it into the fields of data management and technology outsourcing. The company is buying fellow US firm Affiliated Computer Services (ACS) in a cash and shares deal worth £4 billion.

Wall Street on Monday recorded its biggest daily gain for over a month after merger deals lifted investor confidence. The Dow Jones Industrial Average was up 124.17 points to 9,789.36. The NASDAQ jumped 39.82 to close on 2130.74. Last week, Wall Street suffered its biggest weekly loss since July after disappointing data on durable goods and housing sales.

Germany equities led European bourses higher on Monday aided by a particularly strong performance from the German utility sector, after Chancellor Angela Merkel’s Christian Democratic Union and her Free Democratic allies gained a majority in parliament on Sunday.

In a move designed to ease the impact of the global economic crisis on central and Eastern Europe, the European Bank for Reconstruction and Development has appealed for an increase of 50 per cent in working capital.

The multilateral bank, controlled by some 60 governments, including European Union members, the US and Japan, is asking for an extra £9 billion (€10 billion,) necessary to expand their lending capabilities as well as compensating for a sharp decline in private capital flow, especially into the cash strapped former communist countries.

The bank’s move highlights the bank’s concerns that the region’s difficulties may be forgotten as world leaders grapple with the effects of the global crisis.

The yen rose to a seven-month high versus the dollar as Japan’s new government reiterated its opposition to intervening to stem a currency’s gain and the Federal Reserve pledged to keep interest rates low. Japan’s yen advanced 1.8 percent this week to 89.64 per dollar, from 91.29 on September the 18th at one point touching 89.51 yen, the strongest level for almost nine months.

financialsrc

• Lending Club Update: Earning 15% NAR on Microloan Investments ~ ~ ~ April 2011 Update: Shutting Down My Lending...
• Rogers Still Bullish On Commodities Jim Rogers recently gave a presentation in Vancouver, Canada where...
• 39 Pounds in 5 Weeks After 5 weeks on the medically assisted weightless program I...

Tags: Affiliated Computer Services, Banking, Brighton conference, British Economy, British Pound, Confederation of British Industry, Currency, Dow Jones, Economy, European Bank for Reconstruction and Development, Financial News, FTSE, General Motors, Gordon Brown, Government, HomeServe, HomeServe Emergency Services, Labour Party Budget, Magna International Inc, Money Markets, NASDAQ, Opel, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Wall Street, Xerox

Royal Bank of Scotland is considering approaching the market for extra money to avoid handing more control to the government. The bank, now 70% owned by taxpayers, is preparing to join the government’s Asset Protection Scheme (APS) to stop some toxic investments going bad. But it is also considering asking shareholders to invest further to prevent the government’s stake rising to a possible 84.5% if it insured all its bad assets with the APS.

According to official figures released on Friday, the UK government posted a record budget deficit for an August as the recession continues to bite into government tax receipts, The Office for National Statistics said the public sector net cash requirement (PSNCR) stood at £10.379 billion in August. That was lower than the 12 billion pounds expected by analysts but still twice the level of the same month a year ago and a record for the month of August. July’s PSNCR was also revised up by some £1.5 billion. The government’s preferred accruals-based measure, public sector net borrowing came in at £16.119 billion s, also weaker than expected and a record high for August, versus £9.876 billion pounds in 2008.

The flow of net lending to companies fell in July by the largest sum on record, according to a statement issued by the Bank of England on Friday. The figures provide further indication that more action may be needed to get credit flowing in the UK economy.

On a more positive note, mortgage approvals by major UK lenders rose in August for the seventh consecutive month to 57,000 from 53,000 in July. The net flow of lending to UK businesses fell £15.5 billion in July after a £3.6 billion pounds fall in June, making for the largest single decline since 1998.

UK Business Secretary Peter Mandelson has called on the European Union to intervene to prevent governments using state aid as a bargaining chip to protect jobs during Magna International Inc.’s takeover of General Motors Co.’s EU plants. Mandelson has joined the list of European politicians concerned that a German plan to provide €3 billion in loan guarantees to support the GM-Magna deal will sway the company. As the carmaker struggles with overcapacity, Magna has said it plans to cut about 10,500 jobs.

According to senior officials at the State Bank of India,(SBI) India’s largest lender, are looking at acquisitions of up to $1 billion in the UK and expect to maintain a 40 per cent growth rate in its UK business.

The bank’s overseas business plans, expected to be driven by both expansion and acquisitions, include the opening of 40 overseas branches, according to SBI chairman OP Bhatt. The bank was looking at all regions of the World, including the UK, for acquisitions. Besides the UK, the regions where the bank plans to open new branches include North America, Bangladesh and Nepal, where its subsidiary will set up 11 more outfits. It will open five more in branches in the UK by June next year and make London a hub for its European operations to boost international business. At present, the lender has seven branches in the UK and plan to open another, hopefully in October.Currently, the UK contributes over $3 billion to SBI’s turnover.

British Sky Broadcasting has accused the media regulator of making elementary errors in an official review of the pay-television market, and said that Ofcom, the independent regulator and competition authority for the UK communications industries, was exceeding its powers. BSkyB delivered its detailed response to the regulator’s findings that it should sell its most valuable content, including Premier League football and first-run films, to rivals at prices set by Ofcom. In the document, the broadcaster accuses the regulator of producing a financial analysis is fundamentally flawed, as well as challenging Ofcom’s right to even rule on the case, that has taken two years to decide. The pay-TV review was prompted by a complaint from four of BSkyB’s competitors, Top-Up TV, BT Vision, Virgin Media and the now defunct Setanta.

The biscuit group that makes Jammie Dodgers and Wagon Wheels, Burton’s Foods have been taken over by its lenders in a debt restructuring move that leaves Duke Street Capital, its private equity owner, nursing a considerable loss. The fate of Duke Street’s investment in Burton’s comes just over two years after its plans to close one of the biscuit maker’s factories caused the private equity group to be invited to a parliamentary inquiry for questioning.

On the FTSE Standard Life rose 1.8 per cent to 283 pence after Goldman added the insurer to its “buy” list.

Leading property stocks were higher. British Land gained 3.3 per cent to 528 pence after completing the sale of half its Broadgate development to Blackstone. Hammerson followed, gaining 2.6 per cent to 439½ pence.

The UK’s FTSE 100 index continued to climb but at a slower pace , rising 8.94 points to close at 5172.89, making for a 3.2 per cent gain for the week.

Meanwhile the FTSE 250 lost almost all of its previous day’s gains on Friday, falling 57.15 points to wrap up for the weekend on 9,306.93

The dollar fell to fresh one-year lows this week as rising risk appetite stemmed haven demand for the US currency. Continued improvement in sentiment encouraged investors to abandon the low-yielding dollar to seek higher returns elsewhere. The pound continued to lose value against the main currencies on Friday’s trading.

• Pound/US dollar 1.6271
• Pound/Euro 1.1059
• Pound/Japanese Yen 148.7878
• Pound/Swiss Franc 1.6751

Another two US banks have been closed by the federal regulator, taking the total number of American banking failures this year to 94.

The Federal Deposit Insurance Corporation (FDIC), which controls the banking sector, has shut Irwin Union Bank & Trust and Irwin Union Bank.

The move comes after their parent firm – Irwin Financial – was unable to meet an FDIC demand to boost their capital.

The failure of the two banks is likely to cost the FDIC £522 million.

The Dow Jones Industrial Average continued to move upwards towards the weekend , up 36.28 points at 9,820.2. The NASDAQ consolidated a little, up 6.11 points to 2132.86.

Gold dominated trading this week with bullion inching towards its record high of $1,030.80 a troy ounce set in March 2008.

It reached $1,023.85 on Thursday but was back to $1,012 on Friday, up 0.7 per cent on the week. It found support from dollar weakness and concerns about the outlook for inflation.

financial

• Consumer Credit Usage: The Jury is Still Out I admit it. Mr. ToughMoneyLove was encouraged by data suggesting...
• Manufacturing Jobs Coming Back To The US I read a lot of financial news and newsletters on...
• Bank of Canada lowers economic outlook           By Guy W. Close -...

Tags: APS, Asset Protection Scheme, Bank, Bank of England, Banking, British Economy, British Pound, British Sky Broadcasting, BskyB, BT Vision, Burton’s Foods, Currency, Dow Jones, Duke Street Capital, Economy, FDIC, Federal Deposit Insurance Corporation, Financial News, FTSE, General Motors, GM-Magna, Irwin Financial, Irwin Union Bank, Magna International Inc, Money, Money Markets, NASDAQ, Ofcom, Office for National Statistics, Peter Mandelson, PSNCR, RBS, Recession, Royal Bank of Scotland, Setanta, State Bank of India, Top-Up TV, UK Banks, UK business, UK Economy, UK government, UK Recession, US Banks, Virgin Media