Business Secretary Peter Mandelson pointed out recently that the advantages of a weak pound for the UK economy far outweigh it disadvantages. Mandelson went on to explain that because of the pounds “competitiveness” since the beginning of 2009 , U.K. manufacturers are winning valuable export orders and help to soften the blow of the recession domestically.

“Exchange rates move up and down. At competitive levels that we have seen last year, we have seen growth.” Mandelson explained

The pound is currently trading against the dollar at 1.6524, almost sixteen percent less than a year ago. When sterling was at its peak in November 2007 it was being traded as high as $2.116, and in January of this year it had reached a low of $1.3503.

However the pound remains relatively strong against the Euro, which according to Government sources makes it more difficult to do business in Europe, which has always been a valuable export market for the UK. Overall exports fell by 17 percent in the quarter up to end May 2009, compared to the previous year, according to information from the Office for National Statistics.

While this figure is less than inspiring, it could have been so much worse if not for the weak pound.

So for the meantime, a weak pound that will continue to increase the competitiveness of British exporters and boosts UK exports sales is to be encouraged. With the US economy beginning to recover, the possibility to increase UK exports will become increasingly stronger. The problem is that importing raw materials with a weak pound can be problematic. One area where a weak pound is a real cash bonanza is in incoming tourism. And this year with better weather to help it along, tourists are flocking to the UK and keeping their currencies flowing into our cash registers.

So if the production lines can be kept rolling, and sun keeps shining, the weak pound will begin to pay for itself.

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Tags: Banking, British Economy, British Pound, Financial News, Mandelson, Money, Money Management, Peter Mandelson, Pound, Savings

In a move believed to be to block Italian auto giant Fiat from acquiring the European brands of bankrupt General Motors, Opel and more importantly for the UK, Vauxhall Motors is to be acquired by Magna. The huge Canadian car auto parts maker

GM made the bold decision on who could buy Opel/Vauxhall also under pressure from the German government who have undertaken to invest several billion Euro to support the firm and its more than 25,000 German workers, Action was frantic over the weekend as Business Secretary Peter Mandelson announced that he will be seeking an early meeting with representatives of Magna who already employs around 75,000people worldwide, including in their plants in Austria.

Mr. Mandelson emphasized that Magna had made it clear that should they be successful in their bid to acquire Opel/Vauxhall, they would remain committed to continued production by Vauxhall in the U.K. Mandelson also went on to add “Now I will be seeking to reinforce their commitment and to make it into a cast-iron guarantee.” It appears obvious that the UK government will need to finance their commitment in line with their counterparts in Germany who are expected to provide around one billion pounds in interim financing for Opel, an undertaking that largely paved the way for a takeover by Magna along with two Russian partners.

UK Union officials as well as MPs have already expressed certain uneasiness around the possibility that the rescue could see German jobs safeguarded ahead of those in the UK.
To probe that there is still life in the car industry, Japan’s second- largest carmaker Honda Motor Company have announced plans to resume production at its U.K. plant after a four-month shut-down.

What set the production lines rolling was not an increase in demand for Honda cars, but the undertaking from workers at the Honda factory, situated in Swindon, southern England, to accept a three percent pay cut to be held until spring of next year. Honda’s UK Managers have caught on to the idea, also agreeing to take a five percent cut in pay.

The plant reopens on a single daily shift basis, understandable when you consider that car sales in the U.K. have plunged by 24 percent in the last twelve months. Mobile phone operator, Orange have reportedly made an unsuccessful offer to acquire for T-Mobile’s British operations. T-Mobile’s are the UK’s fourth-largest mobile communications network, are instead expected to launch a restructuring of the business in attempt to add some life to the company’s fortunes which have been far form healthy of late.

Vodafone are also reported to have expressed an interest in acquiring is also T-Mobile UK. Rumours have it that they would be interested in trading their Turkish franchises with Deutsche Telekom which may be more appealing to them, as DT already control Greek operator OTE.

On Friday the FTSE 100 Index rose 30.40 points to 4,417.94 while the FTSE 250 closed on 7,572.00 Sterling took a step forward against the dollar on Friday, maintaining its rise above the $1.60 mark. It also increased it steady rise against the rest of the major currencies.

· Pound/US dollar 1.6205
· Pound/Euro 1.1466
· Pound/Japanese Yen 155.1385
· Pound/Swiss Franc 1.7428

As has been widely forecast, the last icon of the American industry, General Motors will file for bankruptcy protection later on Monday, officially marking the most significant failure of any industrial company in the history of US commerce.

Unconfirmed reports have it that a majority of bondholders have agreed to a compromise that will give them a minimum ten percent stake in a new, smaller, leaner and hopefully more efficient GM that will arise from the ashes.

The Dow Jones closed for the weekend still moving upwards, 96.53 points to 8500.22, while the NASDAQ stuttered a further 15.1 points recovered to close on 1751.79

Crude oil prices continue to rise, hitting a new six-month high, as US stockpiles continue to be exhausted, on demand by an economy that is definitely showing signs of recovery.
Light crude climbed $1.23 to close Friday trading at $66.31 a barrel.

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Tags: British Economy, Employment, Financial News, Honda, Mandelson, Mobile phone, Vauxhall

At the end of a torrid first quarter, there are those that are reading into some of the recent statistics issued towards the end of this month and saying that there are some positive signs around.

Depending on which angle you are looking from the fact that house prices are continuing to fall should mean something. In March, house prices were almost ten percent lower than they were for the corresponding month of last year; however they only dropped by as low a percentage than in any of the ten previous months, according to a recent report.

This can mean two things, for those who are property owners, they can take some comfort in knowing that the value of their property is decelerating, and for those who want to get (back) into the property market, prices are becoming attractive and in easier reach.

Statistics are showing that the average price of a property in the UK is now sitting at just over £150,000, less than one thousand pounds down from February 2008.

Property owners were beginning to feel the benefits of reduced mortgage payments evidenced by an increase in consumer spending, proof that the treasury efforts to keep the economy running were beginning to bear fruit.

Another positive sign was the constant increase in mortgage approvals so far this year. The number of approvals rose to close to 40,000 in February and while there are no figures available for March as yet, indications are that the positive trend has continued for the month

The infusion of taxpayer’s money into the banking system has generated no little controversy, with many taxpayers feeling hard done to, especially in the light of the recent bonus controversies. However there are those that say that the government had no option but to support the banking system, and iron out its flaws for the future.

During his recent trip to South America, in which he was a member of Prime Minister Gordon Brown’s entourage, U.K. Business Secretary Peter Mandelson strongly suggested that the ongoing criticism of the British banking system should be allowed to ease off, as it was vitally important that the public regain some of their confidence in the system. Mandelson, who was the first UK minister of authority to speak out in such a direction, pointed out that while the banks have been the butt of some very harsh disapproval from the UK public as well as the government, yet it was time now to look forward.

Mandelson added that a situation had now been created where banks should succeed and go on to serve the British economy and society in a much more effective manner.

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Tags: Financial News, Gordon Brown, Mandelson, Mortgage, Mortgages, Peter Mandelson

Credit card firms are being urged to follow the recent cut in interest rates.

Business secretary Lord Mandelson is meeting the firms’ bosses later today to encourage them to drop their rates.

“The government is deeply concerned that borrowers aren’t getting a fair deal,” said Consumer Affairs Minister Gareth Thomas.

Credit card firms have always said their interest rates are competitive.

Bank of England Governor Mervyn King has also slated banks and building societies for failing to pass on the recent savage interest rate cuts to borrowers.

Speaking yesterday to the Commons Treasury select committee for the eighth time in the past year, King said that Britain was in “exceptional and difficult times” and that he was in “no doubt that the single most pressing challenge” to domestic economic policy is to enable the banking system to lend normally. “That is more important than anything else at present,” he said.

MPs heard that many banks and building societies are failing to pass on the full rate cuts will force the Bank’s monetary policy committee to rethink its approach in December.

“Following the 1.5 percentage point cut some banks withdrew their tracker mortgages. They are now introducing them, but with a higher spread from the base rate than before,” said King.

“This means that we must cut bank rates by more than we would otherwise have done, and we will take this into account when we calibrate the correct cut in bank rate.”

King said that the government financial support of the banks might not have come to an end. “Maybe the banks will need more capital, in which case that should be considered. We have seen that happen in the United States,” he said.

The British Bankers’ Association has announced mortgage lending plunged 52% in the year to October.

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Tags: Credit Crunch, Interest Rates, Mandelson, Mortgage, UK interest rates