It came as no big surprise to anybody when the Bank of England (BOE) announced that they will be holding interest rates at their record low of 0.5%, and for the twelfth consecutive month.

The BOE’s decision gained a consensus of approval by UK economists, who pronounced, individually and collectively that rises in the cost of borrowing could set the UK’s fragile economic recovery back into the red.

The announcement that the bank will be standing firm on the amount of money that will be pumped into quantitative easing program (QE) programme was also met with a similar apathy.

BOE governor Mervyn King has long since made clear his opinion on increasing interest rates raising QE quotas, and all the rest of the UK’s financial programs by simply stating that that it was “far too soon” to make any changes to the status quo.

Sterling has now dropped in value for six consecutive trading days, with the bulk of opinion on the Pound’s increasingly weak position being because of speculation that the forthcoming general election is liable to see a hung parliament which translates to a government that will be too weak to mend the UK’s financial problems. Since the beginning of 2010, the pound has dropped by seven percent against the dollar, reaching a ten month low of $1.4783 on March the 2nd. The pound closed on Thursday on $1.5051 while the Euro was stabilising at 1.1078.

Financial Service Institute (FSA) chairman Lord Turner has voiced his opinion that that the size of banks was also not the main reason behind the economic turmoil, and even some of the UK’s smaller financial institutions could have been pronounced equally guilty of “over-exuberant lending” and taking “risky short-term wholesale deposits, Turner explained “Everyone was seduced by the long boom and were often led astray in the past by complicated mathematical rules. The Bank’s regulators were the ones who failed to notice the inherent weakness in that position.”

The FSA chairman also went on to explain that when the time comes to add up the cost of bailing out the financial services industry at the height of the global financial crisis may in the end turn out to be a lot less than first predicted.

“It is quite possible that the total overt costs of the UK’s big bank rescues may not exceed five-ten per cent of GDP," Turner predicted in a recent interview "and perhaps considerably less as indeed was the case in the Swedish banking crisis of the 1990s.” He summed up.

Recent research is pointing to a situation that increasingly adds weight to the theory that the UK’s property rental sector is heading towards a similar model of the mainland European countries of increasingly longer tenancy agreements.

According to one of the UKs largest letting agencies, during the last year and a half, a fairly dramatic increase in demand for rented accommodation has been observed, with potential tenants being especially interested in properties with long term tenure periods.

Reasons given for this new phenomena in property rental appears to be largely causes by increasing difficulties of young families to raise the new and higher deposit levels required to be granted a mortgage, while around a third confessed that they were unsure that the conditions were ripe to put their toe in the still turbulent waters of the UK property market. With almost 40 percent of potential first-time home buyers opting to remain tenants in the meantime, because of the current tough mortgage-lending criteria and 14% of those questioned said they preferred life as a tenant to that of a homeowner.

Home ownership in the UK has fallen by three percent since 2003 with the trend likely to continue. Several of the UK’s leading property management companies now believe that the UK Government now needs to ensure that renting a home offers the stability levels that are currently only afforded to home owners.

British Airways, once again under strike threat have dug in by saying that more than one thousand of the staff have volunteered to work as cabin crew if indeed the threatened strike goes ahead.

As a further back up, BA announced that they also intended to hire no less than 23 fully crewed planes from a leading European owned charter company. The company’s role will be to help run flights from Heathrow Airport should the strike threats eventually materialise.

The Society of Motor Manufacturers and Traders (SMMT) recently announced that new car sales in the UK increased by 26.4% in February compared with the same month in 2009, with the main push in demand coming because of the Government’s scrappage scheme.

Launched in May of last year in an effort to boost the ailing car industry, the £400 million initiative, which allowed owners of cars at least 10 years old would be offered a £2,000 discount off the price of a new vehicle, with half of the grant being provided by the UK Government and the other £1,000 coming from the lucky carmaker. Figures from the SMMT show that almost 20 percent of new car sales in February came a result of the scheme, which is due to be wound up by the end of March.

On the stock market, Barclays Plc’s Asian partner, the China Development Bank announced that they will be reviewing their “ties” with the bank, U.K.’s second-biggest. The announcement caused shares in Barclays to rise one percent, to 333.1 pence.

The U.K.’s third-largest supermarket owner J Sainsbury Plc has announced plans to expand their activities into non-food products. They will be marketing electronics, entertainment and sports equipment among others through their Web site. Despite the excitement, Sainsbury shares 0.2 percent, to close on 335.4 pence.

Michael Page International Plc, the U.K.’s second- largest recruitment company announced a drop in full-year pretax profit of no less than 85 percent to £21.1 million pounds. Despite the reversal, their shares climbed 6 1.7 percent, to close on 395 pence.

The benchmark FTSE 100 Index fell 0.1 percent, to close on Thursday at 5,527.16.

On Wall Street, for the Dow Jones Industrial Average the only way was up, this time rising 47.38 points to close on 10,444.14. The NASDAQ Composite also held its own, rising 11 points to close on 2,292.31.

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Tags: Bank of England, Barclays, BOE, British airways, Dow Jones, Financial Service Institute, FTSE, general election, Heathrow Airport, Interest Rates, Lord Turner, Mervyn King, Michael Page International Plc, NASDAQ, quantitative easing, Sainsbury, SMMT, Society of Motor Manufacturers and Traders, UK government, Wall Street

UK Prime Minister Gordon Brown received a polite warning yesterday from international leaders who attended a conference in central London that Britain’s tax regime and infrastructure must be improved if the country is to continue attracting investment. Brown and business secretary, Lord Mandelson stressed that the UK still remained a competitive place to do business despite the turmoil caused by the recession.

Following in the footsteps of his opposite numbers at Barclays and Royal Bank of Scotland is Eric Daniels, chief executive of the taxpayer-supported Lloyds Banking Group. Daniels has joined them in waiving his right to a bonus for 2009 of around £2.25 million. Lloyds Banking Group have announced that they would pay 2009 bonuses to those who were entitled to them, whilst emphasising that these awards would be paid in shares and subject to clawback.

Criticism has been rained on the government’s planned 50 pence monthly tax on telephone lines designed to subsidise the cost of superfast broadband has come from all places, by a Labour-dominated group of MPs.

The Commons Business Committee said the new tax, which is expected to raise £175 million per year, would hit poorer families who were less likely to pay for faster broadband. The committee went on to add that the “regressive” tax would “place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge”.

The UK’s largest airports operator of airports BAA, announced on Monday that their pre-tax losses for 2009 had widened, partly because of losses of £277.3 million from the sale of Gatwick Airport, London’s second-largest. The £1.5 billion sale of the airport to Global Infrastructure Partners (GIP) took place just before the end of the financial year. GIP is an infrastructure fund backed by Credit Suisse and General Electric. Competition authorities had ordered a sale to meet concerns about BAA’s market dominance.

The loss on the sale helped inflate losses at BAA owned by a consortium led by Spanish group by Spanish group Ferrovial, from £324.2 million to £821.9 million. Total revenue for the year to December at the group’s London airports, including Gatwick, rose from £2.3 billion to £2.4 billion. Figures for the group excluded BAA’s other airports around the country at Glasgow, Edinburgh, Aberdeen and Southampton

The prospect of a strike is again raising its head for British Airway’s cabin crew. Their proposed strike action looks likely to cause travel chaos for hundreds of thousands of air passengers across the UK. The vote in favour of industrial action by the 12,000 member BA cabin crew comes as a reaction to ongoing disputes over pay and working conditions.

The cabin crew’s union Unite had already decided on a walkout in December, but that BA strike threat was defused by an eleventh-hour High Court ruling.

Meanwhile a strike by around four thousand German airline Lufthansa pilots has been suspended, with union officials agreeing to resume negotiations on disputes covering job security and pay issues.

The action, scheduled to run for four days, was suspended after less than 24 hours, and caused delays and cancellations for passengers. According to the pilot’s union, there will be no further action until at least March 9, the union said.

According to a company spokesman, electronics giant Samsung will introduce its 3D-enabled TVs to the UK within the coming month. No less than twenty different 3D-capable products, with Blu-ray players and the required 3D glasses are expected to be included in the range. To keep pace with demand, TV shows with 3D content will be making their debut in or around the same time, to a partnership with DreamWorks. The rapidly approaching 2010 soccer World Cup will also be broadcast in 3D.

Sterling fell on Tuesday after Mervyn King, governor of the Bank of England, said he could not rule out the possibility of further quantitative easing. Speaking before the Treasury select committee King confessed his concern over scant evidence of a pick-up in UK trade in spite of the weakness of the pound. The pound, which had risen to a high of $1.5575 ahead of the Bank’s statement, fell more than a cent to $1.5441, whilst rising to 1.1415 against the Euro.

The FTSE 100 turned negative on Tuesday following King’s gloomy assessment of the UK economy. The index closing 0.7 per cent lower at 5,315.09.

The US Senate on Monday voted to move forward on a $15 billion jobs bill.

The 62-30 vote in favour of ended months of gridlock in Congress, and is expected to pave the way for a jobs bill to clear the Senate, just as other critical employment benefits are set to expire.

The scaled-back measure is expected to create 250,000 jobs through an array of tax credits and payroll tax exemptions to stimulate hiring. The bill frees businesses from payroll taxes on workers who are hired after more than 60 days of unemployment and gives them a tax credit of $1,000 for new hires that they keep for more than a year.

A number of retail giants reporting positive earnings surprises were not enough to offset Tuesday’s poor macro data, as investors grow concerned that last week’s rally overshot.

Consumer confidence index dropped dramatically to 46.0 in February versus 56.5 in January, the lowest level since last April.

The Dow Jones Industrial Average dropped 126.41 points to 10,276.97 while the NASDAQ Composite also crept back by a significant 34 points to close on 2,209.6.

Chinese premier Wen Jiabao has announced his concern regarding the stability of his country’s investments in US bonds.

China disposed of $34 billion (£21.5 billion) of US government bonds in December 2009, raising fears that Beijing is losing confidence in American economic policy.

US treasury figures show that China is once again no longer the largest overseas holder of US treasury bonds. Beijing ended the year sitting on $755. Billion worth of US government debt, compared to Japan’s $768 billion.

Oil prices retreated below $80 a barrel Tuesday as r sluggish US crude demand justified a 14 percent rally over the last three weeks.

Benchmark crude for April delivery was down 34 cents to $79.97 a barrel, later rising 25 cents to settle at $80.31 on Monday.

Oil had jumped from $69.59 a barrel in early February due to optimism that the global economy will rebound strongly from recession last year. Yet growing inventories of crude, gasoline and diesel fuel suggest demand in the US remains weak.

Some analysts expect crude demand in the US and Japan will gradually follow overall economic growth and lift prices, with crude expected to trade at between $85 and $95 a barrel for most of 2010.

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Tags: 3D TV, 3D-enabled TV, BAA, Bank, Bank of England, Banking, Barclays, British airways, British Economy, Commons Business Committee, Credit Suisse, Currency, Dow Jones, DreamWorks, Ferrovial, foreign investment, FTSE, Gatwick Airport, General Electric, Global Infrastructure Partners, Gordon Brown, Lloyds Banking Group, Lord Mandelson, Lufthansa, Mervyn King, Money, NASDAQ, Recession, Royal Bank of Scotland, Samsung, UK Banks, UK government, UK Recession, Wen Jiabao

Rumours have it that Bank of England governor Mervyn King may have had some serious explaining to do Chancellor Alasdair Darling as to why the consumer prices index went shooting up to 3.5% added to the worst ever January figures on record with a first time deficit for the traditionally high income month. The deficit was a staggering £4.3 billion, largely due to higher government spending and considerably reduced tax receipts. Estimates were for a £2.6 billion surplus for the month. Income tax receipts were down a massive 20% on January 2009, while corporation tax receipts were 6% lower. The only plus was the 3% upturn on VAT receipts rose by 3% due to the rate hike. However total tax receipts for January still dropped by 9%.

It would appear that Royal Bank of Scotland Chief Executive Stephen Hester has decided to decline his 2009 bonus. According to reports, the bonus was to be around £1.6 million pounds, paid out under terms already announced by the bank. The terms were that the bonus payout would not be in cash, and deferred for three years.

Pressure has increased on both Hester and Eric Daniels, CEO of the Lloyds Banking Group, after top bosses at Barclays turned down their multi-million pound bonus payouts last week, despite the bank announcing bumper profits.

The ever optimistic Gordon Brown announced that the Government was continuing in their determination to invest in measures that will promote growth and preserve jobs in the industries of the future, adding weight to his backing of Chancellor Alistair Darling over his decision to delay spending cuts until next year.

Mr Brown, speaking at the Policy Network conference told the audience: "I say to the British people, this is not the time to put the economy at risk. This is the time to make sure that growth and jobs are secured. 2010 must be the year of growth. It must not be the year when the economy dips back into recession. Instead of admitting the mistakes of private banks and institutions in causing the recession, the well-financed right-wing are not only trying to blame governments for the crisis but trying to use legitimate concerns about deficits to scare people into accepting a bleak and austere picture of the future for the majority, and then to use what’s happening as a pretext for public services to be marginalised at precisely the moment they should become smarter and more personalised. "He summed up

Also on Brown and Darling’s side is UK Business Secretary, Peter Mandelson, who has told his senior colleagues that he intends to backs plans for a state-run investment bank that would use public funds and private capital to back small business and large-scale UK infrastructure projects. The new bank would be modelled on the KfW Bank in Germany, which provides funding for banks to loan to small businesses as well as capital for major projects. Apparently Mandelson has met senior KfW executives to discuss if such a bank could be feasible in the UK. Plans for such a bank are now being surveyed by a Treasury team. Hopefully some form of announcement of the formation of such a bank will be announced in the forthcoming Budget.

Overall Lord Mandelson has been increasingly seen and heard on the public stage these days. The UK Business Secretary was reported to have severely criticised monetarist economists for their involvement in getting Britain into its present economic "pickle". Mandelson has voiced his support for economists who have warned how "reckless" early spending cuts could hamper Britain’s fragile recovery. Mandelson’s comments come as Labour seeks to take advantage of the support for delaying spending cuts until 2011.

Also on the downward slope was mortgage lending with the council of mortgage lenders revealing that gross mortgage lending in January 2010 fell to its lowest level in ten years. Reasons given were that property buyers have been deterred by the end of the stamp duty holiday. Gross mortgages totalled £9.1 billion pounds in January, down almost a third from December 2009. These figures are despite a recent increase in mortgage availability, adding concern that poor market conditions would continue or even worsen as the government withdraws monetary support for banks between 2011 and 2014.

The trend for online purchases in the UK fell to its lowest level last month, according to recent figures. Electrical goods, clothes and holidays were the online sectors that recorded the biggest drop in sales, with monthly growth for January of just five percent compared with 19 percent for the same period in 2009.

On the business front, there appears to be increased optimism regarding lending. Research has shown that the number of private companies that anticipate finance to become more readily available has increased, with around 44 percent under the impression that finance would be more accessible this year, compared with eight percent with the same view in last year’s survey. However, despite rising confidence in the availability of finance, fewer businesses said their lender was more supportive than this time last year.

It now looks like BAA will be looking to sell off Glasgow Airport after new figures revealed it is lagging behind Edinburgh in customer traffic. The Glasgow branch has found it difficult to win new airlines who want to use the airport, and have lost a lot of passenger traffic, apparently around half a million a year after the collapse of Scottish airline Flyglobespan. Meanwhile a spokesman for Scotland’s capital has reported that Edinburgh has managed to fill the gap with new routes and extra flights added by air carriers in January, including Ryanair and Jet2. Their entry on the scene has already replaced the 400,000 Flyglobespan passengers a year that were passing through the airport. .

Sterling enjoyed mix fortunes on Fridays trading. It closed up 0.012 against the dollar at $1.54692 while falling to 1.1374 against the Euro.

Overall, the FTSE 100 added a further 51 points to 5,358.175, before the close of business on Friday.

In US forex trading, the dollar hit a nine-month high against the euro of $1.3477, whilst also rising against a basket of currencies. The rise came after the US Federal Reserve’s surprise increase in interest rates for emergency bank loans, to 0.75%, from 0.5%. Analysts saw the move as a sign that the Fed could soon raise its other key lending rate.

US stocks fell in early trading as investors feared any further rate rises could slow the economic recovery.

The Dow Jones Industrial Average was up another 9.45 points to 10,402.35 while the NASDAQ Composite also crept up another 2.16 points to 2,243.87 on Friday’s trading.

US consumer prices rose by less than expected in January, easing concerns about growing inflationary pressures. According to the Labor Department, prices increased by 0.2% last month, with analysts forecasting a rise of 0.3%.

The rise was largely driven by energy prices, which rose for the ninth consecutive month. Over the last 12 months, US energy costs have risen by close to 20 percent. Excluding food and energy, prices fell by 0.1% in January – the first monthly drop since December 1982.

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Tags: Alasdair Darling, BAA, Bank, Bank of England, Banking, Barclays, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economics, Economy, Employment, Financial News, Flyglobespan, FTSE, Glasgow Airport, Gordon Brown, KfW Bank, Labor Department, Lloyds Banking Group, Mervyn King, Money, Money Markets, NASDAQ, Peter Mandelson, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, US forex

The Treasury is looking at introducing tougher requirements on bankers’ pay disclosure than those proposed last week by Sir David Walker.

Alistair Darling, the chancellor, announced a formal consultation exercise on Monday on whether legislation should go further than the Walker review, which proposed that banks should disclose the numbers of employees earning above £1 million.

Treasury officials said there was a case for greater disclosure, for example starting at £750,000 and having narrower bands.

The news came as the chairman of the Financial Reporting Council; Sir David Hogg signalled that his review of broader corporate governance at UK listed companies, published on Tuesday, would be more far-reaching than Sir David’s recommendations on bank boards.

U.K. house prices rose for a fourth month in November as the shortage of homes for sale sustained the property market, according to industry sources.

The average cost of a home in England and Wales climbed 0.2 percent from October to 156,700 pounds, meaning that prices are down 11 percent from the 2007 peak. While U.K. mortgage data due today may show loan approvals at the highest level in 19 months in October, rising unemployment may curb house price increases next year. According to Bank of England Governor Mervyn King, the economy’s recovery from the longest recession on record isn’t “particularly strong.”

Dubai World, the investment company whose $59 billion of liabilities caused stock markets across the World some anxiety will ask all creditors for a “standstill” agreement as it negotiates to extend maturities according to Dubai’s Department of Finance. Reports are that the plan will not be acceptable to most investors and would be considered a default. Dubai, the second-biggest of seven states that make up the United Arab Emirates (UAE)., and its state-owned companies borrowed $80 billion to fund an economic boom and diversify its economy. The global credit crisis and a decline in property prices hurt companies like Dubai World as they struggled to raise loans and forced the emirate to turn for help to Abu Dhabi, UAE capital who hold 8 percent of the world’s oil reserves.

Barclays Bank will book a gain close to £1 billion more than expected on the sale of its asset management arm to BlackRock thanks to a 62 per cent rise in the US fund manager’s shares since the deal was struck. The UK bank on Tuesday completed the £9.1 billion sale of Barclays Global Investors (BGI) to BlackRock, which becomes the world’s biggest asset manager with more than $3,000 billion .Barclays has taken a 19.9 per cent stake in BlackRock as part of the cash-and-shares deal. The sale price was £6.2 billion higher than the value of BGI in the accounts of Barclays, and £900 million more than estimated when the deal was agreed in June.

Thomas Cook will refinance their £1.65 billion loan facilities by next summer but has no plans to use a rights issue, according to a leading company representative. The tour operator’s current facilities are due to expire in May 2011. The company has predicted that 2010 would be a tough trading year, and the refinancing plans were announced as Thomas Cook revealed that net debt had more than doubled from £292 million in 2008 to £675 million. Explanations were that the additional debt had come from completing its share buy-back programme, acquisitions and the need for increased working capital arising from late holiday bookings.

British Airways Plc has announced that they are to conduct a series of feasibility studies and tests to see if their planes can run on bio-fuels. The airline will run the trials in conjunction with Rolls-Royce. On that piece of good news for the environment, shares in BA shares gained 0.6 pence percent, to 193.8, while Rolls-Royce rose 0.9 pence to 476.4.

Cadbury Plc Chief Executive Officer’s Todd Stitzer has signaled his support for a possible bid by U.S. candy maker Hershey Co. in preference to the hostile bid from Kraft. Meanwhile JPMorgan Chase & Co. and Bank of America Corp. are being lined up to provide Hershey a further $7 billion in finance. Cadbury’s shares later advanced 3 pence to 806.

Drinks manufacturer C&C saw its share price jump almost 9 per cent yesterday on the back of an announcement that it is to acquire the British cider assets of Constellation Brands owners of the Gaymer Cider Company, the UK’s second largest cider manufacturer, for £45 million.

The transaction is expected to be completed by mid-January 2010, and will broaden C&C’s existing cider offering beyond Bulmers and Magners to include brands such as Blackthorn, Olde English as well as Gaymers.

Under the terms of the deal C&C will also acquire a cider production facility in Shepton Mallet, Somerset, and a distribution warehouse in Bristol. As well as strengthening its position in the UK cider market, the acquisition is expected to shift C&C’s focus away from on-trade sales towards the faster-growing off-trade distribution channel.

On the Foreign Currency exchanges, the Pound rose against the dollar, yen and Swiss Franc whilst falling slightly against the Euro,

• Pound/US dollar 1.6605
• Pound/Euro 1.1002
• Pound/Japanese Yen 144.5284
• Pound/Swiss Franc 1.6589

Fears of a further fall in share value on the FTSE 100 were dispelled as shares continued to recover, closing in Wednesday on 5312.77, up 67 points from the weekend.

US shares headed higher on Tuesday after a flurry of economic data pointed to a rebound in the economy Better reports on construction and housing suggested there was something to look forward to.

The housing figures, from the National Association of Realtors, provided the best hopes for growth, showing sales agreements 3.7% up on the month and 32% higher than this time last year.

The Dow Jones index closed up 126.66 points, or 1.2%, on Tuesday to reach 10,471.50 points, while the NASDAQ also rose, closing the day on 2175.8.

Australia’s central bank lifted interest rates for a third consecutive month on Tuesday amid signs that inflationary pressures were building in an economy expected to return to “trend” growth of 3.25 per cent next year. The 25 basis point rise to 3.75 per cent matches increases in the last two months and is part of the Reserve Bank of Australia’s strategy of weaning the economy off historically low interest rates. The benchmark rate fell to a 49-year low of 3 per cent earlier this year.

The continuing weakness of the US dollar has pushed up demand for gold to another record level. Gold struck £722.69 an ounce on the London Bullion Market, after striking historic peaks over recent weeks. The dollar index fell 0.8% against a number of currencies as early fears regarding the Dubai debt crisis continued to wane across international markets. Demand for gold has been fueled by moves by central banks to diversify assets.

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Tags: Alastair Darling, Bank of America Corp, Bank of England, Banking, Barclays Bank, Barclays Global Investors, BlackRock, Blackthorn, British Airways Plc, British Economy, British Pound, Bullion Market, Bulmers, C&C, Cadbury Plc, Dow Jones, Dubai World, Economy, Financial News, Gaymer Cider, JPMorgan Chase & Co., Magners, Mervyn King, Money, NASDAQ, National Association of Realtors, Olde English, Recession, Reserve Bank of Australia, Rolls-Royce, Shepton Mallet, Sir David Hogg, Sir David Walker, Stock Markets, Stocks and shares, Thomas Cook, Todd Stitzer, UAE, UK Banks, UK Economy, UK government, UK Recession, United Arab Emirates

Mervyn King, governor of the Bank of England (BOE) has taken an about turn on his previous forecasts for economic growth in the UK in the coming two years, He tampers his newly found optimism with forecasts that any recovery in the UK economy will be both slow and unstable, largely because of the slow rate of industrial output which has been endemic since early 2008. King was quoted as saying that "Britain was facing a prolonged period of balance sheet adjustment” as households, businesses and government understandably rein in spending to levels they can afford. The BOE in its most recent quarterly inflation report has forecast growth rates of 2.1 per cent for 2010 and 4 per cent for 2011, making for a major upward revision from their own forecasts in August, of 1.9 per cent and 3 per cent for 2010 and 2011 respectively. The bank’s forecasts are also much higher than the outlook of private sector economists and even the UK Treasury’s predictions. Mervyn King.

Presenting the Bank’s latest quarterly inflation report, King predicted that the UK economy has "only just started" along its road to economic recovery, and lending by commercial banks would "probably remain weak over the next three years". The governor also predicted during his speech that inflation may "rise sharply over the next few months", triggered by VAT returning to 17.5% on 1 January 2010 as well as the effects of ever increasing fuel costs.

According to data from the Office for National Statistics, unemployment in the UK rose at its slowest rate for 18 months. Yet another signal that the UK economy may finally be on the verge of returning to growth in the fourth quarter of 2009. The level of employment in the UK is recorded through a complicated series of measures. Figures from the ILO (International Labour Organisation) showed that the number of people without a job, rose by 30,000 in the three months to September, bringing the total unemployed to 2.461 million, which was the smallest rise recorded since the second quarter of 2008. Unemployment levels in the UK now stand at 7.8%, which is 0.2% lower than most economic forecasts.

Lloyds Banking Group has announced that they plan increase the amount of fresh capital that they intend to raise by £1.5 billion, from £21 billion to £22.5 billion. The increase came in response to demands by the bank’s bondholders for a larger allocation of the contingent convertible instruments (CoCos). The news of the interested in CoCos was especially encouraging for the US Federal Reserve who is reportedly in talks with Wall Street executives over whether US financial groups should also use this method to raise capital. In the case of the Lloyds CoCos, they would be convertible if their equity strength falls from its current level of 8.6 per cent to below 5 per cent.

British Airways (BA) has announced that they are in advanced talks with and Spanish airline Iberia over some form of merger. Both companies are expected to hold separate board meetings at the earliest opportunity to discuss final details of the merger

In an official statement, representatives of BA hastened to point out that the meetings would consider the potential transaction, and that firm decisions had yet to been taken, and there were no guarantees that a deal would take place. Iberia has leaked that the deal under discussion would give it 45% and BA 55% of a new merged company. The firms have considered a tie-up for a number of years, and held talks on the issue in July 2008. BA chief executive Willie Walsh has previously said that a merger would help both firms in the current economic climate. Reports of the imminent merger sent British Airways shares higher, climbing 7.5 percent to 215 pence.

Share in telecoms operator BT Group, rose 3.7 per cent to 147 pence after they announced that they will be raising their full-year revenue outlook and dividend forecast for 2009. Thanks to a series of cost cutting measures including cutting back on 15,000 jobs, BT increased their second-quarter earnings to more than £900 million. The positive outlook for BT came as they announced along with their second quarter results that they are to raise their total cost-savings target for 2009/2010 from £1 billion to £1.5 billion.

The world’s largest owner of shopping malls Westfield Group have announced that retail sales in October at their UK centres in the U.K. have risen at the fastest pace in seven years, amounting to 3.7 percent in the three months. The company also reported that the number of stores closing in their centers has also fallen since steadily since the second quarter.

According to a recent statement, Westfield’s London shopping complex, which opened at the height of the global financial crisis last year, has attracted some 20 million visitors and has signed more than 15 new tenants.

Sterling continued to lose ground on Thursday trading falling against all the major currencies, with the notable exception of the Japanese yen.

• Pound/US dollar 1.6553
• Pound/Euro 1.1136
• Pound/Japanese Yen 150.0166
• Pound/Swiss Franc 1.6842

The FTSE 100 continues to gain strength, up 46 points to 5,276.55. The FTSE 250 also rose, up 175 points to 9,295.92.

In the US, fears continued to be voiced that, "the ‘real’ economy, as opposed to the financial one is still struggling to recover" and that if the government withdrew its stimulus spending measures, the economy could take some major steps backwards. The Dow Jones indexes erratic behaviour over the last few weeks as well as an already depressed job market seems to indicate the fact.

Meanwhile US Treasury secretary Tim Geithner, continue to voice his belief in the importance of a strong dollar, His statement came as the dollar dropped to its 15-month low. The continuing weakness of the World’s staple currency has led to some concern over the future of the dollar in its traditional role in the global economy. According to Geithner, the United States bears a special responsibility for trying to make sure that their global policies will sustain investors in the currency.

His words of comfort helped Wall Street very little, as the Dow Jones lost some of its earlier gains of this week, down 19 points to 10227.92. The NASDAQ made a minor increase, up six points 2157.17.

Warnings continue to come from the International Energy Agency (IEA) that the recent rises in oil prices "risks derailing the recovery" if they continue, whilst. Pointing out that demand for the "black gold" itself would slow down if price rises continue in 2010. The price of oil is now around $79 dollars a barrel, representing a rise of 77% so far this year. The IEA "in their monthly report, pointed their finger at China who they say are driving up demand, causing them to revised upwardly revise their forecasts. Overall the organisation predicts a 1.6% increase in demand for oil, up to 86.2 million barrels a day.

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Tags: BA, Bank, Bank of England, Banking, BOE, British airways, British Economy, BT Group, CoCos, Credit Crunch, Currency, Dow Jones, Economy, Employment, Financial News, FTSE, Iberia, IEA, International Energy Agency, International Labour Organisation, Lloyds, Lloyds Banking Group, Lloyds CoCos, Mervyn King, Money, Money Markets, NASDAQ, Office for National Statistics, Recession, Retail, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US Federal Reserve, US Treasury, Wall Street, Westfield Group, Willie Walsh

There were one or two petted lips around Westminster yesterday in response to governor of the Bank of England Mervyn King’s call for Britain’s biggest banks to be split up to prevent the possibility of a financial crisis of similar proportions to the one that the UK is going through, in the future. Particularly peeved were Gordon Brown and Alistair Darling who even went as far as rebuking. Mr. King for his comments. King was seemingly unfazed at their comments.

According to Terry Duddy, chief executive of Home Retail Group, owners of the Argos and Homebase chains, the rise in VAT due on January 1 could act as a major for sales of large value items in the weeks leading up to the increase. Whilst announcing that the company had returned to profit in the six months to August 29, , Duddy said went on to announce a rise in consumer confidence and that his company was more optimistic about the outlook for the fourth quarter.

Chocolate kings, Cadbury have subtly increased the pressure on Kraft to raise its proposed £10 billion ($16.6billion) takeover offer. They did so through reporting unexpectedly strong third-quarter trading figures, surpassing even the toughest analysts’ expectations, The Company have succeeded in raising its full-year revenue targets to the “middle” of its 4-6 per cent goal range. Cadbury announced quarterly revenue growth of 7 per cent, which they claimed had been achieved by increasing prices and profit margins, despite a fall in turnover for the period of percent. Correspondingly, Cadbury had made considerable efforts to cut costs and reduce market spending. Since Kraft announced its offer proposal in early September, indications are that investors expect the US food group to pay at least 800 pence per share, while the current cash and shares proposal values Cadbury’s equity at 731pence a share. In the light of the recent results, some investment banks have revalued the target price on Cadbury to 900 pence, however a Kraft offer at this level is considered unlikely, unless counter-bidders suddenly emerge. The consensus is that Kraft will succeed with their offer, if it comes back with a 50-50 split of cash and stock bid of around 825 pence per Cadbury share. Kraft are understood to be considering returning with a formal offer but may wait until after its third-quarter results on November 3, while the UK Takeover Panel has set Kraft a final deadline of November 9 to make a formal offer.

Sterling continued its steady rise against the ever weakening dollar, recovering against the Swiss Franc. whilst faltering against the Euro.

• Pound/US dollar 1.6606
• Pound/Euro 1.1093
• Pound/Japanese Yen 151.6918
• Pound/Swiss Franc 1.6587

The FTSE 100 lost out on some of yesterday’s gains, down 33.79 points to close on 5257.85 The FTSE 250 25 shed all of the previous days gains. Down 143.60 points to close on.9421,04

Morgan Stanley has returned to profit after three quarterly losses in a row, after reporting a net income of £457m in the third quarter of 2008. The bank’s investment banking division fared particularly well with underwriting revenues up 74% from 2008 levels. Meanwhile, Wells Fargo, the country’s fourth-largest bank, reported record $3.2bn profits for the quarter, reporting that revenues from mortgages and consumer credit had surged.

Despite that positive news, the Dow Jones was down for the second consecutive day, yesterday by 92.12 points to crash below the ten thousand points on 9949.36. The NASDAQ Composite index also continued to fall, this time by 12.74 points to close on 2,150.73.

Recent reports continue to speculate that US companies who received billions of dollars of government aid in the financial crisis are to be forced to cut any excessive salary packages awarded to their leading executives. Of the seven companies that received the highest aid from the US Treasury will be obliged to reduce the basic salaries of their 25 best-paid employees, by up to nine tenths of the salary packages, while each firm’s 125 top earners would be see their pay slip cut in half, under the US government plan. There has been widespread outrage in the US over the high level of bonuses paid by firms that not so long ago were forced top go to the government cap in hand and ask for government help to stave of bankruptcy .

Figures just published confirm that China has exceeded its target for economic growth in the third quarter, for the first time this year. Chinese government figures show year on year GDP growth was up 8.9% from 7.9% in the previous quarter. Chinese officials have also said they are sure they will reach their full year target of 8% for economic growth, with the economy grewing by 7.7% in the nine months to September.

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Tags: Alastair Darling, Argos, Bank of England, Banking, British Economy, British Pound, Brown, Cadbury, Currency, Darling, Dow Jones, Economics, Economy, Employment, Financial News, FTSE, Global Credit Crisis, Gordon Brown, Home Retail Group, Homebase, Kraft, Mervyn King, Money, Money Management, Money Markets, Morgan Stanley, NASDAQ, Recession, Terry Duddy, UK Banks, UK Economy, UK government, UK Recession, US Treasury, Wells Fargo

Governor of the Bank of England, Mervyn King, , in a landmark speech made on Tuesday night, reiterated his calls for the UK banks to be split into two separate entities, one handling utility and the other financing risk capital ventures. He emphasized his argument by stating that “a delusion” to think tougher regulation would prevent a future financial crisis that would be no less severe than the current one. His remarks strengthened the certainty that the economic crisis has prompted the UK government as well as countries across the world to re-evaluate their financial regulatory frameworks

King’s call for a break-up of banks comes from an ever-increasing theory that the UK banks had considered themselves to big to fail , and has made the Governor less than popular with the key figures in the move for domestic and international banking reform.

The Treasury and the Financial Services Authority have consistently rejected the theory of splitting up the banks whilst internationally, the proposals of the Group of 20 have been principally aimed at increasing both the quantity and quality of the banks’ working capital to ensure that the future of banking would be more stable.

In his speech, King raised a few eyebrows by his use of Churchill a style oratory, the speech was delivered at a meeting held in Edinburgh, intended to highlight and discuss the burden banks had placed on taxpayers. The Governor used the theme of one Churchill’s most famous speeches to deliver the message “Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, capital venture, Credit Crunch, Currency, Economics, Economy, Financial News, Financial Services Authority, financing risk, Mervyn King, Money, Money Management, Recession, Taxpayers, Treasury, UK Banks, UK Economy, UK government, UK Recession

The International Monetary Fund (IMF) today gave another green light to the Bank of England (BOE) to print more money. Their agreement to allow the bank to accelerate its electronic money-creation programme came in the light of increased data that the benefits of "quantitative easing" were finally being felt in factories and high streets across the UK.

The IMF took advantage of figures issued denoting a bi-annual assessment of global financial conditions to warn that any sign of restraint of credit risked could effectively derail Britain’s economic recovery.

Currently, the central bank has increased its purchases of assets to £175 billion, and indications are that BOE governor Mervyn King is interested in increasing that figure to £200 billion. However King was outvoted by the majority of his colleagues on the Monetary Policy Committee (MPC), who preferred to stay with the lower figure, at least for the meantime.

As part of the bigger picture, the majority of UK based economists are of the common opinion that quantitative easing has helped to stabilise the British economy as well as reducing borrowing costs across the economy. Factors that have gone a long way in sparking off an albeit tentative recovery. Overall, commercial bank lending has remained lower than expected, although the general consensus is that quantative easing (QE) was not intended as a means to increase bank lending.

The IMF’s Global Financial Stability Report has emphasised that the UK was particularly vulnerable to credit constraints caused by the weakness of bank lending and by the need to finance the government’s rapidly rising deficit.

Over 2009 and 2010, the fund estimates the UK will have a funding gap totaling £430 billion, representing 15% of the country’s GDP. This figure is devastatingly higher than the 2.4% projected for the United States and the 3% for the Eurozone region.

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Tags: Bank of England, Banking, BOE, British Economy, Credit Crunch, Currency, economic recovery, Economy, Financial News, GDP, Global Financial Stability Report, IMF, Interest Rates, International Monetary Fund, Mervyn King, Monetary Policy Committee, Money, MPC, Recession, UK Banks, UK Economy, UK government, UK Recession

World leaders announced the Group of 20 nations is replacing the G-8 as the main forum for global economic coordination, reflecting a shift in power from rich countries to emerging markets. The G-8 is not due to be disbanded, instead it will focus on development and security matters. The transfer of influence to the broader group, whose membership ranges from the U.S. to China to Saudi Arabia, symbolizes the fact that the richest industrial nations now lack the sway to govern the world economy alone after their excesses sparked the turmoil that tipped the globe into recession. At the end of a two-day G20 summit, hosted by US President Barack, the world’s leading nations have agreed tough new regulations designed to prevent another global financial crisis. The measures will relate to the amount of money banks have to hold in reserve and to excessive pay for bankers. With a recovery now underway, leaders are trying to temper the excesses that helped trigger the worst financial crisis in seven decades and the deepest recession since World War II. At the same time, richer governments acknowledge they now lack the ability to govern the world economy alone as power shifts to emerging markets such as China.

Before setting of for Pittsburgh, Chancellor of the Exchequer Alistair Darling, announced the appointment of Stephan Wilcke as chief executive of the Asset Protection Agency (APA) The APA has been established to oversee the £585 billion toxic asset insurance scheme, reckoned to be the biggest and perhaps riskiest deal the government has signed:

Wilcke, a former management consultant and private equity boss, will lead a team of up to 50 staff to enforce ensure that Britain’s part-nationalised banks properly manage their impaired loans. Expectations are that Mr. Wilcke’s task will be complicated, not least because the banks have trouble explaining how some of the exotic assets work, due to the fact that many of the officials who agreed the loans left the banks long ago. RBS agreed earlier this year to insure £325 billion of toxic assets while Lloyds aimed to include £260 billion of loans; Lloyds is now trying to raise private capital to limit its participation.

Total business investment in the UK dropped a seasonally adjusted 10.2% sequentially in the second quarter, better than a 10.4% fall estimated previously. Economists expected the decline to be 10.4%. In the first quarter, investments were down a revised 8.9%. In the manufacturing sector, business investments fell 16.2%, faster than a revised 4.6% fall in the first quarter. In the non-manufacturing sector, investments fell 9.5%, more or less the same fall than in the first quarter of 2009. On a yearly basis, business investments fell 21.8%, more than the 18.4% drop that had been estimated, and considerably more than the revised 9.8% fall in the first quarter. Economists expected the decline to remain at 18.4%.

An 18-month high for British Sky Broadcasting helped keep the FTSE 100 steady on Friday, rising 2.4 per cent to 359¾ pence, making them the top blue-chip performer for the week.

Meanwhile, ITV closed 3.5 per cent lower at 44 ¾ pence after refusing to meet the pay demands of prospective chief executive Tony Ball.

JJB Sports, which narrowly avoided administration this year, revealed that first-half losses had almost tripled after problems with stock took a heavy toll on sales and profit margins.

The sportswear retailer struggled to convince suppliers to keep trading with it after breaching its banking covenants last year. The lack of goods in stores saw sales fall 43 per cent to £178.6 million. This translated into a rise in pre-tax losses from £14.8 million to £42.9 million. Shares in the company fell by 2.5 percent to 38.5 pence. .

Shares in 3i Group declined 3.1 percent to 279 pence after the pace of new investments dropped as a lack of debt financing nearly brought the buyout market to a halt. The company have invested £155 million pounds (in the five months through August, compared with the £622 million in the same period of 2008.

British Airways sank 4.3 percent to 220 pence as brokers announced that heir mid-cycle share-price valuations were reached “far earlier than expected.”

Europe’s largest discount airline Ryanair Holdings Plc had their shares slide by 3.4 percent to 3215 pence as the company lowered their estimate for passenger growth while maintaining its earnings forecast.

The FTSE 100 made a minor upward adjustment by an impressive 2.93 points to close on 5,082.20, giving the index a 1.8 per cent decline for the week, while the FTSE 250 continued its free fall on Friday, down 32.58 points to 9060.44.

The pound has hit a four-month low against the dollar, a day after Mervyn King the head of the Bank of England stated this less than welcome opinion that a weak currency was "helpful" to the economy. The pound fell as low as $1.5917, the lowest since early June and then edged back to $1.5939. The pound is still well above the levels hit early in the year when it traded below $1.50 against the dollar. The pound also dropped to a fresh five-month low against the Euro. Another factor hastening the decline in sterling value was renewed fears that interest rates would remain low as G20 leaders announced that their stimulus measures would remain place well into 2010.

• Pound/US dollar 1.5939
• Pound/Euro 1.10858
• Pound/Japanese Yen 143.0041
• Pound/Swiss Franc 1.639

Wall Street on Friday made its biggest weekly loss since July after a surprise drop in the sale of durable goods prompted a sell-off in the industrials sector.

New orders for long-lasting goods, from fighter jets to washing machines, fell 2.4 per cent in August, adding to investor concerns over the pace of economic recovery.

Analysts had been expecting a modest rise of 0.4 per cent compared to a 4.8 per cent gain in July, when car sales were boosted by the cash-for-clunkers scheme.

After opening in negative territory, stocks were lifted by data showing consumer confidence was higher than expected this month. Disappointing new home sales soon renewed investors’ concerns and Wall Street gave up its fleeting gains

The Dow Jones Industrial Average continued to fall going into the weekend down 42.25 points to 9,665.19. The NASDAQ also dropped by 16.69 point to close on 2090.92.

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Tags: 3i Group, Alistair Darling, Asset Protection Agency, Bank, Bank of England, Banking, British airways, British Economy, British Pound, British Sky Broadcasting, cash for clunkers, Credit Crunch, Currency, Dow Jones, economic recovery, Economics, Economy, Financial News, FTSE, G20, G8, Global Credit Crisis, ITV, JJB Sports, Lloyds, Mervyn King, Money, Money Markets, NASDAQ, RBS, Recession, Ryanair Holdings Plc, Stephan Wilcke, Stock Markets, Stocks and shares, Tony Ball, UK Banks, UK Economy, UK government, UK Recession, Wall Street

It now appears likely that Bank of England Governor, Mervyn King will be awarded the post of deputy chairman of a Europe-wide board, that will be responsible for the tracking the stability of financial institutions as well as co-coordinating risk supervision by national bank regulators.

King would join the board as number two to the European Central Bank governor Jean-Claude Trichet, who has been invited to chair the new body.

Reports have it that although no formal offer to Mr. King has yet been delivered, if Mr. King was to accept the post as deputy, his presence might help to calm UK fears that the revamp of Europe’s supervisory system would undermine the City’s position as leader in financial services in Europe.

Meanwhile head City regulator, Lord Turner made a robust defence on Tuesday night of his allegations that the “swollen” financial services sector has produced “socially useless” products, He continued by adding that UK banks may become “boring” lower-risk, lower-return investments.

“Banks need to refocus their energies on their core functions of providing savings and credit and payment products to customers,” Turner added at a speech presented at the Mansion House City banquet hosted by the lord mayor of London.

"The huge profits that many banks were expecting to make this year should be attributed to implicit government guarantees and low interest rates, and therefore much of that money should be used to build bigger capital and liquidity buffers rather than paying big bonuses", summed up Lord Turner.

According to recently released information, the pace of business failures slowed in August to its lowest level in almost 12 months. Although statistics gathered continue to suggest the worst of the UK recession may be over, there are wide geographical disparities within the data, with the north-east of England showing a 92.7 percent increase in the number of insolvencies.

In the first deal of its kind since the credit crunch began in the summer of 2007, Lloyds Banking Group are set to sell more than £2.8 billion in new bonds. The bonds are backed by UK residential mortgages.

Understandably, the sale is being closely monitored, due to its potential to reopen the market for residential mortgage backed securities in Europe. The hint of a return to mortgage backed funding for banks, which helped to fuel the boom in mortgage lending before the crunch is reported to be making a few people in the city feel a little hot under the collar.

Meanwhile the Cadbury/ Kraft turnover saga continues. Cadbury has seemingly approached the UK Takeover Panel to ask Kraft to “put up or shut up” on their unsolicited £10. 2 billion takeover approach of three weeks ago.

Cadbury approached the panel to request that Kraft either make a formal takeover proposal or put their advances on hold for the next six months.

Financial experts are predicting that Kraft will be ordered to make a formal offer within the next two and eight weeks, and if no offer is forthcoming, Kraft will not be able to make another offer for Cadbury for at least six months. Meanwhile reports have it that head of Kraft Foods, Irene Rosenfeld, is due to fly in to London this week in an effort to persuade investors to back their £10.2 billion takeover offer.

The chairman and chief executive are scheduled to hold one on one meeting with global shareholders at an investor day organized by Bank of America Corp. A representative for Kraft wasn’t immediately available to comment, while a spokesman for Cadbury stated that it remained unclear whether chief executive Todd Stitzer would be among the company’s senior executives attending the conference, and that no meetings between Stitzer and Rosenfeld had been arranged. In the shadow of such uncertainty, Cadbury’s stock fell 0.5 percent to 788 pence on yesterday’s trading.

According to experts in the UK real estate market, home sellers have raised asking prices in September as confidence in the property market improved and the supply of homes dwindled.

The average cost of a home increased 0.6 percent so far this month to £223,996 after falling 2.2 percent in August. Price gains in London, the southeast and East Anglia outweighed declines in the rest of England and Wales.

The U.K. property market is showing signs of recovery as the country emerge from the recession. The recovery continues to be aided by the Bank of England maintaining the benchmark interest rate at 0.5 percent alongside other moves to stimulate the British economy.

On the FTSE, house builders Barratt Developments were reported to be looking to raise up to £700 million through a share placing and open offer, to reduce their debt level of £1.3 billion as well as to buy land for fresh housing developments. The news failed to either depress or excite the market, and their stock ended flat at 268 ½ pence.

High street retailer Blacks Leisure who operates the Millets and Freespirit chains saw their shares fall a considerable 17.5 per cent to 42 pence after admitting it was likely to breach its terms of borrowing.

A spokesman for the company warned that trading had missed targets and they are likely to be in breach of their lending agreements.

Shares in Carphone Warehouse, gained 4.9 per cent to 192 ½ pence due to positive comments on the company’s growth policies by their brokers.

On the day, the FTSE 100 ended up 8.24 points on yesterday’s trading at 5,142.60, while the FTSE 250, rose by 28.02 points to close on 9,248.67.

The pound made a minor recovery yesterday against the dollar and Euro while falling against the Yen.

• Pound/US dollar 1.6399
• Pound/Euro 1.1069
• Pound/Japanese Yen 149.188
• Pound/Swiss Franc 1.6767

The Dow Jones Industrial Average re-adjusted itself after losses on Monday, up 51.01 points to 9,829.87. The NASDAQ continued its steady rise, up 8.26 points to 2146.3.

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Tags: Bank, Bank of America Corp, Bank of England, Banking, Barratt Developments, Blacks Leisure, British Economy, British Pound, Cadbury, Carphone Warehouse, Credit Crunch, Currency, Dow Jones, Economy, European Central Bank, Financial News, Freespirit, FTSE, Interest Rates, Irene Rosenfeld, Jean-Claude Trichet, Kraft, Lloyds Banking Group, Lord Turner, Mansion House City banquet, Mervyn King, Millets, Money, Money Markets, Mortgage, Mortgages, NASDAQ, Recession, Retail, Stock Markets, Stocks and shares, Todd Stitzer, UK Banks, UK Economy, UK government, UK mortgages, UK Recession, UK Takeover Panel