In one of the classic understatements of the year so far, new finance minister George Osborne has just announced his findings that the British economy is in a dire state and there will be difficult times ahead. Osborne’s revelation came as the government sat down to take action on tackling the record budget deficit. Osborne took up the role of Chancellor after the center-right Conservatives joined with the center-left Liberal Democrats to form the country’s first coalition government for more than half a century, as the Labour Government wound up 13 years rule.

Britain has barely limped out of the worst recession since World War Two, and the new government is under pressure to show their pre-election promises to reduce spending and raise taxes to cut a budget deficit running at more than 11 percent of GDP were not hollow. The coalition already pledged to significantly accelerate the reduction of the deficit in the next five years, cutting £6 billion pounds ($8.75 billion) from non-frontline public services during the current financial year. George Osborne is expected to unveil his emergency Budget on June 22 as the new coalition Government attempts to overcome the appalling state of the economy inherited from Labour.

Meanwhile on the home front, news from the Council of Mortgage Lenders (CML) is that mortgage borrowing by house buyers is on the increase, with the number of loans made to home buyers rising by 25% between February and March, to reach 45,000. First-time buyer borrowing rebounded faster than that by existing home owners, according to CML who also went on to warn that mortgage rationing might continue indefinitely unless the new government helped lenders raise finance.

The latest news on the small business front has shown decrease in UK business insolvencies last month. On a year to year basis, it was shown that

the total number of insolvencies fell by 15.1% in April compared with the same month last year, 2,274 in April 2009 down to 1,818 in April 2010.

Businesses that fell into the medium sized category were found to have suffered the most in April. Companies employing between fifty to hundred workers being the most vulnerable.

In a move that may indicate a thawing of hostilities between internet giant Google and the printed media – particularly Rupert Murdoch’s News Corp, Eric Schmidt, chief executive of Google, announced that Google were holding talks with Murdoch and other newspaper proprietors regarding running subscription services for their online sites. Murdoch has repeatedly criticized Google for undermining newspapers by allowing internet users too much access to their valuable news content. Late last year Murdoch went far as threatening to sue Google for including headlines from News International in its search results. Staring from June, the Times and Sunday Times are set to erect a pay wall limiting access to their online news sites to paying customers. The papers will also withdraw their articles from Google’s search engine

With annual results due to be issued before the weekend, mobile phone company Vodafone are expected to announce a 150 percent increase in profits, with analysts expecting pre-tax profits of around £10.4 billion for the year to the end of March. Vodafone’s profits for 2009 were just £4.1 billion, largely due to one of impairment of £5.9 billion pounds of impairment charges.

Reports are that the Spanish bank Santander are believed to have emerged as likely winners of the tender to take over the 318 Williams & Glyn-branded Royal Bank of Scotland (RBS) branches across England and Wales. Santander has apparently outbid Virgin, Spanish rival BBVA and Blackstone, with only National Australian Bank’s Clydesdale Bank arm still in the running. RBS is expected to make around £2 billion pounds from the successful completion of the sale.

Meanwhile credit card firm American Express has reportedly become the latest contender to enter into bidding for the payment processing arm of Royal Bank of Scotland. The partially state owned bank has been forced to sell of this division under European Commission rules governing state aid. The move by American Express, which has joined forces with private equity house Permira to table a bid in the £2.5 billion pound auction for RBS’s Global Merchant Services division, has been welcomed by RBS. Previously the bank had stated concerns over stand alone private equity buyers having sufficient experience to manage the business. With experience of processing payments of millions of customers in 130 countries, American Express could fit the bill and help RBS in their drive to expand in emerging markets,

Property development and investment giant, British Land, appears likely to take over the mantle as being the largest company in the field in the UK, leaving their bigger rival, Land Securities in their wake, when both companies announce full year results this week. British Land is expected to reveal that its net value of assets has increased by more than 20 percent over the past year to 490 pence a share, while Land Securities will announce that their shares have risen 16 percent increase in its net asset value over 690 pence a share.

Coming back down to earth with a thump will be British Airways who are widely expected to report losses of more than £600 million pounds when they reports their results on Friday. It is expected that results for the 12 months to the end of March will mark the airline’s worst ever financial performance, over a period in which it suffered from the effects of recession, strikes and bad weather. There are suggestions from senior staff that the company will not be able to survive any further blows. Analysts attending the shareholder’s conference will be keen to hear how chief executive Willie Walsh intends to explain the losses as well as the company’s ongoing dispute with cabin crews.

Pharmaceutical retailer and wholesaler Alliance Boots are expected to join the one billion pounds club on Monday. Alliance Boots, who returned to private ownership in 2007, are expected to announce a trading profit over the one billion pound by exceeding the 11.6 percent growth in 2009, when their profit was £953 million. By passing the one billion pound profit barrier Alliance Boots will become only the third retailer to do so in the history of UK retailing.

The euro has plummeted against the US dollar, falling below $1.22 for the first time since April 2006. The eurozone’s single currency fell more than 1.7% in afternoon trading in New York, to $1.216, before rallying.

The decline came after Germany announced plans to ban naked short-selling of shares from midnight local time on Tuesday. The single currency dropped by more than 2% against the yen on the news. Forex traders fear that the austerity measures being put in place in many eurozone countries will hit growth.

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Tags: Alliance Boots, American Express, Bank, Banking, BBVA, Blackstone, British airways, British Economy, British Land, Clydesdale, Council of Mortgage Lenders, Currency, Economics, Economy, Eric Schmidt, Financial News, George Osborne, Google, Government, Land Securities, Money, Money Management, Mortgages, News Corp, Recession, Retail, Royal Bank of Scotland, Santander, UK Banks, UK Economy, UK government, UK Recession, Vodafone, Willie Walsh

According to information from the Centre for Economics and Business Research (CEBR) property prices in the UK are due to rise in 2010 driven by low borrowing costs and the shortage of homes. Property values are due to rise by five percent and mortgage costs will cheapen as the Bank of England retains a its record low 0.5 percent key interest rate. CEBR have reduced their property price forecast from 6 percent after the tax on home purchases rose and cold weather damped demand for property. Average mortgage interest rates are expected to drop by around one percent by the start of 2011.

US based billionaire investor Warren Buffett, has backed Bank of England Governor Mervyn Jones previous comments by stating that said he doesn’t envy the winner of the UK general election, who will be faced with the need to make "politically very unpopular" decisions to cut the deficit. Speaking after the annual shareholder meeting of Berkshire Hathaway before a crowd of 40,000 , Mr Buffett warned the next occupant of No 10 to fear the bond market, which could turn against the UK if public spending is not brought back into balance over the long term.

Buffet’s comments regarding the UK’s current financial plight echoes previous statements made about growing government debt across the Western world. The debt has been incurred as a result of the economic stimulus measures put in place to prevent a much worse recession after the financial panic of 2008.

It has been reported that the collective wealth of the UKs 1,000 richest people increased by 30 per cent in 2009, largely due to the efforts of London-based steel magnate Lakshmi Mittal. Claiming the top spot for the sixth consecutive year Mittal seen his fortune double from £10,800 million to £22,450 million in the wake of the recovery of the steel industry worldwide.

Chelsea owner Roman Abramovich remains second on the list, whilst adding a mere £400 million to his stack of £7,400 million.

The Duke of Westminster, retains his place as the wealthiest UK born member of the list saw his mainly property based fortune increase to £6,750 million.

According to a recent survey, most of the UK’s small companies feel that the current tax system it too complex, and would like to see it simplified,

Two thousand small and medium sized UK enterprises (SMEs) took part in the survey that found that 77% participating feel that the current system is preventing them from taking advantage of tax benefits and breaks, while

60% were found to be unaware what entitlements they may be suitable for.

While many experts see SMEs as the engine for economic recovery and a key battleground in the upcoming election, many small businesses find the complexity of the tax system frustrating, with almost three quarters with the impression that the tax system was actually acting as a barrier for start-ups.

An ambitious new UK company offering people the chance to rent their neighbours’ cars has had hundreds of drivers registering on the site just a week after launch. The company Whipcar, launched in mid-April, uses the internet to connect owners of underused cars with drivers looking for short-term rentals for a trip to the shops or the school run. But insurance limitations mean that Whipcar has had to turn away a surprisingly large number of sports car owners. Who wanted to become part of take advantage Whipcar’s system, which lets them set their own price before lending their pride and joy to fully insured and vetted neighbours. Whipcar is just one example of a business using the web as a marketplace to bridge the gap between car ownership and traditional rentals. Streetcar, which pioneered car clubs in the UK, was acquired last month for $50 million by Zipcar, an American competitor whose model it was based on.

The FTSE 100 joined stock markets globally in tumbling deep into the red as the Greek bailout failed to ease investor fears. The Footsie fell 2.6%, down 142.2 points to 5411.1,

US-based United Airlines and Continental Airlines have agreed a deal to merge, creating the world’s biggest carrier. The two companies, that both have made losses in recent years, have predicted that the merger, worth around two billion pounds, will allow the now company to cut around five hundred million pounds ($1 billion) a year.

The new company will be trade as United Airlines while using the current Continental colours. News of the deal sent both companies shares upwards of Wall Street.

Shares on Wall Street have fallen sharply as concerns about high levels of European government debt continue to reduce confidence.

The Dow Jones falling by 2%, and NASDAQ by 2.98 %. THE Dow Jones closed down 225 points to 10926.77 while NASDAQ dropped 74.49 points to close on 2924.25

Oil giant BP has acknowledged that they are to be held responsible for cleaning up the huge oil spill which occurred after an accident to one of its wells off the Gulf of Mexico on the US coast.

BP boss Tony Hayward predicted that the spill would need to be contained for two to three months. Since the BP Deepwater Horizon rig sank on 22 April Thousands of barrels of oil have been leaking into the ocean. Meanwhile BP shares hit a seven-month low on about the cost of cleaning up the massive oil spill. Shares in BP fell by 4.3%, (25 pence) to 551 pence in early trading, making for an overall fall of more than 15% since the explosion on the rig two weeks ago.

Despite of forecasts that car sales are not liable to peak again for five years, it has been reported that global car production increased by more than half in the first quarter of this year in comparison to 2009,. Data for 12 of the world’s biggest car markets, accounting for more than three-quarters of world automobile output, showed double-digit increases in the first quarter of 2010. In China, Japan, Canada, Mexico, and the UK, the year-on-year rise was up by almost 75%.

Reaction to the approval of an unprecedented bail-out package to rescue Greece’s embattled economy has been muted. The package, which will see Eurozone members and the IMF loan Greece €110 billion (£95 billion) over three years, had been widely anticipated, but came after the Greek government agreed to make severe budget cuts.

However several Eurozone member countries, with Germany’s voice being loudest heard, have questioned whether the rescue package and budget cuts combined will be sufficient to solve Greece’s deep-seated problems.

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Tags: Bank, Bank of England, Banking, BP, BP Deepwater Horizon, British Economy, CEBR, Centre for Economics and Business Research, Continental Airlines, Dow Jones, Economics, Economy, Employment, Financial News, FTSE, Gordon Brown, Lakshmi Mittal, Mervyn Jones, Money, Money Markets, Mortgage, Mortgages, NASDAQ, Property Prices, Recession, Retail, Roman Abramovich, Streetcar, Tony Hayward, UK Banks, UK Economy, UK government, UK Recession, United Airlines, Wall Street, Warren Buffett, Whipcar, Zipcar

UK airlines are expected lose at least £130 million ($200 million) a day in revenues as a result of the volcanic ash-linked disruption, according to the International Air Transport Association (IATA). IATA, the industry’s governing body has said. Said its members would also lose further money as a result of having to augment expensive contingency plans.

All UK flights in England and Wales were grounded on Friday Those airspace restrictions will remain in place until further notice, with widespread restrictions now in place across Europe.

Research the Royal Bank of Scotland (RBS) has disclosed that almost three quarters of small and medium sized companies (SMEs) have suffered from late payments in the past year, leaving them burdened with £63 billion pounds in unpaid debt. The average amount of bad debt being written off by SMEs doubled in 2009 to £2,529 pounds.

According to a recent report by the UK Institute of Directors, At least £500 billion will need to be invested on infrastructure in the next decade in order for the UK to remain competitive, according to the Institute of Directors (IoD).

The IoD said that despite the fiscal deficit, public spending on energy, transport, and water and should be implemented as it is vital to economic growth.

The group of company bosses suggested that the proceeds from re-privatising the banks, which could be over £50 billion, should be spent on new infrastructure. In 2009 just £7.8 billion was invested on infrastructure. The IoD said that at least £130 billion should be spent on transport projects and that £300 billion will be needed for energy infrastructure, including investments in energy efficiency measures for housing.

Global credit checking group Experian has said UK banks are lagging behind their U.S. counterparts in terms of their willingness to lend to consumers in the six months to the end of March. Experian blamed lack of credit and consolidation in the financial sector for a seven percent fall in organic revenue at its main credit services operations in the UK and Ireland. Shares in the FTSE 100 listed company fell 18.5 pence to 616.5 pence, after it said that its main business of performing credit checks in developed economies had put a lid on revenue improvement

Britain’s biggest retailer Tesco will reveal record profits of around £3.3 billion pounds this week, on global turnover that will breach the £65 billion pound mark. This figure, which will represent an increase of 12 percent on 2009, and double the combined profits of competitors Asda, Morrisons and Sainsbury’s.

The John Lewis Partnership, which is seen as a barometer of British retailing, today announced that sales grew 10% in the week to 10 April, compared with the same period a year ago. The renowned employee-owned department store said customers are still spending despite the uncertainty over next months’ election. The firm has been outperforming its rivals this year and said it is optimistic that strong sales will continue. However, sales at its Waitrose supermarket chain fell 16.7% to £80 million in 2009. However, compared to the same period last year, sales surged 10.7%, highlighting Waitrose’s current position as one of the UK’s fastest growing supermarket.

Wal-Mart Stores Inc.’s UK supermarket arm Asda Group Ltd have announced their aim to become the U.K.’s number one non-food retailer in five years, Asda set out plans for a huge expansion of its standalone general merchandise stores, with plans to increase the number of its ‘Asda Living’ with an average size of 28,000 square feet stores six-fold,, to 150 in five years time, up from 25.

Leading UK Energy provider Eon UK has predicted that European Union regulations are liable to expose Britain to energy shortfalls. The energy firm, which is part of German utility E.ON, has said that EU rules are forcing its oil-fired power station at Grain in southeast England to shut down. The announcement comes as the UK Business Council for Sustainable Energy (BCSE) suggested Britain would need to increase its generating capacity by more than 40,000 megawatts to maintain power supply when output from renewable sources recedes. The BCSE said Britain is planning to install 8,000 offshore wind turbines over the coming decade.

Mobile phone operator Orange, have announced the signing of a deal with BT intended to provide an improved high-speed Internet service to its customers by abandoning its fixed-line network. The company will now compete directly with market leaders Virgin Media and TalkTalk, in a move that could lower charges. The deal with BT will place Orange in the same position as Vodafone who currently offer their customers broadband services using BT’s network.

Dreams, the bed and mattress retailer, have announced an increase in operating profits of 36 percent to £18.4 million pounds for 2009. Latest figures released by the company show sales rose by 23 percent to £280 million pounds. The 240-store chain has plans to open up to 450 stores in the coming years.

On the FTSE Royal Bank of Scotland added 5.11 percent to their shares, making for the best performance of the session. The increase came as a result of positive broker comment from Bank of America Merrill Lynch. Competing UK banks did less well, with Barclays Bank dropping 2.56 percent on the news that the SEC has accused Goldman Sachs of civil fraud in relation to activities revolving around mortgage investments.

The U.K.’s second-largest software company Autonomy saw their shares drop to their lowest level for two months after issuing a pessimistic trading

Shares in British Airways understandably dropped 1.9 percent under a cloud of dust and ash.

The pound continues its slow recovery, despite closing down at $1.5396 before the weekend, while closing slightly up against the Euro at 1.140.

U.K. stocks retreated from a 22- month high before the weekend, falling 81.05 points to 5743.96 after having swung between gains and losses at least eight times on Friday. The FTSE 100 is heading for a seventh consecutive week of gains, the longest winning streak since July,

Bank of America (BoA) has returned to profit, reporting a net income of $3.2 billion (£2.1 billion) for the first quarter of 2010, compared with a $194 million loss in the previous quarter. However figures show a drop in profits of 24% than f the same period a year ago. The US bank said record sales and trading activity at its capital markets arm – including acquisition Merrill Lynch – had driven the latest results.

BoA also announced that they were also setting aside less money to cover anticipated losses on bad loans.

As was to be expected the Dow Jones Industrial Average took a step back on Friday, down 123 points to 11.018.66 while the NASDAQ Composite also lost some ground, down 34.43 points to close on 2,481.26.

Goldman Sachs has been accused of misleading their investors about subprime mortgage products before the US housing market collapsed.

The accusations came from the US Securities and Exchange Commission who charged the bank with failing to disclose crucial information about a synthetic collateralised debt obligation (CDO) product that it structured, which was closely linked to the performance of the residential mortgage-backed securities market. The regulator said that Goldman allowed Paulson & Co, a hedge fund, to influence the portfolio selection process while hedging investment against the CDO.

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Tags: ASDA, Ash, Autonomy, Bank, Bank of America, Banking, Barclays Bank, British airways, British Economy, Credit Crunch, Dow Jones, Dreams, Economics, Economy, Eon UK, Experian, Financial News, FTSE, Goldman Sachs, International Air Transport Association, John Lewis Partnership, Money, Money Markets, Morrisons, Mortgage, Mortgages, NASDAQ, Orange, Retail, Royal Bank of Scotland, Sainsbury, Stock Markets, Stocks and shares, subprime, TalkTalk, Tesco, UK airlines, UK Banks, UK Economy, UK government, UK Institute of Directors, UK Recession, Virgin Media, Vodafone, Waitrose, Wal-Mart Stores Inc

Retailers won the closely watched holiday skirmish with shoppers, who opened their wallets a little bit despite a still struggling economy, fewer discounts than last year and limited variety on store shelves, according to recently released data. A late boost from last minute shoppers and an extra day of shopping increased total retail sales by 3.6% over the year. According to estimates Shoppers in Britain spent over £130 million pounds online on Christmas Day alone, a 29 percent increase from a year earlier. The number of U.K. customers on Boxing Day, the day after Christmas, also increased, by 19 percent. Retailers avoided last year’s pre-Christmas discounting by cutting inventory to “much healthier” levels, according to Morgan Stanley analysts. Prices, which were slashed by as much as 75 percent in 2008, were down by about 50 percent on London’s Oxford Street shopping district on Dec. 26 at retailers including the Zara clothing chain, House of Fraser Ltd, Bhs and Topshop clothing outlets.

Recent data has shown that demand from house buyers in the UK fell in December for the first time since January 2009, with the number of new buyers registering with agents down 2.2 per cent. The monthly survey showed a slight rise in prices for the month of 0.1 per cent and also noted that about half of all homeowners had no mortgage or owned less than 25 per cent of the value of their home. This is the sole sector of the community said to be behind the increased demand for new houses.

Britain’s recovery from recession has so far been sluggish compared with other developed nations but stronger growth in 2010 should help it narrow the gap. The UK economy is forecast to shrink 4.5 per cent this year and Consensus Economics says that the consensus forecast is for a rebound of 1.4 per cent in 2010. The UK looks set to lag behind the recovery in the US where the consensus forecast suggests growth of 2.7 per cent. The sharp fall in the value of the pound will help UK exporters and the manufacturing sector will see a projected growth of 2.1 per cent.

Recent research has revealed that only one-in-three British businesses believe that plans by Lord Mandelson to boost production industries will do any good. In the survey of 57 manufacturers, only 20 said that the business secretary’s programme of ‘industrial activism’ was likely to benefit UK manufacturers. The remaining 37 said the programme would not help the sector or were unconvinced about its outcomes. However, there was better news regarding manufacturers’ expectations of an industrial recovery, with almost two-thirds of those polled saying the sector was in line for an upturn in 2010.

A spokesman for the Anglo-Dutch steelmaker Corus has said that Britain should shrug off worries about the huge government deficit and prepare to spend ‘tens of billions of pounds’ on infrastructure investment to push the economy out of recession. The spokesman went on to add that that the UK needed to draw up a ‘real industrial policy’ that would make the country more attractive to manufacturers. Lord Mandelson’s efforts to encourage ‘advanced manufacturing’ as a way of rebalancing the economy were worthy of praise, while stating that these initiatives did not go far enough, and that investment programmes should also railways, schools, roads, hospitals and other public amenities.

Virgin Money is reported to be in advanced talks to buy a small UK bank, which will provide an opening for the company to be granted a banking license, completing the Virgin’s long-standing ambition to provide a full range of financial products, including mortgages and current accounts to the British consumer.

The FTSE was closed on Friday as the market awarded itself a long weekend for the Festive Season.

Sterling remained below the $1.60 level on Fridays trading, although rising a little, whilst falling slightly s against the Euro

• Dollar 1.5962
• Euro 1.1089

A resurgent dollar is likely to power through to 2010 with its up-trend intact, as a steadily improving economy leads investors to believe U.S. interest rates will increase sooner than had been expected. The demand for riskier currencies has broken down as the year has come to an end, with the dollar now gaining on positive U.S. data. Analysts predict that the U.S. economy continues to show strength, the dollar stands to strengthen even more.

Wall Street was closed on Friday for the Christmas holiday.

In Japan early Monday the Nikkei average hit its highest close in four months on Monday as stronger-than-forecast output data boosted the manufacturing sector. Adding to the upbeat mood in the market, data before the start of trade showed Japan’s industrial output rose a better-than-expected 2.6 per cent in November, the strongest gain in six months as rising exports to Asia bode well for a recovering economy. The benchmark Nikkei climbed 1.3 per cent, or 139.52 points, to 10,634.23, its highest close since August 26.

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Tags: Bank, Banking, Bhs, British Economy, British Pound, Christmas, Consensus Economics, Corus, Currency, Economics, Economy, Employment, Financial News, FTSE, House of Fraser Ltd, industrial activism, Lord Mandelson, Money, Money Markets, Morgan Stanley, Mortgage, Mortgages, Nikkei, Recession, Retail, Stock Markets, Stocks and shares, Topshop, U.S. economy, UK Banks, UK Economy, UK export, UK government, UK manufacturers, UK Recession, Virgin Money, Wall Street, Xmas, Zara clothing chain

The Royal Institution of Chartered Surveyors (RICS) has predicted that house prices are unlikely to rise by much more than one to two percent in 2010. The nation’s chief surveyors’ body did however raise the possibility that more properties would change hands in 2010. In their report, RICS pointed out that the housing market had come through the past year in better shape than many had predicted but said it believed several factors would limit price rises.

According to figures issued by the British Chambers of Commerce (BCC), the UK economy shrank by 0.2% between July and September, which is less than the previous estimate of a 0.3% contraction. While the news confirms that the country is not yet out of the recession, it does add weight to predictions that fourth quarter figures will show the economy is finally returning to growth.

The UK recession, which began in the second quarter of 2008, has seen the UK economy contract by 6%. Meanwhile the Confederation of British Industry (CBI) has forecast that in 2010 recovery for the UK economy will be at best ‘fragile’. The CBI confirmed that the UK economy was likely to come out of recession in the fourth quarter this year, driven by increased spending from consumers looking to buy before the January VAT increase. However, they went on to warn that economic growth would be weak, at around 0.3%, for the first two quarters of 2010, with wage freezes continuing into spring and job losses until the autumn

Lehman Brothers, one of the first major investment banks to collapse during the current financial downturn are back to their old ways, is hiring new staff on fat salary/bonus packages as well as paying generous bonuses in London to existing staff, to stop them from defecting. The bank is reportedly recruiting middle and back office staff in order that their administrators PwC can wade through the millions of transactions that must be reconciled with clients and trading partners to determine what is owed or can be claimed. Meanwhile the judge overseeing Lehman’s US bankruptcy in New York last week approved an extra $50 million (£30 million) in bonus pay-outs to some 230 derivatives traders working to help to untangle the dead bank’s $10 billion portfolio. The bonus pay-outs come as bankers face anger and derision over probable bonuses at the end of this year.

British Telecom (BT) are reported to by pushing forward the launch of its super fast broadband network to make sure that the infrastructure is completed in time for the 2012 Olympic Games in London. Britain’s broadband speeds lag behind those of many industrialized countries and BT is under pressure to fix the problem. The company is planning to spend £1.5 billion on a new broadband network based on optical fiber, but it will run past only 40 per cent of homes, mainly in towns and cities. BT originally pronounced that it could take until March 2013 to build the urban-focused network, but, following successful trials, it now appears that the project will be completed by June 2012, with the Olympics beginning the following month. When it does get going, the new network is designed to increase broadband download speeds 10-fold, to about 40 megabits per second, to cope with the rise of bandwidth-hungry services such as high-definition video.

BAA has won its appeal against the Competition Commission but remains unsure whether the judgment means the company will have to sell airports in London and Scotland. In March of this year, the UK’s largest airport operator was ordered to sell three of its seven airports: Gatwick, Stansted and either Glasgow or Edinburgh. The company won their appeal on a number of arguments, one of them that a decline in passenger numbers should have been considered in the decision

The Competition Commission (CC) has finally cleared the merger of ticket agent Ticketmaster and concert promoter Live Nation. The UK regulator has confirmed that the merger would "not result in a substantial lessening of competition in the market" in the UK.

CC’s decision marks a reversal from their provisional ruling, where they vetoed the merger, stating that they were concerned about its ramifications.

The US Justice Department is also investigating the proposed merger, which was originally closed in February.

According to a new poll by the Auto Trader magazine, the Ford Focus has been voted the UK’s most popular car of the decade. The small family car beat our sports cars, SUVs and city cars to take first place. Despite the company being rocked by financial issues in the past ten years, Ford has retained its place as an iconic motoring brand, with two of its other models, the Fiesta and Mondeo, ranking high in the list of most loved cars by the British public. The Auto Trader poll, designed to analyse the key motoring trends over the past ten years, also looked at categories including ‘greenest’ car and ‘best value for money’ car.

Sterling was seen to be weakening in mid week trading against the dollar and the Euro.

• Dollar 1.5956
• Euro 1.111922

On the FTSE house builders edged higher after analysts announced that the sector valuation was looking brighter after a period of under performance that left them trading below book value. Forecasts are that UK house prices are to fall by 5 to 10 per cent as unemployment peaks in the second quarter of 2010, and saw rising interest rates damping the recovery for the next two years. Despite the less than encouraging forecasts, Taylor Wimpey was up 4 percent to 35¾ pence while Barratt rose 1.7 per cent to 116 pence. However, Redrow fell 0.2 per cent to 131½ pence.

The FTSE 100 gained for a second day, adding 34.67 points to close on 5,328.66, just 54 points off its 2009 high.

Official figures show that the US economy grew by less than originally estimated in the third quarter, with the latest estimate showing an annual growth pace of 2.2%, the figure was down from the previous estimate of 2.8%. In any case, July- September was the first quarter in which the US economy returned to growth, after four quarters of decline.

On Wall Street, the Dow Jones Industrial Average gained 0.8 per cent to 10,414.14 while the Nasdaq Composite was 1.2 per cent higher at 2,237.66, a welcome recovery after losses last week as the dollar strengthened and concern grew over the prospect of a tighter monetary policy.

A report issued by the National Association of Realtors (NAOR) showed new home sales in the US rose 7.4% in November, apparently spurred on by government incentives. NAOR also announced that property sales rose in the month to an annual rate of 6.5 million, making for the highest level in more than two years.

On Tuesday the OPEC oil cartel provided its strongest indication yet that it aims to keep oil prices at $70-$80 a barrel next year as it tries to support the economic recovery. As a first step, the cartel, which controls more than 40 per cent of the world’s oil output, agreed to leave its production levels unchanged at least until the end of the first quarter of 2010.

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Tags: 2012 Olympic Games, Auto Trader, BAA, Bank, Barrat, Barratt, Barratt Developments, BCC, British Chambers of Commerce, British Economy, British Pound, British Telecom, BT, CBI, Competition Commission, Confederation of British Industry, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, Gatwick, House Prices, Lehman Brothers, Money, Money Markets, Mortgage, Mortgages, NASDAQ, National Association of Realtors, OPEC, Property Prices, Recession, Redrow, RICS, Royal Institution of Chartered Surveyors, Stansted, Taylor Wimpey, Ticketmaster, UK Banks, UK Economy, UK government, UK Recession, US Justice Department, Wall Street

Alistair Darling increased the levels of his undoubted popularity with the UK public by announcing some interesting cuts and about turns in his pre-budget cuts. The first was that VAT cut to 15% as recently as March in the Budget, is to be reversed as of 1 January 2010. Income tax bands are to be tampered with, meaning that people who earn £43,000 or more will feel the pain that little bit earlier. On the plus side national insurance bands are to be reduced downwards by a further 0.5% from April 2011, meaning that those earning less than £20,000 will no longer need to pay any contributions. State pensions and child benefits are also set to rise in April of next year.

Meanwhile it has been reported that U.K. consumer confidence stayed close to the highest level in the past eighteen months in November as shoppers have become more hopeful for the economy’s prospects in the coming year. 2010. The proportion of shoppers expecting the economy to worsen in the next six months fell to its lowest level since the survey began in 2004.

As expected, the Bank of England has held UK interest rates at the record low of 0.5%, whilst announcing that there are to be no changes to its programme of pumping newly-created money into the economy – so-called quantitative easing (QE). The Bank cut interest rates to 0.5% in March of this year in an attempt to boost the recession-hit economy while in November; they announced that another £25 billion would be injected into it, taking the total planned under QE to £200 billion. The bank is expected to wait until the current QE programme runs out in January before considering whether it should be expanded. As Chancellor of the Exchequer Alistair Darling announced earlier this week that he would rather suffer criticism for removing economic support too late than too early, Bank of England policy makers are waiting for the final quarter results to see if Britain has finally escaped the recession, and if the £200 billion spent to aid growth has finally brought some results..

Meanwhile in his pre-budget cuts speech, Darling appeared to back away from the bank bonuses issue, by announcing that there will be no windfall tax on banks, but they will pay a one-off levy of 50% on any bonus above £25,000

The number of loans approved for house purchase rose to 55,300 in October, up 9 percent from September and 43 percent higher on a year ago, the Council of Mortgage Lenders said on Thursday. According to an industry body, the amount of buyers has risen from its lowest point in January 2009 when only 23,000 loans were advanced. The number of loans for remortgaging remained weak, however, unchanged from September’s level of 33,000, one of the lowest levels since the series began in 2002.

Nokia have announced that they are to close their flagship store on London’s Regent Street, as a result of slow sales and poor customer traffic. The remainder of the company’s UK stores are to remain open. Nokia were reported to have spent £4 million creating the Regent Street store that was launched in February 2008, and will close in the first quarter of 2010, Seven other of Nokia’s UK stores, including its Heathrow Terminal 5 outpost, are set to receive a revamp.

Shares in Barclays Plc fell 3.2 percent, to 287.5 pence after allegations that they were withholding a “secret” $5 billion windfall profit from its purchase of Lehman Brothers Holdings Inc.’s North American brokerage, despite the fact that the gain was publicly disclosed before the sale closed 15 months ago.

Sterling continued to lose ground against the dollar on Thursday whilst rising slightly against the Euro, as implications of the UK government’s pre-Budget report weighed on the currency,

• Pound/US dollar 1.6278
• Pound/Euro 1.1058

After the UK finance minister forecast that the UK economy will shrink by 4.75 percent this year, rather than the earlier prediction of a 3.25 percent to 3.75 percent decline, the FTSE 100 fell by 0.37 percent to 5,203.89, while the FTSE 250 dropped by 1.24 percent to 8,919.49.

The US trade deficit unexpectedly narrowed in October as exports rose to their highest level in almost a year, official figures have shown.

The deficit fell to £20.2 billion ($32.9 billion), 7.6% lower than September’s downwardly revised $35.7 billion figure.

Helped by the weaker value of the dollar, US exports increased by 2.6% to $136.8 billion, led by civilian aircraft, cars and computer chips.

Imports rose 0.4% to $169.8 billion. Analysts had predicted the deficit to expand to $36.8 billion.

The value of US exports was the highest since November 2008, the figures from the Commerce Department showed.

The trade deficit is now expected to widen again in 2010 as the US economy continues to recover and consumers buy more imported goods.

On close of trading, the Dow Jones Industrial Average was up 120 points to 10,405.83 and the NASDAQ also rose 21 points to close on 2,190.86.

According to the latest figures from the Australian Bureau of Statistics, Australia’s unemployment rate fell in November to 5.7% from 5.8% in November, The figures came as a surprise to many analysts who had expected an increase to 5.9%. Australia is one of the few developed economies not to have fallen into recession like its counterparts throughout the world. The Australian economy has benefited from an increase in commodity prices, while exports have received a boost due to demand from China for its iron ore and other raw materials.

Official figures have revealed that orders for Japanese machinery orders fell by 4.5% in October compared with the previous month, with analysts expecting a fall of just 4.3%. The figures come just a day after the Cabinet Office revealed that the Japanese economy grew at a far slower rate in the third quarter than previous estimates showed.

Meanwhile, the price of crude oil dropped on new data from the US Energy Information Administration showing that gasoline stockpiles grew last week while demand declined. The price of oil dipped below $70 a barrel, falling to a two-month low, amid continuing concerns over demand.

US crude for January delivery fell 84 cents to $69.81 a barrel, before settling at $70.13 as it lost ground for the seventh consecutive day.

London Brent crude fell 81 cents to $71.58 a barrel.

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Tags: Alistair Darling, Australian Bureau of Statistics, Bank, Bank of England, Banking, Barclays, Barclays Plc, British Economy, British Pound, Cabinet Office, Council of Mortgage Lenders, Credit, Credit Crunch, Currency, Debt, Dow Jones, Economics, Economy, Finance, Financial News, FTSE, Global Credit Crisis, Lehman Brothers Holdings Inc, Money, Money Markets, Mortgages, NASDAQ, Nokia, pre-budget cuts, Recession, Retail, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, VAT

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

A recent report from the Bank of England has revealed that the total amount of personal debt in the UK is lower than it has been for more than 16 years, and probably even more, as that was when records first began.

Factors such as rising unemployment and the economic downturn have caused UK consumers to become increasingly reluctant to increase their levels of personal debt, indicated by borrowing falling by £600 million in July, taking the total personal debt in the UK to a little below £1.5 trillion. Which is still a considerable sum of money.

At the same time, current low interest rates means that the amount of equity outstanding on mortgages is decreasing by £400 million a month at current levels, meaning that many home-owners are managing to repay more of their outstanding mortgage, reducing their deficit.

The manufacturing sector, also doing their best to draw in their horns, complain of increasing price rises from their banks, despite the abundance of Government packages to increase liquidity in the banking system and interest rates being at an all time low. According to the Engineering Employers Federation (EEF), credit terms remain "very tight" for manufacturers. A fact that they claim could hold back an early recovery from the recession, and certainly not in line with the US, Japan and even France and Germany.

Britain retail sectors, living in hope of a good Christmas season, are going to need it, if recent forecasts are correct. The forecast, from a leading firm of accountants and business advisers, forecast that the worst effects of the recession for the retail sector will not be felt until next year. Fears that rising unemployment will hit the high street hard and as many as 5,000 companies will be forced to close their doors throughout the UK.

Some good news for the UK economy is the announcement that British Petroleum (BP) has discovered a massive oil field while drilling of the Gulf of Mexico.

BP, currently the largest producer of oil and gas in that area, have till now produced more than 400,000 barrels of oil a day, with their latest discovery expected to increase that figure considerably. The company had to dig deep, not just in their pockets, but also through the Earth’s core to get to the fast reservoir of crude, reaching a depth of 35,055 feet making it one of the deepest wells drilled in the World.

On the news, BP shares jumped 3.8% to 538 pence, making it star of the show on the FTSE 100 yesterday.

It wasn’t really a major achievement as equities continued to be under pressure on the FTSE yesterday, however late trading did push it back to a reasonable condition. The k index ended just 2 points lower at 4,817.55, following losses of 89 points during the previous session.

Meanwhile the FTSE 250 continued to slide, yesterday dropping a further 99.75 points to close on 8,519.93

Sterling made a minor recovery against the major currencies on Wednesday’s trading.

• Pound/US dollar 1.6272
• Pound/Euro 1.1409
• Pound/Japanese Yen 149.9756
• Pound/Swiss Franc 1.7249

In the US, once again Federal Reserve policy-makers are showing increased confidence that the downturn in the US economy is due to officially come to an end. At a recent meeting, chaired by recently re-appointed Fed Chairman Ben Bernanke a more upbeat tone emanated, hinged with an uncertainty about how quickly the economy would grow in 2010. Fears remain that unemployment, which is set to move above 10% this year, may impact on consumer behaviour.

On Wall Street, US stocks were up and down on Wednesday affected by the release of data on job losses, with the release of the Challenger jobs report, which showed that the pace of US job losses has slowed, later offset by data released by the

This was quickly counterbalanced by payroll giant Automatic Data Processing (ADP) stating that employers in the private sector had cut by more than 50,000 the jobs expected in July than the expected 250,000.

On Wall Street, the markets returned to relative stability, with the Dow Jones Industrial Average dropping by 29.93 points to close on 9280.6 while the NASDAQ Composite index stabilised, falling a mere 1.82 points to close on 1967.07

European Union finance ministers have taken up the gauntlet and will press for clearly defined restrictions on bonus pay for bankers in the future. The issue will be at the focus of talks to be held with their US and other G20 counterparts later this month.

Anders Borg, finance minister of Sweden, which holds the EU’s rotating presidency, speaking on Wednesday after a meeting of the EU’s 27 finance ministers designed to set out common positions on bankers’ pay as well as the other hot potato of financial market regulation. Other issues on the table will be how to draw back from the fiscal, monetary and other emergency measures adopted this year to prevent a deep global recession, with financial stability returning.

Gold prices surged to a near three-month high on Wednesday as investors turned to the precious metal after a weak opening in equity markets in New York.

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Tags: Automatic Data Processing, Bank of England, Banking, Ben Bernanke, BP, British Economy, British Petroleum, British Pound, Credit Crunch, Currency, Debt, Dow Jones, Economy, Employment, Engineering Employers Federation, Federal Reserve, Financial News, FTSE, Interest Rates, Money, Money Markets, Mortgage, Mortgages, NASDAQ, personal debt, Recession, Stock Markets, Stocks and shares, UK consumers, UK Economy, UK government, UK Recession, Unemployment, US economy, Wall Street

Recent suggestions are that UK banks and building societies will come under increasing pressure to reduce their fixed mortgage rates after government bond markets began to increase rapidly. Analysts in the bond market have recommended that, as a result of the rise in the price of government bonds which is causing an attendant and converse relationship to yields, lower mortgage rates should automatically follow.

The feeling running high among UK mortgage brokers is that the banks and building societies are simply holding tight from reducing interest rates for as long as possible, in order to earn some extra profit on the backs of the hard-pressed British home owners who are carrying equity on their property. These large financial bodies are manipulating swap rates, used to set fixed-rate mortgages, and which currently account for about half of the mortgages held in the UK.

Swap rates define the cost incurred when a bank or building society alters or "swaps" from a floating interest rate to a fixed rate. Two years of fixed swap rates fell recently by 1.95 percent to a low of 0.785 percent, taking a plunge of nearly half a percentage point since the beginning of August – the lowest level since records began in 1985 – while five-year gilt yields fell to 2.43 percent. As government bond yields have fallen, it would follow that the swap rates should also have dropped, in line with them. This event is taking too long to happen, mortgage analysts claim, while adding that the banks have also shown a determined reluctance to pass over reduced borrowing costs to potential customers, as long as demand for mortgages outstrips supply.

Five-year swap rates also fell to 3.33 per cent, close to a drop of 0.5 percent. These falls were driven by forecasts that official interest rates would remain at historic lows of 0.5 per cent and speculation that the Bank of England might even introduce negative interest rates on commercial bank deposits.

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Tags: Bank of England, British Economy, British Pound, building societies, Credit, Debt, Economy, Financial News, government bonds, home owners, Interest Rates, Loans, Money, Money Management, mortgage brokers, mortgage rates, Mortgages, Swap rates, UK Banks, UK Economy, UK government

For a bank that succeeded in breaking the UK record for corporate losses within a financial year, you would think that the Royal Bank of Scotland Group (RBS) would keep a low profile when it comes to making financial predictions. But not the RBS. And the prediction that they have come up with is nothing less than controversial, as well appearing to be far away from what actually appears to be happening on the UK street.

It appears that a recent survey ordered by the RBS, and paid for by the UK taxpayer, predicts that U.K. house prices will plunge by a further 12.7 percent before reaching rock bottom.

UK properties, which have already plummeted in value by 15 percent since the global economy collapsed in October 2007, to an average of around £220,000, will fall a further £20,000 if RBS’s survey is to be taken seriously.

It goes without saying that the RBS survey contradicts just about every report and survey commissioned during the last quarter, as well as physical evidence showing that the number of mortgage applications is on the increase, as the UK economy slowly but surely pulls itself out of the worst financial downturn the country has seen since World War Two.

According to the Nationwide Building Society, property prices rose for a third consecutive month in July to a fourteen month high, while the highly objective and respected Royal Institution of Chartered Surveyors announced earlier this month that prices will actually increase this year.

In the U.S., where the subprime mortgage collapse actually sparked the global recession, the housing market is already on the increase, with sales of existing homes jumping 7.2 percent in July, to the highest level since August 2007, according to the National Association of Realtors.

The question still remains: Who do you believe?

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Tags: British Pound, Credit Crunch, Economy, Financial News, Global Credit Crisis, Money, Mortgage, Mortgages, National Association of Realtors, Nationwide Building Society, Property Prices, RBS, Recession, Royal Bank of Scotland, Royal Institution of Chartered Surveyors, subprime, U.K. house prices, UK Banks, UK Recession, UK taxpayer