As was generally expected, the Bank of England (BOE) monetary policy committee has announced that they will not be extending their quantitative easing programme, under which it has purchased just over £200 billion, mostly in government gilts. The decision came after that the UK economy posted slight growth for the fourth quarter of last year However the BOE did retain their right to resume purchases should circumstances warrant it. At the same meeting, BOE officials voted to continue holding interest rates at their current record lows.

The Institute for Fiscal Studies (IFS) has issued a statement expressing their conviction that government’s plans to cut Britain’s yawning budget deficit after that do not go far enough. Instead the IFS called for "more ambitious plans", suggesting that no less than £13 billion of extra cuts or tax hikes will need to be implemented by 2015 to stabilise the country’s finances. The IFS also called for an independent body to oversee official forecasts for the public finances

In addition, the IFS’s statement pointed out that the UK Government needed to aim for a tightening of around 5 per cent of national income, amounting to a ballpark figure of £70 billion over the five years to 2015, in order to stem up the hole in the country’s public finances. Chancellor of the Exchequer Alistair Darling, in his pre-Budget report, pointed to a fiscal tightening of £57 billion in for the same term, which according to the institute would be slightly more than four percent national income for the entire period.

The IFS report is only one of a few that Darling has had to contend with, all of them criticising his plans to address the public finances saying his plans do not go far enough and that his aim of halving the budget deficit as a proportion of national income by the 2013-14 financial year was unlikely to succeed.

According to a report from, the Nationwide Building Society, U.K. consumer confidence rose in January, on news that the economy has eventually emerged from its worst recession on record. The index of sentiment increased 3 points from the previous month to 73, almost double the level of 39 measured in the same month last year.

Meanwhile it appears that the Government faces a battle to pass its flagship digital economy bill before the forthcoming election, largely due to the surprise resignation of one of the ministers charged with pushing it through parliament. Aims to address the UK’s future infrastructure needs, with regards to the digital industry, the bill is scheduled to deal with some controversial measures, including anti-piracy policies and the introduction of a 50 pence-a-month broadband tax on every phone line

Toyota world’s biggest car maker, with around 1.6 million of its cars on UK roads, is to recall millions of cars around the world following an accelerator pedal problem affecting seven of its models. The company’s UK division will be making contact with more than 180,000 UK drivers warning them to arrange repairs after a potential problem with sticking or jamming accelerator pedals was identified, but it will be nearly a week before it can start repairs on cars with defective accelerator pedals

In the meantime, the company’s financial results for the three months to December 2009 show a huge swing back into profit. Toyota announced a net profit of 153 billion yen (£1.06 billion) making for an almost 100% reversal on the same period last year.

Toyota also confirmed that they expect to £1.23 billion in recall costs and lost sales, but said it still expected sales to increase to 7.18 million units in the current financial year.

Broadband provider Virgin Media have announced that their TV subscribers will now be able to access to a high definition (HD) channel from Eurosport, which will be the first of several new services that will be launched on its TV platform over the next few months.

Eurosport typically covers such events as the Tour de France, French Open tennis and the World Touring Car Championships. A spokesperson for Virgin Media was quoted as saying: "With HD ready TVs now common in UK homes, the combination of HD channels as well as our pioneering TV on-demand service gives Virgin TV customers a huge range of HD programming with the unique flexibility to enjoy HD content whenever they want, at the touch of a button."

On the FTSE, U.K. pub chain owner, and brewers of London Pride ale saw their shares rise 1.8 percent, to 537 pence in anticipation of the release of their latest trading statement. Also due to publish their recent earnings are the Vodafone Group Plc. the world’s largest mobile phone company. The news failed to spark too much excitement, and their stock fell 0.6 percent to 134.5 pence. In the same boat were the Yell Group Plc who publish of the U.K.’s yellow pages directory, who are about to publish a trading statement. Their shares dropped 0.5 percent to 36.8 pence.

The pound closed down at 1.5777 against the dollar, while the Euro the dollar was up a little at 1.1458

The FTSE 100 Index dropped 30.16 points to reach 5,253.15 at the close of trading on Thursday. The index has dropped 3.6 percent so far this year while still 49 percent higher than in March of 2009.

Troubled Asset Relief Program (Tarp) paymaster Kenneth Feinburg has called insurance giant AIG’s expected latest round of bonus payments "outrageous".

Feinburg’s comments came as reports say the insurance giant are to announce bonus payouts of around $100 million (£63 million) to its financial products division.

AIG was bailed out from bankruptcy thanks to $182.3 billion of US aid in 2008. Their staff has already been compelled to return $39 million of bonuses paid out last year, with Feinberg "insisting" that AIG workers repay a further $7 million of bonus payments.

Time Warner has announced a major leap in their fourth quarter profits, largely thanks to their two recent hit films Sherlock Holmes and The Hangover. This is the first profit that the company has reported since they

split from AOL in 2008. Net income for the leaner and meaner Time Warner was $627 million (£387 million), compared with a $16 billion loss for the last quarter of 2008, largely due to value write-downs for AOL as well as the company’s cable assets.

Even leaner and meaner AOL also reported fourth quarter results showing a reversal in fortunes from the year before.

Despite encouraging news from the retail sector, an unexpected rise in unemployment benefits claims for sent US stocks sharply lower in early trading on Thursday. On the news, the Dow Jones fell sharply by 192 points, to close on 10092.49, while the NASDAQ dropped 38 points, to finish on 2144.32

Oil prices CL-FT dropped by 5 per cent on Thursday’s trading , the steepest one-day drop since July, due to the fear that demand in debt-laden European economies is liable to fall as well as the rise in U.S. unemployment . U.S. crude for March delivery settled down $3.84 (U.S.) a barrel to $73.14, while London Brent fell $3.79 to $72.13 a barrel.

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Tags: Alastair Darling, AOL, Bank of England, Banking, British Economy, British Pound, Dow Jones, Economy, Eurosport, Financial News, FTSE, Institute for Fiscal Studies, London Pride, Money, Money Markets, NASDAQ, Nationwide Building Society, quantitative easing, Recession, Stock Markets, Stocks and shares, Toyota, UK Banks, UK Economy, UK government, UK Recession, Virgin Media, Vodafone

According to a recent report by the Centre for Economics and Business Research (CEBR) UK house prices are liable to rise by about a fifth in the next four years. The forces that will push property prices up are increased lending levels by the banks and interest rates remaining at a low level.

Home values will rise 6.5 percent in 2010 and will have gained around 20 percent by the end of 2013, according to CEBR radically altering their forecast of October 2009, which house prices would increase by only 2.6 percent this year.

CEBR’s announcement strengthens reports from the Nationwide Building Society that showed house prices have begun rising again after the economy returned to growth. However their optimism was dashed by news that potential UK house buyers could soon face a chronic shortage of credit that will see mortgages ‘rationed’.

According to the Council of Mortgage Lenders (COML) as government schemes to keep mortgage lending afloat are due to dry up in 2014, their fears that a funding gap to the tune of £300 billion will open up. COML predicted in their recent report that the UK is at risk of a chronic under-supply of credit, bringing with it the rationing of mortgages for customers that will continue for many years. Before the financial crisis, the funding gap, meaning the difference between what banks took in savers’ deposits and what they lent out, was always covered by the wholesale market in mortgage debt.

As a result of lower oil and gas prices, oil giant BP have reported a 45% drop in annual profit Its replacement cost profit for 2009 was £8.75 billion, compared with £15.39 billion in 2008. The company said that its oil and gas production increased more than 4% in 2009 and its reserves had grown for the 17th year in a row. Profits during the final three months of 2009 were up 33% from the same period a year ago.

However, the fourth quarter results fell short of analysts’ expectations, causing BP shares to fall more than 4% in early trading.

Shares in Northumbrian Water surged 12 percent after press reports that the Ontario Teachers’ Pension Plan may bid £1.7 billion ($2.7 billion) for the company. The water utilities market in the UK is liable to benefit if the speculation on Northumbrian Water is confirmed as it will establish a higher trading range for the other water stocks. On the news, Northumbrian Water rose by 12 percent to close on 289 pence. The Ontario pension fund already owns 27 percent of the U.K. water company and wants to buy the remaining stake.

Severn Trent caught the wave and added 4 percent to 1,170 pence while United Utilities gained 2.8 percent to 551.5 pence.

South Korea’s National Pension Service, the world’s fifth biggest pension fund, will next week take a 12 per cent stake in Gatwick airport, stressing that investment in Britain will play a significant role in quadrupling its international exposure. The NPS, which is aiming to expand its overall portfolio, came to the attention of Britain’s financial community last year when it bought the headquarters of HSBC in Canary Wharf for £773 million. Gatwick airport was sold late last year to Global Infrastructure Partners, an infrastructure fund backed by Credit Suisse and General Electric, for £1.51 billion.

The longest running saga in recent UK takeover history drew to a happy close as US firm Kraft Foods sealed their takeover of Cadbury after shareholders in the UK chocolate maker voted in favour of the deal.

Cadbury said it had received valid acceptances of the offer from investors representing 71.7% of the firm. Kraft chief executive Irene Rosenfeld celebrated the takeover by announcing: "I warmly welcome Cadbury employees into the Kraft Foods family." Despite the warm welcome, Cadbury employees staged protests in London calling for government support to guarantee jobs

Budget airline Ryanair has raised its full-year profit forecast as passenger numbers continue to rise. The company announced that it said it expects full-year net profits of about 275 million Euros, whilst reporting a 10.9 million Euro; (£9.5 million) loss in fourth quarter of 2009, a considerable improvement on the 101.5 million Euro losses for the same period in 2008.

Ryanair said the result had been helped by a 37% fall in fuel costs and passenger numbers increased by 14%, which had offset a 12% drop in fares.

Europe’s second- largest tobacco company Imperial Tobacco Group Plc have announced a “good start” to the year with business “in line” with company expectations, despite the weak economic climate. Despite the news, their shares declined 1.2 percent, to 2,002 pence. The Royal Bank of Scotland Group Plc are to allow its top performing employees to convert a large portion of bonuses given in shares into cash within 12 weeks of receiving them, according to a letter sent to investors yesterday. On the day RBS shares rose 7.9 percent, to 34.86 pence.

The pound closed down at 1.5977 against the dollar, while the Euro traded at 1.1438

The FTSE 100 dropped 4.1 percent in January as the U.S. government called for limits on risk-taking by banks and China moved to restrict lending and cool economic growth. The gauge is still 49 percent higher than in March after governments and central banks around the world sought to encourage growth by maintaining low interest rates and committing more than $12 trillion to stimulate the economy.

The benchmark FTSE 100 Index added 35.9 points to reach 5,283.31 at the close of trading in London.

US President Barack Obama has announced a $3.8 trillion (£2.4 trillion) budget plan for 2011, which includes increased spending for job creation, but cuts in other areas.

He also forecast the US deficit would rise to a record $1.56 trillion this year.

He scrapped plans to send astronauts back to the Moon and will seek to save $250 billion by capping a range of domestic spending programmes for three years.

Congress must approve the budget for the financial year starting on 1 October for it to take effect.

Mr Obama blamed the huge deficit on the decisions of President George W Bush, previous Congresses and his administration’s moves to prevent an economic collapse.

Stocks continued to extend gains after reports showing the U.S. manufacturing sector expanded more than forecast. The Institute for Supply Management’s factory index showed U.S. manufacturing expanded in January at the fastest pace since August 2004, spearheading the recovery from the worst recession since the nineteen-thirties.

On the news, the Dow Jones rose sharply, to close on 10284.91, while the NASDAQ rose 38 points, to finish on 2185.32

Gold lost some of the previous day’s sharp gains, dropping 0.1 per cent to $1,105. Oil rose 0.5 per cent to $74.81 a barrel.

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Tags: Banking, Barack Obama, British Economy, Cadbury, Centre for Economics and Business Research, Council of Mortgage Lenders, Credit Suisse, Dow Jones, Economy, Employment, Financial News, FTSE, Gatwick Airport, General Electric, George W. Bush, Global Infrastructure Partners, HSBC, Imperial Tobacco Group Plc, Kraft Foods, Money, NASDAQ, Nationwide Building Society, Northumbrian Water, Oil, Ontario Teachers’ Pension Plan, Property Prices, Recession, Retail, Royal Bank of Scotland, Ryanair, Severn Trent, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession

The last and most positive item of news that hit before the UK financial community went into New Year mode was that data released by the Nationwide Building Society indicated that U.K. house prices had raised again in December by 0.4%, taking the growth for the year to 5.9%. December’s rise was for the eighth consecutive month. To take some edge from the optimism, Nationwide pointed out that there remained high levels of uncertainty over the outlook for property prices in 2010.

Other good news came from the Bank of England, who pointed out that the FTSE market has recorded the third biggest rise since 1693, over the last nine months. Predictions are that of January carries on at roughly the same pace, the market will have enjoyed its largest sustained rise for 317 years. Someone should point out to the BOE that the FTSE had to fall more or less on its knees in order to make such a dramatic recovery. Not that anyone is not grateful!

The UK statisticians seemed to be competing against each other this festive season to see whose figure could look the most positive.

Just before Christmas, the Office for National Statistics reported that unemployment had fallen 6,300 in a single month, hastening to add some icing to the Christmas Cake by pointing out that in no postwar recession has unemployment ever fallen so quickly. To be positive, unemployment in the UK has been less severe than most analysts expected. Expectations are that jobless levels will certainly carry on rising in 2010, but will eventually level out at around 1.25 million.

According to the Bank of England, quarterly credit conditions saw British banks reported a rise in the availability of secured credit to households, driven partly by an improved economic outlook. Unsecured credit availability to households continued to decline, but banks expected it to stabilize in the coming quarter.

Meanwhile cold Icelandic hearts have appeared to thaw just a little, with the news that Iceland’s parliament has approved plans to repay £3.4 billion to savers in the UK. The repatriations will go to the British as well as the Dutch governments, both of whom partially compensated savers when the Icesave online bank failed in 2008, with more than 320,000 savers losing their savings when the bank collapsed. Not that there weren’t ulterior motives behind the Icelanders generosity. In fact a special bill on the measure, was only narrowly approved against strong opposition, and was seen as crucial to Iceland’s bid rebuild its economy and gain a key to eventually being accepted as members of the EU.

A recent survey of UK adults has come up with the interesting discovery that that around two-thirds had made it a point of keeping track of their financial situation much more than they did two years ago, and were increasingly concerned about whether their bank was safe. Despite that, the survey did discover that far fewer consumers were less willing to make an effort to protect themselves, with only around half making an effort to reduce their debt levels and even less attempting to save than they were at the start of the recession.

More slightly bitter sweet news announced before the end of the year was that the number of repossessed homes that were sold by auction in the UK has fallen by more than half during the past 12 months. The number of repossessed homes sold at auction during 2009 totaled 3,998, compared with 8,222 sold during 2008, with the number of repossessed homes sold at auction in the last quarter falling even more dramatically to just 941 homes compared to 2,941 during the same period in 2008.

Sterling jumped to a 10-day high against the dollar on Thursday as year-end position adjustments led to a broad sell-off in the U.S. currency, with thin trading sparking exaggerated price movements.

The pound also extended gains against the euro as month- and year-end flows as well as technical factors supported the currency, helping lift rise to a 10-day high.

• Dollar 1617
• Euro 1.1285

The benchmark U.K. FTSE 100 rose 0.3% to 5,412.88 on Thursday, bringing its year-to-date gains to 22.1%, its highest gain since a 24.7% return in 1997. Despite the good news, overall the noughties were not great for the.

FTSE that declined 21.9% for the decade, worse than the Dow Jones Industrial Average that fell just 8% and the 14% retreat for the German DAX.

Wall Street ended the day and the decade in the red after encouraging jobs data on Thursday renewed concerns over interest rate hikes.

The number of Americans filing fresh claims for unemployment benefits last week dropped to the lowest level in about 17 months. Analysts had been expecting initial jobless claims to show a modest increase.

A late sell-off left stocks near their lows of the day, pushing the Dow Jones Industrial Average down 1.1 per cent to 10,428.05 and the NASDAQ to 2,269.15.

Commodity markets ended 2009 on a high with US crude oil touching the $80 a barrel mark in the final trading session, while white sugar extended its record-breaking run and copper, lead and zinc all enjoying price gains of more than 100 per cent over the year.

Oil prices maintained their upward momentum over the Christmas period amid ongoing tensions in Iran between opposition supporters and the government and by cold winter weather in the US, which has boosted demand for heating oil.

Gold ended 2009 just below the $1,100 mark at $1,096.35 a troy ounce, up 24.8 per cent over the year.

Gold hit a record $1,226.10 an ounce in early December and the bull market for bullion has now lasted for nine years.

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, copper, Credit Crunch, Currency, Dow Jones, Economics, Economy, Employment, Financial News, FTSE, German DAX, Gold, Icesave, lead, Money, Money Markets, NASDAQ, Nationwide Building Society, Office for National Statistics, Oil prices, Property Prices, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK financial community, UK government, UK Recession, UK unemployment, US crude oil, Wall Street, zinc

The Nationwide Building Society Nationwide have recently announced that they are to substantially increase the discount on offer for first-time home buyers that participate in the company’s mortgage reservation scheme with the offer applying to three-, four-, and five-year fixed-rate mortgages in the meantime. In addition, the Nationwide are offering a complementary combined reservation and legal fee option to borrowers who are planning to move home. These offers, as well as similar, have been designed to reduce the initial lay outs involved in acquiring a property. A spokesman for the Nationwide is the world’s largest building society and one of the largest mortgage lenders in the UK predicted that with these measures they have removed some of the barriers that may have prevented people from buying a property.

In a bid to satisfy European authorities, the Royal Bank of Scotland may have no option but to either close down or farm out 312 of its branches operating s in England and Wales under the RBS banner and serving more than one million small businesses. The EU competition commissioner, Neelie Kroes appears to be forcing the RBS ’hand as they EU looks for substantial disposals to compensate for billions of pounds of taxpayer support as well as to finance the bank’s involvement in the UK Treasury’s toxic asset insurance scheme. The bank’s proposals to the EU, which are not liable to involve the company’s NatWest branch network in England and Wales, are thought to be in a well advanced state of negotiation.

The Icelandic government have announced that they have reached a fresh agreement with the UK government over the reimbursing the 400,000 savers who lost money when Icesave owner Landsbanki collapsed, leaving debts of around £3 billion. The original ruling was rejected by the UK and Netherlands governments, meaning a new bill will go before Iceland’s parliament for final agreement some time today.

A number of UK based manufacturers are combining efforts to promote the ‘Buy British’ angle in their marketing campaigns. among them are amusement ride manufacturer Amusement Technical, who, among others, want to take full advantage of the low exchange rate between sterling and the Euro to increase their export activities. A spokesman for the company explained that the low value of Sterling created a considerable opportunity for UK manufacturers competing for business in the Eurozone. The obvious downturn is that products and raw materials imported from the same region will be considerably more expensive.

The pound continued to rise in a volatile week’s trading, climbing 0.4% against the euro and 0.2% versus the dollar.

• Pound/US dollar 1.6303
• Pound/Euro 1.10989
• Pound/Japanese Yen 148.2221
• Pound/Swiss Franc 1.6658

The FTSE 100 fell 32.71 points on 5190.24 on Friday’s trading. The FTSE 250 dropped also shed some of its gains before the weekend, down 58.97 points to close on 9,426.20.

Bank of America have reported net losses of £612 million ($1billion) for the three months from July to September, a figure much worse than analysts predicted. The figure compares with a net profit of $3.2 billion in the second quarter of 2009 and $1.2 billion for the same period of last year. Bank of America is the fourth major US bank to report their third quarter results which are the least impressive so far.

The Dow Jones index took a tumble on Friday’s trading, falling below the 10,000 points mark, achieved during the week’s trading. The index fell 67.03 points to 9995.91 while the Nasdaq Composite index dropped 16.49 points to 2,156.8

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Tags: Amusement Technical, Bank, Bank of America, Banking, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, Global Credit Crisis, Icelandic government, Icesave, Landsbanki, Money, Money Markets, Mortgage, mortgage seekers, NASDAQ, Nationwide, Nationwide Building Society, NatWest, Netherlands government, RBS, Recession, Royal Bank of Scotland, Savings, UK Banks, UK government, UK Recession

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

During these troubled times for the property market, the Nationwide Building Society have risen to become the largest U.K. customer-owned lender, and when they talk, people are inclined to listen. Even though the news might be difficult to bear.

In a series of statements issued by the Swindon-based company yesterday, they announced that British economy will remain in recession for the remainder of 2009 and the recovery anticipated to begin next year will at best be “sluggish,” due to unemployment continuing to rise next year. The apparent recovery witnessed on the FTSE and in the financial markets will take a lot longer to filter through to the labour market, according to Nationwide.

In the property sector, building societies, currently account for around twenty percent of the U.K. mortgage market continues to have to cope with defaulting clients. Evidence of the continuing problems this is causing in the industry is the fact that Moody’s Investors Service have recently reduced their ratings on eight customer owned lenders, among them Nationwide.

A spokesman for Nationwide went on to announce that all of these factors are liable to combine to force house prices in the UK down by as much as 14 percent in 2009. This forecast comes despite the fact that price declines have slowed in recent months and U.K. banks granted more mortgages in April than the previous month.

The overall picture is the one that is less encouraging with Nationwide’s net income falling to 162 million pounds in the financial year 2008/2009 from 495 million pounds the previous year. The company’s net lending fell by three hundred percent to 2.1 billion pounds, from 8.9 billion pounds in 2007/2008.

Forecasts are that Nationwide’s mortgage turnover will continue to shrink again this year, despite their acquisition of the Cheshire Building Society and Derbyshire Building Society last year and agreement to take over the deposits and branch management of the Dunfermline Building Society in March 2009.

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Tags: Economy, Financial News, Mortgage, Mortgages, Nationwide, Nationwide Building Society, UK Banks

Those Scotsmen who were complaining that not enough Government money was finding its way north of the border had little to complain about yesterday when the news broke that the Nationwide Building Society will be taking over what remains of what was Scotland’s largest building society.

Nationwide will take over various divisions of the Dunfermline that are operable on the condition that the UK treasury invests the tidy sum of £1.6 billion to freeze up the society’s “toxic debts”

Chancellor Alistair Darling, showing a touch of heartwarming humility pointed out that the Darling children had saving accounts at the Dunfermline, but this was not the reason that the government had intervened to save the society, which had a rich history going back 140 years. What made their failure inevitability was the usual formula of taking risks in search of paper profits which turned into losses of of more than £24 million in 2008.

To show that you don’t have to be banker to run a bank, and in some cases it would be better if you weren’t, was the announcement that Tesco, the UK largest supermarket chain intend to get into the banking business, with plans to open thirty in-house branches throughout the UK, and by the end of 2009. The markets showed their skepticism by pushing their share value down by 4.1 percent (13.6 pence to 317.5)

Other news on the FTSE was not positive with banks and commodities standing still. The U.K. mobile phone retailer Carphone Warehouse Group saw their shares rise a modest 1.4 percent (1,75 pence to 125.75) on news that they were about to enter the bidding for Tiscali’s SpA UK operations.

The James Halstead Plc group also moved forward on news of increased income and profits. Their shares rose by 2.1 percent (8.25 pence to 399.25)

The largest owner of shopping malls in Britain, Liberty International Plc who are currently negotiating with Peel Holding Plc regarding the possible purchase the Trafford Centre in Manchester enjoyed a share increase of 2.1 percent on the day (8.75 pence to 433).

Also on the high street, Marks and Spencer Plc, still the UK’s largest clothing retailer were under a cloud yesterday, with uncertainty abounding as to whether the company will be hiring an independent chairman. Their shares fell by 1.3 percent (3.5 pence to 265.25)

On the day, the FTSE 100 index rose by 3.14% or 118.26 points to 3881.17 while the FTSE 250 finished the session 1.53 per cent, or 95.08 points to reach 6,319.36

Sterling rose slightly against the dollar and teetered downward against the Euro and whilst holding its own against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4308
Pound/Euro 1.075
Pound/Japanese Yen 141.10
Pound/Swiss Franc 1.6284

Wall Street shares had a bad day on trading as uncertainties, especially in the car industry, began to emerge.

The Dow Jones Average dropped 254.16 to close at 7522.02. Nasdaq also dropped 43.4 points to 1501.84

Understandably shares in General Motors dropped like a stone after President Obama proved once again that he is not only charismatic but also a pretty tough cookie. GM’s boss, Rick Wagoner knows that now as he was sent packing, as Obama has cut the credit line for those who will not toe the line in getting the US car industry back on track. In Asia, the Hong Kong Hang Seng index fell by almost five percent on the news,

With the Nikkei also taking a turn for the worse, down 4.5%.

Overall fears for the short term future of the car industry was a key factor in pushing stock markets down across the board yesterday.

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Tags: Bank of England, Banking, British Economy, Credit Crunch, Financial News, General Motors, Money, Nationwide Building Society, Obama, President Obama, Recession, UK Banks, UK Recession

The Nationwide Building Society says house prices fell 2.5% in December to make 2008 the worst year on record.

Almost £30,000 was lopped off the price of an average home, making the annual drop 15.9%.

The Bank of England is expected to cut borrowing costs by slashing interest rates again later this week.

Millions of hard working people are worried about paying their mortgages and losing their jobs.

The problem is traditional tools for controlling the economy are not working. For 50 years, the Government has manipulated interest rates and controlled the amount of money sloshing about in the economy to keep unemployment and inflation low and standards of living high.

That trick no longer works, so the Governments here and, to be fair, in the US and many other countries have doled out cash to shore up the banking system and big employers like the motor industry.

The billions the Governments have pumped in to the banking system have not freed up the world economy. Instead banks and companies are stashing the cash to protect their own interests.

Treasury officials seem to be exacting little or no due diligence on whether the money is going on a good investment with the speed the money is handed over.

Perhaps a better idea would be not to give any cash to the banks and big businesses and let them stand or fall according to market conditions.

Instead, divvy up the billions the governments are giving away between the rest of us. In the UK, that would give us about £300 each to spend or save how we liked.

Either way that gives billions that can go to the banks in savings or to retailers as cash flow. The banks and shops offering the best deals to savers and spenders will prosper and the rest will wither and die.

• Alliance & Leicester
• Capital One
• Child Trust Fund
• First Direct
• HSBC
• Post Office
• Tesco Savings

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Tags: Bank, Bank of England, Banking, British Economy, Finance, Financial News, Interest Rates, Nationwide Building Society, Retail, UK Banks