A leading and influential economic group has predicted that the UK economy did not grow in the third quarter of the year. Contrary to expectations as well as many other financial analysts’ forecasts, the National Institute of Economic and Social Research (NIESR) have suggested that gross domestic product (GDP) remained unchanged from July to September 2009. The majority of UK economists have predicted there would be growth in the three-month period, which would end the UK recession, while the NIESR stated that the reason why the UK economy’s failed to register any growth during the quarter was due to weak industrial production in August, especially in the oil industry. The official GDP figures for the third quarter are due to be released on 23 October.

According to market sources, the number of banks who are now prepared to lend for real estate investment has almost doubled over the past six months largely due to improvements and confidence as well as favourable funding conditions.

There are now more than twenty banking bodies reportedly prepared to lend more than £20 million at a time for real estate investments, while there are at least six banks willing to finance property deals of over £100 million. Apparently German banks continue to dominate the real estate investment funding sector, having ample access to funding whilst enjoying the benefits from devalued sterling. The growing numbers of lenders continue to indicate that the property market was opening up to increased activity after reaching a low point in the first half of 2009.

In a fairly drastic cost cutting move, British Airways (BA) have announced their plans to cut 1,700 jobs as well as plans to introduce a two-year pay freeze for cabin crew BA posted heavy losses for their 2008/2009 financial year and forecasts for 2009/2010 predict that their loss making will continue as global airlines continue to struggle. On the announcement, BA stock climbed 3.2 percent to 217 pence. Meanwhile stocks in Europe’s second largest discount airline EasyJet Plc, climbed by 2.4 percent, to 378.9 pence, as the company prepared to report their September passenger statistics.

The makers of Imperial Leather soap and Carex hand wash PZ Cussons announced that they were “cautiously optimistic” on its 2010 outlook as reported strong trading over the past three months. The company said turnover was in line with forecasts for the third quarter and that profits had increased in comparison with the corresponding period of last year.

London equity markets were stronger on Tuesday, despite some late caution as investors awaited details of US earnings season and the surprise announcement from Australia that they will be raising their interest rates

The FTSE 100 rose by 2.26 percent on yesterday’s trading, or 113.65 points to close on 5137.98. The FTSE 250 also continued to move steadily upwards, soaring 218.70 points to finish back over the 9,000 hurdle at 9201.23.

The pound seems to have a permanent stance below $1.60 mark, whilst remaining weak against the rest of the principal currencies.

• Pound/US dollar 1.5898
• Pound/Euro 1.10812
• Pound/Japanese Yen 141.2395
• Pound/Swiss Franc 1.6351

The Dow Jones index continued to recover from last week’s setbacks, rising yesterday by 131.5 points at 9,731.25. The NASDAQ index also followed suit jumping 35.42 points to finish on 2,103.57.

Australia became the first of the World’s leading industrialised nations n to raise interest rates, with its central bank increasing the official cash rate from 3 to 3.25 per cent. Glenn Stevens, governor of the Reserve Bank of Australia, said economic conditions in Australia had been “stronger than expected”, while measures of confidence had recovered allowing the country to rates from their 49-year low “emergency” rate.

The price of gold has hit a new all-time high of $1,043.77 an ounce after a decline in the dollar boosted the attractiveness of metals to investors. According to analysts, continuing concerns of higher inflation in the US as its economy recovers was an increased factor in lowering the price of the dollar, further boosting the price of gold

financial

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Tags: BA, Bank, Banking, British airways, British Economy, British Pound, Carex, Credit Crunch, Currency, Dow Jones, EasyJet Plc, Economy, Financial News, FTSE, GDP, Glenn Stevens, Gold, gross domestic product, Imperial Leather, Investments, Money, Money Markets, NASDAQ, National Institute of Economic and Social Research, NIESR, property market, PZ Cussons, Recession, Reserve Bank of Australia, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK Recession

The pound plunged to a record low of 87.5 pence against the Euro following a think-tank report painting a gloomy picture of Britain in recession.

The National Institute of Economic and Social Research said the economy shrank by 1% in the three months to November – and contraction is speeding up.

The think-tank’s figures show the economy shrank by 0.8% in the quarter ending October 31.

The October industrial production figure – the eighth monthly fall in row marking the longest run of falling output since 1980 – dragged annual output down by 5.2%, the sharpest year-on-year decline since 1991 when the UK was last in recession.

The report followed desperate figures from manufacturing, housing and retail sales on Tuesday, that boosted expectations that a steep recession will put more pressure on the Bank of England to slash interest rates to record levels.

NIESR said that the outlook for 2009 was grim: “The Government faces the real risk that, despite the measures it took in last month’s Budget, output will fall more sharply than it expected to the end of next year. The main problem that it needs to address very urgently is the availability of bank credit; further interest reductions are unlikely to have much effect.”

“There is every reason to believe that the output decline in the fourth calendar quarter of the year will be larger than 1% in magnitude.”

Despite the pound’s losses against the euro, it edged up 0.2 percent to $1.4767 against the US dollar as word hit Wall Street of moves to inject cash to bail out US carmakers.

“These readings made a strong case for the United Kingdom ultimately suffering the worst recession in the developed world,” Commerzbank analysts said in a research note.

Despite the gloom, the FTSE closed up 81 points at 4381 after opening at 4300 but the DOW fell from 8934 to 8691.

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Tags: British Economy, Euro, National Institute of Economic, NIESR, Pound, Social Research