According to a recent statement from the Office for National Statistics, the state of public finances in the UK, are even worse than that of Greece. The latest figures on government borrowing show that in January there was a net shortfall of £4.3 billion, which is much higher than even the most pessimistic of forecasts. January is traditionally the month where a healthy balance of payments is the norm. If the trend continues, the UK will be looking at a deficit of £180 billion for 2010, equivalent to 12.8 per cent of GDP, which will even beat Greece into second place in the "whose going skint fastest" race.

The reasons given for the UK’s poor performance included considerably reduced earnings in the financial sector as well as general weaknesses in the economy. These factors combined to push cash receipts down by 9 per cent overall compared with last year tax, while public spending was up by 15 per cent up in January, driven higher by the rise in unemployment benefits.

The only positive piece of news coming out of the report was that the total national debt carried by Britain remains lower than Greece as well as the fellow financially challenged European countries, Portugal, Italy, Ireland, and Spain.

HSBC have announced a 24 per cent fall in profits for 2009. Their profits fell to £4.65 billion ($7.1 billion) with the main factor being increased loan impairment charges, which largely cancelled out the bank’s strong investment banking performance. Undeterred, HSBC have announced that they would be paying out a total of £4.6 billion in pay and bonuses to staff at their profit earning investment banking division. HSBC shares fell almost 6 per cent to 679 pence on the news.

After months of speculation, retailer to the upper echelons Liberty, have finally confirmed their plans for the sale and leaseback of their landmark mock-Tudor flagship store situated on Great Marlborough Street in London’s West End. The company, which was founded in 1876, and are partially owned by the MWB Group, announced that they had issued instructions to put the building up for sale, and it is expected to fetch around £40 million. A few of the London based property owners are believed to be interested in acquiring the property for lease back to Liberty, but are likely to face strong competition from overseas. A spokesman for Liberty announced that that turnover for the store in 2009 had jumped by 16 per cent.

Despite winning the Carling Cup Final at the weekend, all is not well at Manchester United, but not on the playing field, instead in the boardroom.

The problem is that United, owned by the Glazer family, are running a very high level of debt, some £716.5 million, a fact that has caused much discomfort and loads of speculation among their huge band of supporters. So much so that a group of city financiers, under the title the "Red Knights" have met to discuss the feasibility of setting up what will be a possible hostile takeover of the club. An immediate response from the Glazers was that Manchester United is not for sale."

However, it may not be that easy, as United’s owners are facing a two-pronged attack over their control of the club with the Manchester United Supporters’ Trust (Must) running a campaign to bring about a change of ownership, which might even involve fans boycotting the clubs matches, and with a 76,000 seater stadium to fill, that may well be too bitter a pill for the Glazers to absorb.

The fact that the British general election appears to be getting closer and is now expected in May is having a very negative effect on Sterling. The currency took another pounding on foreign exchange markets, with the possibility that the election may bring of a hung parliament looking an increasing possibility. The uncertainty has caused the pound to drop nearly four cents, reaching a low of $1.4984 at one point before rallying to close $1.5056. The pound also closed at 1.1044 against the Euro.

On the FTSE 100 supermarket chain Tesco were among the FTSE 100’s top performers as America’s second-richest man Warren Buffett raised his stake in the company. Share values rose by 3.2 per cent to 433 pence, after Mr Buffett announced to his Berkshire Hathaway shareholders that their holding had increased to 3 per cent. Berkshire Hathaway has been gradually raising their stockholding in Tesco since 2006 when the retailer announced their plans to enter the US market. Since making their first stock purchase, the American conglomerate is believed to have become Tesco’s sixth largest shareholder.

As the markets closed for the day, the FTSE 100 was up 134 points to 5,484.06.

According to Lawrence Summers, head of the White House National Economic Council, the impact of Barack Obama’s $800 billion fiscal stimulus is yet to be fully felt, and its impact will increasingly be sensed over the coming months. Summers has praised the fiscal stimulus as being an enormous achievement and the many projects that the stimulus funded throughout the country are running exactly as planned.

On Wall Street, the Dow Jones Industrial Average continued to creep upwards. It rose 80 points to close on 10,405.98 while the NASDAQ Composite jumped by 42 points to close on 2,280.79.

According to date from the Bureau for Economic Policy Analysis (BEPA), global trade in goods has continued its rapid recovery from its huge fall in 2009, when the recession was at its peak. Data from BEPA also indicate that the world trading system suffered very little permanent damage to global trade has been done to by the financial crisis. The bureau’s composite index reported that the volume of goods trade worldwide rose at 4.8 per cent in December, making for the most rapid monthly increase in December for any year in its 19-year history, with three monthly index, traditionally less volatile, also rising by a record rate in the fourth quarter of last year, finishing six percent higher than third quarter.

On the other side of the World, things are looking better. So much better that for the fourth time since October, Australia’s central bank has seen fit to raise their interest rates, as it seeks to cool its growing economy.

The increase, from 3.75%, to 4% was widely expected by economists.

Australia was not only the only major economy to avoid recession, but also the first to raise interest rates from half century lows as the economic crisis eased. Australia’s ability to avoid the worst of the global turndown was partially attributed to increased demand for its commodities from China.

However Australia’s boom times may be slowing down with the news that China’s manufacturing activity shrunk a little in February. However economists rushed to point out that while China’s recovery faced some flat periods, it was expected that industrial activity would continue to grow in the coming months.

After the massive earthquake that struck Chile, copper prices jumped more than five per cent on early trading on Monday. Chile is the world’s largest producer of the red metal, and the earthquake has severely disrupted mining operations in the country, consequently triggering a spree of panic buying in the major commodity centres.

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Tags: Bank, Banking, Barack Obama, British Economy, British Pound, Bureau for Economic Policy Analysis, Carling Cup Final, Credit Crunch, Dow Jones, Economics, Economy, Financial News, FTSE, Glazer family, HSBC, Lawrence Summers, Manchester United, Money, Money Management, Money Markets, MWB Group, NASDAQ, Office for National Statistics, Stocks and shares, Tesco, UK Economy, UK government, UK Recession, Wall Street, Warren Buffett, White House National Economic Council

After a nine-month run of steady increases, UK house prices were reported to have fallen in February, while the three-month rate registered a rise of 1.6 per cent. The three month property rise comparison chart was down from the 2 per cent increase seen in the three months to January as well as its peak of 3.7 per cent the three months to September 2009. According to the, prices fell by 1.0 per cent month on month in February,, although on a year on year level, house prices rose by 9.2 per cent against 8.6 per cent in January.

It now transpires that Britain’s escape from recession was stronger than previously thought in the final three months of last year, as the services sector bounced back.

According to the Office for National Statistics, the UK economy grew by 0.3% in the fourth quarter, rather than 0.1% as previously estimated, which marked the first time the economy had grown since the first quarter of 2008, when the UK’s deepest and longest postwar recession on record began.

City economists, who had predicted 0.2% growth, hastened to point out that the figures did not change the overall economic picture; with some of them even warning that the economy could even slip back into recession in the first three months of this year.

Before the weekend, the extent of the beating that the Lloyds Banking Group took through the acquisition of HBOS was revealed. The bank, who are partially owned by the UK public, revealed that no less than £30 billion had been set aside over the past two years to cover toxic debt hat Lloyds had inherited from the deal, with the bank indicating that they expect a further £12 billion of charges on HBOS loans this year, showing what a white elephant the bank had purchased for what then appeared to be a bargain price of £8 billion.

All these negative figures contributed to Lloyds announcing a worse-than-expected pre-tax loss of £6.3 billion for 2009. The figures make a somber contrast to those of Barclays and Royal Bank of Scotland who over the last ten days announced figures that beat market projections. Lloyds also came under a lot of stick over the issue of whether it had met lending targets agreed with the UK government.

Understandably shares in the bank fell heavily after having increased by 18 per cent in the previous nine days on what proved to be false optimism about its 2009 figures. In the event, Lloyd’s report of a series of unexpected bad debts for the fourth quarter sent their shares falling by 4.4 per cent to 52½ pence. Royal Bank of Scotland shares also faded 1.9 per cent to 37½ pence after analysts reduced their ratings which they claimed painted a too optimistic picture.

Financially troubled US insurer AIG are apparently on the brink of selling AIA, the US life group’s Asian business, to the UK’s largest insurer Prudential for about $35 billion in cash, shares and other securities The is deal expected to become official on Monday 1st March. The announcement will come after a weekend of talks, after which the AIG board decided to press ahead with the sale of AIA, one of the jewels in AIG’s crown, in preference to a planned partial listing of the unit. Under the terms supposedly being discussed, Prudential would pay about $25 billion in cash and the remaining $10 billion in shares and other securities for AIA. If the deal does go through, analysts prophesy that it would transfer would more than double the size of Prudential and mean that its business would be dominated by Asian sales and profits.

The UK’s oldest building society Chesham has agreed to merge with the Skipton Building Society, to create a mutual society with more than £15 billion. The merger brings to an end 165 years of high street presence for the society, although their name will continue to be used for the society’s existing share accounts and deposit accounts of assets. A spokesman for Chesham, who service over 20,000 members from their three branches, welcomed the merger, saying it would provide the security of being part of a larger group. In the past year Skipton Building Society, has seen annual profits increase to £63.5 million

According to a recent survey, the cost of car insurance jumped 12.7 percent in Britain in 2009 with the average quoted premium rising to £507 at the end of 2009 compared with £450 pounds a year earlier, The pace of the increase accelerated in the second half of the year, with prices rising by 6.3 percent in the final quarter alone. British car insurance prices have been held in check by stiff competition between providers, largely due to the spread of price comparison websites.

Write-offs at their troubled T-Mobile UK subsidiary helped to pushed Deutsche Telekom’s profits down by 77% in 2009, with profit slipping to €353 million from €1.5 billion in 2008, due to write-offs worth €2.3 billion on goodwill in T-Mobile. Deutsche Telekom and France Telecom have agreed to merge their UK mobile operations. They are awaiting regulatory approval for the deal, which will make the jointly-owned company the biggest UK mobile network operator with some 29.5 million subscribers.

Portsmouth Football Club have lost their battle to avoid entering administration as the Premier League side finally admitted defeat in their struggle to overcome a mountain of debt totalling £60 million, of which – g more than £12 million is owed to HM Revenue and Customs.

The process of administration automatically means that the club will be docked nine points by league bosses, making relegation almost certain and probably a welcome relief for the club’s supporters/ .

Portsmouth has already changed hands four times this season and has been at the bottom of the Premier League for most of it. .

On the foreign exchanges, the pound continued to fall . At close of trade Friday it was $1.5117, while standing at 1.1121 against the Euro.

As the markets closed for the weekend, the FTSE 100 was up 76.3 points, to 5,354.52. The rise erased most of the week’s trading losses, and made for a gain of 3.2 per cent for February.

According to revised figures, the US economy grew at an annual rate of 5.9% in the last quarter of 2009, higher than the first estimate of 5.7%.

According to economists, the rise was down to an increase in manufacturing output rather than stronger consumer spending; with the figures confirming that the world’s largest economy is moving rapidly away from recession.

On Friday, the Dow Jones Industrial Average continued to creep upwards, but at a much slower pace. It rose just 4.23 points to close on 10,325.26 while the NASDAQ Composite also rose by 4.04 points to close on 2,238.26

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Tags: AIG, Barclays, British Economy, British Pound, car insurance, Chesham, Dow Jones, Economics, Economy, Financial News, FTSE, HBos, Lloyds, Money, NASDAQ, Office for National Statistics, Property Prices, Recession, Royal Bank of Scotland, Skipton Building Society, Stocks and shares, T-Mobile, UK Banks, UK Economy, UK government, UK Recession

A recent report from the Chartered Institute of Personnel and Development (CIPD) has stated that the expected substantial cuts in the public sector, will mean that around one in three of the employers in the sector plan to shed jobs during the first quarter of 2010, which is now halfway through.

Despite the UK emerging from recession, CIPD’s latest quarterly survey found that the jobs outlook had worsened. UK unemployment currently stands at 2.46 million, with the number of people out of work steadily rising since the summer of 2008, despite a surprise fall in the three months to November.

British investors concerned about the outlook for UK inflation, consumer spending and the public finances following the recession, received some news that their fears would be confirmed. Inflation spiked up to a 14-month high of 3.5% in January, data released by the Office for National Statistics confirmed, as effects of the VAT hike and a number of other one-off factors such as the sharply falling oil and food prices of a year ago began to take their toll. The Bank of England’s forecasts suggest inflation should fall below the 2 per cent target in 2011 even though its latest analysis concedes that inflationary pressures are currently stronger than anticipated.

Taxpayers could be forced to wait five years before they start recouping the tens of billions of pounds spent propping up the banks.

UK Financial Investments, which oversees the Government’s stake in RBS, Lloyds and Northern Rock, fears it will be 2015 before it can sell off the shares.

It had hoped to start off-loading sooner after the bailout led by Chancellor Alistair Darling, but now believes that may not be possible without big losses. Officials, who have been careful not to give a timetable that could drive down share prices, are working on the basis of five years, while the Treasury fear that they may be forced to retain their minority stake for much longer.

According to a survey held by the Institute of Directors, sixty percent of UK companies who applied for a bank loan in 2009 ended up getting turned down. This sad and ridiculous situation has even led to company owners and directors being reduced to borrowing on their credit cards. Results of the Institute of Directors’ survey shows that the banks are simply not listening to Gordon Brown and Chancellor Alistair Darling orders to start lending again as payback for pumping £850 billion into the economy.

Even more of a cause for concern is that the report shows that 83% of businesses who were rejected for bank finance are also not receiving any information about alternative finance that may be available to them, including the Government’s Enterprise Finance Guarantee.

The report shows that increasingly more businesses, and especially the smaller ones, are turning to forms of expensive unsecured finance, such as credit cards, to get them through their short-term cash-flow problems. Particularly hard hit by the loan famine are small to medium sized UK companies whose desire to expand will be critical to creating jobs and dragging Britain out of recession.

On the same tack, credit card interest rates in the UK have climbed to their highest level since 1998. Millions now find themselves facing crippling repayments on their debts, despite the historically low Bank of England base rates. Average credit card interest has now soared to a staggering 18.8%, leaving consumers facing the prospect of paying more than 40% on the cash they have borrowed, an increase of 25% in the last four years.

Barclays Bank has announced an increase in their full-year profits of 92% in 2009. There full year profits were an outstanding £11.6 billion ($18.2 billion), with the figure being largely boosted by the sale of its BGI fund management arm to US firm BlackRock last year. Without the input from the sale of BGI, Barclays would have made just £5.3 billion, with £2.5 billion of that coming from their investment banking division…

Barclays, who did not take any direct state help during the financial crisis, also saw the level of its total bonus payouts rise to £2.7 billion, with £1.5 billion of that to be paid out for 2009 and a further £1.2 billion to be paid out over the coming three years.

Virgin Media are believed to be in the final stages of an agreement over the sale of its television channels to rival BSkyB. , the channels that are entirely owned and produced by Virgin Media, Virgin 1, Bravo, Challenge and Living, are due to be sold to BSkyB. Rupert Murdoch’s News Corp has a 39.1 percent share in BSkyB.

Meanwhile, Cheltenham based fashion retailer Supergroup, have announced that they ate to launch a flotation designed to rise up to £125 million pounds. If successful, the valuation of the company is expected to be around £400 million, roughly nine times Supergroup’s forecasted 2011 earnings

The pound fell back against the dollar, closing at 1.5633 while also slumping to 1.1453 against the Euro.

Overall, the FTSE 100 was stronger at 5,244.06, a rise of 58 points, and its sixth rise in seven trading days

Foreign demand for US Treasury bonds and notes in December fell by $53 billion as China was seen to be reducing its holdings. China cut its holdings by $34.2 billion, will still remaining the second-biggest US debt holder after Japan.

On Wall Street the Dow Jones Industrial Average continues to climb up 169.67 points at 10268.81. The NASDAQ gained a further 30.66 points to close on 2,214.19

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Tags: Alistair Darling, Bank, Bank of England, Banking, Barclays, BGI, Bravo, British Economy, BskyB, Challenge, Chartered Institute of Personnel and Development, CIPD, Dow Jones, Economy, Enterprise Finance Guarantee, Financial News, FTSE, Institute of Directors, Living, Lloyds, Money, Money Markets, NASDAQ, Northern Rock, Office for National Statistics, RBS, Recession, Stock Markets, Stocks and shares, Supergroup, UK Banks, UK Economy, UK Financial Investments, UK government, UK Recession, Virgin 1, Virgin Media, Wall Street

While the UK economy snapped back into growth in the fourth quarter of 2009, it did so at a rate considerably less than economists’ forecast. It was thanks to the service industries and manufacturing sector, which expanded just enough to pull Britain out of its longest recession on record. According to figures released by the Office for National Statistics, gross domestic product (GDP) rose by a mere 0.1% from the third quarter. The weakness of the recovery will pose a challenge to Bank of England officials who are due to sit next week to consider week whether the economy is strong enough to begin winding down the Government’s emergency stimulus measures. Prime Minister Gordon Brown’ is regarded as being especially anxious to see and end his government’s propping up of the economy, as delaying it may hamper his efforts to win an election due by June of this year. Much of Brown’s campaigns have been based on promises to curb the budget deficit.

Brown is putting up his case that he is better placed that Conservative leader David Cameron to cut the ballooning budget deficit without hurting the economic recovery. Splits in the Labour Party are beginning to show as election day draws closer with Chancellor of the Exchequer Alistair Darling announcing that it would be “absolutely mad” to withdraw stimulus measures now.

The Bank of England’s £200-billion pound asset-purchase facility, designed to keep borrowing costs low and help pull the economy out of the recession also expired this week.

Meanwhile it was announced that the UK economy shrank 4.8% in 2009, making for the biggest annual drop since records began in 1949. It was also reviled that the in the fourth quarter the economy contracted 3.2% compared to records from 2008.

The fourth quarter data, the first to be released by a Group of Seven nation, means Britain is the last member country to exit the recession that was sparked by the worst financial crisis since the Great Depression. The US Government was expected to release GDP data for the fourth quarter on late January 29.

The news that the Lloyds Banking Group has succeeded in placing of £2.5 billion pounds of mortgages with investors, has raised new hopes that securitisation markets are beginning to open for banks. A £4 billion issue last September by Lloyds recorded a first attempt by a bank to tap the securitisation markets since the onset of the credit crisis. However Friday’s issue was the first to cause any form of reaction interest among U.S. investors to purchase prime residential mortgage securities

There are strong signs of recovery popping up London’s financial services industry, which took a severe pounding during the credit crunch. Recruitment is already on the up, and a recent survey showed that more than 80 percent of hiring managers are expecting recruitment volumes to rise in 2010. Only five percent of those responding to the survey named handling redundancies as a key personnel challenge for the year ahead, will close to half of those interviewed pointed to the threat of competitors poaching staff as a problem. The main problem for 2010, according to close to two thirds taking part, would, be salaries and particularly of discretionary bonuses. Remuneration has become a major hot potato in the financial industry, as the sector has emerged from the crisis under increased public and regulatory scrutiny.

Irene Rosenfeld, chief executive of Kraft has predicted that Cadbury has a positive future under the ownership of the US conglomerate, whilst adding fears of job losses at the UK company are "greatly overstated" and.

In her first interview since the takeover was agreed by the Cadbury board earlier this month, Rosenfeld announced that Kraft would not be looking for any mergers and acquisitions activity in the "near term" following the purchase of the UK confectionary company. "We acquired Cadbury because we believe it is a fabulous business and it is our intention to protect those assets," Ms. Rosenfeld pointed out. "It is our intention to invest in the business; in fact, if anything, the opportunities for the business will be greater as a result of the combination than perhaps they might have been on a standalone basis, given some of the competitive pressures." She continued.

Speculation is growing that the planned sale of the discount fashion chain Matalan is unlikely to raise the sum in excess of £1.5 billion pounds targeted by the company’s owner John Hargreaves. American private equity firms TPG, Advent International among others are expected to make offers in time for next Friday’s deadline. Analysts fear that the parties involved are wary of paying too high a price for Matalan. A clause in the deal specifying a "break price" of between £1.2 to £1.25 billion pounds, has been inserted by Hargreaves, entitling him to refuse any bids below this figure

Expectations are that the release of British Airways’ results for the three months to the end of December 2009 will expose further heavy losses at the airline. BA is expected to reveal a loss of £151 million for the third quarter of the financial year, making for total losses up to the end of March to £602 million, up almost fifty percent from 2008, which was BA’s previous record loss. The threat of pre Christmas strikes and severe weather conditions are two factors among many that have contributed to the company’s already poor situation.

Carphone Warehouse subsidiary TalkTalk have announced the launch of a new television and mobile phone service. The launch is yet another sign of the telecoms group desire to step up its challenge to their sector rivals. Charles Dunstone, chief executive of Carphone Warehouse, outlined the plans for the new division on Friday as the company also released details of the demerger of its telecoms and retail interests. TalkTalk, due to gain a stock market listing in March, have identified TV and mobile services as potentially strong sources of growth. Carphone Warehouse’s broadband rivals already offer TV services, and the market is rapidly expanding.

UK Coal’s already stagnating share price was sent even lower as the mining and property group announced that were liable to increase by £100 million pounds in 2009. UK Coal has announced that they expect production in 2010 to be roughly seven million tonnes, compared with 7.9 million tonnes last year. The company faced severe technical and geological problems in its underground mines in the second half of 2008. The troubled company’s shares fell 4.5 pence to 61.5 pence.

The pound posted a weekly advance against the euro after the U.K. economy exited recession in the fourth quarter and Bank of England policymaker. Expectations are that the U.K. currency will continue to gain value as the government’s propping up of the economy may not be extended, with the decision to be announced when the Bank of England meets to decide on interest rates on Feb. 4. Sterling also posted a monthly gain against the Euro, when closing for the weekend at 1.532.

The pound strengthened 1.3 percent in the week, its strongest level in five months. It advanced 2.3 percent in the January. The U.K. currency dropped 0.7 percent to $1.5993 for a monthly decline of 0.8 percent.

The pound rose 8.5 percent against the euro in the first month of 2010, the biggest monthly gain since the single European currency was launched in 1999.

The US economy grew by an annual rate of 5.7% between October and December, official figures have shown.

The number, which is a first estimate, is a big rise from the previous quarter’s growth rate of 2.2%.

It suggests the country’s economy is growing at its fastest pace for six years and confirms the US economy has left its year-long recession behind.

But even with the rebound, gross domestic product (GDP) shrank by 2.4% across 2009 as a whole, making for the worst annual performance since 1946.

On the news, the Dow Jones fell again this time by 53.13 points, 135 points, to close on Friday at 10067.33, while the NASDAQ lost another 31 points, to finish for the weekend on 2147.35

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Tags: Advent International, Bank of England, Banking, British airways, British Economy, Cadbury, Carphone Warehouse, Charles Dunstone, David Cameron, Dow Jones, Economics, Economy, Financial News, GDP, Gordon Brown, Irene Rosenfeld, John Hargreaves, Labour party, Lloyds Banking Group, Matalan, Money, NASDAQ, Office for National Statistics, Recession, Retail, Stock Markets, Stocks and shares, TalkTalk, TPG, UK Banks, UK Coal, UK Economy, UK government, UK Recession

With an earlier than expected rise in inflation, which soared to 2.9% in December, interest rates could be rising sooner than expected in 2010.

The reading for the consumer prices index (CPI) came in well above the expected 2.4% figure making for the largest ever rise in inflation over a single month, according to figures issued by the Office for National Statistics (ONS) Reasons given were reduced s discounting from retailers in the run-up to Christmas and fuel prices remaining unchanged compared with sharp falls a year earlier.

The Bank of England had already expressed fears that inflation would rise this year, but this high figure will curtail the bank’s efforts to store up inflationary pressures while kick-starting the economy out of recession.

The Bank’s target for CPI inflation for 2010 is 2% and the jump to 2.9% puts its policymakers in a delicate position. While higher than expected inflation would force them to raise rates before the economy has properly recovered.

The head of the International Monetary Fund head has again warned that the global economy could yet experience another downturn, known in financial circles as a double dip recession.

Managing Director Dominique Strauss-Kahn said countries should rush to exit from stimulus packages that have bolstered growth through huge amounts of government spending and that it is too early for policy makers to withdraw stimulus that’s driving the global recovery.

“The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a recent speech. "While a plan to withdraw emergency measures “should be designed today” it should not yet be “implemented” because world economies are still dependent on government support and private demand remains weak" Strauss-Kahn has previously voiced his opinion that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than $2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the U.S. housing market. Separately, Germany and France raised their growth forecasts for the year. Strauss-Kahn went on to add that China and Asian economies are leading the recovery.

British Airways cabin crew is to vote again on possible strike action, according to a recent announcement from the Unite union.

A spokesman for Unite predicted that a fresh ballot of its members would be held in the near future. The move came after recent talks with BA failed to find a resolution to a long-running dispute. BA announced in reply that they were "saddened but not surprised" by the decision, whilst promising to make every effort to allow talks to continue. If talks fail, a strike could begin as early as March if cabin crew vote in favour of industrial action.

BA had already planned a 12-day strike for Christmas last year which was blocked by a court injunction.

The long protracted takeover of Cadbury by US food company Kraft now appears to be going forward after the Cadbury board approved a new increased bid. Cadburys will now advise their shareholders to accept a new offer of 840 pence a share – valuing the company at £11.5 billion ($18.9 billion). Shareholders will also receive a dividend of 10 pence a share.

The additional cash represents a 90 per cent premium to the Cadbury share price before the deal was announced and a 50 per cent premium to Cadbury’s undisturbed share price of 568 pence before Kraft approached Cadbury in late August

Spokespersons from both Cadbury and Kraft jointly announced that details of the agreement were still being finalising and would make a statement later.

Many city pundits were surprised that the deal eventually went through so smoothly after months of animosity between the two companies.

It is expected that Kraft’s final offer consisting of 500 pence in cash, with the rest made of Kraft shares made the deal much sweeter for Cadbury shareholders. To finance the takeover Kraft will require borrowing around £7 billion ($11.5 billion)

Shares in Cadbury topped the FTSE 100 on Tuesday.

Sterling was among the few currencies to rise against the dollar and the Euro on Tuesday after UK inflation jumped in December, increasing the possibility of monetary tightening and increases in interest rates being brought forward. The pound closed at 1.636 against the dollar, with the Euro being traded at 1.1459

The FTSE 100 index rose 41.6 points to 5,496.9, while the FTSE 250 index added 33.4 points to 9,571.6.

In the US, Citigroup announced losses of $7.6 billion for the last quarter of 2009, large due to their efforts to repay US government bail-out funds, and coming after three consecutive profitable quarters. Citigroup’s ’s loss was in line with Wall Street analysts’ expectations and would amounted to a loss of $1.4 billion, had it not been for its repayment of the $20 billion in funds it received from the troubled asset relief programme. For the same period of a year ago, Citigroup reported a loss of $17.3 billion. In 2009 as a whole, Citigroup made a loss of $1.6 billion on $80.3 billion turnover.

The Dow Jones Industrial Average rose sharply on early trading after being closed on Monday for Martin Luther King Day. The index rose 115 points to close on 10,725.43. The NASDAQ Composite was also on the up, 32 points to 2320.4

Computer giant IBM has announced that after cost-cutting work helped to increase its earnings by 9% in the last three months of 2009.

They have raised their profit target for 2010. IBM made a net profit of $4.8 billion (£2.9 billion) for the fourth quarter, up from $4.4 billion from the same period in 2008, with turnover for the quarter increased by 1% to $27.2 billion

Crude prices fell to a three week low on Tuesday, with prices averaging around $77.00 a barrel. Traders pointed out the implications in the oil market of the bankruptcy of Japan Airlines, as the Tokyo-based carrier made extensive use of oil derivatives to hedge its cost and the bankruptcy is likely to force investment banks to unwind the hedges.

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Tags: Bank, Bank of England, Banking, British airways, British Economy, British Pound, Cadbury, Citigroup, consumer prices index, Crude oil, Currency, Dominique Strauss-Kahn, Dow Jones, Economics, Economy, Financial News, FTSE, IBM, Inflation, Interest Rates, International Monetary Fund, Japan Airlines, Kraft, Money, Money Management, Money Markets, NASDAQ, Office for National Statistics, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unite, US Government

City Minister Lord Myners said he recognized the need for state-backed banks to compete in the global market, as he signaled the government would not block them from paying large bonuses to staff. Lord Myners told the Scottish affairs committee on Wednesday it was important the Royal Bank of Scotland was able to recruit and motivate employees. His comments came a day after the bank’s chief executive Stephen Hester revealed recruitment posted its biggest problem as RBS was being forced to compete on bonuses.

The number of businesses that went bust in 2009 increased by 18 per cent, but the economic outlook is slightly brighter for 2010. Recent information shows hat from the middle of 2009 onwards, the rate of business failures started to slow down compared to 2008 and early 2009, with a 7.7 per cent year-on-year decrease. This has to be good news for the economy as a whole. Business failures last year were not as extreme as 2008. The number of firms going bust in the fourth quarter of 2009 increased by almost a quarter compared to 2007, still an improvement on 2008, where the year-on-year increase was almost a third.

U.K. manufacturing unexpectedly stalled for a second month in November, a sign the economy is struggling to shake off the longest recession on record.

Factory output stayed unchanged from October, the Office for National Statistics said today in London. Economists predicted an increase of 0.2 percent, according to the median of 25 forecasts in a recent survey.

Bank of England policy makers last week pledged to spend the rest of their £200-billion bond-purchase program as they tried to cement an economic recovery.

Home Retail Group Plc sank 6.2 percent to 265.8 pence, the biggest decline since September, after a company spokesman announced that growth in the industry will be “hard to come by.”

Meanwhile HMV Group Plc slid 8 percent to 84.4 pence, the sharpest drop since December 2008, after saying holiday sales at stores open at least a year were hurt by the performance of its Waterstone’s bookstore chain.

The pound has been little changed against the dollar on recent days, and traded at 1.6245, up 0.5 percent on the day. The Euro was up to 1.262

The FTSE 100 Index added 24.72, or 0.5 percent, to 5,498.20. The FTSE 100 has extended its surge since March last year to 57 percent after central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy

Stateside President Barack Obama has ordered Wall Street banks to repay $117 billion (£72 billion) to taxpayers after criticizing banks for their "massive profits and obscene bonuses" culture. The tax is to recoup money US taxpayers are expected to lose from bailing out the banks during the financial crisis. The move follows populist anger at banks, seen as being responsible for causing the recent economic crisis. President Barack Obama will announce a sweeping new levy on about 50 financial institutions that will raise an estimated $90 billion to reduce the federal debt.

US stocks struggled to push higher on Thursday after an unexpected drop in retail sales gave investors reason for caution.

The Dow Jones Industrial Average had gained 0.1 per cent to 10,690.90 and the NASDAQ Composite was also 0.1 per cent higher at 2,310.58.

The market had opened lower after the latest commerce department figures showed retail sales, excluding cars, had fallen 0.2 per cent in December, with analysts forecasting a 0.3 percent increase

According to figures from the US Commerce Department, sales at US retailers saw an unexpected fall in December, casting uncertainty over the recovery of the US economy. Retail sales fell by 0.3% compared with November. Concerns over job security are expected to continue to restrict spending, with unemployment still at 10%. December’s figures end a tough year for US retailers, with total sales for 2009 down 6.2% on the previous year.

On the other hand, the tech industry’s earnings season got off to a flying start on Thursday with Intel reporting demand for its microprocessors boosted fourth-quarter revenues to $10.6 billion, well ahead of analysts’ forecasts of $10.2 billion. The world’s largest chip maker also reported earnings per share a third higher than Wall Street expected, at 40 cents rather than 30 cents.

Compared with a year ago, when orders collapsed in the teeth of the recession, Intel’s profits were 875 per cent higher at $2.3 billion.

Oil prices traded below $80 a barrel on Thursday, consolidating after recent losses triggered by a sharp increase in US crude and oil products inventories The recession has put a dent in future North Sea oil and gas production, with companies tapping fewer new oil reserves in 2009 than in previous years of operations there. Only eight oil and gas fields – expected to produce a combined total of 140 million barrels over their lifetime – began production in 2009, according to industry consultants.

That compares with an average of 600 million barrels of new reserves brought on stream each year between 2004 and 2008.

Production at the North Sea’s old fields has been declining since the start of the last decade increasing UK dependence on foreign oil.

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Tags: Bank of England, Banking, Barack Obama, British Economy, British Pound, Currency, Dow Jones, economic recovery, Economy, Financial News, FTSE, HMV Group Plc, Home Retail Group Plc, Intel, Lord Myners, Money, NASDAQ, North Sea oil, Office for National Statistics, Oil prices, RBS, Recession, Retail, Royal Bank of Scotland, Scottish affairs committee, Stephen Hester, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, US Commerce Department, Wall Street, Waterstone's

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

UK public opinion is reported to be swinging the way of large scale cuts in the public service sector, according to recent reports. The sector, costing taxpayer’s record amounts of money each year. Is now employing more people than ever before. Unions who represent public sector employees are anticipating having a have a fight on their hands, if as expected, the Conservative party wins the next election and inherits an economy still struggling to pull itself out of recession.

According to statistics issued by the Office for National Statistics before the weekend, business investment in the UK fell 0.6% sequentially in the third quarter, significantly less than the 3% initially estimated. British private and public sector manufacturing investment has reportedly fallen 9.4% since the second quarter and by almost 30 % since the third quarter of 2008.

According to a recent report by the Bank of England the “probability of default by U.K. real estate companies has increased significantly” as households continue to face a weakening labor market paired with tightening credit conditions.

Amid concerns that the government’s 50% banking bonus tax could seriously damage future business levels, stock markets around the world have been focusing upon the city of London investment markets. The UK government went as far as issuing a report, released on Friday, clarifying who is liable to fall under the scope of the banking tax.

With reports in circulation that UK banks, and especially those whose activities are centered on in London continue to consider their position regarding the banking bonus tax, which has been mooted as a one-off charge, is making people in the banking world a little hot under the collar.

The Confederation of British Industry (CBI) has raised its 2010 economic growth forecast, whilst predicting that the Bank of England may place their bond-purchase plan on hold as soon as February as policy makers prepare to raise interest rates.

The CBI also predict that gross domestic product in the UK will increase 1.2 percent in 2010 after contracting 4.5 percent in 2009, up from their previously forecast expansion of 0.9 percent. The group also predicts the bank will raise the benchmark interest rate from 0.5 percent in the second quarter to reach 2 percent by the end of the year.

The recovery will be aided by companies rebuilding stocks to meet a rebound in world growth and as exporters benefit from a weaker pound, down almost a quarter since the start of 2007, making British goods cheaper to buy abroad.

Google, smart boys that they are, succeeded in not paying a penny in corporation tax on the £1.6 billion advertising revenues that it earned in Britain in 2008. The company, which enjoys an estimated 90% market share of UK internet searches, last year, used a cross-border network of subsidiary companies to keep the taxman at bay. Their smoothly interwoven international corporate structure enabled Google to avoid paying what could otherwise have been a corporation tax bill in the UK of as much as £450 million, according to recently filed accounts for subsidiary company Google UK Limited. The accounts show none of the search engine’s advertising revenues from British customers were accounted for in the business, despite operations in London and Manchester While much of the costs linked to the running of Google’s British operations are recognised for tax purposes in the UK. Revenues from customers in Britain, however, are diverted to another Google company in Ireland, where the corporation tax rate is between 10% and 25%, while UK corporation tax is levied at between 28 and 30%

The British Pound has begun to recover and bounced back to a high of 1.6251 on Friday following the rise in risk appetite. Analysts predict that Sterling may continue to recover as a recent Bank of England Financial Stability report said the U.K. financial system has become “significantly more stable”. This was credited to the unprecedented steps taken on by the government.

• Dollar 1.6152
• Euro 1.1262

Things were pretty brisk on the FTSE 100 approaching the weekend, with

nursing homes group Care UK drawing a lot of attention. The company has been reportedly been considering whether to accept a £275 million pound bid from Bridgepoint which will take them private. Care that runs 60 nursing homes, GP practices and NHS walk-in centres in the UK saw their shares rise 10.5 pence to 430.5 pence on Friday.

Overall U.K. stocks were on a minor downward spiral, with banks leading the way. Lloyds Banking Group Plc and Barclays Plc were are ever leading the way, as the European Central Bank (ECB) increased their estimate of the value of write downs by 13 percent. Lloyds, the 43 percent government-owned bank, lost 4.7 percent to 48.7 pence, to its lowest since July. Barclays, the U.K.’s second biggest bank, slid 3.5 percent to 264.25 pence.

Ryanair surged 5.8 percent to 3.282 Euros after the carrier said it will generate surplus cash for shareholders between 2012 and 2015 after they had suspended their talks with Boeing regarding future aircraft acquisitions.

Also on the up was Aggreko Plc, the world’s biggest provider of mobile power-supply gear. Their shares rallied 7.9 percent after announcing that trading in the fourth quarter was better than it estimated.

The benchmark FTSE 100 Index dropped 20.8, or 0.4 percent, to 5,196.81. The FTSE 100 fell 1.2 percent this week. The gauge has still rebounded 48 percent since March and is heading for its biggest annual gain since 1997 as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy.

On close of trading, the Dow Jones Industrial Average was up to 10, 328.61 while the NASDAQ was stable on 2,211.69

GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".

GM had been in talks with the Dutch specialty car maker Spyker over a sale. Talks with Sweden’s Koenigsegg also fell through earlier this year.

GM has been trying to sell Saab as part of its turnaround plans since January. Dutch luxury car maker Spyker has submitted a new offer to General Motors (GM) for its Swedish car brand Saab.

Spyker has submitted a new 11-point proposal to GM, addressing the issues that ended talks.

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Tags: Aggreko Plc, Bank, Bank of England, Banking, Barclays Plc, Bridgepoint, British Economy, British Pound, Care UK, CBI, Confederation of British Industry, Credit Crunch, Currency, Dow Jones, Economics, Economy, European Central Bank, Financial News, FTSE, General Motors, Google, Koenigsegg, Lloyds Banking Group Plc, Money, Money Markets, NASDAQ, NHS, Office for National Statistics, Recession, Ryanair, Saab, Spyker, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession

Heathrow baggage handlers and Eurostar train drivers have said they are ready to join British Airways cabin crew and strike in the lead-up to Christmas. Following a breakdown in talks with managers over pay, British Eurostar drivers announced they will go on strike on Friday and Saturday. Unite, the union representing BA cabin crew, said the 500 baggage handlers and check-in staff it covered at Heathrow and Aberdeen airports also planned to strike over pay from Tuesday 24th December, the same day that BA cabin crew are set to commence their 12-day strike action.

Meanwhile an operation is under way to recover the UK thousands of people left stranded after Flyglobespan, Scotland’s biggest airline, collapsed. After their parent company, Globespan, entered administration on Wednesday. Around 4,500 passengers were stranded by the airline’s collapse, mostly in Spain, Portugal, Cyprus and Egypt, with the Civil Aviation Authority expected to be repatriating about 1,100 of those stuck overseas.

A recent poll has shown that UK business leaders have become more gloomy about the recovery of the British economy over the last month, with only 36 percent of business leaders sensing that a financial recovery is in the offing, down from 49 percent in November.

The survey, taken in the five days after Finance Minister Alistair Darling’s pre-budget report last week, found the number of business leaders who had confidence in Darling had fallen five percentage points to 20 percent following the statement. Almost three-quarters of businessmen reckoned that Darling was "out of his depth" while less than a quarter believed he "understands business".

Public sector net borrowing in the UKs hit a record high of £20.3 billion in November, according to figures issued by the Office for National Statistics.

The public sector net debt as a percentage of overall UK economic output now stands at 60.2%, a considerably rise since the start of the financial crisis.

UK insurance companies also have little positive to report about, with worldwide premium income plunging 18% in 2008 to £215.3 billion, with 2009 also looking to be a fairly tough year. The financial crisis has had a definite effect on insurance rates, with premium income it falling almost 25% to £168.1 billion in 2008. The first nine months of this year, however, do show some promise. Long-term premium income was off 35% relative to the same period in 2008, but general insurance premiums gained 8% to £47.2 billion, mostly due to overseas business.

Virgin Group controlled by billionaire entrepreneur Richard Branson have announced the launch of a new company, designed to come to the rescue of consumers experiencing technical problems with their such as PCs as well as wireless networks not connecting. The opening of this new company, to be known as Virgin Digital Help, is Virgin’s up’s first new UK company in three years offers free online self-help guides such as "speed up" to make computers go faster, or "get connected" to fix links to printers or wireless networks .

Shareholders in Punch Taverns revolted on Wednesday over the pay for executives at Britain’s largest pub owner, voting against its remuneration policies, in one of the biggest shareholder protests over pay this year. 55 per cent of votes on the remuneration policies of the heavily indebted company were cast against them as shareholders objected to the scale of the awards given to executives in a year in which the group suspended dividend payments after its annual pre-tax loss quintupled to £406 million. While the vote on pay was advisory only, a spokesman for Punch announced that they are to conduct “a full review of the remuneration policy and its future implementation” in the wake of the result. The ABI, which represents shareholders that account for about 20 per cent of investments in the UK stock market, signalled its objection to the pay policies by issuing a “red top” alert to its members. Under a long-term incentive plan, Giles Thorley, chief executive, and three other executives were awarded shares worth 200 per cent of their base salary that would vest if total shareholder returns were in the top quartile of the company’s peers over three years. Mr Thorley earned a base salary of £525,000 during the 2008 financial year to August 23. The vote at the annual meeting came after the company warned slowing food sales and patchy trading at its leased estate were depressing profits. Punch shares fell 4.7 per cent to 77.3 pence.

Carphone Warehouse, broadband group TalkTalk and Channel 4 have opted into a joint venture between the BBC, ITV RTL’s AUDK.LU Five and BT to install internet video on television sets. The backing from all public service broadcasters and the UK’s two biggest broadband providers for the project to be known as Project Canvas will help it "secure the future of free-to-air broadcasting" in the Internet age. The venture partners will share an estimated £115 million in yearly costs over the next four years.

Rentokil Initial was among the talking points in the London market on Wednesday, with the stock registering its biggest gain since July.

The pest control-to-package delivery group bounced 4.8 per cent to 105 pence ahead of its relegation from the FTSE 100 next week, with Rentokil management already hinting of a further £150 million of cost savings expected for next year.

Shares in the U.K.’s second-largest drug-maker AstraZeneca Plc climbed 0.5 percent to 2,843 pence after they won a U.S. panel’s backing to expand use of the cholesterol pill Crestor in the prevention of heart disease, a move that, if allowed, could add up to £300 million in annual sales.

Imperial Tobacco Group Plc Europe’s second- largest publicly traded cigarette company, lost 1 percent to 1,894 pence on threat that Japan, the fifth-largest tobacco market, are about to announce further tax increases on cigarettes . U.K. furnishings and clothes chain known for floral pattern Laura Ashley Holdings Plc added 3.8 percent to 13.75 pence, after analysts predicted a better 2010 for the company.

Barclays, Britain’s second-largest bank, slid 6.2 percent to 273.85 pence. HSBC Holdings Plc, Europe biggest, fell 3.5 percent to 684.1 pence.

Lloyds, the 43 percent government-owned bank, lost 8.1 percent to 51.1 pence, the steepest slump since May. Royal Bank of Scotland Group Plc fell 3.5 percent to 30.74 pence.

Sterling lost ground against the dollar and improved against the Euro in sluggish mid week trading.

• Pound/US dollar 1.6167
• Pound/Euro 1.1273

The benchmark FTSE 100 Index slid 102.65, or 1.9 percent, to 5,217.61. The index has rebounded 49 percent since March and is heading for its biggest annual gain since 1997 as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy

As had been widely expected, the Federal Reserve have announced that US interest rates will be kept on hold at between 0% and 0.25%, despite continuing signs that the US economy is recovering. The central bank reiterated that rates would stay at the low level for an "extended period".

The Fed’s hand was strengthened by official data showing earlier on Wednesday that US inflation remains under control, rising by just 0.4% in November, as had been predicted.

With inflation continuing to be low, the Fed is not under pressure to increase interest rates as a means to tackle any inflationary pressure.

On close of trading, the Dow Jones Industrial Average had dropped more than 130 points to 10, 33.61 while the NASDAQ also dropped to 2,183.55.

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Tags: Alistair Darling, AstraZeneca Plc, Bank, Bank of England, Banking, Barclays, British airways, British Economy, British Pound, cabin crew, Carphone Warehouse, Christmas, Civil Aviation Authority, Credit Crunch, Crestor, Currency, Dow Jones, Economics, Economy, Eurostar, Financial News, Flyglobespan, FTSE, Globespan, Heathrow, HSBC Holdings Plc, Imperial Tobacco Group Plc, Interest Rates, Laura Ashley Holdings Plc, Lloyds, Lloyds Banking Group, Money, Money Markets, NASDAQ, Office for National Statistics, Punch Taverns, Recession, Rentokil Initial, Richard Branson, Royal Bank of Scotland, Royal Bank of Scotland Group Plc, Stock Markets, Stocks and shares, TalkTalk, UK Banks, UK Economy, UK government, UK insurance companies, UK Recession, Virgin Digital Help, Virgin Group

Despite threats from major banking groups that they will move key staff abroad, the signs are that Alistair Darling has no intention of watering down his plans to levy a 50 percent super tax on bank bonuses. Apparently the Financial Services Authority (FSA) has already spoken to several smaller banks telling them that they will have to curb bonus payments if they do not do enough to increase their capital holdings with the FSA’s squeeze on bonus payments extending beyond the partially-nationalised Lloyds Banking Group and Royal Bank of Scotland. A recent poll has shown that while the general public are in favour of taxing bonuses, a large percentage feel that the bankers will find a way out of their noose Many feel that the recently announced banking bonus tax is unlikely to raise any significant funds for the UK government and is being used as more of a political pawn coming up to the impending general election.

According to a recent survey from the Bank of England , British consumer spending looks likely to falter in the coming months, as around a quarter of UK households admit that they have switched their fiscal emphasis to saving more, because of growing uncertainty about the long term economic outlook for the country. In addition, the survey shows an increasing proportion of households who were having trouble keeping up to p date with bills and loan repayments has fallen slightly in 2009, in spite of the economic downturn

This little snippet of optimistic news was tempered by the announcement that the rate of inflation has risen to 1.9% in November from 1.5% in October, with the principal cause being the rising cost of petrol. Prices at the pumps rose by 2.9 pence to 108.3 pence a liter in November, compared with a record 9.3 pence fall to 95.2 pence this month last year.

The Office for National Statistics predicted that the consumer prices index (CPI), is expected to rise to 3% or more early next year when the temporary VAT cut is reversed and prices across the board will take a significant increase.

On the same somber note, predictions are that the recovery in the U.K. housing market recovery is liable to come to an end in 2010 as the supply of second hand homes on the market will increase.

Average asking prices are expected to, at best, stand still next year after rising about 2 percent in 2009. Property prices have fallen 2.2 percent this month alone to an average of £220,000 and look likely to drop again in January. What can keep property prices stable is that if the banks show “more forbearance” to consumers who are late on mortgage payments, which after the general election seems increasingly unlikely.

Strike threatened British Airways have announced that they are exploring "all options" to help it cope with the impact of the planned 12-day strike by cabin crew, to be held over the traditionally active Christmas period. Currently up to one million passengers are facing the real e prospect of having their journeys canceled as a result of the strike action by Unite members.

Cabin crew voted nine to one in favor of strikes from 22 December over job cuts and staffing level with BA insisting that they will not climb down on its decision to reduce cabin crew numbers, which is at the heart of the dispute.

Also showing that now is the season for warnings are US food giant Kraft Foods, who have warned Cadbury’s shareholders that they are "taking a risk" if they continue to support Cadbury as a standalone company. They have rushed to claim that their proposed takeover of Cadbury would deliver cost savings and deliver "substantially more value" to Cadbury’s shareholders.

Cadbury has consistently urged shareholders to reject Kraft’s hostile bid, tempting them with the prospect of rival bids, promised dividends and stronger growth. Roger Carr, Cadbury chairman has announced that both Hershey and Italy’s Ferrero had both indicated they were contemplating bids, adding serious negotiations would only start if a compelling and fully-financed offer emerged.

A seasonal rise in DIY sales has given B&Q a recent boost but not enough to prevent owner Kingfisher from issuing a warning that economic and political uncertainty will have an effect on the company in 2010.

Kingfisher shares were lifted by news its UK and Ireland sales were up 4.4% in sales in the third quarter, pushing retail profit up by almost 27%, with a 6.3% improvement in sales at B&Q. with sales of big-ticket items such as kitchens and electrical appliances jumping by 27%.

On the FTSE 100, it was reported that Advent International is offering to buy the Royal Bank of Scotland Group Plc s’ Global Merchant Services unit in a deal worth £3 billion pounds. The news caused their stock to rise 2.5 percent, to 30.56 pence.

The public transport company National Express Group Plc is to mount a £360 million pound rights issue after the Cosmen family agreed to the deal, the issue is designed to reduce company debt after a slump in rail revenue. Share values declined 1.1 percent, to 182.3 pence.

PartyGaming Plc, the online-gambling brand is reported to be in merger talks with Austria’s Bwin Interactive Gaming AG. On the news, their shares rose 2.1 percent to 256.5 pence.

Operators of the Premier Inn budget-hotel chain, Whitbread Plc are scheduled to publish a trading statement. In anticipation of positive news, shares in the company rose 3.1 percent, to close on 1,330 pence.

Vodafone Group Plc has announced plans to sell their 4.39 percent indirect holding in India’s Bharti Airtel Ltd. Shares in the World’s largest mobile phone company rose 0.4 percent, to 141.55 pence.

Standard Chartered Plc, the U.K. bank that gets most of its profit in emerging markets, rallied 4.3 percent. London Stock Exchange Group Plc, whose largest shareholder is Borse Dubai Ltd., jumped 9.9 percent. Lonmin Plc, the world’s third-biggest platinum producer, led gains in mining shares.

Sterling gained ground against the dollar and Euro in sluggish mid week trading.

• Pound/US dollar 1.6259
• Pound/Euro 1.1188

The FTSE 100 Index rose 17.2 points to close on 5,261.57. The index has shown a 50 percent recovery since March and looks to be heading for its biggest annual gain since 1997.

U.K. stocks climbed, led by financial shares, after Abu Dhabi provided $10 billion to avert a default by Dubai’s Nakheel PJSC. The FTSE 100 Index rose 23.77 points to 5,285. 77

US President Barack Obama speaking after a meeting, described as "candid" with executives of some of America’s top banks, announced that he has told bankers to increase loans to small and medium-size businesses.

He went on to add that US banks had received extraordinary assistance and demanded they show extraordinary commitment to rebuild the US economy.

The meeting with executives from Goldman Sachs, JP Morgan Chase and Citigroup, among others, came after the president said he had not run for office to help out "a bunch of fat cat bankers on Wall Street".

On close of trading, the Dow Jones Industrial Average had dropped just nine points to 10,462.66 while the NASDAQ raised a little to close on 2,209.82.

US bank Well Fargo has announced that they are to re pay back £15 billion emergency funding it received under the Troubled Asset Relief Program (Tarp). Following hot on the heels of a similar one by Citigroup, Wells Fargo are the last leading institution to repay Tarp funding, marking a key step towards recovery for the US financial system.

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