U.K. Prime Minister Gordon Brown said Monday that his government has identified billions of pounds in additional efficiency savings in the public sector to help pare the country’s record deficit. Mr. Brown said the government can deliver £12 billion ($19.7 billion) in efficiency savings over the next four years, an increase on the target £9 billion that the Treasury had identified in April. Brown’s announcement comes ahead of Wednesday’s Pre-Budget Report, which will map out some measures to cut the budget deficit. Among the measures that have been considered is a tax on bankers’ bonuses and even on the banks themselves. However the issue of a windfall tax on banks or bonuses presents Brown and Chancellor Darling with a serious dilemma as they leave no stone unturned to raise cash without damaging the economy’s return to growth. Eroding banks’ profits to raise fiscal income might weaken these institutions just as the government is trying to provide increased more capital behind them to cover lending to Britain’s credit-starved companies.

Manufacturing output in the UK between September and October was unchanged against expectations for a 0.4 per cent increase. UK house prices rose 1.4 per cent month on month in November – stronger than forecast. The two pieces of news appeared to cancel each other out and sterling and gilts seemed little affected.

U.K. Chancellor of the Exchequer Alistair Darling is expected on Wednesday to announce a cut in taxes on the use of electric vehicles as company cars as part of efforts to present an environmentally friendly pre-budget report. A U.K. treasury spokesman predicted that from 2012, companies and employees would be exempted from paying taxes on company cars if they were electric vehicles.

Shares in UK government majority owned Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, dropped after Chancellor of the Exchequer Alistair Darling refused to rule out a tax on excessive bonus payments. Royal Bank of Scotland retreated 4.7 percent to 33 pence and Lloyds Banking tumbled 4.1 percent to 53.69 pence.

Andrew Bailey, executive director for banking services at the BOE, has stated the bank’s fears that U.K. consumers are hoarding cash due to their lack of confidence in the banking system. Another factor that strengthens the banks theories are the negligible interest that they would earn even if they did invest their money with a financial institution. In a speech made in Washington D.C., Bailey highlighted the ironic connection between the declining need for cash in everyday life and the sharply increasing demand for banknotes during the financial crisis and ensuing recession.

According to a recent report issued by the Engineering Employers Federation, U.K. factory production will begin growing again next year as exports rebound, Production is expected to grow 0.9 percent in 2010 after it had shrunk by 10.4 percent in 2009. The report went on to add that increasing signals point to the fact that the U.K. is emerging from the longest recession on record. The British Chambers of Commerce pointed out that although the recovery has started the Bank of England will probably be required to maintain its bond purchase plan at £200 billion pounds ($331 billion) while it assesses the strength of signs of a rebound.

Shares in travel companies are on the rise, with the Thomas Cook Group and TUI Travel leading the way. Thomas Cook, Europe’s second-biggest tour operator, jumped 1.9 percent to 221.2 pence, while TUI Travel, Europe’s largest tour operator, rose 1.5 percent to 250.5 pence.

Shares in the U.K. waste recycling company Shanks Group Plc surged forward 43 percent to 128.5 pence after the company revealed that they had received a possible bid offer from an unidentified private equity group. Washington-based private equity firm Carlyle Group, have been reported to be in talks to buy the British waste-disposal company Shanks for about £535 million ($875 million) for some time.

Sterling lost ground on Tuesday as disappointing economic data and concerns over the UK government’s pre-Budget report weighed on the currency,

• Pound/US dollar 1.6292
• Pound/Euro 1.1040

London equities continued to weaken on Tuesday, with renewed concern about the financial problems in Dubai. Banks especially were hard while talks continued between Dubai World and the creditors to restructure debt at the holding company. It is expected that a group of banks, including the Royal Bank of Scotland, Standard Chartered, HSBC, Lloyds Banking Group as well as two from the United Arab Emirates (UAE) will form a steering committee to be appointed to represent creditors. At the end of the day’s trading, the FTSE 100 had tumbled 1.5 per cent to close on 5,230.5,

According to Federal Reserve Chairman Ben Bernanke the US economy is improving, although it is still too early to say that the recovery will last.

Unemployment could stay "elevated", although inflation is likely to remain subdued, while interest rates were likely to stay low for "an extended period",

Following Bernanke’s comments, the dollar lost a lot of the recent gains it had made against the euro.

On close of trading, the Dow Jones Industrial Average had dropped 104.82 points to 10,285.292 and the NASDAQ was also down 19,65 points to to 2,169.96

President Obama has said that money not spent under the £425 billion ($700 billion) US bank bail-out package could be used to cut the US deficit and boost jobs. The cost of the "Troubled Asset Relief Program" (Tarp) had turned out to be "much cheaper than expected". Reports say the cost of the Tarp will be £120 billion below the Treasury estimate. Back in August, the Obama administration had estimated that the rescue package would be £200 billion.

Crude oil dropped for a fourth day, trading below $75 a barrel, as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates.

The China Association of Automobile Manufacturers announced that Chinese car sales and production both exceeded 12 million between January and November, with expectations that car sales and output will to top 13 million for the full year.

Production of new cars has never topped the 10 million cars in one year mark in the past with state incentives having boosted car sales. The Chinese government has reiterated their plans to continue economic stimulus measures into 2010, Despite the downturn and falling sales at most global car makers, demand for cars in China continues to boom.

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Tags: Alastair Darling, Asset Relief Program, Bank, Banking, Ben Bernanke, British Economy, British Pound, Chancellor of the Exchequer, Credit Crunch, Crude oil, Currency, Dow Jones, Dubai World, Economics, Economy, Employment, Engineering Employers Federation, Financial News, Gordon Brown, HSBC, Lloyds Banking Group Plc, Money, Money Markets, NASDAQ, pre-Budget report, Recession, Royal Bank of Scotland Group Plc, Shanks Group Plc, Standard Chartered, Stock Markets, Stocks and shares, Thomas Cook Group, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US economy

Chancellor Alistair Darling will say in his pre-Budget report that the economy performed worse in 2009 than he first predicted, Treasury sources have said.

Darling is expected to say that the UK economy shrank by 4.75% this year – more than the 3.5% originally forecast in the Budget in March.

The adjustment follows the economy’s unexpectedly poor performance in the first three months of the year. The chancellor looks likely to stick to 2010 forecasts of growth between 1-1.5%, despite the emergence of Dubai’s financial problems which now raises fresh fears that UK banks could face more write-downs on bad debts, and chimes with warnings earlier this week from the International Monetary Fund, who said that global banks had only worked through half their toxic assets since the banking crisis broke two years ago. Investors had been hoping the British financial sector had worked through much its toxic debt, which included exposure to America’s sub-prime mortgage market.

Despite this week’s setbacks, economic analysts continue to predict that the UK economy should emerge from recession by the end of the year, with the Northern Ireland and Scotland facing a more challenging recovery. The prediction came as revised gross domestic product (GDP) figures showed the UK recession was shallower than previously thought between July and September. Revised estimates from the Office for National Statistics (ONS) showed a 0.3% fall in UK output in the third quarter, compared with the 0.4% slide originally stated. While UK business confidence surveys on the "mainland" bear out signs of recovery, Northern Ireland business activity continued to fall in October, albeit at the slowest rate since the start of 2008. The reasons apparently are local margins remaining under pressure, is that the manufacturing sector in the province is still reporting a lack of demand and heavy competition in difficult markets. The combination of these factors looks like meaning Northern Ireland will likely lag the UK recovery. Scotland’s growth will continue to lag behind the rest of the UK’s, according to a leading economic think tank. Similar sources also announced that they had observed some "disturbing weaknesses" in the Scottish economy and predicted growth of -4.9% this year and 0.7% in 2010. Job cuts are expected to continue, with the unemployment rate reaching as high as 8% in 2010. The only prescription for growth for both Northern Ireland and Scotland would be to switch to a more export-led economy, exploiting global markets

Jaguar Land Rover had seen its sales rise 23% in the second quarter after its new models were well-received.

Owner Tata Motors said new products such as the upgraded Range Rover, Range Rover Sport and Discovery 4 had had successful launches.

Although Jaguar Land Rover made a net loss of £60 million in the July-September quarter, it was much less than the £240 million loss it made a year earlier.

India’s Tata Motors made a net profit of £2.8 million in the third quarter of, 2008, compared with a loss of £127,000 for the same period last year.

Borders U.K., the bookstore chain once owned by U.S.- based Borders Group Inc., has called in administrators after failing to find a buyer for its stores. A total of 1,150 employees are affected, according to the statement.

“All stores currently remain open for business as normal whilst the administrators undertake a review of the company’s affairs and seek a purchaser for all or some of the company’s stores in which there has already been interest,” Philip Duffy, principal administrator announced in a statement.

U.K. media have reported that HMV Group Plc’s Waterstone’s books chain is considering buying some of the stores. A spokesman for HMV declined to comment on this when contacted by Bloomberg News earlier.

The steep advertising downturn pushed U.K. publisher Daily Mail & General Trust PLC’s into a net loss for its full fiscal year, as management focused on cutting costs and its £1.05 billion ($1.76 billion) debt pile, but the company said there are signs that trading conditions are improving.

Daily Mail, which publishes the Daily Mail and its sister Sunday paper and the Metro free-sheet, posted a net loss of £303.4 million for the 12 months ended Oct. 4, compared to zero net profit a year earlier.

According to brokers, Thursday’s activity on the FTSE was very similar to when Lehman Brothers collapsed, warning that Dubai’s problems could be the catalyst for the market to fall further. RBS, which is 70 per owned by the UK taxpayer, fell 7.8 per cent, wiping off £1.73 billion of its market value. Barclays lost 8 per cent, cutting its capitalisation by £2.65 billion. HSBC fell 4.8 per cent losing £6.2 billion of its value and Lloyds Banking Group lost 5.6 per cent, wiping off £1.5 billion.

All in all around £44 billion was wiped off London’s biggest companies amid growing fears the UK financial sector could be heavily exposed to Dubai World, the state-owned conglomerate which yesterday asked for a standstill on its £36 billion debt pile. The FTSE 100 tumbled 170.68 points or more than 3 per cent to 5194.1 in its biggest one-day percentage fall since the market plunged to six-year lows in March. Encouragingly enough, the exchange recovered well on Friday, closing on 5245.73.

The pound declined against the dollar after a drop in stocks across the world prompted investors to sell U.K. assets and on speculation the government will downgrade its forecast for the economy. Sterling slipped to the weakest level since Nov. 3 against the U.S. currency as the MSCI World Index declined for a second day after Dubai’s attempt to reschedule its debt continued to rattle investors.

• Pound/US dollar 1.6553
• Pound/Euro 1.10996
• Pound/Japanese Yen 142.7188
• Pound/Swiss Franc 1.6565

US shares have fallen on worries about Dubai’s debt problems, with the Dow Jones ending down 154 points, or 1.5%, at 10,309.92, in a shorter trading day.

It was the first chance for markets in the US to react to news that state-owned Dubai World had asked for more time to repay its debts.

US markets were closed for a holiday on Thursday when other world markets suffered steep losses.

The Dow Jones average dropped 154.58 points on Friday’s trading to close on 10309.92 The NASDAQ lost 37.61 points to close on 2138.44

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Tags: Alastair Darling, Bank, Banking, Barclays, Borders Group Inc, British Economy, British Pound, Daily Mail, Discovery 4, Dow Jones, Dubai World, Economy, Financial News, FTSE, General Trust PLC, HMV Group Plc, International Monetary Fund, Jaguar Land Rover, Lehman Brothers, Lloyds Banking Group, Money, MSCI World Index, NASDAQ, Office for National Statistics, Philip Duffy, pre-Budget report, Range Rover, Range Rover Sport, RBS, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, Tata Motors, UK Banks, UK Economy, UK government, UK Recession, Waterstone's

The weaker Pound and an insurge of wealthy foreign shoppers wishing to take advantage of the satiation have contributed to a major revival in retail sales in the shopping centres of London during September. The British Retail Consortium who are involved in producing the London Retail Sales Monitor, have announced that retail sales in central London were up by 7.5 percent on September 2008. The largest month-for-month increase in 12 trading months. Even more encouraging, were sales figures released by the New West End Company, who monitor sales from retailers based around the highly exclusive Bond Street, Oxford Street and Regent Street region in the West End of London. There retailer were reporting an increase of 25 percent jump in sales in September when compared to August, as well as a 4.6 per cent increase on September 2008.

Britain’s banks could be in line to pay windfall taxes that could reach punitive levels. if they are unable or unwilling to provide acceptable guarantees that they will discard their long running practices of tax avoidance. In a recent statement, officials of the UK Treasury described speculation that tax raids on the banks under their spotlight was imminent is being unfounded, as well as reports that higher levels of corporation tax would be imposed as “not being currently under consideration”. The major UK banks have been negotiating with the Inland Revenue and the Treasury for some time to ensure that their tax payments adhere “to the spirit of the law rather than the letter”. The “powers that be” are looking for a new approach from the banks, and on that will be in contrast to their approach before the bail out of the financial system late last year, that was largely funded by the British taxpayer..

The Treasury is working on a new tax code with the banks, with a final verdict expected ahead of the chancellor Alistair Darling’s forthcoming pre-Budget report. One Treasury official said: “If the banks were not participating we would need to look at other channels, but at this stage they are playing ball

Willie Walsh, chief executive of British Airways has announced that he has held "open and frank" talks with union leaders, in order to prevent cabin crew balloting for strike action. Both sides have been involved in a long running conflict regarding BA’s plans to cut 1,700 jobs as well as making further changes to pay and conditions for other members of the BA staff. The union representing the airline’s employees, Unite, has stated that they will have little option but to ballot for industrial action if BA’s changes are imposed on their members. A representative of BA announced that Mr Walsh had written to unite joint leader Derek Simpson after the meeting, while the union declined to comment.

The pound continued its steady rise, despite faltering slightly against the Euro and the Swiss Franc.

• Pound/US dollar 1.6425
• Pound/Euro 1.10969
• Pound/Japanese Yen 147.9728
• Pound/Swiss Franc 1.6587

The FTSE 100 had a good day, up 91.34 points to 5281.54 The FTSE 250 rose strongly on the day’s trading, up 138.44 points to close on. 9564.64.

Chairman of the US Fed Ben Bernanke announced on Monday that the US and Asia adopt policies that prevent a revival of global economic imbalances as the financial crisis ebbs, and such a move was “extraordinarily urgent”. Bernanke went on to warned that global imbalances, meaning the large gaps between national saving, consumption and investment rates that were reflected in large trade deficits and surpluses needed to be bridged. The US must establish “a sustainable fiscal trajectory anchored by a clear commitment to substantially reduce federal deficits over time”. he continued

The Dow Jones index recovered strongly on Monday’s trading; climbing again above the 10,000 points mark, as encouraging US bank results fuelled optimism for the global economy. The Dow Jones was up .96.28 points to close on 10092.19 The NASDAQ Composite index also recovered all of Friday’s losses, up 19.52 points to close for the day on 2,176.32.

Annual car production in China has topped the 10 million mark for the first time in the industry’s history, with car makers boosting output to meet the ever growing demand. Despite the global downturn in demand for new cars for most of the major car makers, demand for cars is bucking the trend with state incentives, such as tax cuts on small cars, going a long way to boosting sales

The price of oil has continued to rise, mostly on the back of the weak US dollar reaching a new high for 2009. US crude settled up $1.08 at $79.61 in New York trading, while London Brent rose 78 cents to at $77.77

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Tags: Alistair Darling, BA, Bank, Banking, Bond Street, British airways, British Economy, British Pound, British Retail Consortium, British taxpayer, corporation tax, Credit Crunch, Currency, Derek Simpson, Dow Jones, Economy, Financial News, FTSE, Inland Revenue, London Retail Sales Monitor, Money, Money Markets, NASDAQ, New West End Company, Oxford Street, pre-Budget report, Recession, Regent Street, Retail, Stock Markets, Stocks and shares, tax avoidance, UK Banks, UK Economy, UK government, UK Recession, UK treasury, Unite, Weak Pound, West End, Willie Walsh

Chancellor Alistair Darling has recommended a pay freeze for 40,000 senior public servants in 2010/11. Darling has written to salary review bodies calling on them to freeze the pay of top level civil servants, such as judges, senior NHS managers as well as General Practitioners. It is expected that public spending priorities and cuts will be announced in this autumn’s pre-Budget report, as the chancellor revealed he would soon be calling ministers into the Treasury for “very robust” discussions.

If the Financial Services Authority (FSA) get their way UK banks and investment firms would have to increase their holdings of cash and government bonds by £110 billion as well as reducing their reliance on short-term funding by as much as 20 per cent in the first year. This series of tough liquidity standards put forward by the FSA on Monday shows a radical firming up of liquidity requirements than in previous years. In total banks and investment firms could be required to increase their holdings of easily redeemable assets by a total of £370 billion as well as reducing their reliance on short-term funding by 80 per cent from current levels

Chief executive of the HSBC bank, Michael Geoghegan, is less convinced than many others that the global financial recovery is well under way. He has in fact taken the standpoint that a second downturn is bound to happen in the coming months. In preparation, Geoghegan plans to freeze any expansion plans for the bank till the situation becomes clearer. Speaking after HSBC announced a shake-up of its governance 10 days ago, Mr. Geoghegan is now responsible for strategic issues that previously lay with the bank’s chairman, Stephen Green.

Taking a more conservative stance on salaries are the Lloyds Banking Group, who are reportedly in the early stages of reviewing pay packages for its top executives. Lloyds, who got themselves into hot water when they rescued struggling lender HBOS last year, pledged to review remuneration after the government backed takeover. The bank did issue a statement over the weekend that no decisions had yet been made on salaries and the bank was more focused on a number of other and more pressing issues, particularly whether they will enter the government’s asset protection scheme.

According to market analysts, many British retailers are facing a worse Christmas than last year, when 15 major chains failed, rising unemployment and fragile consumer confidence would result in many companies, many of them struggling to survive until the holiday season entering formal insolvency proceedings within a year. Market information shows that 125 retail companies encountered critical trading and cash problems in September, up 37 percent from August. Outdoor goods retailer Blacks Leisure showed how difficult it is to survive in the UK high street, by announcing plans to shut down 89 of their loss making stores as well as cutting jobs as part of an emergency recovery plan.

Bucking the retail trend is the department store chain TJ Hughes, who has based their success in specialising in discounted branded goods. The company has reported a 30 percent increase in underlying profits in the year to the end of January. Hughes, who operates in 50 locations across England, Scotland and Wales, announced pre-tax earnings that rose to £9.2 million. Since June 2008, TJ Hughes has undergone aggressive expansion and a 51st store is expected to open soon

The FTSE 100 limped back over the 5,000 points mark, rising 35.63 points to close on 5024.33. The FTSE 250 made its usual early in the week recovery rising 82.57 points to close on 8982.53.

The pound continued to find it difficult to rise above the $1.60 mark, while falling behind against the remaining principal currencies.

• Pound/US dollar 1.597
• Pound/Euro 1.10863
• Pound/Japanese Yen 142.4066
• Pound/Swiss Franc 1.6421

A recent survey has shown the US services industry rising in September for the first time in a year. The services sector accounts for 80% of the US economy. Simultaneously, separate data released showed that the US jobs market also strengthened last month for the first time since January 2008. The data boosted US markets with the Dow Jones index and NASDAQ both rising

The Dow Jones index rose by 112.08 points at 9,599.75. The NASDAQ index rose by 20.04 points to finish the day’s trading on 2,068.15.

Hundreds of farmers have protested to European Union (EU) agriculture ministers at a meeting held in Brussels to discuss low milk prices. The urgently convened meeting came as a result weeks of protests across Europe, with farmers dumping milk stocks and withholding supplies at what they see as being sold at uneconomic prices. To the farmer’s considerable chagrin, the only decision reached at the meeting was to create a panel of experts to examine at the dairy sector. Recently prices of milk and dairy products have fallen sharply in Europe as supply exceeds demand.

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Tags: Alistair Darling, Banking, Blacks Leisure, British Economy, British Pound, British retailers, Credit Crunch, Currency, Dow Jones, Economy, European Union, farmers, Financial News, Financial Services Authority, FSA, FTSE, HBos, HSBC, Lloyds Banking Group, Michael Geoghegan, Money, Money Markets, NASDAQ, NHS, pre-Budget report, Recession, Stock Markets, Stocks and shares, TJ Hughes, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US economy

For the first time in many a long while, Prime Minister Gordon Brown has been drawn to admit that he would have no option but to make some public spending cuts, and that they would be both considerable and imminent.

Brown, addressing a meeting of trade unionists announced that the government would have no option but to “cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets”. He went on to admit that a new pay austerity for the UK was on its way, hinting strongly that “realistic” public sector pay settlements were a must.

The Prime Minister’s comments were made at a meeting to the Trade Unions Council (TUC) held in Liverpool were obviously designed to pre-empt the forthcoming pre-Budget report due to be released in the autumn. The report will set out Labour’s plans for priority public spending and any cuts. Full details of departmental spending from 2011 are not expected to be included.

The suggestion that there me be public spending cuts is certainly radical, as Brown has steadfastly refused to admit the need for cuts in any form till now,

Not slow to take political advantage of Brown’s apparent turnaround was shadow chancellor George Osborne, who described the PM’s statement a “complete capitulation”.

The prime minister claimed the recession had thrown up some fairly major challenges and on each occasion the government had made the right choice: whether propping up the banks or cutting taxes to boost the economy.

Chancellor Alasdair Darling is expected to use the pre-Budget report to try to identify net cuts to accelerate the government’s plan to halve the deficit to 5.5 per cent by 2014. Never slow to criticise, Bank of England governor Mervyn King, says that the deficit cuts will be too timid.

Summing up his speech in Liverpool, Brown admitted that Britain was only just on the road to recovery – and conditions were “fragile”. He defended his governments over the last year by stating that they had rescued the banking system, saved up to half a million jobs and taken specific actions to help not business and home owners.

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Tags: Bank, Banking, British Economy, British Pound, Budget, Credit Crunch, Economics, Economy, Financial News, George Osborne, Gordon Brown, Money, pre-Budget report, Prime Minister, Recession, spending cuts, Tax, Trade Unions Council, TUC, UK Banks, UK Economy, UK government, UK Recession