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UK Government to encourage investment in small businesses

July 29th, 2009 by admin | 0 Comments | Filed in Business Acounts, Daily News, Employment, Recession, UK Small Business, UK employment

governmentBusiness Secretary Peter Mandelson is expected to announce on Wednesday the UK Government’s intention to launch a £150 million pound investment programme aimed towards small manufacturing companies specializing in areas where high levels of production and engineering skills are emphasized.

The program will be designed to benefit companies involved in high to medium tech manufacturing industries involved in the development of new technologies and designs.

Mandelson’s initiative comes as an extension of Prime Minister Gordon Brown’s package to help businesses access venture capital and loans.
Yesterday Mandelson along with Chancellor of the Exchequer Alistair Darling met with chief executives of the UK’s leading banks at Downing Street and told them to step up lending for small companies.
Those represented included the Royal Bank of Scotland Group Plc and Barclays Plc.

Veteran British banker Sir Win Bischoff is to become the new chairman of Lloyds Banking Group, taking over the reins in September from Sir Victor Blank who stepped aside after being blamed by investors for Lloyds’ disastrous takeover of HBOS. . The 67-year-old former chairman of Citigroup appointment comes despite objections from some investors who were less than happy about Sir Win’s handling of Citgroup’s problems during the financial turndown.

Europe’s largest short-haul airline Ryanair have announced a strong increase in their first-quarter profits which they attributed largely due to the steep decrease in fuel costs. Despite the fact, Ryanair’s share price fell by nine per cent or 20 pence to close at 400 pence, on warnings that their full-year earnings would be lower because of the need to cut air fares due to extreme competition.

Lower oil prices have affected the profitability of BP in the second quarter, in fact halving from the same period a year ago. This year’s results showed profits of a still commendable £1.9 billion
The results took BP’s half-year profits to around £3.2 billion, down 57% from the same period in 2008.

The situation at National Express, the bus and rail operator ,became even more complicated after their UK based competitor Stagecoach announced that they were in talks with the consortium led by Spain’s Cosmen family and CVC Capital over a possible asset trip operation if the group were successful in their take- over attempt.
Representatives of Stagecoach also hinted that they even consider making a bid of its own for the whole of National Express.
This latest development only strengthens speculation that the board of National Express will reject the takeover approach from the Cosmen and CVC consortium.
News of Stagecoach’s interest sent shares in National Express 6.4 per cent higher in mid-morning trading to 368 pence, while shares in Stagecoach were 2½ pence lower at 135 pence.

As was widely expected, the FTSE 100 failed to extend its winning streak to a record-breaking 12th straight session as profit taking began to set in.
The blue chip index sank 57.3 points, or 1.3 per cent, to 4,528.8,
The FTSE 250 recorded a further reverse this time down 145.70 points to 7,731.16

The pound continued to stutter on Tuesday against the leading currencies.
Pound/US dollar 1.6421
Pound/Euro 1.1591
Pound/Japanese Yen 154.7119
Pound/Swiss Franc 1.7659

The Dow Jones faltered slightly on a flat day’s trading, down 11.79 points to 9096.72 The NASDAQ made another small gain, up 7.62 points to close on 1975.51

Deutsche Bank has reported a 67% rise in quarterly profits, boosted by its investment banking arm.
Germany’s largest bank announced a net profit of £950 million (1.1 billion Euros) for the second quarter of 2009, compared to £550 million (645 million Euros) profit for the same period last year.

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Darling to apply pressure on banks to reduce lending rates for small businesses

July 27th, 2009 by admin | 0 Comments | Filed in Daily News, Employment, Energy Prices, Money Management, Mortgages, Recession, Retail, Stocks and shares, UK Bank Accounts, UK Banks, UK Small Business, World Banks

bankingExpressing his fears that interest rates being charged to small businesses may be too high, Chancellor Alistair Darling is set to meet with top management of the major UK banks poste haste to discuss how much they charge small firms for loans.

Apparently information has reached Darling that the cost of loans seemed to have risen, despite the fact that the UK’s base interest rate of 0.5% is a record low. Bank executives will be asked to explain their viewpoints on interest rates and why they remain high at a special meeting convened for today in Downing Street.

The UK economy has contracted in the second quarter, and by considerably more than economists had expected, according to information released by the Office for National Statistics. GDP in the UK fell by 0.8 per cent quarter on quarter in the three months to June after a 2.4 per cent decline in the first quarter.

The world’s third largest bank, Bank of China has begun offering mortgages to British borrowers, and at rates below many of the deals on offer from established UK lenders. Bank of China, who till now had focused their attentions on expatriate Chinese communities, have announced their desire to compete with the major high street banking groups, such Barclays and HSBC. Funding for loans will come from the bank’s its own capital reserves/ UK mortgage brokers are apparently trembling at their knees at the prospect saying that the Bank of China’s tracker rates are among the best on the market. Estimates are that the Bank’s entry into the market should go some way towards relieving the shortfall of home loans in the UK.

Car production in Britain continues to remain in the doldrums, thirty per cent lower in June of 2008. June’s figures made for some depressing reading, with only 91,718 new cars leaving the plants, making for 410,710 for the half year. This figure is more than 50% less than it was for the same period of 2008.

Caravan park operator Park Resorts, hit by falling caravan sales and cuts in discretionary spending announced that they are close to agreeing terms with its lenders on restructuring the terms of its debt holdings, currently running around 330 million pounds. Park Resorts were acquired by GI Partners in March 2007 for 440 million pounds and over the last two years the company has injected a further 45 million pounds in fresh equity.

On the FTSE Friday, the market was buoyed an unexpected rise in retail sales for June after a sharp fall in May. According to reports, sales were up 1.2% over May and 2.9% over the same period in 2008. The figures were boosted by the good weather and an early start to the sale season.

In the retail sector Kingfisher were among the beneficiaries of the improving retail environment. It said subsidiary B&Q delivered ahead of expectations, but its French business is still weak. Overall, like for like sales fell 1.9% – analysts had been expecting a fall of 3.2%. The shares rose 1.7% to 209.5 pence.

The utilities sector took a lot of the edge of smiles on the floor, with news from UK water regulator Ofwat that it planned to cut water bills by an average of £14 a year by 2015 dampening the atmosphere.

Shares in United Utilities fell by 4.63% to 479.25 pence, while Severn Trent dropped 7.28% to 1,032 pence. Despite the fact that Scottish & Southern announced that their half-yearly profits were likely to be significantly higher than 2008, and the company looked likely to deliver 4% annual dividend growth, the sector gloom caused their shares to rise a mere 0.26% to 1,137 pence

Carphone Warehouse were among the day’s winners as their shares rose 3.31% to 171.5 pence after reporting first quarter revenue in line with expectations.
Tate & Lyle were also among the day’s top performers after announcing first quarter results that were well ahead of expectations. Their shares moved forward 8.83% to close on 339 pence.

Shares in Vodafone were in demand after the group announced in-line quarterly figures and optimism for the full-year’s trading. Shares in the company climbed 2.8 per cent to 120 pence. BT Group, due to announce their first-quarter results on Thursday, gained 1.3 per cent to 115 pence. Ahead of their full-year results also due on Thursday, shares in BSkyB gained 0.5 per cent to close on Friday at 515 pence,

Following a positive production report issued on Thursday, Lonmin was the star of the commodities sector with their shares rising 3.8 per cent to 1243 pence.

The FTSE 100 inched to its 10th straight gain on Friday making it one day short of its best ever winning streak.

The FTSE 100 index closed down for the weekend still rising, on Friday by 16.81 points to 4576.61, while the FTSE 250 continued to gain, up 51.21 points to 7,938.44.

The pound lost ground on Friday after data showed the UK economy shrank more than expected in the second quarter.

Pound/US dollar 1.6399
Pound/Euro 1.156
Pound/Japanese Yen 155.3089
Pound/Swiss Franc 1.7598

As the lights went off for the weekend on Wall Street, the Dow Jones had risen by 23.96 points to 9093.24. The NASDAQ, after some impressive gains, dropped 7.64 points to close on 1965.96.

Crude oil prices rose while gold held above the $950 mark and concerns about supply problems continued to support sugar prices as commodity markets headed for a strong finish to the trading week
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Darling’s budget passes over small businesses

April 23rd, 2009 by admin | 0 Comments | Filed in Daily News, Recession, Retail, The Budget, UK Small Business

Most people who had the courage to listen to Chancellor Alasdair Darling’s budget speech yesterday were left shocked but not particularly surprised by its content. One group who were left speechless however was the Federation of Small Businesses (FSB) who complained that the budget had largely ignored the small businesses. Businesses that are predicted to be the driving force behind the nation’s economic recovery as well as being one of its principal forces in creates new jobs.

Whilst the FSB expressed their appreciation of the Treasury’s focus on saving as well creating new jobs in the Budget, they also pointed out that small business enterprise must be encouraged in order to present a framework for job creation.

The majority of small to medium sized business in the UK are suffering from short and long term cash flow problems, with the Government’s proposed trade credit insurance scheme being seen as a lifeline for many. However ,

the FSB announced their disappointment that the Government had failed to announce automatic rate relief for small firms in the budget, and expressed their fears that the Chancellor missed the opportunity to give those firms the immediate financial boost they need at this time. This announcement came in the wake of U.K. Business Secretary Peter Mandelson plans released on Wednesday that the government to actively intervene in the trade credit insurance market with a temporary scheme designed to five billion pounds of Treasury guarantees. The feelings from the FSB is that the sum is insufficient and without a specific time frame.

Another brainchild of Mandelson, appeared to be given the “green light” in the budget are plans to boost the struggling motor industry with the introduction of a “car scrappage” scheme The scheme will allow consumers a £2,000 subsidy against exchanging their car for one that is more environmentally friendly.

Apart from the glum budget, it was also revealed yesterday that unemployment in the UK continues to climb. It has now reached 2.1 million in the first quarter, with last month’s figures signalling the 13th consecutive monthly rise.

The latest figures showed that a further 177,000 jobs have been lost, marking a 6.7 percent increase in unemployment, up by 0.6 percent from the previous quarter, according to figures released by the Office for National Statistics

The figures also showed that the number of people who have been unemployed for more than a year increased by 49,000 in the first quarter and is now approaching half a million.

Despite the doom and gloom, things on the stock exchange were still positive

On the day, the FTSE 100 added 43 points to close at 4,030.66 in London, while the FTSE 250 rose around 180 points to 7,159.96.

Retailers were the sector who showed the highest gains, led by auto retailer Inchcape, followed by video games retailer Game Group. Also doing well were sporting goods retailer Sports Direct International

Sterling fell back on Wednesday after the budget speech revealed the unhealthy state of public finances and the UK borrowing requirements for the coming fiscal year

Pound/US dollar 1.4566

Pound/Euro 1.1173

Pound/Japanese Yen 143.19

Pound/Swiss Franc 1.6979

US equities fell on Wednesday as a late sell-off in the financial sector as investor’s comments from Tim Geithner, the Treasury secretary, that the government wanted to retreat from the banking sector as soon as possible.

The Dow Jones Average dropped 83 points to close at 7886.57. Nasdaq rose by 2 points to close at 1645.85

Markets in the Asia-Pacific region were mixed again.

In Tokyo, the Nikkei 225 added 0.18 percent to 8,727.3 but the Topix index was down 0.09 percent to 829.96 and the Mothers market dropped 0.26 percent to 321.84.

Crude oil prices were lower right after the US Energy Information Precious metals prices were up but copper declined, while grains prices were mixed on the Chicago Board of Trade.

The International Monetary Fund (IMF) announced that they had revised their predictions and that the global economy is set to decline by 1.3% in 2009, instead of their original prediction of half a percent.

They also narrowed down their predictions to announce that major economies such as Germany, Japan and Italy will shrink in 2009 by an average of five percent.
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Banks pledge to help small businesses

December 9th, 2008 by admin | 0 Comments | Filed in Business Acounts, Daily News, Money Management, Recession, UK Banks

Banks have promised to try and make life easier for small businesses by agreeing a ‘statement of principles’ brokered by Business Secretary Peter Mandelson.

Businesses say they are having problems arranging loans and overdrafts despite the billions of pounds the government has injected in to the economy as banks have screwed down lending criteria.

Following the meeting, banks have agreed to cut the time it takes to transfer business accounts from one bank to another from ten to five working days.

The Federation of Small Businesses said the concession was “very welcome” because it would allow firms to shop around more easily between banks in search of better lending terms.

Banks have also agreed to consider business assets as securities before business-owners’ personal assets. That could reduce the number of personal bankruptcies that result from businesses collapsing during the recession.

The borrowing problem seems to have bypassed care worker Kaylie Coomber, 20, from Highnam, Gloucestershire, who asked her bank for a £50 overdraft extension and got a letter back telling her she could have £84million.

She had telephoned the Alliance and Leicester to ask if they would give her the higher limit in the run up to Christmas – and the paperwork came through telling her she had an £84million overdraft facility and would only be charged £5 for the privilege.

Her bank, the Alliance and Leicester said: “We apologise for any inconvenience or upset caused to Kaylie and can confirm this is an unfortunate one-off incident. The letter was sent off incorrectly.”

Meanwhile, on the markets, both the FTSE and the DOW closed up – the FTSE rose 251 points from 4049 to 4300 and the DOW 296 points from 8638 to 8934. The Pound closed unchanged against the US dollar and Euro – standing at $1.47 and 1.56 Euros.

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Worrying signs of business distress increasing

October 21st, 2008 by admin | 0 Comments | Filed in Daily News, Global Credit Crisis, Recession, UK Small Business

Small businesses are the work horses of any economy. They might not be big, but there sure are a lot of them…and they are almost all struggling. Not only are the credit conditions proving more than a handful for even the best prepared small business people, but the markets at home and abroad are struggling to find cash for all but essential purchases.

David Cameron has floated the idea of a temporary national insurance holiday for small businesses of 1%. This would save a small business which employs 4 people an average of £600 a year. He went on to say that without help, even great small businesses will go to the wall. His message was clear…we must save small businesses from going to the wall to stop this slump turning into something much worse.

He also called on the government to help small businesses with VAT holidays to help with cash flow since banks have recently become very wary about lending money to small firms as they hoard capital for their own balance sheets. Small businesses, according to Cameron, cannot wait for months as the £500bn bailout scheme works its way through the system. Cameron was adamant that the small businesses needed the help now.

David Cameron went on to criticise the chancellor, Alastair Darlings spending splurge as something which could put future interest rates cuts on hold as this approach would fuel inflation and would prevent the bank of England from cutting rates to help homeowners.

Well, the bank wasn’t supposed to cut interest rates while the inflation rate was above the bank’s target rate of 2%…but then again Alastair Darling isn’t supposed to borrow more than 40% of national income. It seems that these fine rules are all well and good when the sun is shining; the umbrella is just too big a temptation to leave in the car when it starts raining. It looks like all bets and rules are off for the forseeable future.

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Small businesses are next….

October 21st, 2008 by admin | 0 Comments | Filed in Daily News, Debt, Global Credit Crisis, Recession, UK Small Business

How will small businesses make their payrolls if the credit crunch persists? This is the nightmare scenario facing many small businesses. The standard response you get from small business people is that “we always make our payroll, even if we don’t pay our suppliers”. The trouble with this thinking at a time like this is that everyone is thinking the same thing. Suppliers may not be getting paid as the firms further down the supply chain start to hoard cash to pay their own staff should things get just a little tighter. Once a firm at the bottom of the supply chain goes bust, the result cascades up the supply chain and could set off a chain reaction.

How does the government avoid this catastrophe? Simple…they bail everyone out…or they do nothing. My gut reaction is that they will do nothing. As banks pull 20 year old credit lines left and right, smaller firms, who in less tough times could have got a loan from the bank secured on their property are really struggling to avoid closing the doors for the last time.

Business groups called on the Conservatives to announce more radical policies to deal with the deteriorating economic environment. Miles Templeman, director general of the Institute of Directors said: “Both measures would give small businesses a boost during the economic downturn. However, they do not go far enough, and we hope that more ambitious plans will emerge in the near future.”

Liberal Democrat Treasury spokesman Vince Cable said: “My own preference would be that, if there’s room for tax cuts, to give ordinary people their own money back.

How many will go isn’t clear right now, but the unhappy fact is that many in the homebuilding sector have gone already and many more in the real economy look set to go bust unless some remedy is found. If the UK loses its small business base, the seeds of tomorrows multinational companies, then it’s isn’t just a recession or a depression, it’s a tragedy that could take a generation to fix.

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