Figures released yesterday confirmed that the UK economy grew by 0.1% in the last quarter of 2009, meaning that the recession is finally over, but later and which much less impact than the US or the Eurozone economies. Britain’s economy had been in recession for eighteen months, the longest period since quarterly figures were first recorded in 1955.

The news was widely anticipated with signs such as last week’s UK unemployment figures that fell for the first time in 18 months.

Analysts now predict that no matter which party wins this year’s election when it happens, the loser will be the pound/ Reasons given are that neither David Cameron or Gordon Brown will be able to muster sufficient support in parliament to control the UK’s budget deficit, which is the largest in the in the Group of 20.

Strategists have pruned back their forecasts on the sterling versus dollar pair by as much as 2 percent this month, to the lowest level since June 2009, with Sterling liable to be weighed down by possibility of the first parliamentary stalemate in more than a generation and growth levels that lag far behind Britain’s rival industrialized economies. Add that to a fiscal shortfall that has ballooned to almost 13 percent of gross domestic product and the picture for the pound looks less than rosy.

Previous precedents do not bode well for the pound, as when the last time a U.K. election failed to produce a clear winner in 1974, Sterling fell in value by 28 percent in the next two years, with the government’s failure to fund its deficit leading to the International Monetary Fund stepping in to bail-out the economy.

The UK’s so-called ‘Big Six’ group of energy suppliers is on course for a profits windfall due to the extremely cold weather conditions experienced in the UK during December and early January. Consumers were forced to turn up their thermostats when the country experienced the coldest weather conditions for decades with the daily demand for gas hitting an all-time high on Jan. 7th of 454 million cubic meters. Analysts predict that accumulative profits for the big six (Centrica, EDF, E.ON, Scottish and Southern Energy, ScottishPower and RWE npower) could easily reach an additional £100 million for the period.

The Chelsea and Yorkshire building societies are expected to finalise details of a merger this week. Doing so will mean the creation of the second biggest society in Britain, after the Nationwide. Yorkshire Building Society members are liable to give their thumbs up for the merger, following the lead of the Chelsea Building Society who gave their support to the deal on Friday. A successful deal would mean the consolidated company would have combined assets of £35 billion pounds, around three million members and 180 branch offices around the UK.

On the news that Barclays plans to defer bonuses for top executives including Chief Executive Officer John Varley for up to three years, stock in the company 4.1 percent, to 271.35 pence.

Pilots at British Airways pilots have been warned by the labor unions representing the cabin crews not to become strike breakers if an employment dispute leads to a work stoppage. News that caused BA’s stock to decline 0.8 percent, to 207.9 pence.

Prudential Plc, the U.K.’s largest insurer have announced plans to cut back expansion in developed markets to focus on growth in developing Asian countries, such as Malaysia, Vietnam and Indonesia. Shares in Prudential shares dropped 0.4 percent to 605.5 pence.

Sterling rose slightly against the dollar and the Europe in early week trading. The pound closed at 1.6144 against the dollar, with the Euro being traded at 1.146

Shares in the FTSE 100 took a minor downturn, despite the news that the recession was over in the UK. It closed on Tuesday down 26 points to 5,276.85.

A calmer mood prevailed in markets on Monday and Tuesday after a three day downturn that knocked 5 per cent of its values. Reports coming out of Washington over the weekend suggesting that Ben Bernanke looks like being reappointed chairman of the Federal Reserve for another four-year term settled the markets which had closed at fresh a 15-month high as recently as last Tuesday.

The Dow Jones rose by 84 points, to close at 10255.28, while the NASDAQ recovered 14 points, to finish at 2210.53.

According to the National Association of Realtors (NAR) sales of previously-owned US homes fell 16.7% in December, after having risen in the three months from September to November as first-time buyers took advantage of tax credits. However the decline in December came as no surprise as most buyers had rushed to complete deals before the original 30 November deadline. The first-time buyer tax credit has since been extended until 30 April, causing the NAR to predict that there was likely to be another surge in sales in the spring. December sales fell to a seasonally-adjusted annual rate of 5.45 million from 6.54 million in November, 15% higher than in the comparable period in December 2008.

Computer giant Apple have announced a 50% increase in profits after seeing a bumper Christmas period, with sales of iPhones doubled from a year ago.

Net income rose to $3.38 billion (£2.08 billion) in the three months to 26 December, from the $2.26 billion in the same period in 2008. A spokesman for Apple announced that they had succeeded in selling 8.7 million iPhones in the quarter. Sales of Macs also rose 33%, although iPod sales fell by 8%.

General Motors (GM) has confirmed that Saab is to be eventually acquired by Dutch luxury carmaker Spyker.

GM has been trying to sell Sweden’s Saab since January 2009 although recently they announced that they would begin the procedure of winding down the company while still continuing their search to find a buyer.

Wind-down activities have now been suspended, "pending the close of the transaction".

Saab lost £255 million in 2008, and has not made a profit since 2001.

In the commodities market, gold took advantage of the relative stability in the dollar, to rise to $1,097 an ounce. Oil also rose by 0.5 percent to $74.92 a barrel.

financial

• Prosper Delinquent Debt Sale In Progress Yesterday Prosper began a delinquent debt sale.  This happens when...
• You Just Won $1 Million...Now What? Many of us have dreamed of what we would do...
• An Honest Review Of WorldVentures First and foremost, I would like to say that I...

Tags: Apple, Banking, Barclays, British airways, British Economy, British Pound, Centrica, Chelsea Building Society, Credit Crunch, David Cameron, Dow Jones, E.ON, Economics, Economy, EdF, Federal Reserve, Financial News, FTSE, General Motors, Gordon Brown, International Monetary Fund, iPhone, John Varley, Money, NASDAQ, National Association of Realtors, Nationwide, Prudential Plc, Recession, RWE npower, Saab, Scottish and Southern Energy, ScottishPower, Spyker, UK Banks, UK Economy, UK government, UK Recession, Yorkshire Building Society

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.

financial

• Updating the Government's Vision into our Economic Future The Congressional Budget Office this week issued its Summer Update of...
• An Early Visit with the Tax Man and Weekend Reading Yesterday was the deadline to pay estimated federal income taxes....
• Top 10 Canadian Dividend-Paying Multinationals When you think about multinational companies, Canada probably isn't the...

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