In an interview held over the weekend, chancellor of the Exchequer Alistair Darling predicted that should the Labour Party be re-elected in this year’s anticipated elections they will be prepared to tightly rein in spending and curb Government borrowing. The treasury chief warned that the UK has little option but reduce the massive budget deficit entailing making the toughest public spending cuts seen in 20 years.

Darling’s comments signaled a change in direction or a possible split in Labour’s election strategy as until recently Gordon Brown’s has pinned the bulk of his preliminary electoral campaign and its possible success on the need to support economic recovery, instead of reducing the country’s current £178-billion-pound deficit. The International Monetary Fund has forecast that the UK’s GDP deficit will peak this year at 13.2 percent.

To the chagrin of many, city bankers look likely to suffer minimal impact from the bonus super tax imposed on them by the government last month.

Most banks who were available for comment hinted they are preparing to absorb if not all at least part of the cost of 50 per cent tax by inflating their bonus pools, and are prepared to run the risk of irritating the government and even their own shareholders in order to keep their staff happy. The banks are unofficially conceding that dividends are likely to be hit by their capitulation, and they are already under pressure as regulators have pressurized banks to increase their capital holdings, which will have a consequent effect on their profit margins.

Meanwhile, the Association of British Insurers (ABI) has written a letter to the remuneration committee chairmen of the UK’s top 350 companies warning boards against paying big bonuses and keeping directors safe from tax increases. ABI are concerned that investors will lose out amid fears that banks will absorb the supertax on bonuses at the expense of dividends. Last year was marked by a number of cases of shareholders rebelling against companies’ plans.

With Christmas trading a fading memory, it has been reported that city analysts are taking a close look at Tesco and attempting to determine how much the extra £100 million pounds’ worth of loyalty vouchers given to customers affected their Christmas trading. Fears are that by Tesco’s inflating their Clubcard loyalty scheme they could have "artificially" inflated their UK sales figures for the period, with estimates that the extra vouchers could have added around 1.5% the supermarket chain’s UK turnover for the Christmas , which is due to be released on Tuesday.

The Crown Estate, owner of the UK’s coastal seabeds, have granted development rights to energy companies that will herald the largest wind energy project ever seen in the world.

The announcement has the potential to see an additional 32 GigaWatts (GW) of clean electricity feeding into the UK grid, on top of 8 GW from previous rounds. 32 GW will mean enough offshore wind energy to supply nearly all the homes in the UK, with projection that investment in UK offshore wind overall could be worth £75 billion and support up to 70,000 jobs by the year 2020.

A total of nine development zones, with a capacity of just over 25 GW, have been allocated to Ten European Companies following a competitive tender.

Plans are currently under approval by the UK Government to construct what will be the fastest railway in Europe. The multi billion pound project would see trains travelling from London to the West Midlands at 250 mph from a new station to be constructed in the capital.

Construction is scheduled to begin in 2017, and the first trains should toll out of London 2025, carrying more than a thousand passengers at a time. The project is expected to cost as much as £60 billion.

Taking a short term view, the UK is currently investigating a variety of options on how to deal with increasing stocks of swine flu vaccines, with the British public showing a lack of interest in taking advantage of the free injection. The department of health is looking at either renegotiating existing contracts with the drug companies, such as GlaxoSmithKline and Baxter International to reduce the consignments. Other last attractive options are to sell the vaccines on to other countries or simply give them away. France and Germany also intend to cancel millions of doses of the H1N1 vaccines because of oversupply.

All of the five UK mobile networks are now reported to be in talks with Google over plans to market their new Nexus One mobile phone. Vodafone are the first operator to officially announce that had sealed a deal to offer the device, while no official launch date has been set as yet. The remaining four UK mobile phone operators. While it is expected that the big four will be providing support and service for the Nexus One, Google will be marketing their new baby exclusively online.

A little reminder that the internet doesn’t yet rule all of the World came with the news that UK greeting cards company Clinton have reported a rise in sales of 3.5 percent on last year for the weeks approaching Christmas, with like-for-like sales in the 22 weeks to Jan. 2 rising. However this upturn in sales appeared to be a drop in the ocean as the company continues to experience difficult trading conditions and has closed 12 of their stores in the last six months.

The pound stuttered slightly above the dollar in pre-weekend trading, while sliding backwards against the Euro.

• Dollar 1.6025
• Euro 1.1116

As brokers set off home for the weekend in their snow ploughs and sleds, the FTSE 100 edged just 7.52 points higher to 5,534.24. For the week the index was up 2.4 per cent, making for the third straight weekly gain.

In the US official figures have shown the unemployment rate holding steady at 10% despite the fact that employers unexpectedly cut 85,000 jobs in December. The US Labor Department had initially estimated that 11,000 jobs were cut in November, but now says that the economy had in fact added 4,000 jobs.

Since the recession began in 2007, 7.2 million jobs have been lost in the US, with 4.2 million of them in 2009 alone.

The Dow Jones Industrial Average closed for the weekend still on the up, eleven points to 10,618 while the NASDAQ also jumped 17 points to close on 2,3170.71.

General Motors (GM) reluctantly advised that they have begun "winding down" process for Saab, whilst continuing efforts to find a buyer for their Swedish car-making subsidiary.

GM intends to organize an "orderly" winding down at Saab, which they expects to take several months. The US group also confirmed that they are continuing to evaluate the several proposals they had received to acquire Saab, including the one from Formula One boss Bernie Ecclestone.

With the news that the exports had risen by 17.7% in December, China now claims to have overtaken Germany to become the world’s largest exporter.

December’s remarkable rise ends a 13-month decline in trade as a result of the global downturn.

Total Chinese exports for 2009 were £7.5 trillion, which marked a downturn in foreign of 13.9%, as the global economic downturn led to a fall in demand.

financial

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Tags: Alastair Darling, Association of British Insurers, Bank, Banking, Baxter International, Bernie Ecclestone, British Economy, British Pound, budget cuts, Clinton Cards, Currency, Dow Jones, Economy, Financial News, FTSE, GDP, General Motors, GlaxoSmithKline, Google, Gordon Brown, H1N1, International Monetary Fund, Labour party, Money, Money Markets, NASDAQ, Nexus One, Recession, Retail, Saab, Stock Markets, Stocks and shares, super tax, swine flu, Tesco, The Crown Estate, UK Banks, UK Economy, UK government, UK Recession, US labor Department, Vodafone

Whilst the panic surrounding the possibility of a global swine flu pandemic seems to have temporarily waned, there must have been some interesting questions asked and scenarios raised what would happen if the UK economy was indeed affected by an epidemic of this nature.

Whilst the UK once again gave an exhibition of the stiff upper lip that kept us going through World War Two, the question would have to be, how would we have coped if the epidemic had been as serious and as viral as first feared, and who can guarantee that the flu will not return in full force in the next month, week or days. It seems to be fairly common knowledge that the health authorities in the UK have been aware that “something was in the air” and it may be viral, and have been stockpiling serums and anti viral treatments for some time. Hopefully enough to treat every UK citizen, with some to spare.

The question on everyone’s lips would have to be, how would the current shaky financial situation affect us when we are busy fighting against our own personal dose of swine flu? Would the banks and building societies understand? Or would the UK treasury once again have to step in, and guarantee the financial well being of those who were struck down by the dreaded flu until they can get back on their feet again.

Reports have it that the Mexican economy has been particularly devastated by the effects of the flu, which has forced them to virtually shut down all but their essential services and strongly advising its citizens to volunteer a form of self imposed quarantine for seven days. .

The UK public and the business community are still highly vulnerable and it is almost delusionary to imagine your friendly bank manager, rise out of his sick bed especially to distribute special emergency bridging loans to anyone who asks to see them through the flu induced crisis.

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Tags: British Economy, Employment, Global Credit Crisis, Pandemic, Recession, Retail, swine flu, UK Recession

There appears to be no arguing with statistics, and the one that says that UK property values for 2009 will reduce by close to 20% as has been predicted. It appeared that property prices were indeed bucking the trend, yet March’s figures showed a 0.3 decline and it appears that April figures will be less than optimistic. It now appears that an overall decline of close to 37% from their peak in 2007 is inevitable, with 2009 being the worst year, where prices will fall by around 2.5%.

Currently the average costs of a house in the UK is around £ 55,000

The decrease in property values is being driven by the reluctance of first time buyers to take a chance on the market, which seemed to be improving just a few weeks ago; however mortgage fell last month for the first time since the end of 2008.

The bank of England hastened to explain that their “quantative easing” scheme is yet to fully kick in, and once it would borrow terms would be less restricted and the public should be more inclined to invest in property. Forever anticipating the demand, rumours have it that finance provider Virgin Money has intimated interest in acquiring certain of the more juicy parts of the Northern Rock building society, when the company is sub divided towards the end of 2009.

Virgin Money is seemingly interested in acquiring seventy high street branches of Northern Rock

There was a lot of nervous coughing and sneezing on the FTSE yesterday with airlines and travel company shares being hard hit as the market began to take into account the possible economic impacts of the swine flu outbreak.

With the flu outbreak in Mexico spreading rapidly with isolated cases already reported in US, Canada, Spain as well as the UK, shares in British Airways dropped by 7.7%, while London quoted cruise giant Carnival could only lie back and watch their shares lose 6.8% on the day’s trading.

But to prove that every cloud does indeed have a silver lining, shares in drug companies took a major turn for the better, with Roche, who have a very important niche in anti-flu drug market having a very good day.

Also basking in shades of victory yesterday were U.K. sportswear retailer JJB Sports PLC whose shares jumped by 31% Monday, after the firm’s creditors eventually agreed to back the company’s hard worked for rescue plan, which will considerably ease the company’s current rental burden and release valuable funds to aid the company’s survival plans. JJB’S success in renegotiating rents is expected to set a precedent for many other retailers in similar positions.

Telecoms stocks were also at the forefront among the profit earners yesterday. Shares in Vodafone rose 2.4 per cent (3 pence to 125.45) after its US joint venture m Verizon Wireless produced some very favourable results

In the oil sector, BP were the stars in a weak sector, with their shares rising 0.9 per cent to (4.5 pence to 483) ahead of today’s first-quarter results.

The retails sector showed some restrained excitement, largely fired by rumours focused on the Sainsbury group. Whether the rumours have any foundation remains to be seen, however the company’s shares pushed up by 1.5 per cent (5 pence to 328)

Overall the FTSE 100 recovered from an early drop to close up 11.02 points to 4,167.01. The FTSE 250 index did a lot worse, dropping 90 points to close at 7,279.93

Sterling fell slightly against the dollar and the Euro and held its own against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4563

Pound/Euro 1.119

Pound/Japanese Yen 139.27

Pound/Swiss Franc 1.6817

Fears that a swine flu outbreak could turn into a global pandemic was the principal symptom that caused Wall Street shares to have a weak day’s trading.

The Dow Jones Average dropped 51.29 to close at 8025. NASDAQ also fell 14.88 points to close on 1679.41

The market spluttered and wheezed all day as companies tried to wear down who would lose and who would stood to benefits benefit from the outbreak.

American Airlines shares plummeted by 13.3 per cent to $4.70, with Delta Air Lines also dropping by 14.3 per cent to $6.75. Investors rapidly pinpointed that the travel industry would be the first to suffer and rapidly cancelled their travel plans. Hotel chain Marriott, dropped 5.1 per cent and online travel agency Expedia suffered a similar fate, with their shares dropping 6.3 per cent.

The projection that the demand for steel demand is likely to fall by around 15% cent this year seems to be also accurate. If the current slump continues, According to forecasts issued Monday by the World Steel Association, it will be the greatest in the industry since the end of World War Two.

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Tags: Bank of England, FTSE, JJB Sports PLC, Northern Rock, Recession, swine flu, UK property values, Virgin Money