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

financial

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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

Stephen Hester, chief executive of Royal Bank of Scotland will be expected to jump up through a few flaming hoops next year following the public outcry over his pay award that could reach as high as £9.6 million for this year.

Hester will be given considerably tougher performance targets to meet next year to collect his maximum bonus, and will need to hit exacting goals on profitability and other measures, and not just the internally set RBS share price target set for his 2009 long-term incentive plan.

The news of Mr. Hester’s new deal came as UK Financial Investments, the government body that manages the state’s 70 per cent stake in RBS as well as 43 per cent of the Lloyds Banking Group holding, published its first annual report on Monday. The report made for grim reading, showing that the UKF’s stakes were trading at a paper loss of £10.9 billion as at the end of June.

On the FTSE, it was hats off to British Airways Plc and their Chief Executive Officer Willie Walsh. Shares in the airline advanced 5.5 percent to 126.6 pence after news that the company has secured backing from some investors for a share sale to boost the company’s finances.

Separately, the airline is prepared to improve the terms of a proposed merger with Iberia Lineas Aereas de Espana SA, and is willing to consider a 50-50 share swap ratio.
Shares in the military research company Qinetiq Group Plc rose by 1.5 pence, to 138. The company who split off from the U.K. defense ministry in 2006 reached an agreement on talks with trade union Prospect to avert a pay dispute.

The U.K.’s biggest reader of water meters Spice Plc suffered a fall 1.50 pence to 67.25 pence after reporting an increased full-year net income and stating that they remained confident of future prospects in a wider economic environment that remains “challenging.”

Having recovered from their debt struggles, specialist fabrics maker Low & Bonar have forecast their intention to issue a dividend by the end of the year.
The possibility arises as the company announced the disposal of its flooring division as well as raising £30 million from shareholders over the past year in an attempt to reduce debts that have quadrupled to reach £208 million in the year to May 2008.

In interim results, the group announced that their net debt was standing at £99 million at the end of May, just under three time’s analysts’ consensus for full-year earnings.
The company manufactures specialist materials for carpet tiles, road surfaces and architectural awnings.

The FTSE 100 continues its steady recovery, closing the day up 35.55 points to 4237.18. The FTSE 250 also continues to rise, on Tuesday by 132.29 points to end the day on 7,411.09.

The pound gained ground on Tuesday as rising equity markets boosted investor confidence and statements from Adam Posen ahead of his appointment to the Bank of England’s monetary policy committee, announced that sterling should continue to appreciate in the medium term.

Pound/US dollar 1.6328
Pound/Euro 1.1682
Pound/Japanese Yen 152.8168
Pound/Swiss Franc 1.7766

Wiping the slate with all of the analysts’ forecasts, US bank Goldman Sachs reported a net profit of $3.44 billion (£2.1 billion) for April to June, The rise in profit was put down to decreased volatility in stock markets, rises in global share prices as well as the bank’s increasing involvement in many firms’ rights issues and takeovers.

A spokesman for the bank announced that $6.65 billion had been earmarked for pay and bonuses in the quarter, making for an average of $226,000 per employee.
They can do so with impunity as Goldman recently paid off the $10 billion in government loans it had taken as part of a government bail-out programme.

There was optimism afoot on Wall Street as the Dow Jones index rose for the second day, this time by 27.81 points to 8359.49 while the NASDAQ continued its steady comeback, climbing by just 6.52 points to approach the 1800 mark 1799.73
.
According to a report from the Commerce Department, US retail sales rose by 0.6% in June. The increase followed May’s 0.5% gain, and was an improvement on analyst expectations of 0.4%. The increase in sales was largely led by the automobile and transport sector. Without their input, sales dropped 0.2%, their fourth straight decline.

Official figures have shown Eurozone industrial output also rose in May compared with April, the first month-on-month increase since August last year.
The information comes two weeks after official figures showed eurozone retail sales fell in May, while unemployment rose.

And just to remind us of the French Revolution, on Bastille Day workers at a failed French car parts supplier threatened to blow up their factory unless the company’s two biggest clients Renault and PSA Peugeot Citroen pay them extra compensation. Employees of the engine parts maker New Fabris have rigged up a series of gas canisters inside a factory workshop which they say will be detonated on July 31 if the two carmakers fail to pay €30,000 to each of the 366 workers facing unemployment. Financial analysts are still trying to figure out the logic behind the threat.

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Tags: Bank, British Airways Plc, Financial News, Iberia Lineas Aereas de Espana SA, Money, Royal Bank of Scotland, Stephen Hester, UK Financial Investments

Bank of England profits soared to nearly £1bn last year on the back of operations supporting the financial sector.

Pre-tax profits quintupled to a record £995m in the year ended February, the most since the Bank began revealing its earnings in 1971.
This allowed the bank to pay out a dividend to the Treasury of £417m, up from more than five times from the previous year, according to the bank’s annual report.
The scale of the BOE profits has raised a few eyebrows however, with some analysts of the opinion that the Bank has been charging troubled lenders “distress rates”.

Meanwhile the organisation formed by the UK treasury to handle their interest in the semi-nationalised banks under their control have begun to sound out investors about the possibility in selling off some of their share holdings as stock market revival appears to be increasing confidence in the financial sector.
The body, UK Financial Investments, manage the 43.5 per cent stake in Lloyds Banking Group as well as the 70 per cent stake in Royal Bank of Scotland, hope to have completed some sell offs within the next twelve months.

Shares in both banks rose strongly on Tuesday after news of this possible development began to filter through. Royal Bank of Scotland Group PLC (RBS) and Lloyds Banking Group (LYG) rose strongly Tuesday following a report that the government is sounding out investors with a view to selling its interests in the banks – even though that sale could take up to several years. RBS was up 5.8% at 44 pence while Lloyds was up 4.8% at 103 pence, both outperforming the FTSE100 index which was up 0.9%.

The report also said it could take five or six years for the U.K. government to exit the two banks.
HSBC Holdings PLC (HSBA.LN) was up 3.5% at 575 pence while Barclays PLC (BCS) was up 2.4% at 288 pence.

A UK car scrappage scheme championed by Gordon Brown, Britain’s prime minister, got off to a stuttering start on Monday as confusion about how it would work prompted several leading manufacturers to delay their involvement.

Glitches over tax and other administrative issues marred the launch of the scheme while Honda, Ford and GM were reported to be waiting to clear up some important details on how the trade-in scheme will operate , with the first scraps of information only being received from the Department for Business and Regulatory Reform before the weekend.

As expected, Marks & Spencer confirmed yesterday that the dividend due to be paid to shareholders will fall by a third after annual results revealed a near 40% drop in profits. (£604.4million compared to £1billion in 2007) This is the first time that M&S has been forced t cut their dividend since 2000, causing considerable consternation among their shareholders.

Doing better is Scottish & Southern Energy (SSE), who is expected to announce “modest” increase in profits, when producing their annual results on Thursday. Analysts predict that SSE will post underlying profits of about £1.25 billion for the year to the end of March, up only £200,000 from 2007, but still showing an increase. To retain their market share, the energy group has been forced to cut both electricity and gas tariffs during 2008, although both by much less than had been feared.

The benchmark FTSE 100 Index continued to impress, rising 36 points to 4,482.45, while the FTSE 250 index also rose by 121.69 points to close on7698.32
Sterling rose slightly against the dollar and the Euro and rose slightly against the Japanese Yen and the Swiss Franc:
· Pound/US dollar 1.5484

· Pound/Euro 1.11367

· Pound/Japanese Yen 149.02

· Pound/Swiss Franc 1.719

Wall Street had a reasonable day on trading The Dow Jones Average dropped a mere 6.7points to close at 8497.39, while the NASDAQ rose 7.36 points to 1739.72.
The US Senate have voted overwhelmingly in favour of a bill that will impose new restrictions on the credit card industry. Designed to set a curb on sudden interest rate increases and hidden fees The bill marks the first major financial reform made by the Obama administration.

Spokesmen for the credit industry have warned that the measure could lead banks to issue fewer credit cards thus making it more difficult for consumers to get credit.

Hewlett-Packard (HP) reported a 17% fall in quarterly profit, attributed to reduced businesses and consumers spending on computers, printers and ancillary products. .
The world’s top PC marker said that net profit totalled £1.1billion in the three months ended 30 April, whilst warning that profits and revenue were likely to continue to fall during 2009 HP made the expected announcement that they are about to cut around 2% of its global workforce, making for a job loss of more than six thousand people.

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Tags: Credit, Credit Card, Gordon Brown, Hewlett-Packard, Marks & Spencer, Scottish & Southern Energy, UK Credit Cards, UK Financial Investments