UK unemployment has risen to its highest level in 14 years despite all the indications that the recession has begun to recede

Recent reports indicate that in the second quarter through June, the number of people seeking work rose from 2.22 million to 2.44 million, an increase of 220,000 making for the highest level of unemployment since 1996. According to the Office for National Statistics, claims for jobless benefit climbed by 24,900 in July to 1.58 million.

A separate statement issued by the Bank of England predicted that unemployment will keep climbing even after the recession is recognized is over, which will hamper the pace of recovery. To soften the unemployment burden, BOE Governor Mervyn King announced that the bank will to expand its bond-buying program.

According to the International Labour Organization, overall UK unemployment rose to 7.8 percent between April and June, compared with 9.4 percent in the U.S. in July, 9.4 percent in the euro region in June and 5.4 percent in Japan.

According to the UK’s Financial Service Authority (FSA) an end to the practice of awarding non performance related bonuses appears to be in the offing at long last. From 2010, UK financial institutions will be disallowed for paying their staff guaranteed bonuses out with the current financial year. Exempt however are senior bank employees who can still have their bonuses spread over two or three years.

Lloyds TSB have announced that its Insight asset management business is to be sold off to the Bank of New York Mellon (BNY) for £235 million.

Analysts say the deal may mark the start of a phase of consolidation and disposals among mid-sized asset management groups facing increasing margin pressure.

BNY Mellon beat off several competitors in the auction for Insight, whose revenues in both 2006 and 2007 were around the £125 million. 2007.

The Lloyds group, 43.5 per cent taxpayer owned is known to be consolidating their activities, in anticipation of talks to be held with the European Commission about state aid approval. Lloyds surged 6.4 percent to 96.83 pence.

Also on the offload trail are RBS who are well into the process of selling or shutting down its businesses in two-thirds of the 54 countries where it has been operating, in the aftermath of suffering the largest trading loss incurred in British corporate history last year.

As part of their campaign, RBS have announced a £53 million deal to sell off 99.4 percent of the Banks branches in Pakistan to the privately owned Muslim Commercial Bank, the country’s biggest lender by market value. The deal is not yet official, requiring regulatory approval which, according to analysts will be a formality. Royal Bank of Scotland Group Plc, the biggest bank owned by the U.K. government, added 5.4 percent to 45.15 pence.

Independent Television Corporation (ITV) the hard pressed and profit starved UK commercial network broadcaster has received a long overdue boost in the shape of a positive recommendation of better times ahead to investors from their bankers. The news pushed their shares up towards its target price of 50 pence, for the first time in a long time.

The U.K.’s largest publicly traded residential landlord Grainger Plc were among the stars on the FTSE on Thursday as their shares shot up by 16 percent, (33.5 pence, to 243.5 ) on news that that they had succeeded in reducing their debt burden by £100 million pounds since March, through disposal of real estate.

The FTSE 100 to a new 10-month high on Thursday, making for an increase of more than a third since early March, as reports of a global economic recovery gains impetus.

The FTSE 100 continued to make up for losses earlier in the week, up 38.70 points to close on 4,755.46. Meanwhile the FTSE 250 took another giant step forward, rising 131.73 points to close on 8,483.66

Sterling has a mixed day on yesterday’s markets, ring slightly against all of the currencies, with the notable exception of the EURO.

• Pound/US dollar 1.6575
• Pound/Euro 1.1605
• Pound/Japanese Yen 158.3223
• Pound/Swiss Franc 1.7751

In the US retail sales fell in July, following two months of rises, as fears of job security appear to have put a block on consumer spending.

The figures proved to be an unpleasant surprise for analysts, who had been expecting a rise of 0.7% in overall sales last month.

On Wall Street, US stocks reached new highs for the year, with the Dow Jones index rising 36.58 points to close on 9398.19, while the NASDAQ again passed the 2,000 point mark, up 10.63 points to finish the day on 2009.35

The big news coming out of Europe was that both the French and German economies have announced an end to the year-long recessions in both of Europe’s strongest economies.

Stronger exports and consumer spending, as well as government stimulus packages, contributed to of 0.3% between April and June

However economic activity in the eurozone fell by 0.1%, a sign that the region is still in the throes of the recession.

The Volkswagen / Porsche takeover deal has finally been finalised. Volkswagen is to pay €3.3 billion for a 42% stake in Porsche’s main production division. Between the lines, the takeover was closer to a rescue for debt-laden Porsche, which will amount to a complete merger of VW and Porsche SE during 2011

Crude oil prices rose by more than $1 a barrel as commodity markets rallied after better-than expected economic data fuelled hopes that the eurozone’s recession was close to ending.

Gold rose 1 per cent to $956 a troy ounce, bolstered by dollar weakness

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Tags: Bank of England, Bank of New York, Banking, BNY Mellon, British Economy, British Pound, Crude oil, Currency, Dow Jones, Economics, Economy, Financial News, Financial Service Authority, FSA, FTSE, Gold, Grainger Plc, Independent Television Corporation, International Labour Organization, ITV, Lloyds TSB, Mervyn King, Money, Money Markets, NASDAQ, Office for National Statistics, Porsche, RBS, Recession, Royal Bank of Scotland, U.K. government, UK Banks, UK Recession, Unemployment, US retail, Volkswagen, Wall Street

When U.K. Prime Minister Gordon Brown announced at a a press conference “ Don’t think its over” he wasn’t referring to his special relationship with Alasdair Darling, instead to the much more serious matter of the ongoing recession in the UK.

Brown hastened to point out that despite the many signs that the economy is stabilizing after a severe contraction that began almost two years ago and peaked in Autumn 2008 , “economic recovery cannot be taken for granted either here or abroad.”

He went on to add that the Labour government’s anti-recession measures “will shorten the recession and it will reduce its impact,” The Financial Services Authority (FSA) announced on Thursday that three HSBC firms have been fined a total of £3.2 million for” misplacing” client’s confidential details.

According to the FSA, HSBC Life lost an unencrypted CD with the details of thousands of policyholders, while HSBC Actuaries misplaced an unrelated disc containing a further 2,000 pension scheme members private details. HSBC Insurance was also fined.

FSA added that the fines could have reached as high as £4.5 million had the three firms not agreed to reach an early settlement In a statement to the Stock Exchange on Thursday National Express have announced the names of the mystery bidders interested in acquiring their company. Spain’s Cosmen family in partnership with the private equity group CVC, have made a joint takeover bid for National Express, in a deal that values the group at more than £500 million The Cosman family, are the currently the largest individual shareholders in National Express with 18.5 per cent of the shares.

On the news, National Express shares rose 4.4 per cent to 324p.
Also on the Stock Exchange Thursday, Mondi, Europe’s largest maker of paper bags, saw their shares soar in value by nine percent to 234.35 pence as a result of de-classification arrangement reached in their home base of South Africa.

Zetar, the confectionery and snacks business, announced yesterday that the collapse of Woolworths last year had had a profound effect on their turnover and profitability for their last trading year. Pre-tax profits for the company fell from £5.9m to £2m for the year to April 30, despite the fact that turnover rose from £109.2m to £118.6m..
Turnover from the confectionery division rose from £68.5m to £75.1m, and from the snacks division from £40.7m to £43.5m. But margins in both came under pressure from price rises in commodity ingredients.

The U.K.’s largest supplier of administrative services Capita Group announced that their first-half revenue had reached £1.3 billion. Despite the fact, their shares fell 0.5 pence, to 712.5.

Announcing that the process to split its two units is “well on track, Carphone Warehouse Group Plc, U.K.’s biggest mobile-phone retailer also added broadband clients and increased retail revenue in the first quarter. Their stock rose 0.5 pence to 166 on the news.

The publisher of Britain’s Daily Mail newspaper Daily Mail and General Trust Plc announced that sales in the quarter ended June 30 had fallen to 520 million pounds ,13 percent down from the same period a year earlier. Despite that fact, their shares rose 4.25 pence, or 1.4 percent, to 310.75.

The owner of the Howden Joinery builders’ merchant Galiform surged 24 percent to 46.5 pence, on the announcement that their gross profit margin improved in the first half.
On Thursday , the FTSE 100 index closed up 66.07 points to 4,559.80, its highest level since January., while the FTSE 250 continued its relentless increase, gaining 93.18 to 7,887.23

Early falls in sterling following a press report that two UK banks require additional funding were reversed after the Bank of England announced that they had decided to maintain their asset purchase programme.

Pound/US dollar 1.6491
Pound/Euro 1.1647
Pound/Japanese Yen 156.1026
Pound/Swiss Franc 1.7716

Leading US shares jumped on the back of good corporate and economic news and closed at their highest levels for more than six months. The Dow Jones index closed above 9,000 for the first time since January, up 188 points, or 2.1% on the day.

On Wall Street , the Dow Jones rose by a massive 188.03 points to 9069.29 while the NASDAQ moved forward 47.22 points to close on 1973.6
Software giant, Microsoft reported disappointing results for the second quarter, with profits down by almost a third.

Net profit for the period was $3.1bn (£1.9bn), down by 29% from the same period a year earlier. Revenue came in at $13.1bn, down 17% from a year ago.
A spokesman for Microsoft said that the company had been affected by weakness in the global personal computer (PC) and server markets

The car industry was in the news on Thursday, with UK Business Secretary Peter Mandelson announcing that the U.K. government is awaiting the decision , expected within a week on which company will be acquiring General Motors Co.’s operations in Europe.

There are currently two bids on the table SA for GM’s Opel unit which includes the Vauxhall brand in the U.K., from Magna International Inc. and RHJ International,
The only member of the “Big Three” US carmakers not to have gone bankrupt, Ford has gone on to show how it should be done by reporting a quarterly profit of $2.3bn (£1.4bn).

However, the euphoria around Ford was shattered when it was revealed that the profit was largely due to one-off gains related to debt restructuring, with demand for new cars remaining weak. Excluding the gain, Ford said it made an operating loss of $424m.

In Europe, Volkswagen (VW), finally announced their plans to buy German sports car firm Porsche. The takeover will be carried out in stages whilst retaining the Porsche’s autonomy. VW says its board will hold talks with Porsche “in order to reach a final concept fulfilling this goal”. Both sides had earlier said they wanted to form an integrated automotive group.

Oil prices continue to drop, while the base metals sector were mixed and gold retained its hold above the $950 an ounce level

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Tags: British Economy, Credit Crunch, Economy, Employment, Financial News, Gordon Brown, Money Management, Recession, UK Recession, Volkswagen