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

• An Honest Review Of WorldVentures First and foremost, I would like to say that I...
• You Just Won $1 Million...Now What? Many of us have dreamed of what we would do...
• Nice warm lunch time run 5.7 miles in 48:51--8'35" miles, around 11am. Didn't do anything...

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

According to Thomas Huertas, the banking director at the U.K.’s Financial Services Authority, London’s role as the European Union (EU) equivalent to Hong Kong as a self-regulating financial center, is drawing to a close.

The group of 27 European states that comprise the EU plans to centralize oversight of markets in the wake of the global financial crisis, with proposals for new regulators for the banking, securities and insurance industries, Huertas said. Evidence of a continental European sway away from London was provided by recent statements from Michel Prada, former chairman of French market regulator "the Autorite des Marches Financiers", who said that while continental Europeans “admire the City,” the also felt high levels of jealousy and irritation towards it.

About 10 percent of jobs in Britain’s financial services industry could be cut, equivalent to over 110,000 jobs. An official from one of the UK’s leading union Unite has announced estimates that 38,000 jobs had gone this year at banks and other financial firms it represents and that was set to rise substantially.

The financial services industry employs between 1.1 million and 1.3 million people. Part-nationalised banks Royal Bank of Scotland and Lloyds Banking Group have cut thousands of jobs, and planned restructurings at the two banks are likely to affect about 25,000 employees,

Dubai World began negotiations to restructure about $26 billion in debt and said the remainder of its $59 billion of liabilities is on “a stable financial footing. Dubai World began talks with banks; easing concern a delay in debt payments will hurt U.K. lenders.

Chelsea Building Society has confirmed it is in advanced merger discussions with its Bradford-based larger rival Yorkshire Building Society.

It said the talks are part of a detailed review of its activities, financial position and corporate structure, which includes looking at the benefits of a possible merger. However the group, which is the UK’s fourth largest building society, stressed that it remained well-funded and had strong liquidity. Yorkshire Building Society is already the UK’s second biggest society, and a tie-up with the Chelsea would create an organization with more than £35 billion of assets, 178 branches and 2.7 million members. Cheltenham-based Chelsea said the merger would boost its capital position by around £100 million. Both the societies said the deal would only go ahead if it produced mutual benefits.

According to a survey of leading UK mortgage lenders, Home owners are choosing to make bigger repayments on home loans instead of increasing spending. This news, whilst pleasing to most, will come as a blow to attempts to drive economic recovery through consumer demand. A rising household saving rate means the Bank of England must instead look to exports to fuel growth. A spokesman for the Lloyds banking group which includes Bank of Scotland, Cheltenham and Gloucester, Birmingham Midshires, Lloyds TSB and Halifax, confirmed that the percentage of customers making regular overpayment on their mortgages has doubled compared to last year. With the average monthly overpayment within the group being around £350 pounds.

BSkyB has been named as Britain’s most admired company by City experts. The media giant, owner of Sky News is the youngest company ever to win Management Today’s top award.

Tesco came in at number two, with its chief executive Sir Terry Leahy retaining his most admired leader crown. BSkyB topped its sector in every one of the nine criteria decided upon and rated by industry peers and City analysts as well as winning the ‘quality of goods and services’, ‘quality of marketing’ and ‘capacity to innovate’ overall awards.

Online retail sales are expected to rise 14 percent to £5 billion this month, According to a recent study, almost three quarters of Britons will do more than half of their Christmas shopping on the Internet,.

A leading industry body specialising in global e-retail, forecast that Monday, December 7 would be the busiest online shopping day this year, with spending reaching £350 million. The survey also states that around 90 percent of consumers plan to buy at least some of their Christmas presents online this year.

The pound retreated strongly against the dollar and the Euro whilst rising against the Yen.

• Pound/US dollar 1.6528
• Pound/Euro 1.10975
• Pound/Japanese Yen 145.6191
• Pound/Swiss Franc 1.6537

The FTSE 100 has rebounded 51 percent from its low on March 3 amid government stimulus programs and record low- interest rates. The gauge fell 3.3 percent from Nov. 25 till the end of trading Thursday as Dubai World’s move to delay debt payments risked triggering the biggest sovereign default since 2001. The FTSE 100 closed on Thursday on 5313.00.

According to a recent survey, the US private sector job cuts narrowed in November for the eighth consecutive month, with less than 170,000 jobs being lost last month, 26,000 fewer than in October. The US services sector shed 81,000 jobs in November, up slightly on October, with fewer jobs being lost in the manufacturing sector. According to a spokesman for the Obama administration, since the beginning of the £473 billion jobs stimulus package, passed in February, it has saved or created more than one million jobs across the US. According to the latest US Labour Department figures, the unemployment rate in the US rose to 10.2% in October, and its highest rate since April 1983. Since the recession began in the US in December 2007, the number of unemployed has risen by 8.2 million, while the jobless rate has risen from 4.9%.

The Dow Jones index closed down 86.53 points, on 10,366.15 points, while the NASDAQ remained steady on 2173.14.

Bank of America has announced plans to repay the £27 billion US government bailout it received during the credit crisis of 2008 as well as after the purchase of Merrill Lynch earlier this year.

The move is designed to allow Bank of America to free itself from government restrictions, including executive pay limits that were a stipulation of granting the funds. The bank reported a $1 billion net loss for the three months from July to September, worse than had been expected, especially when compared to a net profit of around £2 billion in the previous quarter and around £1 billion in the same period of 2008.

financial

• What is a Thrift Bank? There are different kinds of banks out there but one...
• David Bach and my two major pet peeves I came across David Bach's Five Ways to Save $2,500...
• Building a Better CD Ladder Online With many baby boomers saying "never again" to stock market...

Tags: Autorite des Marches Financiers, Bank, Bank of America, Bank of England, Banking, Birmingham Midshires, British Economy, British Pound, BskyB, Chelsea, Chelsea Building Society, Cheltenham and Gloucester, Currency, Dow Jones, Dubai World, Economics, Economy, Financial News, Financial Services Authority, FTSE, Halifax, Lloyds Banking Group, Lloyds TSB, Michel Prada, Money, Money Markets, NASDAQ, Recession, Royal Bank of Scotland, Sir Terry Leahy, Stock Markets, Stocks and shares, Tesco, Thomas Huertas, UK Banks, UK Economy, UK government, UK Recession, Yorkshire Building Society