UK tops the list – for bank bailouts!

The news that even before the news broke that UK treasury will be “investing” more than a quarter of a billion pounds in the Lloyds Banking group; Great Britain tops the list of countries as far as percentage bailouts to banks will please no one. According to a recent report by the by the International Monetary Fund, Chancellor Alistair Darling has already overseen funding equivalent to 20% of the U.K.s anticipated GDP for 2009. Considerably more than any of the other major economies. The US, even taking into account the mega-bailouts taking place every second day there will spend less than 7% of their GDP in their attempts to keep the economy moving forward.

Needless to say, the opposition leapt on these figure, with Phillip Hammond shadow chief secretary to the Treasury, insisting: “This is a stark illustration of the true cost of Labour’s Age of Irresponsibility and taxpayers are on the hook for billions of pounds as a result.”

The Lloyds deal was finally signed late on Friday with the UK government,

receiving almost sixteen billion pounds in non-voting B shares against assurances that the British Treasury’s insurance will cover the bank’s future losses against their “toxic assets”.

Acquisition of these shares bumps the taxpayer’s stake in Lloyds up to 65% from 43%, in the likely event that private investors don’t take up an offer to buy 4 billion pounds of shares currently in government hands. .

Meanwhile, Prime Minister Gordon Brown’s call at the weekend for banks to adopt a new remuneration culture and curtail excessive bonuses has met with a response best described as “skeptical

Further bad news for the banking World was the announcement that world’s oldest investment trust, Foreign & Colonial Investment Trust (FRT) have suffered considerable stock market losses in 2008. The losses are reckoned to have come about following FRT’s decision to continue its investment program based around accumulations of stick equities and to fund the acquisitions through borrowing. Investing in equities and borrowing to increase earnings. The trust announced losses of 680 million pounds for 2008, with a decline in their equity portfolio quarter of nearly 25% causing their net asset value to drop by 28.5 percent to 256.6 pence per share.

A sign that the UK public are drinking more wine, either to improve their health or drown their sorrows is the news that Majestic Wine UK leading wine wholesaler has acquired family-owned wine specialist Lay & Wheeler, for a around six million pounds. Majestic, the UK’s biggest wine warehouse group, see the acquisition as a continuation of their policy of offering a complete turnkey service for the fine wine lover, beginning from the vineyards and up to and including home delivery. .

Taking a long term view is UK paving stone manufacturer Marshalls who posted a 4.5 million pound pre-tax loss for 2008. With the building materials market in a state of constant decline, revenues fell six percent to 378.1 million pounds However, shares in the group after they revealed significant “cost-cutting measures” that should take them through to the expected upsurge in building opportunities, expected to begin towards the run in to the London 2012 Olympics.

The obvious distress in the UK building industry was compounded by the news that Wolseley Plc, the world’s biggest distributor of heating and plumbing gear said it was planning a further rights issue

Most U.K. stocks dropped as a surge in U.S. unemployment added to concern the global economy is deteriorating.

FTSE indexes showed their fourth successive weekly drop amid a slew of constant losses, especially in the financial sector.

The FTSE 250 index dropped by 103.82 points on Friday (1.75%) to 5831.55 while the FTSE 100 actually rose finishing the session up 0.02% per cent, or 0.87 points, higher at 3,530.73

Sterling rose slightly against a weak dollar and remained stable against the Euro, Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4135

Pound/Euro 1.1138

Pound/Japanese Yen 139.10

Pound/Swiss Franc 1.6361

Wall Street shares had an indifferent day’s trading on Friday with news of a sharp rise in unemployment figures.

The Dow Jones Average actually rose a little (32.98 points) to close at 6627.42. NASDAQ did however drop 5.74 points to 1293.85

Considerably larger drops can be expected Monday on Wall Street as official employment figures released late last Friday are digested. The figures showed that the unemployment rate in the United States jumped to 8.1 per cent in February, to its highest level since 1983. According to the US labour department, 12.5m Americans are now unemployed.

These job loss figures would have been the highest since 1949, if not for sharp downward revisions to the December and January figures.

However, unemployment rates in the US surged to the highest level in more than 25 years in February. With their economy lost more than 600,000 jobs for a third consecutive month, the United States appear to be spiraling towards a viscous circle of reduced spending and increasing unemployment.

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Tags: Alastair Darling, Bank, Bank of England, Banking, British Economy, British Pound, Financial News, Gordon Brown, UK Banks