The Economy - January 2010

Local Area Labour Market - January 2010
On 29 January 2010, the Office for National Statistics (ONS) published statistics on UK labour markets. ONS say that in order to understand the labour market of an area, a number of different indicators are needed. ONS has developed a framework for presenting the overall picture painted by these indicators, which is based on the concepts of labour supply, labour demand and labour costs.

  • Statistics relating to the employment, unemployment and benefit dependency of the resident population of the area provide indicators of labour supply.
  • Statistics relating to jobs and vacancies at workplaces in the area provide indicators of labour demand.
  • Earnings statistics provide indicators of labour costs relating both to labour supply and labour demand.
  • The median earnings of the resident population of the area are a characteristic of the labour supply provided by people living in that area.
  • And the median earnings of people with a workplace in the area are an indicator of the nature of the labour demand arising from employers in the area.

Details statistics and indicators are available at:
www.statistics.gov.uk/downloads/theme_labour/LALM_statistical_indicators_Jan10.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Slow recovery for construction industry
On 27 January 2010, James Brockett wrote in PM Online that barely a quarter of the construction jobs lost during the recession will return in the next four years as the industry faces a slow recovery, according to a report.

Industry body ConstructionSkills said that 375,000 jobs have been lost from the sector since 2008, and predicted that only 100,000 of those would be recouped by 2014. Output in construction is estimated to have shrunk by 13 per cent last year. Despite the news that the UK economy has emerged from recession, construction is likely to see a further marginal decline in 2010 and will probably not see growth until next year, said the report.

Construction output in the next few years is forecast to be strongest in Wales, Scotland, the East of England and East Midlands.
Source: www.peoplemanagement.co.uk/pm/articles/2010/01/slow-recovery-for-construction-industry.htm
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
January 2010: Economic Sentiment Indicator approaching its long-term average
On 28 January 2010, the Europa website disclosed that, in January 2010, the Economic Sentiment Indicator (ESI) rose for the tenth successive month and stood at 97.1 (+2.1 points) in the EU and 95.7 (+1.6) in the euro area. Thus, although the rebound appears to be slowing, the indicator has now returned to a level approaching its long-term average in both areas.

The majority of Member States reported a general improvement in sentiment. Among the largest Member States, Italy (+4.2 points) reported the most significant increase, followed by the UK (+3.2) and the Netherlands (+2.7). The improvements were less marked in Poland (+0.9), Germany (+0.6), France (+0.6) and Spain (+0.3).

Sentiment in industry, which increased by 3 points in the EU and by 2 points in the euro area, remained the main contributor to the overall improvement. Most respondents in this sector reported strong improvement in both their order books and their production expectations. The declining level of stocks, across all the main industrial sectors, confirmed further destocking. The results of the quarterly manufacturing survey confirmed these positive developments. The survey participants were optimistic about past and future orders. Firms also reported an increase in their capacity utilisation rates which now stands at 73.1% in the EU and 72.4% in the euro area, although these are still far below their respective averages.

Confidence in financial services - which is not included in the ESI - is now stabilising at around the pre-crisis level. It remained broadly unchanged in the EU and improved by 6 points in the euro area.
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/75&format=HTML&aged=0&language=EN&guiLanguage=en
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
January 2010: EU Business Climate Indicator
On 28 January 2010, the Europa website showed that the Business Climate Indicator (BCI) for the euro area rose for the tenth successive month, but it remains at a low level, suggesting that year-on-year growth in industrial production was still negative in December 2009. The significant increase in the BCI reflects managers' optimism about order books and production expectations. At the same time their assessment of production trend observed in recent months was more subdued. The declining level of stocks confirmed further destocking.

The BCI is based on a factor analysis of the euro area aggregate balances (seasonally adjusted) of five of the monthly questions in the industry survey (only employment and selling-price expectations are excluded).
Full details of the Business Climate Indicator are available on the Europa website at:
http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/77&format=HTML&aged=0&language=EN&guiLanguage=en
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Threat of double dip recession looms large, warns TUC
In response to the publication of figures on 26 January 2010 by the Office for National Statistics, Midlands TUC Regional Secretary Cheryl Pidgeon has called for caution in relation to any cut in public spending.

Figures showing growth of just 0.1 percent in Q4 of 2009, whilst positive for economic growth, highlighted just how fragile the economy still was and the TUC warned against any action that might cause a slip back into the recession.

With 2.5 million people currently unemployed, and the numbers of people out of work expected to increase, she suggested that the UK was in the early stages of the recovery process and that no sectors of the economy were fully recovered so some tough decisions would be necessary to get Britain back to normal.
Source: http://www.tuc.org.uk/economy/tuc-17485-f0.cfm
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Britain at risk of plunging back into recession
Figures released on 26 January 2010 showed that the UK economy had taken its first tentative steps back on the road to economic recovery. However with just a 0.1 percent increase in Q4 of 2009, the results were disappointing and far below the 0.4 percent estimated by some economists, prompting fears of a second slump:

  • The weak performance threw doubt on the government's optimism for a strong recovery and called into question plans that both political parties have drawn up prior to the general election;
  • There were warnings that interest rates were unlikely to increase in the short term, directly affecting savings. In addition, the value of the pound fell which would benefit exports but would make the cost of foreign holidays more expensive.
  • Confidence in the improving housing market could be undermined by the poor performance figures.
  • With the UK being the last of the G7 group of leading nations to emerge from the global recession, the Chancellor, Alistair Darling, had to concede the possibility of Britain suffering a 'double dip' into the recession. To avoid a second slump, the Bank of England may be forced to pump billions of pounds more into the economy
  • Buoyed by strong car sales due to the scrappage scheme and seasonal retail spending in Q4, the next set of figures is not expected to be as good. These are due to be published in the last week of April 2010. As this falls just days before the expected election date of 6 May, there is conjecture over whether the Prime Minister may schedule the election to a date that will not be overshadowed by negative financial results.
  • A new 50p higher rate of tax which was due to be introduced in April 2010, although supported by both party leaders, is under review as it may affect the business recovery as entrepreneurs consider the affect.
  • There is disagreement with regard to public spending, with the Conservatives calling for cuts and Labour insisting that spending should continue at current levels.
  • Globally, predictions from the International Monetary Fund (IMF) expect the British economy to expand by just 1.3 percent in 2010, compared with growth of 2.7 percent in the US, 1.5 percent in Germany and 1.4 percent in France.
  • There are international fears that the UK has not fully understood the scale of the economic meltdown and put robust plans in place to deal with it effectively.

Source: The Telegraph

Following the publication of financial results for Q4 of 2009 by the Office for National Statistics on 26 January 2010, the Forum of Private Business (FBP) warned of the risk of a second slump.  With a growth in Britain's economy of just 0.1 percent, the Forum for Private Business (FPB) Chief Executive, Phil Orford, commented that politicians' and economists' forecasts for the last two quarters of 2009 were over-optimistic and that reports of a recovery from the recession were premature.  He added that the Q4 figures, whilst being positive, did not signal a definite recovery and that the risk of a further slump could be possible.  With the economy still so fragile and political instability caused by the impending election, confidence was not high.
Source: Forum of Private Business
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Unemployment reached highest level on record in 2009
On 27 January 2010, the annual report by the International Labour Office (ILO) found that the number of jobless worldwide reached nearly 212 million in 2009 after an unprecedented increase of 34 million compared to 2007. 

The report, Global Employment Trends, also found that global unemployment levels are likely to remain high through 2010 in the Developed Economies and European Union, with estimates of a further 3 million people becoming unemployed.

The ILO also reported the largest increase in youth unemployment since 1991, recording an increase of 10.2 million in 2009 compared to 2007.

The impact of unemployment in the report showed wide variations between regions and countries, with unemployment benefits and social protection being non-existent in some areas of the world. The ILO stressed the importance of building some form of basic social protection schemes for the most vulnerable of the world's labour force.

A Global Jobs Pact has been agreed by the ILO constituents to address the issues and it seeks to focus on accelerated employment generation, sustainable social protection systems, respect for labour standards, and strengthening social dialogue.

The unemployment rate in the Developed Economies and European Union registered an increase to 8.4 percent in 2009, up from 6.0 percent in 2008 and 5.7 percent in 2007, with employment in industrial sectors faring more badly than other areas.

 Over 40 percent of the increase was attributed to the Developed Economies and European Union region, even though they represent less than 16 percent of the global workforce.

Regional outlook

  • Central and South-Eastern Europe, Latin America and the Caribbean account for more than 60 percent of the increase in the global number of unemployed in 2009;
  • In sub-Saharan Africa, the unemployment rate is estimated to have risen to 8.2 percent in 2009;
  • In North Africa, the overall unemployment rate is estimated to have reached 10.5 per cent in 2009;
  • The Middle East's regional unemployment rate has not risen substantially over the 2007-2009 period;
  • In Latin America and the Caribbean the unemployment rate is estimated to have risen from 7 percent in 2008 to 8.2 percent in 2009;
  • In East Asia unemployment is estimated to have edged up to 4.4 percent in 2009 from 4.3 percent in 2008 and 3.8 percent in 2007;
  • The South-East Asia and the Pacific region, which includes several economies that are highly dependent upon foreign trade and investment flows, is estimated to have risen to 5.6 percent in 2009.

Full details are available at: International Labour Organisation
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Gross domestic product - preliminary estimate 4th Quarter 2009
On 26 January 2010, the Office for National Statistics (ONS) released the Gross domestic product (GDP) statistics for the fourth quarter of 2009.

The chained volume measure of gross domestic product (GDP) increased 0.1 percent in the fourth quarter of 2009. The increase in output was due mainly to increases in distribution, hotels and restaurants and government and other services.

Output of the service industries increased 0.1 percent. Output in the production industries increased 0.1 percent. GDP decreased 3.2 percent between 2009 Q4 and 2008 Q4.

Contributions to growth
Distribution, hotels and restaurants was the largest contributor to the positive growth this quarter. Government and other services and total production also had significant contributions to the increase. This was partially offset by a small decrease in business services and finance. Construction and transport, storage and communication were flat over the quarter.

Index of Production
The production industries increased 0.1 percent compared with a decrease of 0.9 percent in the previous quarter.

Manufacturing increased 0.4 percent. Mining and quarrying increased 1.0 percent and Electricity, gas and water supply decreased 3.3 percent. The production industries decreased 6.3 percent between 2009 Q4 and 2008 Q4.

Construction
Construction growth was flat compared with an increase of 1.9 percent in the previous quarter. Construction decreased 4.9 percent between 2009 Q4 and 2008 Q4.

Distribution, hotels and restaurants
Distribution, hotels and restaurants increased 0.4 percent compared with an increase of 0.7 percent in the previous quarter. Motor trades and retail made the largest contribution to the increase. Distribution, hotels and restaurants decreased 0.5 percent between 2009 Q4 and 2008 Q4.

Transport, storage and communication
Transport, storage and communication growth was flat compared with an increase of 0.7 percent in the previous quarter. The most significant positive contribution was from post and telecommunications. This was offset by a significant negative contribution from transport support. Transport, storage and communication decreased 4.1 percent between 2009 Q4 and 2008 Q4.

Business services and finance
Business services and finance growth was flat compared with a decrease of 0.8 percent in the previous quarter. The most significant positive contribution was from real estate. This was offset by a significant negative contribution from banking.

Business services and finance decreased 4.8 percent between 2009 Q4 and 2008 Q4. 

Government and other services
Government and other services increased 0.2 percent, compared with a decrease of 0.2 in the previous quarter. Health made the largest contribution to the increase. Government and other services decreased 0.7 percent between 2009 Q4 and 2008 Q4.
Full details are available at: http://www.statistics.gov.uk/pdfdir/gdp0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Focus on Consumer Prices - December 2009
On 25 January 2010, the Office for National Statistics issued the Focus on Consumer Prices report for December 2009.

It provides detailed information on:

  • Consumer Prices Index (CPI) which is the main domestic measure of UK inflation for macroeconomic purposes;
  • Retail Prices Index (RPI) which is the most familiar general purpose measure of UK inflation of goods and services;
  • Headline rate of inflation and underlying rate of inflation.

It contains tables of latest figures, average retail prices, CPI data back to 1996, RPI data back to 1987, long run series of consumer price inflation, purchasing power of the pound, EU Harmonised Index of Consumer Price Indices (HICP) back to 1998, seasonally adjusted RPIY and RPI pensioner indices. There are useful charts and helpful guides on Consumer Price Indices with links to other information held on the National Statistics website, plus a list of future publication.
Full details are available at: http://www.statistics.gov.uk/statbase/prep/867.asp
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK set to leave recession
Figures due to be published in the last week of January 2010 showing a rise in the gross domestic product, are expected by city economists to confirm that the UK is recovering from the recession.

Forecasts show the gross domestic product (GDP) in the fourth quarter to be up by 0.3 percent on the previous quarter, which represents the first rise in GDP since early 2008.

Warnings are expected from the chancellor, Alistair Darling, to restrain any optimism due to the fragility of any recovery.

There are differing opinions from economists in the level of growth, with expectations from 0.1 percent to 0.3 percent, with Goldman Sachs forecasting 0.4 percent.

A recent report from Ernst & Young says that profit warnings dropped to a six-year low in 2009 and the start of economic recovery has come sooner than expected.
Source: Times Online
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Employment suffered badly in the recession
With official figures due to be released in the last week of January 2010, a report from the Chartered Institute of Personnel and Development (CIPD) says that the effect of the recession on unemployment is likely to be greater than suggested.

The CIPD report, called "Work Audit - The jobs recession in 3D", states that 1.3 million people were made redundant during the recession, which is twice the fall in employment and equivalent to 4.4 percent of people in work before the start of the recession. In addition, over 60 percent of those getting jobs after redundancy found their earning capacity impacted as they accepted posts with salaries up to 28 percent less than previously achieved. The report also underlines the difficulties faced in getting full-time employment.

The report goes on to say that there were 6.2 million new claims for jobseeker's allowance between April 2008 and November 2009 - a rise of more than seven times the rise in the unemployment claimant count during the recession.

The CIPD's economic adviser, John Philpott, warned of the impact on the perception of job security and consumer confidence as a result of peoples' widespread experience of redundancy, recurrent unemployment and contracted salary levels.
Source: http://www.cipd.co.uk/pressoffice/_articles/GDPworkaudit250110.htm
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Confidence up but saving at 5 year high
On 25 January 2010, the Nielsen-British Retail Consortium (BRC) released the Consumer Confidence Survey which showed that 70 percent of respondents believe that the UK will remain in recession for 2010 and that this will be reflected in their spending habits.

The Nielsen Global Online Consumer Survey, conducted by Nielsen Customised Research, was carried out between 4 and 18 December 2009 and polled over 17,500 consumers in 51 markets from Europe, Asia Pacific, North America and the Middle East. 501 respondents were polled in the UK.

The survey also found that, whilst more people were feeling confident about job prospects and personal finances, the biggest cause for concern was the level of personal debt over the next six months, with the economy and spiralling utility bills a close second. These concerns manifested themselves with 69 percent of people converting any spare cash to either savings (40 percent) or paying off personal debt (29 percent). Savings figures have reached the highest levels since November 2004.

Further results suggest that the leisure industry will continue to suffer as people cut back on going out. High street trading post-Christmas will suffer the usual seasonal effect, accentuated by the adverse weather that kept many shoppers indoors.

The impending General Election in the UK will also add to fears of uncertainty, which will be reflected in consumer spending.
Source: http://www.brc.org.uk/details04.asp?id=1688
The full results of the Consumer Confidence Index are available at:
www.brc.org.uk/downloads/Consumer_Confidence_Survey_January_2010.ppt  
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Employers likely to shorten assignments as agency worker rules change
On 21 January 2010, the Agency Workers Regulations 2010 ruling was laid before Parliament. Implementation has been delayed until October 2011:

  • The changes under the new law mean that, after 12 weeks of employment temporary workers will have the same rights to pay, holiday and other basic working conditions aspermanent staff;
  • As a result of the new rules, employers are likely to cut back on their use of Britain's 1.3 million agency workers. Although most assignments are limited to 12 weeks as the norm, longer assignments may be curtailed as a result of the law;
  • Some employers recruiting habits may change with less reliance on agency workers and more emphasis on an in-house bank of casual staff. Others may expect their existing workforce to incorporate extra work into their normal working day rather than using temps;
  • There will be penalties of up to £5,000 for flouting the laws and for utilising staff in different roles to avoid the 12-week period.

Employer groups have raised concerns that the cost and administrative burden of the new rights might restrict job creation and flexibility.
Source: People Management
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Retail Sales Business Monitor  
On 22 January 2010, the Office for National Statistics (ONS) published the Retail Sales Business Monitor, a monthly publication containing detailed estimates of retail sales in Great Britain. It includes the latest indices and growth rates of the average weekly value of retail sales at current prices and also at constant year 2005 prices, referred to as the volume of retail sales. 

The monthly retail sales estimates cover the retail trades (excluding the motor trades) in Great Britain. The inquiry goes out to a sample of almost 5,000 retailers of all sizes every month. All of the largest retailers are included together with a sample of smaller retailers. Except where otherwise stated, large businesses are those having 100 or more employees.

The RSI is based on a four, four, five week standard period within the quarter. For each four or five week period contributors report their retail sales for all their outlets and by mail order. The statistics include VAT, and services to customers. Hire purchase and other instalment credit sales are valued at the credit price of the goods; that is including deposits and, where credit is provided by the shop, credit charges. Figures of credit sales relate only to the period during which the transactions took place; cash received from credit sales in previous periods is not included. Sales by chemists and opticians exclude receipts under the National Health Service. 

The retail sales index uses COICOP (Classification of Individual Consumption by Purpose) classification for deflators from 2000 onwards.
Source and detailed Tables: http://www.statistics.gov.uk/downloads/theme_economy/SDM28_December_2009.pdf  
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Retail Sales: December 2009
On 22 January 2010, the Office for National Statistics (ONS) published figures showing that UK retail sales volumes increased by just 0.3% between November and December 2009, The statistics contain a first estimate of retail sales in value and volume terms, seasonally and non-seasonally adjusted and are based on the broad group headings: all retailing; predominantly food stores; predominantly non-food stores; non-specialised stores; textile clothing and footwear stores; household goods stores; other stores; and non-store retailing and repair.

Detailed sector summary: Value of retail sales (seasonally adjusted)
The value of retail sales in December 2009 was 3.6 per cent higher than in the same month a year earlier. The monthly sales values:

  • 1. for predominantly food stores was 4.9 per cent higher than a year ago;
  • 2. for predominantly non-food stores was 1.6 per cent higher than a year ago (within predominantly non-food stores, the largest rise was in household goods stores which rose by 3.5 per cent. Textile, clothing and footwear stores rose by 2.0 per cent while non-specialised stores rose by 1.6 per cent. Other stores fell by 0.2 per cent over the period);
  • 3. the non-store retailing and repair sector was 9.7 per cent higher than a year ago;
  • 4. the 3.6 per cent year on year movement in the all retailing series was approximately comprised of: 2.4 percentage points from predominantly food stores, 0.7 percentage points from predominantly non-food stores and 0.5 percentage points from non-store retailing and repair.

Detailed sector summary: Prices and Internet Sales

  • Estimated prices (non-seasonally adjusted): Estimated prices of retail sales in December 2009 were 1.2 per cent higher than December 2008;
  • Experimental Internet retail sales (non-seasonally adjusted): Based on ONS experimental Internet sales series, the non-seasonally adjusted data average weekly value of Internet retail sales in December 2009 was £346.0 million which was approximately 4.9 per cent of total retail sales.

The Chief Economist at the British Chambers of Commerce (BCC) commented on the sales figures, saying:

  • The weaker than expected increase in retail sales points to a more challenging Christmas season than initially indicated by a number of larger retail chains. Although the figures are still consistent with a return to positive economic growth, it is clear that any recovery remains fragile and patchy.
  • These figures suggest that smaller, independent retailers - those outside the major chains - are facing the biggest hurdles.
  • While the Monetary Policy Committee need not increase its quantitative easing stimulus, it is too early to contemplate a reduction in the programme or an increase in interest rates. The main policy priority remains preventing a double-dip recession.

The ONS statistics are available at: http://www.statistics.gov.uk/pdfdir/rs0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Vehicle output increase in December 2009
Just under one million cars were made in the UK last year, according to the Society of Motor Manufacturers and Traders (SMMT) report of 22 January 2010.

Showing the biggest rise since May 1976, car output was up 58.5 percent in December 2009. Commercial vehicle output also rose for the first time in 17 months. Overall statistics for 2009 were markedly less than the previous year.

The results promised a greater level of stability for global automotive markets, following the recession.
Source: The Society of Motor Manufacturers and Traders Limited (SMMT)
Full report available at: http://lib.smmt.co.uk/articles/news/News/Dec%2009-UKProd_WEB.doc
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Outlook for household finances brightens in January
On 22 January 2010, the Markit/YouGov Household Finance Index (HFI) for the UK reported that there was optimism for the month of January 2010, although consumer price perception was at its highest in a year.

Key points:

  • Household finances deterioration at its slowest since February 2009;
  • 12-month outlook for household finances the most optimistic since the start of the survey;
  • VAT reversion t 17.5 percent caused consumer price perceptions to jump in January 2010;
  • Debt levels increased for second consecutive month.

Current and Future Finances
The slowest rate of deterioration of household finances for almost a year was recorded in January 2010. Although a quarter of households reported that their finances had suffered in January across all income groups, the level of pessimism for the coming year has dropped from 50 percent in February 2009 to 33 percent currently.

Jobs, Spending and Debt
Concern about job security was endemic, with public sector workers showing a greater level of worry than the private sector.

Employment income dropped in particular in the building industry, with the adverse weather condition thought to be a factor.

Inclement weather, the VAT increase and seasonal post-Christmas effect all contributed to a drop in consumer spending.

Statistics for January showed a small rise in the level of overall debt. In contrast, mortgage debt levels reduced for the sixth month running.

The level of savings dropped at its slowest rate for almost a year, with equal percentages of respondents predicting both rise and fall in their savings in the next twelve months.

Inflation Perceptions
The perception of inflation for January 2010 was at its strongest, with a North-South divide in evidence. Respondents in the South East reported the strongest inflation perceptions, while those in North West England the slowest.

House Prices
The majority of households assessed their house value to have risen in value in January for the fifth month in succession. Survey, and underlined a positive outlook for the housing market.

Demand for mortgages continued to rise in January. However, the availability of mortgages has continued to deteriorate.

Government's Management of the Economy
Across the UK, confidence in the Government has fallen further, with approximately 41 percent of households less confident in the Government's handling of the economy compared with the previous month.
Source: Markit - News Release
-----------------------------------------------------------------------------------------------------------------------------------------
Public sector finances: Statistical Bulletin
On 21 January 2010, the Office for National Statistics (ONS) published (produced jointly with HM Treasury) a statistical bulletin on public sector finances for December 2009.

Provisional estimates of the public finances show that the public sector had:

  • a current budget deficit of £11.5 billion in December 2009;
  • net borrowing of £15.7 billion (a new record) in December 2009 (somewhat less than analysts had expected);
  • total borrowing for the first nine months of 2009 was £120bn - the most since records began in 1946;
  • net borrowing excluding financial interventions of £50.3 billion during the third quarter of 2009/10.

and at the end of December 2009:

  • net debt was £870.0 billion, equivalent to 61.7 per cent of gross domestic product;
  • net debt excluding financial interventions was £740.6 billion, equivalent to 52.5 per cent of GDP.

Source: http://www.statistics.gov.uk/pdfdir/psf0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
EU Consumer Confidence Indicator: January 2010
In January 2010, the DG ECFIN flash estimate of the consumer confidence indicator signals an improvement for the EU aggregate (up to -13.3 from -14.3 in December 2009) and a broadly unchanged level for the euro-area aggregate (-15.8 compared with -16.1 in December).

Computation of Flash CCI
To compute the flash consumer confidence indicator for the EU and euro area, DG ECFIN uses the data available on the cut-off date. The estimation procedure combines historical data with information from those Member States for which data are available in the reference month. Experience has shown this procedure to be statistically reliable.
Full tables are available on: http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
Source: Europa press release
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Bank of England Governor calls for merger of G20 and IMF
On 18 January 2010, the Bank of England Governor, Mervyn King, recommended that the G20 merge with the International Monetary Fund (IMF), with the aim to radically overhaul management of the international economy. Speaking at Exeter University, he warned that, for another global economic crisis to be avoided, action was required by politicians to create an international body with the authority to reform the IMF, rather than just looking at reforms in the financial sector.

He expressed concern that continuing global economic imbalances which involve rich countries relying on borrowing to pay for cheap exports from overseas are fuelling the current crisis and needed to be addressed. He stressed that changes needed to be made to the multilateral institutions responsible for monitoring the global economy.

The Governor suggested that the G20 may be the ideal platform to steer the introduction of the necessary reforms, with the emphasis on exporters spending more and deficit economies such as the UK and US saving more.

There may be dissension from the US which holds the balance of power at the IMF.

There were calls from economist David Blanchflower to disband the Monetary Policy Committee (MPC) as he saw it as culpable in failing to see the recession coming and acting too late.
For the full text of Mervyn King's speech: Mervyn King's speech: full text
Source: The Telegraph 20/1/2010
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Inflation rises to 2.9 percent
On 19 January 2010, figures from the Consumer Price Indices (CPI) for December 2009 were released showing that UK inflation rose at its fastest rate for nine months.

The CPI is the main UK measure of inflation for macroeconomic purposes and forms the basis for the Government's inflation target. It is also used for international comparisons. The Retail Price Index (RPI) is the most familiar domestic measure of inflation in the UK; its uses include indexation of pensions, state benefits and index-linked gilts. CPI and RPI both measure the average changes month-to-month in prices of consumer goods and services purchased in the UK, although there are differences in coverage and methodology. The CPI does not take into account certain items that are included in the RPI. The RPI includes council tax, mortgage interest payments, buildings insurance and house depreciation.

The Office for National Statistics said the CPI inflation rose 0.6 percent in December 2009, bringing the annual rate up to 2.9 percent. This represents the biggest monthly increase since records began and exceeded the City's predictions of 2.6 percent. Extraordinary factors had depressed levels in the previous year, including a dramatic fall in oil prices in December 2008 and the VAT rate cut to 15 percent.

The Retail Price Index (RPI) rose to 2.4 percent, its highest level since November 2008 - a rise from 0.3 percent in November 2009. This figure includes housing costs. This constitutes the biggest monthly rise in the annual rate of RPI inflation since 1979.

The biggest increases come from transport and clothing and footwear. Food, energy, tobacco and alcohol (core CPI) rose by 2.8 percent on the year - the fastest pace of growth since records began in January 1997.
The full report is available at: Office for National Statistics - Consumer price indices December 2009
Other Source: BBC News
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK predicted 'to grow faster' than other major economies
On 18 January 2010, investment bank Goldman Sachs predicted that the UK will see stronger growth next year than any other major economy.

It also suggested that sterling's 25 percent depreciation during the economic crisis would help boost exports and wider economic growth. This prediction contradicts the more mainstream who expect the UK will suffer a lengthy recovery and could even suffer a setback.

In support of Goldman Sachs' opinion is the Organisation for Economic Co-operation and Development's (OECD) leading indicator, which is now at its highest level since 1972, suggesting a strong recovery.

Jim O'Neill, chief economist at Goldman Sachs, stated in its key annual investment conference that he forecasts a 3.4 percent expansion for the UK economy in 2011, greater than that predicted for the US and the eurozone. The prediction that the UK will fare better then the US is surprising to some quarters.

Sterling's poor performance is thought to have provided a boost for British exports. However, it is feared that as the pound rises against other currencies in coming months, the effect will be short-lived.

The pound has risen to a four-month high against the euro causing speculation inflation data will be higher than expected.

As a result, the Bank of England will have to increase interest rates from their current low rate of 0.5 percent, possibly predicted for the end of 2010. This may come much sooner, should Consumer Price Index inflation rise above its 2 percent target.

The OECD's leading indicator, currently at a level of 105.7, is at its highest since 1972, which in addition may point towards a rebound from recession.
Source: The Telegraph
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK inflation expected to show most increase in a decade
On 19 January 2010, the Office for National Statistics published the latest CPI which shows that UK inflation has risen more in December 2009 than at any time in the last ten years.

The Consumer Price Index (CPI) is the measure of inflation used by the Bank of England to set interest rates. In the year to December 2009, the consumer prices index (CPI) rose by 2.9 per cent, up from 1.9 per cent in November.  In the year to December 2009, the all items retail prices index (RPI) rose by 2.4 per cent, up from 0.3 per cent in November. Over the same period, the all items RPI excluding mortgage interest payments index (RPIX) rose by 3.8 per cent, up from 2.7 per cent in November.

The level of this increase is the greatest since records began in 1997. CPI was only 1.9 percent higher on an annual basis in November 2009. 

A prediction by the Bank of England's Monetary Policy Committee (MPC) warned that the rise in energy prices will result in inflation exceeding the 2 percent target in the first months of this year. If this happens, it will affect the decision of when to increase interest rates from current 0.5 percent rate.
Source: www.statistics.gov.uk/pdfdir/cpi0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Credit card bad debt write-offs problems emerge
There has been a huge rise in the amount of money that banks are writing off as bad debts on their credit cards.

Bank of England figures show that the total value of the write-offs doubled to £1.6bn in the third quarter of 2009. In each of the two preceding quarters, the figure had been about £800m whilst it totalled £3.2bn during 2008.

The figures reflect the impact of the recession and are an acknowledgement by the banks that the money will never be repaid by defaulting borrowers.

By contrast, the value of mortgages written off in 2008 was just £408m, and has averaged £260m in each of the first three quarters of 2009.
Source: http://news.bbc.co.uk/1/hi/business/8467161.stm
-----------------------------------------------------------------------------------------------------------------------------------------
Painful progress' forecast for UK economy
The latest quarterly report from the Ernst & Young Item Club economic forecasting group predicts that the UK economy faces a difficult decade as it struggles towards recovery from the recession.  It warns that the focus needs to shift from debt-led consumer spending to increased exports.

The report also suggests that UK economic growth will be lucky to hit 1 percent in 2010 and that consumer spending is likely to increase by just 0.4 percent.

The group warned that UK economic growth will depend almost entirely on the world economy maintaining sustained progress and advised that our focus should be shift from the domestic market to increased global trade, with China being our main market for potential increased trade.

The Item Club suggests that, in the short-term, official figures for December 2009 will be boosted by seasonal and one-off factors such as firms restocking, the success of the government's car scrappage scheme and increased consumer spending before VAT returns to its normal 17.5 percent level on 1 January 2010. Low interest rates & low inflation will aid recovery but unemployment is likely to rise.

However, on a positive note, in the long term it sees exports starting to pick up in 2011, with a predicted rise of 9 percent, rising to 10 percent in 2012.
Full report from Ernst & Young Item Club available at: Ernst & Young Item Club Winter 2010
Source: BBC News
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK cities 'will take years to recover from recession'
On 18 January 2010, the independent think-tank Centre for Cities issued a report which predicts that some UK cities and towns will take years to recover from the recession.

It claims that where the workforce is more highly educated and qualified speed of recovery will be greater. For example, areas like Cambridge and Edinburgh will fare better than locations like Stoke-on-Trent, Burnley and Newport who are less qualified and where there are fewer business start-ups.

In addition, the divide between first and last in the economic ratings has grown - the strong will get stronger and the weak weaker. Examples of cities with a strong private sector include Brighton, Milton Keynes, Reading, Cambridge and Edinburgh, whereas cities with a weaker business base including as Stoke, Burnley, Barnsley, Newport and Doncaster will have a tougher time as the UK recovers from the recession. The City of London, although in some respects the centre of the recession, has not felt the impact as much as other parts of the country.

The study assessed 64 of the UK's cities and towns over the past two years.
Full report from Centre for Cities available at : Centre for Cities 18/01/2010
Source : BBC News
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Pound shows continued increase against dollar and euro
Sterling maintained its steady increase against both the dollar and the euro, figures showed on 13 January 2010, as industrial production rose more than had been expected. 

The pound registered a peak of $1.6293 against the dollar and industrial output for the UK increased by 0.4 percent in November 2009. 

Official figures showed a jump in oil and gas extraction, whilst manufacturing performance was less than predicted. Manufacturing output continued to show no growth for a second month running. 

The Bank of England had already boosted the pound with suggesting that the quantitative easing programme was no longer required as inflation showed greater stability compared to last year. 

Sterling has recovered from its New Year low of around $1.591, although not reaching the November 2009 level of $1.68 and is still vulnerable to adverse economic news. 

Concerns have been raised by some economists regarding the poor 0.12 percent rise in exports. Britain's increasing deficit with the European Union has also been a worry. 

Performance against the euro has proved encouraging with increases from the low of about €1.07 in October 2009 to current levels around €1.12. 

The Bank of England committee that sets interest rates, the MPC, has maintained the quantitative easing pot at the same level of £200 billion for the last two months and but will have to decide in February whether or not to dedicate any further cash to the project. 

The market will next be influenced by the National Institute of Economic and Social Research's (NIES) latest UK gross domestic product figures due to be released later.
Source: This Is Money
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
NIESR says UK economy returning to growth
On 13 January 2010, the National Institute of Economic and Social Research (NIESR) reported that the UK economy appears to be returning to growth, bringing an end to the recession. 

The NIESR, a leading economic think tank, said that the UK economy grew by 0.3 percent in the fourth quarter of 2009, but fell by 4.8 percent overall in 2009. 

Official figures for the gross domestic product (GDP) for the fourth quarter are due to be released on 26 January 2009. 

Previous figures have shown that the UK economy has shrunk each quarter for the last six quarters, making the current recession the longest since records began in 1955. 

The NIESR are suggesting that the speed of growth appears to be increasing, with estimates of a 0.2 percent increase in GDP in the three months ending in November 2009.
Source: BBC News and NIESR report
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Household spending on clothing at record low
On 14 January 2010, new figures from the Office for National Statistics (ONS) revealed that UK households spent less on average per week on clothing and footwear in 2008 than at any time since 2001-02. 

Family Spending
The annual report from ONS on household expenditure in the UK, found that spending on clothing and footwear has fallen to a record low - down to an average of £21.60 per week. This category of expenditure reached an all-time high of £23.90 in 2004/05, and has been falling ever since. 

However, most categories of expenditure rose in 2008, with food and non-alcoholic drink going up to £50.70 per week on average compared to £48.10 in 2007. Expenditure on electricity, gas and other fuels has also risen to £18.90 from £17.20.

Average UK household weekly expenditure in 2008 was £471.00, up from £459.20 in 2007. 

Transport remains the largest single expenditure category for households in the UK, with average weekly spend going up from £61.70 in 2007 to £63.40 in 2008. However, expenditure on purchasing vehicles decreased - down from £22.80 per week in 2007 to £21.10 in 2008 - while weekly expenditure on operation of personal transport went up, from £28.80 to £31.80. This increase is mainly due to a rise in spending on petrol, diesel and other motor oils from £18.30 to £21.00. 

There is a difference between household expenditure in urban and rural areas, with country-dwellers tending to have higher weekly expenditure. In 2008, the average spend in rural areas was £505.40, compared to £446.70 in towns and cities. The main areas where this difference can be seen are in spending on transport, recreation and culture. 

In 2008, 33 percent of households in the lowest income decile owned a home computer, and 26 percent had an internet connection. In the top income decile group, 98 percent of households owned a computer, and 96 percent had an internet connection. 

Family Spending is based on the findings of the Living Costs and Food Survey (LCF), a survey of 6,000 households across the UK. The LCF shows how households spend their money on all items, including food, clothing, leisure, transport, and housing. The survey also provides data on how spending patterns vary depending on household income, household composition and regional location of households.

Information from the LCF is a major source of data for the UK National Accounts and is used by government departments as a basis for policy making. It is also used to determine the content of the 'basket of goods' used to measure inflation in the Retail Price Index and is a valuable resource for business and academic research.
Source: Office for National Statistics
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Federal Reserve makes record $52.1bn profit
The Federal Reserve (the Fed) made record profit of $52.1bn (£32.2bn) in 2009, a rise of 47% over the previous year as its unconventional efforts to prop up the economy created a windfall for the US government.  The Fed paid a record $46.1bn to the US Treasury last year - the largest amount ever paid by the central bank since its creation in 1914.

It is important to note that the Fed funds itself from its own operations and returns any profits to the Treasury department.

The numbers are good news for the federal budget and a sign that the Fed has been successful, at least so far, in protecting taxpayers as it intervened in the economy - although there remains a risk of significant losses in the future if the Fed sells some of its investments or loses money on its stakes in bailed-out firms.

Much of the higher earnings came about because of the Fed's aggressive program of buying bonds, aiming to push interest rates down across the economy and thus stimulate growth. By the end of 2009, the Fed owned $1.8 trillion in U.S. government debt and mortgage-related securities, up from $497 billion a year earlier. The interest income on those investments was a major source of Fed profits - but that income comes with risks, as the central bank could lose money if it later sells those securities to reduce the money supply.

The Fed also made money on its emergency loans to banks and other firms and on special programs to prop up lending, such as one that supports credit cards, auto loans, and other consumer and business lending. Those programs impose interest and fees on participants, with the aim of ensuring that the Fed does not lose money.
Source: Washington Post article 12/1/2010
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Index of Production for November 2009
On 13 January 2010, the Office for National Statistics published the index for production for November 2009.

  • The seasonally adjusted index of production in November 2009 fell by 6.0 per cent compared with November 2008;
  • The seasonally adjusted index of manufacturing in November 2009 fell by 5.4 per cent compared with November 2008.

Manufacturing
For manufacturing, in detail:

  • output decreased in 10 of the 13 manufacturing sub-sectors and rose in three sub sectors;
  • the largest decreases in output were in the machinery and equipment industries which fell by 17.4 per cent and the basic metals and metal products industries which fell by 12.1 per cent;
  • within the machinery and equipment industries, the main falls were in the:
  • - manufacture of machinery for the production of mechanical power -29.2 per cent
  • - manufacture of other general machinery -8.8 per cent
  • within the basic metals and metal product industries, the main falls were in the:
  • - processing/treatment of metals; mechanical engineering -20.5 per cent
  • - manufacture of basic metals -12.4 per cent
  • the largest contributors to the 5.4 per cent year on year fall in overall manufacturing were approximately 1.4 percentage points from the machinery and equipment industries and approximately 1.3 percentage points from the basic metals and metal product industries.

Mining and quarrying
The seasonally adjusted index of mining and quarrying in November 2009 fell by 6.5 per cent compared with November 2008. In particular:

  • oil and gas extraction decreased by 4.1 per cent;
  • coal extraction decreased by 16.0 per cent;
  • the largest contributor to the 6.5 per cent year on year fall in overall mining and quarrying was approximately 3.7 percentage points from oil and gas extraction.

Electricity, gas and water supply
The seasonally adjusted index of the electricity, gas and water supply industries in November 2009 fell by 10.6 per cent compared with November 2008. In particular:

  • electricity supply output decreased by 16.9 per cent;
  • gas supply output decreased by 5.5 per cent;
  • the largest contributor to the 10.6 per cent year on year fall in the electricity, gas and water supply output was approximately 10.2 percentage points from the electricity supply output.

Source and further information: http://www.statistics.gov.uk/pdfdir/iop0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK nearly out of recession but struggling to enter recovery phase
On 11 January 2010, the British Chambers of Commerce (BCC) reported there have been improvements in many areas of the British economy.. The BCC economic survey for the fourth quarter of 2009 shows improvements in most key national indicators (and a particular boost for manufacturing ) and that the UK economy appears to be "on the brink of leaving recession". However, progress has generally been weaker than it was in 2009 Q3. BCC warned that:

  • despite exports in the service sector strengthening, the industry was still struggling;
  • there needs to be easier access to capital for businesses;
  • UK productivity could be hit if "sharp falls in business capital spending are not reversed";
  • the 1% increase to employers' National Insurance Contributions planned for 2011 should be scrapped.

The results support the view that the economy is on the brink of leaving recession, but they do not provide conclusive evidence of any robust and significant growth during the fourth quarter of 2009. Several key measures are still negative in both the manufacturing and service sectors. In manufacturing, home orders, employment expectations, and investment in plant and machinery are still in negative territory.

The survey suggests that the service sector performed worse than manufacturing in Q4. Service balances are negative for home sales and orders, employment, cash flow, and investment in plant and machinery.
Source: BCC Report
The 2009 Q4 summary is available at:
http://www.britishchambers.org.uk/6798219244543774127/q4s-2009.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Statistical Bulletin for UK trade
On 12 January 2010, the Office for National Statistics published its Statistical Bulletin for UK trade - November 2009:

  • The UK's seasonally adjusted deficit on trade in goods and services was £2.9 billion in November 2009, compared with the deficit of £3.1 billion in October 2009;
  • The seasonally adjusted deficit on trade in goods was £6.8 billion in November 2009, compared with the deficit of £7.0 billion in October 2009;
  • The seasonally adjusted surplus on trade in services was £3.9 billion in November 2009, unchanged from October 2009;
  • Excluding oil and erratic items, the seasonally adjusted volume of exports was 0.2 per cent higher but the volume of imports was 0.9 per cent lower in November 2009, compared with October 2009;
  • Export prices of goods fell by 0.4 per cent and import prices of goods fell by 0.6 per cent, compared with October 2009. 

Value of total trade in goods (seasonally adjusted)
In November 2009, the UK's deficit on trade in goods narrowed by £0.2 billion to £6.8 billion, compared with the deficit of £7.0 billion in October 2009.

Total exports were broadly unchanged at £20.2 billion, but total imports fell by £0.2 billion (0.8 per cent) to £27.0 billion.

Trade in goods - EU analysis (seasonally adjusted)
In November 2009, the deficit on trade in goods with EU countries widened by £0.2 billion to £3.8 billion, compared with the deficit of £3.5 billion in October 2009. EU exports rose by £0.1 billion (1.3 per cent) to £11.2 billion, and EU imports rose by £0.3 billion (2.4 per cent) to £15.0 billion.
The detailed Bulletin is available at: www.statistics.gov.uk/pdfdir/trd0110.pdf 
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
October / November 2009 small business lending statistics
On 11 January 2009, The British Bankers' Association (BBA) reported that level of new structured-term lending to small businesses dropped slightly from £592 million in October 2009 to £573 million in November 2009. Total lending stocks registered at £55.6 billion and deposit levels at £54.5 billion. 

BBA statistics director, David Dooks, commented that statistics showed that the level of small business demand for loans, currently at just under £600 million a month, was less than a year ago, although availability of funding has improved. In contrast to this, structured lending levels continued to increase to a level of 4 percent higher than last year.
Source and access to full report: BBA Newsroom
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
CBI reports UK Financial Services sector activity disappointing
The CBI reported on 11 January 2010 that activity in the UK financial services sector increased slightly over the past three months but less than expected. Companies are expecting business volumes to reduce in the first quarter of 2010.

As well as business volumes, companies' profitability also increased marginally in the three months to December 2009 although expectations of continued growth in the coming quarter are low, according to the latest CBI/PwC Financial Services Survey. In the three months to December 2009, 32 percent said that volumes rose, while 28 percent said they fell.

Similarly, banks and securities traders do not expect the last quarter's growth in business volumes to be repeated in the coming quarter.

Overall, businesses were much more optimistic about the general business situation than in September 2009. However, profitability is expected to be flat in the coming quarter.

Employment levels fell only slightly, with the prediction of a flat level in the next quarter.

Firms are becoming more confident that financial markets will not fall any further but the majority of firms feel that the UK is less competitive as a financial centre.
Source and analysis for each business sector: CBI Press Release
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
UK economy improving, but struggling to enter recovery phase
On 12 January 2010, results of the British Chambers of Commerce (BCC) Economic Survey for the fourth quarter of 2009 show improvements in most key national indicators, in particular in manufacturing, although progress has slowed.

The view taken from the survey is that the economy is on the brink of recovery. However there are several key results which are still negative in both the manufacturing and service sectors, with manufacturing faring better than the service sector.

Businesses seem to be weathering the economic storm and confidence is improving, with strong improvements in employment and the manufacturing sector export levels. However, negative service sector balances for home sales and orders, employment, cash flow, and investment in plant and machinery present an obstacle to the next phase of economic recovery.
Source and access to full reports: British Chambers of Commerce
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Retailers face 'very tough' 2010
Retailers are facing a "very tough" 2010, despite posting upbeat Christmas sales figures, the head of the British Retail Consortium (BRC) has warned. BRC's Director General Stephen Robertson said consumer spending may not grow in the face of tax rises and continuing economic uncertainty. 

Four out of five retailers who responded to the British Retail Consortium's (BRC's) 2010 Concerns Snapshot Survey said they expected retail sales in 2010 to be the same as 2009. But, encouragingly, none thought sales would be worse and just over a fifth thought they would be better.

But retailers are concerned about a range of factors that could affect the strength and speed of the recovery in the New Year. Weak consumer demand topped respondents' concerns with 22 per cent of retailers citing it as their main worry for 2010, closely followed by rising unemployment at 20 per cent. The other major concerns reported in the BRC's Snapshot Survey are increases in personal taxes and weakness in the economy - both at 16 per cent. 

The uncertainty is affecting retailers' ability to maintain and create jobs, a crucial part of recovery. Nearly a third of retailers said they expected to decrease employment in 2010 compared with this year.
A full version of the BRC's 2010 Concerns Snapshot Survey is available at:
www.brc.org.uk/downloads/2010_Trading_Survey_Press.ppt
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Economy worsens in the US
US unemployment suffered the worst month in December since the recession began. Economists have accused President Obama of repeating the mistakes made during the Great Depression, which followed the Wall Street crash of 1929.

As 661,000 Americans dropped out of the system, the jobless figures did not truly reflect the situation. The broad U6 category of unemployment rose to 17.3 percent. 

This has had an impact on home foreclosures which have been running at over 300,000 a month since February 2009. One million American families lost their homes in the fourth quarter. President Obama is trying to delay the process to slow down evictions. 

US house prices have been slowly rising on the Case-Shiller index, but momentum stalled in October 2009. 

The US economy grew at a 2.2 percent rate in the third quarter. The Federal Reserve's (Fed) Monetary Multiplier hit an all-time low of 0.809 percent in mid-December - even in 2004 when there was no housing collapse, unemployment was 5.5 percent, banks were trading well, the Fed Multiplier was 1.73 percent.
Source and access to full report available at: The Telegraph
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
London shows strongest output growth in December 2009
The growth of business activity in London in the final quarter of 2009 was the strongest of all UK regions. Private sector output rose and job losses slowed to the lowest rate for sixteen months, with cost-cutting measures and ongoing adjustments to excess capacity being the main reasons for job cuts in December 2009.

Data showed that of those reporting a decline in business activity, three times as many respondents reported a rise. This rise is the strongest since April 2006.

Levels of new work have risen for six consecutive months, and the latest rise was the strongest since January 2005. Backlogs of work continued to fall, but at the slowest pace since February 2008.

London showed the weakest rate of inflation of the twelve UK regions monitored by the survey and input costs increased for the third month running in December.
Source and full report available at: Markit
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Householders paying by card
On 11 January 2010, a new survey by Shelter revealed that over 1 million householders have used credit cards to pay their mortgage or rent in the last 12 months. It is thought that 1 in 12 Londoners have resorted to this means of paying their mortgage or rent.

Although borrowing options have become restricted and the trend in people paying of personal debt has risen, an exclusive YouGov poll for ROOF magazine reports over a million people using credit cards to keep a roof over their head.

Whilst mostly occurring in the working class professions, the middle/upper classes are falling victim, with 4 percent of respondents to the survey admitting to using credit cards in this way. A total of 6 percent of rent or mortgage payers surveyed revealed that met their rent or mortgage commitment in this way in the last 12 months, suggesting that more than one million people nationwide have followed this trend.

Kay Boycott, Shelter's director of policy and campaigns, warned that once they obtain a charging order on people's property, credit card companies can go back to the court for a possession order to force a sale to recover the debt. She suggested that anyone facing difficulty should contact them for free advice sooner rather than later.
Source and full report available at: Shelter
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
CBI pessimistic about economic recovery
The CBI has raised doubts about a sustained economic recovery in Britain's financial services sector. In its latest quarterly survey, published on 11 January 2010, the employers' group found that financial institutions are at their most pessimistic since December 2008.

Results from the survey found that trading levels and profits had increased slightly during the three months to the end of December but most predicted that trading levels and profits in the first quarter this year were likely to be remain static or drop.

Banks and dealers for interest and trading income have low expectations for the next 3 months.

Further job losses are expected by the end of March, throughout the financial sector which employs about one million staff across the UK.
Source and full report available at: The Times Online
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Car sales reach nearly two million in 2009
Sales of new cars in the UK reached almost two million last year, the Society of Motor Manufacturers and Traders (SMMT) has said. 

  • New car registrations rose in December by 38.9% to 150,936 units;
  • Full year registrations down 6.4% to 1,994,999 units, the lowest level since 1995;
  • Since its introduction, the scrappage scheme has accounted for over a fifth of all new car registrations and is estimated to represent 20.8% of the December market;
  • Average new car CO2 emissions fell by 5.4% on the 2008 level to 149.5g/km in 2009.  

Source: www.smmt.co.uk/articles/article.cfm?articleid=21056 
Download Report from:  SMMT Report
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Confidence in the manufacturing sector continues its downward slide
Confidence in the manufacturing sector continues its downward slide, according to research by private equity firm Bowmark Capital.

Manufacturing optimism hit a low of 66.1 points in 2009, a fall of 14 per cent from 2007. Some 81 per cent of respondents to Bowmark's survey from the manufacturing sector said that staffing levels had decreased, while 25 per cent were having problems servicing their debt. 

Business services, on the other hand, saw a year-on-year uplift of 13 per cent in business confidence to 78.7 points. 

The Bowmark Entrepreneurs' Index, which surveys directors of small to medium-sized businesses, found that 59 per cent of respondents expected a sustained recovery in the UK economy in 2010.
Source: www.growthbusiness.co.uk/news/business-news/1107423/dog-days-for-manufacturing.thtml
-----------------------------------------------------------------------------------------------------------------------------------------
CIPS Survey figures suggest the UK is pulling out of recession
New figures published on 7 January 2010 from the Chartered Institute of Purchasing and Supply's (CIPS) Market Business Activity Index show that the services sector is expanding, offering new hope that the UK is emerging from recession.

The index, which gauges activity in the country's services sector, showed an increase in December 2009 with a reading of 56.8. This was up from a reading of 56.6 the previous month. The UK service sector ended 2009 on a positive note, with growth of both activity and new business improving since November. Expectations for the coming year remained high and, despite declining again, employment fell at the slowest pace for nearly a year-and-a-half.

Key points:

  • Activity and new business continued to grow at end of 2009;
  • Backlogs and employment fell at slower rates;
  • Cost inflation accelerated to steepest in over a year.

Source: www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=5974
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Producer prices index
On 8 January 2010, the Office for National Statistics published the Producer Prices Index Statistical Bulletin for December 2009. The index showed that the prices of goods leaving UK factories rose at a faster pace than expected in December 2009.

Other statistics are:

  • The output price index for home sales of manufactured products rose 3.5 per cent in the year to December 2009, compared with a rise of 2.9 per cent in the year to November. The rise for December is the highest rate since January 2009;
  • The index rose 0.5 per cent between November and December, mainly reflecting price rises in other manufactured products, transport equipment, food and electrical products;
  • The output price index excluding excise duties rose 3.2 per cent in the year to December 2009. The index rose 0.6 per cent between November and December;
  • The output price index excluding food, beverages, tobacco and petroleum rose 2.6 per cent in the year to December 2009. The index rose 0.7 per cent between November and December;
  • The input price index for materials and fuels purchased by the manufacturing industry rose 6.9 per cent in the year to December 2009 (the fastest pace since November 2008) and rose 0.1 per cent between November and December. The rise in the input index between November and December partly reflected a rise in the price of imported parts and equipment and fuels (inc CCL). These increases were offset by a fall in crude oil prices;
  • Prices of imported materials as a whole (including imported crude oil) were unchanged between November and December;
  • The input price index for manufacturing industry excluding the food, beverages, tobacco and petroleum industries rose 1.0 per cent in the year to December. Seasonally adjusted, the index rose 0.4 per cent between November and December;

Producer Price Indices monitor the price changes of goods bought and sold by UK manufacturers. Input prices are prices of materials and fuels bought and output prices, also known as 'factory gate prices', are prices at which goods are sold. As well as output and input price indices, results are shown for 'narrow' indices, which are a subset which exclude more seasonal and erratic items (food, drink, tobacco and petroleum). 
Source and detailed statistics: www.statistics.gov.uk/pdfdir/ppi0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Composite Leading Indicators, January 2010
On 8 January 2010, the levels reported by OECD of composite leading indicators (CLIs) for November 2009 indicated stronger signals of recovery than October 2009.

By contrast, the index of industrial production shows that downturns for all major seven countries, except Canada and the United Kingdom, are also visible. The CLIs for all seven countries have moved above their long-term trend. 

The outlook for major economies continues to point to a recovery.
Source and access to full report available at: OECD
 © Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
CBI reaction to MPC decision
On 7 January 2010, Ian McCafferty, CBI Chief Economic Adviser, reacted to the announcement from the Bank of England's Monetary Policy Committee (MPC), stating that:

  • The CBI was not surprised that the Bank of England had made no changes to interest rates or quantitative easing (QE) policy;
  • Recovery in the UK is likely to be slow and drawn out, similar to that following the 1980s recession.
  • The economy will have to absorb a good deal of structural adjustment. Banks need to rebuild their capital and reduce their leverage, consumers must restore their savings, companies must adapt to higher costs of capital, and the public sector needs to rectify its deficit. Sub-par growth is therefore likely to persist into 2011.

Source and access to full report available at: CBI
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Interest rate increase fears
On 8 January 2010, after reports show that the UK has one of the highest rates of inflation globally, there are fears that interest rates will be increased.

Coupled with rising energy prices, consumers are preparing for a further impact on their economic stability. The UK's Consumer Prices Index is the highest in the G7 at 1.9 percent and nearly quadruples the euro area's 0.5 percent, according to the Organisation for Economic Co-operation and Development. 

Separately, a poll from the European Commission showed that UK household inflation expectations have jumped to the highest level since October 2008. 

In Britain there is now clear evidence the economy emerged from recession in the fourth quarter. On 7 January 2010, Halifax said house prices jumped for a sixth month in December and that they are 9.4 per cent above April lows.  But, estimates from Henderson Global Investors suggest that the CPI could climb as far as 2.8 percent this month, caused in part by increases in fuel and food costs.
Source: Daily Mail article
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Going for Growth - Lord Mandelson's speech to the Work Foundation
Lord Mandelson defines the core challenges in building sustainable growth in the British economy in the years ahead. He sets out new plans to promote enterprise, develop a national British 'innovation system', create new forms of growth finance for innovative companies and tackle the huge challenge of renewing Britain's infrastructure. He argues that Britain's full recovery depends on a reassertion of the values of long term investment in industrial competitiveness and Britain's future strengths.

The New Statesman was among the first to comment on Lord Mandelson's speech to the Work Foundation on 6 January 2010. They say it looks like Gordon Brown's "life support machine" has come to the Prime Minister's rescue again. Despite previous differing views on the managing of the economy, in his speech today, the Business Secretary looks set to insist that the PM's deficit strategy is "credible" and even "praise" the pre-Budget report.

Lord Mandelson opened his speech saying that:

  • This week marks the start of a new decade in which we know the economy will come under fiercer competitive challenge than ever before, as the world tilts further east towards China and the other emerging economies. But we do not have to resign ourselves to relative economic decline.
  • In Britain we still have one of the best environments in the world for starting and growing a new business.
  • He said that we are emerging from the financial crisis and the downturn with our key industrial strengths intact, unlike our experience in previous recessions.
  • The competitive value of the pound is helping exports and increasing the sourcing of manufactured goods in the UK. And the Government will maintain its support for the economy through existing public spending and investment until the recovery is firmly locked in.
  • But that's not the end of the story. The recovery is only the beginning of how we are going to pay our way in the global economy and create the jobs of the future.

Lord Mandelson concludes by saying:

  • Only by growing our economy can decent jobs be created, living standards protected, and the winners' circle expanded outward to those on low and middle incomes.
  • We have learnt the right lessons from the downturn and will sustain the recovery. But the key question is how we can achieve a step-change in the growth rate of the British economy in the decade ahead.

Read the full extract of Lord Mandelson's speech at: www.bis.gov.uk/going-for-growth
Read the New Statesman commentary at:
http://www.newstatesman.com/blogs/the-staggers/2010/01/labour-needs-mandelson-brown
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Profitability of UK companies: 3rd quarter 2009
On 6 January 2010, the Office for National Statistics published statistics on the profitability of UK companies for Q3 2009.

The net rate of return by private non-financial corporations in the third quarter of 2009 was 11.5 per cent. This compares with the revised estimate of 11.7 per cent in the previous quarter. The annual net rate of return in 2008 was 14.1 per cent. This compares with the estimate of 14.2 per cent for 2007. The annual net rates of return for 2008 have not been revised since the previous publication.

Figures for the latest quarter show that:

  • Manufacturing companies' net rate of return was 6.9 per cent;
  • Service companies' net rate of return was 12.9 per cent;
  • The net rate of return of companies other than United Kingdom Continental Shelf (UKCS) companies was 10.6 per cent;
  • The net rate of return of UKCS companies was 34.6 per cent.

 Manufacturing companies
The net rate of return for manufacturing companies in the third quarter of 2009 is estimated at 6.9 per cent. This is in line with the net rates of return for manufacturing companies in seen in earlier quarters of 2009. Rates of return for previous years in the current decade have been in the region of 9-10 per cent.

Service companies
The net rate of return for service companies in the third quarter of 2009 is estimated at 12.9 per cent. This is lower than the average for 2008 of 15.4 per cent. This is the lowest value since 1993 Q2.

Non-United Kingdom Continental Shelf (non-UKCS) companies
Non-UKCS companies comprise manufacturing, service and other companies (such as construction and power supply). The net rate of return for non-UKCS companies in the third quarter of 2009 is estimated at 10.6 per cent.

United Kingdom Continental Shelf (UKCS) companies
The net rate of return for UKCS companies increased in the third quarter of 2009 to 34.6 per cent, compared with the revised estimate of 33.9 per cent recorded in the previous quarter. The rates of return for this industry broadly follow movements in oil and gas prices.  Due to the nature of the capital assets employed, net rates of return for Continental Shelf companies are not directly comparable to those for other industries.
Source and other statistics: www.statistics.gov.uk/pdfdir/prof0110.pdf
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
BRC-Nielsen Shop Price Index - December 2009: Shop Price Inflation Up
On 6 January 2010, the BRC-Nielsen Shop Price Index for December 2009 was published:

  • Overall shop price inflation was up 2.2% in December;
  • Food inflation increased to 3.7% in December from 2.8% in November 2009;
  • Non-food inflation was up 1.4% in December from -1.2% in November.

Source: www.brc.org.uk/details04.asp?id=1679
The index can be downloaded from: www.brc.org.uk/showDoc04.asp?id=4031&moid=6885 or from: www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=5952
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Freeze on UK interest rates continues
On 7 January 2010, the Bank of England's Monetary Policy Committee voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £200 billion financed by the issuance of central bank reserves.

The Committee expects the announced programme to take another month to complete. The scale of the programme will be kept under review.
Source: www.bankofengland.co.uk/publications/news/2010/001.htm
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
Euro area inflation estimated at 0.9%
Euro area annual inflation is expected to be 0.9% in December 2009 according to a flash estimate issued by Eurostat, the statistical office of the European Union published on 5 January 2010. It was 0.5% in November 2009.

Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available as well as early information about energy prices. The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (18 times exactly anticipating the inflation rate and 6 times differing by only 0.1 over the last two years). 
Source: EuroIndicators
© Copyright Bizezia Limited, publisher of LEARNEZIA
-----------------------------------------------------------------------------------------------------------------------------------------
The CBI on the UK's economic risks and opportunities in 2010
Richard Lambert, CBI Director-General, made the following comments on the economic and political situation in his message for the New Year. His message is that the UK does indeed face big structural problems - but with sufficient determination they can be largely fixed within the lifetime of the next parliament. At the same time, the job of political and business leaders is to focus relentlessly on those policies that will enable a different and more sustainable pattern of economic growth for the future - education and skills, enterprise and innovation, competitive taxes and flexible labour markets, private sector investment, trade growth and open markets. Getting all this right would make 2010 the year in which unemployment passed its peak, and the UK economy began to reshape and rebuild itself.

He said that 2010 will be a year of exceptional challenges for businesses in Britain. Looking 12 months ahead, the risks and the opportunities both seem strikingly clear:

Risks

  • The first risk is that the international banking crisis is far from resolved. Although conditions at UK banks have improved significantly since the summer, with a sharp rise in their key capital ratios, there could still be more aftershocks to come from the global credit crunch; the process of regulatory reform has hardly begun; and the transition to more robust funding structures is likely to be both slow and expensive. In the meantime, net lending to companies is still shrinking, and business investment remains very weak.
  • The second big risk lies in the poor shape of the public finances. The Government has not yet established a credible path back to fiscal stability for the UK. The longer this is delayed, the greater the threat to long term interest rates and sterling. Everyone knows that painful decisions are going to have to be made sooner or later about public spending and tax. But the timing and shape of these moves remain unclear - and that is another significant concern for business.
  • The other big risks are to do with more general economic and political worries. To judge by an analysis of economists' forecasts, the level of uncertainty about the outlook for growth is still very high. And we are already in that frustrating period in the run up to a general election when policies are set by opinion polls, and politicians are unwilling to look much further ahead than the end of their noses.

Opportunities

  • But then there will also be opportunities in the year ahead. We will have a new and re-energised government by the summer, with - we hope - the authority to take the decisions necessary to reshape the public finances. The debate about the future of the banking system will move on from political point scoring around bonuses to much more important questions about reserves and liquidity.
  • Meanwhile, business conditions are now stabilising after a terrible 12 months. Many businesses are still worried about the possibility of a double dip recession, and what that would mean for jobs. While another setback cannot be ruled out, the more likely outcome is that the economy will bump along the bottom for a little while before starting a fragile recovery driven by higher exports, renewed investment in working capital, and a slightly stronger pattern of domestic consumption.
  • The second half of this year might produce rumblings in the public sector, if the new Government begins to get a grip on the spending side. But with a bit of luck, it could also see the start of better times for the private sector. If 2009 was a year when many companies were preoccupied with survival, 2010 may be a time of opportunities for those with the resources and foresight to grasp them.

Source: CBI press release 
© Copyright Bizezia Limited, publisher of LEARNEZIA