UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

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Hi de hi, good old fashioned British holidays

At the seaside, recession can mean revival

 It is a pleasant, sunny, yet breezy day in Morecambe and the glass-fronted restaurant at the Midland hotel offers uninterrupted views across the bay to the mountains of the Lake District.

 

This once neglected art deco gem has been transformed into a boutique hotel that is helping to drive the regeneration of the Lancashire seaside resort.

British seaside towns are enjoying a renaissance not seen for decades as the credit crunch bites and staycations become appealing. Gerberas are placed in vases and the cafe has comfortable red leather bucket seats. Nostalgic 1930s music is playing in the background to add to the atmosphere.

The hotel has been re-opened for more than a year and resembles a liner in its structure, stairs and clean lines. Matt Whitehead, the manager, drives to work each day along the seafront and feels lucky. He refers to his hotel as "she".

He said: "The first time I came to Morecambe it was a cold, windy day. It was like a ghost town. The hotel was boarded up. Now you see people walking on the promenade and our database shows people are coming from all over the UK.

"More people are coming to Morecambe for a holiday. "Whatever the reason – the Euro or the fact we are here – it has to be a good thing."

sourced from The Guardian

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We are in a recession, we have a labour goverment so that all strike

Cadbury workers 'vote on strike'

Cadbury's produces some of the UK's best known chocolate bars Cadbury workers begin voting on possible strike action on Saturday, according to the union Unite. Ballot papers consulting on action will begin to arrive at the homes of workers at the UK's best-known chocolate maker, it said. Unite claims that Cadbury is breaking a long-standing pay deal with workers at its Bourneville, Chirk, Marlbrook and Somerdale plants. About 1,300 people work across the sites, the union said. The ballot will run to 18 August, it added. sourced from THE BBC Postal staff set to strike again The union has warned a national strike could take place Industrial action at the Royal Mail is set to escalate with strike action scheduled for three days next week, the BBC has learned. The strike action on 25, 27 and 28 July comes on top of Friday's one-day walkout by 12,000 Royal Mail employees. The escalating action is in defence of workers who, the Communication Workers Union (CWU) say, are being unduly pressured by Royal Mail managers. The Royal Mail has accused the union of standing in the way of modernisation. 'Illogical cuts' Union members in London and other selected regions are to down tools in the dispute over job cuts and working conditions. This could result in no deliveries of mail on Saturday 25 July, and no work at Royal Mail's London distribution centres on 27 and 28 July, says BBC business correspondent Joe Lynam. The CWU has accused Royal Mail managers of trying to "break the union for good" and accused them of "illogical and arbitrary" job cuts. Deputy General Secretary of the CWU, Dave Ward, said his union recognised that the Royal Mail is "facing huge problems" but said that it had a very different view of what modernisation is needed. The vision that Royal Mail has put to workers involves "endless job cuts, hugely damaging cuts to the service and continuous cuts in our members' pay, pensions and conditions," he said. Paul Tolhurst at the Royal Mail countered that with "mail volumes falling and our profits under huge pressure, there is no real opportunity for us to stop [making] the changes." "Particularly," he added, "as these changes we are trying to put in were agreed with [the union] in 2007." Earlier on Friday, about 400 employees marched on Westminster to deliver letters of protest to the Business Secretary Lord Mandelson. Sell off The Royal Mail is suffering from a big drop in demand for letters as more and more people use the internet to communicate. The government announced last month that it was delaying controversial plans to sell a stake in the postal service to a private company. It maintains that the partial sell off of Royal Mail is required as part of measures to tackle the company's finances - in particular a pensions deficit said to be near £8bn. Lord Mandelson has said the company cannot survive without the sale. The Royal Mail employs more than 150,000 people in the UK, most of whom are represented by the CWU. sourced from THE BBC

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NEW blog in development

[caption id="attachment_571" align="aligncenter" width="310" caption="allaboutgrub"][/caption]

Hi all, I have been developing a new blog please come and visit it

allaboutgrub.wordpress.com

 - this blog is all about food, ingredients and where to buy good quality food from - add a marker to my allaboutgrub map to tell others about great places to eat out or places to buy great food from -

"go on share your food experiences with others" 

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Lloyds Bank chairman to step down

Sir Victor Blank is to step down as chairman of Lloyds Banking Group by June 2010.

Sir Victor has been chairman of Lloyds since 2006

Following a meeting with the board, Sir Victor said it was "the right time for the Group to appoint a new chairman".

Lord Leitch, who has been appointed deputy chairman, said the board was "very sad" at the decision.

Sir Victor and Lloyds' chief executive, Eric Daniels, have faced criticism for their decision last year to buy HBOS, the troubled owner of Halifax.

The UK Treasury owns 43% of Lloyds.

Sir Victor confirmed he was stepping down just before he went inside Lloyds' headquarters in the City of London on Sunday.

Sir Victor has jumped before he was pushed Robert Peston, BBC business editor Read Robert Peston's blog Lloyds sees HBOS loss of £10..

He told BBC business correspondent Joe Lynam that he "still had lots to do" and denied he was being forced to resign under pressure from shareholders.

In a statement released after the meeting, he said he would continue working until a successor was appointed "to ensure the successful integration of the two banks".

"This remains - in the medium term - a unique value-enhancing opportunity," he added.

Mr Daniels said Sir Victor had played a very important role "during a period of significant change for our company and at a time when there has been unprecedented volatility in the markets".

HBOS losses HBOS made a loss in 2008 of almost £11bn. But Lloyds TSB, as it was called, made a profit of £807m last year, albeit an 80% drop on the previous year.

The two banks together are expected to be in loss this year.

The government earlier this year agreed to insure £260bn of the bank's toxic loans, and to potentially raise its stake in the bank to 65% following the HBOS losses.

The deal was part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses resulting from the credit crisis.

Lloyds' directors do not believe that Sir Victor would have been ousted by shareholders at the forthcoming annual meeting, according to the BBC's business editor, Robert Peston.

However, he believes that UK Financial Investments (UKFI), which manages the government's stake in financial institutions such as Lloyds and the Royal Bank of Scotland, was "acutely aware" of other shareholders' convictions that there had to be a change at the top of Lloyds.

"I am now persuaded that UKFI would have voted its 43% (that's taxpayers' 43%) against him staying on," Mr Peston said.

 'First-class chairman' Lord Leitch said the board "was unanimous in wanting Sir Victor Blank to seek re-election as chairman for another three years".

LLOYDS' TOXIC ASSETS 83% of the £260bn toxic assets came from HBOS 17% come from the books of Lloyds TSB Of the toxic assets, £151bn are in corporate and commercial loans £74bn comes from residential mortgages "We are very sad about Sir Victor's personal decision to retire, although we respect and understand his reasons for it," he said in a statement.

"Sir Victor is a first-class chairman and we are delighted that he will continue with us to ensure an orderly succession and the continued integration.

" Lloyds last month announced it is to cut 985 jobs at a business offering car finance over the next two years, the first major job losses from the merger.

 The government backed the Lloyds takeover of HBOS last September, bypassing normal competition rules to avoid the collapse of the Halifax owner.

Shares in the bank have dropped by 27% so far this year, closing at 89 pence on Friday.

Lloyds controls about 25% of British customers' personal bank accounts and about 28% of the mortgage market.

sourced from The BBC

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A poor advert for advertising standards?

Link to BBC article

A poster showing a nervous man alongside the slogan "Take Courage my friend" has been banned by the Advertising Standards Authority (ASA) for suggesting the beer could boost confidence.

Newsnight's culture correspondent Stephen Smith reports.

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Obama calls for G20 joint action

US President Barack Obama has said that countries must take concerted action to spur global economic growth.

 

President Obama called for both stimulus and regulatory reforms

 

President Obama was speaking ahead of this weekend's meeting of G20 finance ministers in West Sussex near London.

He said the US had two goals at the G20 - to ensure joint action to jump-start economies and to move forward on a regulatory reform agenda.

He added that he was optimistic about the meeting's prospects. "We are in this together," he said.

Earlier, UK Chancellor Alistair Darling had also called for co-ordinated global action.

"We must work together not as a small group of advanced economies but globally, including the emerging and developing economies," he told reporters in London.

Growing rift

The finance ministers meet ahead of the main G20 summit of world leaders in London on 2 April.

 

It's very important to make sure that other countries are moving in the same direction, because the global economy is all tied together  US President Barack Obama Darling urges global co-operation

President Obama's comments came amid reports of a growing rift between the US and Europe over the G20 in recent weeks.

Washington has been calling for more spending plans, while most European leaders have been pressing for increased global regulation of the financial system.

Speaking at a meeting in the Oval Office with Treasury Secretary Timothy Geithner, Mr Obama said the $787bn stimulus package he signed into law last month was "doing a good job" stimulating the US economy.

He added: "It's very important for the American people to understand that, as aggressive as the actions we are taking have been so far, it's very important to make sure that other countries are moving in the same direction, because the global economy is all tied together."

On Tuesday the head of the US Federal Reserve, Ben Bernanke, also called for the revamping of the global system of financial regulation.

sourced from The BBC

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British jobs for British workers

Deal hope in foreign workers row

Workers say the action is not racist, but about discrimination against Britons

A possible deal to end the row over the use of foreign labour at Lincolnshire's Lindsey Oil Refinery will be put to local union leaders and workers later.

The proposal emerged after talks chaired by Acas.

A GMB union source told the BBC the deal could see half of the disputed 200 jobs offered to British workers, but the Unite leader has denied this.

Hope that new 'half-and-half' deal in foreign workers row could end wildcat strikes

A proposed deal that could end the bitter row over foreign workers at an oil refinery will be put to unions today.

Marathon talks aimed at ending a series of wildcat strikes at Lindsey plant in Lincolnshire ended last night with the outline of a possible deal.

Union sources said it involved offering half the jobs of the disputed recruitment contract to UK workers.

Downturn will bring big fall in migrant workers, says CBI

Companies facing decline in demand for goods and services will reduce their use of agency staff, MPs are told

The use of migrant labour in Britain will decline abruptly as companies face a sharp fall in demand for their goods and services, the Confederation of British Industry told MPs yesterday. John Cridland, the CBI's deputy director general, told the Commons home affairs committee that the first response of many firms to the downturn was to reduce their dependency on agency staff, many of whom are migrant workers.

He said that there was evidence that many nationals of new EU states were going home as unemployment rose in Britain and suggested that the flow of skilled migrants from outside Europe would also decline. He added: "I expect that, when we have the next report from the [Home Office's] migration advisory committee on the needs for skilled labour, we will not see the same need for non-EU labour in the same numbers because of the need to provide as many employment opportunities as possible for the unemployed. All I'm suggesting is that the market will correct itself, but what we cannot avoid is a significant increase in unemployment, which is a sad but inevitable consequence of recession."

read full articles Click here

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McDonalds to open 1,000 stores this year

[polldaddy poll="1314875"]

McDonald's to open 1,000 stores

McDonald's US sales were up 5% on the year before US fast-food chain McDonald's says it plans to open 1,000 new restaurants this year. The world's largest hamburger chain also said fourth-quarter net income fell 23% to $985.3m (£710m), from $1.27bn a year before. Revenue fell to $5.57bn from $5.75bn, even though global same-store sales rose 7.2%, as the firm was hit by the strong dollar. In the US, the firm raised the price of its Double Cheeseburger in November. Announcing the results, chief executive Jim Skinner said: "For 2009 we plan to invest $2.1bn in capital to open about 1,000 new restaurants and reinvest in our existing locations." Despite beef, cheese, and other ingredients rising in price, the company reported an 8% fall in total operating costs and expenses. McDonald's has seen sales rise in the economic downturn, helped by its low prices and ubiquity of its outlets. In the quarter, its same-store sales in the US rose 5% on the year before. International same-store sales were also ahead, rising 7.6% in Europe and 10% in the Asia-Pacific, Middle East and Africa division. sourced from The BBC

McDonald's to open 1,000 new stores

Despite falling short of Wall Street expectations, the burger chain experiences better-than-expected profit and will open 1,000 new restaurants.

NEW YORK (Reuters) -- McDonald's Corp. reported a better-than-expected quarterly profit on Monday though revenue fell short of Wall Street expectations due to a stronger U.S. dollar, and its shares fell more than 2%.

The world's largest hamburger chain also said it would open 1,000 restaurants this year.

Fourth-quarter net income fell about 23% to $985.3 million, or 87 cents per share, from $1.27 billion, or $1.06 per share, a year earlier, when results included a large tax-related benefit.

Analysts on average were expecting earnings of 83 cents per share, according to Reuters Estimates.

sourced from CCN Money read full article

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UK jobless 'to reach 3.4 million'

Unemployment will soar to 3.4 million as the financial crisis deepens, forecasters predict ahead of official jobless figures this week.

The Ernst & Young Item Club says the number of those out of work in the UK will pass 3.25 million by the end of 2010, and hit 3.4 million in 2011.

"All of the economic statistics are now in free-fall," it said in its forecast.

It warned the next 12 months would see the UK economy suffer its largest contraction since 1946.

The UK's gross domestic product would shrink by 2.7% in 2009 and another 0.5% the following year, the Item Club said in its latest report on the UK economy.

The official unemployment total reached a 10-year high of 1.86 million last October and some analysts expect the figure to increase to two million when new figures are published on Wednesday.

'Depression' warning

The group says that inflation and interest rates will stay close to zero, helping pensioners and those with tracker mortgages.

However, it said these conditions will do little to aid the housing market, set to fall 22% more over the next 18 months as it remains starved of finance for new mortgages. Meanwhile banks will be unable to lend to companies and consumers until the US sorts out its own banking problems.

"The government has failed to stop bankers hoarding cash and it seems this panicky behaviour is spreading out to the rest of the economy," the group warned.

The Item Club predicts that business investment will fall by nearly 17% this year, dropping almost another 6% in 2010 as worried company treasurers sit on cash.

In addition, consumer spending is expected to shrink 2.6% in 2009 as employees fearing for their jobs become "much more cautious" consumers.

sourced from The BBC read full article

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Finance crisis: In graphics

This is one of the most tumultuous times on record in the global financial markets.

The financial landscape is going through a period of upheaval with some major firms folding, other operations merging and a limited number of companies in both the Europe and the US, being rescued by governments.

BILLION-DOLLAR BAIL-OUTS

Governments have spent billions of dollars on rescue packages, led by the US with its $700bn rescue package.

soured from The BBC read full article

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High street hit by Downturn

The economic downturn has seen high profile failures such as Woolworths, and High Streets across the country are worried about falling sales.

News video from the BBC

Founder on Lush talks about the downturn from the BBC

Founder of Lush Cosmetics Mark Constantine explains why British retail has taken a turn for the worse.

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Sales soar at Primark

Primark sales sour over the Christmas period. As the rest of the high street suffer Primark sales increase.

Article

Primark has enjoyed another successful Christmas, with sales soaring by more than a fifth as its cut-price chic continued to appeal to shoppers.

Parent company Associated British Foods said today that total sales at the fashion store rose by 21% in the final 16 weeks of last year.

The sharp rise was partly attributed to Primark opening six new stores during the year, but the group said like-for-like sales growth, which excludes new space, was "very strong" at around 4%.

Primark's performance provides further evidence that shoppers are becoming increasingly thrifty as the recession hammers consumer confidence – a trend that sent clothing sales falling sharply at Marks & Spencer.

Primark fired several suppliers in 2008 following allegations that they were using child labour. But this week, allegations emerged that one of its UK suppliers was subjecting its workers to sweatshop conditions, with illegal immigrants receiving just half the minimum wage for 12-hour days, seven days a week.

read full article sourced from the Guardian

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Sales slide at Currys and Argos

When I read this article, it really does real like the downturn is having a major effect. You would expect a lot of small retail shops to close and the odd big one like Woolworth, but here we are facing the end of Argos, Currys and PC world - so all those out of town retail parks will soon be very empty.

The article

Sales at several of Britain's top retail chains have fallen markedly as a result of the economic slowdown.

DSG International, which owns Currys and PC World, said like-for-like sales - which ignore new stores - had dropped 10% in the three months to 10 January.

Home Retail Group said like-for-like sales at its Argos chain had fallen 7.5% in the 18 weeks to 3 January.

DIY chain Homebase, which is also owned by Home Retail Group, saw like-for-like sales in the same period drop 10.2%.

Many retailers are struggling as consumers cut back on spending amid rising jobless figures, falling house prices and recession worries.

read more sourced from the BBC

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Recession and the housing market

As the housing market starts falling is this going to most difficult year for many home owners. As the prices fall by up to £3,000 per month, this is not the time move.

But as I’m sure you will have noticed a lot of houses that were for sale late last year are now for rent, people who have let their property will not find it an easy marked. If your house is on the market you would be very lucky to sell it, the biggest problem is agreeing a sale price and then all the people in the chain being able to to get the mortgages and financial security.

Almost 3,000 home owners are falling into negative equity every, negative equity is bad if you are planing or need to move. Negative equity means you are paying more for your mortgage then the value of your property.

But over a period of time house prices will increase after the low. I am not surprised this has happened to the housing market, the prices were getting so high and out of control. I know a lot of people hold the banks responsible for the housing situation, but we had a lot to do with it, people over estimated their salary with self certification and people mortgages them self’s up to the hilt.

read full article

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HMV to snap up some Zavvi stores

Entertainment retailer HMV has said it is to buy 14 stores from troubled chain Zavvi, funded by selling new shares.

Proceeds will also be used to fund a move into the live music market, taking a joint stake in a firm running 11 venues such as Hammersmith Apollo.

It will also get naming rights to some of the venues.

HMV also said that sales in the five weeks to 3 January - which includes the Christmas period - were up by 2.9%, or by 0.5% not including new stores.

Rebranding

The Zavvi stores it is buying are all profitable, HMV said, primarily in locations where it does not currently have a store.

It expects the cost of the purchase to be about £2m - including fitting out and rebranding the stores. Nine of them are in the UK and five in the Irish Republic.

read full article at The BBC

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What are you giving up in the downturn?

It has been a tough December for retailers, and grocers have not been spared in the downturn.

But it is not just that overall sales are falling.

Canny consumers have been trying to make their money go further and that has meant changing the way they shop.

any of the lost sales suffered by retailers will not be from people who were considering buying something and then decided not to.

They are just as likely be from customers considering buying one product and then instead, buying a different one.

read full article scoured from the BBC

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Q&A: What is a recession?

The dreaded R-word - recession - is in the air as every day seems to bring more gloomy economic news.

Many commentators are now openly talking about the current slowdown turning into a recession.

But how do economists define a recession and when will we know if the UK is going through one?

What is the definition of a recession?

This is a thorny question on which experts still disagree.

However, technically speaking, the UK economy would slide into recession when it experiences two successive quarters of what is known as "negative growth".

For this to happen, the total amount of goods and services produced by the UK - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.

read full article at The BBC

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Will economy create ghost towns?

News article from the BBC . . . watch here

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New Capitalism

Robert Peston has done a couple of short videos - relating to the current economic situation.

Part One [Broadcast Thursday December 18th]:

Watch here

Part Two [Broadcast Friday December 19th]:

Watch here

sourced from The BBC

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