Tagged: UK

UK Recession ‘worse than estimated’

BBC NEWS | 2009/11/27 | 11:46:02 GMT

Chancellor Alistair Darling will say in his pre-Budget report that the economy performed worse in 2009 than he first predicted, Treasury sources have said. Mr. Darling is expected to say that the UK economy shrank by 4.75% this year – more than the 3.5% originally forecast in the Budget in March. The adjustment follows the economy’s unexpectedly poor performance in the first three months of the year. But he is likely to stick to 2010 forecasts of growth between 1-1.5%.

Return to growth

On Thursday, Mr. Darling said that since the Budget forecasts were made, “new data has shown that most economies, ours included, suffered a severe shock in the first quarter of this year”. He added that he still expected a return to growth around the turn of the year. The UK economy has contracted for the past six quarters, but the economies of the US, Japan, France and Germany have all started growing again. Recent UK economic figures, such as retail sales and manufacturing output, have indicated signs of recovery. October’s retail sales were up 0.4% from September, according to the Office for National Statistics. And the latest Purchasing Managers Index showed manufacturing output increased at its fastest rate for almost two years in October.

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Britain opens inquiry into Iraq war

ABC News | Wed Nov 25, 2009 | 11:16am AEDT

A long-awaited public inquiry has heard the British Government tried to distance itself from Washington’s talk of overthrowing Saddam Hussein as early as February 2001, two years before the Iraq invasion. Britain’s biggest investigation into the Iraq war has begun hearing evidence in London. The invasion is considered the most controversial foreign and military policy decision in 50 years. One of the first witnesses was Sir Peter Ricketts, a top intelligence official in the years before and during the invasion. He said that in 2001 it was assumed that overthrowing Saddam Hussein was not British policy, despite growing talk in the US about regime change in Iraq.

US priorities after September 11 remained Al Qaeda and Afghanistan. But Sir Peter said it became clear by the end of 2001 that the ‘war on terror’ had moved into a second phase involving Iraq, even though there had been no evidence of a link between Baghdad and the terror attack. Sir William Patey, who was the chief of the Middle East department of the UK’s foreign office, also said he and his colleagues in London and Washington had discussed the overthrow of Saddam Hussein as early as February 2001. “I made a note that on February 22, 2001 … [that] our policy should be to keep a long way from the regime change end of the spectrum,” Sir William told the inquiry. “We were aware of these drum beats from Washington.”           Continue reading

UK Economy Shrank Less Than Previously Estimated

Bloomberg | November 25, 2009 | 05:12 EST

The U.K. economy shrank less than previously estimated in the third quarter as consumer spending stopped falling and the service industries slump eased, bringing the longest recession on record closer to an end. Gross domestic product fell 0.3 percent from the previous three months, compared with a prior measurement of a 0.4 percent drop, the Office for National Statistics said today in London. The result matched the median prediction of 28 economists in a Bloomberg News survey. Prime Minister Gordon Brown this week called for stimulus to stay in place to avoid “choking off recovery” as an election looms within six months. The Bank of England has expanded its bond-purchase plan three times since March to ensure Britain’s escape from recession and Governor Mervyn King said yesterday the pickup isn’t “particularly strong.”

“Over the coming quarters the economy will accelerate pretty sharply,” said Nick Kounis, chief European economist at Fortis Bank Nederland NV in Amsterdam and a former U.K. Treasury official. “In third quarter the U.K. was one of the sick men of Europe but it’s going to step up a few gears and will be one of the stronger performers in Europe next year.” The pound erased gains against the dollar and was trading at $1.6702 as of 10:05 a.m. in London. U.K. government bonds extended gains, pushing yields lower. The yield on the 2-year gilt fell 5 basis points to 1.17 percent.         Continue reading

King Says BOE Has ‘Open Mind’ on More Bond Purchases

Bloomberg | November 11, 2009 | 10:23 EST

Bank of England Governor Mervyn King said the U.K. economy faces a “hard path” back to health and he has an “open mind” on further bond purchases, signaling officials aren’t ready to withdraw stimulus yet. “Even if we get significant positive growth rates in the future, we have a long way to go to get back to where we were,” King told reporters in London today. Deputy Governor Charles Bean said credit is still tight and there are signs some companies are turning away orders because of a lack of capital. The pound fell and bonds rose after King unveiled the central bank’s quarterly forecasts. The Bank of England last week expanded the bond-purchase plan to 200 billion pounds ($335 billion) and the governor said today “the U.K. faces a prolonged period of balance sheet adjustment. We have a completely open mind as to whether to do more asset purchases or not,” King said. The pound fell against all 16 of its most-traded peers tracked by Bloomberg and government bonds erased earlier declines. The British currency fell as much as 0.5 percent today and traded at $1.6653 as of 3:22 p.m. in London. The yield on the two-year U.K. government bond slipped five basis points to 0.7 percent. “It was very important that he did not rule out further asset purchases,” said Colin Ellis, an economist at Daiwa Securities SMBC in London and a former Bank of England official. “That could suggest one or two people wanted to do more last week. The bank’s been surprised on the downside several times on this recession. King’s very conscious he doesn’t want to rule out further action.”      Continue reading

British Airways to cut 1,200 jobs amid losses

BBC NEWS | 06/11/2009 | 17:10:45 GMT

British Airways says it plans to cut a further 1,200 jobs after reporting a first-half loss for the first time. The job loss announcement means the airline will have shed a total of 4,900 positions by March 2010. The company suffered a loss before tax of £292m ($485m) for the six months to the end of September, compared with profits of £52m a year earlier. The first half of BA’s financial year is usually stronger because it covers the summer holiday season. BA said revenue over the six-month period was down 13.7% to £4.1bn, compared with £4.75bn in 2008. “Aviation remains in recession with revenue likely to be £1bn lower this year,” said BA chief executive Willie Walsh. He told the BBC that this had been the “most difficult year in the history of the aviation industry”. “All airlines are facing the same pressure. Operational changes at British Airways are absolutely necessary to improve the performance of the business,” he said. BA has already achieved 1,900 global job reductions by natural wastage, voluntary redundancies and reduced overtime.

Strike ballot

BA is currently in a battle with unions over changes to jobs and pay. It wants to cut the number of cabin crew staff on its long-haul flights from 15 to 14, with the change coming into effect on 16 November. The company is also proposing a two-year pay freeze. It says the changes are essential to its survival. On Thursday, the Unite union said it would continue with a strike ballot of British Airways cabin staff over the    Continue reading

Growth in UK unemployment slows

BBC NEWS 2009/10/14 10:17:49 GMT

The latest official UK unemployment figure has risen once again, but the rate of increase has slowed. nemployment increased 88,000 to 2.47 million in the three months to August, from the three months to May. The jobless rate rose to 7.9% from 7.6%. The rise in the number of unemployed was the lowest since July 2008, said the Office for National Statistics. The number of people claiming unemployment benefit grew in September by 20,800 to 1.63 million. While the number of people claiming the benefit is now the highest since 1997, the rise compared with the previous month was the least since May 2008. The number of young unemployed people – those aged between 16 and 24 – continued to rise, totaling 946,000 in the three months to August. This compares with 927,000 for the three months to July.

‘Fragile recovery’

Despite fears of another rise in youth unemployment, this actually fell in the three months to August, declining to 946,000 from 947,000 in the three months to July. “Although unemployment isn’t as high today as many feared it would be at the time of the Budget, it remains a serious problem, which is why we must keep increasing support and advice to get people back into jobs,” said Work and Pensions Secretary Yvette Cooper. Paul Kenny, general secretary of the GMB union said the latest figures showed “some tentative signs of a very fragile recovery in the economy”. Investec chief economist Philip Shaw agreed that the numbers suggested “the pace of deterioration in the jobs market is easing quite sharply”. The latest unemployment data comes a week before the ONS releases its first estimate for how the UK economy performed between July and September. Despite some signs of economic improvement, analysts remain unsure as to whether the economy will post growth and therefore exit recession. If the economy contracts again, it will be the first time that the UK has endured six successive quarters without economic expansion.

UK growth falls less than thought

BBC NEWS | 2009/09/29 09:36:32 GMT

The rate of contraction of the UK economy in the three months from April to June has been reduced again. Gross domestic product fell by 0.6% compared with the previous quarter, better than the previous estimate of a 0.7% contraction. The original estimate produced by the Office for National Statistics had indicated a 0.8% decline. The latest improvement came mostly from the manufacturing and construction sectors of the economy. The ONS figures showed manufacturing fell 0.1% in the second quarter, which was half the amount previously estimated. The rate of decline in construction was 0.8% instead of 2.2%, the ONS said.

Recovery hopes

Several other countries, including Germany and Japan, emerged from recession in the second quarter. Chancellor Alistair Darling suggested this week that the UK was approaching the end of its recession. “Germany, France and Japan are showing signs of growth. Many independent forecasters now believe the UK too is coming out of recession,” Mr. Darling said on Monday. “I think it is too early to say so with total confidence. But I stick with my Budget prediction that, as long as we continue to support the economy, recovery will be underway in the UK by the turn of the year,” he said at the Labour Party conference in    Continue reading