Finance Matters

• 24Sep

  ‘Shoes not booze’ sell online, though overall spending is down

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  From The BBC:

  UK online spending fell by 10% in August compared with July with alcohol sales down but footwear purchases up, according to a survey.Total online sales dropped to £3.8bn, although this was still 16% higher than August 2008, according to retail research group IMRG Capgemini. Sales of shoes rose by 3% as parents bought back-to-school footwear for their children. However, online spending on beer, wine and lingerie has dropped in 2009. SalesNearly all sectors showed a dip in online spending in August compared with the previous month. Alcohol sales have fallen year-on-year in five of the past six months, and annual growth of lingerie sales was negative in each of the past six months. IMRG said that this was evidence of consumers cutting back on luxuries during the recession. There was a slight rise in month-on-month spending on gifts, electrical items and shoes, the report found. Tina Spooner, of IMRG, said that the August dip was a seasonal trend which had also been seen in recent ye…

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• 23Sep

  FSA argues for ‘radical change’

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  From The BBC:

  “Radical change” is needed in the financial sector in order to restore public trust, according to the head of the City watchdog.Banks must focus on their “essential social and economic functions”, the Financial Services Authority (FSA) head Lord Turner said on Tuesday night. He also told the BBC the FSA had got regulations on the amount of money banks keep in reserve “quite wrong”. Excessive risk taking by banks was seen as a factor in the economic downturn. Banks must focus on restoring the public’s trust in their role, despite signs of economic improvement, Lord Turner said. He argued that the industry should consider carefully any business that fell outside its core roles, saying that bank bosses should walk away from activities that had no “social benefit”. Lord Turner told the BBC that banks should “rededicate and commit themselves” to their traditional role of deposit-taking and lending to individuals and businesses.
  He said they “had fooled themselves into thinking that continu…

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• 23Sep

  Charitable giving hit by downturn

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  From The BBC:

  The amount of money donated to good causes fell by 11% in the year to April as the downturn hit charities, a new survey suggests.Estimated total donations fell from £11.2bn in 2007-8 to £9.9bn. Although half of all adults in the UK donated to charitable causes in 2008-9, the average amount they gave fell by £1 a month to £10 per month. The figures came from the Charities Aid Foundation and the National Council for Voluntary Organisations. Medical research is the most popular sector for donations, the report said. However, religious charities take the largest share of the total amount given. High earnersThe report, based on a survey of 3,316 people, found that the drop in giving was due in part to the fall in large donations made by high-earning professionals. Most people give cash donations, although larger amounts tend to be given via direct debit. “Even though there are welcome signs the recession is technically ending, the economic downturn is still severely…

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• 23Sep

  EU unveils new ‘super-regulators’

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  From The BBC:

  The European Union (EU) has unveiled plans for new “super-regulators” across the banking sectors in Europe.The proposals include a European Systemic Risk Board to warn of future risks, and watchdogs over banks and insurers across the EU’s 27 nations. The EU said it was necessary to prevent another financial crisis, and even suggested deeper reforms. “The European system can also inspire a global one and we will argue for that in Pittsburgh,” it said. Landmark proposalsLeaders of the G20 are meeting in Pittsburgh later this week. The reforms, unveiled by European Commission President Jose Manuel Barroso, are the first attempts to create supra-national regulators that can overrule local watchdogs. As well as a new systemic risk board, which would be staffed by the European Central Bank and based in Frankfurt, the EU has proposed three new bodies to watch banks, insurers and exchanges. “Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when government…

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• 23Sep

  UK economy ‘faces tough recovery’

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  From The BBC:

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  UK economy ‘faces tough recovery’
  The UK economy has begun to emerge from recession but growth next year will be fragile, a forecast by business group the CBI has warned.It predicts UK GDP will grow by 0.3% between July and September from the previous three months, and will rise by 0.4% between October and December. However, it said a lack of demand meant it was hard to foresee rapid growth. January’s increase in VAT would dampen spending, it warned, while firms would be “cautious” in raising output.
  Growth in the three months to the end of September would follow five consecutive quarters of contraction which has seen UK GDP fall by a cumulative 5.5%. CBI director-general Richard Lambert said that the short-term outlook for the UK was “brightening” thanks to the recovering global economy, the weak pound and the government pumping more money into the economy through its quantitative easing programme. There was also likely…

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• 23Sep

  Mortgage approvals up 81% in year

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  From The BBC:

  The number of mortgages approved by the major banks in August was up 81% from the same month a year ago when the housing market was in a slump.The British Bankers’ Association (BBA) said the annual rise was exaggerated by the low lending levels of a year ago. Approvals for house purchases in August dipped slightly compared with July after seven months of month-on-month rises, the figures show. The BBA said major banks had been more active than other lenders recently. However, the number of homes being put up for sale was low. Consumers cautiousThere were 38,095 mortgages approved for house purchases in August by the major banks, compared with 21,001 in August last year.
  A year ago the mortgage market was at an “all-time low”, according to David Dooks, the BBA’s statistics director. However, the figure actually fell even further in November to 18,330. He said that the annual change was “difficult to understand”, but was an “exaggeration” as a result of the combination of the low number…

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• 23Sep

  UK ‘blocking tough finance rules’

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  From The BBC:

  German Finance Minister Peer Steinbrueck has accused the UK of blocking tougher financial rules ahead of the G20 summit.”There clearly is a lobby in London that wants to defend its competitive advantage tooth and claw,” Mr Steinbrueck told Stern magazine. Germany and France have led calls for more restrictions on banks, which have been resisted by the US and UK. But the UK Treasury told the BBC the UK was not blocking more regulation. The leaders of the richest 20 nations will discuss reforming the global economy when they meet in Pittsburgh later this week. London oppositionThe UK has “particular difficulties” regulating hedge funds “to put it politely”, Mr Steinbrueck told the weekly German news magazine.
  He said the financial sector accounted for 15% of the UK’s gross domestic product (GDP) in contrast to just 6% in Germany. However, a spokesman for the UK Treasury told the BBC the finance sector accounted for 8% of UK GDP, not 15%. Despite the debates leading up to the summit, Mr S…

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• 23Sep

  MPC unanimous on rates decision

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  From The BBC:

  The Bank of England’s monetary policy committee was unanimous in their decision to keep rates on hold at 0.5% this month.They were also in agreement not to extend further the Bank’s programme of pumping money into the economy. But members who in August called for a bigger injection of money than the £25bn decided, said the Bank may still need to extend the programme further. This increased the amount pumped into the economy to £175bn from £150bn. At that meeting in August, three members, including the Bank Governor Mervyn King, had voted for a bigger injection of £50bn. The Bank publishes the minutes of its meetings on monetary policy two weeks after the event….

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• 23Sep

  Dollar falls to one-year euro low

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  From The BBC:

  The US dollar has fallen to a one-year low against the euro ahead of the G20 meeting of world leaders.The dollar dropped to $1.4840 against the euro and it also fell against a basket of other currencies. Traders have been switching to other currencies as signs of economic recovery have begun to emerge, with many countries having exited recession. New Zealand has became the latest nation to end its recession, joining the likes of Germany, France and Japan. The New Zealand dollar rose to its highest level against the US currency for 13 months, after the country unexpectedly pulled out of recession in the second quarter of the year. The New Zealand dollar rose by more than a cent to $0.7315, its highest since early August 2008. Against the Japanese currency, the dollar fell to 90.90 yen from 91.24 yen, while the British pound rose to $1.6366 from $1.6352. The low yield status of the US dollar has also prompted speculators to sell it ahead of a Federal Reserve decision on interest rates du…

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• 23Sep

  Germany facing ‘muted’ recovery

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  From The BBC:

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  Germany faces ‘bumpy’ recovery
  Germany’s economy has stopped its “free fall” but any recovery will be “muted” and take a long time, the head of the country’s central bank has said.But Bundesbank chief Axel Weber told the BBC that the eventual phasing out of stimulus measures would see unemployment rise and consumption fall. “It does not endanger the recovery but it makes it more protracted,” he said. The car scrappage scheme and workers being put on fewer hours have helped keep German jobless levels steady. Along with France, Germany emerged from recession after its GDP grew by 0.3% between April and June. “Recovery will be protracted and relatively muted but relatively positive,” Mr Weber said. “All we are talking about is recovery from a low level.” Bank bonusesAt the G20 meeting in Pittsburgh this week, world leaders will discuss when and how government stimulus packages should be withdrawn. Mr Weber said that the Europ…

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