Economics
Economic growth The Organisation for Economic Co-operation and
Development (OECD) gave warning about risks to Britain’s economic growth. It
said that the Bank of England may have to cut interest rates as the impact
of the financial market upheavals combines with the toll on the housing
market and the high street from five interest rate rises. It also warned the
Government that reduced profitability in the City, caused by the market
disruptions, could hit tax revenues and trigger increases in the Treasury’s
borrowing totals.
House prices rose by 0.7 per cent during September, the Nationwide
Building Society reported. However, the underlying trend in house prices
continued to weaken, with prices up by 1.6 per cent over the third quarter
as a whole, against a 2.2 per cent rise in the second quarter and a 2 per
cent rise in the three months to the end of August.
Mortgage lending The British Bankers’ Association (BBA) said net
mortgage lending, after stripping out repayments and redemptions, rose by
£6.1 billion in August, up from £5.8 billion in July. However, mortgage
approvals, an indicator of future market trends, totalled only 61,000, down
14 per cent from a year earlier.
Net borrowing by consumers on credit cards fell in August for the sixth
month in succession, by £102 million, BBA figures showed, as borrowers paid
down debts, while borrowing through personal loans and overdrafts was 11 per
cent lower than a year ago.
High street sales The CBI’s snapshot of high street sales showed that a
net balance of plus 12 per cent of retailers reported higher sales in
September, down from plus 15 per cent in August.
Services sector Official estimates showed that services sector output
rose by 0.3 per cent in July, for the second month in a row, to stand 4.3
per cent up on last year.
Inflation expectations over the coming year rose in September to their
highest level since the start of the year, a YouGov Citigroup survey showed.
The median expectation of inflation rose to 2.6 per cent, from 2.4 per cent
in August.
Economic productivity, measured by output per worker, rose by 2.7 per
cent in the year to the second quarter, from 2.8 per cent in the previous
quarter.
German inflation rose in September, an initial estimated showed, with
the annual rate of consumer price increases rising to 2.7 per cent, from 2
per cent in August to the highest in almost six years.
US business investment helped America’s economy to grow at a revised
3.8 per cent annualised rate in the second quarter, slightly less than the 4
per cent previously reported, because of a stronger appetite for foreign
goods and services, which boosted imports.
US sales of new homes fell in August to their lowest level in seven
years, dropping by 8.3 per cent, while the average sales price fell by 7.5
per cent from a year earlier — the biggest drop in percentage terms in
nearly 37 years.
Banking
& finance
Britannia Building Society reported an 8 per cent rise in first-half
pre-tax profits to £81.7 million, from £75.8 million last time.
The UK India Business Council has been told to improve opportunities
for British companies in India, which accounts for just 1 per cent of UK
exports.
Benfield, the FTSE 250 reinsurer has been on the receiving end of a
£700 million approach from Goldman Sachs’s private equity arm, it emerged
last night.
Lloyd’s of London reported half- year pre-tax profits of £1.8
billion, up from £1.3 billion last year, as strong premium increases offset
losses on bad weather.
Royal Bank of Scotland has effectively completed funding its part in
the takeover of ABN Amro, raising £4.2 billion.
The British Bankers’ Association has told the Government that the
debacle of Northern Rock, the mortgage lender, has harmed the UK as an
international banking centre.
Construction
& property
Erinaceous, the quoted property services group, revealed that it had
made first-half pre-tax losses of £3.1 million, compared with profits of £12
million last time.
Ballymore, the privately owned property developer, is to build a
60-storey housing block on land by Manchester Picadilly station.
Farmland prices rose by 22.6 per cent in the first half, lifting the
average price per hectare to £8,850, according to the Royal Institution of
Chartered Surveyors.
Consumer
goods
Robert Wiseman Dairies, the milk group, revealed that the Office of
Fair Trading had first contacted it more than three years ago as part of its
inquiry into dairy produce price-fixing. Wiseman, which added that it would
take some time to respond to the allegations, also confirmed that its sales
and performance have been in line with expectations.
SSL International, the maker of Durex condoms and Scholl footcare
products, said it was planning to close its Spanish condom factory and its
UK technical centre in Cambridge, and would transfer the work to Thailand
and India.
Scottish & Newcastle, Britain’s biggest brewer, has chosen John
Dunsmore, head of its Western Europe division, to suceed Tony Froggatt as
chief executive from the beginning of November.
Engineering
Rolls-Royce has opted to build its new testing facility near Berlin
despite Government pleas to have the site in Britain. A German state
government offered £10.8 million of financial support to the British
engineer’s project, about £3 million more than a package thought to have
been put together by Derby.
BMW, the German carmaker, released its long-awaited long-term strategy,
predicting that it would sell “clearly more than two million vehicles” a
year by 2020.
Health
Astra Tech, the maker of dental implants and a subsidiary of
Astra-Zeneca, the drugs maker, has purchased Atlantis Components, the US
dental company, for $71 million (£35.2 million) in a cash deal.
Industrials
Arcelor Mittal, the world’s biggest steelmaker, said that it hopes to
start building a 12 million tonne steel plant in the eastern Indian state of
Orissa next year.
Leisure
Golden Tulip Hospitality, the Dutch hotel company, said that it
is to scrap its franchise model in the UK following the loss of its British
hotels to Whitbread’s Premier Inn and will invest £50 million in acquiring
assets.
Mitchells & Butlers, the pubs group, reported a 2.6 per cent rise
in like-for-like sales in the 18 weeks to mid-September and confirmed that
it would be interested in Punch Taverns’s managed pub division if it became
available.
Millennium & Copthorne Hotels announced a joint venture between its
New Zealand subsidiary and a Chinese property developer to look at
investment opportunities in China.
Gourmet Holdings, owner of the Richoux café chain, is to develop a
patisserie chain after acquiring Amato, in London’s Old Compton Street, for
£675,000 plus share options worth £150,000.
Media
Entertainment Rights, owner of the Postman Pat, Basil Brush and Rupert
Bear brands, said that its acquisition of Casper the Friendly Ghost and
Classic Media had lifted its programming portfolio. It also reported that
its half-year underlying losses had widened to £3.2 million, from £2.2
million last year.
Natural
resources
Circle Oil, the oil and gas exploration and development group, said its
first-half pre-tax loss had eased to $1.2 million, compared with a loss of
$1.9 million last time.
Retailing
Jessops’ chief executive has resigned from the camera retailer
after only a year in the job and a number of profit warnings. Chris Langley,
who joined the chain in 2005 as chief operating officer and became chief
executive in May last year, is leaving to “pursue other business interests”,
but will remain as an adviser to the group until November.
Support
services
Foster + Partners, the architectural group, has appointed Lord Browne
of Madingley, the former BP boss, to the board as senior non-executive
director.
Compass Group, the contract caterer, said full-year results would be
“at the higher end of market expectations” because of comparable revenue
growth of 5 per cent.
Technology
Microsoft, the US software giant, said its new video game Halo 3 had
generated sales of more than $170 million (£84 million) within 24 hours of
release, a record for first-day sales of an entertainment product.
Google, the US internet search engine, said it will increase its staff
by a third to drive expansion and enlarge its research and development
operations in Europe.
Telecoms
China Mobile, the world’s largest wireless carrier, led a rally in
Chinese telecoms stocks with a near-7 per cent surge. China Unicom, its
smaller rival, gained as much as 5.5 per cent in the morning, while China
Telecom, the fixed-line operator, climbed almost 8 per cent.
Transport
American Airlines Iceland’s FL Group has written to the board of AMR,
parent company of American Airlines, and urged it to consider spinning off
its frequent-flyer programme.
British Airways plans to spend $8.2 billion (£4.1 billion) on new
aircraft before the London Olympics in 2012.
Utilities
FPL Group, the American power company, said that it will invest $2.4
billion (£1.2 billion) to increase its solar energy output and reduce carbon
dioxide emissions.
