Economics

Bank of England Mervyn King, Governor of the Bank of England, turned down a pay rise of £110,000 when he was reappointed. He was entitled to a new pay package of between £375,000 and £400,000, with lower pension benefits, when he started his second five-year term this month, but he declined the new deal, remaining on his present salary of £290,653, figures in the Bank’s annual report show.

House sales The number of house sales completed in June fell to a 30-year low, figures from the Royal Institution of Chartered Surveyors show. Estate agents sold an average of 15 properties each during the three months to the end of June, the lowest level since 1978. The balance of surveyors reporting that prices were falling rather than rising in June remained at a near- record low of 88 per cent, up from 92.2 per cent in May.

Retail sales Like-for-like retail sales fell 0.03 per cent in June, pushing the annual decrease to 0.4 per cent, according to figures from the British Retail Consortium. The fall came despite deep discounts offered by retailers.

Factory gate prices rose by 10 per cent in June, compared with June last year, official figures showed. This was up from a 9.3 per cent rise in May and was the fastest annual pace in at least two decades. The cost of raw materials rose by 2.3 per cent in June, pushing the annual increase to 30.3 per cent.

Eurozone industrial production fell in May at the fastest rate in nearly 16 years. Industrial output dropped by 1.9 per cent in May from April — the steepest monthly decline since December 1992. Despite this, production was still better than the 2.3 per cent slump that economists had forecast.

Banking & finance

Friends Provident The turnaround plan of Friends Provident, the insurance group, suffered another blow when it admitted that it could not attract high enough bids for Pantheon Financial, the financial advisory business that it bought in June 2007. The sale of Pantheon was one of three disposals planned in a turnaround programme announced in January after Friend’s failed £8 billion merger with Resolution.

Alliance & Leicester Santander, the Spanish bank that bought Abbey for £8.5 billion four years ago, will acquire Alliance & Leicester, Britain’s ninth-largest mortgage lender, for 299p per share, or 317p after shareholders keep their 18p interim dividend. Investors will get one share in Santander for every three A&L shares.

Freddie Mac and Fannie Mae, the US mortgage lenders, suffered falls in their shares of 15.5 per cent and 5.3 per cent respectively in midday New York trading after the US Government proposed plans to inject billions of dollars of taxpayers’ money into the companies, if forced to, by buying newly issued stock.

Construction & property

Warner Estate Holdings said that the £1 billion Ashtenne Industrial Fund has been extended until 2016. The fund is managed by Morley and asset-managed by Warner Estate, whose contracts have also been extended. Warner Estate added that it had achieved investor support to introduce annual redemption provisions of 5 per cent of net asset value, beginning in December.

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