Economics
Interest rates The Bank of England’s Monetary Policy Committee split
three ways this month over its interest rate verdict, for a second month in
a row, with one member, Tim Besley, again voting for an immediate rise in
borrowing costs. David Blanchflower, the Bank’s arch-dove, backed a rate cut
for the eleventh month in a row.
The public finances registered a larger than expected net surplus last
month of £4.8 billion, but this was still down from the £6.4 billion of a
year earlier. Worries that overall public borrowing for the 2008-09
financial year will soar far above the Chancellor’s £43 billion forecast
rose as the cumulative total for the year to date rose to £19.1 billion, up
from £10.7 billion this time last year.
Manufacturers’ expectations of future output sagged to a
seven-year low this month, the CBI reported. The gloom came as industry
order books declined for the second month in a row and by more than they had
expected. In better news, the CBI’s gauge of price pressures in industry
fell to plus 31 for August, from an 18-year high of plus 34 in July.
Gross mortgage lending totalled £24.8 billion in July, up by 5 per cent
from June but down by 27 per cent compared with July 2007, figures from the
Council of Mortgage Lenders showed.
Export prospects Worries over UK export prospects were heightened as a
purchasing managers’ survey of exporters from Euler Hermes reported that
overseas sales sank in July for the second month in a row and at the fastest
pace since November 2001.
Banking
& finance
Liberty Financial Consultants The Financial Services Authority, the
City watchdog, has banned Darrell Mark Eaden, who operated the
Barnsley-based Liberty Financial Consultants, from working as a senior
manager after he mishandled customers’ pensions transfers between May 2004
and March 2005. The company is no longer trading.
Travelex, the retail foreign exchange operator, was granted a licence
by the Chinese Government to become China’s first nonbank foreign exchange
provider. The Chinese foreign exchange market is estimated to be worth $9.7
billion (£5.2 billion).
Pension credits From October 6, pensioners will be able to claim
backdated pension credits, housing benefit and council tax benefits only for
the previous three months, rather that the 12 months currently allowed. It
is estimated that the changes will save government £100 million.
Bradford & Bingley A number of banks and fund managers said that
they had increased their shareholdings in Bradford & Bingley as the
investment banks underwriting the mortgage lender’s £400 million rights
issue apportioned shares to the capital-raising’s sub-underwriters.
Lehman BrothersAnother $3 billion worth of writedowns is expected at
Lehman Brothers when the investment bank publishes its third-quarter figures
next month. Analysts believe that the bank will reveal much bigger losses
than previously expected.
Construction
& property
Oak Holdings, The property development and consultancy group, said that
it had signed a development deal with Rotherham Metropolitan Borough Council
for its £390 million property project, which contains the terms for a
250-year lease of the site.
Consumer
goods
PepsiCo, the soft drinks group, and Starbucks, the coffee shop chain,
which already have a deal to sell bottled Frappucinos, will make Tazo
bottled iced tea available in the United States through the PepsiCo bottling
system from mid-October.
Citrus growers Fears of a shortage of oranges were put aside after
Tropical Storm Fay did not cause a significant amount of fruit to drop in
the Florida orange groves, nor was it strong enough to harm the trees,
according to the state’s largest citrus growers’ association.
Engineering
Cobham, the London-listed aerospace and defence company based in
Dorset, said that it would acquire the trade and net assets of GMS, the
American intelligence and surveillance group, from the Allied Defense Group
for $26 million (£14 million).
BAE Systems A new partnering arrangement has been confirmed between the
Ministry of Defence and BAE Systems, the aerospace and defence group,
initially worth £2 billion – with anticipated growth to more than £3 billion
during the next 15 years. It will guarantee secure supplies of ammunition to
British troops.
Tolent, the civil engineering group based in Gateshead, said that
first-half pretax profits were down by 28 per cent to £1.1 million because
of the difficult conditions in the construction sector. Revenues for the
company were £85 million, up by 12 per cent on last year but down by 18 per
cent from the second half of last year.
Avingtrans, the Nottingham-based provider of precision engineering
components to the medical and scientific sectors, has appointed Stephen
McQuillan, from Serco Defence Operations, as chief executive.
Health
Eli Lilly, the American drugs maker, and Boehringer Ingelheim, the
German pharmaceuticals group, said that their jointly developed duloxetine
drug, also known under the brand name Cymbalta, was shown to alleviate
diabetes-related pain over six months. It was the first study that had
tested the painkiller for longer than three months.
Industrials
ArcelorMittal, the world’s biggest steel producer, said that it had
agreed to buy London Mining Brasil, the iron ore miner, for up to $810
million (£436.1 million) to help to improve its self-sufficiency in raw
materials. Arcelor-Mittal said that it was buying the company from the
Oslo-listed London Mining.
Robinson, the maker of packaging for Jaffa Cakes and Fruit Pastilles,
said that it was on course to improve profits, despite pressure on the
business from rising costs. The Chesterfield company has 400 staff. Robinson
has had to cope with a 12 per cent increase in plastic resin costs compared
with a year ago, as well as a jump of more than 50 per cent in electricity
prices.
Leisure
Macau gambling China may act to curtail visits by mainlanders to Macau,
the only place in China were gambling is legal, according to local reports,
which said that the Government may tighten individual visas to Macau to one
visit every six months, from the present limit of one every two months.
Media
Mecom, the European newspaper publisher based in London, reported lower
first-half pretax losses of £20 million, compared with £25 million last
time. Mecom – whose titles include the Berliner Zeitung – said
that it expected a “stable” performance in the second half. It added that
intense competition in Denmark’s newspaper market had prompted a 63 per cent
slump in its operating profits in the country.
Vision Media Group (International), the outdoor media contractor, said
that it had agreed or signed contracts with shopping centre owners that
would more than double the size of its UK network and increase sales by £7
million per year.
NBC Universal, the media group owned by General Electric, has bought
Carnival Films, the British television production company behind Hotel
Bablyon and Harley Street, in a £30 million deal aimed at
bringing high-end UK drama to the United States. The American broadcaster
said that it wanted to double the size of its nonUS business by 2010.
Natural
resources
Empyrean Energy, the oil and gas exploration company, said that its
pilot hole at the Kowalik 1H well, in the Sugarloaf prospect in Texas, had
been logged and plugged back and the logs from the well had shown the
expected correlation to previous wells. Plugging back involves putting
cement in or near the bottom of a well to exclude water, or to allow
production from a geological formation that has already been drilled
through.
Retailing
Marks & Spencer Fresh fears about Marks & Spencer rose after it
emerged that the high street retailer had brought forward a key trading
statement by one month. M&S will report its second-quarter sales figures
on October 2, rather than wait until its half-year results in November.
House of Fraser, the department store chain bought by Baugur, the
Icelandic investor, two years ago has defied the general doom and gloom on
the high street to report a 2.9 per cent jump in first-half sales. It said
that it had continued to increase profits and that underlying pretax
earnings were up by more than 30 per cent from last time.
Cortefiel, the Spanish fashion group behind the Springfield label, is
planning to make its British debut with an exclusive deal with Debenhams.
Concessions will appear at Debenhams’ stores in Oxford Street, London, and
Guildford, Surrey.
Tesco The Advertising Standards Authority (ASA) has criticised Tesco
for running a television promotion which claimed that it was cheaper than
Asda and Morrisons, its rivals. The ASA said the advertisements were based
on discounts and were not representative of the overall shopping picture at
the retailer.
EBay, the online auction house, said that it would streamline its sales
process to make it easier for retailers to list products in bulk at fixed
prices and to reduce fees for fixed-price sellers. EBay said that the
majority of sellers would see their overall fees fall.
Asda The supermarket group, owned by Wal-Mart, the US retail giant, is
cutting the cost of its mobile phone charges and claims that it will be the
cheapest pay-as-you-go operator in the UK as traditional rivals raise their
prices.
Support
services
Business Direct Group, the London-listed support services group based
in Warwickshire, said that it had received expressions of interest from
various parties about a possible sale of all or part of the group. It added
that discussions had yet to reach an advanced stage and there could be no
certainty that they would be successfully concluded.
Northbridge Industrial Services, the industrial equipment rental group,
said that first-half trading had remained strong during the first half to
June 30. The company, based in Burton upon Trent in Staffordshire, added
that its order book and rental inquiries were still at record levels and
trading was ahead of market expectations for the full year.
Technology
Xaar, the Cambridge-based inkjet technology group, reported first-half
pretax profits of £3.8 million, up from £3.1 million last time. but said
that it believed that sales to China would be lower than expected in the
second half and this will have some effect on profitability.
Nintendo Hillcrest Laboratories, the US start-up technology group, has
taken legal action against Nintendo for allegedly violating patents with its
Wii video game system, alleging that the Wii's motion-sensing controller
infringes on three Hillcrest patents related to the technology.
Telecoms
LM Ericsson, the Swedish wireless equipment maker, and
STMicroelectronics, the Swiss computer chip maker, unveiled plans to create
a 50-50 joint venture to make wireless chip sets for mobile handsets.
Motorola, the mobile phone hand-set maker, has unveiled two new phones
that allow users to listen to songs and surf the internet. Motorola has lost
out to Nokia, the market leader, and other rivals since last year.
Transport
BAA The Competition Commission said in a report that it may require
BAA, owned by Ferrovial, of Spain, to sell two of its three London airports
– Heathrow, Gatwick and Stansted – and either Edinburgh or Glasgow.
South Central rail franchise National Express, Stagecoach, Govia — a
joint venture between Go-Ahead and Keolis — and Ned Railways, the Dutch
operator, have been shortlisted in the competition to run the new South
Central rail franchise, which combines the former Southern railway routes
with the Gatwick Express operations. Southern railways is currently run by
Govia.
Aer Lingus Colm Barrington, chief executive of Babcock and Brown, the
aircraft leasing group, will become chairman of Aer Lingus, the Irish
carrier, in September.
Utilities
UK wholesale gas prices increased by nearly 15 per cent after
StatoilHydro, the Norwegian energy group, discovered a leak from a gas
pipeline linking its Kvitebjoern field in the North Sea to the Kollsnes
onshore processing plant. The pipeline, which pumps about 5 per cent of
Norway’s total gas output, could be out of action until 2009.
