The benefits of micro finance

Link to the article: BBC Newsnight

Gavin Esler is joined by the Nobel Peace Prize winner and pioneer of microcredit, Professor Muhammad Yunus, and by the economist Dr Dambisa Moyo author of Dead Aid, to debate the scope and benefits of micro finance, where low interest loans are extended to the world's poorest people.

Brown angry over pension

Link to the article: Channel 4

Last Modified: 27 Feb 2009
By: Victoria Macdonald

A leading Tory MP has called for the Treasury minister Lord Myners to step down amid the growing row over the multi-million pound pension deal awarded to former Royal Bank of Scotland boss Sir Fred Goodwin.

The Prime Minister Gordon Brown called the package 'unjustifiable and unacceptable', again insisting he was ready to take legal action to claw some of it back.

So far, Sir Fred has refused, insisting that ministers had approved it.

Government lawyers are now examining the scope for any legal clawback of Sir Fred's pension. With their eye in particular on whether the RBS Board was fully informed of the discretionary nature of the payment.

But the Conservatives said the blame lay at the doors of both parties and wratched up calls for Lord Myners to resign.

What is toxic debt?

Link to the full news article: Channel 4

Last Modified: 27 Feb 2009
By: Channel 4 News

And why is it such a problem for the UK economy. Channel 4 News online explains all.
Q: What is toxic debt?

A: Like the expression credit crunch, toxic debt is a new phrase born of the economic downturn.

It is used to describe a class of assets that once had value - or were perceived to hold value by banks - but are now worthless; or at least have a reduced value which is hard to establish.

To give an example, it is useful to look at the area from which many economists believe the term toxic debt came from - home loans in the United States to people who could not really afford to pay them back.

The banks hoped these loans, assets, would be secured against the value of the homes, even if people defaulted on their payments.

But once large numbers of people started to default, and a glut of property came onto the market, suddenly the value of houses plummeted. Thus, the assets became toxic.

House prices fall as sales plummet

Link to the article: Channel 4

Last Modified: 27 Feb 2009
By: Channel 4 News

Monthly house prices in England and Wales fall by 0.8 per cent in January, with the average house price 15.1 per cent down on January 2008.

According to the latest figures from Land Registry, the average house price is now £156,753, down almost £28,000 on January 2008.

RBS loss biggest in UK history

Link to the article

Last Modified: 26 Feb 2009
By: James Blake

Chancellor Alistair Darling reveals that he has asked the former CEO of RBS to forego payment of his pension in light of the bank's losses.

Although Sir Fred Goodwin is only 50, he is already benefiting from payments of £650,000 a year.

The Royal Bank of Scotland's loss in 2008 was confirmed this morning at £24.1bn, the biggest in UK corporate history.

The size of its so-called "toxic assets", debts that may never be repaid and are now being taken on by the taxpayer, is £325bn.



Darling on RBS results



Union on Goodwin pension

Rob McGregor of the Unite trade union:

Pension 'obscene'; further bailout

Link to the article: Channel 4

Last Modified: 26 Feb 2009
By: Gary Gibbon

Former RBS chief Sir Fred Goodwin will not be handing back some of his pension deal as Gordon Brown says he will take legal action if necessary.

The news comes as the bank was offered billions more in taxpayers money to keep it afloat.

Sir Fred Goodwin, the man blamed for the downfall of the Royal Bank of Scotland, has pocketed a retirement package of £693,000 per year that critics called "eye-watering" and "obscene".

On the day it revealed the biggest annual loss in British corporate history, more than £24bn, RBS has now promised sweeping changes, including insuring against any further losses.



Interview: Stephen Hester

RBS chief executive Stephen Hester offers his view on the bank's toxic assets.



Interview: Stephen Timms

Stephen Timms, , financial secretary to the treasury, responds to claims that the government had been made aware of, and consequently signed off, Sir Fred's pension plan.

Government launches toxic asset insurance for banks

By Sumeet Desai and Matt Falloon

LONDON (Reuters) - The government launched a scheme on Thursday expected to insure more than 500 billion pounds worth of banks' toxic assets to try to spur lending and avoid having to fully nationalise top lenders.

British retail banks with more than 25 billion pounds in eligible assets will have until March 31 to join the Asset Protection Scheme which will run for a minimum of five years and cover them against huge losses on their riskiest assets.

Link to the full article: Reuters

Pressure for 'light' regulation

Link to the article

Last Modified: 25 Feb 2009
By: Siobhan Kennedy

The FSA chairman Lord Turner told the Treasury select committee there was political pressure to make regulation "a bit more light touch".

He said that affected the Financial Services Authority's scrutiny of banks like Northern Rock and HBOS, admitting regulators had failed to ask enough questions.

Lord Turner said they failed to spot the banking crisis because of problems with the system of regulation.

Blanchflower Says U.K.’s Recession May Intensify

By Brian Swint

Feb. 25 (Bloomberg) -- Bank of England policy maker David Blanchflower said the U.K. recession may intensify “significantly” and it’s too early to gauge when the economy will start to recover.

“This is not the bottom,” he said in an interview at Stirling University in Scotland today, before delivering a speech. “I expect the first quarter to be worse than the fourth, probably significantly worse. I don’t see any signs of green shoots at the moment.”

The British economy shrank the most since 1980 in the final three months of last year as spending by consumers and companies shrivelled, data showed today. Bank of England policy makers reduced the benchmark interest rate to 1 percent this month, the lowest ever, and defeated Blanchflower’s bid to cut it even further to 0.5 percent.

The bank’s forecasts show that “with monetary policy where it is, overly restrictive, we cannot get inflation back to target unless we ease further,” Blanchflower said. “The question is, how far close to zero is the lower bound? I don’t exactly know.”

Link to article: Bloomberg

EU Officials Concerned About Risks of Pound Drop

Feb. 25 (Bloomberg) -- European Union officials are concerned that the pound’s slide to a record low against the euro could destabilize the British economy, according to a document prepared last month by European Commission and EU finance ministry officials.

The pound’s “very rapid” drop “raises questions about the financial stability of the British economy,” said the document, which was prepared ahead of the Feb. 14 Group of Seven meeting in Rome and obtained by Bloomberg News. The currency’s weakness “is a source of concern for the euro area.”

The report contradicts Prime Minister Gordon Brown’s argument on Feb. 13 that a weaker currency helps rather than hinders the economy. With the pound down 18 percent against the euro in the past year, it also underscores investors’ concern about Britain’s fiscal health as the government racks up debt to fund bank bailouts.

Link to full article: Bloomberg

Cadbury Sticks to Forecasts as Candy Defies Recession

By Sarah Shannon

Feb. 25 (Bloomberg) -- Cadbury Plc, the world’s largest confectionery maker, said revenue growth this year will meet the lower end of its forecast and kept its goal for higher profit margins as chocolate and gum sales defy the global recession.

Cadbury rose the most in three months in London trading. Sales growth in 2009 will be “around the lower end” of the company’s 4 to 6 percent target range, the maker of Trident gum and Wispa chocolate bars said today. Cadbury repeated its target for “mid-teen” growth in profit margins by 2011.

Sales have held up as consumers from Asia to the U.K. and Ireland continue to buy “affordable treats,” Chief Executive Officer Todd Stitzer said on call with journalists. Cadbury last year spun off its U.S. soft-drinks division and sold its Australian beverages unit, transforming itself into a dedicated candy maker. Profit from continuing operations more than doubled in 2008, and rose 35 percent on a so-called underlying basis.

“We were impressed with Cadbury’s guidance for 2009 as it showed a confidence in the business we have not really seen out of management in the past,” Sanford Bernstein analyst Andrew Wood said in a report. He rates the stock “outperform.”

Cadbury rose 20 pence, or 3.9 percent, to 528.5 pence in London trading. The stock has fallen 13 percent in 2009, more than competitor Nestle SA’s 7.6 percent drop.

Excluding currency movements, sales in 2008 rose 6 percent to 5.4 billion pounds from 4.7 billion pounds a year earlier.

Increased Margins

“It’s a very good first year as a focused confectionary company,” said Martin Deboo, an analyst at Investec Securities with a “hold” recommendation on the stock. “The fact that margin progression has been achieved despite increased investment in marketing will read well.”

The underlying profit margin widened by 1.8 percentage points to 11.9 percent in fiscal 2008, boosted by the weakness of the pound against currencies in which sales are made.

The rising cost of cocoa, which increased 40 percent last year, has been recovered through price increases, Stitzer said. Price rises will only be “modest” this year if commodity expenses continue to increase, he said.

“We are recession-resilient, not recession-proof,” Stitzer said. “2008 has demonstrated the resilience of the total confectionary model, but we don’t expect to be immune from economic weakness.”

Refinancing Plan

Cadbury said today that it plans to refinance a 1 billion- pound revolving credit line “well in advance” of the March 2010 expiry date. Net debt at the year-end was 1.9 billion pounds, down from 3.2 billion pounds at the end of 2007.

Net income fell 10 percent to 364 million pounds ($529 million), from 405 million pounds in 2007. Profit from continuing operations rose to 370 million pounds from 149 million pounds, missing the 390 million-pound median estimate of seven analysts surveyed by Bloomberg News.

Cadbury agreed to sell its Australian drink business to Asahi Breweries Ltd. for 550 million pounds ($780 million) on Dec. 24. The company spun off its U.S. soft-drinks unit, Dr Pepper Snapple Group Inc., in May.

The candy maker plans to increase the final dividend to 11.1 pence a share from 10.5 pence, raising the payout for the year by 6 percent to 16.4 pence.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

Link to full article: Bloomberg

Dairy Milk sales help Cadbury defy the recession

Cadbury has bucked the economic gloom with a 30% rise in annual profits thanks to strong growth in its main brands, as recession-hit consumers turned to chocolate treats.

In a record year for the company, sales of its biggest brands, Dairy Milk chocolate and Trident gum, grew by 11% while Halls cough drops posted a 9% rise in sales.

The confectionery giant also reported higher profit margins after putting up its prices to offset rising cocoa costs.

"Chocolate and chewing gum are performing well as consumers seek to comfort themselves with brands they are familiar with," said Todd Stitzer, the chief executive.

Link to the full article: Guardian

Spain's Recession: After the Fiesta

Ft.Com Video

A brighter future, but who pays?

Link to the article: Economist

Feb 25th 2009 | WASHINGTON, DC
From Economist.com
Barack Obama, in his address to Congress, asks for sacrifice but skips the details

AS A new president, Barack Obama’s first speech to Congress was not, officially, a state-of-the-union address. That was just as well: its current state is awfully precarious. On Tuesday February 24th, a few hours before he spoke to the Senate and House of Representatives, a survey reported that consumers’ confidence in the future was at its lowest in 40 years of polling.

Mr Obama did not sugar-coat matters. The economic crisis “is the source of sleepless nights,” he said. His budget, to be delivered on Thursday, “reflects the stark reality of what we’ve inherited—a trillion dollar deficit, a financial crisis and a costly recession.”

He promised that beyond this grim present lies a brighter future of plug-in hybrid-energy cars, wind- and solar-powered cities, digital health records, vanquished disease, and the world’s highest college-graduation rates. And, with the inspirational flourish for which he is famous, he insisted that Americans would triumph because there exist “amid the most difficult circumstances”—his voice descending to a throaty growl—“a generosity, a resilience, a decency”.

Such speeches are typically meant to sketch a president’s broad agenda rather than deliver specifics. This one at times felt like an economics class with simple explanations of how credit markets work, and at others like a late-night cable TV commercial: “The average family who refinances today can save nearly $2,000 per year on their mortgage.”

Still, he did give clues to his priorities. Congress, he said, had to act soon to overhaul America’s multiplicity of financial regulators, which struggled to anticipate and cope with the financial crisis. He called for a cap-and-trade system to reduce the growth of greenhouse-gas emissions. He gave warning that the Treasury would probably need more than the $700 billion that Congress has already authorised for propping up the banking system (while studiously avoiding the debate over whether banks should be nationalised in the process). He strongly indicated that there would be more aid for General Motors and Chrysler, which are now contemplating whether to file for bankruptcy to shrink themselves more rapidly. “The nation that invented the automobile cannot walk away from it,” he said.

A theme that permeated the speech was rapidly rising national debt, following the budget-busting $787 billion stimulus that Mr Obama just signed. “Everyone in this chamber—Democrats and Republicans—will have to sacrifice some worthy priorities for which there are no dollars. And that includes me,” Mr Obama said. But he has yet to say what he is prepared to sacrifice. He still plans to expand publicly financed health care, make permanent tax credits to the majority of workers, expand college assistance and invest in alternative energy.

The budget on Thursday is expected to show that Mr Obama inherited a deficit of $1.3 trillion this fiscal year, and raised it to $1.5 trillion with the fiscal stimulus (a post-war high of some 10% of gross domestic product). Mr Obama will promise to get it down to $533 billion or 3% of GDP by fiscal year 2013. Most of that drop will come from the expiration of temporary stimulus measures, the cessation of capital injections and the hoped-for start of economic recovery. The rest will come from withdrawing troops from Iraq, trimming payments to privately-managed Medicare plans, letting George Bush’s tax cuts expire as scheduled in 2010 for the richest 2% of Americans, the taxation of foreign corporate income and the sale of permits for carbon-emissions trading. He promised, as every previous president has, to vet the budget “line by line” for waste; he will find it just as hard as his predecessors to kill programmes with powerful congressional backers.

At a Monday budget summit with congressional leaders and again on Tuesday Mr Obama rightly noted that the cost of old people’s health care and pensions are the country’s biggest long-term fiscal threats, but on neither occasion did he propose how to deal with them. In fairness it is early and stabilising the economy should be Mr Obama’s priority, not long-term fiscal discipline. Premature fiscal tightening could abort a recovery. The summit on Monday and the speech on Tuesday were part of the process of softening up the public for future pain.

Both events also demonstrated that despite being jilted on his quest for some Republican support during the debate on the fiscal stimulus, he is not giving up on his pursuit of bipartisanship. On Tuesday night, at least, Republicans were co-operative, rising in applause almost as often as Democrats.

Virgin Media posts loss of £50m

Link to the article

Last Modified: 25 Feb 2009
Source: ITN

Virgin Media has blamed the consumer downturn for a quarterly loss of £50 million.

It comes after the company slashed the balance sheet value of its home shopping business Sit-up, which trades as bid tv, price-drop tv and speed auction tv.

Group operating losses, following the Sit-up write-down of £54.8 million, were £50.2 million compared with £17.8 million a year earlier, Virgin Media said.

At Virgin Media's core business, net customer additions of 14,800 in the final three months of the year were down from more than 24,000 a year earlier.

It sold 185,000 contracts for broadband, television, telephone or mobile phone services during the period, down from 272,100 in the same period of 2007.

However, the company said it was encouraged by a further increase in average revenues per user - to £42.30 - and a reduction in churn (the rate at which customers leave the service) to 1.2 per cent. It was 1.4 per cent in 2007.

Chief executive Neil Berkett said: "Record numbers of customers are now using Virgin Media's services, despite the current economic environment."

He described the customer response to the recent launch of 50Mb broadband as encouraging and said the company had also strengthened its position in the video-on-demand and catch-up TV markets.

"Over the course of 2008 we received more than half a billion views as on-demand TV came of age," Mr Berkett said.

Virgin said its total number of broadband additions stood at 57,100 in the final quarter of this year, compared with 68,700 in the previous quarter.

It said this reflected slower growth in the market as a whole and its own focus on higher revenue services offering faster broadband speeds.

The company reported 3.68 million broadband customers at the end of the period. It also added 44,500 television customers, leaving it with a total of 3.62 million at the end of the year.

Virgin is reportedly expected to decide later this week whether to sell its broadcast division, which includes 50 per cent of its UKTV joint venture with the BBC.

The content arm, excluding UKTV, generated fourth quarter revenues of £118.8 million, including £84.6 million from Sit-up. However, Virgin said year-on-year revenues and profits at the home shopping operation were lower due to the downturn in retail spending.

Last month, the Sit-up business stopped broadcasting one of its two Freeview channels following an unsuccessful auction process.

© Independent Television News Limited 2009. All rights reserved.

The middle class credit crunch

Link to the article

Last Modified: 24 Feb 2009
By: Nina Teggarty

More4 News reports that those now finding themselves without work include professional people who may once have assumed their careers would be immune.

Unemployment is at its highest level for a decade, and the experts all agree it is likely to continue rising.

Nearly two million people are out of work in Britain as the economic downturn bites ever deeper.

Nina Teggarty reports.

Battle for the Royal Mail's future

Link to the article

Last Modified: 24 Feb 2009
By: Jenny Wivell

Postal workers protest as the government says a partial sell off is the only way to save their pensions.

Postal workers are demonstrating in Westminster this lunchtime against government plans to sell off one third of the Royal Mail.

But the government insists that selling off 30 per cent of the Royal Mail is the only way to protect the pension scheme, which its trustees reportedly say is massively in deficit.

The row has been intensified by the publication of a letter warning staff that they face having their pensions slashed unless the part-privatisation goes ahead.

But with more than 140 Labour MPs set to vote against the plans, Gordon Brown may face the largest rebellion of his premiership over the measure.



Pat McFadden

Samira Ahmed is joined from Westminster by the postal affairs minister, Pat McFadden.

What is "quantitative easing"?

Feb 24 - Senior Reuters economics correspondent Sumeet Desai explains some terms currently being used to describe the current financial crisis.

Understanding economic news used to be much more straightforward but the global financial crisis has changed all that ...now there is toxic debt, sub-prime mortgages, tier 1 capital and ....quantitative easing by central banks. Our senior UK economics correspondent Sumeet Desai explains what it means and what is behind the headlines about "printing more money".

Link to the full article: Reuters

LDV vans 'running out of cash'

Link to the article

Last Modified: 23 Feb 2009
By: James Blake

The department of business says Peter Mandelson will not be involved in negotiations to save a carmaker for the sake of "propriety", James Blake reports.

The LDV vans plant in Birmingham says it is "running out of cash" and has asked the government for a multi-million pound loan.

LDV is owned by the Russian company Gaz, which is run by Mandelson's friend, the Russian Oligarch Oleg Deripaska.

The plant, believed to be the one union leaders were warning last week was under threat, has not produced any cars for two months.

Company bosses have asked for the loan to tide it over while it negotiates a buyout.

Brown calls for honest and open lending

Link to the article

Last Modified: 22 Feb 2009
By: Channel 4 News

Gordon Brown says bankers must be stewards of our money not speculators with it.

Tougher Financial Regulation, Further Tax Cuts and increased Government Spending. Alongside seven other leaders in Berlin today, Gordon Brown claimed Europe was united in its policy response to an extraordinary financial crisis.

The prime minister told high street banks in Britain that he wanted the return of traditional and prudent lending practises and has asked the FSA to curb 100 per cent mortgages. His opponents said he should have done that five years ago when he was warned the loans were too risky.



Interview: Paul Myners

Paul Myners - the Financial Services Secretary responsible for setting up the asset protection scheme - talks to Krishnan Guru-Murthy.

Selling the recession

Link to the article

Last Modified: 22 Feb 2009
By: Krishnan Guru-Murthy

When everyone's feeling nervous about spending, how do advertisers persuade us to part with our cash?

Every week more and more figures confirm that we're in the grips of long and deep recession. We speak to one of the titans of British advertising, Sir Frank Lowe, and take a look at some of the ads that got us reaching into our pockets in previous recessions.

Selling the recession

Link to the article: Channel 4 News

By Krishnan Guru-Murthy

When everyone's feeling nervous about spending, how do advertisers persuade us to part with our cash?

Every week more and more figures confirm that we're in the grips of long and deep recession. We speak to one of the titans of British advertising, Sir Frank Lowe, and take a look at some of the ads that got us reaching into our pockets in previous recessions.

US thanks China for recession aid

Link to article

Last Modified: 21 Feb 2009
By: Faisal Islam

America thanks China for helping it through recession and says human rights concerns come second to economic survival.

America and China will work together to help lead the world recovery, says the secretary of state, Hillary Clinton.

On her first official visit she has downplayed her past criticism over human rights and expressed her appreciation of China's purchasing of American debt.

It is the first time a top American politician has recognised the long running reality of American financial dependence on China.

But as our economics correspondent Faisal Islam reports from Shanghai, the price the Chinese want for further support could cause other problems.

This report contains flashing light.



oining Krishnan Guru-Murthy is Dr Linda Yueh, an expert on globalisation and the Chinese economy.

Dublin: credit crunch protest

link to article

Last Modified: 21 Feb 2009
By: Carl Dinnen

Fury at those who led them to economic disaster brings more than 100,000 people to the streets of Dublin.

They could be the kind of scenes Europe will soon get used to - thousands of people took to the streets of Dublin today to protest at the government's handling of the economic crisis.

They are angry about plans to cut public spending, especially after the bailout out of Irish banks.

Financial crisis is hits eastern EU

Link to article

Latvia's ruling coalition has collapsed and the president has called for talks to to forge a new government to tackle the deepening economic crisis. Latvia has already had an IMF led rescue loan of $9.5bn last year, and a team from the IMF was back as the government fell. After the end of the eastern bloc all the accession countries were helped by their richer neighbours to the West but now they want their money back amidst fears of a widespread collapse that could impact us all. Alex Ritson reports.

Is Britain bust?

Link to the article

Last Modified: 19 Feb 2009
By: Siobhan Kennedy

One and a half trillion pounds, that is how much Britain's national debt could shoot up, thanks to the cost of bailing out the banks.

£1.5tn is equivalent to almost the entire economic output of the UK.

The grim estimate by the National Office of Statistics is far higher than the chancellor's pre-budget forecasts.

The first time the billions poured into the ailing banks has been taken into account.

And the deepening recession is also denting the government's income from tax.

Mandelson frothy over Starbucks

Link to the article

Last Modified: 18 Feb 2009
By: Jane Deith

The coffee chain Starbucks has rowed back from comments made by its chief executive on US television that sparked a row with business secretary Peter Mandelson.

The chairman of Starbucks Howard Schultz was on the business network CNBC to talk up his new instant coffee brand but when he was asked about the economic crisis, he put the blame at Britain's door.

Mandelson was booked for the same show and Schultz's comments had filtered back to him, leaving a bitter taste.

He insisted the UK is not spiralling and claimed Starbucks is in a great deal of trouble.

Mandelson was in New York to dispel gloom about the British economy so when the Guardian's New York correspondent asked him about Howard Schultz's swipe at a drinks party at the British Consul, he said what he really thought.

He swore about the comments and criticised Starbucks again.

The coffee chain's profits are falling. It is closing 300 stores and Peter Mandelson's spokesman says he does not stand by the language, but does stand by the sentiment of his comments.

A Starbucks spokesperson said: "Starbucks has no intention of criticising the economic situation in the UK. The reality of the global economy is that no country is immune to the difficulties. We are all in this together.

Can you clear your credit card?

Link to the article

Last Modified: 18 Feb 2009
By: Bridgid Nzekwu

Some law firms claim they can write off your debts by exploiting loopholes in credit legislation. But is it too good to be true?

The Ministry of Justice has told claims management companies to stop their misleading marketing campaigns, or it will take action.

Krishnan Guru-Murthy spoke to our money reporter, Bridgid Nzekwu, to Kevin Rousell, head of claims management regulation at the justice ministry, and to John Rattigan of claims management company Cartel Client Review.

Why are food prices still so high?

Link to the article

Last Modified: 17 Feb 2009
By: James Blake

A key measure of inflation hits its lowest level for nearly half a century. So why is the weekly shopping so expensive?

Economists had predicted a sharp drop in inflation, but the official figures revealed a surprisingly small fall.

On the government's preferred measure of inflation, the consumer price index, prices rose 3 per cent in January - that was just a small drop from December's rise of 3.1 per cent.

And the retail prices index, which includes housing costs, fell from 0.9 per cent to 0.1 per cent, taking Britain to the brink of deflation.

RBS: no rewards for failure

Link to the article

Last Modified: 17 Feb 2009
By: Gary Gibbon

RBS cash bonuses are down 90 per cent on last year, to £175m, putting the pressure on Lloyds to follow suit. Gary Gibbon reports.

The Royal Bank of Scotland, which is now largely owned by the government, announced the cut shortly after the chancellor, Alistair Darling, insisted bonuses would be slashed to "the absolute legal minimum".

Mr Darling said he wanted to see a cultural change within the bank, although the Tories called it "too little, too late".

It will increase the pressure on Lloyds, the other bank bailed out by the taxpayer, to follow suit.

How will your spending change?

Link to the article

Last Modified: 16 Feb 2009
By: Channel 4 News

Buisness leaders predict that household spending will fall, unemployment will rise to three million, and wage increases will shrink as the economy falls deeper into recession.

In its latest dire warning on the economy, the Confederation of British Industry (CBI) - which represents 240,000 firms in the UK - said the economy will shrink by 3.3 per cent in 2009, compared with its November forecast of a 1.7 per cent contraction.

As part of its forecasts, the CBI also says that government will have to borrow almost £100bn more than previously forecast as it tries to bring a deeper-than-expected UK recession under control.

See below for the CBI's predictions of how the recession will affect your money:



* Household will spend less with consumption falling by 2.7 per cent in 2009 and a further 0.2 per cent in 2010, compared to a 1.7 per cent increase in spending in 2008.

* Household will save more with the ratio of income saved increasing from 0.8 per cent in 2008 to 2.8 per cent in 2009 and 4.5 per cent in 2010.

* Inflation is predicted to fall with the Consumer Price Index predicted to be 1.0 per cent in 2009 compared to 3.6 per cent in 2008. The Retail Price Index is expected to fall to -2.9 per cent in 2009 compared with +4.0 per cent in 2008, which may affect pensions and wage negotiations.

* Unemployment will increase to 2.59 million in 2009 and hitting 3.00 million people in 2010.

* Average earnings will increase at a smaller rate, with earning including bonuses increasing by 1.7 per cent in 2009 compared to 3.5 per cent in 2008.

Mini workers turn on union bosses

Link to the article

Last Modified: 16 Feb 2009
By: Darshna Soni

Workers at Mini sacked with just one hour's notice, many with no pay-off, were so angry they pelted union leaders with fruit, accusing them of betrayal.

Eight hundred and fifty agency staff were dismissed at the end of their shift at the plant in Cowley, which is cutting production to just five days a week.

BMW has built the Mini into a hugely successful brand, especially overseas, but it has not been immune from the crisis across the industry, with a 35 per cent slump in sales last month.

Can the Colonel save our jobs?

Link to the article

Last Modified: 16 Feb 2009
By: Helene Cacace

More4 News finds it is not all doom and gloom in the job market as KFC says it is creating up to 9,000 jobs.

It would seem to be the one area of the economy that is expanding like a junk food addict's waistline.

But if fast food is our only growth industry, where does that leave the government's drive for healthy eating?

Helene Cacace reports.

Author attacks 2012 Olympic legacy

Link to the article



Last Modified: 15 Feb 2009
By: Channel 4 News

Hackney resident and celebrated author Iain Sinclair reports for Channel 4 News on how developments for the 2012 Olympic Games are destroying east London.

His new book, Hackney, That Rose-Red Empire, comes out this week but has already caused controversy.

Sinclair was banned from launching the book, which explores Hackney's past, in a local library.

The book, and his report for Channel 4 News, also looks to the future, namely the 2012 Games - and Sinclair is not a fan.

He says it will destroy the history and community of East London.

However Olympics minister Tessa Jowell has come out fighting against Sinclair's criticisms, saying that 75p in every £1 spent on the Olympics is spent on regeneration.

Cost of helping jobless spirals as Labour's popularity declines

Link to the article

Last Modified: 14 Feb 2009
By: Gary Gibbon

Extra spending to help the unemployed does not appear to be making the Labour government any more popular. Gary Gibbon reports.

But all this spending is not making the government any more popular, as the impact of job losses is felt most in Labour heartlands like Sheffield.

A poll for tomorrow's Independent on Sunday puts Labour on just 25 per cent, their lowest showing yet.

That is despite new schemes like the Flexible New Deal, using private sector firms to help the long term unemployed find work.

It was designed to help cities like Sheffield, blighted by job losses in the 1980s.

Our political editor Gary Gibbon went to find out whether it is making a difference.

New low for EU economy

Link to the article

New official data from Eurostat indicates the Eurozone economy shrank by 1.5% in the previous quarter and 1.2% on the year.

John Moylan has been looking at the figures.

Interview: Lord Turnbull

Link to the article

Last Modified: 13 Feb 2009
By: Krishnan Guru-Murthy

Krishnan Guru-Murthy interviews Lord Andrew Turnbull, former head of the civil service about lavish hospitality invitations received by civil servants; and also about his view of the current banking crisis.



"We used to be criticised for being introverted and out of touch. Nowadays we have tried to develop people who are outward facing, listening, explaining - in contact with their constituencies but not captured. The business constituency is obviously one of those, if you are going to be touch with them - they make extensive use of hospitality.

"You have a choice. You can either stay in your cell and pray, or you can go out and join them.

"You need to think clearly. It must not be too lavish.

"A good starting point is to stay away from private yachts."

Lord Turnbull on the banking crisis



"You're making the mistake of starting in the middle of the story. The perception that it started with greedy, wrongly incentivised bankers. This story, as Adair Turner's excellent economy lecture tells you, starts way, way back.

"It starts with the global imbalances between the US and China; it starts with inflation targeting which took no account of asset prices and it goes right back to the Clinton administration's active promotion of sub-prime lending. All that happens before you get to the banking story.

"Now what it is, is a collective failure that all sorts of people - the regulator, the bankers, the economic policy makers. They believed in a particular view of the world and the things which should have acted as restraints in all this - the regulators, rating agencies, accounting, corporate governments - none of that worked, because of the power of consensus.

"It was a bit like Y2K. Why did we all believe Y2K? We all went along with each other. A very strong collective belief came about.

"The best source of this is Alan Greenspan. He had a view that banks would not be so foolish as to destroy themselves. But then he said in a rather plaintive sense, 'I'm terribly sorry but that was not right.'

"And that was the collective view that things were all going well. There was a sense that a bubble was developing (although Greenspan said 'you cannot prick bubbles you can only pick up the mess'). But no-one believed that it was a bubble of the proportions that we now have.

"And so to focus solely on the banking centres is a pretty inadequate discussion.

"Go and read Adair Turner's lecture, go and read the Group of Thirty report, chaired by Paul Volcker and then you will get a much wider appreciation of this whole story."

Gordon Brown's MP grilling

Link to article

MPs question Brown over banking crisis

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Last Modified: 12 Feb 2009
By: James Blake

As MPs question the prime minister over the banking crisis, he appears to blame the financial regulator for its oversight of HBOS.

The prime minister has told MPs that the bank regulator, the Financial Services Authority, had given HBOS a clean bill of health for its financial strategy before the appointment of its former chief executive to the regulator.

Sir James Crosby yesterday resigned as deputy chairman of the FSA after it emerged that a former employee had claimed he had been sacked by Sir James for warning that Halifax Bank of Scotland was taking too many risks.

Called to give evidence to the cross-party liaison select committee of MPs this morning, Gordon Brown said the treasury had not been aware of the investigation and that Sir James's appointment to the FSA had been recommended by an independent panel.

Bankers 'sorry' but not 'responsible'

Link to article at Channel 4

Last Modified: 10 Feb 2009
By: James Blake

Four of the men at the centre of the banking crisis deny being "personally responsible" for what happened and say they have all lost money.

The four bankers in the firing line were Lord Stevenson of Coddenham, the former chairman of Halifax Bank of Scotland, Andy Hornby, the bank's former chief executive, as well as Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland and Sir Tom McKillop the former chairman.

It was the "s-word" that everyone wanted and expected, as bank bosses finally said "sorry" in public this morning for the chaos that led to the massive taxpayer bailout.

The apologies came as they faced hostile questioning from MPs on the treasury select committee.

Interview: Barclays CEO John Varley

Link to the article at Channel 4

Last Modified: 09 Feb 2009
By: Faisal Islam

Barclays group chief executive John Varley talks to Faisal Islam about the decision for executive directors not to be paid bonuses for 2008.

He called for "adjustments" to be made to "compensation structures in the industry", stating that "willingness to take risks was definitely fuelled by the banks".

Barclays Bank says no bonuses for senior executives

Link to the article at Channel 4

Last Modified: 09 Feb 2009
By: James Blake, Faisal Islam

As Barclays announces a £6bn profit for 2008, bank chief executive John Varley tells Channel 4 News he is already cutting back on reward payouts.

Barclays Bank has said it will not give bonuses to its senior executives this year, despite making a profit last year.

Britain's fourth biggest bank announced it made £6bn last year, but that was well down on the year before. And the chief executive, John Varley, said none of its directors would be given a bonus.

Treasury Minister Yvette Cooper said bankers had a "moral responsibility" to forego their bonuses this year, as pressure grows on the government to do more to curb executive pay.

Rates cut amid warning of a 'severe and synchronised' downturn

Link to the article at Channel 4

Last Modified: 05 Feb 2009
By: Faisal Islam

The Bank of England base rate is cut by half a per cent to stand at just 1 per cent, the lowest level ever, as Faisal Islam reports.

The Bank of England today warned of a "severe and synchronised" economic downturn spreading across the world.

But with rates now heading towards zero, attention is switching to what else the bank can do to keep boosting the economy.

EU protectionism row escalates

Feb 10 - The Czech presidency of the European Union calls an emergency summit, accusing some members of breaking bloc rules in efforts to shield their economies from recession.

A 'Buy American' provision in a U.S. economic stimulus package adds to concern over the prospect of a rising tide of protectionism.

Peter Parker reports.

Link to the article: Reuters

Brown talks tough on bonus culture, but no ban

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Last Modified: 09 Feb 2009
By: Faisal Islam

Prime Minister Gordon Brown slams the city's bonus culture, but stops short of actually banning them.

They're economically and politically outrageous, but they're not going to be banned.

Gordon Brown said Britain was leading the way in sweeping aside the city's bonus culture, insisting there would be no rewards for failure.

But despite the harsh rhetoric there are no concrete promises, unlike the United States which has just slammed a mandatory cap on top bankers' future pay.

The head of Barclays Bank told Channel 4 News bonuses were part of the problem, but he's not getting rid of them altogether.

Interest rates hit another all-time low

Link to article at Channel 4

Last Modified: 05 Feb 2009
By: Channel 4 News, Faisal Islam

Interest rates fall to 1 per cent as the Bank of England announces a cut for the fifth consecutive month.

The decision by the Monetary Policy Committee (MPC) reduces interest rates to another historic low as the bank grapples with the deteriorating UK economy.


The announcement is the first decision from the Bank of England's policy makers since the UK's slide into recession was officially confirmed and an International Monetary Fund (IMF) forecast that Britain would suffer worse than all other advanced nations in the worst global slump since the Second World War.

The dramatic reductions from 5 per cent last October have been good news for most borrowers with tracker mortgages but dealt a savage blow to savers.

A depressing slipup, or economical with the truth?

Link to the article at Channel 4

Last Modified: 04 Feb 2009
By: Faisal Islam

Gordon Brown talks about taking action to bring the world out of depression, a word seized on by the Conservatives and a slip that may prove costly.

Mr Brown's spokesman said afterwards that he didn't think the world was in depression, despite what he said during Prime Minister's questions today.

But after the Prime Minister's warnings about the dangers of talking down the British economy, his use of the dreaded "D" word is bound to come back to haunt him. Here's our economics correspondent Faisal Islam.

Iceland's Kaupthing bank not 'fit and proper', FSA told

Link to the article at Channel 4

Last Modified: 03 Feb 2009
By: Siobhan Kennedy

The FSA is accused of failing to act, or listen to the alarm bells, before Kaupthing went bust, taking the savings of millions of British investors with it.

The financial watchdog was warned that the Icelandic bank Kaupthing was not "fit and proper" to run the British bank it took over, MPs heard today.

As Channel 4 News revealed yesterday, the head of Singer & Friedlander, Tony Shearer, told the treasury select committee he had become concerned when he saw Kaupthing's accounts and met the people in charge.

FSA failed to heed doubts about Kaupthing

Link to article at Channel 4

Last Modified: 02 Feb 2009
By: Siobhan Kennedy

Channel 4 News learns that when Kaupthing bought British bank Singer and Friedlander, its chief executive told the regulators the deal should not go through.

He will share his concerns with a committee of MPs tomorrow, but his intervention has raised fresh questions about whether regulation of the banks was tough enough.

The collapse of Iceland's banks last autumn created uncertainty for millions of UK savers who had billions of pounds tied up in their British subsidiaries.

Siobhan Kennedy reports.


FSA statement

"It would be our usual practice to talk to the directors of a financial institution going through a 'change of control' i.e. when an authorised firm is acquired by another.

"In such circumstances the FSA always conducts 'change of control' checks and only approves the change if we are satisfied our requirements will be met.

"It is not our practice to discuss individual firms but, in this instance, we do not believe the statement made to the Treasury Select Committee represents an accurate summary of the events."

Interview: David Green, ex-global policy head, FSA

Mandelson: no policy of exclusion

Link to article at Channel 4

Last Modified: 02 Feb 2009
By: Nick Martin

Lord Mandelson says it is important to respect Europe's principle of free movement.

There is no policy of discrimination or exclusion, the business secretary insisted, as wildcat strikes against the use of foreign workers spread across the country.

Davos consensus: blame the banks

Link to the article at Channel 4

Last Modified: 01 Feb 2009
By: Faisal Islam

The five-day World Economic Forum in Davos ends today with no clear consensus on the best way out of the current economic crisis.

But the 2,000 business and political leaders, who gathered at the Swiss resort, did agree on one thing - their banking colleagues got everyone into the mess with their extravagant lending policies.

But are the corporate masters of the universe the right people with the right ideas to get the world out of trouble.

What lies ahead for budget airlines?

Link to the article at Channel 4

Last Modified: 31 Jan 2009
By: Alex Thomson

Alex Thompson speaks to Sir Stelios and asks what the future is likely to bring to budget airlines as the world's oil runs out.

Obama slams Wall Street

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Last Modified: 31 Jan 2009
By: Faisal Islam

Laying the ground for a new financial rescue plan next week President Obama has promised to provide billions of dollars to businesses to create jobs and lower mortgage costs.

But in his weekly televised address he also railed against the "arrogance and greed" of Wall Street bankers after revelations they'd paid themselves a total of $18bn in 2008.

Meanwhile, Gordon Brown, has urged Britons to remain optimistic in the face of economic decline, during an interview at the World Economic Forum.

Business confidence plunges

Link to article at Channel 4

Last Modified: 31 Jan 2009
By: Carl Dinnen

Gordon Brown may have been insisting in Davos he was confident about Britain's economic future - but is anyone else?

PY Gerbeau, a French businessman and eternal optimist, tells Channel 4 News it's in the British national character to always see the glass as half empty. But if Britain badly needs to regain some confidence where can we get it?