Lower borrowing fails to lift Treasury gloom

By Angela Monaghan

Published: 11:42PM GMT 13 Mar 2010

Figures published on Thursday by the Office for National Statistics are
expected to show that the Government borrowed £14bn in February, £5bn more
than the £9bn it borrowed in the same month last year.

However, despite the higher level, economists said it would leave the
Chancellor well-positioned to undershoot his full-year borrowing projection
of £178bn, announced in the 2009 pre-Budget report (PBR) in December.

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Bank keeps rates at record low as house prices plunge 1.5%

By
Daily Mail Reporter
Last updated at 1:46 PM on 04th March 2010

House prices fell for the first time in eight months during February as the market was hit by bad weather and the end of stamp duty holiday, new figures showed today.
In a further sign of the slowdown in the housing market the average cost of a home fell by 1.5 per cent during the month to stand at £166,857, according to Halifax.The fall came as the Bank of England’s Monetary Policy Committee (MPC) held interest rates today at their 0.5 per cent
all-time low.The figures from Halifax follow a similar Nationwide report last week, and will fuel fears that prices are about to plunge again, with many economists expecting further falls this year.
Expensive houses on an exclusive street in Knightsbridge, London. Recent figures have shown a mini-boom in the South while prices have fallen in the NorthThe group blamed the slide on a fall in activity caused by the bad 
weather during the early part of the year and the stamp duty threshold
falling back to £125,000 at the end of December.Howard Archer, chief UK and European economist at IHS Global Insight, said: ‘The fall in house prices in February reported both by the Halifax and the Nationwide is supportive to our long-held view that house prices will be prone to corrections in 2010 and will probably be no better than flat over the year.’This view is further supported by Bank of England data showing a marked dip in mortgage approvals in January from already relatively muted levels, even allowing for the impact of the bad weather.’The fact of the matter is that the house price rises that have been seen since early 2009 have been out of kilter with the overall economic fundamentals.’Halifax added that an increase in the number of properties being put up for sale had helped to reduce slightly the imbalance between supply and demand.Martin Ellis, Halifax housing economist, said this increase in supply, combined with the fall in activity, helped to curb some of the upward pressure on house prices.

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House prices plunge 1.5% amid fears of new market slump

By
Daily Mail Reporter
Last updated at 10:22 AM on 04th March 2010

House prices fell for the first time in eight months during February as the market was hit by bad weather and the end of stamp duty holiday, new figures showed today.In a further sign of the slowdown in the housing market the average cost of a home fell by 1.5 per cent during the month to stand at £166,857, according to Halifax.The figures are in line with those reported by Nationwide last week and will fuel fears that prices are about to plunge again, with many economists expecting further falls this year.The group blamed the slide on a fall in activity caused by the bad  weather during the early part of the year and the stamp duty threshold falling back to £125,000 at the end of December.
Expensive houses on an exclusive street in Knightsbridge, London. Recent figures have shown a mini-boom in the South while prices have fallen in the NorthHoward Archer, chief UK and European economist at IHS Global Insight, said: ‘The fall in house prices in February reported both by the Halifax and the Nationwide is supportive to our long-held view that house prices will be prone to corrections in 2010 and will probably be no better than flat over the year.’This view is further supported by Bank of England data showing a marked dip in mortgage approvals in January from already relatively muted levels, even allowing for the impact of the bad weather.’The fact of the matter is that the house price rises that have been seen since early 2009 have been out of kilter with the overall economic fundamentals.’Halifax added that an increase in the number of properties being put up for sale had helped to reduce slightly the imbalance between supply and demand.Martin Ellis, Halifax housing economist, said this increase in supply, combined with the fall in activity, helped to curb some of the upward pressure on house prices.Last week figures from Nationwide also showed a sudden fall in house prices.And
separate figures showed that the recent mini-boom in house prices over
the past few months has been largely fuelled by price rises in the
South.

Over the past year, prices have rocketed 10.5 per cent in London,
8.5 per cent in the South-East and 6.6 per cent in the South-West. But in the North they are down 3.4 per cent in the North East,
down 2.2 per cent in Yorkshire and the Humber and down 1.1 per cent in
the North West. The latest falls come as the Bank of England’s Monetary Policy Committee (MPC) is set to hold interest rates at their 0.5 per cent
all-time low.The Bank’s rate-setters are also expected to keep
its quantitative easing (QE) programme unchanged at £200 billion at its
latest policy meeting and The ‘wait and see’ stance comes after a month of mixed signals for the MPC as the UK crawls out of recession.Figures have shown the UK growing at a faster pace than first thought - but the 0.3 per cent advance seen in the last quarter of 2009 offers scant cause for celebration as the recession was deeper than first thought.
The Bank of England’s Monetary Policy Committee is set to hold interest rates at their 0.5 per cent all-time lowRecent surveys showed manufacturing and services activity picking up pace and consumer confidence at its highest level for two years, but VAT hikes and snow have hit retailers, and house prices also registered their first fall in nearly a year during February.The MPC’s inflation-watchers will also be focusing on the current weakness of the pound amid fears over a hung parliament delaying plans to tackle the UK’s deficit.The pound fell to a 10-month low against the dollar on Monday and has slumped by around 8 per cent so far this year.Members of the MPC have meanwhile dropped hints that more QE could be in the offing if the recovery fails to gain traction.The impact of temporary VAT cuts, car scrappage schemes and spending brought forward to beat recession are set to fade, while the dire public finances mean there will be little scope for further giveaways.The Bank lowered its growth forecasts in the February inflation report, when the Governor said the economy was still ‘bumping along the bottom’.Mr Archer said: ‘We expect the Bank of England to keep interest rates down at 0.5 per cent not only on Thursday but through 2010 given likely persistent concerns about the strength and sustainability of the recovery.’It is likely that the economy will go through many more twists and turns over the coming months.’The MPC is unlikely to make any rash policy moves to tackle a short-term inflation spike, with the Consumer Prices Index (CPI) currently well above target at 3.5 per cent thanks to the VAT rise and higher petrol bills.The Bank expects CPI to drop well below its 2 per cent target over the longer term, as the huge slack created by what is now the deepest recession since official records began drives down prices. 

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Sterling tumbles amid growing fears of hung Parliament

Sterling plummeted to a nine-month low against the dollar today and could
tumble further, analysts warned, as fears mounted that the general election
could result in a hung parliament.

Sterling fell 2 per cent to $1.4943 at one point, its lowest since early May.
It also plunged against the euro, to €1.0991, its lowest since the end of
November.

Investors‘ concern was fuelled by weekend opinion polls indicating that a hung
parliament looked more likely. They fear that the lack of a clear majority
in the House of Commons could lead to political deadlock over a solution to
the country’s ballooning debt problems.

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EU forces Greece to take more action as it endorses plan to cut deficit

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Reuters

Published: 3:49PM GMT 03 Feb 2010

In an assessment closely watched by markets weighing up Greece’s credibility
as a debtor, the European Union executive put Athens on a short leash,
ordering it to submit an interim report on progress in reducing its huge
deficit by mid-March.

It said the plan to cut the budget gap from 12.7 per cent of gross domestic
product (GDP) in 2009 to below 3 per cent in 2012 would not be easy to
implement, and Greece must be ready to make further deep fiscal adjustments.

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America picks up the pace of recovery amid hopes for rising employment

Economic growth in the United States surged in the final three months of last year at its fastest rate for six years, lifting hopes that employers could begin to hire staff.
The 5.7 per cent rise in estimated gross domestic product (GDP) from the Commerce Department, better than expected, was followed by other positive economic data, but nevertheless it was insufficient to give a significant lift to markets, which have begun to fall since hitting a ten-month high last week.
The Institute for Supply Management-Chicago said that its business barometer had risen to 61.5 in January, the highest in four years, from 58.7 in December.
In a further boost to recovery hopes, the Reuters/University of Michigan Survey of Consumers’ consumer confidence for January rose above expectations to 74.4, from 72.5 in December.

For the full year of 2009, GDP fell by 2.4 per cent, marking the biggest full-year decline since the 10.9 per cent recorded in 1946. The change from the first quarter of 2009, when GDP fell at an annual rate of 6.4 percent, was the largest three-quarter swing in growth rates since 1981.
The fourth-quarter surge suggests that a sustainable recovery is building. It follows an increase of 2.2 per cent in September, when the world’s biggest economy left recession after four quarters of contraction and the worst downturn since the Great Depression of the 1930s.
The Commerce Department said that growth had been driven in large part by a 3.4 percentage point contribution from inventories, as businesses cut back less aggressively on their stock and fewer companies liquidated their inventories to address poor demand.
Nigel Gault, chief US economist at IHS Global Insight, said that the best news in the data was on exports (up 18.1 per cent) and business spending (up 13.3 per cent). “The improving trend in capital goods orders suggests more gains in equipment spending ahead. If firms are feeling confident enough to raise their equipment spending, they’re probably confident enough to start hiring again,” he said.
However, he said that an inventory swing of the size seen at the end of 2009 could occur only once. “Growth is likely to be subdued by historical standards, in the 2.5 to 3.0 per cent region for 2010,” he said.
Christina Romer, chair of President Obama’s Council of Economic Advisers, said that the data represented “the most positive news to date on the economy.” However, she said that the focus must remain on getting Americans back to work.
The number of unemployed people now stands at 15.3 million, giving an unemployment rate of 10 per cent, compared with 7.7 million and 5 per cent at the start of the recession in December 2007.
President Obama vowed in his State of the Union address on Wednesday to make job creation his top priority. Although government figures out this week showed a fall in the number of Americans filing for initial unemployment insurance to 470,000 last week from 478,000 a week earlier, Americans remain concerned about job prospects.
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US economy races back to enjoy strongest growth since 2003

Published: 2:17PM GMT 29 Jan 2010

The world’s biggest economy chalked up annualised growth of 5.7pc in the
fourth quarter, beating the expectations of Wall Street analysts, and
marking its best performance since 2003.

However, the figures from the Commerce Department in Washington D.C. also
showed that the US economy contracted 2.4pc in 2009, its worst performance
since just after World War II.

The numbers revealed a sharp slowing of the inventory cutbacks that have been
forced on companies by a downturn that began in late 2007. A smaller drop in
inventories alone contributed 3.4 percentage points of the growth in the
quarter. Inventories declined at a much slower $33.5bn annual pace compared
with $139.2bn rate in the third quarter. The second quarter had seen inventories
fall at a record $160.2b pace in the second quarter.

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Tax deadline boosts December mortgage figures

Bank lending on residential property doubled at the end of 2009, reflecting a last-minute surge of applications for mortgages in December.
The end of the stamp duty holiday on properties costing up to £175,000 caused many transactions that might have taken place in January and February to be brought forward.
The British Bankers’ Association (BBA) said that 45,897 mortgage applications were approved last month, slightly higher than the 44,965 loans approved in November and up 102.2 per cent from December 2008. Total mortgage advances rose by 6 per cent to reach £10.2 billion, a level last seen in November 2008.
“The high street banks continued to lend substantial amounts in the weaker mortgage market of 2009, approving more than 440,000 loans for house purchase,” David Dooks, the statistics director of the BBA, said. “Their share of gross lending went up from a historical level of about two thirds to three quarters, due to specialist lenders largely withdrawing from the market and building society finance contracting.”

Howard Archer, chief UK and European economist at IHS Global Insight, said that, despite the rise, approvals in December were still “appreciably below” the average monthly level of 60,314 seen since 1997.
While house prices have fallen from their peak in 2007, lending criteria have been tightened, leaving many first-time buyers facing a seemingly unbridgeable gap, according to the British Property Federation (BPF). Figures from the BPF published today will show that 80 per cent of those who rent their home cannot afford to buy.
Housing market experts suggest that lending in the first two months of 2010 could fall sharply after the artificial lift in December. Many predict that a rise in interest rates could result in more homes up for sale and another fall in prices by the end of the year.
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Britain emerges from recession, but only just

By Martin Evans


Published: 10:39AM GMT 26 Jan 2010

After almost two years of consecutive contraction, data released by the Office
for National Statistics, confirmed that the UK economy had finally begun to
expand.

But the 0.1 per cent growth in Gross Domestic Product (GDP) was much smaller
than the 0.4 per cent widely expected, fuelling fears that a further “double
dip” slip back into recession could be around the corner.

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Big freeze pays off as Waitrose sales soar

Shoppers rushed to stock up their freezers last week, amid concern that heavy
snowfall would leave them housebound or with understocked supermarkets.

Total sales at Waitrose were up 16.6 per cent on the same week last year,
driven by frozen foods. Filling foods for hot dinners foods proved
particularly popular, with frozen chicken sales up 125 per cent on last year
and pies up 51 per cent.

New year health resolutions also seemed to have a heavy impact on sales, with
frozen soya beans up 262 per cent, butternut squash up 100 per cent and the
usually festive Brussels sprout up 64 per cent.

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