BANKING & INSURANCE
Government set to take £50bn stake in Britain's top banksTHE government is preparing to buy a huge stake in Britain's stricken banks to boost confidence in the economy as the freefall in global markets continue
s (
Scotsman). News of the drastic measure emerged after the UK's leading shares suffered their biggest ever one-day fall and as European governments failed to agree a common strategy in their war against the global financial crisis. Under the plan, to be announced later this week, The Scotsman understands that the government will inject between £30 billion and £50 billion into the banks, with more to follow if required. In return, the state will receive preference shares to be held for the duration of the crisis. The four key banks involved are believed to be HBOS, Lloyds TSB, Barclays and Royal Bank of Scotland. They are understood to have agreed the capital injection in outline over the weekend and in further discussions yesterday. Indeed, yesterday's massive sell-off of bank shares leaves them with no alternative. However, the move will raise concerns over the exposure of taxpayers to financial risk, following the use of public funds to nationalise the stricken bank Northern Rock earlier this year.
Read all today's banking news from scotsman.comECONOMYUK economy 'already in recession' Britain is already in a recession, which is worsening and could see unemployment rise by 350,000 by next year, a business group has warned (
BBC). A quarterly survey of 5,000 businesses by the British Chambers of Commerce (BCC) says confidence has collapsed in both manufacturing and service sectors. The firms call for urgent action from the government and the Bank of England. Technically the UK is not yet in recession - defined as two consecutive quarters of negative economic growth. But the BCC described the survey results as "exceptionally bad" and said the economy was under "immense pressure" for the second quarter in a row. It also said the jobless total was expected to increase within two years. The BCC believes the number of people out of work will rise by between 300,000 and 350,000 over the next year or two, which would take the unemployment total to more than two million. Confidence had collapsed in both the manufacturing and service industries, according to the survey. The BCC represents small and medium sized companies, and argues that a recession has already begun. It wants the Bank of England to do what it can to stimulate the economy, by cutting interest rates on Thursday.
Markets gripped by panic sellingGlobal stock markets plummeted yesterday as governments threw ever more at the financial crisis but failed to stop it becoming significantly worse (
Herald). The UK's FTSE-100 index sustained a record points loss and New York's Dow Jones Industrial Average suffered its biggest-ever intra-day drop of 800 points. The latest rout heaped pressure on Prime Minister Gordon Brown to take even more radical action to stabilise the UK banking sector, with talk swirling last night that the government could go as far as injecting capital into most of the big banks in return for equity stakes. Royal Bank of Scotland, HBOS, Lloyds TSB, and Barclays were being touted vaguely last night as potential candidates for a capital injection from government. Speculation meanwhile continued to mount that the UK government would be forced to follow Ireland, Denmark and, seemingly, Germany in guaranteeing all personal deposits at banks. The FTSE-100 sustained the biggest one-day points loss since it was created in 1984, plunging by 391.1 points, or 7.8%, to 4589.2. It was down as much as 430.6 points at one stage during the session, at 4549.7, and its close last night was its lowest finish for more than four years. Yesterday's 7.8% drop was the FTSE-100's third-biggest-ever in percentage terms. It has been exceeded only by the falls on Black Monday on October 19, 1987 and the following day when the FTSE-100 dropped by 10.84% and 12.22% respectively. The FTSE-100's fall yesterday wiped about £93bn off the combined value of the UK's top 100 companies.
Read all today's economics news from scotsman.comINDUSTRYNow construction industry weighs in with attack on Business StreamScottish Water's business supply arm is responsible for damaging delays to vital construction projects north of the Border, the head of an influential industry trade body has claimed (
Scotsman). Michael Levack, chief executive of the Scottish Building Federation (SBF), accused Business Stream of failing to connect supplies to new developments quickly enough. And Levack revealed that the SBF – which has about 700 members – has set up a working group to monitor what it claims are the failings of utility companies and will report its findings to ministers. Last night Business Stream – a wholly owned subsidiary of Scottish Water that operates as an arms-length company – mounted a stout defence of its service. But Levack's comments will resonate throughout the Scottish business community. Yesterday Levack claimed it was not uncommon for firms still to be waiting for a connection more than a year after submitting their initial application.
Read all today's industry news from scotsman.comTECHNOLOGYIBM to build data centre at GreenockIBM, the US technology giant, yesterday said it was investing £2m in the construction of a mini data centre at its base in Greenock and that the new venture would be aimed at small and medium-sized businesses (
Herald). The move marks the latest phase in the history of IBM's long relationship with Scotland. The idea behind the new "collocation" data centre, scheduled to be open at the end of the year, is to help smaller companies reduce their IT costs as firms struggle against the economic downturn. Fiona Kyle, strategy and business development manager at IBM in Greenock, said: "IBM already has two big data centres in Portsmouth and Warwick. These are generally for large corporations that want us to manage their entire IT infrastructures. "The new data centre in Greenock will offer facilities typically only available to large enterprises, such as energy efficient cooling, dedicated electric infrastructure backed up by diesel generators, 24-hour security, alarm monitoring and CCTV, and resilient internet connections. "It allows smaller companies to reduce their costs by allowing us to take care of their IT for them. Now they can get a Rolls Royce-class of service for the price of a Mini Cooper-class service."
Read all today's technology news from scotsman.comTRANSPORTEasyJet sees share price dip despite rise in passengers EASYJET, the low-fares carrier, booked a sharp rise in passenger numbers yesterday but growing concerns about the economy buffeted shares across the sector (
Scotsman). During September, Luton-based EasyJet carried 4.2 million passengers, a 22.1 per cent increase on a year earlier. At 86.9 per cent, the airline's load factor – a measure of how full its planes are – was almost two percentage points higher than in September 2007. The strong performance echoed an equally positive result from larger rival Ryanair, which said on Friday its September passenger numbers grew by a fifth. However, both airlines have warned of slowing consumer demand over the winter months. Shares in EasyJet closed 7 per cent lower at 305p. Meanwhile, British Airways tumbled 12.3 per cent to 145p amid concern that the deepening financial market turmoil would curb demand for air travel. BA said on Friday that premium class travel was 8.6 per cent lower in September, with passenger numbers down by 5.6 per cent overall.
Read all today's transport news from scotsman.com
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