Scottish Business Briefing –Thursday October 30, 2008

Published on Thursday 30 October 2008 07:16

WELCOME to scotsman.com's Scottish Business Briefing. Every morning we bring you a comprehensive round-up of all news affecting business in Scotland today.

ECONOMY

Bank insider urges deep rate cuts

The current financial crisis may be more far-reaching than even the 1929 crash, a Bank of England policymaker has warned (BBC). Professor David Blanchflower is a member of the Bank's Monetary Policy Committee (MPC), and has often been a lone voice in urging rate cuts. Now he has said big interest rate cuts are needed to avoid a deep recession. UK rates are at 4.5%, after the Bank cut them by half a percentage point earlier this month. The cut was part of a co-ordinated move with both the Federal Reserve and European Central Bank (ECB). On Wednesday the Fed cut its key rate further, to just 1%. "My view remains that interest rates do need to come down significantly - and quickly," Prof Blanchflower told an academic audience in Canterbury. "If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession."

Read all today's economics news from scotsman.com

INDUSTRY

Melrose finds new gas in Bulgaria

MELROSE Resources has revealed a major gas discovery in Bulgaria, as the company draws close to securing a lucrative deal to provide gas storage to the country (Scotsman). The Edinburgh-based oil and gas firm supplies about 15 per cent of Bulgaria's gas from its Galata field, which it plans to turn into a storage facility. Yesterday, it said it had made a discovery in the nearby Kavarna exploration permit, and that its initial estimate is that it contains reserves of 24 billion cubic feet of gas. Galata's production is being reduced, but Melrose believes it may be able to maintain a major chunk of Bulgarian production through the latest discovery along with the recent Kaliakra find and other prospects in its ownership. Melrose intends to pipe gas from the recent discoveries into Galata during the summer, which will be released for supply during the winter when demand is higher. Chief executive David Thomas said the company still had to agree commercial terms with the Bulgarian government and submit a development plan for the facility, but was confident the deal would be completed smoothly.

Read all today's industry news from scotsman.com

RETAIL

Haughey sale freezes out 14m of debt

FORMER Celtic director Willie Haughey's refrigeration firm has wiped out 14 million of debt by selling non-core assets, leaving it poised to grow profits and turnover this year (Scotsman). City Refrigeration Holdings, which employs more than 8,000 people in Scotland and Northern Ireland, said its lack of debt meant it was not dependent on borrowing from banks – a problem which for many businesses as financial institutions tighten their lending criteria. In its latest accounts filed with Companies House, City, which supplies large scale fridge equipment to companies including supermarket giant Asda, revealed that turnover in 2007 was 2 per cent higher than the previous year, at 222 million. Pre-tax profit was 37per cent higher at 1.7m. Financial director Colin Seggie claimed yesterday that the firm was on track to increase both profit and turnover in the current year.

Granite City is the strongest foundation for Scots market

SCOTLAND'S commercial property market is managing to ride out the economic storm thanks to strong office activity in Aberdeen and a buoyant industrial sector (Scotsman). But office lettings in the country's two biggest cities – hit hard by the credit crunch – will struggle to gather momentum before 2010. Those are two of the key findings in Ryden's 63rd biannual Scottish Property Review. The report, which details every major office, retail and industrial letting and investment deal over the last six months, is seen as a trusted benchmark of the Scottish commercial property marketplace. According to the firm, office market demand is running at "about average" levels, as slowing activity in Glasgow and Edinburgh is offset by high demand in the Granite City. Ryden said Edinburgh's office market continued to rely on existing occupiers, particularly law firms and accountants looking to move to more modern premises.

Read all today's retail news from scotsman.com

TECHNOLOGY

BiFab powers ahead with renewable plan

THE LAST heavy fabrication yard in Scotland is planning to open a new manufacturing facility in Germany in order to make further headway producing offshore wind turbine structures (Scotsman). Burntisland Fabrications (BiFab) also has plans for a "major" expansion at its fabrication yards at Burntisland and Methil. The company, which fabricates platform decks and other support structures for the offshore oil and gas industry, aims to bolster its presence in the UK and European renewables market, including offshore windfarms as well as wave and tidal energy technologies. The group recently completed a 5 million contract to provide substructures to Talisman Energy's and Scottish & Southern Energy's flagship Beatrice Wind Farm in the North Sea.

Read all today's technology news from scotsman.com

TRANSPORT

Lufthansa-BMI move threatens Scots links

THE future of BMI's Scottish operations has been thrown into doubt after Lufthansa confirmed its widely anticipated takeover of the airline in a 318 million deal (Scotsman). News of the move triggered overtures from Virgin Atlantic to secure a tie-up with the expanded German carrier to take on the planned merger of British Airways and American Airlines. Details of the deal, published yesterday, showed that Lufthansa will increase its holding in Bmi from 30 per cent to 80 per cent by exercising a long-standing option to buy chairman Sir Michael Bishop's stake. The deal is not expected to be concluded until 12 January. Last night analysts said the move could result in flights on Bmi's Scotland-Heathrow routes reduced to free up valuable landing slots at Heathrow for more lucrative longer-haul services. They also suggested Aberdeen-based Bmi Regional, which operates non-London UK and European routes, could be sold off, perhaps to Flybe. A similar fate may await Bmi Baby, its no-frills arm, because neither fits with the full-service Lufthansa brand.

Read all today's transport news from scotsman.com