Friday, 5 February 2010

Economy faces a bumpy ride

Yesterday the FTSE 100 index tumbled more than 2.1 per cent - or 113.8 points to settle on 5139.31 at the end of the day.

It was the largest one-day fall for three months and prompted speculation that the economic recovery was faltering.

Bad news from the eurozone, with huge debts for countries such as Greece and Spain, appeared to be the catalyst for a selling spree.

Analyst at BGC Partners, David Bulk, said: "This week's story is Greece. Next week's story could be Portugal. Nex month could be Spain and maybe even Italy. The next quarter - who knows? It coiuld be the UK and next year the US."

He said that equities were "uncomfortable".

It's a gloomy prognosis, and a "double-dip" would appear to be on the cards. Although still rising, the pace of house price rises slowed in January.

The uncertainty about the General Election won't help.

It looks like being a bumpy economic ride for the next few months.

Wednesday, 3 February 2010

January services sector affected by snow

The services sector in Britain slowed more than expected in January, and no doubt the snow and cold weather had a lot to do with it.

The Chartered Institute of Purchasing & Supply's purchasing managers' index (PMI) was down to 54.5, from 56.8 in December. Anything above 50 is growth, but the forecast had been for a score of 56.5.

CIPS chief executive officer, David Noble, said: “This may be a temporary blip caused by one-off events rather than signs of a double-dip recession, but we can't dismiss the possibility.

"The chaos caused by the snow hit this sector particularly hard, much more than manufacturing or construction, reducing the growth rates of activity and new business wins."

Nevertheless, Mr Noble was positive on a number of points.

"At ground level, employment is moving closer to a level of stabilisation and there's even evidence of recruitment in the financial sub-sector. And, it seems the VAT increase coupled with growing confidence and demand has encouraged some firms to raise their output prices slightly."

"Even with imminent tax increases and government spending cuts, confidence in the future is buoyant as wider economic pick-up is expected to offset any fiscal austerity to come."

Philip Shaw of Investec was not surprised at the low figure. And wondered how much the snow had been influential.

He said: "I think the policy implications are unchanged: certainly a rise in quantitative easing this week seems very unlikely and while we wouldn't totally rule out a further expansion of asset purchases, the likelihood is that £200bn will be the top."

Tuesday, 2 February 2010

Small business owners lend money to their own businesses

Small business owners have been drawing on their personal finances to keep their businesses afloat during the recession.

In fact, there was a rise in personal insolvencies in the first nine months of 2009, and experts believe many business owners have sacrified their perosnal finances in favour of their businesses.

Owners have been using their own credit cards, drawing on personal savings and using overdraft facilities to prevent their businesses going under.

Chris Poll, chief executive of CreditPal, said: "Thousands of small and medium-sized enterprises (SMEs) have been forced to rely on credit to survive in the last two years as a result of disruptions to business cashflow.

"We believe we have identified an SME fear factor at play, with companies more likely to seek finance from non-traditional sources because they are scared of even applying for finance from banks and building societies."

Incredible, isn't it?

The banks, who should be there to support our businesses - after all UK taxpayers now own most of the banks - are scaring off business owners, who have to dip into their pockets to keep their businesses going, while at the same time paying taxes to keep the banks who won't lend to them afloat.

Monday, 1 February 2010

UK leads Europe in online shopping

Figures from the Centre for Retail Research (CRR) show that shoppers in the UK spent more online than anywhere else in Europe last year. In fact, UK online purchases accounted for almost a third of all European sales.

The UK spend was £38bn online in 2009, or an average of £1,102 per shopper.

The figures mean that online sales now amount to around 10 per cent of total retail sales in the UK, according to the CRR.

The centre reckons that internet shopping would continue to grow sharply this year, reaching £42.7bn in 2010.

"This year is when we will really start to see online sales achieving a significant share of overall retail trade in the UK," said Bruce Fair, managing director of online shopping and price comparison site Kelkoo, which commissioned the research.

Mr Fair said that online shoppers were growing in confidence of the security of the Internet and monetary transactions.

Online shopping had been boosted by the recession, Mr Fair said. "In these hard times, it is no surprise that shoppers are turning to the internet rather than the High Street, especially when you consider that purchasing items online can result in savings of 20% or more," Mr Fair said.

It demonstrates the importance of a website for all businesses, and the ability for people to buy right there and then.