(23 August 2008)
CATCH UP ON THE WEEK
THE UK faces recession in the next six to nine months, particularly if interest rates are not cut, the British Chambers of Commerce warned, referring to a “difficult and risky climate”. UK growth will be slightly negative or zero in the next two or three quarters. It said a major recession is unlikely.
STERLING continued its dramatic fall against the dollar and slipped versus the euro after Bank of England policy maker Tim Besley, left, said inflation will fall by the end of next year, adding to the case for interest rate cuts. The currency extended its longest sequence of declines against the dollar in more than 37 years. Increases in food and energy prices are likely to slow.
BAA, the airports operator owned by Spain’s Ferrovial, was told by the Competition Commission that it may have to sell either Edinburgh or Glasgow airport. It may also have to sell two of its three London airports – Heathrow, Gatwick or Stansted – to end its near monopoly. The ruling will be subject to a consultation process, but is likely to be rubber-stamped by the commission in a final report due early next year.
RETAIL sales increased by 0.8% last month, according to the latest figures from the Office for National Statistics. The unexpected jump went against analysts’ predictions of a 0.3% drop and called the scale of the consumer slowdown into question.
OIL briefly rose above $121 a barrel on mounting tension between the US and Russia, boosting European energy stocks but hurting Government bonds as inflation worries resurfaced. The rise follows similar hikes in crude prices which have gained more than 6% amid tensions over Russia’s military intervention in Georgia. There is speculation that Saudi Arabia may halt the increase in production, made after appeals from the US and Britain, to increase supplies.
Sir Martin Sorrell The chief executive of WPP, the world’s second-largest advertising company, shrugged off the economic slowdown in the United States, the UK and Europe to report a 15% rise in first-half profits.
Colin Matthews The chief executive of BAA was left reeling after the Competition Commission announced plans to break up the airports operator.
WORDS ON THE WEB
“The latest economic growth statistics, which show that growth in the second quarter stood at a less-than-impressive 0%, deny Brown one of his proudest boasts, that the UK economy’s enjoyed ’63 quarters of successive growth’.”
Peter Hoskin, www.spectator.co.uk/coffeehouse/
“Water, it seems, is the new frontier in environmental campaigning. The WWF has released a report entitled UK Water Footprint: the impact of the UK’s food and fibre consumption on global water.”
QUOTES OF THE WEEK
It’s not getting any worse.”
Mike Farley, group chief executive of Persimmon, the UK’s biggest housebuilder, who said that after a collapse in sales in April volumes had stabilised.
“I’ve been celebrating all morning. This is the best decision in the history of aviation ever.”
Michael O’Leary, chief executive, Ryanair on the Competition Commission’s provisional report which suggests that BAA should sell three airports.
“I’m willing to sit down with them again, but I want to talk to them privately. I don’t want to conduct it in the media.”
Richard North, chairman of Woolworths, defending the decision to reject an offer from Iceland founder Malcolm Walker
Published in The Scotsman here.