Archive for April, 2009

Deadline for LDV

LDV needs funding now!

Remaining staff at struggling van maker LDV have been sent home, after the firm applied to enter administration.

About 800 people are employed at its Birmingham factory - though most have not been working, with production halted since December last year.

Employees have been paid up to the end of last week, it said, but the firm could not confirm any further payments.

LDV said it would continue to look for funding until 6 May when it is due to formally go into administration

There are about 1,200 people employed in dealerships, and LDV estimates that "several thousand" staff are employed by its suppliers.

The company is still working with a Malaysian investor, Westar, which LDV says wants to keep production in Birmingham. But it is thought unlikely to be able to do a deal before next week's deadline.

The leader of the Unite union, Tony Woodley, called on the government to give LDV £4m in emergency aid to stave off the immediate threat of administration and give it time to reach an agreement with Westar.

"With so many skilled jobs at risk and with a genuine possibility of a buyer, if this company goes to the wall for the want of a relatively small amount money, then it would be criminal," Mr Woodley said.

'Exceptional conditions'

The firm has suffered from the broader decline in demand for commercial vehicles in the UK with registration of new LDV vans down by 73% in March from a year previously, according to the SMMT

However, it has had long-running problems and has made a loss for the last four years.

LDV said that it had been relying on the goodwill of suppliers to stay afloat, but that "the actions of a small number of suppliers" had caused the firm's position to reach a point where it had "no alternative" other than to apply for administration.

"During the past few weeks, the global economic crisis has forced us to operate in exceptional conditions and we cannot continue in this position without funding indefinitely," chief executive Evgeniy Vereshchagin said in a letter to staff.

'Worrying development'

Plans for the future of the business have included a management buy-out, with proposals to begin making electric vans from the end of the year.

The firm has held talks with UK government ministers over possible government support for the buy-out, and a bridging loan enable it to secure funding from the European Investment Bank.

Asked about the situation in the House of Commons, Prime Minister Gordon Brown said: "We have tried to be of help to them."

"We have said that there is a range of government support available if they have a business model for moving forward that we can work with and be able to support."

But he reiterated that the responsibility for ensuring the firm was on a sound financial footing lay with its Russian owner Gaz and potential investors.

Last month, Erik Eberhardson, the chairman of LDV's Russian owner Gaz, said he believed that LDV could be saved and that a management buyout was the best option.

The cancellation of the 2010 British International motor show and a record drop in UK car production are the latest signs of trouble for a sector that has experienced tough times for months.

Uk richest affected by recession

Chelsea chairman roman abramovich

Not the richest guy in the uk. Roman comes in at 2nd richest but he is the most well known publicly.

The chelsea chairman/owner  who is a russian born oil magnate is now worth £10 billion, down from £17 billion last year.

The uk`s richest man is Lakshmi Mittal.

Lakshmi Mittal lost around £25 billion last year, However mittal is still worth an estimated £16 billion. Mittal was the most affected on the rich list after loosing 60% of his wealth.

The top 100 richest people on the list are worth about $135 billion less this year than they were last spring, and the top 1,000 lost a collective $228 billion.

Ouch!

Worst recession since 1945

1945 recession

The current recession was today said to be the worst uk recession since 1945.

ww2 and the need to pay for military hardware like battleships, tanks and spitfires may have
played a part in the 1945 recession.

Cynical or what

UK Car industry suffering

Car industry production down 50%

March 2009 The uk car industry production figures show a fall in vehicle production of over 50%

Car makers are struggling to sell new vehicles so have resorted to cut down in production.

Meanwhile, thousands of new unsold vehicles are being held in locations throughout the country.
These surplus vehicles realy need to be sold before production steps up, but when will that be?  

What is a recession-What caused the recession

The dreaded R-word - recession - is in the air as every day seems to bring more gloomy economic news.

Many commentators are now openly talking about the current slowdown turning into a recession.

But how do economists define a recession and when will we know if the UK is going through one?

What is the definition of a recession?

This is a thorny question on which experts still disagree.

However, technically speaking, the UK economy would slide into recession when it experiences two successive quarters of what is known as "negative growth".

For this to happen, the total amount of goods and services produced by the UK - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.

Are there different degrees of recession?

Absolutely.

The economy could contract in two consecutive quarters but then recover and actually see growth for the year as a whole.

Were that to happen, most commentators would label it a mild recession.

However, there is also the danger of a full-blown or severe recession where there is an absolute decline in economic growth on a year-by-year basis.

What has happened in the past?

There have been five full-blown post-war recessions, in 1974, 1975, 1980, 1981 and 1991.

PREVIOUS SEVERE RECESSIONS 1974: 1.4% fall in GDP 1975: 0.6% fall 1980: 2.1% fall 1981: 1.5% fall 1991: 1.4% fall Annual GDP figures by market prices (Source: Official for National Statistics)   Recession 'looming' for UK firms Back to the 1970s?

In 1991, the economy contracted in three consecutive quarters and annual GDP fell 1.4% compared with the year before.

But there are also recent examples of a mild recession.

In 1990, the economy retreated in the final two quarters but its growth in the earlier part of the year was enough to ensure expansion for the year as a whole.

Are there less formal indications of a recession?

Technical jargon aside, the psychological impact of the tougher economic climate on people cannot be underestimated.

In the US, experts such as Alan Greenspan say families now feel as if they are living in a recession - even though it is not technically the case - because living costs have risen so fast in such a short time and incomes are being steadily squeezed.

This is likely to make people more cautious, causing them to spend less and, in turn, harming the economy further.

A similar "feel-bad factor" may be taking root in the UK and some experts have warned of the dangers of a self-fulfilling prophesy whereby, by making regular comparisons with the mid 1970s and early 1990s, the country talks its way into a recession.

When will we know if the UK is in recession?

One of the problems about officially declaring a recession is that one can only confirm it after it has happened.

Official GDP figures are published about every three months by the Office for National Statistics and sometimes its initial estimates have to be revised later when new information emerges.

For instance, were the UK to go into a mild recession in the last six months of 2008, as some experts are now forecasting, this would not be confirmed until early next year.

As for the fear of a full-blown recession, we will only really know about whether this has come to pass next year or even 2010.

Where do we stand right now?

The economy shrank for the first time in 16 years between July and September 2008 confirming that the UK is on the brink of recession.

Output fell by 0.5%, according to the Office for National Statistics, a bigger-than-expected drop, and most analysts believe the UK is about to enter recession and have called for aggressive rate cuts to ignite the economy.

The UK will be classed as being in recession if the economy slows in the fourth quarter as well.

The 0.5% fall is the biggest drop in UK gross domestic product since the first quarter of 1990.

taken from news.bbc.co.uk/1/hi/business/7495340.stm for your conveneince.

UK Budget 2009

The budget

Personal taxation
The following changes have been announced which will come into effect from April 2010:

an additional Income Tax rate of 50 per cent will apply to people earning over £150,000
the personal allowance will be restricted to those earning over £100,000
Income Tax and National Insurance rates for 2009-10 Types of tax (momey, tax and benefits section) Pensions and savings
The Budget announced the following changes to pensions:

an increase of £100 to over-80s households and £50 to over-60s households in 2009/10, via their Winter Fuel Payment
tax relief on pensions contributions will be restricted to those earning £150,000 and over
The overall annual investment limit for ISAs rises to £10,200 of which £5,100 can be saved in cash. These higher limits will be available to over-50s from 6 October 2009 and to everyone from 6 April 2010.

Saving and investing with ISAs (money, tax and benefits section) Housing and homeowners
The stamp duty land tax threshold on residential properties costing £175,000 or less will be extended until 31 December 2009.

Stamp Duty (money, tax and benefits section) Motoring and transport
The government has announced a temporary vehicle scrappage scheme - it offers consumers £2,000 off the cost of a new vehicle to replace a vehicle more than 10 years old.

Budget 2009 confirmed the fuel duty increase announced in the 2008 Pre-Budget report.
Alcohol and tobacco
Alcohol duty rates increase from 23 April 2009. The duty will increase by 2 per cent, adding one penny to the price of a pint of beer, 13 pence to the price of a bottle of spirits and four pence to the price of a bottle of wine.

Duty on tobacco will increase by 2 per cent from 22 April 2009.

Employment and training
The Budget announced that 18-24 year olds who have been unemployed for 12 months will be guaranteed a job, training or a work placement.

An extra 54,500 places will be created in the next academic year for 16 and 17 year olds who wish to take them up.
The UK economy
Budget 2009 sets out the Government’s long-term economic goals, including its growth, inflation, borrowing and public spending plans and forecasts.
The environment
Budget 2009 provides over £1.4 billion of extra targeted support in the low-carbon sector.

Measures include extra money to support businesses, public buildings and households to be more energy efficient. Measures such as these aim to save around £60 million in energy bills each year.

Construction jobs hard to find

From contractorjournal.com

Construction job vacancies evaporate as recession bites
The latest batch of employment figures provides little comfort to the thousands of construction workers who are now looking for jobs, as vacancies in the industry have plunged deeper.

The figures show that in the three months to March this year there were 12,000 recorded vacancies for jobs in construction. This is half the figure of a year ago.

The figure is not a perfect match for the job opportunities out there, but the trend as shown by the graph below does give an indication of how much harder it will be for those who lose their job to get back into work quickl

The latest update on the number of jobs in construction will come in a couple of months, but to date these figures have not matched the reality on the ground, as has been discussed before.

However the data on redundancies up to the end of last year do reflect the high level of job losses and anecdotal evidence and various announcements suggest that the upward trend has continued through the first quarter of this year.

One of the missing links in the information on the jobs market is the effect of workers from overseas. If in the face of the recession growing numbers return to their homelands, this may reduce the pain within the construction labour market.

Forecasts for construction workloads suggest the worst is yet to come, which would mean the pace of job losses could continue to accelerate over the coming months.

Britain overcoming economic difficulties

Gordon Brown today said Britain was "overcoming" the problems caused by the recession as it emerged that spending cuts worth £15bn are likely to be announced in the budget on Wednesday.

The prime minister delivered his upbeat message as he published a strategy intended to help firms take advantage of economic opportunities in the future.

"Our industrial policy is about a dialogue with business, leading to a consensus about what we in Britain need to do to face this global future, and then of course a partnership for the future that I believe is to the benefit of all," he said.

"We have difficulties that we are overcoming, but we have also got enormous opportunities and challenges ahead. Working together, we can meet and master every challenge."But Brown's message was undermined by news that the budget will contain proposals for spending cuts.

The cuts will come from "efficiency savings" expected to target staff working on "back office" functions rather than frontline services.

The Treasury has outlined plans to achieve savings worth £5bn by 2011. On Wednesday, the chancellor, Alistair Darling, is expected to say that a further £10bn will be cut from Whitehall budgets through savings implemented over the following three years.

In a further development, the Institute for Fiscal Studies today said Darling's plan to raise income tax to 45p in the pound for those earning more than £150,000, from 2011, was "very unlikely" to raise the £1.6bn predicted by the Treasury.

Darling's budget will also set out plans for more than £2bn of extra spending on the unemployed – including a scheme to help those unemployed for more than 12 months – and proposals to offer 18 to 25-year-olds six months of training and work experience.

Research suggests as many as 1.25 million of the 3 million projected unemployed will be under the age of 25.

Darling is also expected to reveal that the economy will contract by as much as 3.5% this year, compared with his prediction of a 0.75% to 1.25% slowdown in the pre-budget report last November.

The chancellor will predict that the recession is likely to end this year and that the economy will grow by as much as 1% next year, even though the forecast's accuracy is entirely dependent on the world economy.

He is unlikely to introduce any tax rises, arguing that they might slow the recovery, and may signal that the rate of growth of spending will have to be reduced in the period after the election.

In a politically delicate attempt to train the electorate's sights on a coming recovery, Brown – with the business secretary, Lord Mandelson, and the skills secretary, John Denham – today published a comprehensive paper on the state of British competitiveness.

Mandelson told the Guardian the policy was "designed to frame the budget statement".

"It's not enough to limit the damage of the recession to the economy, vital as this is," he said. "We need to provide a vision of the opportunities and advantages for the UK in the world economy at the upturn and beyond."

He argued that "the job of governments is not to substitute for markets or displace the private sector".

"We are not into bailing out the past, but removing the barriers to investing in the future," he added. "If markets fail, or don't work efficiently, government has a role to play, as we saw with the financial markets."

The policy statement – Building Britain's Future – calls for greater cross-departmental working in Whitehall, greater use of a £175bn government public procurement programme and clearer signs through regulation for investors thinking to commit themselves to new industries such as renewables.

It also proposes that university research must meet tougher criteria on commercial application.

Mandelson stressed that the government was not picking winners but highlighting potentially strong areas of future growth including aerospace, composite materials and industrial biotechnology.

In a sign of this new activism, Darling will announce an extra £500m of government spending on reducing carbon emissions, including a pledge of £40m to top up and keep open a grants programme for renewable energy technologies.

But at a Liberal Democrat press conference unveiling plans to cut tax bills by £700 a year for people on low and middle incomes, Vincent Cable strongly attacked the government's new industrial interventionism."It's a really dreadful old Labour idea," the Lib Dem Treasury spokesman said.

"I'm horrified that the government is going back to it. It's a massive waste of money."

1991 recession

Britain has officially plunged into recession for the first time since 1991. But while there are many differences today, some things haven't changed much at all ...
Recent comments from the business minister, Baroness Shriti Vadera, referring to some "green shoots" in the economy immediately drew comparisons with Norman Lamont's "green shoots" blunder in October 1991.
The recession was officially declared in January 1991, after starting in the third and fourth quarters of 1990 – two consecutive quarters of contraction – mirroring the pattern this time round.
Unemployment has also followed a similar pattern. It started rising in February 2008 and is now close to 2 million. During the 1990s slump, unemployment first rose in April 1990 after falling for the previous 44 months, and went on rising for three years. Then, inflation was in double digits and interest rates had risen as high as 15%

From the guardian

Gordon brown suggesting internet to aid uk recession recovery

Gordon Brown has said that the "digital future" is "essential" to Britain's industrial strategy to climb out of the current economic downturn. During the keynote speech at the Digital Britain summit in London, the prime minister told attendees: "The internet revolution lies at the heart of success for Britain in this new economy. Investing in the digital future is essential to our industrial strategy". "Britain is a leader in the digital and creative industries and needs to be encouraged to sell its services and expertise to the rest of the world". "Only by embracing a digital Britain and taking a lead in the global digital economy can we maintain our competitiveness as one of the world's leading economic and industrial powers in years to come". Lord Carter's "Digital Britain" interim government report was published in January, described as a "plan to secure Britain’s place at the forefront of the global digital economy".