There is speculation in the marketplace that management at Lloyds Bank may well be considering a breakup of the group with the company's Scottish Widows subsidiary said to be top of the list. If valued on a similar rating to its peers Scottish Widows accounts for around 20% of Lloyds Bank's total market capitalisation yet only accounts for 8% of the group's earnings. There are also additional funding requirements to take into consideration, which are expected to come in to play in 2012.
The FTSE 100 index has dipped below 5000 amid concerns about the UK economy, forthcoming budget cuts and tax increases. There is also concern about problems in Greece and the European debt markets which appear to be growing again. Against this background it seems so though UK investors are reluctant to chase the market although the fall below the 5000 level has surprised many.
Automotive giant Toyota has begun production of a petrol/electric hybrid version of its popular Auris model at its Derbyshire production factory. This is the first petrol/electric hybrid to be mass-produced in Europe and marks what could be a very interesting development for the UK automotive industry which has been struggling of late. This comes just days after Nissan agreed a deal with the UK government to begin production of its own electric vehicle in the Northeast and just ahead of an expected appeal from General Motors for assistance with a similar operation in the UK.
The UK financial sector is showing signs of recovery although the rate of recovery would appear to be less than some analysts had expected. A survey by the Confederation of British Industry has confirmed that 38% of those surveyed confirmed their volumes have increased in the last three months and 29% said they had fallen, which leaves a net increase of 9%. This is by far and away the largest figure since September 2007 although many analysts have expected a larger increase. So what does this mean?
As many had feared, George Osborne has confirmed that the Bank of England will become the central and the focal point of the UK financial regulatory structure in the future. The FSA will become a subsidiary of the Bank of England, will be disbanded completely or replaced by other new authorities. Either way, there is growing concern that George Osborne could be about to set the UK financial regulatory framework back by many years.
George Osborne has already announced significant changes to the UK regulatory structure which will effectively take significant powers away from the Financial Services Authority (FSA) and transfer these to the Bank of England. There will also be the introduction of various other agencies which will become involved in the financial sector, in one way or another, which has led to concerns about the regulatory framework becoming too fragmented.
Shares in BP fell to a 14 year low yesterday amid concerns the company may well have to go cap in hand to shareholders for additional funding. There is also speculation that if BP was forced into the money markets to raise funds then the company would likely pay a premium over and above the average interest rates at the moment. So when will this nightmare end?
Hector Sants, the outgoing chief executive of the Financial Services Authority (FSA), has today joined the debate regarding insider dealing and the handling of this particularly "hot potato" in the future. As part of the shakeup of the FSA, and the Bank of England, George Osborne had initially indicated that insider dealing would fall under the auspice of the new Economic Crime Agency. However, Hector Sants believes that the new Consumer Protection and Markets Authority, which is effectively replacing the FSA, should take overall control of prosecuting alleged insider dealers in the UK.
The management of British Airways have today tabled a new offer for the company's 11,000 cabin crew which were due to be balloted about a third course of strike action by the Unite union. This comes just hours after the company had made public its bid to take on a further 1,250 new cabin crew on significantly worse terms than the current workforce. So could this be the end of the strike?
It has been a difficult few days for the FTSE 100 index which fell a further 54 points today to 5046.47 as investors become more and more concerned about the UK economy and the outlook for the worldwide economy. Even though George Osborne's budget was fairly well-received within the city it seems that the reality of the UK economic situation is only now starting to hit home with many people and some investors have been spooked.
