U.K. Factory Index Falls More Than Forecast on Export Slump

By Scott Hamilton

May 1 (Bloomberg) — A U.K. factory index fell more than economists forecast in April and U.S. manufacturing probably slowed as the world economy stayed reliant on China to drive economic growth.

The gauge of British factory output dropped to 50.5 from 51.9 in March, London-based Markit Economics said today. The median forecast of 27 economists in a Bloomberg News survey was for a decline to 51.5. The Institute for Supply Management’s U.S. index probably eased to 53 last month from 53.4, according to the median of 77 forecasts. A Chinese purchasing managers’ index rose to 53.3 from 53.1. A level above 50 indicates growth.

Pound Strength Is ‘Crippling’ Britain’s Recovery, Civitas Says

By Svenja O’Donnell

April 12 (Bloomberg) — Britain’s exchange rate is “crippling” the economic recovery, and devaluing the pound by as much as 25 percent could push growth back to an annual 4 percent, research group Civitas said.

The pound’s “significant” drop since 2008 hasn’t been enough to make U.K. exports competitive on world markets, and a future decline in the currency is inevitable, according to John Mills, the author of the Civitas report published in London today. A devaluation of as much as 15 percent would balance the U.K.’s trade deficit, he said.

“The exchange-rate policy which we have pursued for decades has made it much more expensive to run most manufacturing operations here than in other parts of the world,” Mills said. “Getting the exchange rate down is a matter on which, in the end, we will have no choice.”

Data yesterday showed the U.K. trade deficit widened to the most in three months in February as exports of cars and heavy machinery fell, especially to the U.S., China and Russia. British manufacturing has become less competitive as some Asian countries devalued their currencies, boosting their competitiveness and hurting the U.K. economy, Mills said.

Osborne Says Moody’s Warning on Debt Shows U.K. Can’t Waver on Austerity

By Robert Hutton and Gonzalo Vina

February 14 (Bloomberg) — Chancellor of the Exchequer George Osborne fended off accusations that he’s not doing enough to boost growth and said a warning by Moody’s Investors Service that Britain may lose its Aaa credit ratingshowed he’s right to focus on reducing borrowing.

“For me it was a reality check,” Osborne told BBC Radio 4’s “Today” show this morning. “It’s yet another reminder that Britain doesn’t have an easy way out of its economic problems. Of course the weaker growth prospects of Britain and just about every other economy is a challenge. People have a choice about where to put their money. If they don’t see Britain dealing with its problems, they will take their money elsewhere.”

The driver behind the change to a “negative outlook” for Britain’s Aaa rated debt is a “weaker macroeconomic environment,” Moody’s said in a statement in London late yesterday. Shocks from the euro area’s sovereign debt crisis are also weighing on the U.K., it said.

Osborne rejected criticism from the opposition Labour Party that he’s too focused on retaining Britain’s top-grade credit rating, arguing that keeping borrowing costs low is the best way to deliver growth. Ed Balls, Labour’s Treasury spokesman, said today that Osborne’s austerity program is getting in the way of economic expansion and risks tipping the U.K. into its second recession in less than three years.

‘Waking Up’

“I fear the world is making the 1930s mistake, and the ratings agencies are partners in this,” Balls told the BBC. “Today is the first evidence that even the ratings agencies are waking up.”

U.K. 10-year gilt yields were little changed at 2.12 percent at 9:41 a.m. in London after inflationslowed to the least in 14 months in January. The pound fell 0.3 percent to $1.5724, after earlier declining to $1.5686, a two-week low.

“The U.K.’s outstanding debt places it amongst the most heavily indebted of its Aaa rated peers, alongside the United States and France, whose Aaa ratings also carry a negative outlook,” Moody’s said.

Spending cuts that helped the U.K. preserve its top credit rating last year and bolstered the pound are now weighing on the currency as investors lose confidence. Sterling had its worst January since 2008 against a basket of nine developed-market peers, falling 0.6 percent, after a 3.1 percent advance in the second half of 2011, according to data compiled by Bloomberg. Gilts are lagging behind lower-rated Treasuries, after world- beating gains of almost 17 percent last year.

‘Bristol Pound’ currency to boost independent traders

By Dave Harvey

Feb 5 (BBC) — The Euro is in trouble, the world’s financial system is in turmoil. Is this the perfect time for cities to go it alone, and print their own money?

A group of independent traders in Bristol are launching their own currency, with the backing of the council and a credit union.

The “Bristol Pound” will be printed in notes, and also traded electronically.

There are other local currencies in the UK, but this is the first which can be used to pay local business taxes.

Ciaran Mundy, the director of the Bristol Pound, explained the concept behind the currency.

“Big companies just hoover up money from a local area,” he told me.

“Money goes into their financial system and typically out into London and into the offshore sector.”

Corporate challenge
But by definition, Bristol pounds must stay in the city. Spend a tenner in a Bristol bakery, and they must use it to pay their suppliers or staff. In turn, those companies will have to use the money within the local economy.

“We’ll be driving more business to independent traders, and ensuring the diversity of our city, which is one of the things people love about Bristol,” Mr Mundy said.

Already more than 100 firms are signed up. A family bakery, the Tobacco Factory Theatre, the Ferry company, dozens of small cafes – even Thatcher’s Cider will accept Bristol pounds.

So how will it work?

They will print notes in £1, £5, £10 and £20 denominations. A Bristol pound will be worth exactly £1 sterling.

People will open an account with the Bristol Credit Union, which is administering the scheme, and for every pound sterling they deposit, they will be credited one Bristol pound.

This money can then either be cashed, or used electronically to pay bills online or even with a mobile phone.

Since the money is held by the credit union, which has FSA backing, it will have the same protection as any other deposit account. The standard government scheme guarantees up to £85,000 per person.

Bristolians are being challenged to help design the new notes. The organisers have already created a logo, and produced security features to counter forgery.

There is a silver hologram design, a gold foil strip with serial numbers embedded, and other features which are impossible to reproduce.

But whose face should be on the notes? That is down to Bristolians.

Small change?
“Bristol’s own currency should reflect the values and the lives of people who live here,” explained the designer, Adele Graham.

“We’re open to any suggestions. It could be famous people, but it can be any design at all which Bristolians feel represents their city.”

Local people can submit their ideas on the Bristol Pound’s website. The competition will run until the end of February, and the notes will be launched in May.

But will the Bristol Pound really take off?

Most local currencies have remained small. The Totnes Pound was the first to launch, in Devon in 2006, and has 70 traders involved.

Eighteen months ago Stroud, in Gloucestershire, starting printing its own currency, but to date no more than 30 firms are taking the money.

Bristol’s organisers point to two key differences: online banking, and council support.

Since the scheme is run by a bona fide financial institution, the Bristol Credit Union, traders can pay each other large amounts of money at the click of a button.

Also unique is the ability to pay local business rates in local currency. The council leader, Councillor Barbara Janke, is fully behind the scheme.

She told me: “This is a chance to demonstrate the economic resilience of the city.

“We want to make it as easy as possible for people to use the Bristol Pound.”

‘No real boost’
Paying business rates in Bristol pounds means firms need not worry about being stuck with thousands of pounds they can’t spend, if their own suppliers refuse them.

Naturally, there are sceptics. Will people find it inconvenient to carry two kinds of notes in their pockets? Will it be more than a gimmick?

Interestingly, it is the prospect of success that worries some the most.

Ben Yearsley understands money. Big money. He is an investment strategist at Hargreaves Lansdown, the Bristol finance house which looks after £22bn of people’s savings.

He points out that the scheme will do nothing to help Britain’s economic recovery.

“This won’t boost spending,” he explained. “It will merely move money from one sector to another, from national firms to local ones.”

And if the Bristol Pound really works, Mr Yearsley worries that big national firms may be put off.

“A lot of people work for the national companies, and you may actually cause an increase in unemployment. Worse, there may be a brake on investment in the city.”

But the organisers think he worries too much.

Stephen Clarke, a local lawyer who is working for the new currency for nothing, said: “This is not an attack on national chains.

“We just want to preserve our local independents, and you can see how hard it is for them at the moment.”

Whenever local shops close down, and supermarkets or chain stores open, there are complaints about “cloned high streets” and “chain store Britain”.

Well, now if people really want to support independents, they can quite literally put their money where their mouth is.

U.K. to Propose Work-for-Benefits Program, Sunday Times Reports

By Svenja O’Donnell

Jan 8 (Bloomberg) — The U.K. coalition government is planning a compulsory community work program for the long-term unemployed, the Sunday Times said, citing Employment Minister Chris Grayling.

The plan will include stopping benefits for as many as three years for those who refuse to sign up, the newspaper said.

Grayling has indicated his support for the plan, saying a “work for dole” program will help curb the U.K.’s expenditure on benefits for the jobless, the paper said.

People who have been unemployed for three years or more will be forced to work unpaid for six months under the terms of the program, the Sunday Times said.

It is not a sign of prosperty…

Resurgent self-employment soars to 75-year high

By Richard Tyler

Dec 26 (Telegraph) — Britain is witnessing a renaissance in self-employment on a scale not seen since the 1930s, the latest business figures show.

Barclays estimates that nearly 480,000 new businesses were created over the past year a record and said official statistics revealed that self-employment now stood at the highest level relative to the total working population for 75 years.

The UK is in the middle of a boom for start-ups. Our best guess is that in England and Wales we are up 4pc to 5pc in the year to November and thats on the back of two strong years, said Richard Roberts, small and medium enterprise analyst at Barclays.

He said more people were setting up their own ventures because being self-employed had become more socially accepted.

The enduring nature of the economic downturn was also a factor. Few people will voluntarily risk their savings during short, sharp recessions, Dr Roberts said, with any increase in entrepreneurial activity coming from people shifting from unemployment into self-employment.

As the economy has shown little sign of recovering for the past two years, people were taking the plunge, he said. Most new business owners would have spotted an opportunity to make money, but some will have been made redundant and had no choice.

France and Germany also announce agreement to target 0 deficits for all euro members which
takes the steam out of any relief rally as they solve the solvency issue.

Not much upside for the world economy when it all thinks and acts like this:

Osborne Vows More Austerity as Slump Hits U.K. Deficit Plan

By Gonzalo Vina

Nov 30 (Bloomberg) — Chancellor of the Exchequer George Osborne said Britain faces two extra years of austerity as he sought to shore up his deficit-reduction plans, intensifying a conflict with unions that are staging a mass walkout today.

Osborne used his end-of-year economic statement to Parliament yesterday to announce 23 billion pounds ($36 billion) of additional spending cuts after the Office for Budget Responsibility slashed its forecasts for economic growth. The fiscal watchdog predicted Osborne will need to borrow an extra 112 billion pounds by 2016 and said more than 700,000 public- sector workers will lose their jobs over the next six years.

“Osborne acknowledges that the consolidation program is behind schedule and aims to make up for lost ground with an even longer period of fiscal austerity,” Michael Saunders, chief European economist at Citigroup in London, said in an interview. “The government has no alternative. If they slide, the markets will put the U.K. from Category A to Category B.”

Unions say as many as 2 million public-sector workers will join today’s 24-hour strike over plans to make them contribute more toward their pensions and retire later. Osborne is extending his spending cuts beyond 2015, when they were due to end, risking a backlash from voters in the election due in May of that year.

*DJ UK Cameron: Economic Threat As Serious As It Was In 2008
*DJ UK Cameron: “We Need To Tell Truth About Econ Situation”
*DJ UK Cameron: This Was Debt Crisis, Not Normal Recession
*DJ UK Cameron: Crisis Caused By Too Much Borrowing
*DJ UK Cameron: More Govt Borrowing Would Make Crisis Worse

???

*DJ UK Cameron: More Borrowing Risks Higher Rates, Less Confidence

???

So much for his legacy

Cameron Says Nothing Is Taboo as U.K. Tries to Boost Economy

By Eddie Buckle

Sep 4 (Bloomberg) — Prime Minister David Cameron said “nothing should be taboo” as the government considers extra measures this fall to boost Britain’s flagging economic growth.

“We haven’t gone far enough,” Cameron wrote in an article for today’s Mail on Sunday newspaper. “My order to Whitehall this autumn is to think even more boldly about what we can do to put the turbo-boosters on Britain’s economy.”

The government will if necessary tackle lobby groups “that are defending every last bit of the regulation that crushes business,” Cameron wrote. “And yes, if it means putting even more pressure on the banks so they lend more to small businesses, then we’ll do that too.”

U.K. economic growth slowed to 0.2 percent in the second quarter and the Bank of England cut its growth projections last month to about 1.5 percent this year and 2.2 percent in 2012. Banks have warned that implementation of any proposals to be made next week by the government-appointed Independent Commission on Banking to strengthen lenders’ financial positions should be postponed because of the faltering recovery.

HIGHLIGHTS:

U.K. Manufacturing Contracts Most in More Than Two Years
Fisher Says Bank Capital Levels Should Reflect Tail Risks
U.K. House Prices Decline the Most in 10 Months, Nationwide Says
Quantitative Easing Prospects Rise as UK Growth Forecast Cut
BCC Lowers U.K. Outlook, Pushes Back BOE Rate-Increase Forecast
Continued Stimulus Is Not Called for, Sentance Writes in the WSJ