Switzerland has warned countries against expecting swift results from its decision last week to water down bank secrecy laws , saying it could take years for the necessary legislation to come into action.
Hans-Rudolf Merz, Switzerland’s finance minister, said renegotiating the country’s more than 70 double taxation treaties “won’t be so fast” as each would have to be approved individually by the country’s parliament.
Barclays races to seal iShares deal ahead of APS deadline
Barclays is racing to announce the sale of its iShares business as early as next week to strengthen its position before a deadline to apply for the Government's asset protection scheme (APS). The bank's shares jumped by 23 per cent yesterday after it said it was in talks with "a number of potentially interested parties" about selling the exchange-traded funds arm of Barclays Global Investors (BGI).
More than a million British workers will lose their jobs over the next two years as the recession takes an unexpected turn, hitting the north and Midlands as badly as the south, a leading economic forecaster has warned.
The West Midlands, Wales and the north of England could take more than a decade to recover from job losses that are forecast to rival those in London, according to Oxford Economics, the consultancy.
President Barack Obama on Monday said he had asked Timothy Geithner, US Treasury secretary, to use “every single legal avenue” to block the $165m in bonuses paid by the troubled insurance group AIG , a day after the company revealed that European banks had benefited heavily from its massive government rescue.
“This is a corporation that finds itself in financial distress due to recklessness and greed,” Mr Obama said. “Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165m in extra pay.”
One in every 56 UK business will fail in 2009, according to a report by accountants BDO Story Hayward.
The report estimates that the number of business failures will increase by 59% to 36,000. This compares with 22,600, or one in 87, that failed in 2008.
Construction and real estate firms will bear the brunt of the failures, along with manufacturing.
High-profile retailers Woolworths and Zavvi were among the companies that went into administration last year.
The increasing number of businesses failing has led to sharp increase in job losses.
Official data due on Wednesday is expected to show that the number of people out of work will surpass the two million mark in three months to January.
"The deteriorating economy and expectations of a drawn-out recession has led to a downward revision in the UK outlook and has severely impacted the survival rate of UK businesses," said Shay Bannon, head of business restructuring at BDO Stoy Hayward.
The report estimated 10,300 construction and real estate businesses would fail, while 2,300 manufacturing firms would go out of business.
The estimates include both voluntary and compulsory liquidations.
G20 nations issue pledge to avoid protectionism
Finance ministers make it clear that raising barriers to trade and movement of workers will not resolve economic crisis
THE chancellor said last night that the “grave” global economic situation would not turn into a repeat of the Great Depression of the 1930s because of the actions being taken by governments to boost their economies and avoid a damaging trade war.
Alistair Darling, after chairing a meeting of the G20 finance ministers and central bankers in West Sussex, contrasted the readiness of countries to act now with their failure to do so during the 1930s.
The G20, which comprises the western industrial countries plus big emerging economies such as China, India, Brazil and Russia, issued a strong commitment against protectionism, saying they would fight all forms of it and maintain open markets.
They also signalled a clampdown on hedge funds, risky financial instruments and tax havens. Tim Geithner, America's Treasury secretary, said reform was vital so “we never face a crisis like this again”.
The finance ministers of the G20 countries, who between them account for 85% of the world economy, also pledged that they would take sustained action to end the global recession.
The meeting, which was intended to set the scene for the April 2 gathering of global leaders in London, papered over any differences of opinion.
“Decisive, co-ordinated and comprehensive action” had been taken to boost growth and cut unemployment, they said, and further action would be taken if necessary.
This could give Darling cover to announce a giveaway in his April 22 budget, but Treasury officials said no decisions had been taken on whether the pledge of action would result in further measures.
The chancellor, who had announced tax cuts and spending increases worth £20 billion in his November pre-budget report, has been playing down the prospect of additional action, although he has hinted at measures to help savers.
Darling said he welcomed the G20's commitment to take “whatever action is necessary” to end the global recession and added that it was vital to boost confidence as well as supporting the banking system.
He was backed up by Geithner who said the decisions taken yesterday would help to bring the recession to an end sooner.
As well as agreeing action to boost growth, the finance ministers and central bankers set out a framework for dealing with bank rescues and for future regulation. Hedge funds will be more closely regulated, as will the sophisticated derivatives' markets that had provoked the global financial crisis.
Last week Europe’s tax havens, including Liechtenstein, Luxembourg, Jersey and Switzerland, entered into information sharing agreements.
The communiqué glossed over underlying divisions between the countries over whether further public spending would help the recovery. While Britain and the United States have led calls for more fiscal stimulus measures, Germany and France have been more cautious.
Wall Street Makes It Four
It came down to the wire, but the Dow Jones industrial average ended Friday with its first four-day rally since November, thanks in large part to positive news emanating from leading U.S. banks.
The Dow rose 0.8%, or 53.92 points, to 7,223.98, while the Nasdaq composite index increased 0.4%, or 5.40 points, to 1,431.50, and the S&P 500 index rose 0.8%, or 5.81 points, to 756.55. Over the past week, the Dow gained 9.0%, while the Nasdaq rose 10.6% and the S&P 500, 10.7%.
Friday’s gains were small relative to the dramatic advances on Tuesday and Thursday , but the winning streak may provide a psychological boost.
The rally was a confluence of forces. There was a significant sell-off coming into this week, as well as a dearth of positive news, then Citigroup
“What’s important is we haven’t retraced any of the week’s moves,” said Art Hogan, chief market strategist at Jefferies. “Even if it’s a bear market rally, the good news is the duration.”
While most stocks were flat, General Motors
Meanwhile American Axle & Manufacturing Holdings
http://www.forbes.com/2009/03/13/briefing-americas-closer-markets-equity-financial.html
Rifts are emerging as finance ministers from developing countries and major powers prepare to meet in England.
They hope to agree on an agenda for the G20 summit of leaders of major world economies in London next month.
But the ministers are meeting amid differences on how to tackle the worst economic downturn in decades.
The US is calling for further spending to spur growth. Some European governments stress the need to change the rules governing financial markets.
This weekend's meeting is being held in Horsham, south of London.
The US, supported by Britain, wants other governments - especially those in continental Europe - to do more to bring their economies out of recession, says the BBC's business correspondent Mark Gregory.
But European governments have indicated they are unlikely to strain their finances by agreeing to much more spending until they have seen some results from the first round of stimulus programmes already launched, says our correspondent.
UK Chancellor Alistair Darling played down talk of rifts ahead of next month's G20 summit.
"Generally, I think we are in agreement on the issues," Mr Darling told the BBC.
"Of course, if you have 20 people in a room, there will be differences. Each country has to decide what to do to their economies."
The G20 includes the world's biggest industrial and developing countries, making up 85% of the world economy.
Boost for IMF?
Correspondents say the finance ministers want to signal they are working together to tackle the most serious economic downturn in 80 years.
"The present crisis cannot be solved by one country alone. Everyone must work together both to rebuild the financial sector and provide a fiscal stimulus," said Japanese Finance Minister Kaoru Yosano
The meeting is also likely to focus on the need for tougher regulation of banks.
Some progress has been made on this front. Switzerland, Austria and Luxembourg on Friday said they would relax banking secrecy rules.
An increase in funding for the International Monetary Fund (IMF) is also on the agenda.
US Treasury Secretary Tim Geithner has proposed tripling the IMF's resources to $750bn to ensure it can help all those caught in the crisis.
Japan has already offered $100bn. The EU has backed an increase to $500b and is considering a loan of $100bn.
However, Brazil, Russia, India and China - known as the Bric countries - said they would not contribute extra cash unless they were given extra voting power.
"We will only agree to increase capital to the IMF after the reform the (IMF) quotas is carried out, because there is still an imbalance in our participation in the IMF," Brazilian Finance Minister Guido Mantega said after meeting officials from the Bric countries.
The IMF's voting structure means that the US and Europe have a greater say on what it does.
Death of the boozer: how the recession called time on Britain's public houses
Despite unveiling a robust performance, the pub company JD Wetherspoon laid bare the scale of the tax burden facing the pub sector yesterday. Tim Martin, its chairman, said: "In our view, the levels of tax now being levied are unsustainable for many pubs, and this, combined with other factors, is contributing to the closure of pubs in record numbers."
A record 2,000 pubs have closed and 20,000 jobs have been lost since the Chancellor, Alistair Darling, controversially raised beer tax in the Budget in March 2008, Oxford Econ-omics, the independent economic forecasting group, revealed last month.
The Government will add to the existing hefty regulatory burden on pubs when it introduces a mandatory code of practice on alcohol sales this year, designed to reduce under-age or irresponsible drinking, that it admits will cost pubs an extra £300m, as part of the Policing and Crime Bill 2008/09.
These additional regulations come at a time when consumers are shunning their local pub and increasingly drowning their recessionary sorrows at home with booze bought at Tesco, as one of the worst consumer downturns in living memory bites. Mark Hastings, at the British Beer & Pub Association, said the pub sector could lose a further 75,000 jobs over the next two years if the Government does not provide any relief.
Even before the worst of the economic downturn kicked in, pub companies were battling soaring food and commodity prices, as well as rising fuel and utility bills.
The Government has exacerbated the plight of pubs by ratcheting up the regulatory and tax burden on pubs since the introduction of the Licensing Act in 2005. While the smoking ban introduced in 2007 hit the sector like a train, pubs upped their food offer to partly offset the loss of trade from dedicated smokers.
Gavin Humphreys, the client services manager for beer, wine and spirits at Nielsen UK, says: "Pubs are under huge pressure from the commodity increases in terms of the cost of goods coming through and also the increased bureaucracy and legislation at a time when the current economic climate is not helping." Yesterday, JD Wetherspoon said it made a post-tax profit of £17.3m but paid tax of £190m in the six months to 25 January, including £53m of excise duty and £79m of VAT.
Last March, the Chancellor dropped a bombshell on the sector with plans to increase alcohol duty rates by 2 per cent above the rate of inflation in subsequent years. The BBPA, along with four other trade associations, has written to the Government with two specific requests. First, the industry has asked that the proposed duty escalator is not taken forward in either 2009 and any subsequent years and that duty be frozen. Second, the BBPA has urged the Government to "back off introducing further regulations", such as the mandatory code of practice.
Mike Benner, the chief executive of the Campaign for Real Ale, said last week : "The entire economic picture has changed beyond recognition in the last 12 months and, with the return of Keynesian economics, I hope the Chancellor might draw some inspiration from one of the great economist's most famous lines – 'When the facts change, I change my mind.' Scrapping the increases in beer tax would be a truly popular piece of Keynesianism."
Arguably a more serious problem facing pubs is the deepening recession. Oxford Economics says that consumer spend in real terms on alcoholic drinks fell by 9.8 per cent over three years in the early 1980s recession and by 8.9 per cent over four years in the early 1990s. Nielsen said that on-trade sales of beer are already down by 9.4 per cent over the 52 weeks to 21 February 2009.
Yesterday, JD Wetherspoon, one of the sector's most resilient companies, posted half-year pre-tax profits before exceptionals up by 2 per cent to £30.8m and said like-for-like sales had grown by 1.9 per cent, partly due to its 99p pints offering. But many pubs – part-icularly freehouses, which don't have such deep pockets – could find they cannot ride out the economic storm.
China will increase public spending further this year to boost its economy if needed and already has contingency plans in place to do so, Premier Wen Jiabao said on Friday at his annual press conference.
Speaking at the closing of the National People’s Congress in Beijing, Mr Wen said he was “worried” about the value of China’s large holdings of US assets and warned the US to take measures to guarantee its “good credit”.
