BANKING & INSURANCEClydesdale seeks Bank of England assistanceThe Clydesdale Bank turned to the Bank of England for funding assistance after the end of its financial year in September when a strong first half pet
ered away to leave profits flat for the year (
The Herald).
After a year in which most of its UK rivals sought capital injections, posted losses and/or been taken over, Clydesdale chief executive Lynne Peacock made much of the bank's "traditional" approach which allowed it to post a pre-tax profit of £343m - £1m, or 0.3%, down on 2007.
The company's pre-tax profits had been 17% ahead at £194m at the half-year stage before it took a hit from rising defaults on company loans.
It took a £175m charge, up 47% on the year before, to cover bad debts for the year.
Peacock said: "We are pleased when you think about what is going on in the world and the impact of economic conditions. In the UK a number of banks have struggled to survive and our pre-tax profit has been maintained."
The company, owned by National Australia Bank and encompassing the Clydesdale and Yorkshire Bank brands, said that since the year end it made its first call, for £1.3bn, on the Bank of England's special liquidity scheme (SLS).
This allows banks to swap assets they can't sell, such as mortgages, for government bills which they can.
Read all today's banking news from scotsman.comECONOMYUK 'entering recession', says Bank governorMervyn King on Tuesday night gave his gloomiest assessment of Britain's economic prospects since becoming Bank of England governor in 2003, saying that the country was now "entering a recession" (
FT).
He compared the recent capital flight from British banks with a "mild form" of a 1990s-style emerging market crisis, warning about the risk of another sharp decline in sterling and an even deeper recession.
In one of only three big speeches Mr King gives a year, his views are bound to be taken by markets as a clear sign the Bank is gearing up for further significant cuts in UK interest rates.
The Bank's quarterly forecasting round is already under way and Mr King's gloom, punctuated only by relief at the fall in oil prices, will reflect the UK central bank's new thinking about the economy.
Until Tuesday night, Mr King and the Bank had refused to utter the word "recession", insisting that the term should only be used to signify a deep contraction in output and not two successive quarters in which the economy might shrink a little.
On Tuesday night he had no such qualms, saying a recession was likely because the recent financial crisis had come on top of the rise in oil prices, which had already squeezed incomes.
"If the news on the domestic front were not sufficiently discouraging, the rest of the world economy also appears to be slowing rapidly," he added.
Mr King's speech came as the National Institute of Economic and Social Research, one of the leading academic think-tanks in Britain, forecast that it was odds-on that the economy would contract for four successive quarters starting with the third quarter of this year.
Read all today's economics news from scotsman.comINDUSTRYScots industry facing a return to the dark days of the early 1980sINDUSTRY in Scotland is facing the bleak prospect of a return to the dark days of the early 1980s as the looming recession tightens its grip on the country (
The Scotsman).
According to CBI Scotland's latest industrial trends survey, firms are planning the largest reduction in investment in plant and machinery for 28 years.
The survey, published yesterday, found that planned investment in buildings is forecast to fall at the second-fastest rate since the early 1980s.
And it showed that problems accessing finance and uncertainty over future orders are restricting companies' growth to a level not seen for almost three decades.
The findings in Scotland were part of a UK-wide survey which recorded the sharpest single-quarter fall in manufacturing confidence since 1980.
The UK quarterly business confidence index fell to minus 60 per cent in October from minus 40 per cent in July – the weakest reading since the minus 70 per cent of July 1980, the worst of the early 1980s recession.
North of the Border, the survey found that domestic orders fell sharply over the past three months and production fell "considerably", though by less than expected.
Unit costs continued to rise, although this is expected to ease with the global slowdown.
Scottish firms reduced their headcount marginally for the third consecutive quarter, but job losses were much less than had been expected.
Fear of collapse in Scottish buildingProspects for the construction industry have turned dramatically bleak in the last couple of weeks, Scottish Building Federation chief Michael Levack has warned, as contractors used to filling their order books well in advance are seeing them at less than two-thirds normal levels (
The Herald).
"Contractors at this point in the year would want to have 60% or 70% of next year's work in the bag. This is not the case. I would suggest that these are now around 40%. They have a lot still to find," he told The Herald. "Things looked like they were holding up. But they have changed rapidly in the last couple of weeks."
Figures on the construction industry are notoriously difficult to obtain through layers of contractors and sub- contractors but the SBF claims a Scotland-wide workforce of some 225,000.
Of these, some 15,000 could be redundant before the end of the year, Levack believes, with worse to come in 2009.
"Going into the new year things will really take a nosedive," he added.
The general construction industry, which excludes pure housebuilders who have their own woes, is being hit by a fall-off in private sector jobs, due to a crash in the commercial property market, at the same time as public sector contracts, which typically account for 40% to 50% of their work, are drying up.
Read all today's industry news from scotsman.comRETAILChristmas shines like a beacon as the big hope for Scotland's beleaguered high streetRETAILERS are desperately pinning their hopes on a sales revival in the crucial Christmas period after Scottish shops recorded their worst performance since March 2006 (
The Scotsman).
Plummeting consumer confidence dented high street spending in September, leaving annual like-for-like growth flat – compared to a 3.3 per cent rise the previous year – according to the latest report from the Scottish Retail Consortium (SRC).
Only the food sector reported like-for-like growth, rising 4.6 per cent off the back of rocketing prices.
Including stores opened within the past year, total sales grew by 4.6 per cent.
Fiona Moriarty, director of the SRC, said the figures showed weakening consumer confidence and the squeeze on household budgets.
She said: "The zero growth in Scottish retail sales in September was the weakest performance for two and half years. As we enter the all-important run up to Christmas, Scottish retailers will be nervously hoping to avoid negative results next month.
"Despite trading marginally better than the rest of the UK, conditions are still very tough for Scottish retailers with the only growth in September experienced in the food sector."
She said that heavy discounting in non-food stores had had little effect – as sales fell 3.9 per cent.
Green to battle through downturnOPENING new stores and cutting down on debt will remain the focus for retail entrepreneur Sir Philip Green as his Arcadia fashion empire looks to weather the high street storm (
The Scotsman).
The group, owner of seven high street chains including Topshop, Burton and Dorothy Perkins, yesterday reported a 6.1 per cent slide in annual operating profits to £275.3 million.
Sales in the 12 months to 30 August dipped 0.6 per cent to £1.85 billion and were down 1.8 per cent in the first seven weeks of the new financial year.
Green said he expected business to remain tough but refused to write off the key festive trading period, despite some commentators forecasting the worst Christmas in living memory.
"We've bought inventory, we've got shops, we've got people, we've got customers and we're going to trade the best we can," the retail magnate said, after confirming he would not be taking a dividend for the third year running.
Green acquired Arcadia for £850m in 2002. His family owns 92 per cent of the business while the remaining stake is held by HBOS, which backed the takeover.
The billionaire businessman also owns the Bhs department store chain, which earlier this month reported a 40 per cent drop in full-year operating profits.
Despite flagging sales, the Arcadia business is set to extend its reach by adding 210,000sq ft of UK trading space in the year ahead.
Read all today's retail news from scotsman.com
