UK News
Insights from the UK and beyond
from The Great Debate UK:
Fears of UK hung parliament may be overstated
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --
Fears of a hu
ng parliament following the UK's general election may be overstated. With Nick Clegg, leader of the Liberal Democrats, Britain's third largest party, performing well in the first prime ministerial debate, sterling has received a mild knock. Investors do not like the uncertainty that goes with a hung parliament. While many European countries are used to coalition government, the UK is traditionally a two-party system - with government swinging between Labour and the Conservatives.
Added to this uncertainty is the fact that none of the three parties has come up with a credible plan for cutting the government's deficit, which stands at 12 percent of GDP. One fear is that valuable months could be lost in horse-trading over forming the next government. Another is that a minority government could embark on a populist, but expensive, programme to prepare the ground for a second election later this year.
The hung parliament scenario is really two sub-scenarios. In the first, the party with the largest number of seats would govern on its own. This is probably what would happen if the Tories were the largest party. Such a government might well be unstable.
from MacroScope:
Britain heading for rude awakening?
 
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There is a divisive election ahead for Britain, the threat of a ratings downgrade on its sovereign debt and a deficit that has ballooned into the largest by percentage of any major economy. UK stocks, bonds and sterling, however, are trundling along as if all were well. What gives?
For a fuller discussion on the issue click here, but the gist is that all three asset classes  are being support by factors that may be masking the danger of a broad reversal. UK equities have been driven higher by the improving global economy, bonds held up by the Bank of England's huge buying programme and sterling by valuation and the distress of others.
from Global Investing:
Global FTSE 100 shrugs off parochial UK GDP data
Britain's FTSE 100 seems to be almost impervious to any bad data that can be thrown at it. GDP data shocked the market showing the UK unexpectedly contracted in the third quarter.
Sterling tumbled more than a cent against the greenbackand gilts jumped while the FTSEurofirst 300 pan-European equity index trimmed gains considerably.
M&S needs to manage succession as well as recession
Marks & Spencer is finally getting to grips with the recession, first-quarter results from the bellwether retailer show. But it needs to sort out a row over management if its shares are to enjoy the full benefit.
Many investors are still up in arms over M&S’s decision last year to elevate the charismatic Stuart Rose to executive chairman — combining the roles of chairman and chief executive against corporate governance guidelines.
Who do you blame for the credit crisis?
Bankers, politicians and regulators have taken their share of the blame for the credit crisis.
Gary Jenkins, Head of Fixed Income Research at Evolution Securities, polled about 200 investors for a more specific view on who was at fault.
from Global Investing:
Who gets the last laugh?
Public critisicm may be heating up against banking executives being rewarded with huge bonuses despite taking too much risk (especially ex Merill Lynch head John Thain who requested a bonus and spent $1,405 on a garbage pail during a $1.22 million renovation of his office).
However, there are smaller fish who are being rewarded after doing something similar -- taking too much risk and choosing the wrong bank in which to put their deposit. We're talking about those who deposited in the collapsed Icelandic bank Landsbanki.
from Global Investing:
To spend, or not to spend?
A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy.
Nick Parsons, head of market strategy at nabCapital, has come to this conclusion:
Consumers go it alone as storm clouds gather
The dust has settled on Alistair Darling’s first Budget and consumers have been given little reason for celebration. The Chancellor, though announcing various measures designed to increase housing affordability, has done nothing to help the masses.
There were no moves to give a helping hand to hard-pressed householders, already struggling amid rocketing mortgage, food, fuel and tax costs, to ride out an impending recession. Darling did pledge to introduce a savings scheme targeted at low and moderate earners, often least able to save: the “saving gateway” will attract government matching for savings over the duration of people’s participation in the scheme. This has the potential to introduce up to eight million people into mainstream savings in the UK who otherwise might not make thrift a priority.
Another “slap in face with wet kipper” Budget
By Francesca Lagerberg, head of the national tax office, Grant Thornton
Most Budgets have all the attraction of being slapped in the face with a wet kipper and sadly this one is unlikely to reverse the trend. As expected, from today up goes the cost of booze (4p on a pint) and fags (11p on a packet). Also for those who like driving larger less-green new cars there is a “showroom” tax coming in from 2009 that could cost them around 950 pounds.
However, for the entrepreneur there was a little cheer. After strong representations from business, Chancellor Alistair Darling has deferred the “income shifting” rules that were due to start from this April. These were a direct attack on family-owned businesses that include lower tax paying family members who take out dividends or profits but make a less significant contribution to the business. A case last year (Jones v Garnett) went against the government and it was looking to legislate to get the result it wanted. The proposals were wide-ranging and ill-targeted. A deferral will hopefully allow time to revisit this whole approach.
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The Wall
