Plus ca change?
Political shift in EU
France has voted in its first socialist president in 17 years after Francois Hollande defeated the incumbent Nicolas Sarkozy in the run-off for the Presidency. M. Hollande was elected on an anti-austerity message although it remains to be seen how much renegotiating of the EU fiscal pact he will truly be able to achieve. German leader Angela Merkel, who worked closed with M. Sarkozy through the financial crisis, has already declared her opposition to any renegotiation of the fiscal pact as has Jean-Claude Juncker, the head of the eurogroup committee of eurozone finance ministers.
House price slide
Holiday over
The ending of the stamp duty holiday may have pulled a supporting pillar away from the housing market. After a period of relative stability in the housing market, transaction levels slipped into negative territory in April as demand flattened out in what is normally a period when interest in the market picks up. The Royal Institution of Chartered Surveyors' monthly survey showed a balance of 6 per cent of surveyors saying house sales had decreased in April, with more surveyors predicting further house price falls and a further dwindling in sales.
Spending slump
April washout
The downturn in the weather during the month of April was reflected in the mood of consumers, according to the latest household spending figures. According to Visa Europe, household spending in the UK in April was 4.3 per cent lower than the same month last year and 1.9 per cent lower than the level recorded in March. The results illustrate the fragile nature of UK consumer confidence and also reflect the fact that many shoppers brought forward purchases of warm weather clothing during the warm spell in March and then abandoned the high street during April's deluge. Shoppers stayed away even though shop price inflation fell in April as retailers tried to tempt shoppers back with offers and discounting.
Solid Sainsbury
Space race over
Confirmation came on Wednesday from Sainsbury that the supermarket space race is over. Following on the heels of Tesco's decision to slow down its expansion plans and concentrate on the business of selling, Sainsbury confirmed its original plan to ease off the accelerator during the coming year after several years of aggressive floor space growth. Some analysts had expected Sainsbury to up its expansion plans to take advantage of Tesco's woes. Sainsbury's trading performance came in marginally ahead of expectations in continued tough conditions as full year pre-tax profits rose by 7.4 per cent to £712m.
Reform coming
Bank plans
The government enshrined its intention to reform the UK banking sector in this week's Queen's speech to Parliament. In the speech it was confirmed that a banking white paper will be published next month which will implement the recommendation of the Vickers review into banking, which included plans to ring-fence retail banks from their investment banking operations. Other priorities established in the speech include reform of the UK's complex pensions system and a care and support bill aimed at beginning to take the social care the government is able to offer its increasingly ageing population.
Pain in Spain
Bank bailout
Spain has once again become a focus of investor concern after bond yields crept up again as the country was forced to frame the terms of yet another bank bailout. With the Spanish economy crippled by soaring unemployment and a moribund property sector, its banks are once more under pressure with the third biggest operator, Bankia, under most pressure. The bank, which was formed by the amalgamation of seven regional banks in 2010, is thought to require a fresh injection of up to €10bn. The Spanish government is expected to confirm this as part of a wider recapitalisation plan for its banks in the coming days.
See John Adam's review of Santander.
