Bright spark
Nuclear boost
The UK government this week set out its plans for electricity market reform, aimed at improving the support for new nuclear. The energy bill seeks to set guarantees on returns for nuclear and renewable energy generation through a contracts for difference mechanism, and will also formalise a carbon price floor to encourage investment in clean energy. Electricity bills are likely to rise by £160 a year to cover the new initiatives, but this is less than the £200 a year cost of not acting, according to the government.
Plan B
IMF call
The International Monetary Fund has suggested that the UK needs to formulate a Plan B for its economic policy should a recovery not take hold between now and the autumn. In its annual review of the UK economy, the IMF said the strategy of pulling back public spending growth in the expectation that private sector investment would fill the gap had not materialised yet. If this fails to happen by November, the government should consider cutting interest rates from their current record low and pumping more money into the economy through an extension of its quantitative easing.
Eurobonds blow
OECD call
German chancellor Angela Merkel has dashed hopes that Europe may come together to issue collective eurobonds, despite support for the idea from both the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund. The OECD called for Europe to consider "jointly guaranteed government bonds to help recapitalise banks and enhance credit availability". It also called for further structural reforms in Europe, which could speed up economic integration and allow for better, more co-ordinated response to future crises. Ms Merkel feels the eurobonds would remove the incentive for periphery countries to enact difficult structural reform.
Marks fails to Spark
Tough times
The tough consumer spending environment was illustrated in Marks & Spencer's lacklustre results this week. The high street doyen performed creditably enough in such difficult conditions, but scaled back expectations of its performance during the rest of this year. Shortly after he took over in 2010, chief executive Marc Bolland targeted a sales uplift of £1.5bn to £2.5bn by 2014, but this has now been scaled back to £1.1bn to £1.7bn due to the weak economy, and even this new revised target is ambitious considering sales only grew by £194m in the year just finished.
QE coming?
More stimulus
The wobbles that have hit global equity markets over the past month could prompt a coordinated bout of quantitative easing (QE), according to some economists. With the eurozone having slumped into the economic doldrums, the UK returning to recession and the US recovery looking somewhat shaky, some are forecasting a further blitz of money printing by the central banks of the UK and US and the first proper bout of QE by the European Central Bank. Such talk helped to put a floor under equity markets early this week after the heavy losses of the previous week.
On the grid
F1 float
Motor racing franchise Formula One has confirmed its plans to float in Singapore before the end of June. The issue is expected to give the business a valuation of up to $12bn after it confirmed the pre-IPO sale of a chunk of stock to three cornerstone investors – Waddell & Reid, BlackRock and Norges Investment – for a combined $1.6bn. CVC Capital has recouped most of the $1.7bn it spent on Formula One in 2006 and will sell another 11 per cent of its holding in the float, leaving it with around 30 per cent of the business. The float is expected to see around a third of the business change hands.
