Golden years?
The UK pensions industry will come under renewed fire after a report from the Organisation for Economic Cooperation & Development (OECD) confirmed that UK employees have suffered bigger losses from their occupational pension schemes over the past decade than workers in nearly any other developed country. The OECD report also makes a number of recommendations designed to alleviate the looming pension crisis, including linking state pension ages to life expectancy rates. Of course, this measure might be self-defeating in the case of the UK if a growing proportion of our retirees expire early due to the effects of malnutrition or fuel poverty.
Spain taps EU
Barroso rides in
Spain's government is seeking up to €100bn (£81bn) from the European Union (EU) to bolster the country's ailing banking sector. While the move initially boosted markets, the rally was short-lived. European Commission (EC) chief, José Manuel Barroso, said that future problems could be avoided if all 27 EU countries submitted their banks to a single EU cross-border supervisor. Senor Barroso failed to mention that the concurrent sovereign debt crisis could have been avoided altogether if the EC had bothered to enforce existing budget covenants under the Maastricht Treaty.
Manufacturing shrinks
UK hopes fade
An unexpected fall in manufacturing output has set back recovery hopes for the UK economy. The Office for National Statistics revealed a 0.7 per cent decline in manufacturing output between March and April, following on from the 0.9 per cent rise in the previous month. Overall industrial production output was unchanged in April, although this was largely attributable to a rise in energy output brought about by unseasonably cold weather conditions. Most analysts had forecast unchanged output for manufacturing, so the outcome will probably add to the pressure on central government to initiate another stimulus programme.
China beats consensus
May exports surprise
China's May trade statistics indicate that Europe's debt woes have yet to produce a fall-away in world trade comparable with the aftermath of the Lehman crisis. Of course, it may be just a question of timing, but the figures do provide a crumb of comfort following recent gloomy predictions on the global economy. Chinese exports in May rose by 15.3 per cent year on year - more than double the rate of a recent consensus estimate produced by Bloomberg. Tellingly, Chinese retail sales fell during the month, so last week's rate cut was probably designed to counter a domestic slowdown.
Saudis rile OPEC
Crude oil glut
OPEC signalled that it is prepared to reduce the existing glut in world oil supply that reduced crude prices to below $100 a barrel. Prices have fallen by about $30 a barrel since March, helped in part by Saudi Arabia, which has deliberately undermined prices by lifting production to a 30-year high. The Kingdom wants to prevent high fuel prices from stymieing incipient growth in the US economy, but its actions have attracted criticism from fellow OPEC members, as well as OPEC president (and Iraqi oil minister) Abdul Kareem Luaibi, who believes a range of $100–$120 a barrel is "reasonable and acceptable".
Benchmark trough
Executive returns
Are we really all in this together? FTSE 100 executives, already bristling due to a series of shareholder revolts over pay, will not welcome the publication of a survey by employee share plan consultancy MM&K, which showed that FTSE 100 chief executives received a median pay increase of 10 per cent last year, following on from a 13 per cent rise in 2010. Sir Martin Sorrell, chief executive of advertising giant WPP, is the latest head to incur the wrath of shareholders over a proposed pay deal, as independent shareholders push for a more meaningful link between executive pay and investor returns.
Nautical but nice
Cairn takeover bid
Cairn Energy has tabled a £414m cash bid for North Sea-focused Nautical Petroleum. The offer price of 450p a share represents a 51 per cent premium to Nautical's closing price on the day prior to the offer. The deal offers a straightforward strategic fit for Cairn and would expand its footprint in the North Sea. A successful takeover would leave Cairn with a 25 per cent stake in the Kraken oil field project, alongside operator EnQuest. It would also double Cairn's stakes in the Burgman, Carnaby, Varadero and Catcher oil discoveries that it secured via the recent acquisition of Agora Oil & Gas.
