Tesco trips up
Profits fall
Supermarket giant Tesco's recent travails were laid bare in disappointing half-year results this week, which showed the group's first fall in profits since 1994. Chief executive Philip Clarke believes the group's 'Build a better Tesco' strategy will help pull it out of the rut it has found itself in. Tesco has already employed an additional 8,000 UK staff and modernised hundreds of stores in an effort to tempt shoppers back. But, worryingly, it is not just in the UK that Tesco is suffering - European operations are suffering from the eurozone crisis, a ban on Sunday trading in South Korea hit Tesco's biggest Asian market and the US operations are still loss-making.
See: Tesco's profits dive
Banks break up
EU rules proposed
A European Union advisory group chaired by the governor of the Bank of Finland, Erkki Liikanen, has followed the lead of the UK's Vickers review of the banking sector by suggesting that European banks separate their riskier investment banking operations from their retail operations. The suggestions go a little further than the UK proposals in saying that proprietary trading should be kept in a separate legal entity rather than simply ring-fenced as Vickers suggested. The Liikanen report also suggested bonuses be paid relative to salaries and lending to the property sector be subject to stricter capital requirements.
Lending slump
Banks queried
The government's Funding for Lending scheme appears to be faltering after the latest mortgage lending figures indicated a significant drop in lending for house purchases. In fact, households paid back more than they borrowed in August and the amount of fresh money loaned for house purchases dipped by £400m. This undermines the government's £80bn Funding for Lending scheme, which was designed to give lenders the confidence to increase the number of loans being offered. But the Bank of England has said it will need more time before it can judge whether the scheme is having an effect or not.
Eurowoe goes on
Jobless record
The awful economic data just keeps coming from the embattled eurozone. Along with news this week of further anaemic industrial growth figures came fresh unemployment data, which showed the number of jobless in the eurozone has reached another record high, at 18.2m or 11.4 per cent of the region's workforce. Youth unemployment is even worse, with 22.8 per cent of young people out of work in the eurozone. Manufacturing Purchasing Managers' Indices across the eurozone this week represented the most gruesome collective performance since 2009, when the region was mired in post-Lehman fallout and the International Monetary Fund warned that the world will take a decade to recovery from the 2008 financial crisis.
Closing down
JJB adds to list
Troubled high street sports retailer JJB is finally closing its doors after administrators failed to find a buyer for the whole business. In the end, only rival Sports Direct managed to pick any meat off the bones of JJB's carcass. It spent a shade less than £25m for 20 choice stores, the freehold of JJB's head office in Wigan, the entire stock left in the business and the Slazenger brand. In total, JJB's closure will results in 133 shops closures and 2,200 job losses. The money raised will go some way to repaying JJB's principal lenders but shareholders will not see any value for their shares.
Gross risk
US warning
Bill Gross, the head of the world's largest bond investor PIMCO, has issued a stark warning over the state of the global economy and, in particular, the US economy which he says could resemble Greece before 2020 unless budget deficits are tackled. He believes the US has to enact budget cuts or tax rises to close the 11 per cent annual 'fiscal gap' which is blighting its economy. Without concerted action, Mr Gross believes that equities and bonds will be routed over the coming years and that "only gold and real assets will thrive". He also believes the UK, France and Japan as well as Greece and Spain exist within the "ring of fire" where the risk of major meltdown is highest.
