UK sales soar
The UK retail sector was given a major shot in the arm this week with news of a strong trading period in January. The British Retail Consortium's survey showed a 3.9 per cent rise in like-for-like sales over the month and a 5.4 per cent rise in the total amount spent in stores compared to January 2013, when snow blighted the high street's performance. The strongest category was furniture, suggesting that the housing market recovery is beginning to make its mark.
The UK's 'Big Six' energy companies could come under increasing regulatory pressure after the government, keen to be seen to be addressing public anger over soaring energy bills, put pressure on the regulator Ofgem to sharpen up its policing of the sector. Energy secretary Ed Davey this week urged Ofgem to scrutinise the profits made by energy companies particularly from their gas businesses amid concern that margins for gas supply hugely outstrip those for electricity. Centrica found itself in the eye of the storm given that its British Gas business controls more than 40 per cent of the market amid claims from some that the government could press for a break up of the business to encourage more competition in the sector.
Land of the setting sun
UK like Japan in '90s
The former head of the Financial Services Authority, Lord Adair Turner, has said that the UK economy has failed to rebalance since the financial crisis and is beginning to resemble Japan in the 1990s. Lord Turner pointed out that the recent economic revival in the UK has been driven by the old familiar engines of a housing market recovery allied to rising consumer spending. In particular, he criticised the government's Help to Buy scheme which is helping to drive the residential property rebound and also highlighted the risks of banks getting sucked into the commercial property sector again, where many sustained huge losses in the second half of the last decade and some are still suffering pain today.
Sticking to the programme
The new head of the US Federal Reserve, Janet Yellen, this week pledged 'continuity' in the US monetary policy, hinting that the recent tapering of asset purchases would continue as long as policymakers retain the confidence that the economy is strong enough to withstand it. She also hinted that the wobbles in emerging markets caused by US tapering would not derail the programme as long as the US economy was unaffected. Interest rates are also likely to remain at historic lows for some time, even if US unemployment drops below the 6.5 per cent level that was previously said to be the trigger for considering rate rises.
Morrison seeks buyer?
The family of the founder of supermarket chain Wm Morrison, who still hold around 9.5 per cent of the equity in the company, have been in contact with a number of buyout groups with a view to putting together a package to take the business private. After a tough period in which it has lost ground to rivals due to its lack of online and convenience presence, as well as the rise of the discount supermarkets, the Morrison family are believed to have actively approached the likes of private equity groups Apax Partners, CVC and Carlyle. But the size of such a deal, which could run to £7bn or more, plus the investment required in the business, would make putting together such a deal challenging unless a number of funds can work together.
China changes gear
Chinese economic figures surprised on the upside this week when it reported a 10 per cent rise in imports in January and exports also rose by 10.6 per cent, contributing to a trade surplus of $31.9bn for the month. The export figure was particularly strong as it more than doubled from the growth rate recorded in December. But economists warned against reading too much into the data, pointing out that January and February data from China is famously erratic due to the timing of Chinese New Year and that the two months' outcome should be considered before coming to any firm conclusions.