Darling warns banks on loan rates

From the BBC News:

The chancellor is to quiz bank bosses over how much they charge small firms for loans, saying he is “extremely concerned” their rates may be too high.

Alastair Darling said the cost of loans seemed to have risen, despite the UK’s record low base interest rate of 0.5%.

He told the BBC that banks had a duty to restore lending levels, saying the government did not rescue the banking sector “out of some charitable act”.

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Europe bank chief warns on debt

BBC News reports:

Governments that have borrowed heavily to fight the economic crisis should not accumulate any more debt, the president of the European Central Bank has said.

So why has he said this?

“There is a moment where you cannot spend more and accumulate more debts. We are at that moment,” he said.

The problem will be that interest payments on the debt will make it impossible to maintain government spending and cause further economic decline as well as having implications for future generations.

Credit Crunch Literally…

Britain eats its way through recessions. When the going gets tough, the tough, it seems, tuck into pudding, says Michael Blastland in his regular BBC column.

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Sharp fall in eurozone economy

BBC reports on fall in the eurozone economy.

The economies of the 16 countries that make up the eurozone declined by 2.5% in the first three months of 2009, the EU’s statistics agency Eurostat said.

This 2.5% decline will impact on consumer spending as people perceive that their jobs may be at risk. This could cause further falls in the economy over the next year.

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Fred-sizing the economy

Nice item from the BBC on explaining the economy by making it “fred-size”.

The size of Britain’s economy can be hard to get your head around – but what if you were to shrink it to human scale? Michael Blastland introduces Fred – a one man British economy.

More on the business environment and the economy.

Surveyors report market momentum

BBC reports on improvements in interest in the UK housing market.

Interest from home-buyers is starting to gain “real momentum”, although sales remain low, UK surveyors say.

The housing market is a traditional indicator of the strength of the UK economy. Once people start buying houses, this can kick start the economy, as people start to buy new things for their new homes.

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More retailers in administration

BBC reports on Mosaic going into administration.

Mosaic, which owns some of the most famous brands on the UK High Street, has gone into administration, with debts of about £400m.

But most of the group, including Oasis, Karen Millen, Warehouse and Coast have been immediately sold to Mosaic’s main creditor – Icelandic bank Kaupthing.

As the recession deepens it would appear that more and more retailers are going into administration.

220% increase in number of businesses going bust!

The BBC reports on the huge increase in the number of businesses going bust!

There has been a huge rise in the number of firms going bust in England and Wales because of the recession.

The Insolvency Service said that in the last three months of 2008 there were 2,428 corporate insolvencies such as administrations and receiverships.

That was a 220% rise on the same period the year before.

This of course has an impact on suppliers of those businesses as well as the immediate impact on the employees.

This kind of negative news, along with job losses reported across the country makes consumers behave in the very way in which reinforces the recession, as spending reduces and firms cut back on production.

Things will start to change once the economy starts to feel that it is at the bottom and has higher expectations about the way in which the economy is moving.

More on the economic environment in which businesses operate.

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World growth ‘worst for 60 years’

IMF says economic growth is the worst for sixty years.

The BBC reports:

World economic growth is set to fall to just 0.5% this year, its lowest rate since World War II, warns the International Monetary Fund (IMF).

Though the UK is in recession, and the rate of growth is falling, it must be remembered that the world economy is still increasing, only by 0.5%, but still increasing.

UK in recession: official

BBC reports that the country is in recession:

The UK is now in recession for the first time since 1991, official government figures have confirmed.

Gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter.

That means that the widely accepted definition of a recession – two consecutive quarters of falling economic growth – has been met.