In Brief
British households are more pessimistic about their finances now than at any time since April 2009, according to Markit.
More UK businesses face financial woes than at any time in two years, according to Begbies Traynor.
The Spanish Government’s moves to speed up restructuring its banking sector have been received well on the markets.
In Depth
GB
According to research group Markit, British households are more pessimistic about their finances now than any time since April 2009. The group’s Household Finance Index for January came in at 36.1 – compared to 39.9 last month. The chief reasons include inflation and the recent VAT rise.
Furthermore, more businesses are in financial trouble than any number since 2009, according to insolvency specialist Begbies Traynor. 147, 836 businesses face financial woes this quarter – a 4% increase on the same period two years ago – according to a newly released report. This could slow GDP growth for Q4 2010 to as little as 0.2%.
Finally, Deputy Prime Minister Nick Clegg is talking about breaking up the banks into savings and investment firms this morning. His intention is to protect the public from bailing out the banks should another recession occur. However, his actions could be taken as meddling by bank executives, and sour feeling in the finance sector to the UK.
EU
The euro has been faring well since 2011 began – certainly compared to last year. Last week for instance, EU leaders moved closer to increasing the size the EFSF bailout fund, while the week before Spain and Portugal held successful bond auctions. These indicate that foreign investors have confidence these indebted nations can repair their finances.
This streak of good news continues this Monday morning. For instance, the Spanish Government has signalled that it is speeding up restructuring its regional banks. These banks – unlike Spain’s national banks – lent too freely before the recession, and so took the brunt of the collapse. Hence the Government’s move has been received well on the markets.
In addition, this morning new German and European PMI (Purchasing Manager’s Index) figures have been released. These report business conditions in the manufacturing and services sectors. The latest report shows that conditions in the German and European manufacturing sectors slowed slightly in January, but increased in the services sectors.
Coming Up
The Bank of England MPC (monetary policy committee) releases minutes of their latest meeting on Wednesday. Interest rates stayed the same, but any change in the rhetoric of committee members could impact on sterling sentiment.
By Peter Lavelle with best currency broker Pure FX.
