Europe in the red
Eurozone GDP shrank by 0.2% in the third quarter of 2008, following a 0.2%
contraction in the previous quarter, making it official that the currency bloc
is now in recession. Germany became the first of the major EU nations to go into
recession with a larger-than-expected 0.5% fall in the third quarter after a
0.4% decline in the second quarter. Ireland went into recession earlier this
Rate cut madness
Minutes released by the Bank of England following its November decision to slash
interest rates from 4.5% to 3% – the biggest cut since 1981 – prompted
expectations of another cut in December. The minutes show the committee
considered a bigger cut than was made and voted unanimously.
Layoff flood begins
Large redundancy programmes were announced by various UK companies in November
following news that the country is probably in recession. UK pharmaceuticals
companies AstraZeneca and GlaxoSmithKline are to slash 1,400 and 620 positions
respectively, while in construction, industry supplier SIG will close 900
positions and Taylor Wimpey will cut 1,000.
Ford, General Motors and Chrysler asked Congress for a $25bn “bridge” loan in
the style of the $77bn banking bail-out. GM CEO Rick Wagoner says that without a
government handout, the US could suffer three million redundancies from the
sector. Industry critics say car firms should file for Chapter 11 bankruptcy
The International Monetary Fund has approved a $5.1bn loan to bail out Iceland’s
collapsed economy, comprised of $2.1bn from the IMF itself and the balance from
Denmark, Finland, Norway, Sweden, Russia, Poland and the Faroe Islands. Iceland
is to re-float its currency and use the cash to bolster its foreign exchange
BA’s wings fall off
British Airways’ pre-tax profits shrank 92% year-on-year for the period between
April and September, the company said, from £616m in 2007 to £52m in 2008. Chief
executive Willie Walsh said the period was “one of the bleakest on record” as
BA’s business was affected by the banking sector crisis, record fuel prices and
the collapse of other airlines.
BT kills 10,000 jobs
Shares in BT rose on the news that the telecoms giant was to cut 10,000 jobs
from its workforce to save costs in 2009, mostly agency, contract and “offshore”
staff, the group said. BT added that it hoped to save £100m in pension
contributions when it overhauled its final salary scheme in April 2009.
The merger of Lloyds TSB and HBOS got the go-ahead from Lloyds TSBs’
shareholders who voted overwhelmingly for it. Plans to raise £5.5bn in funding
by issuing new shares and special preference shares were also approved.
Shareholders voted the day after Alistair Darling warned they could receive less
money if they did not support the government-approved deal.
US Securities and Exchange Commission published its ‘roadmap’ that
could result in US companies being compelled to use international financial
reporting standards by 2014. The necessary milestones that must be achieved
include an improvement in the quality of the accounting standards,
accountability at the standard setter’s ruling body, an improvement in the
ability to use XBRL with IFRS and progress in education and training of
accountants and investors.
The government is to review the controversial ‘Section 75’ regulations that can
result in companies having to fully cover the liabilities of their pension
schemes. “The current problem with Section 75 is that companies can restructure
or acquire businesses and trigger the need to make unnecessary and large cash
payments to the pension fund,” says
The US Court of Appeals ruled that an investment bank did not owe any duty of
care to the shareholders of a company it advised during a merger. Rather, it is
the board of directors that owes fiduciary duties to shareholders.
Joyce v Morgan Stanley
GoCompare is to demerge from esure and and be floated on the London Stock Exchange with the aim of boosting growth and performance
Three former Tesco executives, including the former finance director of Tesco UK, have been charged with fraud in relation to a £263m accounting scandal at the supermarket chain
Co-operative Group is trialling a new blockchain technology that can be used to track food from source to ensure its authenticity and sustainability
Sports Direct is facing a shareholder backlash despite promising to change some of its more outdated working conditions the sportswear retailer has forced on staff