A leading think-tank has warned the economic recovery in the UK is the weakest of any since the end of the First World War.
The warning came as the National Institute of Economic and Social Research (NIESR) said its monthly estimates suggest gross domestic product (GDP) grew at 0.5% in the three months to September, compared to a revised 0.4% in the quarter to August.
NIESR said the level of GDP in the period is still 4% below the pre-recession peak - suggesting the recovery is the weakest since 1918.
The figures for the third quarter may surprise some economists who have forecast near stagnant growth between July and September.
The figures come amid deepening fears over the health of the country's recovery and after the Bank of England announced plans to pump an extra £75 billion in to the economy to stimulate growth.
If NIESR's estimate is correct, the third quarter growth of 0.5% would represent a solid bounceback from the 0.1% recorded between April and June. The third-quarter GDP figure will be confirmed by the Office for National Statistics on November 1.
The think-tank still warned growth had been "anaemic" in the UK over the last year.
A Treasury spokesman said the figures supported the Government's case for its deficit-busting austerity measures.
He said: "These figures show that, while the UK cannot isolate itself from what is happening to our major trading partners, the action being taken by the Government to tackle the deficit and rebalance the economy is helping the UK economy to continue to grow.
"Other data published today similarly shows that the economy is recovering but that the financial turbulence in the Eurozone and the weaker outlook for global growth will mean that the recovery will be choppy."
Courtesy of The Evening Standard
Wednesday 12 October 2011
Friday 7 October 2011
"Banks and building societies hit by Moody's downgrades"
Britain's beleaguered banks and building societies were dealt another blow today after a debt agency said the decreased likelihood of Government backing made them less credit-worthy.
Lloyds Banking Group, Santander UK, Royal Bank of Scotland, Co-operative Bank, Nationwide and seven smaller building societies saw their credit ratings slashed by Moody's Investor Service.
The move - which triggered a fall in banking shares on the London Stock Exchange - means the cost of borrowing for the affected financial institutions is likely to increase.
RBS, which saw its shares drop more than 3%, also came under pressure after a report in the Financial Times suggested it could require a further bailout from the Government.
The bank said it was "disappointed" that Moody's had not acknowledged its progress in strengthening its finances since 2008.
Moody's stressed its review did not reflect a deterioration in the financial strength of the banking system or the Government.
The move reflects a shift in Government policy to transfer risk from taxpayers to creditors, rather than deepening problems within the banks.
Elisabeth Rudman, senior vice president of the financial institutions group at Moody's, said: "Moody's has lowered the amount of support it incorporates into the institutions' ratings to reflect the overall weakening support environment."
Moody's said the downgrade comes after Government support was removed for the seven small institutions, which include the Norwich & Peterborough, Principality and Yorkshire building societies.
Elsewhere, support was reduced for the larger "more systemically important" institutions including Lloyds and RBS.
While the Government is "likely to continue to provide some level of support" to those banks, it is also "more likely now to allow smaller institutions to fail" if they become financially troubled.
Lloyds, Santander and Co-op Bank have had their ratings downgraded one notch, RBS and Nationwide a two-notch revision, while the seven building societies saw ratings cut by between one and five places.
However, Moody's said on the basis of stand-alone financial strength, five institutions - Co-op, Nationwide, Santander and Yorkshire and Principality building societies - have had their ratings increased.
Taxpayer-backed Lloyds, which is 40.2% state-owned, stressed that its stand-alone rating had not changed.
A Lloyds spokesman said: "It is important to note that both the stand-alone rating and short-term ratings remain unchanged. We believe this change will have minimal impact on our funding costs."
Meanwhile, it is understood RBS, which is 83% owned by the taxpayer, could be liable for another bailout if it fails a rerun of European banking stress tests.
RBS, which received the biggest bailout of the 2008 financial crisis, could see its protective cash buffers fall below regulators' requirements after exposure to eurozone debt is taken into account.
RBS has reduced its exposure to debt-laden nations including Greece and Italy, but it is feared that once so-called "haircuts" - effectively write-offs - are given, the bank will fail to keep up.
Courtesy of London Evening Standard
Lloyds Banking Group, Santander UK, Royal Bank of Scotland, Co-operative Bank, Nationwide and seven smaller building societies saw their credit ratings slashed by Moody's Investor Service.
The move - which triggered a fall in banking shares on the London Stock Exchange - means the cost of borrowing for the affected financial institutions is likely to increase.
RBS, which saw its shares drop more than 3%, also came under pressure after a report in the Financial Times suggested it could require a further bailout from the Government.
The bank said it was "disappointed" that Moody's had not acknowledged its progress in strengthening its finances since 2008.
Moody's stressed its review did not reflect a deterioration in the financial strength of the banking system or the Government.
The move reflects a shift in Government policy to transfer risk from taxpayers to creditors, rather than deepening problems within the banks.
Elisabeth Rudman, senior vice president of the financial institutions group at Moody's, said: "Moody's has lowered the amount of support it incorporates into the institutions' ratings to reflect the overall weakening support environment."
Moody's said the downgrade comes after Government support was removed for the seven small institutions, which include the Norwich & Peterborough, Principality and Yorkshire building societies.
Elsewhere, support was reduced for the larger "more systemically important" institutions including Lloyds and RBS.
While the Government is "likely to continue to provide some level of support" to those banks, it is also "more likely now to allow smaller institutions to fail" if they become financially troubled.
Lloyds, Santander and Co-op Bank have had their ratings downgraded one notch, RBS and Nationwide a two-notch revision, while the seven building societies saw ratings cut by between one and five places.
However, Moody's said on the basis of stand-alone financial strength, five institutions - Co-op, Nationwide, Santander and Yorkshire and Principality building societies - have had their ratings increased.
Taxpayer-backed Lloyds, which is 40.2% state-owned, stressed that its stand-alone rating had not changed.
A Lloyds spokesman said: "It is important to note that both the stand-alone rating and short-term ratings remain unchanged. We believe this change will have minimal impact on our funding costs."
Meanwhile, it is understood RBS, which is 83% owned by the taxpayer, could be liable for another bailout if it fails a rerun of European banking stress tests.
RBS, which received the biggest bailout of the 2008 financial crisis, could see its protective cash buffers fall below regulators' requirements after exposure to eurozone debt is taken into account.
RBS has reduced its exposure to debt-laden nations including Greece and Italy, but it is feared that once so-called "haircuts" - effectively write-offs - are given, the bank will fail to keep up.
Courtesy of London Evening Standard
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