BoE sees worse inflation outlook

19 September 2012 Last updated at 07:21 ET

Bank of England policymakers think inflation is set to slow less rapidly because of higher oil costs and possible food price rises.

Minutes from the latest meeting of the Monetary Policy Committee (MPC) showed that they felt inflation was unlikely to slow as it had forecast in August.

They also showed all nine MPC members voted to hold rates and not increase the programme of quantitative easing.

However, one MPC member said there was "good case" for more QE.

More stimulus?

Figures released on Tuesday showed that inflation as measured by the Consumer Prices Index (CPI) fell to 2.5% in August, down from 2.6% in July.

Inflation is now much closer to the Bank of England's 2% target, having dropped from a peak of 5.2% in September last year.

However, the minutes from September's meeting of the MPC noted: "The rise in oil prices and the probable increase in utility and some food prices meant that the near-term outlook was for a less rapid fall in inflation than the Committee had thought at the time of its August Inflation Report projections."

All members of the MPC agreed to keep its programme of quantitative easing (QE) at £375bn.

Under QE, the Bank buys government bonds, hoping to create beneficial knock-on effects for the economy.

The latest minutes showed most members found the decision to maintain QE at the current level "straightforward".

But others felt extending it "was more likely than not to be needed in due course".

And one member said that "a good case could be made" for announcing an increase in QE immediately.

Several analysts have said they think the Bank will increase the QE programme above the current level.

Howard Archer, an analyst at IHS Global Insight, said his firm "strongly suspect" it will increase the programme by another £50bn in the fourth quarter of 2012.

Brian Hilliard of Societe Generale agreed, noting that this was the second consecutive MPC meeting at which increasing bond buying had been discussed.

"I don't think that is going to sway the majority until November, but the fact that it has been discussed two meetings in a row does point to a further expansion of QE in the November meeting," said Mr Hilliard.

19 Sep, 2012

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Asos enjoys sales boost from US

19 September 2012 Last updated at 07:17 ET

Online fashion retailer Asos says a big increase in demand from US customers helped sales grow 31% in the three months to the end of August.

Overall sales increased to £141m in that period, up from £107.4m, but 65% of the sales increase came from the US.

The company said that sales outside the UK, European Union and the US jumped 53% to £47.4m in the period.

Chief executive Nick Robertson said it would hit full-year profit forecasts.

In the UK, Asos saw sales increase by 15% to £49.8m in the three months to 31 August, maintaining strong performance at home.

Asos has grown while many of its rivals that operate physical stores have struggled amid economic uncertainty.

For the year to 31 August, Asos saw a 91% increase in sales to US customers, totalling £49.5m, while sales outside the UK, the European Union and the US jumped by 94% to £165.2m.

For the year to the end of August, its UK sales totalled £205.2m - a 10% rise on the previous year.

In the same period, Asos said that it had five million active customers, defined as people who have shopped with Asos in the last 12 months - a 35% increase year-on-year.

Jean Roche, an analyst with stockbroking business Panmure Gordon, called the numbers "particularly impressive".

Meanwhile British fashion retailer French Connection has reported a first-half loss before tax of £6.3 million.

19 Sep, 2012

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Amount paid in bonuses hits £37bn

19 September 2012 Last updated at 06:18 ET

The amount paid in bonuses to UK employees in the year to end-March rose 3% to £37bn - about £1,400 per worker - according to official figures.

Staff in the finance and insurance sector received £13bn of the total, 9% down on the previous year, the Office for National Statistics (ONS) said.

However, the finance sector received 36% of all bonuses, even though just 4% of all employees work in the industry.

It amounted to £12,000 per employee working in finance and insurance.

The ONS said the industry with the second highest average bonus was the mining, quarrying and oil industries, with bonuses per employee worth £6,900 each.

This was an increase of 9% on the 2010-11 financial year.

In 2011-12, the average private sector worker received £1,700 in bonuses, more than five times the average public sector worker's bonus of £300.

But this public sector figure includes payments at the temporarily nationalised banks, such as RBS.

Excluding financial services, the average public sector bonus was £100.

19 Sep, 2012

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Lonmin shares rise after pay deal

19 September 2012 Last updated at 05:13 ET Continue reading the main story

Shares in Lonmin jumped 9% in the first 20 minutes of trading in London, after the firm signed a pay deal with striking miners in South Africa.

The deal brings to an end a strike lasting nearly six weeks at the Marikana mine in Rustenburg.

The miners, who are mostly rock drill operators, cheered when they were told late on Tuesday that they would get pay rises of between 11% and 22%.

By mid-morning Lonmin shares had fallen back slightly, trading 3.5% higher.

The workers had been demanding a salary of 12,500 rand a month ($1,513; £935). They currently earn between 4,000 and 5,000 rand.

The agreement also includes a signing bonus of 2,000 rand for employees.

Last month, police opened fire on demonstrators at the mine in Marikana, killing 34 striking workers.

In total 44 people died at the Lonmin-owned mine in mid-August and many others were injured. Unrest has also spread to other mines.

19 Sep, 2012

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Workers turn away from pensions

19 September 2012 Last updated at 04:59 ET

The number of people actively paying into a workplace pension scheme dropped for a third consecutive year in 2011, official figures show.

Some 8.2 million people were active members of pension schemes at work, down from 8.3 million the previous year, the Office for National Statistics said (ONS).

The fall came from a dip in membership in the private sector.

However, the figures are expected to pick up as a new pension policy starts.

A policy of automatic enrolment will be phased in from October that will see workers signed up to a workplace pension scheme, unless they opt out.

The government hopes that the policy - one of the biggest ever changes in the UK pension landscape - will encourage more people to save for their old age.

19 Sep, 2012

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Zara owner Inditex profits up 32%

19 September 2012 Last updated at 04:31 ET

The world's largest clothing retailer, Inditex, which owns Zara, has posted a jump in first-half profit after opening new stores and gaining new customers.

Inditex reported a net profit of 944m euros ($1.23bn; £758m) for the six months to 31 July, up 32% on the same period last year.

Net sales rose 17% to 7.2bn euros, while like-for-like sales, which excludes new store openings, rose 7%.

Inditex's other brands include Massimo Dutti, Bershka and Oysho.

The group opened 166 stores in the first half of the year, taking its total store count to 5,693 across 85 countries.

It said it had invested 450m euros in its home market of Spain - in commercial and logistics activities aimed at supporting international growth.

Online push

Inditex also gave an update on trading in the current quarter. It said that sales between 1 August and 17 September were up 17%.

It is also making a push into online retailing. It launched Zara online in China on 5 September and has plans to start Massimo Dutti and Zara Home online sales in the US in October.

"The drivers are certainly there - the rapid roll-out of online sales and fast fashion - but even so it's a spectacular performance," said Societe Generale analyst Anne Critchlow.

"Online is allowing Inditex to access customers that wouldn't be near one of its concept stores," she added.

Shares in Inditex were up 3.8% in morning trading in Madrid.

19 Sep, 2012

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Newbury Racecourse in land sale

19 September 2012 Last updated at 04:02 ET

The owners of Newbury Racecourse have sold part of the land to property developers who intend to build 1,500 homes over the next 10 years.

Newbury Racecourse plc has sold land on its western, central and eastern sites to David Wilson Homes, part of Barratt.

David Wilson will pay "a minimum of £42.6m for the land", with the proceeds funding new racecourse facilities.

The company said it expected housebuilding to start this year, with homes going on sale in mid-2013.

The sale is intended to fund a major upgrade of the Berkshire racecourse.

Facilities for horses to be bred and cared for inside the racecourse grounds, including a new facility to house stable staff, new stables, a new paddock and improved facilities for owners and trainers are to be discussed by the board.

Newbury Racecourse has estimated that its improvement plans will cost up to £12m, with works commencing - if funding is in place - in 2014 and 2015.

As part of the sale, David Wilson will pay £5.1m up front, with most of the balance near the end of the decade-long project.

Newbury Racecourse hopes raise more money from investors on the back of the proceeds from David Wilson.

Consultation with the local community on the plans will continue through the Newbury Racecourse Public Liaison Group.

The owners of the racecourse have said that they want it to be profitable all year round, not just when major events are held.

Dominic Burke, chairman of Newbury Racecourse, said that the sale was "a key stage in our long term strategy of releasing value from our land assets to develop the facilities and infrastructure of the racecourse".

About 30% of the homes to be built are intended to be affordable and shared-equity properties.

19 Sep, 2012

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French Connection reports loss

19 September 2012 Last updated at 02:31 ET

Fashion chain French Connection has reported a half-year loss after sales fell during what it described as a "very difficult" six months.

The firm - which had issued a profit warning in May - reported a loss of £6.3m for the six months to 31 July, down from a £700,000 profit last year.

Revenues fell by 7% to £96m, and sales in the UK and Europe - which account for half its revenue - fell 10%.

Profit margins were also hit as it cut prices to try to drive sales.

19 Sep, 2012

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BoJ extends asset purchase scheme

19 September 2012 Last updated at 02:35 ET

The Bank of Japan (BoJ) has extended its asset purchasing programme by 10 trillion yen ($126bn; £78bn), following similar moves by the Federal Reserve and the European Central Bank.

The move, aimed at boosting the economy, increases the overall size of the stimulus programme to 80tn yen.

Though the increase had been widely anticipated, some analysts were surprised by the size of it.

Finance Minister Jun Azumi said the BoJ "took more action than we anticipated".

Under the asset purchasing programme the central bank buys bonds in order to keep the long-term cost of borrowing down.

The BoJ also left interest rates unchanged at between zero and 0.1%.

The market responded positively to the news, with the Nikkei 225 index rising to a four-month high, while the yen fell against both the dollar and the euro.

The yen has strengthened in recent weeks, hurting Japan's export-led economy.

"This is a positive for the economy in the sense that it prevents the yen from rising," said Hiroaku Muto, senior economist at Sumitomo Mitsui Asset Management.

"But capital expenditure and the domestic economy won't pick up until Europe's crisis abates and the US economy stabilises."

19 Sep, 2012

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Youth jobs plan is 'insufficient'

18 September 2012 Last updated at 19:49 ET

The government's youth contract is not enough to tackle the scale of youth unemployment, a group of MPs has said.

The youth contract provides £1bn for a range of schemes aimed at getting young people into work.

The Work and Pensions Select Committee said the contract was "a good start" but alone would not be enough "to address the current unacceptably high level of youth unemployment".

Labour said the report showed the government should "change course fast".

The government's youth contract brings together £1bn of funding for a number of schemes, up until 2015, to help get young people into work.

'Eye-catching targets'

Measures include providing 160,000 employers with a "wage incentive" of £2,275 to take on an unemployed 18-24 year-olds, 250,000 work experience placements and additional support from Jobcentre Plus.

If all targets are met, the contract is expected to create an additional 430,000 work opportunities over the next three years.

Dame Anne Begg, chair of the committee, said she welcomed the contract, particularly the increased support from Jobcentre Plus advisers and the widening of work experience opportunities.

The committee also praised the creation of a scheme targeted at 16 and 17 year-olds who are not in education, employment or training - the majority of whom do not receive support from Jobcentre Plus because they are not eligible to claim Jobseekers Allowance.

Dame Anne said: "Some of the measures in the youth contract have been shown to be effective but they will only make a significant impact if all the targets are met.

"Our concern is that there is a real risk that the government will fall short of its more eye-catching targets.

"In particular, past experience shows that 160,000 wage incentives is a very ambitious target in the current economic climate.

"And 250,000 additional work experience placements for young people may also be unrealistic."

'Wake-up call'

The committee said the government needed to widen its criteria for the scheme for 16 and 17 year-olds - which is currently only open to those with no GCSEs.

On wage incentives, the committee said their impact would be "only at the margins" and the government should keep under review the amount it pays employers.

More money may be needed in areas where youth unemployment is particularly high and to encourage the recruitment of disabled people and ethnic minorities.

The committee called for the government to simplify access for employers to the numerous schemes by setting up a dedicated telephone helpline for those who want to offer a job, training or work experience to young people.

Labour's shadow work and pensions secretary Liam Byrne said: "This major cross-party report is crystal clear: the Tory-led government's plan for youth jobs is failing and we need to change course fast."

"This is now a very loud wake-up call, at a time when the country is in a double-dip recession made in Downing Street."

Ronan Dunne, chief executive of O2, said: "Today's report shows that the youth contract hasn't yet had the impact needed to tackle the level of UK youth unemployment.

"I believe that it's not only the businesses that have signed up to the youth contract who can act to help the one million unemployed young people, rather all businesses, big and small, have a role to play in supporting young people on their journey to work.

"This can be anything from offering quality work experience and apprenticeships through to mentoring."

19 Sep, 2012

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