Comment & Analysis

Monday March 23, 04:09 AM
Glance-PRESS DIGEST - Financial Times - March 23

The Financial Times EMPLOYERS WARN ON FISCAL BOOST The CBI will warn Chancellor of the Exchequer Alistair Darling that offering another big fiscal boost in next month's budget would be 'unaffordable'. Instead, the employers' group will argue for a 'confidence-building' budget that delays planned rises to employers' business rates and national insurance contributions. The Conservatives seized on the warning over a new stimulus package, calling it a 'very significant moment' that highlighted Prime Minister Gordon Brown's 'dangerous' reliance on debt. SOARING BUSINESS COSTS INCREASE PRESSURE ON COMPANY PROFITS A new business price index published Monday says the cost of doing business is rising much faster than the prices paid by consumers. According to Fathom Financial Consulting, which used a wide range of published official figures and financial market data, there is currently a 2.2 percentage point gap between business and consumer price inflation. With companies' profit margins being squeezed, new investment is likely to be sluggish for some time to come. LONDON HOMES LOSE TOP SPOT London and the home counties have suffered some of the biggest house price falls in the world, according to the annual Wealth Report, published by Citi Private Bank and Knight Frank. The capital was pushed off top spot by Monaco as the most expensive place to buy residential property. Prime property in London is now being sold for 28,000 euros per square metre, compared to 50,000 euros per square metre in Monaco. In third spot was Manhattan, at 16,500 euros per square metre. FSA TO LOOK INTO NEW RBS ALLEGATIONS The Financial Services Authority is to investigate whether non-executive directors of Royal Bank of Scotland (LSE: RBS.L - news) were intimidated before it was bailed out by taxpayers. The Labour politician Lord Foulkes has written to the City watchdog asking it to look at 'whether there was any intimidation of non-executive directors who had been asking probing questions which led them to believe they would not be reappointed if they continued to pursue such probing questions'. JJB NEARER TO FITNESS CLUB SALE JJB Sports (LSE: JJB.L - news) is expected to finalise a deal some time before Wednesday to sell its fitness clubs and secure its future. Insiders said the company is 'on the verge' of agreeing a sale of its chain of 50 health clubs to David Whelan, the owner of Wigan Athletic Football Club. A 70 million pound deal with Whelan would save JJB from administration because it has a multi-million pound quarterly rent bill for the gyms due on Wednesday. An extension to a standstill arrangement on a 60 million pound debt to lenders expires on Tuesday. GOVERNMENT CONSIDERS ITS OPTIONS ON DUNFERMLINE The government is under pressure to help in the bail out of Dunfermline Building Society in what could be the first such assistance to the mutual sector since the start of the credit crunch. Dunfermline is Scotland's largest building society, with assets of 3.3 billion pounds and 312,000 customers. According to officials, it is set to announce losses of about 26 million pounds in its annual results this week. The government is considering several options, including recapitalisation through the issuing of pibs or a straight injection of Treasury cash. SHARE PRICE IS VENTURE TALKING POINT Centrica (LSE: CNA.L - news) has bought a 23.6 percent stake in Venture Production and said it might bid for the whole company. The chairmen and chief executives of both companies are expected to meet on Monday for potentially fractious talks. Venture's board argue the 725 pence a share that Centrica paid when acquiring most of its stake last week 'substantially undervalues' the company. Royal Bank of Scotland analyst Phil Corbett has set a benchmark price for Venture far ahead of the 787.5 pence it closed at on Friday, targeting 850 pence. AIRCRAFT ORDERS POINT TO 'SUBDUED''YEAR PricewaterhouseCoopers says that following a 'catastrophic' second half in 2008, the global aerospace and defence sector is set for a 'subdued' year in terms of deal activity. Neil Hampson, head of PwC's global aerospace and defence team, said the civil aerospace industry was waiting to see how many aircraft orders will be cancelled to figure out 'what the extent of the downturn will be'. While conservation of cash will remain the rule, some of the big defence groups with strong balance sheets may take advantage of the downturn to make opportunistic purchases in key areas. CLEANING UP AMID ENGINEERING BAD TIMES Scotland's manufacturing sector has just reported its worst results for eight years, with every key measure going negative in the final quarter of last year. Peter Hughes, chief executive of the trade body Scottish Engineering, said: 'Optimism is very hard to find.' But even amid the gloom there have been some success stories. Teknek, a supplier to the electronics industry, had sales of 15 million pounds in 2008 and has just launched Nanoclean, a new generation of contact cleaning technology. Prepared for Reuters by Durrants Keywords: PRESS DIGEST Financial Times March 23

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