|Tesco plc breaches agreement with two-tiered pricing|
|Monday, 08 August 2011 08:21|
News round up: Tesco, European Central Bank, Bank of England, US credit rating, Verizon, double-dip recession, UK banks and UK government debt.
European Central Bank
The European Central Bank will wade into the financial markets today in an attempt to prevent the turmoil in the single-currency area from spiralling out of control. After desperate calls from global leaders for the bank to buy Italian and Spanish government bonds, it announced that it would take action aimed at quelling the recent financial market chaos, says the Times.
Bank of England
The Bank of England is this week set to slash its forecasts for the UK economy once more and signal that interest rates are going nowhere in an attempt to safeguard the fragile recovery in the wake of the continued shock to global markets following America's credit downgrade. Its latest quarterly inflation report will confirm the picture of disappointing growth at home and abroad that last week helped wipe 10pc off global equity markets, says the Telegraph.
US Credit Rating
Standard & Poor’s decision to downgrade the credit rating of the US has unleashed an extraordinary row with the Obama administration about its competence and rationale that could brighten the regulatory spotlight already shining on the rating agencies. The administration accuses S&P not only of numerical incompetence by making a “$2 trillion mistake” in its initial analysis but of having made an arbitrary decision to downgrade and then changing its arguments to fit that decision after its errors were pointed out, says the Financial Times.
Strike at Verizon
More than 45,000 workers at US telecoms giant Verizon have gone out on strike after the unions walked away from contract negotiations. The Communications Workers of America (CWA) trade union announced the move yesterday, saying that since negotiations began on 22 June, Verizon had "refused to move from a long list of concession demands”, reports the Independent.
Risk of double-dip recession
Britain could be facing the grim prospect of a double-dip recession unless banks do more to help the economy, Business Secretary Vince Cable has warned. Mr Cable said: 'The top priority now, to boost growth and jobs and avoid a double dip, is making the banks lend again,' according to the Daily Mail.
Britain’s banks are lucky there is a global stock market rout going on. It did something to disguise investors’ concerns on Friday that the government-appointed Vickers Commission (ICB) will force some groups into a dramatic overhaul of their business models. This, the FT’s Weekend Edition believes, is the reason why RBS and Barclay’s shares led losses on Friday in their sector, as it is they that have the most to lose from ‘ringfencing’.
UK government debt
“After a week in which some $2.5 trillion (£1.5 trillion) was wiped off the value of global equities, investors are set to seek further solace from traditional indices, with gold and other safe havens likely to continue their ascent. Conversely, however, the Government's borrowing costs are expected to hit record lows in the coming weeks, as investors turn to UK government debt as a relative safe haven for their money, amid fears of a new global recession.
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