UK poised to shoot out of recession

A drop in inflation is set to end a five-year run of falling wages in real terms as salaries trailed behind the cost of living, forecasters predict.

Average wage growth of 1.8 per cent in the three months to October is still well behind November’s 2.7 per cent inflation rate, although economists expect the gap to narrow by the end of next year, bolstering spending power.

George Buckley, the chief UK economist at Deutsche Bank, said: “Consumers are in good shape to support a modest recovery in 2013.”

The Government’s official fiscal watchdog, the Office for Budget Responsibility, is predicting growth of 1.2 per cent next year – well below pre-recession rates, but the strongest since 2010. Although manufacturing and construction industries are struggling to achieve any growth, consumers will be in a stronger position as the pressure from the cost of living eases, Mr Buckley added.

“Look at inflation: it peaked at 5.2 per cent last year and finished last year at 4.2 per cent. This year it will be 2.7 per cent or thereabouts,” he said.

IHS Global Insight’s Howard Archer added: “Consumer price inflation is likely to be in a 2.5 to 3 per cent range through much of 2013, but will hopefully ease back in the final months.”

Other reasons for optimism include a recovery in consumer confidence to an 18-month high in November, as well as households beginning to address debt-laden balance sheets. Household debt to income ratios have fallen sharply from 175 per cent at the peak to 145 per cent, while interest payments as a share of income are also historically low at less than 6 per cent, according to Deutsche Bank.

Record low interest rates – expected to remain at 0.5 per cent next year – as well as central bank money-printing has also boosted share markets, despite a largely stagnant year for the housing market.

Economists have also been surprised by the gradually recovering jobs market on both sides of the Atlantic. According to the Office for National Statistics, UK employment hit a record 29.6 million in the quarter to October, although this may have been boosted by part-time workers as well as temporary staff working on the Olympics. In the US, payrolls data has been steadily improving, with the world’s biggest economy adding almost 150,000 jobs in November.

A third of bankers hate their jobs, survey finds

If you agree with the sentiment take some heart from this: a third of them say they hate their jobs. That’s the conclusion of a survey by eFinancialCareers of more than 500 financial services professionals.

One of its findings is that disillusionment among financial services professionals hasn’t become deep-set, but the sort of passion and enthusiasm associated with a career in the industry appears to have faded.

When asked their attitude to their current position, nearly four in 10 (38 per cent) poll participants said that they tolerated their job, and 29 per cent said they hated it. A fifth responded that they liked their current post, and just 12 per cent said they loved it.

James Bennett, global managing director of eFinancialCareers, said: “Clearly, decreased motivation among financial services professionals presents a concern for employers. This disillusionment may not be resulting in a sudden desire to switch jobs, but appears to be manifesting itself in a lack of ambition and less of a willingness to work punishing hours.”

With few City firms hiring, chances to jump ship are low. eFinancialCareers says the number of job opportunities for bankers are down 28 per cent in the year to December. Added Mr Bennett: “Also should job opportunities improve in the forthcoming year, professionals’ disillusionment could result in a flurry of leavers from organisations where employer loyalty has been eroded.”

A large proportion of respondents (38 per cent) said they wanted to leave the industry or sector entirely. This is coupled with a more short-term commitment to their current employer: 46 per cent of respondents only expect to stay in their current position for a maximum of two years.

Dozens of retailers on the brink as rents fall due

On the day many retailers will pay their final rent instalment of 2012, the insolvency specialist Begbies Traynor will warn that next year is likely to see more companies running into financial difficulties.

The news is another blow to a sector that has endured a torrid 12 months. Well-known retailers such as JJB Sports and Comet have disappeared from the high street this year while other such as Clinton Cards and Blacks Leisure have gone into administration.

Julie Palmer, a partner at Begbies Traynor, said: “Though the performance of national retailers is well-documented, it represents just the tip of the iceberg, with thousands of smaller and specialist retailers struggling to stay afloat in austerity Britain.

“Consumers have been saving their shoe leather this festive period by shopping at supermarkets and large department stores, focusing on the perceived value of getting all things in one place while avoiding the cost and hassle associated with town centre parking.”

Begbies Traynor said the companies most likely to suffer next year include those specialising in books and stationery. Pharmaceutical and personal care providers were also at risk, as well as off-licences.

On a brighter note, it said companies selling furniture, lighting equipment, home decorations, hardware and paints were now in a stronger position than in 2011.

The financial health of Britain’s retailers will be put the test today when quarterly rent payments are due to landlords. This could be the final nail in the coffin for retailers already struggling to balance the books.

Nick Martyn, property litigation associate at the law firm Mundays, said: “Stumping up three months’ rent in advance can put a strain on retailers’ cash flow – already stretched by shoppers’ tightened purse strings and suppliers’ pressure for shorter payment terms. Previous rent days this year forced retailers Aquascutum, Peacocks and Game into administration, with the latter suspending dealing in its shares as a result of experiencing difficulties in raising the £180m needed to pay rent for the March 2012 quarter.

“Retail tenants are increasingly asking their landlords if they can pay rent on a monthly rather than quarterly basis to bolster their cashflow – especially important over the Christmas period,” he added.

HMV is among the retailers under pressure, having issued a “going concern” warning earlier this month. The company, which has 238 stores, suffered a £37.3m loss during the six months ending 31 October, and warned that it would almost certainly breach banking covenants in January.

The company will be among those hoping for a boost over the festive period, with UK shoppers set to spend £2.9bn on Boxing Day alone, according to Moneysupermarket.

Almost 4 million people will head to the high street on 26 December – although 1.41 million will log online on Christmas Day to shop from home.

MF Global deal frees funds due to creditors in UK

KPMG, which is winding down the broker’s UK arm, said it had agreed to hand between $500m and $600m to US administrators. They had claimed that a large chunk of the $2.5bn (£1.5bn) collected in the UK following the company’s demise last year was owed to US clients.

The dispute had been due to be heard in the High Court in April, meaning both sides will now avoid costly legal fees. Sources said the administrators had “worked around the clock” to get the deal done before Christmas.

Richard Heis, joint administrator at KPMG, said: “This settlement, if concluded, will allow a major escalation [in returning money back] … we will move quickly to get money in agreed claimants’ pockets at the earliest opportunity.”

MF Global filed for bankruptcy protection in New York last October after making disastrous $6.3bn bets on the bonds of Europe’s most indebted countries. The company’s 6,500 UK creditors have been highly critical of the time it has taken for them to get their money back.

KPMG, which has already made some interim payments, said the agreement was a significant landmark. “The deal will clear important obstacles and significantly reduce the reserves that have blocked us from making additional distributions to the former customers and creditors of MF Global,” Mr Heis added.

Saudi retailer plans Bahrain, Oman expansion

Saudi-based consumer electronics retailer eXtra said on Sunday it was planning to raise its capital in a bid to fund expansion plans across the GCC.

The company, also known as United Electronics Company, said in a statement that it plans to increase its share capital by 25 percent through bonus shares.

The move comes as the retailer is poised to make its debut in the Bahrain and Oman markets.

Subject to regulatory approval, the company will increase its capital by six million shares, raising the company’s current capital from SR240m ($64m) to SR300m.

Abdullah Al Fozan, chairman of eXtra, said: “We have a clear strategy in place to expand the business both in our home country of Saudi Arabia and across the wider Middle East.

“We will imminently open our first stores in Bahrain and Oman, and we have ambitious plans in place to expand further in the future.

“This share issue is fully in line with our strategy to support these ambitious goals.”

Founded in 2003 and headquartered in Khobar, eXtra is the largest and fastest-growing consumer electronics and home appliance retailer in Saudi Arabia.

The company currently operates 29 stores across the kingdom, offering over 12,000 products.

Fitch sees ‘solid’ growth for GCC oil exporters

Oil exporters in the Gulf will enjoy another “solid economic performance” in 2013, according to a new report by Fitch Ratings.

The ratings agency said a broadly stable outlook for the Middle East and North Africa (MENA) region in 2013 will “mask continued divergence between oil exporters and oil importers”.

Fitch said Bahrain, Kuwait and Saudi Arabia and the UAE will see oil production levels slightly down on 2012, reducing overall GDP growth rates, but non-oil growth will remain healthy.

High oil prices and production will allow further government stimulus alongside large twin budget and current account surpluses, its report said.

Fitch added that oil exporters’ fiscal positions will “weaken modestly” in 2013 owing to slightly lower oil revenues and continued spending growth.

It said the political situation for oil exporters should be more stable, but warned that “current tensions in Bahrain and Kuwait will remain and further local stresses are possible”.

Although inflationary trends will vary, in general Fitch said it believes price pressures will remain subdued in line with global trends.

“Governments will try to limit the impact of higher international food prices on domestic prices, and efforts to rein back petroleum subsidies in North Africa will be gradual. Fitch does not expect any hikes in interest rates,” the report said.

Growth prospects are much weaker for the oil importers rated by Fitch and especially for Egypt and Tunisia, which are the only two countries with negative rating outlooks.

It said continued political unrest is putting pressure on creditworthiness.

“Two years into the Arab Spring, their transitions are proving to be complex and bumpy while the weak eurozone economy weighs more heavily on North Africa,” Fitch said.

However, Fitch said it still expects growth to continue to revive slowly in Egypt and Tunisia, though remaining well below the pace needed to reduce unemployment.

In Lebanon, spillover from Syria is clouding prospects, with reduced tourism and business confidence bringing weaker growth while political spillover is exacerbating an already complex political situation.

Fitch added: “Major divergences between the external positions of oil importers and exporters will endure. All the region’s oil importers will run current account deficits while all the region’s oil exporters will record large surpluses and make further additions to already large sovereign external assets.”

MidEast IPO value more than doubles in 2012

About $2bn has been raised through IPOs in the Middle East and North Africa (MENA) this year, more than double that seen in 2011, Ernst Young said on Sunday.

According to its MENA Q4 and year-end 2012 IPO Update, the amount raised by regional capital markets raised rose 134 percent from $843.9m.

The report said companies raised a total of $339.8m through three initial public offerings (IPOs) in the fourth quarter of 2012.

This was significantly higher than the $226.1m raised in the fourth quarter of 2011 and the $252.3m raised in the third quarter of 2012.

Phil Gandier, MENA head of transaction advisory services, Ernst Young said: “It’s been an eventful year for the region, with mixed implications for the capital markets.

“Drawing comparisons over the last two years we have noticed a steady climb in the amount of funds being raised by IPOs possibly hinting that markets are inching towards better results.”

He said the outlook for 2013 would be influenced by investor sentiments, against the backdrop of regional developments.

“We are confident that Saudi Arabia and the UAE will continue to be the regional hubs of IPO activity for investors in 2013.”

Saudi Arabia led the country standings in 2012, raising $1.4bn through seven IPOs, followed by the UAE with $277m and Oman with $264.4m.

Globally during Q4, US markets raised $7.3bn (29 IPOs), narrowing the lead on the Asian markets, which raised $8.8bn (59 IPOs).

European exchanges also saw something of a return to form, with deal value reaching $7bn (20 IPOs).

But overall the number of deals fell 46 percent from 255 deals in Q4 2011 to 136 deals.

Qatar set to launch academy for child minders

Qatar is set to launch an academy for the training of nannies next year, an initiative of Sheikha Mozah bint Nasser, the emir’s wife.

The Qatar Nanny Training Academy will be launched in April and will provide educational and training services in childcare.

Rabia Kerzabi, a member of the academy’s founding committee said in comments published by Qatar News Agency that the academy aims to attract female students to train with it for 10 months.

They will then qualify as nannies for Qatari and Arab families and will be able to care for children with adhering to Islamic traditions, QNA said.

The academy, which is based on partnerships with international expertise in the field of childcare, will be free to join, the news agency added. 

The academy will provide a wide range of courses ranging from hygiene and nutrition to entertaining children and first aid.

Yemen sees $3.17bn deficit in 2013 budget

Yemen’s cabinet on Sunday approved a draft budget for 2013 that projects a deficit of 682 billion rials ($3.17bn) and expenditure of 2.77 trillion rials, state news agency SABA reported.

The impoverished Arabian Peninsula state is still grappling with the aftermath of last year’s violent political turmoil that led President Ali Abdullah Saleh to step down in February; the government has sought billions of dollars of aid to overcome financial and security challenges.

SABA said the draft budget, which now awaits approval in parliament, projected revenue of 2.08 trillion rials.

Next year’s forecast deficit is 21 percent higher than the deficit originally projected by the government for 2012, while expenditure is about 2 percent higher. In April, Yemen approved a 2012 budget with a deficit of 562 billion rials and expenditure of 2.70 trillion.

Restoring stability in Yemen, which is battling Islamist militants with Washington’s help, has become an international priority because of fears that al Qaeda could become further entrenched in a country which flanks top oil producer Saudi Arabia and lies along major shipping lanes.

International donors including Saudi Arabia have pledged around $8bn in aid over the next couple of years to Yemen, which was driven to the verge of bankruptcy and plunged into factional anarchy by the year-long uprising against Saleh.

The economy of Yemen, where 40 percent of the population lives on less than $2 a day, shrank 10.5 percent in 2011, the International Monetary Fund estimated. In October, it forecast the economy would shrink 1.9 percent this year.

The official inflation rate spiralled as high as 25 percent year-on-year in October 2011; it subsided to 6.9 percent in July this year, latest central bank data show.

Belgium may hand Arnault tax file to Paris: press

Sat Dec 22, 2012 10:11am EST

PARIS (Reuters) – Belgian tax authorities may hand French tycoon Bernard Arnault’s file to their Paris counterparts for closer scrutiny of Brussels-based companies linked to his LVMH (LVMH.PA) luxury empire, according to media reports.

John Crombez, Belgium’s minister for fraud prevention, said any information on local “mailbox companies” held by France’s richest man should be shared with Paris, newspaper De Tijd reported on Saturday.

Belgian legal and government officials did not immediately return calls seeking comment. LVMH said in a statement that its Belgian companies complied with all applicable laws.

Arnault, 63, caused an outcry in France earlier this year when it emerged that he was seeking Belgian citizenship, while insisting that the move was not tax-related.

Other wealthy figures, including actor Gerard Depardieu, have blamed France’s high tax rates and recent increases for their decisions to leave the country. Soon after taking office in May, Socialist President Francois Hollande introduced a new 75 percent rate on income above 1 million euros ($1.3 million).

According to L’Echo, a Belgian daily, Arnault’s holdings in the country include several companies registered at the same Brussels address with combined assets of 7 billion euros.

“If Bernard Arnault is working with pure mailbox companies in Belgium we should signal this to French tax authorities,” the anti-fraud minister was quoted as saying.

LVMH said it was “surprised” by the press reports and denied any wrongdoing.

“The companies of Groupe Arnault and LVMH have very real economic activities in Belgium, where some of them have been based for several decades,” the company said in an emailed statement.

“All of their activities are fully compliant with Belgian tax legislation as well as international law.”

($1 = 0.7590 euros)

(Reporting by Laurence Frost and Barbara Lewis; Editing by John Stonestreet)