UK unemployment rises by 28,000

UK unemployment rose by 28,000 to 2.67m in the three months between November and January, meaning that 8.4 per cent of the economically active population are without a job, figures from the Office of National Statistics show.

Meanwhile youth unemployment rate rose to a record high of 1.042m in the three months to January, taking the unemployment rate for 16 to 24-year-olds to 22.5 per cent, the highest since record began in 1992.

The figures also revealed that 270,000 public sector jobs gone in the past year while 226,000 have been created in the private sector.

The Office for National Statistics said that the number of people claiming jobless benefit rose by 7,200 – slightly more than economists had forecast – to a 1.612 million in February.

Growth in average earnings was slowing, increasing by only 1.4 per cent in the year to January, compared to a rate of 1.9 per cent in December.

The figures will increase the pressure on Chancellor George Osborne to take measures to boost growth and jobs when he presents his 2012/13 budget next week, at a time when the economy is struggling to show sustainable recovery.

West launches rare earth trade case against China

The European Union, the United States and Japan have formally asked the World Trade Organisation to settle a dispute with China over Beijing’s restriction on exports of raw materials, including rare earth elements critical to electronics makers.

The dispute is one of several between Beijing and the other three economic powers, as Chinese industry remolds the world economic order. It is the first case to be jointly filed by the EU, United States and Japan at the WTO.

US President Barack Obama, a Democrat, is toughening his stance on Chinese trade practices amid criticism from his Republican rivals that his administration has not been strict enough with Beijing.

US Trade Representative Ron Kirk said the case was part of a broader effort by the Obama administration to make sure China and other countries play by global trade rules.

“America’s workers and manufacturers are being hurt in both established and budding industrial sectors by these policies. China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace,” Kirk said in a statement.

UK trade deficit rises from 2-year low

The UK’s goods trade deficit widened less than expected in January, keeping hopes alive that the economy is rebalancing.
Total goods exports to non-EU countries rose to a record high, helped by car sales to the United States, Russia and China. Total oil exports also hit a record peak due to higher oil prices, though Britain’s deficit in trade in oil widened.

The Office for National Statistics said the goods trade deficit grew to £7.53bn in January – versus forecasts for £7.88bn.

As expected this was up from two-year low of £7.2bn in December, which had been the narrowest since December 2009.

Overall goods imports rose faster than exports as Britain sucked in oil from Nigeria, Saudi Arabia and Russia as well as chemical products from Germany, the Netherlands and the United States.

The total trade deficit, which includes services, widened to £1.8bn from £1.2bn, after Britain’s surplus in services fell.

Standard Life profits surge

STANDARD Life reported a better-than-expected 28 per cent increase in its 2011 profit, helped by cost cuts and a strong performance at its Canadian unit.

Edinburgh-based Standard Life, Britain’s fifth-biggest insurer, made a pre-tax operating profit of £544m last year, ahead of the £476m expected by analysts.

The improvement was driven in part by £45m in cost cuts, as well as a 70 per cent increase in profit at Standard Life’s Canadian division.

“Today’s results again demonstrate that we are well on track to transform the operational and financial performance of Standard Life,” Chief Executive David Nish said in a statement.

Card insurer CPP looks to cut 10% of workforce

TROUBLED card insurer CPP is seeking to cut ten per cent of its UK workforce as the firm attempts to restructure its business in the aftermath of a damaging probe by regulators.

The firm currently employs over 1,300 people at sites in York, Chesterfield and Tamworth and if not enough take voluntary redundancy by the end of March then the firm will consider other options, including compulsory redundancies.

Voluntary redundancy will be offered to employees in management and administrative roles but the firm promises that no customer-facing staff will be affected.

Greek bond yields remain highest in Eurozone

Greece’s new bonds, issued following last week’s debt swap deal, have begun trading at high yields, suggesting that investors do not have confidence in the current rescue deal.

Greece issued 20 new bonds to its investors on Monday, with early pricing showing bid yields ranged between 19.4 percent on the shortest duration debt maturing in 2023 and 14.3 percent on the 2042 bond.

Greece remains by far the highest yielding country in the eurozone with new 2023 bond carrying a 550 basis point yield premium over the closest comparable issues, from Portugal.

The private sector debt swap lopped about €100bn euros off Greece’s gargantuan debts but still leaves Athens as the euro zone’s most indebted country and does not preclude a messier default or even a euro exit further down the line.

On Friday the International Swaps and Derivatives Association concluded that the Greek debt swap constituted a credit event and would trigger payment on credit default swap (CDS) insurance contracts.

Government backs 95% mortgages for first-time buyers

The government has launched a new mortgage indemnity scheme that is designed to allow first-time buyers to step onto the property ladder and boost the construction industry.

Under the NewBuy scheme major lenders including Barclays, Nationwide and Natwest will allow people to borrow up to 95 per cent of the value of a home, with the sum guaranteed by the government and building firms.

The scheme is only available on purchases from major housebuilders who will provide a deposit of 3.5 per cent of the property’s value. The government will provide an additional guarantee of 5.5 per cent in an attempt to .

Jonathan Samuels, CEO, Dragonfly Property Finance is sceptical about the scheme: “If the Government thinks this scheme will kickstart the property market then it is in Cloud Cuckoo Land. The concern is that NewBuy is intrinsically leveraged, and we know where leveraging got us in the past. People should buy when they are genuinely in a robust position to do so, not because a bank says they can buy.

The government has also announced an extension of the right-to-buy scheme for council housing. Tenants will be eligible for a £75,000 discount on the price of the house.

David Cameron commented: “Strong families and stable communities are built from good homes. That’s why I want us to build more homes and I want more people to have the chance to own their own home.”

“We’re rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England. And we’re delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home,” he added.

Game Group shares fall 70% on administration fears

Computer games retailer Game has warned investors that their shares could be worthless as it struggles to source new products from suppliers, causing shares to plummet by over 70 per cent in early trading.

The group, which trades from about 1,270 stores in nine European markets and Australia, said this morning it remained in talks with suppliers and lenders in relation to terms of trade that allow it to operate within a banking facility agreed last month.

It is reportedly struggling to pay a substantial rent bill that is due within the next fortnight.

Game said it was working to resolve the supply issues as quickly as possible.

But it warned investors: “It is uncertain whether any of the solutions currently being explored by the board will be successful or will result in any value being attributed to the shares of the company.”

Vince Cable accuses government of ‘lacking vision’

Vince Cable has accused the government of lacking “a compelling vision of where the country is heading beyond sorting out the fiscal mess”.

The business secretary also called for Royal Bank of Scotland to be split up, saying: “My suggestion is that we recognise that RBS will not return to the market in its current shape and use its time as ward of state to carve out of it a British business bank with a clean balance sheet and a mandate to expand lending rapidly to sound business.”

In the letter to Deputy Prime Minister Nick Clegg, leaked to the BBC, he also called for “more leadership” in supporting key technologies.

OFT will not review BMI sale

The Office of Fair Trading (OFT) has said the European Commission was best placed to review IAG’s proposed acquisition of Lufthansa’s UK unit bmi and that there is no need for a separate British review of the deal.

But the consumer watchdog said it would continue to work closely with the EC to assess whether the deal raises competition concerns for airline passengers including those travelling to and from airports in Scotland and the North West of England to London’s Heathrow airport.

Late last year, British Airways owner IAG agreed to buy bmi for £172.5m, seeing off rival bidder Virgin Atlantic in the race to grab loss-making bmi’s coveted runway slots at Heathrow.

Virgin Atlantic last month made a formal complaint to the EC about the deal, saying competition on some European routes would diminish and that fares would increase.

The OFT said the EC should consider the deal because the impact of the acquisition on the overall competitive position at London’s Heathrow airport requires a comprehensive review of routes across many jurisdictions, not just those in Britain.