British manufacturers face a long, slow haul to recovery, a leading employers’ organisation said yesterday, forecasting a muted comeback for the sector this year.

The EEF, whose members include leading engineering, technology and manufacturing companies, is forecasting growth of only 1.2 per cent this year among manufacturers, despite a competitive advantage from the falling value of the pound.

The organisation expects GDP in Britain to rise by 0.9 per cent, while the global slowdown will continue to hamper recovery for UK companies. Lee Hopley, its chief economist, said: “Whilst some can safely say the worst is behind them, others are only just begining to feel the chill.”

The grim prognosis came as government figures showed continuing weakness in industrial output. Manufacturing statistics for November revealed a decline of 5.4 per cent compared with the same month in 2008. The biggest fall in output came from machinery and equipment, which fell by 17.4 per cent, while metal products fell by 12 per cent.

The figures and the forecast from the EEF suggest that British companies are gaining little advantage from the precipitous fall in sterling over the past two years. On a trade-weighted basis, the pound has lost about 25 per cent against rival currencies, but so far British exporters are not making big inroads into foreign markets.

Simon Hayes, UK economist at Barclays Capital, said there was little sign that British exporters were taking advantage of the weakness of sterling: “The foreign currency prices of our exports have not changed much over two years.”

The cost of maintaining jobs during the downturn may be putting pressure on exporters, reducing their profitability, he suggested. “Holding on to workers is expensive. Margins are being squeezed by labour costs.”

Unemployment has not risen as sharply in this recession and companies may be holding on to staff in the belief that demand will soon pick up,Mr Hayes said. “If they are right, good. If they are wrong, it’s an altogether different story.”

The CBI said that it may be too early to expect a boost from the weakness in sterling. A recent survery of the business group’s members showed an expectation of rising export orders in the coming year.

Lai Wah Co, head of economic analysis at the CBI, said that signs of growth among Britain’s main trading partners in Europe and America were only just emerging. “We don’t have the market share in developing countries of some our competitors, such as Germany,” she said.

BDO, the accountancy firm that contributed to the EEF forecast, believes that more potent medicine will be needed as some key manufacturing sectors continue to suffer the impact of the 2008-09 slowdown.

Tom Lawton, head of manufacturing at BDO, said: “Manufacturers will need to continue to implement cost-cutting measures, including staff reductions, to maintain profits in what will be a very challenging market.”

Expectations of a drawn-out recovery were reinforced yesterday by Kate Barker, a member of the Bank of England’s Monetary Policy Committee. She said: “I expect the first half of 2010 at least to be quite patchy and not gather pace. After that, I’m a bit more optimistic.”

The National Institute of Economic and Social Research said yesterday that the economy had contracted last year at the sharpest rate since 1921, despite hopes that it had finally emerged from recession in the last three months of the year. The institute said that its latest estimate showed that GDP had risen by a modest 0.3 per cent in the final three months compared with the third quarter. This means that, for the year as a whole, the economy contracted by 4.8 per cent — a bigger fall than in any year of the Great Depression and the biggest contraction for 88 years. However, the institute said that signs of a recovery were starting to emerge after the economy bottomed out in March last year after 12 months of sharp falls.

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Source : The Times.

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Orange is set to cut up to 300 call centre jobs in Bristol as part of a consolidation of its offices in the city.

The mobile phone company employs 2,500 people in Bristol, where it has its headquarters, and started a review of its operations there last October. It has decided to terminate its lease in the city’s Keypoint complex and move its staff into an adjacent building.

As a result of the review, Orange will end its call centre activities in Bristol, a decision that affects about 300 staff. Those affected will be offered a relocation package to move to its larger call centre operations in Plymouth or Darlington. Staff who do not wish to up sticks to move to Devon or the North East will be offered redundancy packages, Orange said.

Staff were told of the plan this morning, with representatives of the Communication Workers Union (CWU) describing it as a “bombshell” and a “betrayal of a loyal and hard-working workforce”. Orange closed the call centre for the day after delivering the grim news.

A spokeswoman for the CWU said that redeployment to Plymouth or Tyneside was not a realistic option for most people. She said that many of the call centre staff had worked in the office for a long time, some since it was founded 12 years ago, adding: “There were a lot of tears this afternoon.”

Those workers affected will now enter a 90-day consultation period. The CWU said that redundancy packages offered by Orange were much higher than the statutory minimum.

Orange’s review of its property comes ahead of a proposed merger with the rival T-Mobile in the UK to create Britain’s largest mobile network, a deal that has provoked fears of further job cuts in the company’s combined call-centre operations.

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Source : The Times

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Ladbrokes, the bookmaker, confirmed today that it had launched the search for a new chief executive after the decision by Chris Bell to step down in the summer by mutual agreement.

The company paid tribute to Mr Bell’s 20-year stint with the company, the last nine as chief executive, but said that it was “an appropriate time to seek new leadership for the business”.

Peter Erskine, the chairman of Ladbrokes, said: “The board is currently engaged in the search for a new chief executive to fully capitalise on Ladbrokes’ brand strength and position the company for a new era of profitable growth.”

Brian Wallace, the finance director of Ladbrokes, and John O’Reilly, the head of its internet gambling operations, have both been tipped as possible successors.

Shares of Ladbrokes fell by 0.2p to 144.8p in early trading.

Analysts said that Mr Bell had led Ladbrokes ably through a period of huge adjustment for the betting industry, including tax and regulatory changes and the inexorable rise of internet betting.

But in the past two years trading has been lacklustre and Mr Bell’s ambitious international expansion plans have proved something of a damp squib.

Many investors became disenchanted in October after the company accompanied a profit warning with the launch of a £275 million equity issue to bolster its balance sheet.

Earlier in the year, Ladbrokes had responded to the tough trading environment by cutting its dividend and putting its loss-making Italian betting shops up for sale for an estimated £50 million.

In August, the group reported a 26 per cent fall in first-half operating profits to £98.6 million, from net revenues down 6.6 per cent at £504.4 million, amid a reduction in the amount staked and after sports results, notably the final weeks of the Premier League, had run in the punter’s favour.

Ladbrokes, along with William Hill, its main rival, also announced that they were moving their internet sports betting operations to Gibraltar. The move is expected to save Ladbrokes £7 million net in tax and other costs and allow it to offer better odds.

Mr Bell hit the headlines in 2008 when he banned his company’s 14,000 staff from using British Airways after his teenage daughter had a bad experience. She and a friend were bumped off a flight from Barbados. He retracted the ban after a personal apology from Willie Walsh, BA’s boss.

Mr Bell is also vice-chairman of the Association of British Bookmakers, chairman of the Bookmakers’ Committee, a member of the Horserace Betting Levy Board and a non-executive director of Game Group, the computer games retailer.

Mr Bell spent 12 years at Allied Breweries before going into gambling.

He earned £2.04 million last year, including £617,000 basic pay and a £957,000 bonus.

Source : The Times

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Tesco, the supermarket behemoth, today reported its strongest Christmas in the UK for three years as customers redeemed an extra £34 million of Clubcard vouchers.

Total UK sales in the six weeks to January 9 jumped by 8.3 per cent compared with the same period last year – or 8 per cent excluding petrol – while like-for-like sales excluding petrol and including VAT increased by 5.1 per cent in the period, or 4.9 per cent adjusting for VAT.

The company said that the improved performance in the UK was all volume growth rather than driven by price increases.

It said that Clubcard redemptions had boosted like-for-like growth by 0.7 per cent as shoppers were lured by double points and December’s money-off voucher mailshot.

The performance was at the top end of market forecasts and follows last week’s better-than-expected 4.2 per cent like-for-like growth from J Sainsbury over the festive period, again boosted by promotions.

Justin King, the chief executive of Sainsbury’s, said that the supermarket’s Nectar card was becoming increasingly important in a more promotional environment, as supermarkets adjusted to a new era of subdued growth caused by lower food inflation.

A report this week by Deloitte Touche Tohmatsu, the accountant and business adviser, said that, although the world’s biggest retailers have all increased their sales in the past year, two thirds suffered a hit to profits, sacrificing margins to ensure that customers kept spending.

The Tesco group as a whole delivered total sales growth over the period of 7.5 per cent at constant exchange rates in the six-week period as like-for-like sales in Asia, Europe and the United States continued the improving trend seen in the third quarter.

Sir Terry Leahy, the chief executive of Tesco, said: “We’ve delivered a very strong performance over the Christmas and new year period. It was a great Christmas for Tesco customers with an excellent seasonal range in store and online.”

Sir Terry paid tribute to the “tremendous efforts“ of staff and suppliers “during the freezing weather”.

The Tesco boss said that customers had been “looking for ways to treat themselves”, with 35 per cent more bottles of champagne sold than last year and strong sales from its Finest range.

Non-food recorded improving like-for-like sales, driven by growth in clothing, electricals and toys.

The company said that online sales were “very strong” in both food and non-food, with total online sales growth reaching almost 20 per cent in the six weeks.

In grocery, it delivered more than 100 million items to almost 1.5 million customers in the run-up to Christmas.

In the US, its Fresh & Easy chain, which has had teething problems, had a better Christmas and new year than last year, with total sales growth of 35 per cent at constant exchange rates and “strongly positive” like-for-like growth.

Source : The Times

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Budget retailer Poundland is set to expand at a rate of one store per week this year after enjoying record sales over the Christmas period.

The chain saw sales surge by 34.8% in the five weeks to January 3, with revenues from stores open at least a year up 4.4%.

Chief executive Jim McCarthy told Sky News: “At the peak we served four million customers a week. We were one of the few stores with queues outside.”

The West Midlands-based firm attributed the rise in sales to consumers’ “flight to value” during the recession.

The discount chain has opened 46 stores across the UK since April 2009, taking over some locations from the failed retailer Woolworths.

There are currently 254 Poundland shops in the UK and expansion plans include at least 50 new stores in the next year.

The company estimates it serves 2.5 million customers in an average week.

It expects to sustain its success through the economic recovery through reduced competition on the high street.

Mr McCarthy said: “We believe some of the behaviour acquired during the recession will continue. 

“With many stores on the high street now closed it is a less attractive place. 

“We’ve been going for 20 years and have done well most of that time.”

Source : Sky News

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Spanish giant Santander has stepped up the high street banking revolution by kicking off the rebranding of its Abbey and Bradford & Bingley branches.

Around 300 branches in London and the South East will be the first to undergo the name change, with another 700 outlets across the rest of Britain getting the treatment within the next three weeks.

The Spanish bank, which bought Abbey in 2004 and added B&B and Alliance & Leicester to its portfolio in 2008, will carry out a similar exercise on its 300 A&L branches in the autumn.

Abbey and B&B customers will be able to carry out transactions in any Santander branch, regardless of which group they formerly belonged to.

They can continue to use their Abbey and B&B cheques and credit cards, although these will be changed to Santander when they come up for renewal.

Santander now has 25 million UK customers, and is actively seeking to grow its share of the current account and mortgage markets.

It is marking the start of its rebranding exercise with the launch of its fee-free Zero account, which is available to mortgage customers only, while Abbey and B&B current account customers will henceforth be able to make free cash withdrawals from Santander ATMs in Spain.

Alison Brittain, Santander’s executive director of UK retail banking, told Sky News a shake-up in the banking sector was long overdue.

“This of course gives us massive efficiencies but the most important element is how good this will be for UK high street and for competition in the financial services industry,” she said.

“Santander is both a very safe and secure organisation as a global bank and a challenger to the established names on the high street.”

Ms Brittain said she had sympathy for those who would miss the historic British names, but pointed out that the 150-year-old Spanish bank has already enjoyed five years operating in the UK as Abbey.

Kevin Mountford, head of banking at moneysupermarket.com, said: “Santander will be keen to maintain and grow their position as a major player in UK retail banking and they are challenging their rivals by offering competitive rates and unique deals to their customers.”

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Source : Sky News

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Mamas & Papas, the fast-growing mother-and-baby retailer, has secured a new funding package from HSBC to support its expansion overseas.

The business, based in Huddersfield, West Yorkshire, is specifically looking to build up its operations in Europe, the Middle East, Russia and Japan.

Mamas & Papas, whose celebrity customers include Gwen Stefani, the singer, Jessica Alba, the actress, and Stella McCartney, the fashion designer, presently trades from 50 retail outlets in the UK and Ireland. It also supplies a further 250 retailers, including a growing number of international distributors, retailers and franchisees.

This saw the brand make its first appearance in the rapidly-growing Saudi Arabian market last year while the Mamas & Papas brand also launches in Japan later this month with a catalogue and web site launch. Mamas & Papas is hoping it could prove lucrative since the Japanese market, with more than one million births per year, is twice the size of the UK market — while a new initiative has just been launched by the Japanese government to encourage more births.

Jason Greenwood, the group finance director of Mamas & Papas, said: “2009 was another strong year for Mamas & Papas driven by the opening of new stores, diversification in our award winning product ranges and the announcement of further global expansion.

“As we enter a new decade and a new phase of growth we need a banking partner with the unrivalled international presence to support our global strategy, plus the ‘on the ground’ expertise to help us realise our ambitions — wherever and whenever we need to. The company aim is to become the world’s favourite nursery brand and this partnership is central to the growing momentum.”

He said that, as part of the new relationship, Mamas & Papas had switched all of its banking to HSBC’s Leeds office.

Mamas & Papas, which employs more than 1,100 people, was founded in 1981 by Italian entrepreneurs David and Luisa Scacchetti to import nursery equipment for wholesale. The company, which remains owned and managed by the Scacchetti family, moved into retailing under its own brand in 1998.

Martin Lunt, HSBC’s head of corporate banking in Yorkshire & the North East, said: “We are thrilled to be supporting one of Yorkshire’s — and indeed the UK’s — best known and most exciting businesses in their mission to become the number one global nursery brand. We firmly believe that the strength of the Mamas & Papas brand, along with the superior quality of its products and its franchise model will help to make it a success in every international market it enters.”

In stepping up its overseas expansion, Mamas & Papas is following the lead of Mothercare, which has grown aggressively overseas in recent years. Mothercare now trades from The company trades from 1,060 stores in 51 countries, including 671 branches of Mothercares and the Early Learning Centre outside the UK.

Source : The Times

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Google is expected to launch its hotly-anticipated new mobile phone today in its most direct challenge yet to Apple’s hugely popular iPhone.

The Nexus One, which boasts a highly-developed touch screen and other enhancements, is due to be unveiled at Google’s headquarters in Silicon Valley.

Precise details of the launch – including final prices and information on when it will go on sale in Britain – are still unconfirmed, though speculation is rife that it will be priced at $530 (£328).

The phone is based on Google’s Android software, which it first launched two years ago as a way of moving sideways into the mobile market. Experts said that the phone was an improvement over other recent Google-based phones, particularly the Motorola Droid, which launched in the US before Christmas.

“The design and feel of the phone is better – much better, in fact – and it’s definitely noticeably faster than Motorola’s offering,” said Joshua Topolsky, editor of technology blog Engadget, which posted video of the Nexus One in action over the weekend. “But it’s not so much faster that we felt like the doors were being blown off … don’t get us wrong, the phone cooks – but it’s not some paradigmatic shift for Android.”

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Swiss food company Nestlé has ruled itself out of the bidding for Cadbury and has instead given Kraft Foods the firepower to sweeten its own offer.

The maker of Nescafé, Kit Kats and Ski yoghurts declared today that it “does not intend to make, or participate in, a formal offer for Cadbury”. This follows discussions with the Takeover Panel, which regulates merger activity in the UK.

Some City experts had speculated that Nestlé was gathering a war chest to unleash on Cadbury, after it raised $28bn (£17bn) in cash yesterday through the sale of its stake in an eye-care group. This morning, though, Nestlé announced instead that it has agreed to buy Kraft’s US and Canadian frozen pizza business for $3.7bn.

Kraft swiftly declared it will use the proceeds of this sale to sweeten its own bid for Cadbury by increasing the cash element of the offer – probably by around 60p per Cadbury share. Kraft’s original offer was 300p in cash and 0.2589 Kraft shares for each Cadbury share.

“Kraft Foods is doing this because of the desire expressed by some Cadbury security-holders to have a greater proportion of the offer in cash and because Kraft Foods shareholders have expressed a desire for Kraft Foods to be more sparing in its use of undervalued Kraft Foods shares as currency for the offer,” declared Kraft, which believes the uncertainty over the Cadbury battle is pulling down the value of its shares.

Cadbury, though, refused to be swayed from its opposition to Kraft’s bid, which is worth around £10.3bn, or around 740p per Cadbury share.

“Kraft has once again missed the point,” said a Cadbury spokesman. “Despite this tinkering, the Kraft offer remains unchanged and derisory with less than half the consideration in cash.”

Shares in Cadbury fell by almost 2% this morning to 789.5p.

The panel has set today as the initial deadline for Cadbury shareholders to say whether they will support Kraft’s offer. But the vast majority of investors are expected to sit tight and see whether Kraft improves its offer further. Cadbury has until 15 January to release new information to bolster its defence to the takeover, while Kraft faces a deadline of 19 January if it wants to raise its offer. Other interested parties – potentially Italian firm Ferrero or Hershey of the US – have until 23 January to launch their own bids.

Jeremy Batstone-Carr, analyst at Charles Stanley, said Nestlé’s decision leaves Kraft as the “overwhelming front-runner” in the battle for Cadbury.

“Nestle’s decision effectively removes Ferrero and Hershey from the field as competitive forces, although we do not altogether rule out the possibility that Cadbury and Hershey might form a defensive alliance against a reinvigorated Kraft,” Batstone-Carr said. He added that the fall in the value of Cadbury’s shares suggested that stockmarket traders rate its survival prospects as “50:50″.

Source : Guardian

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More mortgages were taken out in November than at any time since March 2008, triggering fresh hope for the property market.

The Bank of England said that 60,518 mortgages were granted in November, a 4.85 per cent rise on October, comfortably beating the figure of 58,000 forecast by analysts. The level of approvals is more than 200 per cent higher than the 27,162 figure for November 2008, when confidence in the market was at its lowest.

The Bank said that the total value of lending secured on dwellings rose by £1.5 billion in November, compared with a rise of £1.1 billion in October and more than double the average of £0.7 billion over the previous six months.

Commentators said that the figures were a sign of “increasing momentum” in the housing market and supported the view that there will be further price rises this year. Predictions from economists and estate agents for prices in 2010 have ranged from a fall of 7 per cent to a rise of 7 per cent.

Despite the positive data from the Bank of England, some experts said that lenders must do more to support demand by further relaxing their criteria and offering more competitive deals, particularly to first-time buyers.

Oliver Gilmartin, senior economist of the Royal Institution of Chartered Surveyors (RICS), said: “The [Bank of England] figures support our view that increasing momentum in the housing market will see further rises in house prices during early 2010. Mortgage approvals have now been rising consistently for a year and the latest credit conditions survey from the Bank of England continues to suggest a gradual improvement in the lending environment over the coming months.

“Lenders reported an increase in credit availability for borrowers with loan-to-value ratios above 75 per cent in Q4 2009, whilst the maximum loan-to-value ratio rose for the first time in over two years. Despite an expected increase in property listings and the onset of several headwinds during 2010, the current imbalance between demand and supply is set to underpin further price gains in the near term.”

The figures come after warnings by mortgage experts that interest rates are set to rise this year, as the cost of funding home loans increases on the back of a possible rise in the Bank of England base rate. RICS warned that even small increases in the base rate would cause proportionately large rises in monthly repayments for borrowers on variable-rate deals.

For example, repayments of £300 a month on a 1 per cent interest rate would rise to £450 a month if rates went up by 0.5 percentage points.

Low-key start to drive for 2,000 council homes

The biggest council housebuilding programme for two decades began with a whimper rather than a bang yesterday, with work starting on 15 homes on Tyneside.

The scheme, which has £600,000 in government funding, marks the start of a programme announced last year to build 2,000 council homes with funding of £141 million to be matched by local authorities.

Housing organisations welcomed the start of construction work, but warned that the funding would not be enough. Nearly 5 million people are expected to be on social housing waiting lists this year, according to the National Housing Federation.

The federation has said waiting lists in some areas are so long that, at current rates, people would wait for up to 280 years to be housed.

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Source : Times

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