The Week That Was….

At we felt that it would be helpful to provide an brief overview of the past weeks main stories both in the UK and around the world. If you have any questions or points please don’t hesitate to get in touch.

Sterling climbed to its highest level against the euro in almost 2 years on continuing concerns about the deepening crisis in the Eurozone. France elected socialist candidate to President, Francois Hollande, much to the dismay and concern of many of the other Eurozone leaders. In particular Angela Merkel who believes that the Eurozone countries should be following a goal of austerity meanwhile Hollande is promising to renegotiate eurozone government debt to concentrate on promoting growth.

Spain has confirmed that it has slipped back into recession and as a consequence has had its credit rating cut to BBB+ by Standard and Poor’s which cited the risks posed by the country’s banks. The Spanish economy reduced by 0.3% from December 2011 to March, a 2nd consecutive reduction in economic growth. Fortunately these results were not as bad as had been expected by economists.

Because of the poor economy and the associated concerns with paying back loads and correcting their growing public deficit this drove up the cost of borrowing, increasing the threat of the country requiring a bailout by the other Eurozone countries.

Not only did Standard and Poor downgrade the countries credit rating, in light of the concern with the Spanish publics ability to repay their debt. Standard and Poor downgraded nine of the Spanish Banks, including Abbey National owner Santander and BBVA.

David Cameron drew criticism from European politicians for his assessment that we’re not “halfway through” the economic crisis.

In the US, the Dow Jones hit its highest level since December 2007 following stronger than expected manufacturing figures.  Manufacturing had its fastest growth for 10 months, the fastest infact since June. Orders, production and hiring rose during the period. President Obama is increasingly sounding confident which will stand him in good stead for the upcoming Presidential elections. US employment figures within manufacturing also are continuing to rise. They being at their highest rate for the last 9 months. World markets will follow closely this Friday’s monthly US employment figures.

Economists at the Ernst & Young Item Club predicted that losses on corporate loans in the UK will hit their highst level since the 1990s recession this year, fuelled by the weak consumer sector.

Both HSBC and the Australian owned  Clydesdale and Yorkshire banks announced further job cuts. The “magic circle” law firm, Herbert Smith, blamed stagnant deal market for job losses in its City office.

Lloyds Banking Group cheered investors by notching up a profit of £288m in Quarter 1, despite setting aside a further £375m to cover PPI claims. BP reported a $4.8bn profit for the quarter.

The UK High Court ordered UK internet providers to block access to the file sharing website Pirate Bay. Microsoft invested $300m in the US bookseller, Barnes and Noble to develop an e-reader called Nook. Apple and Samusng are planning a peace summit to end their bitter litigation over smartphones. Several dozen protesters were arrested outside the London Stock Exchange after May Day protests.

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