The UK government received some welcome news amid the current economic troubles facing the country recently as an Office for National Statistics (ONS) report revealed that revisions to fourth quarter GDP figures resulted in 0.4 percent growth, much faster than the previously forecast 0.1 percent expansion.
The initial estimate was enough to take the UK out of what is officially defined as a recession period, but the overall size of growth during that time gained from a 5 percent drop to 5.5 percent, mainly because the economy was slightly smaller than originally thought going into the quarter, hence the revision upwards.
Before the final quarter of the year, Britain had suffered seven consecutive quarters of economic contraction, its worst run of form on record.
As such, a rise in the services industry by 0.4 percent was a very welcome tonic for the country’s policymakers. That’s a recovery from a 0.2 percent drop in the third quarter.
Manufacturing jumped 0.6 percent in response to a 1.5 percent drop the previous quarter, while private spending rose 0.5 percent.
Many analysts are warning that the mini-recovery will not save the country from sinking back into recession this year if the current stagnant economic climate persists.
“We need to really dig in for a turbulent 3-month period ahead, and I definitely wouldn’t say we are clear into a full blown recovery as yet,” said Lloyds TSB lead strategist Adam Chester.
“Torrid weather and an all round bad January has investors spooked again and general sentiment says the economy is still in danger of sinking back down into the red again,” he added.
Beijing-based investment firm Clarus China Everbright, a prominent Chinese investor into the UK, says they are sticking with the same investment plan despite news of the upward revisions to the British economy by the ONS, as they also cited concerns over a weak first quarter to the year.
Growth may have been hobbled by the decision by the Bank of England to halt their monetary stimulus program and the governments return to 17.5 percent VAT in the New Year. A host of government initiatives, such as the car scrapping scheme, are also due to conclude soon, which may affect output in the manufacturing industry.
Britain has followed Germany and France out of recession, but experts are concerned that it took so long to get back on its feet when others were heading back into the black 12-months ago.
Friday, 26 February 2010
Tuesday, 16 February 2010
Japanese brewing tie-up falls through after disagreement
After coming to an impasse over the management hierarchy of a potential new entity, Japanese brewing companies Kirin and Suntory have ditched plans to merge their food and beverage groups.
The new company would have had combined revenue of over $40 billion and discussions have been ongoing since 2009, consolidation being desperately needed to keep pace with global competition in a cut throat international market. Expansion abroad is essential with a domestic market that continues to get older and smaller.
The two companies come from very different backgrounds, and this may have been a critical factor stopping the deal from progressing. Kirin is based in the nation’s capital and is very corporate in nature. It’s also listed on the Tokyo stock exchange. Conversely, Suntory is much more of a family orientated smaller group, based in Osaka.
Kirin’s share prices slumped nearly 8 percent on Tuesday after news the merger had collapsed was made public, sparking a trading frenzy involving 17 million of the company’s shares. The new entity could have rivalled top groups like Kraft and Pepsicoinc with regards to revenue.
The unravelling of the deal caused investor nervousness in the Japanese market and another brewery, Asashi, saw their stock decline 6 percent. Clarus China Everbright, an investment firm who has a small stake in Asashi, said in an email to clients on Wednesday that the market may be over-reacting to the news.
Other analysts agree, Sompo Japan Asset Management chief of finances Shigeo Sugawara said that there has been an “unnecessary jolt to the exchange” and Kirin’s share prices have already “had the possibility of a merge collapse dialled in”.
Sugawara added “The deal falling through is not good for Kirin. As a large, listed company in search of growth the Suntory deal was really the only one on the table for them. They are going to have to be creative in order to find further opportunities now.”
Kazuyasu Kato, the Kirin President, made a brief statement to the press following the conclusion of talks, “It was understood by both parties that we would never come to an agreement regarding the executive structure of the new company. It would not be fair to our shareholders to progress”.
In a statement released later a spokesperson for Suntory, known for its ‘Premium Malt's’ beer and ‘Boss’ canned coffee cited a “disagreement over the merger ratio” as the deciding factor.
The new company would have had combined revenue of over $40 billion and discussions have been ongoing since 2009, consolidation being desperately needed to keep pace with global competition in a cut throat international market. Expansion abroad is essential with a domestic market that continues to get older and smaller.
The two companies come from very different backgrounds, and this may have been a critical factor stopping the deal from progressing. Kirin is based in the nation’s capital and is very corporate in nature. It’s also listed on the Tokyo stock exchange. Conversely, Suntory is much more of a family orientated smaller group, based in Osaka.
Kirin’s share prices slumped nearly 8 percent on Tuesday after news the merger had collapsed was made public, sparking a trading frenzy involving 17 million of the company’s shares. The new entity could have rivalled top groups like Kraft and Pepsicoinc with regards to revenue.
The unravelling of the deal caused investor nervousness in the Japanese market and another brewery, Asashi, saw their stock decline 6 percent. Clarus China Everbright, an investment firm who has a small stake in Asashi, said in an email to clients on Wednesday that the market may be over-reacting to the news.
Other analysts agree, Sompo Japan Asset Management chief of finances Shigeo Sugawara said that there has been an “unnecessary jolt to the exchange” and Kirin’s share prices have already “had the possibility of a merge collapse dialled in”.
Sugawara added “The deal falling through is not good for Kirin. As a large, listed company in search of growth the Suntory deal was really the only one on the table for them. They are going to have to be creative in order to find further opportunities now.”
Kazuyasu Kato, the Kirin President, made a brief statement to the press following the conclusion of talks, “It was understood by both parties that we would never come to an agreement regarding the executive structure of the new company. It would not be fair to our shareholders to progress”.
In a statement released later a spokesperson for Suntory, known for its ‘Premium Malt's’ beer and ‘Boss’ canned coffee cited a “disagreement over the merger ratio” as the deciding factor.
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