King gives the banks a good old telling off!
The Governor of the Bank of England, Mervin King, warned yesterday that a sustained economic recovery was still uncertain and that inflation is likely to remain above the 2% target for the next year. King delivered a rather blunt message to banks saying that their harsh treatment of corporate clients was leading to a "heartbreaking" situation in Britain's small and medium sized business sector. He said "It is a very tough job to build up these businesses and I do think that we need a pattern of finance that respects the need for these longer-term relationships." Mervin added "They [small and medium-sized companies] may have had the same banking relationship for 60, 80 years and then suddenly out of the blue, comes a letter churned out by a computer which says that the terms of our relationship have changed." These dovish comments tempered Sterling slightly but that didn't stop the Great British Pound hitting a fresh 5 month high against the USD following recent robust economic indicators.
The land registry on Wednesday said that house prices in the UK rose by 0.1% in June which brings the new average home price to £166,072 which is still 8.4% higher that a year ago. These values demonstrate a return to value last seen in the summer of 2006.
In other economic data releases out yesterday the US orders to American factories for high value manufactured goods fell by 1% during June which is the second consecutive monthly decline for the durable goods data. Economic activity has "continued to increase" over the past seven weeks but there are signs of a slowdown according to the Federal Reserve's latest Beige Book survey released overnight. Last time all 12 districts said that activity had risen but on this occasion only 10 Federal Reserve districts made the same claim and even then only moderate growth was noted. The Beige Book, which is based on contracts between regional Federal Reserve banks and local businesses found several signs that the recovery has slowed.
In the eurozone official figures showed that German consumer prices were up by 0.2% which pushed the annual rise in inflation to 1.1% from 0.8% this was lower than analysts expectations of 1.3%. We have already seen German unemployment figures come out broadly in line with expectations this morning. The data release out at 8:55 this morning showed the headline figure move to 7.6% from 7.7% in June.
Economic data releases to look out for today include
UK Mortgage approvals out at 9:20 expected to be around 48 and EMU confidence indicators at 10am. Also watch for US weekly jobless claims at 13:30.
On this day in 1949 BBC Television broadcast its first weather forecast…
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