An optimistic start to the week, with the announcement of financial stimulus plans in the United States, and elsewhere, providing the impetus for share price rises on stock markets across Europe and Asia. The Hang Seng in Hong Kong and the Nikkei in Japan, rose by 5% and 9% respectively, while there were also strong gains in India and mainland China. The FTSE 100 followed suit rising by 5% in early trading, with similar rises on the French and German stock exchanges. Not such good news for HBOS and Lloyds TSB however, with the Merger Action Group (MAG) claiming that Business Secretary Lord Mandelson acted unlawfully in allowing the merger of the banks to take place. MAG – which is a self-appointed group, made up of businessmen, bank shareholders and customers – is taking its appeal to the Competition Appeal Tribunal, in the hope that the merger can be referred to the Competitions Commission. Shane O'Riordan, spokesman for HBOS, dismissed the appeal as an "unhelpful and unnecessary distraction" according to the Sky News website, adding further "We're confident the appeal will be unsuccessful."
In other news, David Ross co-founder of Carphone Warehouse – and a member of the organising committee for the 2012 Olympics, in London – resigned as a director following revelations that he had used a large proportion of his stake in the company (a total of just under £165 million, on paper) as security against undisclosed personal loans. More gloomy news on Tuesday with separate announcements that retail sales had fallen in consecutive months for the first time since 1995, that manufacturing output had fallen sharply during October and property sales had slowed once again. The latest retail survey conducted by the British Retail Consortium, and accountants KPMG revealed that sales fell 0.4% in November, following a 0.1% fall in October, compared to the same periods in 2007. The Royal Institution of Chartered Surveyors (RICS) announced that property sales had fallen from 10.9 per agent, for the 3 months to October, to 10.6 per agent for the 3 months to October.
In related news, the Council of Mortgage Lenders (CML) – or its Director-General, Michael Coogan, to be precise – launched a scathing attack on the handling of the current financial crisis by the British Government. Mr. Coogan was quoted on the Sky News website saying, "Current policy objectives are conflicting and incoherent. The Government needs to decide on its key priority. The tug of war with lenders pulled in every direction needs to end." Mr. Coogan's comments followed the release of CML figures which showed that mortgage lending had fallen by nearly 60% during October. Plenty more harbingers of economic doom for the rest of the week, in the lead up to festive season that promises to be significantly less festive than usual. On Wednesday, the chief economist of the World Bank spoke of "the worst recession since the Great Depression" according to the Independent website, and his sentiments were echoed elsewhere. Predictions by the US Department of Energy suggest that demand for oil will continue to fall across the globe until at least the end of 2009 and, in Britain the economy is expected to contract by a further 1% or more this winter, according to some experts. On Thursday, Sterling sank to new lows against a basket of major currencies but particularly so against the Euro, with €1 buying nearly £0.88, the highest amount since the launch of the Euro, 9 years ago. The Bank of England is widely anticipated to cut interest rates to 0%, or close to 0%, in the near future, which is driving investors away from Sterling. These latest figures represent 20% depreciation in a 12-month period but the weakness of the pound is yet to provide a stimulus for export trade; in fact the trade deficit grew rather than shrank during October. As if Prime Minister, Gordon Brown did not have enough to contend with at present, the German Finance Minister Peer Steinbrück poured scorn on Mr. Brown's plans to soften the impact of recession – which include a 2.5% cut in VAT and increasing the national debt to around £120 billion in 2009, through investment in public projects – calling them "crass" and accusing Mr. Brown of "tossing around billions" according to the Sky News website. Herr Steinbrück called into question the principle of using public money to stimulate the economy – as advocated by Victorian economist John Maynard Keynes – and said bluntly, "The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking".
Thursday also brought the sad news that British retailer – some might say institution – Woolworths' was to hold a closing down sale in each of its 815 branches in the United Kingdom. The company, which opened in first branch in Britain 99 years ago, went into administration in late November, and with a buyer not forthcoming, the once venerated chain store is soon to be no more. If optimism was the keyword for the start of the week, so pessimism was for the end. Sterling fell to yet another record low against the Euro – for the fifth consecutive day – at just €1.12, whilst the US Dollar too fell, on the news that the proposed $14 billion bail-out plan for the US motor industry had been rejected by the Senate. The plan was, according to the White House, the "best chance to avoid a disorderly bankruptcy", and the industry teeters on the brink of collapse with wage cuts – ironically the issue on which the plan foundered – and job losses inevitable. Unsurprisingly, shares in car manufacturers fell sharply around world – by at least 10% in the cases of Honda, Nissan and Toyota – with a 5.6% loss on the Nikkei, in Japan, and stock markets in the United Kingdom, France and Germany all opening lower; the FTSE 100 fell just over 147 points to 4,241 in early trading on Friday.