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February 27, 2007

Royal Mail asks for stamp price increase

Permalink: Royal Mail asks for stamp price increase by Elaine Frei

Filed under: Economy, News

Royal Mail asks for stamp price increase

A package of proposals delivered by Royal Mail to Postcomm has asked for an increase in the price of stamps and for changes to Royal Mail’s universal service obligation (USO). Other provisions include an end to the regulation of bulk business mail such as advertising.

Royal Mail wants to increase stamp prices by 6p, to 38p for a first class stamp and 29p for a second class stamp. The price increase is the same amount as Royal Mail says it currently loses on each stamped letter it delivers. Under the current pricing agreement with Postcomm, Royal Mail is allowed to increase prices on stamps. Under the agreement, however, the next price hike was not to come until 2008. The new proposal does not say when Royal Mail would implement its proposed increases.

Royal Mail’s chief executive says the changes are necessary in order to keep Royal Mail in business and competitive. It has lost a number of contracts since the market was opened to competition last year. Under the changes, businesses would lose the right to have franked mail delivered to every address n the UK. Royal Mail, according to the new proposal, wants its delivery obligation to apply only to mail with a first or second class stamp on it. In addition, Royal Mail wants to be able to charge businesses more for bulk “junk” mailings than it can under current controls.



February 26, 2007

Rising pensions costs reduce other benefits

Permalink: Rising pensions costs reduce other benefits by Elaine Frei

Filed under: Economy, News

Rising pensions costs reduce other benefits

According to new research by Aon Consulting (NYSE: AOC), an actuarial firm, 49 percent of UK firms have either raised the amount of money employees must contribute to their pensions schemes or cut other benefits in order to maintain current levels of employee contributions to their pensions. This is due to a significant increase in how much the pensions schemes cost employers, who are now responsible for making up for any deficits suffered by the schemes.

Costs for pensions are going up for several reasons. People are living longer, for example, so that pensions have to be paid out for a longer period of time. In addition, returns from investments made by the pensions schemes have declined so that “contribution holidays”, in which employers and employees did not have to contribute to their schemes because of high returns on investments, are no longer possible.

Now, new rules put in place by the Pensions Regulator stipulate that employers must make up any shortfalls in pensions schemes, which means in some cases that they have to put millions of pounds into the schemes. This has happened recently to British Airways (LSE: BAY; NYSE: BAB), and BAE Systems (LSE: BA; OTCBB: BASEY), and BT (LSE: BT.A; NYSE: BT), among others. Some others, such as Marks & Spencer (LSE: MKS), have taken another tack, informing employees that they much either contribute to their pensions scheme for the first time or see their pensions accrue at a slower rate in order to erase their pensions deficit. Still others, among them Royal Mail, are thinking of closing their pensions schemes to new employees. This has already happened to 58 percent of final salary schemes, according to the Aon report.



Persimmon reports record profits

Permalink: Persimmon reports record profits by Elaine Frei

Filed under: Economy, News

Persimmon reports record profits

Homebuilder Persimmon (LSE: PSN), the UK’s largest, has said its profits were at a record £582.1 million in 2006, a gain of 17.5 percent. Revenues were 37 percent higher to £3.14 billion. Along with its full-year results, Persimmon said that it believes 2007 will also bring strong results, noting that buyers seem not to have been slowed down by the Bank of England’s surprise interest rate hike in January.

Persimmon’s chairman, John White, announced that the company will raise its full-year dividend by 50 percent. This was made possible by the fact that the number of homes built in 2006 by the company was at 16,701, a gain of 32 percent over the year before, and a selling price that averaged 4 percent higher at £188,129.

While analysts have said that they expect the housing market to slow later in the year due to recent interest rate hikes, but Mr. White cited continuing orders as evidence that those in the market for a new home have not lost confidence due to the increases in the interest rate. The news sent Persimmon shares 3.5 percent higher in morning trade.



February 23, 2007

Advertiser says it will reap benefits from Beijing Olympics

Permalink: Advertiser says it will reap benefits from Beijing Olympics by Elaine Frei

Filed under: Economy, News

Advertiser says it will reap benefits from Beijing Olympics

London-based advertisers WPP (LSE: WPP; NASDAQ: WPPGY) said on Friday that it expects to realize a benefit from the 2008 Beijing Olympics. The company, which said that its 2006 pre-tax profits were up 14.5 percent to £766.3 million and that it will outperform its sector this year, claims that China is currently its fourth-largest market and that it will likely be its third-largest by the start of the Olympics there. WPP said that it had 15 percent of the advertising market in China currently and that their business in China grew by over 20 percent in 2006.

The annual report from the advertiser also noted that it would likely benefit from more liberal rules on advertising by gambling concerns in the UK. It also said, however, that it will probably incur losses due to recently imposed restrictions on advertisements for junk foods in association with children’s television programming. Ofcom has restricted junk foods advertisements during programs that have an audience of predominantly children.



February 22, 2007

Business investment up in fourth quarter

Permalink: Business investment up in fourth quarter by Elaine Frei

Filed under: Economy, News

Business investment up in fourth quarter

The Office of National Statistics has released new data showing that business investment in the UK was up in the last quarter of 2006, suggesting that corporations are more confident about the economy. Investment in business was up 3.3 percent in the quarter and was 11.1 percent higher than it was in the fourth quarter of 2005. The increases were especially concentrated in the energy, utility, and services sectors.

The bad news was that investment dropped 4.5 percent in the quarter for firms engaged in manufacturing. This seems to indicate that these companies are having a difficult time with the current economic conditions. Some analysts believe that business investment will continue to grow, but that it might be limited in some areas by hikes in interest rates. In addition, it is predicted that margins could be narrowed in some sectors by higher input prices and an increase in competition.



February 21, 2007

Minutes show latest MPC interest rate vote at 7 to 2

Permalink: Minutes show latest MPC interest rate vote at 7 to 2 by Elaine Frei

Filed under: Economy, News

Minutes show latest MPC interest rate vote at 7 to 2

Minutes of the most recent meeting of the Monetary Policy Committee of the Bank of England were released Wednesday. They show that the committee’s vote on holding the interest rate at its current level was 7 to hold the rate steady to 2 votes to raise the interest rate by 25 basis points. The two committee members who voted to raise the rate, Tim Besley and Andrew Sentence, were shown to believe that the tightening moves made since August was “modest” in relation to how much inflation had risen. The rest of the committee believed it was a better idea to hold the rate and see what effect recent rate hikes had on demand.

The information contained in the minutes caused some analysts to rethink their expectation that the interest rate will be raised again in March. On the other hand, others pointed to the recent quarterly inflation report from the Bank that said inflation would remain above the 2 percent target if rates remain at their current level. The opinion expressed in the report as that more tightening of monetary policy would be necessary even though energy prices had come down.



High Court admonishes government in pensions case

Permalink: High Court admonishes government in pensions case by Elaine Frei

Filed under: Economy, News

High Court admonishes government in pensions case

A High Court judge ruled Wednesday that the government erred in rejecting parliamentary ombudsman Ann Abraham’s findings that it was guilty of maladministration in providing misleading information that led to tens of thousands of people losing their pensions. The judge ordered the government to reexamine the issue with Ms. Abraham’s findings in mind. However, it also ruled that the government was correct in rejecting the finding of Ms. Abraham that all the individuals who lost their pensions during the period under examination, from the late 1990s to 2005, were served an injustice through the government’s provision of misleading information about pensions schemes.

The judge gave permission to appeal his decision both to the government and to the pensioners bringing the case against the government in those parts of his ruling that went against them. Solicitors for the four individuals who brought the case said that the ruling, despite not going completely their way, meant that “the government has been caught red-handed” in trying to deprive pensioners of their just due.

It is expected that the government will now follow the ombudsman’s original finding that the government should look at all possible options for covering the pensions. This course would likely mean that business or the financial services industry responsible for paying for failed pensions schemes. Some members of Parliament, however, have threatened to amend the pensions bill currently under consideration in a way that would force the government to give more aid to victims of failed pensions.



February 20, 2007

OFT calls for new drug spending plan

Permalink: OFT calls for new drug spending plan by Elaine Frei

Filed under: Economy, News

OFT calls for new drug spending plan

The Office of Fair Trading (OFT) has said that the National Health Service (NHS) is paying far too much for name-brand drugs. In the conclusion of a study that has been ongoing since September 2005, the OFT has decided that the Pharmaceutical Price Regulation Scheme (PPRS) needs to be redesigned because in its current state it does not result in the NHS obtaining the best prices on the drugs. The report says that alterations to the system should be made that will get the NHS better value for its money and to focus on drugs that deliver the greatest benefits to patients. The Department of Health currently purchases £7 billion worth of brand-name drugs each year. The OFT estimates that a new plan could cut £500 million per year from that amount.

The PPRS, as it is presently constituted, sets a ceiling on the profits each pharmaceuticals company is allowed to make on its sales of name-brand medicines to the NHS each year. It is voluntary scheme and comes up for negotiations every five years between the Department of Health and the Association of the British Pharmaceutical Industry (ABPI). The Department of Health is not required to act on the OFT report, but is not likely to ignore its findings due to the large amount of public funds involved.

In reaction to the report, the ABPI said that the increase in the amount of money the NHS pays for drugs has to do with an increased use of drugs, not with any problems in pricing. The ABPI warned that limiting price caps could reduce the amount of research and development the drug companies will do and could spur drug companies to move out of the UK entirely. A lower cap on how much NHS can pay for individual drugs could also limit what the drug companies can charge other governments for their products, since many health services use the NHS price as a guideline and insist that they be charged less for the drugs they purchase.



Business Plan ABC’s – Getting Started

Permalink: Business Plan ABC’s – Getting Started by Kathyrn Lang

Filed under: Economy, Blog

Writing a business plan can be as simple as ABC.

A – Action Plan. You need to devise a step by step guide on what you are going to do and when.

B – Budget. Know the cost of different aspects of the future business. Set up a system for dealing with those costs.

C – Current Situation. List the factors that are in line at present, include market information, competition, and location, location, location.

D – Documents. Start compiling letters of support, funding promises, and other communications that show this is a serious and legitimate project.

E – Executive Summary. Break down who you are and why you are the person best suited for this business.

F – Feasibility. Be honest about evaluating anything that could hinder the new business. It is important to know the bad as well as the good.

G – Goals. Lay out what you want to achieve and the ways that it will be done.

These are just the guidelines to help you begin to develop a vision for your business. It is important to take the time to lay out a plan that will get you where you need to be.

Developing a business plan allows you to know and understand exactly what you want to do and how you can go about doing it. It is a map, a guide, to the creation of the project that you have envisioned. It serves as a course corrector to help a new company stay on target, on time, and within budget.

Before venturing into a new business, take the time to follow the ABC’s and develop a business plan that will allow you to keep focused on your business. A business plan will also prepare you to present your ideas to others you encounter – your accountant, your lawyer, and even potential investors.



February 16, 2007

Report: UK online shopping to grow by 40 percent by 2020

Permalink: Report: UK online shopping to grow by 40 percent by 2020 by Elaine Frei

Filed under: Economy, News

Report: UK online shopping to grow by 40 percent by 2020

A report released Friday by the price comparison service uSwitch, 40 percent of retail sales in the UK will be made online by 2020. Such sales made up only 2 percent of all UK sales in 2002, but will reach 15 percent this year, with total sales worth around £40 billion.

One factor in the increase in online sales, according to the report, is that broadband costs have fallen while speed is increasing. This makes it easier and less expensive to shop online than it is to go out and shop in brick and mortar stores. Another factor adding to increased online sales is the fact that there are now over 13 million broadband subscribers in the UK.

The report makes the claim that savings to consumers by shopping online could reach £13 billion per year, or £500 for each household in the UK. Savings in particular categories include 13 percent on groceries, 15 percent on travel and leisure activities, and 21 percent on services, according a spokesman from uSwitch.

The report claims that the 8 million households in the UK that shop online spend an average of 2 hours each day in the activity and spends around £980 per year on online purchases, 10 percent of the average total spent on shopping in a household.



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