London, United Kingdom (AHN) – The Bank of England will inject an additional $117.7 billion into the economy in an attempt to encourage commercial bank lending and stimulate sagging growth.

That decision was reached by the Bank of England’s Monetary Policy Committee when it met and voted on Thursday.

The move boosts the amount of the bank’s asset purchase program, financed by issuance of central bank reserves, to $431.7 billion, bank officials said.

Businesses in the United Kingdom welcomed the move.

In a statement, the bank’s Monetary Policy Committee explained why it acted.

“The pace of global expansion has slackened, especially in the United Kingdom’s main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery.”

“In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated. The squeeze on households’ real incomes and the fiscal consolidation are likely to continue to weigh on domestic spending, while the strains in bank funding markets may also inhibit the availability of credit to consumers and businesses.”

“While the stimulatory monetary stance and the present level of sterling should help to support demand, the weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.

“CPI inflation rose to 4.5 percent in August. The present elevated rate of inflation primarily reflects the increase in the standard rate of VAT in January and the impact of higher energy and import prices. Inflation is likely to rise to above 5 percent in the next month or so, boosted by already announced increases in utility prices,” the committee added.

“But measures of domestically generated inflation remain contained and inflation is likely to fall back sharply next year as the influence of the factors temporarily raising inflation diminishes and downward pressure from unemployment and spare capacity persists,” the committee explained.

“The deterioration in the outlook has made it more likely that inflation will undershoot the 2 percent target in the medium term. In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the Committee judged that it was necessary to inject further monetary stimulus into the economy.”

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London, United Kingdom (AHN) – People in the United Kingdom are not saving enough for retirement through an employer-sponsored or private pension, according to several surveys.

A survey done by HSBC of 17,000 people in 17 countries found that only 39 percent of people in the UK have a financial plan to save for their retirement compared to up to 84 percent of people in Malaysia.

While another survey of 4,177 UK employees by the National Association of Pension Funds and YouGov found that 49 percent of workers in the UK had savings for retirement through pension at their workplace or a private pension plan.

The latter survey also found that 34 percent are relying on a state pension, 21 percent say they plan to put money into an individual savings account and 17 percent say they plan to invest in real estate as a way to fund their retirement.

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London, United Kingdom (AHN) – Just a day after Iceland rejected a referendum on repayment plan, the British and Dutch governments have decided to take the Nordic country to the court to recover their $578,000,000, which was lost when Icelandic savings bank Icesave collapsed.

The British and Dutch governments had asked their depositors to bail out the money to Iceland, however, the collapse prompted them to demand their money back. Only 40.9% votes were in favor and 59.1% were against it.

Responding to the vote, the British government said that Iceland’s vote disappointed them, while the Dutch government said that this ended the time for negotiations.

Danny Alexander, UK’s Chief Secretary to the Treasury said that they would take Iceland to the international court.

Speaking on the Andrew Marr program, Alexander said, “It’s obviously disappointing… We tried to get a negotiated settlement. “We have an obligation to get that money back, and we will continue to pursue that until we do… We have a difficult financial position as a country and this money would help,” Alexander added.

Dutch Finance Minister Jan Kees de Jager said that his government would discuss what actions should be taken with Britain, adding that the European Free Trade Association Surveillance Authority would finally resolve this matter.

“I am very disappointed that the Icesave agreement did not get through. This is not good for Iceland, nor for the Netherlands. The time for negotiations is over. Iceland remains obliged to repay. The issue is now for the courts to decide,” De Jager said in a statement.

Meanwhile, Iceland’s Finance Minister Steingrimur Sigfusson said that it would take at least 12 months to resolve this matter in the court. Talking to the BBS, Sigfusson said that the bankrupt bank is still able to pay out 90% of the British and Dutch claims. Iceland’s Prime Minister Johanna Sigurdardottir said that the rejection of the plan had divided the country.

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London, United Kingdom (AHN) – A commemorative mug made to celebrate the Royal wedding of Prince William and Kate Middleton has a major slight flaw – it features the wrong prince.

Alongside Kate Middleton, is her future brother-in-law Prince Harry.

On the back, an inscription reads: “The fairytale romantic union of all the centuries. 29th April 2011.”

It remains unknown if it is a mistake, a deliberate spoof or a marketing person’s clever way to stand out from the pack of wedding knickknacks.

The mug, was reportedly designed by Chinese firm Guandong Enterprises. “Crafted in the finest bone china, it features an exquisite design of the happy couple with ornate gold detailing to honor this great moment in history,” the company says on its website.

“Please be our guests to own this esteemed, limited edition heirloom to celebrate with your work associates, friends, family and loved ones on 29th April 2011.”

It further states in small print states the firm’s products “are not supplied to, or approved by, Prince William of Wales, Catherine Middleton or any member of the Royal Family.”

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London, Britain, United Kingdom (AHN) – Tight finances will continue to squeeze people in Britain, causing more families to struggle to pay debts, according to the Consumer Credit Counseling Service.

Charity CCCS issued the dire forecast in its Statistical Yearbook for 2010 based on an analysis of 470,000 households with debt.

Most people coming to the agency for help managing debt say they are having problems because of a loss of income or rising prices, or a combination of the two.

Homeowners with unsecured debt faced more problems than renters did, CCCS found.

Increases in prices meant that families with children needed more money to meet expenses.

The average age of people who sought advice from the CCCS was 42.

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London, England, United Kingdom (AHN) – British ministers said that the United Kingdom is set to seize the assets of embattled Libyan strongman Moammar Gaddafi in Britain in the coming days.

The minister said the Treasury had established a unit that traced the Libyan dictator’s assets made up of billions of dollars in bank accounts, commercial property and a $15 billion (GBP 10 billion) mansion in London.

The Treasury estimated Gaddafi’s total liquid assets in Britain at $30 billion (GBP 20 billion), mostly in London.

The assets will be frozen as part of a global effort to unseat Gaddafi from his grip on power for decades.

Whitehall, however, emphasized that the ongoing identification and subsequent seizure of the dictators’s assets is secondary to getting Britons out of Libya where the civil unrest keeps building up.

Libyans have taken their cue from Egyptians, who successfully ousted President Hosni Mubarak from power.

On Thursday, British Prime Minister David Cameron – who is in Muscat, Oman for a British Petroleum event – apologized for the problems related to the evacuation of British nationals in Libya. The BP plane that the coalition government borrowed turned out to have mechanical problems and was delayed by at least 10 hours before it could fly out of Gatwick Airport.

While Cameron was in the Middle East, Deputy Prime Minister Nick Clegg was on a family holiday at a ski resort in Davos, Switzerland, causing a vacuum in political leadership in 10 Downing Street.

Clegg had to cut short his vacation and admitted he “forgot” he was supposed to run Britain while Cameron was on an overseas official trip.

Despite the blunders in the evacuation effort, Britons stranded in Libya were finally able to leave the country aboard military planes and a Royal Navy warship.

Cameron said he was disappointed with the decision of British Airways and BMI to cancel scheduled flights out of Tripoli because the government initially held back chartering aircraft so as not to disrupt the scheduled flights of the two commercial air carriers.

Shadow Foreign Affairs Secretary Douglas Alexander, who used to hold the transportation portfolio under the Labour government, said the Tories should have recognized as early as Monday that BA and BMI would likely not fly into a war zone and chartering planes became more difficult because of the high cost of insurance for planes flying into Libya.

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Cairo, Egypt (TML) – Egypt’s transitional government – struggling to restore political quiet after three weeks of turmoil – faces no less formidable a challenge trying to right an economy reeling from the combined impact of shutdowns and strikes, as well as higher inflation and capital flight.

A survey of forecasters taken by The Media Line before unrest broke out saw Egypt’s gross domestic product on track to expand 5.7% in 2011. But David Cowan, economist at Citigroup Global Markets in London, now said the combined effect of lost output and higher inflation eating into people’s income will likely trim growth this year to 1.5%.

“That’s a significant falloff,” Cowan told The Media Line. “It would be very difficult to see growth become negative unless there is a war or something that really damages the economy. But at that rate you’ll be seeing stagnant incomes, because population growth is about 1.5%.”

That will almost certainly complicate efforts by a transitional government to stabilize Egypt and lead the country into promised elections later this year. Many Egyptians – 40% of whom live on $2 a day or less – are counting on the new regime to raise wages, create jobs and contain soaring prices for food and fuel.

As the protests at Tahrir Square wind down, the country has become beset by strikes by everyone from police and ambulance staff to textile workers and employees of the Suez Canal. In a communiqué read out on state television on Monday, a spokesman for the Supreme Council of the Armed Forces called for “national solidarity” and criticized the strikes.

In addition, banks remained closed on Wednesday and are expected to remain so on Thursday, the last day of the business week in Egypt. There was no word on whether they would reopen Sunday. The stock market has been closed for the past three weeks.

The tourism industry, which is Egypt’s single-biggest money maker, remains virtually shut down and unlikely to recover until the unrest is over and political certainty returns, said Jean-Paul Pigat, head of Middle East and North Africa analysis, at Business Monitor International in London.

He estimated that Egypt’s GDP growth in the current fiscal year, which ends in June, will slow to 3.2% from a previous forecast of 5.1%.

Aside from domestic turmoil, Egypt’s economy faces the inflationary impact of climbing global prices for food and energy.

Higher petroleum prices will boost revenues from the Suez Canal, a major route for the world oil trade, and lift incomes and job prospects for Egyptians employed in the oil-rich Gulf, Cowan said. But steeper inflation will cut into people’s income, reducing their purchasing power, he said. He forecasted consumer prices rising to a 15% year-on-year rate by the end of 2011 from an average of 11% last year.

However, Pigat told The Media Line that the most serious immediate problem facing the government was the flight of capital out of the country.

Investors moved hundreds of millions of dollars out of the country on January 26 and 27, prompting the central bank to shut the country’s banks for a week. Although Egypt’s Commercial International Bank (CIB) said on Tuesday its clients transferred abroad only 25% of what it had been preparing for, Pigat and other analysts said the flow was likely to resume. The re-opening of the stock market could boost it.

“It’s undeniable that capital is flowing out of the economy, which is one of the reasons they were forced to close the banks,” Pigat said. “That’s the biggest risk to the economy going forward. It has pronounced implications for balance of payment and Egyptian pound.”

In Egypt’s favor, the central bank has $35 billion of foreign currency reserves, enough to cover seven months worth of imports. That, together with possible imposition of currency controls, could prevent a severe depreciation of the Egyptian pound, Pigat said.

But otherwise, Egypt’s government will be strapped for funds to address the economy. Before the outbreak of unrest, it was running a budget deficit equal to 8% of GDP, which Moody’s Investors Service termed “stretched” when it cut the country’s credit rating January 31. Cowan said that could reach as much as 11% this year.

A fund manager, who spoke on condition of anonymity, told The Media Line that the kind of things the government needed to do in order to assuage protestors would be economically beneficial and require policies that are business-friendly so as to encourage foreign direct investment (FDI).

“People in the streets are asking for three things – to improve the poverty situation, for jobs and free elections,” the fund manager said. “The first two are economic drivers – higher employment and more subsidies for basic needs. The government doesn’t have resources to boost subsidies without higher taxes. But, if they increase taxes, there will be less spending and fewer job opportunities. That means they will turn to FDI.”

But Pigat said he was less optimistic because Egypt’s military is in control of the transition and might continue to wield power even after elections. The army owns vast swathes of the economy, including land, factories and tourism enterprises and will be loathe to cede it to the private sector or to increased competition.

“We don’t have any certainty that any new government will be more business friendly or more willing to push through business reforms,” Pigat said.

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London, United Kingdom (AHN) – British Business Secretary Vince Cable on Wednesday unveiled new programs aimed at increasing exports by small companies to reverse the nation’s trade deficit.

Cable explained that the UK had racked up a trade deficit in goods and services by consuming too much while exporting too little.

It is a problem shared by many other countries around the world, with the notable exception of exporting giant China.

The gap between the goods and services that the UK imports compared to those it exports grew to $7.78 billion in December, which was the highest level since August 2005.

The government has come up with plans to help boost trade and investment along with exports by small UK companies. The government will offer companies more access to help such things as credit, insurance and financing specifically for exporting.

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Cairo, Egypt David Rosenberg – Protestors are still camped out at Tahrir Square and haven’t backed down on their demand that President Husni Mubarak resign immediately, but the rest of Egypt is slowly getting back to business.

Economists, investors and policy makers are assessing the damage.

Starting over the weekend, banks re-opened on a limited basis as did stores, offices, schools and factories. And, serving as evidence that business returning to usual, Cairo’s traffic jams reappeared. The Egyptian pound resumed trading and showed surprising resilience in spite two weeks of political and economic trauma.

“People are returning to work, deliveries have resumed and goods are reaching markets,” Simon Kitchen, economist at EFG-Hermes, a Cairo-based investment bank, told The Media Line. “It’s still an environment where things can change quickly, but it’s an encouraging sign.”

A stalemate between the government and the opposition showed its first signs of resolving early this week when a group of opposition leaders met with Vice President Omar Suleiman to discuss political reforms. Although nothing substantive came out of the talks, the meeting suggested that opposition leaders were ready to let Mubarak remain until the end of his term while the government met other demands for greater democracy.

Not all of Egypt was shut down by the unrest. The Suez Canal, a major source of income for the economy, remained opened. Egyptians working abroad, who sent some $9.5 billion in earnings to their families back home in the last fiscal year, were able to resume sending funds after a brief hiatus when local banks were closed.

Many businesses, especially those furthest away from the epicenter of the protest in central Cairo as well as those that are less labor intensive, continued to operate even last week as the economy came its closest to a complete shutdown.

But many of the businesses that had closed resumed activity Sunday and Monday. Orascom Construction, Egypt’s biggest company, said it has started up work at 50 building sites, accounting for 90 percent of its activities. The state-run Korean Investment Promotion Agency said that operations returned to normal at two of four Egyptian factories operated by South Korean companies.

Yet, not everything was back to normal. Cairo’s stock exchange won’t open until next Sunday at the earliest, bourse officials said. Tourists who were in the country when unrest broke out have fled, curtailing the peak winter travel season. The curfew imposed by the government to contain the unrest continued to taking a toll on business, said Magda Kandil, executive director and director of research at the Egyptian Centre for Economic Studies.

Egyptians traditionally do their shopping and socializing in the evening while many people, especially those employed in the civil service, hold down two or three jobs and work late into the night, Kandil told The Media Line. But, for now, people are supposed to be off the streets by 7 p.m. local time.

Economists said that even those businesses that were shut should be able to earn back their losses with extra shifts. The one key sector that remains vulnerable to the turmoil is tourism, which is Egypt’s single biggest money earner and accounts for about 10 percent of GDP, Kitchen said. He said investment may also take time to revive since it is so reliant on sentiment.

Nevertheless, Egyptian exports shrank 6 percent in January, although Kandil noted that other factors besides political turmoil may have played a role, including the bombing of an Alexandria church New Year’s Eve and a shark attack at Egypt’s Sinai coast resort area.

Bank Credit Agricole estimated last week that the unrest cost Egypt’s economy some $310 million a day, or a total of more than $3 billion so far. It revised its forecast for 2011 GDP growth to 3.7 percent from 5.3 percent and said the Egyptian pound could depreciate as much as 20 percent.

Moody’s Investors Service warned on Jan. 31 that the tense political situation may hurt the economy as the government tries to win public support by increasing subsidies and raising wages. Moody’s downgraded the country’s debt and assigned it a “negative” outlook, saying looser purse strings would widen an already yawning budget deficit equal to 8 percent of gross domestic product and fan inflation.

Samir Radwan, Egypt’s new finance minister, told a news conference in Cairo on Sunday that the government won’t reduce subsidies even if global prices of food and commodities rise. Public spending will be used as a tool to “achieve social justice,” he said.

In fact, the markets’ response to the turmoil in Egypt has so far been muted. The Egyptian pound traded at a six-year low on Monday, but the sell-off was less severe than expected. Egypt’s London-listed stocks were all higher and the cost of insuring Egypt’s debt fell in the five-year credit default swap market.

Kandil told The Media Line that the political reforms now being discussed would likely give a boost to the economy, which expanded 5.2 percent last year, but need to hasten the pace to bring down unemployment, increase incomes and create jobs for a rapidly growing population. She said foreign investors had until now been hesitant to put long-term capital into the Egyptian economy out of concerns about political stability and the future of Mubarak’s regime.

“The reform involves changing institutions that would make governance and the fight against corruption much better going forward,” Kandil said. “If some of the changes in the pipeline are implemented swiftly, they should help economy to pick up momentum in the second half of 2011.”

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London, United Kingdom (AHN) – By a vote of 323 to 301, the British Parliament on Thursday approved tuition fee hikes by an average of $9,440.00 per year and tripled the upper limit to $14,159.00 per year in “exceptional” circumstances even with students protesting outside.

The sluggish economy made the tuition fee hikes even more unpopular and drew protesting students from around the country.

However, politicians successfully argued that the hikes were fair and necessary to maintain the quality of the universities. Opposing MPs had argued that if the government merely instituted the same level of cuts to university funding that it would have only resulted in raising tuition and fees by a more modest $6,301.00 per year.

Clashes between police and students resulted in injuries to six police officers, according to Scotland Yard. In addition, at more than a dozen protestors have been injured and at least six people have been hospitalized.

Mounted police were used to control crowds of people waiting outside Parliament. Protestors forced their way into Parliament Square and up to police lines where they threw missiles, flares, used sticks, and paint balls, according to police.

Even Prince Charles and his wife Camilla, Duchess of York, were not immune from the wrath of protesting students. Prince Charles’ car was attacked by demonstrators who broke a car window and hit the car with paint balls. However, neither the heir to the throne nor his wife was apparently hurt.

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