UK household spending drops for first time in 10 years.

Figures released from the Office for National Statistics (ONS) revealed the impact the recession had on households across the UK. Data from the ONS annual Family Spending Report showed the average household spent £455 a week in 2009, lower than the £471 seen in 2008.

The report showed just how affected consumer confidence was in 2009 following the recession, as spending hit a 21-month low.

Interestingly, the figures revealed high earners were hit particularly hard during the economic crisis, with families in the top tenth income bracket reducing spending by nearly 12 per cent.

ONS statistician and report editor, Giles Horsfield said: “Higher expenditure on some housing related costs such as rent, electricity and gas [was] offset by lower spending on mortgages.”

Further figures from ONS revealed consumer spending in 2010 is on the rise with data leading to an increase in 7%, despite the looming VAT increase and the announcement of comprehensive public spending cuts.

Experts warn Irish crisis could have knock-on effect on the rest of the eurozone.

 As the Irish government unveiled their four-year plan to save 15bn euros, financial experts have voiced their fears that the problems will spread across the rest of Europe and will be detrimental to the future of the euro altogether.

While it may not mean the death of the euro as a whole, Lionel Barber, editor of the Financial Times said a “change in the structure and make-up of the eurozone may be necessary to ensure its survival.”

The euro has fallen by 1.9% against the dollar to less than $1.34 leaving investors fearing that other European countries may seek financial help in the near future.

Mr Barber added: “We are not seeing the death of the single currency; there are a lot more cards to play. What we may be seeing if the beginning of a change in the eurozone, so in other words the euro may survive but the eurozone in its present form, with its present membership, may not.”

Klaus Regling of the European Financial Stability Facility has rejected claims of a failure in the eurozone, branding it “inconceivable”.

Mr Regling said any countries giving up the euro would only face “economic suicide.”

Government warns that private sector must pick up the slack from public spending cuts.

The Government has said that the public spending cuts announced by George Osborne could bring 490,000 public sector job losses to the UK and the private sector should benefit.

Along with the cuts, the Chancellor announced that businesses would see a £7bn tax cut in the budget with hopes to instil the promise that taxes will be lower in future.

The Telegraph reported that chief economic advisor to the Ernst & Young ITEM Club, Peter Spencer said: “The Government has bent over backwards to produce business-friendly policies…Companies now have to step up to the plate.”

Forecasting a positive economy, Spencer added: “Large companies are in excellent shape, with plenty of opportunities for investment and employment and the financial strength to exploit them.”

General secretary of the TUC, Brendan Barber disagreed, claiming that regions with weak private sectors will suffer from the cuts as they struggle to provide the resources.

Barber said: “Public sector job losses are likely to occur in some of the UK’s more depressed regions where private sector job creation is already extremely poor. Job losses will depress local economies even further.”

Feeling the strain of competitors, Nokia announces plans to cut 1,800 jobs.

The mobile phone maker announced the extensive cuts in a bid to push out smartphone competitors. New boss, Stephen Elop has made his intentions to reassess the business known within the company with the job slash. 

With plans to focus on customer demands rather than introducing new products into the market, HR boss Juha Akras said: “We are committed to managing these changes in a way that reflects Nokia’s values, and will support affected employees with alternative solutions, such as helping them find new positions within the company.”

In terms of smartphones, sales may have risen by 61% compared to last year, but Nokia is up against fierce competition with Apple’s iPhone and the introduction of Google’s Android. 

Meanwhile, Apple has seen profits soar by 70% as the iPhone remains stable in the smartphone market.

More worries for UK economy – are we heading for a double dip recession?

A worrying report from the British Chambers of Commerce (BCC) warned that UK economic growth in the third quarter of this year was “considerably” slower than the previous quarter and businesses could still face trouble in months ahead.
With Christmas fast approaching and the VAT increase being introduced in January, it was thought that shoppers would try and get their festive purchases early but it seems the report has rejected the assumption.

A survey from the British Retail Consortium (BRC) revealed similarly concerning results showing that growth in the UK retail market slowed from 1% in August to 0.5% in September.

Although of course, these figures could change very quickly, it is a clear sign that the UK is not out of the water just yet.

Director general of the BRC, Stephen Robertson said: “We’ve now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future.”

He added: “It’s clear people are cautious and major spending is largely on hold.”

Punch Taverns set to sell 1300 pubs - Which other operators will follow suit?

Punch Taverns has made the bold move of selling off the parts of its business that are no longer profitable. In the face of difficult trading conditions and falling profitability across the group, the board have taken the necessary steps needed to get their business back into good shape.

But Plimsoll has asked the questions - Which other operators need to follow suit and how many pubs will be lost as a result. The Plimsoll Analysis has picked out the following findings that point to the depth of the issues facing pub operators in Britain today:

- The average profit margin is down to just 0.4%
- 372 operators have posted a loss for at least 2 years running
- 265 companies have seen the value fall by over 30% in the last year

With so many pubs and their operating companies in difficulty it seems inevitable that the speed with which to good old British pub is disappearing will increase in 2011. The question is - which pub will be next?