Scotsman.com:

Medium-term prospects for the British economy may have improved after a report today pointed to faster productivity growth in three quarters of the UK’s “regions”.

Research by the Centre for Economics and Business Research (CEBR) suggests that productivity, or output per worker, is set to accelerate in nine out of the 12 regions between now and 2015 compared with 1998-2008.

The biggest increase in productivity growth is forecast for Wales, rising from an annual rate of just 0.6 per cent to 1.5 per cent. Other regions where a substantial improvement is expected include Yorkshire and Humberside and the West Midlands.

Less significant rises are forecast for Scotland, where output growth is predicted to nudge up from an already robust 1.3 per cent to 1.4 per cent, Northern Ireland and the north-east of England.

Read More: http://business.scotsman.com/business/Productivity-boost-for-UK39s-ailing.6712579.jp

From Citywire:

The data on the services sector, which accounts for around three quarters of the economy, rebounded sharply from December’s lows and hinted at some reasonably solid growth.

There was a similarly upbeat picture in the construction and manufacturing surveys. Manufacturing has been one area of the economy that has been consistently strong for a few months now. But before anyone gets too carried away thinking this may be a re-birth of industry, we need to remember that the sector shrank more than the others during the recession.

And if, as some data suggests, the sector has been bolstered by a weak pound then the renewed talk of interest rate increases in the months ahead is another cause for concern. Higher rates mean a stronger pound which could hobble the sector going forward.

From the BBC:

The pound has risen to its highest level against the dollar in three months, buoyed by a return to growth in the construction sector in January.

The Markit/CIPS UK Construction Purchasing Managers’ Index rose to 53.7 in January, beating forecasts of 49.9. A reading above 50 indicates growth.

In December, when heavy snow disrupted building work, the index read 49.1.

After the release of the data, sterling rose 0.5% on the day to $1.6232, its strongest since 5 November.

It also strengthened against the euro, rising 0.6% to 1.1741 euros.

More: http://www.bbc.co.uk/news/business-12343459

From the BBC (http://newsvote.bbc.co.uk/1/hi/business/8365939.stm):

Festive sales will start early this year – including price cuts on Christmas Day – as VAT is set to rise, a retailing expert has said.

However, discounts will not be as generous as last Christmas, according to Don Williams, head of retail at accountancy firm BDO Stoy Hayward.

Debenhams started a £250m price cutting campaign with a four-day sale on Wednesday, six weeks before Christmas.

Many retailers are expected to promote cheaper prices before VAT rises.

The tax will revert to 17.5% on 1 January, having been cut to 15% in November 2008.

The buy-to-let mortgage market grew for the first time in two years during the third quarter, figures have showed.

A total of £2.1 billion was advanced to investment landlords during the three months to the end of September, 10% more than during the previous quarter, the Council of Mortgage Lenders said.

But despite the improvement, the figure was still the second lowest since records began in 2006 and well down on the peak of £12.4 billion which was lent during the third quarter of 2007.

There was also a 10% increase in the number of buy-to-let mortgages advanced during the three months, at 23,700, up from 21,600 during the previous quarter.

Source – Press Association – http://www.google.com/hostednews/ukpress/article/ALeqM5grnCX0gpcdRIO60b52B5zOAisOpQ

The UK economy has “only just started” along its road to economic recovery, according to Bank of England governor Mervyn King.

In its latest inflation report, the Bank indicated it would be late 2011 before the UK economy recovered to the level it was at before the recession.

Mr King also warned inflation may “rise sharply over the next few months”.

He also said the Bank was “open minded” about extending its programme of pumping money into the economy.

Last week, the Bank extended the programme – a policy of injecting money into the economy through buying bonds from banks and other companies called quantitative easing – by £25bn.

http://news.bbc.co.uk/1/hi/business/8353931.stm

Worrying news from the BBC:

Bad credit card debts may reach as much as 9% of all outstanding balances by the end of next year, an accountancy firm has said.

“Bad debts in the sector have reached historic highs,” according to PricewaterhouseCoopers (PwC). The figure stands at about 6% now.

This comes despite a “cooling passion” for credit cards, with borrowing down 3% to £64bn in the past year.

The number of credit cards in circulation has fallen by 8%, it said.

Full article: http://news.bbc.co.uk/1/hi/business/8349153.stm

News from the BBC:

A record number of people were declared insolvent in England and Wales in the third quarter of 2009, according to figures from the Insolvency Service.

There were 35,242 personal insolvencies, up 28% from the same period last year and an increase of 6.6% on the previous three months.

This extended the record number which was reported earlier this year.

But there was better news for business, with 4,716 company liquidations, down 4.7% quarter-on-quarter.

However, the number of businesses in England and Wales going bust in the third quarter of the year was still 14.6% higher than the same period a year ago.

http://news.bbc.co.uk/1/hi/business/8346170.stm

News from the BBC:

A big shake-up of UK banks with taxpayer support will be unveiled on Tuesday, the BBC understands.

Announcements on the future of Lloyds and Royal Bank of Scotland will be made jointly by the banks and the Treasury.

Lloyds is expected to say it will raise more than £20bn from investors in return for staying out of the state-run insurance scheme to cover toxic loans.

Both will also have to set up new banks out of their existing branch networks and sell them within four years.

The creation of the new banks is on the instruction of the European Competition Commissioner Neelie Kroes and is supposed to boost competition.

RBS is also expected to confirm that it will participate in the government’s toxic loan scheme, but on different terms.

The bank, which is 70% state-owned, would buy an insurance policy from the government to cover future losses from some of its more toxic investments.

The Bank of England’s rate-setters have decided to pump another £50bn of new money into the economy in their programme of quantitative easing.

It will take their total spending to £175bn, unexpectedly going over the £150bn set aside by the chancellor.

In a statement, they said that the UK recession “appears to have been deeper than previously thought”.

The rate-setters also decided to keep interest rates unchanged at their historic low of 0.5% for a fifth month.

http://news.bbc.co.uk/1/hi/business/8187360.stm