Sky News - Total UK Wealth Tops £7trn As Rich Get Richer

Total wealth includes both household and financial assets

Total household wealth in the UK has soared past the £7trn mark for the first time but society is becoming more divided, according to new research.

Net wealth - the value of residential buildings and financial assets less outstanding debts - is estimated to have hit £7.05trn at the end of 2012.

But the increase has not been shared equally between the top and bottom rungs of society, with the top 10% accumulating wealth at a much greater rate.

Researchers for Lloyds TSB Private Banking said that despite the current tough state of the economy, there has been a £2.71trn increase over the past decade, equal to a gain of £86,000 per household since 2003.

Lloyds said a rise in financial assets has boosted the increase in household wealth over the last decade, contributing £1.7trn to the overall increase.

The value of household wealth has grown at a faster rate (62%) than either gross household disposable incomes (44%) or the consumer price index (29%), since 2002.

Financial assets include bank and building society deposits, government bonds, shares in listed companies, life assurance and pensions.

Meanwhile, housing wealth has increased by £1trn over the past decade as the value of property has risen by more than the increase in mortgage debt.

Lloyds economist Nitesh Patel said: "Most of this increase came during the 'boom' years prior to 2007 when the economy grew rapidly, with rising employment and incomes."

However, not everyone has gained equally with the stratification of society strengthening, according to the research.

"While wealth has soared in the past decade, there is a large divide in where it has accumulated," Mr Patel said.

"The wealthiest 10% of households hold 22 times more wealth, on average, than those in the bottom half."

Lloyds used official figures as well as those from its own database to make its findings.

BBC News - Bank of Japan begins stimulus sending Yen lower

The Japanese yen has dropped to its lowest level since 2008 against the US dollar after the central bank began the latest round of its stimulus programme.

The yen fell as low as 98.85 against the dollar, before rebounding slightly.

Investors said the central bank's plan to buy assets worth trillions of yen, which has government backing, would continue to weaken the currency.

As a result, the yen may break through the 100 mark against the dollar as early as this week.

"This has really shaken up many people's attitudes toward the Bank of Japan and the new government," said Andrew Wilkinson, chief economic strategist at Miller Tabak and Co in New York.

"It feels like it's gathered a whole new momentum behind it, as the doubters have joined the bandwagon and it's becoming a self-fulfilling prophecy."

Last week, the central bank said it would double the supply of the currency in the market.

It added that it would be much more aggressive in pursuing a 2% inflation target to boost growth.

A weak yen helps Japanese exporters keep their products competitive, as well as boosting profits earned overseas.

On Monday, exporters helped push the main Nikkei 225 stock index 3.1% higher, before the gains were pared back in later trading.

Bloomberg News - Draghi Signals ECB Stands Ready to Ease Policy If Needed

Draghi Signals ECB to Keep Policy Loose, Ease Again if Needed

Ralph Orlowski/Bloomberg

Mario Draghi, president of the European Central Bank (ECB).

European Central Bank President Mario Draghi said the bank stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth as the debt crisis enters its fourth year.

“Our monetary policy stance will remain accommodative for as long as needed,” Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark interest rate at a record low of 0.75 percent. “We will assess all the incoming data in the coming weeks and we stand ready to act.”

With doubts growing about Draghi’s forecast for an economic recovery later this year, the ECB is looking at a range of measures including lower rates, more long-term loans to banks and a program to encourage lending to small- and medium-sized companies, three officials with knowledge of the deliberations said this week. The ECB president said today that officials are “looking at various instruments,” though he stopped short of saying what they would be.

The yield on France’s 10-year bond yield fell to a record low after Draghi’s remarks, declining to 1.893 percent, the lowest since Bloomberg started compiling data in 1990. The euro initially dropped before rebounding to $1.2862, almost unchanged from its level at the start of the day.

‘Highly Likely’

An interest-rate cut “now looks highly likely,” said Howard Archer, chief European economist at IHS Global Insight inLondon. “Indeed, it is very possible that the ECB could trim interest rates to 0.5 percent as soon as at its May policy meeting.”

Draghi said risks to the economic outlook remain on the downside and inflation is “edging down well below” the ECB’s 2 percent target. It will slow to 1.3 percent next year from 1.6 percent this year, according to ECB forecasts.

“We are considering both standard and non-standard measures” to increase stimulus, Draghi said.

Draghi spoke hours after Bank of Japan (8301) Governor Haruhiko Kuroda began his unprecedented onslaught to end 15 years of deflation. The BOJ said it plans to purchase 7.5 trillion yen ($78.6 billion) of bonds a month and double the monetary base, which includes cash in circulation, in two years. TheBank of England kept its main lending rate unchanged at 0.5 percent and refrained from expanding its stimulus program.

Exit Struggle

In Europe, evidence is mounting that the 17-nation euro economy is struggling to exit a recession that began more than a year ago, partly as financial institutions restrict access to credit.

The ECB’s measure of bank lending to the private sector fell for a 10th month in February, dropping 0.9 percent from a year earlier. Euro-region manufacturing and services activity, measured by surveys of purchasing managers, contracted more than economists forecast in March.

“Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks,” Draghi said. The consensus at today’s meeting was not to cut rates “for the time being.”

Draghi said that the ECB will examine other countries’ experiences when assessing what further emergency measures to take.

In the U.K., the Bank of England has employed the Funding for Lending Scheme to get credit flowing to companies, while Denmark’s central bank has taken its deposit rate into negative territory, effectively charging financial institutions that park excess cash with it overnight.

Draghi stressed the ECB’s “determination to fight” any speculation of a euro break-up after Cyprus last month became the fifth euro-area nation to secure a bailout. A botched first attempt to rescue Cyprus sent bank shares tumbling across the region and rattled confidence in policy makers’ ability to tame the sovereign debt crisis. Draghi acknowledged that the initial response hadn’t been “smart.”

By Matthew Brockett 

BBC News - Bank of Japan's Haruhiko Kuroda in aggressive growth move

Japan's central bank has surprised markets with the size of its latest stimulus package, as it tries to spur growth and end years of falling prices.

This is is the first policy meeting chaired by new governor Haruhiko Kuroda

The move was seen as a clear signal by the bank's new boss, Haruhiko Kuroda, that he was willing to spend heavily to achieve an inflation target of 2%.

The bank said it would increase its purchase of government bonds by 50 trillion yen ($520bn; £350bn) per year.

That is the equivalent of almost 10% of Japan's annual gross domestic product.

The bank added that it would buy longer-term government bonds as well as riskier assets.

"The previous approach of incremental easing wasn't enough to pull Japan out of deflation and achieve 2% inflation in two years," Mr Kuroda said.

"This time, we took all necessary steps to achieve the target."

Right moves?

Japan's economy has been hurt by a variety of factors, not least decades of deflation or falling prices.

Falling prices discourage people from spending and companies from investing, and that has trapped Japan in a cycle of sluggish growth and recession.

Given the slowdown in Japan's export sector in recent years, reviving domestic demand has become ever more crucial to spurring a fresh wave of economic growth in the country.

Prime Minister Shinzo Abe has also said that stoking inflation is key to boosting domestic consumption.

Under pressure from the government, the central bank had doubled its inflation target to 2%, earlier this year.

Analysts said that while achieving that target was an uphill battle, the central bank's policies indicated that it was moving in the right direction.

"Achieving 2% inflation in two years remains quite difficult. But the possibility of that target being achieved is now much higher than before with these measures," said Yoshimasa Maruyama, chief economist as Itochu Economic Research Institute.

The yen fell against the US dollar, and Tokyo's Nikkei 225 index rose 2.2% on the central bank's decision, indicating markets were reacting positively to the extent of the stimulus measures.

'Abenomics'

Prime Minister Shinzo Abe, who was elected last year, has been pushing for the Bank of Japan to do more to help the economy.

His plan, a combination of big government spending as well as an aggressive central bank asset buying programme, has been dubbed Abenomics.

Mr Kuroda, who was nominated by Mr Abe for the top job at the central bank, is seen as sharing those views, which are a departure from the BOJ's previous stance.

On Thursday, the bank said it would increase its purchases of Japanese government bonds and extended the average maturity of the bonds it purchases from three years to seven years.

The bank added that it would also buy relatively riskier assets such as exchange-traded funds and real estate trust funds.

The decisions passed with unanimous votes from the board of the central bank, despite earlier reports that Mr Kuroda may not win the backing of his colleagues for the measures. The strength of support is an indication that this would mark the beginning of Mr Kuroda's shift towards more aggressive monetary easing.

Mr Kuroda has previously said that he would do "whatever it takes" to drive growth.

Analysts said the moves by the central bank indicated that he was delivering on the earlier rhetoric.

"Kuroda made good on his promise of boosting monetary easing in terms of both volume and types of assets that the bank purchases," said Junko Nishioka, chief Japan economist at RBS Securities in Tokyo.

"Today's decision was far more than market expectations given some scepticism among market players beforehand that the BOJ may not decide on aggressive policy steps this week."

However, some observers have expressed concern that this new strategy may leave Japan, which already has the largest debt pile of any industrialised nation, even more in the red.

Reuters News - Fed officials are somewhat more upbeat on economic growth

1 of 2. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, participates in a session titled, ''Help or Harm: Central Bank Monetary Policies at the Outer Limits'' NABE Economic Policy Conference in Washington March 5, 2013.

Credit: Reuters/Yuri Gripas

RICHMOND, Virginia | Tue Apr 2, 2013 9:50pm EDT

(Reuters) - Two Federal Reserve officials voiced cautious optimism on Tuesday that the economy was on a lasting upswing, but they offered differing views on what that outlook ought to mean for the central bank's controversial program of buying bonds to stimulate growth.

"At some point we will reduce the flow rate and end this program," Charles Evans, president of the Chicago Federal Reserve, told reporters. "It could well be later in the year."

Jeffrey Lacker, head of the Richmond Fed and who spoke in a joint appearance with Evans, said he had been impressed by the resilience of U.S. consumers during the first quarter, but was not yet ready to upgrade his forecast for growth a bit above 2 percent in 2013.

Lacker is a noted inflation hawk while Evans is known for his dovish posture on policy.

 

(Reporting By Alister Bull; Editing by Leslie Adler)

Sky News - Triple-Dip Recession 'To Be Avoided': BCC

The UK's manufacturing and services sectors have strengthened in the first quarter of the year, according to the British Chambers of Commerce (BCC).

The group's survey of more than 7,000 businesses revealed that export orders and sales in services were particularly strong - close to their all-time high in 1994.

Investment levels and business confidence about the next 12 months also increased over the period, the BCC said.

It comes ahead of GDP figures for the first quarter of the year - which, if negative, would mean that Britain had slipped into its third recession in less than five years.

But the BCC's chief economist, David Kern, said its survey results showed the economy had continued to grow at the start of 2013.

"The survey reinforces our assessment that recent GDP figures published by the Office for National Statistics have exaggerated the weakness of the UK economy and the volatility in output," he said.

"If an announcement of negative growth in the first quarter is misleadingly described as a triple-dip recession, confidence will again be damaged unnecessarily."

The EEF said the poor state of the UK's roads were hitting businesses

The BCC warned that despite the economic improvements, most of the group's key indicators remain below their pre-recession levels, last seen in 2007.

But the survey's positive report on Britain's manufacturing contrasts with separate figures which showed a contraction in the sector for the second consecutive month in March.

The Markit/CIPS manufacturing purchasing managers' index came in weaker than forecast for the month, but was slightly higher than February's four-month low.

In response, EEF manufacturers' organisation said there had been little to suggest the sector had staged a recovery in the first quarter of the year – despite the BCC’s survey.

"The continued weakness in the PMI is disappointing overall, but of particular concern is another month of falling export demand," the EEF's chief economist Lee Hopley said.

"While manufacturers have made some good gains in non-EU markets over the past couple of years, the ongoing drag on orders from the eurozone is still significant and likely to impact on prospects over the coming months."

It comes as the group called on the Government to boost spending on roads - ahead of investment in high speed rail.

The EEF said that half of their members said their operating costs were significantly higher because of the poor state of the UK's roads.

It said an independent infrastructure commission should be set up to "take the politics out of" spending plans.

Reuters News - South Korea vows fast response to North; U.S. deploys stealth jets

By Jack Kim

SEOUL | Mon Apr 1, 2013 2:55am EDT

(Reuters) - South Korea will strike back quickly if the North stages any attack on its territory, the new president in Seoul warned on Monday, as tensions ratcheted higher on the Korean peninsula amid shrill rhetoric from Pyongyang and the U.S. deployment of radar-evading fighter planes.

North Korea says the region is on the brink of a nuclear war in the wake of United Nations sanctions imposed for its February nuclear test and a series of joint U.S. and South Korean military drills that have included a rare U.S. show of aerial power.

North Korea said on Saturday it was entering a "state of war" with South Korea in response to what it termed the "hostile" military drills being staged in the South. But there have been no signs of unusual activity in the North's military to suggest an imminent aggression, a South Korean defense ministry official said last week.

"If there is any provocation against South Korea and its people, there should be a strong response in initial combat without any political considerations," President Park Geun-hye told the defense minister and senior officials at a meeting on Monday.

The South has changed its rules of engagement to allow local units to respond immediately to attacks, rather than waiting for permission from Seoul.

Stung by criticism that its response to the shelling of a South Korean island in 2010 was tardy and weak, Seoul has also threatened to target North Korean leader Kim Jong-un and to destroy statues of the ruling Kim dynasty in the event of any new attack, a plan that has outraged Pyongyang.

Seoul and its ally the United States played down Saturday's statement from the official KCNA news agency as the latest in a stream of tough talk from Pyongyang.

North Korea stepped up its rhetoric in early March, when U.S. and South Korean forces began annual military drills that involved the flights of U.S. B-2 stealth bombers in a practice run, prompting the North to puts its missile units on standby to fire at U.S. military bases in the South and in the Pacific.

The United States also deployed F-22 stealth fighter jets on Sunday to take part in the drills. The F-22s were deployed in South Korea before, in 2010.

On its part, North Korea has cancelled an armistice agreement with the United States that ended the Korean War and cut all hotlines with U.S. forces, the United Nations and South Korea.

NUCLEAR WEAPONS "NOT A BARGAINING CHIP"

Park's intervention came on the heels of a meeting of the North's ruling Workers Party Central Committee where leader Kim Jong-un rejected the notion that Pyongyang was going to use its nuclear arms development as a bargaining chip.

"The nuclear weapons of Songun Korea are not goods for getting U.S. dollars and they are ... (not) to be put on the table of negotiations aimed at forcing the (North) to disarm itself," KCNA news agency quoted him as saying.

At the meeting, Kim appointed a handful of personal confidants to the party's politburo, further consolidating his grip on power in the second full year of his reign.

Pyongyang took part in nuclear disarmament talks for five years aimed at paying it off in return for abandoning its atomic weapons program. Those talks fell apart in 2008. Some experts say the talks gave the North grounds to pursue a highly enriched uranium program that took it closer to owning a working arsenal.

Songun is the Korean word for the "Military First" policy preached by Kim's father who used it to justify the use of the impoverished state's scare resources to build a 1.2-million strong army and a weapons of mass destruction program.

CALLS FOR RESTRAINT

White House National Security Council spokeswoman Caitlin Hayden said North Korea's announcement that it was in a state of war followed a "familiar pattern" of rhetoric.

China has repeatedly called for restraint on the peninsula.

However, many in South Korea have regarded the North's willingness to keep open the Kaesong industrial zone, located just a few miles (km) north of the heavily-militarized border and operated jointly by both sides, as a sign that Pyongyang will not risk losing a lucrative source of foreign currency by mounting a real act of aggression.

The Kaesong zone is a vital source of hard currency for the North and hundreds of South Korean workers and vehicles enter daily after crossing the armed border. It was still open on Monday despite threats by Pyongyang to shut it down. Closure could also trap hundreds of South Korean workers and managers of the more than 100 firms that have factories there.

The North has previously suspended operations at the factory zone at the height of political tensions with the South, only to let it resume operations later.

(Additional reporting by Paul Eckert in WASHINGTON; Editing by David Chance, Raju Gopalakrishnan and Ian Geoghegan)