PRESS DIGEST - Financial Times - June 20

The Financial Times

MPC SWITCH INCREASES CHANCE OF RATE RISES

On Thursday, economists warned that, as Mervyn King gained more authority over the Bank of England's monetary policy, interest rates are more likely to increase as a result of the MPC's new composition. The comments came as the Bank's chief economist, Charlie Bean, was appointed deputy governor, while Spencer Dale, a career economist at the Bank, was promoted to chief economist. The appointments were enough to send interest-rate futures markets higher.

ONS DATA SHOW SURPRISE INCREASE IN RETAIL SPENDING

The Office for National Statistics released figures on Thursday to show that retail volumes increased by 3.5 per cent in May. In the last three months, sales rose 1.8 per cent on the previous quarter and 5.4 per cent since the same period a year earlier. Despite soaring food price inflation, coupled with an unprecedented rebound in sales of clothing, a record monthly growth in food sales gave few signs that consumers were suffering from rising living costs.

MINISTERS' TEENAGER PROBLEM IMPROVES

England's Neet rate has fallen for the second year in a row, promising the beginning of the end for one of ministers' most intractable problems. According to provisional figures from the Department for Children, Schools and Families, the Neet total dropped to 9.4 per cent of England's 16 to 18-year-old population at the end of 2007. Neets became a massive problem for the government, but also concerned experts of all political hues. This is because of evidence that young people with such a bad beginning to their working lives are damaged permanently.

SFO HEAD WARNED OVER REFORM PLANS

Investigators, lawyers and pressure groups have warned that the fight against financial crime is in danger of being undermined by contentious reforms mooted by the new head of the Serious Fraud Office. Fraud experts are worried that Richard Alderman, director of the SFO, would cut back the number of criminal cases the agency brought against big companies and senior executives. One leading defence lawyer said: "The SFO is on a government-directed path to destruction." The criticisms add to concerns about the future of the SFO less than two weeks after it announced the departure of a third of its senior management.

HAVE A HOLIDAY, WHATEVER THE COST

Three-fifths of holidaymakers admit to overspending on foreign breaks, despite the credit crunch and the fear of a looming recession. According to a survey by National Savings & Investments, half of those surveyed claim they did not care about spending too much. Even though the UK is in an uncertain economic climate, 49 per cent of holidaymakers believe they deserved to cut loose because they had worked hard all year. Almost a third also said they lost track of their spending because they were caught up in the holiday spirit. One in 10 spends over 2,500 pounds on their holiday, which shows that the overspending is often more than just loose change.

MULBERRY TO DIP ITS TOES INTO SHOES

Mulberry Group (MUL.L)J said it had not experienced the pain felt by others in the high street, and is planning new product launches, such as women's shoes. In a similar vein to Burberry (BRBY.L), the company brushed aside fears the financial crisis would harm demand for its upmarket products. Godfrey Davis, chairman and chief executive, said: "The truth is that we haven't felt the impact of that tough climate. In our stores it's not immediately apparent to us." Its shares increased 9.4 per cent to 162.5 pence.

LAND OF LEATHER RAISING 13.5 MILLION POUNDS TO STAVE OFF CRISIS

Land of Leather LAN.L has persuaded new and existing shareholders to buy more equity in an attempt to resolve an immediate cash crisis. However, shares in the retailer fell to below a heavily discounted five pence placing price as it outlined plans to raise 13.5 million pounds in an emergency working capital-raising. The executive chairman, Roger Matthews, said he was pleased the banks had undertaken the fund raising exercise in the face of tough market conditions, especially as it was ahead of rivals also looking to tap the markets for cash. Mr Matthews said: "There is going to be a fairly long queue."

ECONOMIST GROUP UPBEAT ON ADVERTISING