PRESS DIGEST - Financial Times - April 28

Financial Times

BUILDING CONTRACT PRICES DROP

Tender prices for new construction contracts are set to drop at the fastest rate since the early 1990s this year as builders compete for a decreasing number of contracts, according to figures released by the Building Cost Information Service. The value of new contracts fell 2 percent in the last quarter of 2008 and prices are set to worsen by another eight percent over 2009. The BCIS, a division of the Royal Institution of Chartered Surveyors, claims that prices will not turn positive until 2011. The deterioration is a cause for concern because most contractors operate on profit margins of just 1 or 2 percent.

SETBACK AS HOME LOAN APPROVALS FALL

Signs of recovery in the housing market suffered a setback on Monday as mortgage approvals for homes fell last month for the first time since November. The British Bankers' Association reports that mortgage approvals in March decreased by 7 percent to 26,097 after rising from a record low of 17,895 in November. Approvals are now 25 percent lower than a year ago and 67 percent below the November 2006 peak. Seema Shah, of Capital Economics, said housing market activity is "unlikely to make a steady and significant recovery this year."

DISCLOSURE OF PAY GAP WILL HIT JOBS, WARNS BUSINESS

The government has been accused by the British Chamber of Commerce of giving meaningless assurances as it confirmed plans that will force employers to disclose any pay gap between average pay for men and women. Harriet Harman said the move would help the UK recover from recession and build a "fair" future. However, David Frost, director-general of the BCC, said the bill would discourage job creation, "We already know that half of small firms struggle to navigate employment law and this will just add to the problem". Katja Hall, CBI director of human resources policy, warned that the gender pay gap can be misinterpreted since it "does not compare men and women doing the same job".

SMITH DROPS PLANS FOR STATE WEB DATABASE

Home Secretary Jacqui Smith has abandoned plans for a single database in an effort to allay fears that all web use and phone calls would be held by the government, and that the data would be concentrated in one place. Companies such as BT (BT.L), Virgin Media and Carphone Warehouse (CPW.L) will instead be asked to monitor such communications traffic. Smith acknowledged that such a move would put a considerable burden on the media groups, but argued that they already provide data to police and security services and added that they would be "recompensed". The Home Office has earmarked over two billion pounds over ten years to fund the new approach.

BANKS FACE HIGHER CAPITAL RATIOS

The UK's "too-big-to-fail" banking groups could be forced to put aside billions of pounds of extra capital as a safety net against future financial crises, after the chancellor decided not to split them up. Alistair Darling is expected to announce in May that banks including HSBC (HSBA.L), Royal Bank of Scotland (RBS.L) and Barclays (BARC.L) could be forced to hold more capital than the sector average. The move would suggest that some banks are too big to collapse and that higher capital ratios are the penalty for relying on taxpayers to rescue them. Darling's banking white paper will call for close international and national regulation of large banks.

EIGHTIES FASHION REVIVAL HELPS ASOS RAISE FORECAST

Online fashion retailer Asos has seen its full-year sales more than double to 165 million pounds due to demand for 1980s-style clothing. Chief executive Richard Robertson said pretax profits would be slightly higher than expectations, with analysts pointing to a figure of 13.8 million pounds. JPMorgan Cazenove, joint broker, raised its forecast to 14.1 million pounds, almost doubling last year's 7.3 million pounds. The company was also helped by the growing trend for online retail, while the weaker pound also boosted sales to customers outside the UK.

JJB AGREES GROUND-BREAKING RESTRUCTURING WITH CREDITORS

JJB Sports has become the first listed UK group to be rescued from administration by agreeing a debt restructuring with creditors using a company voluntary arrangement. The firm's creditors backed the revised payment scheme implemented using the insolvency procedure, saving 12,000 jobs. KPMG head of restructuring Richard Fleming believes that other firms will explore the strategy. JJB's landlords will now allow rent to be paid monthly for a year from June instead of quarterly on 250 of the stores it is renting. The agreement came as the government said it would consider reforming insolvency laws.

POWER STATION PLANS WARM UK COAL