PRESS DIGEST - Financial Times - April 12

Financial Times

ALARM RAISED ON MORTGAGES

A warning from the Council of Mortgage Lenders that mortgage lending may halve this year has prompted Alistair Darling to say he will do "everything I possibly can" to restore normality to the housing market. The Chancellor of the Exchequer's comments point to an increased likelihood that the Bank of England and the government may take over risky mortgage assets that banks cannot sell, in an attempt to unblock the lending markets. Darling said Britain could act without waiting for other countries as it became clearer the G7 will not propose any globally coordinated moves to ease strains in financial markets.

THE RICH SWITCH TO CASH AND BLUE CHIPS

A report from Tulip Financial Research reveals Britain's richest people are moving their wealth from riskier investments into blue-chip industrial stocks and cash. Since November, about 70 billion pounds has been switched into the shares of leading UK companies. The richest one percent of investors reduced their holdings in unit and investment trusts by almost 50 billion pounds, and property-related investments by 21 billion pounds. John Clemens, managing partner at Tulip said: "The inflow of cash has helped maintain the share prices of FTSE 100 companies." The report is based on a regular survey of the wealthiest individuals in the UK, 470,000 adults living in 335,000 households.

SLOW HOUSE PRICE GROWTH CONTINUES

The FT House Price Index reveals UK house prices were flat in March, making it the fourth month out of five where almost no growth was seen in the market. On an annual basis, house price inflation was at 5.5 percent in March, down from an annualised 6.1 percent in February. The latest data paint a slightly less gloomy picture than that presented by figures on housing from Halifax and Nationwide. The data show London continues to be out of step with the rest of the UK in terms of housing demand, with prices rising at 12.3 percent, five percentage points higher than the region which shows the next highest growth.

HOLIDAYMAKERS PAY FOR POUND'S DOWNWARD PATH

Sterling's latest slide against the euro has made shopping in Paris, going to EuroDisney and owning a home on the Mediterranean distinctly less affordable. Confidence in the British economy has dwindled since the onset of the credit crisis, knocking the pound down 13 percent since last summer's peak. The surge in the euro, almost 20 percent in the last year, means Britons' spending power in Europe has been hit even harder. Not all holidaymakers will feel the full effects this summer, however, as almost half of holidays are booked as packages or through tour operators who fix prices well in advance and use hedges to protect themselves from currency fluctuations.