PRESS DIGEST - Financial Times - Feb 18

Financial Times

FURY OVER ROCK NATIONALISATION

Announcing the first nationalisation of a sizable British bank in a quarter of a century, Alistair Darling put Northern RockNRK.L into public ownership on Sunday, shocking the two private bidders who had hoped to take over the mortgage lender. Concerned to avoid queues forming outside banks, the chancellor and Northern Rock's new executive chairman, Ron Sandler, insisted it would be 'business as usual', with branches opening on time and customers would be able to deposit and withdraw money. Shares in Northern Rock will be suspended this morning and shareholders should expect virtually no compensation for their equity.

DAYS LOST TO STRIKES BY WORKERS TOP ONE MILLION

For only the second time in a decade, the number of days lost due to industrial action rose above one million in 2007. Strikes by postal staff, driving test examiners, job centre staff, Revenue and Customs staff, prison officers and passport staff helped lift the number of days lost by 37 per cent to 1.03 million. Unions have warned that there could be even more industrial action this year if the Prime Minister sticks to his pledge to keep public sector pay rises in line with the government's two per cent inflation target, and civil servant are expected to stage further rolling stoppages next month.

MINISTERS WILLING TO LOOK AT RULES ON PENSIONS

Ministers are prepared to consider new work-based pensions which would have less onerous requirements on funds to protect the value of benefits against inflation. The government is to resist moves by the Conservatives to insert a clause into the current pensions bill that would make it easier to create pensions based on career average earnings, rather than final salary. Only when the scheme is in balance or surplus would benefits be given protection against inflation. The Association of Consulting Actuaries sees the Conservative plan as a way of sharing the risk of pension provision more equally between employees and employers. The ACA warns if 'conditional indexation' is not permitted, employers who decide to close their final salary schemes have no option but to adopt money purchase pensions that put all the longevity and investment risk on to employees.

FINANCIAL SERVICES GROUPS TO CUT RECRUITMENT OF GRADUATES

Due to the credit crunch, it is expected financial services companies will reduce by 15 per cent this year the number of graduates they recruit. A survey of almost 100 public and private sector employers, conducted by Incomes Data Services, reports the graduate recruitment market 'could easily tip downwards if a wider slowdown takes place'. Employers are expecting an overall 12.2 per cent increase in graduate recruitment in 2008, with manufacturers leading the way, this contrasts against the18.3 per cent increase in 2007. Increases in graduate starting salaries are also expected to be more modest with the average for 2008 expected to be 2.8 per cent against 4.4 per cent last year.