PRESS DIGEST - Financial Times - June 19

The Financial Times

KING AND DARLING ISSUE BLEAK FORECAST

On Wednesday night, Mervyn King and Alistair Darling delivered the bleakest official assessments of economic prospects for 15 years in what the Bank of England called "the most challenging period" since 1997. In his annual Mansion House speech to City grandees, Mr King predicted that "the squeeze on real income growth is likely to mean that both house prices and consumer spending weaken together." The chancellor, in turn, conceded his Budget forecasts would not be met.

MINIMUM PRICE FOR ALCOHOL ON THE TABLE TO CURB BINGE DRINKERS

Under plans being examined by the government to curb binge drinking, a minimum price could be set for a unit of alcohol in England and Wales. Ministers are waiting for an independent report into the impact of pricing and promoting, which is due to be published in the coming weeks, before deciding on a course of action. However, supermarkets have warned that they cannot work together to set prices because to do so would violate competition laws. Asda also believes that raising prices would not put an end to binge drinking, and that "pricing is a blunt instrument with regards to alcohol; it hits everyone."

STRESSED-OUT BY HOUSING COSTS

According to a survey of nearly 7,000 people by Shelter, the housing charity, roughly a quarter of households say housing costs are causing them "stress or depression." Homeowners have to deal with the pressure brought on by rising arrears and falling prices, just as banks make it harder for them to remortgage. The survey found that a ninth of households, the equivalent of three million people, had sold possessions to help pay housing costs. More than one in ten had also borrowed money from banks, friends and family for mortgage repayments.

LONDON'S BUSINESS EDGE THREATENED, SURVEY SAYS

More than half of business leaders in London claim the city's competitiveness is under threat, citing concerns about skills shortages, transport infrastructure and the taxation of foreign residents. The latest CBI/KPMG London Business Survey shows the percentage believing the capital's competitiveness to be threatened had doubled in the past year. It also found that 1-in-10 believe it had deteriorated and only 1-in-12 thought it had improved, down from one in three a year ago. Richard Lambert, CBI director-general, believes business is getting more difficult in London "partly because of the global economic slowdown but also the more particular problems of transport and skills."

ENERGY FROM INDUSTRY COULD HALVE GAS IMPORTS

Industries across the UK could halve gas imports and generate as much electricity as 10 nuclear power stations by installing or extending plants that generate energy while using the waste heat to warm local buildings. A Pöyry Energy Consulting report, analysing the UK's potential for combined heat and power units, has found nine sites where CHP could be applied or extended. The principal consultant at Pöyry, Tim Warham, said: "We were surprised at the large technical potential for industrial CHP we encountered. Provided the policy framework is right, CHP could make a huge contribution to securing power supplies for the UK."

IMPERIAL TO UNVEIL ALTADIS RESTRUCTURING

Imperial Tobacco (IMT.L) will unveil on Thursday the details of its planned restructuring of Altadis, the maker of Gitanes and Gauloise cigarettes it acquired for 10 billion pounds last year. Last month, the fourth largest tobacco company said it expected to generate savings of 300 million euros a year by 2010 from the Altadis takeover, with the figure increasing to 400 million euros by 2012. Details of the cost saving programme will be scrutinised closely by analysts, which are placing pressure upon the company to prove it can cover the high price for its Franco-Spanish rival.

DAIRY SPENDING AIDS WYNNSTAY

Wynnstay Group (WYWYN.L) has been helped by the willingness of farmers to spend, in spite of a rise in the cost of agricultural products, to lift interim pre-tax profits by one million pounds to 2.9 million pounds. The company, which supplies both animal feeds and seeds, has also moved into the pets market through the acquisition of 10 superstores in January. The move has helped it boost turnover from 79.9 million pounds to 116.5 million pounds in the six months to April 30. Ken Greetham, chief executive, said dairy farmers were prepared to feed cattle for yield in the wake of the share increase in milk prices over the past 12 months.

VICTORIA SEEKS TO DIVERSIFY

Victoria, the carpet manufacturer, announced pre-tax profits were up 27 per cent to 3.5 million pounds in the year to March 29, shrugging off the travails of the UK's building sector. The business did particularly well in Australia with profit up by almost a half from 2.1 million pounds to 3.1 million pounds. The group has predominantly focused on the housing industry, but plans an aggressive push into non-residential property. Its managing director, Adam Bullock, said the move was not a defensive measure to dilute its exposure to the housing market, but it will give Victoria "a wider channel to market and better use of its manufacturing capacity."

CARETECH PLACING AND ACQUISITION

CareTech (CTH.L) is raising 30 million pounds in its first placing since its flotation on Aim in 2005. The company, which provides residential care services for adults with learning and other disabilities, is also paying up to 15.3 million pounds for Valeo (VLOF.PA), owner of another 10 homes. The placing price of 420 pence is a discount of 3.4 per cent to the mid-market closing price of 435 pence on Tuesday. The company also announced a 24 per cent rise in revenue to 30.7 million pounds for the six months to March 31, with pre-tax profits up from 2.4 million pounds to 3.8 million pounds.

PRIVATE GROUP BUYS DAMAGED PFD FOR FOUR MILLION POUNDS

On Wednesday, one of the literary world's most heated rows moved closer to conclusion with news that PFD, the literary agent, has been taken private. A group of private investors led by Andrew Neil paid four million pounds for PFD, whose businesses halved after 21 staff members walked out last September. Mr Neil said that he had been attracted to PFD because the damage it suffered to its reputation last year meant it was available at an attractive price. Mr Neil said: "If we were asset strippers - which we are not - then the value of the back catalogue alone would have been worth the price we paid."

Prepared for Reuters by Durrants