PRESS DIGEST - Financial Times - NOV 12

BANK LIFTS FORECASTS FOR UK GROWTH

Bank of England governor Mervyn King has stated that Britain is "facing a prolonged period of balance sheet adjustment" as spending continues to be reined in, signalling a trend that will limit inflationary pressures. The decision has been made by the Bank to sharply upgrade its forecasts for growth for the next two years but it has stated it still expects any recovery in the British economy to be slow and unstable mainly due to how deeply output has fallen since the beginning of last year.

LABOUR MARKET FLEXIBILITY HELPS TO RESTRICT CUTS

Recently released data suggests the UK's labour market has so far functioned relatively well when compared to international standards. Current UK unemployment has risen by 7.8 per cent since 2007, whereas US unemployment more than doubled to 10.2 and Ireland's trebled to 13 per cent. John Philpot, chief economist at the Chartered Institute of Personnel and Development, said of the "British-style flexible market" that it "enables employers and workers voluntarily to adjust pay and hours of work, thereby limiting job cuts."

BUILDING OF CITY OFFICES SET TO HIT 30-YEAR LOW

The amount of commercial properties being constructed in London has dramatically fallen, according to a recent survey. The cranes survey, commissioned by property consultants Drivers Jonas, revealed that the construction of office skyscrapers and West End buildings is being put on hold as a consequence of the recent economic crisis. Developments are at their lowest level in 30 years. Anthony Duggan, partner at Drivers Jonas, said: "There are just five buildings scheduled for completion post-2010." The consultancy's survey predicts that there will be a dramatic recovery for prime rents across London as the best locations are snapped up due to the inactivity.

HEDGE FUNDS BACK KRAFT TO SUCCEED IN CADBURY OFFER

The hedge fund industry shows signs of a regained appetite for risk as brokers reveal that they could cast the deciding vote in Kraft's 16.2 billion dollar (9.8 billion pound) hostile takeover of Cadbury(CBRY.L). It is estimated that as many as 14 per cent of the confectionary giant's shares are in the control of hedge funds, so called merger arbitrageurs. One hedge fund trader said: "The more trades arbs put on this deal, the better it is for Kraft (KFT.N) because these guys just want a quick payday."

NATIONAL EXPRESS FACES UPHILL BATTLE TO RAISE FUNDS

National Express's (NEX.L) largest shareholder, Spain's Cosmen family, is to rally its fellow investors to oppose the bus and rail operator's proposed 360 million pound fundraising. National Express needs the agreement of at least 50 percent of its investors to go ahead with the planned rights issue and the matter will be voted on at the group's November 27 EGM. The Cosmens, who hold an 18 percent stake, want the company to be refinanced and restructured before a rights issue takes place.

FORMER HIGH-FLYER AERO INVENTORY FALLS INTO ADMINISTRATION

Aim-listed aircraft component supplier Aero Inventory AI.L has fallen into administration after its financial backers refused to put up the money to keep the struggling firm afloat. According to KPMG partner and lead administrator Jim Tucker, the downturn in the airline industry and concerns about Aero's share price led to a fall in stakeholder confidence. Until recently, the company had been considered one of Aim's high fliers and had been considering moving to the London Stock Exchange's main market. It was while preparing for this move that the company discovered material issues with its stock valuation.

UP TO ONE IN 10 STAFF TO BE AXED AT GUARDIAN AND OBSERVER

Guardian Media Group expects to cut up to 10 percent of staff at its Guardian and Observer titles. The group said that the cuts were necessary for the group's future, recognising that advertising revenue lost during the recession was unlikely to return to previous levels because of the impact of the Internet. Guardian News & Media faces a projected fall in revenue of 13 percent for this financial year.

SAINSBURY STEPS UP PRICE COMPETITION

After announcing better-than-expected first-half profits Justin King, chief executive of J Sainsbury (SBRY.L), has forecast a "feisty" Christmas as supermarkets look for ways to encourage cash-strapped consumers to spend more. King said: "The money is there to be spent, if we can persuade people to come in and spend it." But King downplayed suggestion of a fresh price war by saying supermarkets are "constantly battling each other to reduce the cost of the weekly shop."

JOHN LEWIS TO DELAY VAT INCREASE

Department store John Lewis is to hold off passing on a higher rate of value added tax until the end of January. The rate of VAT is to revert from 15 percent to 17.5 percent on January 1 but the retailer has said it will not be increasing prices until about four weeks after the rate change officially takes place. Consequently products in John Lewis's clearance sale will be sold at the lower rate of tax -- prompting speculation that John Lewis might steal a competitive march on the rest of the high street.

SCOTTISH AND SOUTHERN CHIEF VOWS TO TRY TO HOLD PRICES

The chief executive of Scottish and Southern Energy(SSE.L), Ian Marchant, predicts that wholesale energy prices are likely to gather momentum, eventually resulting in retail prices rising. But the energy provider said it would try to keep retail prices unchanged for as long as possible. After delivering a 36 percent increase in underlying profits for the six months to September, Marchant said Scottish and Southern Energy's performance was consistent with the company goal of a "single-digit increase" for the year as a whole.

Prepared for Reuters by Durrants