PRESS DIGEST - Financial Times - Nov 15

BROWN SETS OUT ANTI-RECESSION PLAN OF TAX CREDITS AND RATE CUTS

Gordon Brown on Friday gave a speech to the US Council on Foreign Relations, in which he outlined an anti-recession strategy focussing on tax cuts for low earners and further cuts in interest rates. The hope is that Britain will spend its way out of the downturn, and the tax cuts for people on low incomes are required as such people had "a higher propensity to spend if their credits are higher", Mr Brown said. Mike Brewer, of the Institute for Fiscal Studies, warned that improved tax credits would not reach all low income households, with some of the young and many people without children missing out.

BANKS SEE RISE IN VOLUNTARY REPOSSESSIONS

There has been an increase in the numbers of homeowners deciding voluntarily to hand back their properties because they can no longer afford their mortgage repayments. Northern Rock, which was one of the most aggressive mortgage lenders before it ran into difficulty and was nationalised, has seen a rise in voluntary repossessions since the summer, while another mainstream mortgage lender said anonymously that it had seen voluntary repossessions jump from ten a month in January and February to 55 a month in September and October. The Council of Mortgage Lenders said a rise in voluntary repossessions "is something we would expect in the current market conditions" but that it is not the end of the story as the "property still has to be sold and the debt repaid".

GENDER PAY GAP GREW LAST YEAR

Fresh calls have been made for private sector employers to be forced to conduct equal pay audits after the gender pay gap widened last year. Figures from the Office for National Statistics for the 12 months to April show that the difference between the average pay of men and women widened 0.1 percentage points to 17.1 percent, with gross median weekly earnings for men and women working full time rising 4.6 percent to 521 pounds, and 4.4 percent to 412 pounds, respectively. Katherine Rake, director of women's campaign group the Fawcett Society, said the news "sadly demonstrates that the government has failed to take serious action to combat discrimination still facing women in the labour market."

SIR STELIOS IN EASYJET BOARD BATTLE

A rift has developed in the boardroom of EasyJet (EZJ.L) over the airline's strategic direction, with founder Sir Stelios Haji-Ioannou challenging the plan for ambitious growth supported by the acquisition of hundreds of cheap Airbus aircraft. Sir Stelios has increased his stake in the airline from 15.6 to 26.9 percent via the transfer of his sister's 11.3 percent stake to his Cayman Islands-registered company EasyGroup Holdings, in order to appoint two more directors to the board. An Easyjet statement said the board had already sought to adopt a "more cautious approach to fleet growth" and that Sir Stelios had indicated, however, that he wished the company "further to restrict future aircraft orders and to make future dividend payments in conjunction with a cessation or slowing of growth".

HBOS WARNS OF NATIONALISATION RISK

HBOS HBOS.L has issued a circular to its shareholders, warning them that the bank faces the prospect of being nationalised if they vote against its takeover by Lloyds TSB (LLOY.L). Lloyds' controversial all-share deal requires approval from 75 percent of HBOS investors. The deal is crucial in raising the capital required for the underwriting of HBOS' share placing as part of the government bail-out. The circular also revealed that HBOS had received a "preliminary" indication from the financial regulator that it would need to raise 12 billion pounds in additional capital if it was a standalone entity.

RAB CUTS COSTS BY CLOSING THIRD OF ITS FUNDS

RAB Capital is closing around a third of its funds in a bid to cut costs and streamline its business. The funds, which the group has deemed as too small to operate independently, represent around nine percent of the group's 2.8 billion assets under management. They include three mutual funds and the single fund that used Lehman Brothers as a prime broker. RAB has also abandoned plans to build a retail mutual fund business.

GKN WARNING AFTER 'SIGNIFICANT' DECLINE

In its latest trading update, (GKN.L) has warned that production levels for the remainder of the year would be 20 percent lower than previously expected. The motor and aerospace supplier attributed the downturn to a "significant" decline in business in the past seven days. The company also said that it was reviewing the impact of profits for the financial year in light of the recent deterioration and acknowledged that opportunities for cutting costs were limited given the short time-frame.

OFFSHORE WIND COSTS ALARM CENTRICA

Centrica (CNA.L), owner of British Gas (BG.L), is reviewing its four billion pound wind power investment programme as a result of the soaring cost of offshore wind farms. The group plans to build 1,600 megawatts (MW) of offshore wind capacity, of which around 360 MW has so far been installed. It said that the earlier estimated cost of two million pounds per MW had now risen to three million per MW. Centrica said that it would "need to revisit all our numbers to ensure that our projects are economic before we give them the go-ahead".