UK Business Arena Charming Foreign Investors

With the Recession now officially over and the economy on a slow (very slow in fact!) recuperation drive, the UK business sector is charming a large number of foreign investors – with most businesses looking for stable economies that have shown signs of a good buildup post government bailouts and financial injections!

Thomas Cook, for example, has decided to cut its dividends to focus more on growing its business in the UK. The travel giant and the second largest tour operator in Europe has become one of the ring leaders in getting the best out of the UK business sector after weak sales in the African & Middle East forced them to look elsewhere for revenue.


Another firm that has zeroed in on the UK business sector is the National Australia Bank (NAB) – after Moody's downgrade because of speculations that it might be sold off because of weak business status. The increased concentration on the British side has been because of a renewed interest in the European region for most banks that are still a smaller factor in their respective regions.

The fact that partnership accounting as well as joint venture tax issues have become easier to sort out in the UK, has made the whole UK business sector open for a lot of partnership ventures – with domestic firms and sponsors tying up with foreign business trying to bite in a share of the lucrative revenue that the country is churning out.

Whether this trend lasts on the long term is something that only time will be able to tell for sure!

Standard & Poor’s Downgrades Italy’s Credit Rating

This came as a shocker to most of the Europeans, but to say that this was not being expected would be a lie. In fact, most of the European states knew that the downgrade was coming, and had had less of a debilitating effect on the region than the credit downgrade of the US.


Italy’s credit rating had been cut down one notch to A/A-1 by the audit agency, and the action is still being debated all over the country itself as well as Europe. The agency, in a post-downgrade conference, called the downgrade an unfortunate but necessary event considering the almost-absence of any signs of economic resurgence and growth for the country in the short-term as well as the long-term basis!

Italy’s National Reform Plan, which had been carrying much of the nation’s fiscal reform hopes, was talking too long to be implemented, and a spate of scandals and dismal governance from State Premier Berlusconi and the government in totality were some of the main reasons behind the credit downgrade.

Another audit agency, Moody’s, was also set to downgrade the country’s credit rating, but S&P surprisingly became the first agency to do so instead. While the state and the allied fiscal growth prospects is being viewed in poor light due to these changes, the country itself has been positive. A number of experts on research and development tax credits and London accountants say that Italy has the resources to come out of the economic growth stall, and emerge out of the current crisis.

If that shall happen in the near-future, is a fact that remains to be seen.

More Worries as European Commission Cuts Growth Forecast

The UK economy has been in tatters ever since the Recession took a beating out of it, and the real estate as well as the automobile sectors has gone limp. Add to this slow trading and business growth in other sectors such as retail and manufacturing, and the complete scenario does not look too rosy for any London accountant in the UK.


The European Commission has cut the UK economic growth forecast to a tiny 1.1% by this quarter and the end of this year – which is even lesser than chartered accountants in the UK might have guessed. The previous estimate, which was 1.7%, had been cut because of the slow output and growth overall in all of the industries in the UK – including a 0.2% rise in business turnover till June 2011.

However, the European Commission states that the UK is better off from a lot of other states in the region, including debt-ridden Greece, Spain etc. Belgium has been hit with a slow economic growth forecast too, but the fact that the whole of Europe’s net growth might come to a standstill at the end of 2011 is a larger concern than individual states stalling with their economic machines.

As for now, the UK government has decided to force on the austerity cuts on most of its forces, including the police force as well as the army to bail out the country’s economic structure – which gave rise to many a controversy (the performance of the police in the UK riots, joint venture tax issues & the mass VRS of the Gurkha regiment).

Bank of England – Which Road to Take?

As the UK has continuously bounded about between speedy economic recovery to stalled economic growth, the question about the time period for which the financial stimulus packages will be kept plentiful was always a crucial one for the Bank of England.


After manufacturing and services sectors showed weakened growth and stalling, there were major calls for the asset-purchase by the Bank of England to help push against a possible Recession that were being forecasted by some experts in the country. However, the good news for the economy, at least in the temporary view of things, is that the Bank of England has kept the target of the same program at GBP 200 Million and interest rates have been stayed at 0.5%.

Quantitative easing with inflation by doubling its target was refused by the authoritative financial body, as it measured the facts that the Riksbank (Swedish) had dropped plans of a tightened lease and a couple of policy makers in the UK too had backed down from their strong vocal support of a rise in interest rates.

With this, the BoE has decidedly pursued a dogged objective to take the middle path between rising inflation and a stalling economic recovery. The chances of these strategies working are as good as them backfiring. The forecasts have been positive though, although the indicators on the ground-level are not as rosy as UK partnership accounting experts and London accountants would like.

And we would only need to wait till 2012 to see if the impending doom will arrive as a financial collapse!