Credit Crunch

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Is the credit crunch coming to an end?

This morning has seen the release of some optimistic data the £ has reached a 10 month high against the dollar, rising to as much as $1.6850, GBP is at its highest level since October 2008.

UK manufacturing activity was up last month for the first time since March 2008, as new orders where coming in, according to a survey carried out by the Chartered Institute of Purchasing and Supply (CIPS) and Markit.

“The manufacturing sector has clearly pulled out of the nosedive it was in earlier this year and is no longer plummeting,” said David Noble, chief executive of CIPS.

GBP has has bounced back 25% from the 23-year low of $1.35 it hit in earlier in this year.

The dollar is weak because investors have moved their capital  into riskier assets, having been encouraged by signs of a global economic recovery.

Two of the worlds largest banks barclays and HSBC both of whom turned down help from the british taxpayer last year, have posted 1st half pre tax profits of nearly £3 Billion. This represents a slight rise for barclays but a massive 57% for HSBC.

Some of Barclays staff can expect bonuses of up to £200,000 if results remain on track.

But John Varley, the Barclays chief executive told BBC Radio 4’s Today programme:

“The subject of compensation is a hot topic and I understand that, and it is very important that we are sensitive to the views of citizens and indeed central bankers like Mervyn King [Governor of the Bank of England] on this subject.

“We do not make bonus payments at this point of the year. The year is not over – there are five months to go. We will make our decisions about variable compensation at the end of the year.

“When we do so, we will take guidance from the Financial Services Authority…we will take guidance from the Walker review on governance…so we are sensitised to this issue and we will behave responsibly.”

Many other UK companies especially those in the building sector are still struggling.