Bank of England to cut rates - papers 8 August

The Times today says that the Bank of England's latest report on inflation released yesterday indicates it is preparing to cut interest rates to head off the spectre of recession hitting the UK.

The paper says comments from deputy governor Mervyn King indicated the bank was prepared to make lending even cheaper in order to head off a collapse in spending because of the fall in stock market returns.

And City economists now believe that it would not take much further bad news to push the bank into voting for another interest rate cut before the end of the year.

Falling stock markets are also having other effects, according to the FT, which today says US stock market Nasdaq is shelving plans to develop a 24-hour global marketplace after writing off a $20m investment in its Japanese operations.

The Jasdaq market was opened to take advantage of the boom in retail investing of the late 1990s into early 2000, but has still to make a profit.

A similar marketplace set up closer to the UK, called Nasdaq Europe, has also failed, the paper says.

With trading down and the level of public offerings at near zero it is much harder for operators of stock markets to make money from their services.

The Scotsman says that interest rate cuts could not come soon enough to save the Scottish economy, which is now officially in recession according to figures released yesterday.

The paper says ministers are being accused of burying their heads in the sand over the wave of bad economic indicators, and are still floundering around following the figures released by the Scottish Executive.

The local economy has not officially shrunk by a combined 1% during the last quarter of 2001 through the first quarter of 2002.

Professional indemnity insurance has already figured prominently in the news during the past week, and today the FT says that the Association of British Insurers is calling on the government to reform overall workplace insurance because claims from businesses are rocketing adding pressure to hike up premiums beyond acceptable levels.

The main problem is that employers' liability is fault-based, and lawyers are finding the litigation process is leading to some good pickings - currently soaking up 40% of the cost of providing liability insurance.

But it is primarily the increase in diseases with long latency periods, such as asbestosis, that are threatening the current insurance regime, the ABI argues.

Improvements in medical practice also mean that it is increasingly the case that employees can prove in court that their diseases were caused by working in particular environments.

The insurance sector is in trouble after the US Securities and Exchange Commission said it was investigating Aon, the world's second biggest insurance broker.

The investigation is focusing on accounting of up to $3bn worth of assets and liabilities.

The FT says that Aon and another 1,000 US companies are facing a Wednesday deadline for submitting in writing a promise to the SEC that their accounts are in order.

The Times picks up on the ongoing debate over whether property prices will crash by noting next year will see nearly 2.5 million square feet of office space come onto the market, a level not seen since 1990.

That will be a trebling of the "speculative office space" set to be available on the market by the end of this year.

The Scotsman says that shareholders in Aberdeen Asset Management's Leveraged Income split capital investment trust are unlikely to get any of their money back after the firm announced the appointment of Ernst & Young as liquidators.

Royal Bank of Scotland, which loaned the failed company £41m is expected to get its money back.

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