PRESSURE ON Gordon Brown and the Bank of England over worsening economic prospects mounted yesterday as a surprise slump in industry sparked City warnings third-quarter growth could drop as low as 0.2%, according to this morning's papers.
As the Bank held interest rates for a second month in the face of business demands for a cut, bleak official figures showed industry’s output tumbled 0.9% in August, confounding hopes of a gain, reports The Times.
Severe production shutdowns in the North Sea fuelled the sharp drop in output. But with manufacturing also breaking a four-month winning streak of rising output to suffer a 0.2% decline in August, the figures emphasised the worsening economic outlook.
City economists said even if industry had rebounded last month and fully reversed the August decline, its dire third quarter would still knock about 0.2% off GDP growth for the quarter.
AND PRESSURE ON the government to accelerate a review of the retirement age and rethink its pensions "lifeboat" policy grew yesterday amid more bleak estimates about the size of the funding "black hole", reports .
Business advisers KPMG said its researches showed more than 40% of adults had not made any pension provision, while the Association of Consulting Actuaries estimated pension schemes were now running a £130bn deficit.
The size of the black hole, based on data from 391 companies, has been falling steadily in line with the stock market recovery but the association feels the improvement has done nothing to ease employers' worries about the impact of legislation on benefits and funding costs.
LLOYD'S OF LONDON, which plays host to the world's largest and oldest insurance market, posted a 21% rise in pre-tax profit for the first half of 2005, and expects to make a profit for the full year despite heavy hurricane claims in the second half, says the Scotsman.
Lloyd's made a pre-tax profit of £1.38 bn in the first six months, against £1.14bn in the same period last year, but like the population of the US Gulf Coast, it fears that its 62 individual insurers, known as "syndicates", could be hit hard if another storm rolls into the already hard-hit southern states.
Lloyd's last month said it expected its net loss from Hurricane Katrina, which devastated parts of the Gulf Coast and left New Orleans under feet of floodwater, to be around the £1.4bn mark.
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