‘Rebajas’, ‘Gran Liquidacion’, ‘Descuentos’.

It’s hard to find a shop window in Madrid that isn’t littered with signs announcing big sales.

But despite the time of year, this is not a summer sale. This is a retail cool down.

There’s a cold front hitting Spanish shoppers.

With the housing market in a downturn, inflation continuing to rise and unemployment now at its highest rate since 1998, consumer confidence is taking a beating.

And while the Spaniards rein back on their spending, the retailers are battling to stay in business.

Luis Galeote owns a shop selling luggage and shoes in central Madrid. He has seen his sales fall by 25% in a year because people are cutting back on non-essentials.

“What happens is that people pull back on consumption of unimportant things, like in our case suitcases,” he explains.

“We stock shoes which are considered as a necessity but even they are affected.”

Retail sales across Spain have been falling rapidly since December.

First hit were shops selling consumer goods, such as flat-screen televisions and mobile phones. But since then the malaise has spread right across the retail sector to supermarkets and department stores.

Shutting up shop

Walking around Madrid it is not unusual to find streets dominated by boarded-up shops.

Shop owner Luis Galeote has seen sales fall

Wynn Williamson, a real estate analyst for Aguirre Newman, has seen many retailers close down in the neighbourhood where he lives in the city.

He thinks people are spending less because they’ve been hit hard by rising interest rates.

“Eighty percent of Spaniards are home owners and 97% of mortgages are variable rate mortgages. So where people were previously paying 500 euros (£402) a month, that rate could go up to 1000 euros.”

“Basically every person has less money to spend on luxury items, such as lunches and taxis, and that affects the economy all in all.”

Professor Pedro Schwartz of San Pablo University in Madrid thinks that things are going to get worse before they get better.

“What is worrying is that the problems are spreading quickly because of a lack of confidence”.

“We haven’t fallen into negative growth rates yet, but we will have a recession and it’s coming very quickly.”

With the Spanish economy stalling the government has tried to put its foot on the accelerator.

It has introduced a package of measures, including greater investment in public infrastructure and a 6bn-euro programme of tax breaks to try to get people spending again.

Will it be enough to turn the tide?

That will all depend on how much shoppers tighten their belts as the summer turns to winter.

News reported by The BBC

The government must give more money to help Britain’s six million unpaid carers, MPs have said.

The Commons work and pensions committee said people who looked after friends and relatives saved the taxpayer £87bn.

It recommended income replacement for those unable to work and compensation for extra costs of “intensive” caring.

Carers say the current £50.55-a-week allowance is “insultingly low”. Ministers say they are working to give carers more “balance”.

In its report the committee said more state help was of “critical importance” and the current system was “outdated”.

‘Disappointed’

It recommended a “two-tier” approach combining income replacement and pension protection for carers who were unable to work or only able to work part-time, and compensation for extra costs incurred by “intensive” caring.

It also said the government should help carers who want to return to work to do so.

The MPs said they were “disappointed” the government had not directly addressed financial help for carers in its Carers Strategy launched earlier this year, and that the group was identified as a long-term priority only from 2011.

“Carers need a separate benefit which recognises that they are not unemployed but are making an important contribution to society” Imelda Redmond, Carers UK

Carers struggled to stay in work and often found their vocational skills became rusty and out of date, they said.

The committee’s chairman, Labour MP Terry Rooney, told the BBC: “The average, if there is such a thing, carer is aged between 35 and 55. That’s normally a prime earning period for people, so they lose out in terms of employment opportunity, earnings, future pensions.

“And that group, I think, especially, truly needs to be recognised and recompensed in a better way.”

‘Valuable contribution’

He said 2011 was “too far away” and he hoped the report would bring changes more quickly.

The £50.55-a-week is the lowest income-replacement benefit and amounts to £1.44 an hour, assuming a minimum 35-hour week.

Imelda Redmond, chief executive of campaign group Carers UK, said the existing Carer’s Allowance was “insultingly low”.

“It’s not just about the benefits side. It’s looking at support” Anne McGuire Minister for disabled people

“The two-tier benefit recommended by the committee would be a major improvement to the current system,” she said.

“Carers need a separate benefit which recognises that they are not unemployed but are making an important contribution to society.”

Anne McGuire, minister for disabled people, said she welcomed the report as a “valuable contribution to the debate” and said the government was working with employers to help carers get a better balance between their work and caring responsibilities.

She said a review of the care and support system would take place as part of a wider welfare reform programme.

But she told BBC Radio 4′s Today programme: “It’s not just as straightforward as it might appear that you just up the amount of money – there are all sorts of ramifications to that.”

She added that the government had already provided extra resources to allow carers to take short breaks.

News reported by The BBC

US car giant General Motors (GM) is hoping to return to profit in 2010, a top executive at the firm has said.

In the past 18 months, GM has lost $57.5bn (£31.36bn), $15.5bn in the second quarter of 2008 alone.

GM has closed factories and laid off staff but has struggled to counter a slowing economy and rising fuel prices.

If GM continues to cut costs and car sales recover in 2010 “we would hope to have the corporation profitable again by then,” vice chairman Bob Lutz said.

But he added: “At this point, the future is so cloudy in terms of the development of the market, when it’s going to pick up again.”

The company is losing money on all its model lines, Mr Lutz said.

Prices for small, more fuel-efficient, cars should rise as demand grows, he added.

Hummer slowdown

High fuel costs have dampened demand for the large sports utility vehicles that GM is known for.

The company has previously said it will consider selling the iconic Hummer brand.

Among the mooted buyers are Russian Machines, the engineering firm which makes trains, planes and some automobile parts and Indian carmaker Mahindra & Mahindra.

GM bought the Hummer brand in 1998. In June, Hummer sales were slightly over 2,000, well below their peak.

News reported by The BBC

Japan has unveiled a stimulus package worth 11.7 trillion yen ($107bn; £59bn) to boost the country’s economy.

The government hopes that the plan will help people cope with rising prices and stave off a recession.

The plan only includes 2 trillion yen of fresh government spending, with 9 trillion yen in loan guarantees and aid for small businesses.

The package is much smaller than the $167bn the US spent on tax rebates and other measures to revive its economy.

“This package is not a one-off,” said economic and fiscal policy minister Kaoru Yosano.

“It is aimed at continuously supporting the Japanese economy as well as people’s lives.”

No tax cuts

The package also includes discounts on motorway tolls, assistance to farms and help for part-time workers to find better jobs.

The measures do not include the temporary income tax cuts that had been advocated by the New Komeito Party, a junior coalition party.

The government has been reluctant to inject a bigger amount of public money into the economy because of the country’s fragile finances.

Spending on emergency stimulus packages in the 1990s, when the country was mired in recession, means that Japan’s public debt is among the highest of industrialised nations.

Inflation up

Japan’s economy is struggling with consumers facing high energy prices and the country’s exporters suffering as the global economy slows.

The economy shrank between April to June. If GDP contracts between July and September then the country will be technically in a recession.

On Friday, data showed that industrial output rose by 0.9% in July, but economists said that the stronger-than-expected figure did not ease fears of a recession.

Other figures released on Friday showed Japan’s unemployment rate fell from 4.1% to 4%, while core inflation rose to 2.4%.

Little optimism

The rise in Japan’s industrial output, against forecasts of a 0.5% drop, surprised analysts.

“As far as July’s data is concerned, the situation for industrial output doesn’t look so bad, as it showed relatively firm shipments while the inventory ratio declined,” said Hiroshi Shiraishi, an economist at Lehman Brothers.

“But for the outlook, while domestic demand is already weak, there is a strong possibility a slowdown in external demand will have a full impact later on. So we can’t be optimistic.”

The rise in the core consumer price index, which excludes fruit and vegetable prices but includes oil, was at the top end of analysts’ expectations.

However, analysts said fears of an economic slowdown made it unlikely the Bank of Japan would raise rates.

“At first glance, CPI’s rise above 2% may be seen as a factor to prompt the BOJ to raise rates soon, but as it has been saying, the impact of high oil prices will come off in the future,” said Junko Nishioka, economist at RBS Securities Japan.

“It’s the downside risks to the economy that will make the BOJ hold fire.”

News reported by The BBC

India’s economy grew at a slower-than-expected annual rate of 7.9% in the three months to June, its slowest rate of growth in more than three years.

This compared with 8.8% in the previous quarter and 9.2% seen in the same quarter a year earlier.

High interest rates, rising oil and food prices are likely to contain growth at about 7.5%, analysts said, down from 9% or more in previous years.

India has struggled to contain inflation, which is at a 13-year high.

Monetary tightening

The Reserve Bank of India has been raising rates to cope with rising inflation, and they now stand at 9%, an increase of 1.25% since April.

“These are numbers that shouldn’t surprise,” said Saumitra Chaudhury, a member of the Prime Minister’s Economic Advisery Council.

“When you have monetary tightening, you do get lower growth. That was expected,” he said. “But it’s not terribly low; 7.9% is still high by historical standards.”

Analysts doubt the central bank will ease interest rates.

“In the face of good growth and loose fiscal policy, I don’t expect any relaxation in the central bank’s tight policy stance even though inflation has moderated slightly,” said Indranil Pan, chief economist at Kotak Mahindra Bank.

Separately, India’s annual inflation dipped to 12.4% for the week ending 16 August – down from 12.63% a year earlier – as fuel and power costs eased. This time last year, inflation stood at 4%.

News reported by The BBC

Bradford & Bingley (B&B), a buy-to-let loans specialist, has reported a loss for the six months to 30 June, with impairment charges up sharply.

B&B reported a loss of £26.7m for the period, against a £180.4m profit last year, and said it remained “cautious”.

Credit impairment charges for the six months rose to £74.6m, up from £5.3m in the same period last year.

B&B recently completed a £400m share rights issue in order to improve its balance sheet.

B&B’s shares closed down more than 2% at 49 pence.

Access to credit

“As a focused business within a sector that is currently going through a cyclical downturn, Bradford & Bingley has experienced a particularly challenging first half,” said the lender.

“We have witnessed unprecedented financial dislocation, with wholesale medium-term funding markets being difficult to access since last summer”.

B&B’s rights issue had to be restructured twice after initially failing to attract sufficient interest.

Private equity firm Texas Pacific Group (TPG) had been about to invest in the bank but it withdrew when credit agency Moody’s downgraded B&B’s debt rating.

B&B’s impairment charges for the first half of 2008 soared largely as a result of a rise in the number of mortgages in arrears for three months or more.

The lender said has seen arrears increase and said it “anticipated this trend to continue throughout the second half”.

The firm said it was taking steps to detect early arrears cases and improve collection.

‘Favourable conditions’

Looking ahead, B&B said it would focus on higher quality loans and maintain a “prudent approach to funding”.

While the bank is still going to focus on the buy-to-let market, it said it would reduce the volume in the second half until “more favourable conditions return”.

In June, Steven Crawshaw resigned from his role as chief executive due to health problems. He was replaced earlier this month by Richard Pym, the former head of Alliance & Leicester.

News reported by The BBC

The chancellor has insisted it is his duty to be straight with the public, after telling a newspaper the UK faces its worst economic crisis in 60 years.

Alistair Darling told the Guardian the downturn would be more “profound and long-lasting” than most had feared.

Shadow chancellor George Osborne said Mr Darling had “let the cat out of the bag” about the state of the economy.

But Mr Darling told the BBC it was important to explain the “unique” problems being faced globally.

“This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly” Alistair Darling

The chancellor admitted, in his newspaper interview, that the government had “patently” failed to get its message across that it understood people’s concerns about rising living costs and growing job insecurity.

He said that voters were “pissed off” with Labour’s handling of the economy, a key issue at the next election, and said it was “absolutely imperative” that ministers communicated their intentions better.

When asked why he had been so frank, the chancellor told BBC News: “I think it is important that government ministers and particularly me as Chancellor level with people.

“I explained that what is happening to every country in the world, ours included, is that we have a credit crunch the like of which we have not seen for generations.

“We have that at the same time as oil and food prices going up. But I also am clear that the fundamentals of our economy are strong.”

He said the current government differed from previous ones because it is prepared to “take action to help the economy and to help people get through this difficult time”.

He cited the rescue package provided for Northern Rock and tax rebates due at the end of next month as examples of assistance offered by the government.

Shadow chancellor George Osborne reacts to Alistair Darling’s “remarkable” interview
Ministers are expected to announce a package of measures next week to kick-start the moribund housing market.

The chancellor has been criticised for sending contradictory signals over possible measures to assist homebuyers, particularly the prospect of a temporary suspension of stamp duty on home purchases.

In a wide-ranging Guardian interview, Mr Darling said Labour had to rediscover its “zeal” if it wanted to be re-elected for a fourth term.

Mr Darling hinted at tensions within Gordon Brown’s Cabinet, saying there were “lots of people who’d like to do my job” and “no doubt, actively doing it”, although he appeared to rule out an autumn Cabinet reshuffle.

The chancellor’s remarks come after a summer of bad economic news.

House prices are falling at their fastest rate in 18 years, leading to fears of a wave of repossessions.

Mortgage lending has slowed dramatically due to the credit crunch while key indicators have suggested that the economy could be poised to go into recession.

Vince Cable reacts to the Chancellor’s assessment of the UK economy

The economy showed no growth in the second quarter of the year while building firms and retailers have laid off thousands of staff amid fears that the economy will deteriorate further.

A member of the Bank of England’s Monetary Policy Committee said on Friday that radical action was needed to ensure the crisis did not get worse and warned of a sharp rise in unemployment.

Mr Osborne said: “Who is telling the truth at the top of government?

“The prime minister says the economic situation isn’t as bad people think and that Britain is well placed to weather the economic storm but the chancellor says we are at a 60-year low.

“Gordon Brown has briefed out stories that he has an economic recovery plan all worked out, meanwhile the chancellor says the downturn will be more profound and long-lasting than people thought.

“It’s not clear whether Alistair Darling meant to tell us the truth about the mess 10 years of a Labour government has left our economy in, but he has certainly let the cat out of the bag.”

“He has come out and been frank, but I have no sympathy and nor I hope has anyone else!” James, Surbiton

Send us your commentsLiberal Democrat Treasury spokesman Vince Cable said the government had been inconsistent with its message.

“Until very recently there was no problem, there was a state of denial, Britain was the strongest country in the western world, any problems we had were from overseas,” he said.

“Now suddenly we’ve lurched into Apocalypse Now, the return of the Great Depression.”

The Treasury said the chancellor’s comments were “entirely consistent” with his previous statements.

A spokesman said: “These are the same difficult economic circumstances that every other country in the world is having to deal with.

“But with employment levels near record highs, interest rates that are historically low and the past decade of rising incomes and job creation, the UK is well placed to deal with this.”

News reported by The BBC

Organisers of the Royal national Mod festival have warned the troubles of budget airline Zoom could severely disrupt this year’s event.

The week-long Gaelic festival, to place in Falkirk from 10 October, is due to feature a large number of musicians from Canada.

Zoom, a UK-Canadian carrier, suspended all flights on Thursday due to financial problems.

About 10,000 people from across the world are due at the Falkirk event.

Following Zoom’s announcement yesterday, thousands of passengers were stranded on both sides of the Atlantic.

‘Short notice’

Those who have booked to fly with the airline in the coming months have been told to rebook with other carriers, and contact credit or debit card issuers about refunds.

Falkirk Mod convener Angus MacDonald said Gaelic speakers and performers at the event were due to fly from Nova Scotia, in Canada, with the airline.

He said: “This news is very disappointing, particularly as plans have been put in place for a number of high profile members of the Gaelic community in Canada to visit this year’s Royal National Mod in Falkirk.

“It is hoped alternative arrangements can be made without too much difficulty.

Mr MacDonald said it was likely the Nova Scotian regional government officials would still make it to the Mod.

But he added: “My concerns are for the individual travellers and musicians who may well have relied on the low fares Zoom offered, and will find it very difficult to replace their ticket with a full commercial rate ticket with another airline, particularly at such short notice, with the Mod just a few weeks away.”

The Mod, an annual showcase for traditional music, poetry and song, was first held in Oban in 1892.

News reported by The BBC

It is becoming an all-too familiar tale.

An airline says that it is in financial trouble. Before long its planes are grounded.

Passengers are stranded and scramble for seats on other flights. Efforts to revive the business fail. Air crew lose their jobs.

UK-Canadian carrier Zoom is just the latest to find itself facing this prospect as it suspends its flights.

Its co-founder admits that he “does not hold much hope” of finding the investors needed to rescue the airline.

And if it does go to the wall, its name can be added to those of Silverjet, Oasis, Eos and Maxjet – carriers which have gone under in the past year.

Dangerous times

Some said that Zoom’s apparent demise was inevitable and indicative of the times.

And the aviation industry is full of speculation that other carriers are in trouble.

Experts are unwilling to name names, doubtless because this could undermine confidence in carriers.

Silverjet was another carrier hit by high fuel bills

But there are rumours of some airlines being told they have to pay in cash, upfront, for things such as air traffic control fees and fuel – such is the lack of faith held in the soundness of the carriers.

And this is a dangerous time of year for the more vulnerable airlines.

As businesses they rely on having a strong cash flow.

In recent months they have been collecting ticket money from people booking their summer holidays.

But as that peak period comes to an end, it is a less busy time with fewer passengers looking to travel – a position exacerbated by the wider economic slowdown with many putting off non-essential travel.

Meanwhile, the carriers still have their overheads: staff to pay, planes to lease, airport costs to cover.

And then there is the biggie: the fuel bill.

Oil prices may have come down a little from their highs of close to $150 a barrel in July, but they are still about twice what they were a year ago.

There is widespread agreement that the big, low-cost airlines in the UK – the likes of Ryanair, Easyjet and BMI – are well-financed and in no danger

And essentially, this translates to a doubling in the price of jet fuel.

So when new airlines have taken off on the back of a business models that price fuel at half the cost you are actually facing, , well, you can see the problem.

Zoom, a relatively small carrier, says its fuel bills have increased by $50m (£27.3m) in the past year.

When you are flogging a single ticket from London to Canada at £99, covering those sort of cost increases is going to be nigh on impossible.

Likewise, Oasis said that a 60% rise in its fuel bill was the reason for its ultimate demise.

Its super-cheap tickets (London Gatwick to Hong Kong for as little as 1,000 Hong Kong dollars ($128; £65) each way) meant that it spluttered badly when costs surged.

Managing overheads

With oil still at about $120 a barrel – and not tipped to fall dramatically anytime soon – what, or who, will be next?

There is widespread agreement that the big, low-cost airlines in the UK – the likes of Ryanair, Easyjet and BMI – are well-financed and in no danger.

Many analysts believe other carriers will follow Zoom’s demise

These carriers – and the likes of British Airways and Virgin Atlantic – have been tinkering with their routes, though.

This has included cutting back on flights over autumn and winter as they try to ensure that their overheads are controlled and their planes are as full as they can manage.

One analyst, Chris Yates, says that newer long-haul budget carriers are most vulnerable because their margins are so small – especially with the economies of many countries beginning to unravel.

Oasis, Silverjet and Zoom all fell into that category.

Other low-cost airlines elsewhere in the world could go to the wall too, he says.

And it seems inevitable that there will be more consolidation between carriers – allowing them to spread some of the overheads.

British Airways and American Airlines are hoping to get permission for a tie-up. BA also hopes to link up with Iberia.

Arguably the latest development with Zoom adds weight to their argument that such deals need to happen if airlines are to continue to operate on some routes.

News reported by The BBC

The Scottish entrepreneur who founded the collapsed airline Zoom said “anxious” creditors had caused the carrier to fail.

Hugh Boyle, who set up Zoom with his brother John in 2002, said it was a “tragic day” for passengers and staff.

Mr Boyle said the airline had “left no stone unturned” to secure a refinancing package but the actions of creditors meant it could not continue flying.

He said a plane was seized which caused a “domino effect” leading to collapse.

Zoom was founded by Hugh Boyle, who relocated to Canada after making his fortune selling Direct Holidays in 1998.

Financial investment

The airline set up in 2002 as a low-fare transatlantic airline based in Canada’s capital city, Ottawa.

It moved into the British market, initially specializing in cheap flights to Canada.

In June last year, the carrier began flights from London Gatwick to New York for as little as £130. In recent weeks, free flights for children were offered on some flights.

Speaking to BBC Scotland, Hugh Boyle said: “Obviously it is a very difficult time for airlines as I think everybody will know.

“Zoom was in the process of having a restructuring and a financial investment into the company.

“This, unfortunately, took a bit longer than anticipated.

“Some of our creditors got very anxious and we had a plane seized, which resulted in a domino effect of having to suspend our services.”

Separately in a statement, Mr Boyle added: “The collapse of Zoom is a result of matters beyond our control.

“Only last year Zoom Airlines made profit, but that turned into a loss in the last year due to the unprecedented increase in the price of aviation fuel and the economic climate.

“The price of oil resulted in our fuel bill jumping by nearly $50m in one year and we could not recover that from passengers who had already booked their flights.”

News reported by The BBC