The highlight of this week was a new president being sworn-in in America as the 44th American President Barack Obama, takes centre stage.

There is nothing like a change in power to make people feel better which is a bit like having a shot in the arm. Barack Obama has plenty to do in his new role having followed the office of probably one of the worst presidencies in history. They say that major depressions come every 75 years or so and this one has come at about the right time according to history, helped along with bad management of the largest economy in the world!.

UK is officially in recession

Back over in the UK where we are still stuck with our government we are now officially in recession due to having two consecutive negative growth quarters ending December 2008. Sterling came under more pressure too this week with most currencies falling away again. The Sterling to US dollar rate closed at just over $1.37, which represents a fall of over 7% this week and has fallen by just under 35% since the rate hit $2.11 back in August of 2007. The US Dollar is back to the rates we were seeing back in December of 2001.

The other currency that has fallen sharply is the Sterling Euro rate closing the week at just under €1.06, having recovered a small amount last week.

Oil price recovers

Despite gloomy news around the globe the oil price has recovered this week with Opec cutting production and as much as 1.55 million barrels per day in January. The priced closed up at $46.47, which is a rise of 27% in one week. So it will be interesting to see where the price of oil moves this week with cold weather on its way on the one hand and on the other hand “peace” is restored in the Middles East for the time being.

Rising job losses

This has also been another week of job losses and warnings of job cut-backs, with Microsoft announcing 5,000 cuts in its work force which is the first ever in its history of trading! Over in Germany chip-maker Qimonda has filed fro bankruptcy with the loss of 12,000 jobs around the world. Corus, the Anglo-Dutch steel maker owned by Tata is to cut around 3,500 jobs with up to 2,500 of hose in the UK alone! But it is Spain that seems to be worst hit with their unemployment rate hitting 13.9% or 3.2 million jobless in the last quarter of 2008.

More trouble on the tech front!

Another first in this economic gloom as Samsung the South Korean chip-maker records its first ever quarterly loss. Samsung Electronics is the world’s biggest chip-maker and made a loss of 22.2 billion Won (£11.6 million), which is as a result of falling global demand as well as prices in memory chips and liquid crystal displays (LCDs). Japan’s electronics company Sony has also given out a profits warning along with other tech firms including Microsoft and Nokia.

If you want to read some good news for business in all this gloom the BBC have a great article on Why recession can be good time to start business

End of the week saw:
Stock exchanges:
FTSE 100: 4,052
DOW: 8,078
S&P: 831.95
Nikkei: 7,745

Currencies
UK Sterling £ to US Dollar $ 1.37210
UK Sterling £ to Euro € 1.05837
UK Sterling £ to Japanese Yen 121.637
UK Sterling £ to Aus $ 2.09337
US Dollar $ to Euro € 0.771464
US Dollar $ to Japanese Yen 88.6288

Commodities
Nymex Crude oil – $46.47
Gold – $895.80

There are probably many businesses that are recession-proof, but things might be different in the present down-turn as things might get tougher with falling property prices, rising unemployment and so on.

If you are looking for a business that is recession-proof try typing the term “recession-proof business” in the upper left box and then choose from the hits there. This search will turn up sites giving you their wisdom on top tips to survive a recession along with other blogs and websites telling you which businesses are most likely to survive during a recession.

I will leave it to you to decide on which of these writers know their stuff. However, if you hit on something that looks like the type of business you would like to buy or even set up yourself, then do a bit more research on that type of business.

Good luck – these are challenging times and I guess there are no guarantees, but if you run your business well, continue to advertise and provide great customer service then your business should service and continue to flourish when times come right again.

The UK economy is likely to fall into recession this year, according to the Organisation for Economic Cooperation and Development (OECD).

The Paris-based think tank predicts that the UK economy will shrink at an annual rate of 0.3% in the third quarter, and by 0.4% in the fourth.

According to the latest official figures, the UK economy did not grow at all in the second quarter of 2008.

The working definition of a recession is two quarters of negative growth.

The gloomy outlook for the UK economy has pushed the pound sterling to its lowest level for two years against the euro.

Responding to the OECD figures, Chancellor Alistair Darling said many leading economies were suffering from slowing growth and the UK could “get through” a difficult period with the right policies.

Dark clouds?

The OECD forecast is the gloomiest yet for the UK economy by an official organisation, even gloomier than the forecast released by the International Monetary Fund (IMF) one month ago.

In its latest report, the OECD says that the UK economy will grow by just 1.2% for the whole of 2008, a sharp reduction in its earlier forecast of 1.8% made just two months ago, and less than the 1.4% predicted by the IMF.

The OECD’s figure is less than half the official Treasury forecast of 2.5%, although the Chancellor has recently indicated that this was likely to be revised downwards as the UK was facing “the worst economic conditions in 60 years”.

The think tank is also gloomy about growth prospects in the rest of Europe, and says the region’s three other largest economies – Germany, France, and Italy – will barely grow at all this year.

It points out that “financial market turmoil, housing market downturns, and high commodity prices continue to bear down on global growth”.

The OECD adds that the particular circumstances of the credit crunch make for “a particularly unclear picture”.

George Osborne on the government’s plans to boost the housing market
The shadow Chancellor, George Osborne, said:

“This is more gloomy news, coming on the back of the Chancellor’s warning that the economy is facing the worst crisis in sixty years.

“The depressing thing is that at the very moment when Britain needs a strong and united leadership, we have a weak and dysfunctional government.”

Exports hit

The sharp revision of the growth forecast for the eurozone, with the German economy not growing at all in the next two quarters, will have consequences for the UK.

The eurozone is Britain’s largest trading partner, taking 50% of British exports. With growth slowing, even with a devalued pound, there is unlikely to be strong demand in the export sector, analysts say.

According to the OECD, the US economy may grow slightly more strongly than it had previously expected, but “uncertainty as to the extent of weakness hinges importantly on how rapidly the effects of the temporary fiscal stimulus will fade”.

In July, the US Treasury paid out $168bn in tax rebates to help boost the US economy.

The OECD adds that in view of the weak outlook for the future, the US central bank, the Federal Reserve, is right to keep interest rates low at 2%.

Gloomy outlook

The OECD sees the still-unfolding downturn in the housing market as the biggest problem facing Western economies.

It says that reduced credit supply is adding to the problem, with house prices still falling in the US, and downturns in housing market activity spreading in Europe from Spain, Ireland and the UK to other countries.

It adds that “potential further losses on housing and construction finance” are also a source of concern for the financial sector, especially as the “depth and extent of financial disruption is still uncertain”.

The OECD also warns that “sharp increases in energy and food prices have boosted headline inflation and sapped real incomes of consumers”.

However, it sees some reason for optimism on inflation, and says that if commodity prices are sustained at their current levels and do not rise to record levels again then “some moderation of both headline and underlying inflation is to be expected”.

And if this happens, it suggests that there might be scope for the European Central Bank, which has recently raised interest rates, to cut them to boost the eurozone economy.

Given rising government budget deficits, it argues that monetary rather than fiscal policy should be used to boost the economy.

News reported by The BBC