UK recession: winners and losers

There are losers and winners of recession! of ours!!!

Banks

Investment banks are judged to have been one of the main causes of the recession and a downturn lasting six quarters of recession has seen a dramatic shake-up in Britain and on Wall Street.

But while Lehman Brothers, Merrill Lynch and Bear Stearns have all disappeared, rumours of the sector’s demise turned out to be greatly exaggerated. Fewer banks and more government business has meant bumper profits for survivors such as Goldman Sachs and Barclays.

The banks’ plans to pay large bonuses have become such a political hot potato that Barack Obama has said he is “up for the fight” with Wall Street. On Britain’s high streets, big names such as Alliance & Leicester, Bradford & Bingley and Dunfermline building society were taken over, while Royal Bank of Scotland and Lloyds Banking Group are now under state control.

In the US, scores of small regional banks are still collapsing every month. Enormous debts from deals and loans that have turned sour remain on banks’ balance sheets and will be a reminder of the recession for years to come.

Retail

Recession has sorted the wheat from the chaff in the retail sector, with thousands of shops closing and household names from Woolworths to Dolcis and Borders disappearing. Analysts at Verdict estimate that retailers with sales of £7.4bn have gone bust over the past two years, with one in seven shops empty at the close of 2009. Sectors such as furniture and homewares bore the brunt, with The Pier, Ilva, MFI and Land of Leather among chains that perished as consumers deferred big purchases. By comparison, supermarkets and value chains such as Primark gathered momentum as consumers traded down.
Transport

Transport companies have been among the biggest losers, with airlines such as British Airways, which made the majority of its profits from business-class seats, losing large amounts of money. Budget airlines easyJet and Ryanair have picked up passengers.

Rail firms have also struggled with a fall in passenger numbers, particularly on commuter routes where demand is down due to higher unemployment. National Express paid £1.4bn to run the east coast line in 2007 but handed back the loss-making route last year.
Manufacturing

What is left of UK manufacturing suffered several blows as banks stopped lending. Carmakers such as Jaguar Land Rover and Honda laid off workers and short-time working was introduced as the dearth of loans available to consumers saw sales slump by more than 30% at the height of the credit crunch.

Suppliers to the industry were also caught in the credit squeeze, which sent the likes of Visteon to the wall in Britain. Deflating commodity prices also hit steel maker Corus, which is laying off up to 4,500 UK workers, hitting already deprived areas such as the north-east.

Property

The boom in commercial and residential property prices came to an abrupt halt with house prices down 20% year-on-year by January last year.

However, the market took an unexpected turn as the year progressed with prices pushed up as buyers fought over a small number of properties. Estate agents were selling just 1.5 houses a week.

It could be worse: government support has held back the number of UK repossessions, but in some US states more than 1 in 10 homes is being foreclosed.

There are also signs of life in the UK commercial property market, with average values up 9% since July, but commercial property investors remain nervous as banks are sitting on vast property losses – in the first year of the recession valuations plunged 40%.
Energy

The oil price has stayed higher than in previous downturns and cushioned the oil companies. From the record $147 a barrel seen in July 2008, oil sank to $40, but has since recovered to $80. Nonetheless, Shell has delayed some of its more costly projects, such as its tar sands operation in Canada. The lower oil price and higher exploration costs have also seen BP and Shell lay off 10,000 workers worldwide.

Wholesale energy prices have almost halved since the beginning of the recession, but the big six suppliers – RWE, E.ON, Centrica, Scottish & Southern, Scottish Power and EDF – have only cut electricity and gas bills by about a tenth, arguing they need to bank higher profits to invest £200bn in infrastructure projects.

The credit crunch also made it harder for wind farm developers to finance new projects, but higher government subsidies announced last year have helped ease the logjam.

Fun

The economic gloom put mass escapism on the menu with the buzz around James Cameron’s sci-fi move Avatar, as well as blockbuster films such as Harry Potter and the Half-Blood Prince and Star Trek, putting the UK’s box offices on track for record takings of £1bn in 2009.

By December Marks & Spencer boss Sir Stuart Rose said Britons were “fed up of being fed up”. Champagne sales soared as shoppers cast off the drudgery of discounters like Aldi and traded up to close the year with a bang.