Unilever, the company behind Persil, PG Tips and Flora said it will apply lessons from its Asian business as consumers change their shopping habits amid a financial crisis that has left Greece mired in recession for the past five years and Spain with the highest unemployment rate in the industrialised world. “Poverty is returning to Europe,” Jan Zijderveld, the head of Unilever’s European business told the Financial Times Deutschland in an interview. “If a consumer in Spain only spends 17 euros when they go shopping, then I’m not going to be able to sell them washing powder for half of their budget.” Unilever has already started to change the way it sells some of its products. In Spain, the company sells Surf detergent in packages for as few as five washes, while in Greece, it now offers mashed potatoes and mayonnaise in small packages, and has created a low-cost brand for basic goods such as tea and olive oil, according to The Telegraph.
Chastised for failing to spot it was coming in 2007, America’s central bank quickly embarked on a series of policies designed to show it meant business in easing the crisis and preventing a repeat of the Great Depression. Unlike then, many of the severest headwinds facing the US are beyond the Fed’s control. “It is the uncertainty over the fiscal cliff in the US and Europe’s debt crisis that is really hurting,” says Priya Misra, a strategist in New York at Bank of America. The bank predicts the Fed will introduce a third, $600bnof QE before the end of the year. Bernanke admitted in June that a third round of QE will be subject to “diminishing returns”. It is a view that an increasing number of investors subscribe to. If the world’s most powerful central banker can no longer deliver the ‘shock and awe’ that suited during a period of crisis, he must hope that governments in Europe and in the US quickly find the right mix of policies to foster growth and trim debt, The Telegraph reports.
The Government was facing calls last night to increase support for cash-strapped small businesses as new figures revealed that more than a million are suffering because customers, many of them larger rivals, are delaying payments. The total amount owed to Britain’s small and medium-sized enterprises has climbed to a record £36.5bn in the past six months, putting even more strain on the cash-flow of already hard-pressed companies and pushing some to the brink. Chuka Umunna, the Shadow Business Secretary, said: “These figures expose an ongoing national scandal. Small businesses are being forced, in effect, to bankroll many of their largest customers who simply refuse to pay on time. It is totally outrageous and unacceptable,” says The Times.
Lonmin is set to hold a “peace accord” meeting this week after the violence at a mine in South Africa that claimed 44 lives spread to bus drivers that take workers on to the site. After a week of mourning, only 13% of the 28,000 workforce returned to work yesterday, which was not enough to restart the mine. Those that showed up were prevented from entering the shafts by militant colleagues. A spokeswoman for the company said that some of its bus drivers were visited by a group of 30 people who warned of “repercussions” if they carried workers to the Marikana mine . Lonmin has taken to local radio stations to urge miners to return to work. The company would not confirm whether it would lay off staff or set an ultimatum for workers to return to the mines now that the period of mourning has ended, The Times explains.
German business confidence it at is lowest level for more than two years according to figures that underscore the drag of the debt crisis on Europe’s powerhouse economy. The influential Ifo Institute said business confidence in Germany fell for the fourth consecutive month in August amid fears that the country is heading for recession. The institute’s business climate index, which surveys companies in manufacturing, construction, wholesaling and retailing, showed that expectations for German exports was negative for the first time in three years. Hans-Werner Sinn, president of the Ifo Institute, said: “The German economy continues to falter.” Dominique Barbet of BNP Paribas said: “The declining growth rate in Germany shows that the country is not immune from the general slowdown in Europe and outside Europe.” The data caused Brent crude to drop. Stockmarkets were broadly flat on low trading volumes, The Telegraph reports.
Finnace Secretary John Swinney will face calls today from CBI Scotland director Iain McMillan to freeze taxes and trim Scottish Government spending to free up cash for infrastructure projects. In its submission ahead of next month’s Scottish budget, the business lobbying group is demanding that Swinney adopts a “bolder approach” to slashing the cost of government by capping the public sector wage bill, outsourcing more services to the private sector and spinning off Scottish Water. The CBI also wants to see graduates contributing to the cost of their university education, adding more money to the devolved administration’s £35bn budget. The organisation is challenging Swinney not to increase taxes for businesses during the current three-year spending review, following on from the £95m tax on large retailers in last year’s budget and the £36m levy on empty premises, The Scotsman reports.
