Growth in Wales tops league

The key findings of the latest Lloyds TSB Wales PMI® complied by Markit says:

• Business activity grows at fastest rate since February 2011
• Improvement backed by stronger gain in new business and backlog clearance
• Input price inflation at five-month high

The Markit press release says: "The latest PMI survey signalled that the recovery in the Welsh private sector economy gained momentum at the start of the fourth quarter. Wales posted a faster increase in private sector output than all other UK regions, and new business growth was the fastest in 20 months. On a less positive note, employment fell slightly and input prices rose at the strongest rate in five months.

Though this may be only a small silver lining on the dark clouds fast approaching.

RBS to be nationalised?

It hard to know what to make of the news these days, one thing for certain its about to get much worse, as the world seems to be heading towards recession.

This morning Moody's Investors Service downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution.

The Chancellor, Mr Osborne said [to the BBC] he was confident that British banks were well-capitalised. "They are not experiencing the kinds of problems that some of the banks in the eurozone are experiencing at the moment."

However in his blog, Robert Peston, BBC Business editor says:

If the minimum stressed capital ratio were set at 8%, Royal Bank of Scotland, Barclays and Lloyds would all be forced to raise new capital.

Among the British banks Royal Bank of Scotland is most vulnerable to being forced to raise new capital, because under July's health checks its stressed capital ratio emerged relatively low at 6.3% (compared with 7.3% for Barclays, 7.7% for Lloyds and 8.5% for HSBC).

So if the new minimum capital bar were set at 7% (and we have no idea where it will ultimately be set) RBS would seem to need to raise a few billions of additional capital.....

.....I would therefore expect the chancellor to argue pretty strongly to his eurozone counterparts that RBS has quite enough capital for now.

And if he were to lose this battle, he might well be better off launching a takeover bid to acquire all of RBS - to nationalise it fully - than recapitalising the bank through an exercise of the existing rescue mechanism.