THE meltdown in the eurozone was felt by households and businesses across Britain as the nation faced up to what Bank of England governor Sir Mervyn King called the most serious financial crisis “since the 1930s, if not ever”. Here is a look back at a dramatic year in which turmoil returned to financial markets.
l January – Retailers were braced for a New Year hangover after VAT rose from 17.5% to 20% under the Chancellor’s austerity measures. Shoppers flocked to the high street to make the most of the sales and last-minute purchases ahead of the increase.
Dixons, HMV and Next reported lacklustre sales for the festive period, although there were better performances from Marks & Spencer, Sainsbury’s and Morrisons.
Barclays chief executive Bob Diamond pledged to show restraint over banker pay, but told MPs that big bonuses were here to stay if the sector was to succeed.
l February – Britain’s pharmaceutical industry was dealt a major blow after drugs giant Pfizer announced the closure of its leading UK research centre at Sandwich, Kent.
The UK’s biggest energy supplier unveiled a record profit haul just weeks after it hiked bills amid the coldest winter in 100 years.
BP suffered its first annual loss in nearly two decades after revealing that the Gulf of Mexico oil spill will cost it more than £25.2bn. The energy giant recorded a full-year loss of £3.1bn, but chief executive Bob Dudley said the embattled firm would resume quarterly dividend payments after they were suspended in the summer.
l March – Damage caused by Japan’s massive earthquake and tsunami sparked fears of a major slowdown in the world’s third largest economy, triggering a slump for shares worldwide. London’s FTSE 100 Index fell for six sessions in a row to its lowest level in four months.
The UK’s gas and electricity suppliers were accused by energy watchdog Ofgem of failing “to play it straight” with consumers. Ofgem said for the first time it had evidence the “big six” firms had hiked bills in response to rising costs faster than they reduced them when expenses fell.
Thousands of John Lewis partners celebrated a bonus windfall worth nearly two months’ pay after the employee-owned firm announced a 20% rise in pre-tax profits to £367.9m.
l April – UK banking giants should protect their retail arms from risky investment banking and put more capital aside to prevent future taxpayer bail-outs, the Independent Commission on Banking said in its interim report.
As well as calling for retail business to be ring-fenced from so-called “casino” banking to protect savers and borrowers in the event of a future crisis, Lloyds Banking Group should also go further to address competition concerns and sell off more than the 600 branches it has currently agreed with Europe.
Banks were under pressure to settle payment protection insurance mis-selling claims after a High Court ruling left them with a potential £4.5bn compensation bill.
Marks & Spencer announced plans to return to France, a decade after it pulled out of the country. The retailer will launch a website in France and open a three-storey outlet on the Champs Elysees in Paris.
l May – Mothercare dealt a fresh blow to the UK high street as it unveiled plans to close 110 outlets and focus on out-of-town superstores.
Russian billionaire Alexander Mamut vowed to secure a “dynamic future” for Waterstone’s after striking a £53m deal to buy the book shop from ailing HMV.
BP’s hopes of making the Arctic a key part of its recovery plan were dealt a major blow by the failure of a share swap and exploration deal with Russian oil group Rosneft.
l June – The Government came under pressure to help end uncertainty over the future of thousands of elderly residents and staff at Britain’s largest care homes group Southern Cross.
Lloyds Banking Group unveiled plans to slash a further 15,000 jobs by 2014 in a bid to save £1.5bn a year. The huge round of job cuts was unveiled by new chief executive Antonio Horta-Osorio as part of his strategic review for the taxpayer-backed lender.
Veteran bookmaker Fred Done secured horseracing’s ultimate prize by agreeing a £265m deal to buy the Tote from the Government.
l July – Rupert Murdoch’s News Corporation withdrew its bid for satellite broadcaster BSkyB in the wake of the phone-hacking scandal. The owner of 39% of BSkyB said continuing with the deal would be too difficult in the climate, but that it planned to remain a long-term shareholder.
British manufacturing suffered a major blow when the last UK train-making company Bombardier announced more than 1,400 job losses after failing to secure a multi million-pound order for 1,200 new train carriages as part of the £6bn Thameslink main line rail project.
Airport operator BAA was told it must sell two of its UK airports after a ruling by the Competition Commission was upheld.
l August – Banking giant HSBC said it would cut up to 30,000 jobs over the next two years in a cull set to impact more than 10% of its workforce. The efficiency drive, which will save the bank up to £2.1bn a year, was the latest within an industry battling to cope with reduced levels of activity.
London’s FTSE 100 Index tumbled some 10% in two weeks amid panic that the eurozone will be crushed under the weight of its debts and the US will lead the world back into recession.
Cambridge-based A technology company Autonomy, set up in 1996, agreed to be taken over by Hewlett-Packard in a £7.1bn deal.
l September – The Government vowed to ban the payment of referral fees in personal injury cases in a bid to tackle rising insurance costs.
Hundreds of pounds can sometimes be paid out as lawyers claim the cost of referral fees back from the defendant or their insurance company if they are successful.
Radical plans to ensure taxpayers are no longer on the hook for banking failures were hailed by George Osborne as a “decisive moment” in the drive to overhaul Britain’s beleaguered banks.
he shake-up of the sector includes ring-fencing banks’ high street divisions to protect them from riskier investment arms and setting aside more cash to cushion the blow of potential losses or future financial crises.
Retailer JD Sports Fashion revealed that £700,000 of stock was looted after 16 stores in London, Nottingham, Manchester and Birmingham were hit by disorder in August, with six in London suffering “very significant thefts”.
l October – Sir Mervyn King said the Bank of England’s surprise move to pump £75bn into the UK economy was the right thing to do as the country faced “the most serious financial crisis” ever seen.
BP said the story of North Sea oil still had a “long way to run” after the company received the go-ahead for a major £4.5bn project.
Energy companies were hit by a new storm over prices after it was claimed their average profit per customer had jumped to £125 a year.
l November – Taxpayers were sitting on a potential £400m loss after Northern Rock was sold to Sir Richard Branson’s Virgin Money. The tycoon vowed to challenge the industry’s “big five” after agreeing the £747m deal for the business.
Shares in holidays giant Thomas Cook plunged after it admitted dire trading had forced it back to its banks for more financial help.
Taxpayer-backed Lloyds Banking Group was thrown into chaos when chief executive Antonio Horta-Osorioits boss took an unexpected leave of absence due to illness.
l December – Royal Bank of Scotland was brought to its knees by “multiple poor decisions” and its £50bn “gamble” on buying Dutch bank ABN Amro, a long-awaited Financial Services Authority report said.
HSBC was handed a record City fine after a mis-selling scandal involving nearly 3,000 vulnerable elderly customers living in care.
Lloyds Banking Group named the Co-operative as its preferred choice to buy the 632 branches it is selling under European competition rules. The sale update came as Lloyds said chief executive Antonio Horta-Osorio would return to his job on January 9.