Nine years ago, the pound was ejected from the European exchange rate mechanism after failing to hold on an agreed rate of DM2.95. Until recently, businesses would have strongly rejected plans for an exchange rate above DM2.60, but a consensus is growing that improvements in productivity mean exporters could live with a rate close to DM3.However, separate figures yesterday highlighted a danger for manufacturing if the pound continued to fall against the dollar. The cost to industry of raw materials rose 1.4 per cent from April to May, as the price of petrol products jumped by 13.4 per cent on the month.Commodities such as oil are priced in dollars, so a falling pound would raise the cost of imports to UK business, economists warned This would squeeze business profits further. Prices of manufactured goods rose just 0.3 per cent in May.Ross Walker, UK economist at Royal Bank of Scotland, said: “A weaker dollar exchange rate and higher oil prices suggest little respite in the months ahead.”.

The new Secretary of State for Transport, Stephen Byers, is to meet Ken Livingstone’s Tube supremo, Bob Kiley, this week amid signs that talks over the part-privatisation of the London Underground are again teetering on the brink of collapse. The new Secretary of State for Transport, Stephen Byers, is to meet Ken Livingstone’s Tube supremo, Bob Kiley, this week amid signs that talks over the part-privatisation of the London Underground are again teetering on the brink of collapse.
Mr Byers has made it a priority to break the apparent deadlock between Mr Kiley, the chairman of London Underground, and the two private- sector consortia chosen to take over most of the Tube network, Tubelines and Metronet.Despite more than a month of talks, there has been no significant progress over Mr Kiley’s insistence on having “unified management control” over the entire network.A confidential London Underground document paints a gloomy picture and says Mr Kiley might have to “inform Government and submit evidence reflecting inability to conclude” the private public partnership (PPP). The document even raises the possibility of the Underground going back to unsuccessful bidders on the PPP and reopening talks.If no breakthrough is achieved and the Government tries to impose the PPP on the Underground, then Mr Livingstone, London’s Mayor, will almost certainly proceed with his threatened court action, which has been delayed until 23 July.Tubelines, made up of Bechtel, Amey, Jarvis and Hyder, has been selected to take over the Jubilee, Piccadilly and Northern deep-tube lines; Metronet ­ Balfour Beatty, Adtranz, WS Atkins, Seeboard and Thames Water ­ has been chosen for the Bakerloo, Victoria, Central and Waterloo & City lines.The consortia will be responsible for providing the trains, stations and track, while London Underground will remain under public ownership and operate actual services.Total private-sector investment in the network is scheduled to reach £15bn, of which £9bn is earmarked to be spent in the first seven and a half years. This figure includes investment in the sub-surface lines, the District, Circle, Metropolitan and Hammersmith and City lines. No preferred bidder has yet been named for this part of the network, although another consortium led by Bechtel ­ Surface Lines ­ is seen as the front-runner. The unsuccessful bidders for the deep-tube lines were the Linc consortium ­ made up of John Mowlem, Bombardier, Fluor Daniel, Alcatel and Anglian Water ­ and TubeRail, whose members are Amec, Brown & Root, Alstom and Carillon.Government advisers say they have bent over backwards to accommodate Mr Kiley’s demands, even allowing him to approve the order in which investment projects are carried out, vet the chief executives of the private consortia and appoint “partnership directors” to their boards. But the advisers remain sceptical about whether Mr Kiley is really interested in PPP, believing that his ultimate objective is to keep the Tube network publicly run, owned and funded.One of the consortia said last night: “Progress in the talks could be described as slow going.

We are borrowing £3bn to invest in the Tube, and we will be paid according to the results we deliver. Any new management structure which did not give us control over how we meet those targets would present grave concerns for us.”. British Telecom’s £5.9bn rights issue, combined with asset sale proceeds, means that the telecoms giant will emerge with net debt of about £17bn ­ a hefty but manageable amount. Now BT must decide how to satisfy investment demand for the creation of a utility stock as well as one or more growth stocks. British Telecom’s £5.9bn rights issue, combined with asset sale proceeds, means that the telecoms giant will emerge with net debt of about £17bn ­ a hefty but manageable amount. Now BT must decide how to satisfy investment demand for the creation of a utility stock as well as one or more growth stocks.
Utilities are meant to be low risk, with visible cash flows providing dividend income. Growth stocks, in contrast, aim to provide capital gains, but are more volatile.

For nearly a decade BT sought to be both utility and growth stock. The cancellation of the final dividend and the emergence of faster-growing, more focused rivals, particularly in the broadband and mobile markets, should have put paid to the notion that BT can face both ways simultaneously.But has it? Though Sir Christopher Bland has made a fast start as BT chairman, the group is still unconvincing as either an engine of growth or a reliable generator of dividend income. As a growth stock, BT has some interesting, if underperforming, businesses, such as Wireless and Ignite, its internet protocol network. There is also long-term growth potential in Openworld, BT’s domestic internet arm, and perhaps in Concert, the business joint venture with AT&T.