Headlines

The U.K. entered a recession, as its economy contracted 1.5% in the fourth quarter after a 0.6% fall between July and September, the Office for National Statistics said Friday. On the year, the economy contracted 1.8% compared with the third quarter's 0.3% annual growth. It is the first time since 1991 that the economy has contracted in two consecutive quarters. The fourth-quarter decline in GDP was the sharpest since the second quarter of 1980. The fall in GDP was sharper than economists had predicted.

Government regulators and two of the country's biggest banks face a difficult battle to keep the U.K.'s latest financial-rescue measures from turning into a full-scale nationalization, The Wall Street Journal reported. The government already owns 70% of Royal Bank of Scotland Group PLC and 43% of Lloyds Banking Group PLC, meaning it has significant control over both.

Sony Corp warned it would post a record $2.9 billion annual operating loss due to sliding demand and a stronger yen, and unveiled fresh restructuring steps to revive its ailing electronics operations, Reuters reported. The operating loss will be Sony's first in 14 years, underscoring deepening troubles for a company that has fallen behind Apple Inc's iPod in portable music, Nintendo Co in videogames, and is losing money on flat TVs.

Telecommunications equipment maker Nortel's bankruptcy filing is posing significant risks to future revenues of Bangalore-based Sasken Communication, The Economic Times reported. Merrill Lynch said, as per its "back-of-the-envelope" calculation, the bankruptcy risks an earnings downside of 20% to 30% to the 2009-10 and 2010-11 estimates from Nortel. Nortel is believed to be contributing roughly 10% to Sasken's earnings.

China sentenced two men to death and imposed life in prison on Sanlu Group Co.’s former head for their involvement in the tainted-milk scandal that claimed the lives of at least six babies, Xinhua news agency said. Sanlu’s former chairwoman Tian Wenhua was sentenced to life in prison by the Shijiazhuang Intermediate People’s Court today, the news agency said. Zhang Yujun, who made and sold melamine- laced protein powder, and Geng Jinping, who produced and marketed toxic food, were sentenced to death, Xinhua said.

J Sainsbury is planning to cut more than 5 percent of its London head office staff as part of a restructuring plan in an effort to keep costs down at the supermarket chain, the Financial Times reported. Justin King, chief executive, told staff on Wednesday that he would be cutting more than 200 jobs as part of a restructuring of central teams in the business. Sainsbury said it would be moving from five main business units in its trading division to three--non-food, grocery and fresh food--which would make a number of roles redundant.

CPI Plastics Group Ltd., the plastics maker based in Mississauga, Ontario, sought bankruptcy protection in Canada and the U.S., blaming the deepening U.S. recession and rising prices of raw materials, Bloomberg reported. The 37-year-old firm and four of its units were forced into bankruptcy by the Bank of Montreal after CPI’s $3.4 million loss in the fourth quarter violated loan agreements with the bank. CPI, which has a facility in Pleasant Prairie, Wisconsin, has debt of about $54.4 million and estimated assets of less than $100 million, court papers show.

A third more Scottish companies were forced into liquidation in the final quarter of 2008 than in the same period the year before, new figures from the Scottish Government have revealed. The statistics also revealed that the number of individuals falling into bankruptcy--known as sequestration north of the Border--rocketed by 75 percent year-on-year, The Scotsman reported.

Vehicle production in the United Kingdom slumped by nearly half in December from the same month the year before as the credit crisis continued to hit demand hard, a trade group said Thursday. The Society of Motor Manufacturers and Traders, or SMMT, said nearly 48 percent fewer cars were made in December 2008 compared with the previous year. In addition, the group said commercial vehicle production fell about 57 percent in December from the previous year, with full year production down six percent.

Optimism in Britain's manufacturing sector has slid to a near 30-year low despite the falling pound, while the car industry continues to suffer amid plummeting demand, business leaders said Thursday. In its quarterly assessment of the manufacturing sector, the Confederation of British Industry found that 70 percent of companies are less optimistic than three months ago, while just 6 percent are more positive. The ensuing negative balance of 64 percent was the lowest since July 1980, when Britain was mired in an extremely deep recession.