Having ended September at a seven-week low of 4,091.3, the FTSE 100 index rose as evidence grew an economic revival in the United States to reach 4,368.8 on 15 October, its highest close since August 2002.

On 22 October saw the FTSE’s biggest one-day fall since 1 July, with the index losing 1.5% of its value in closing 66.7 points down at 4,285.6 in response to the Bank of England’s report that its monetary policy committee were within one vote of agreeing an increase in interest rates earlier in the month.

The FTSE 100 index rose by 35.2 points to close at 4,300.9 on 30 October following news from the United States of a better than expected increase in GDP.

Oil

Concerns over the level of winter oil supplies in the United States, running at 7% below last year’s levels, contributed to a 20% increase in prices since mid-September with Brent crude reaching $31.17 on October 14.

Thereafter, prices fell by more than 12% to the end of the month after the head of OPEC said he expected the cartel to raise production levels if prices remained high, and US Energy Information Administration announced that stocks were higher than had been feared. Prices dipped to one-month lows on 30 October, Brent crude dropping 48¢ to $26.96.

Economic growth

GDP in the United States rose by 7.2% in the year to the end of September, its best showing in more than 19 years and exceeding analysts’ forecast of a 6% increase, largely on the back of consumer spending following tax cuts earlier in the year.

Scotland’s economy avoided slipping into recession with an unexpected 0.4% rise in GDP in the second quarter, following a revised 0.1% decline in the first three months of the year.

The EC forecast for the eurozone is for growth of zero to 0.4% in the third quarter and 0.2-0.6% in the final three months of the year.

France has been given a further year to reduce its budget deficit in line with the limits imposed by the EU’s stability and growth pact. Expected to hit 4% of GDP this year, France’s deficit must now meet the 3% target by 2005.

Balance of trade

UK exports to the eurozone hit a four-year low of £7.8 billion in August, down 9% on the month, according to the Office for National Statistics. Overall, the trade deficit widened to £3.6 billion from £3.0 billion in July.

Interest rates

Interest rates in the UK remained unchanged at 3.5% for the third successive month.

The European Central Bank maintained its rates at 2%, with bank president Wim Duisenberg commenting that there were gathering signs that the eurozone was on the brink of recovery.

The Federal Reserve held rates at their 45-year low of 1%, amid concerns at the lack of inflation in the United States.

Exchange rates

Sterling reached climbed to a five-year high against the dollar on 29 October, closing at $1.7019 after peaking at $1.7078, fuelled by speculation of an imminent increase in interest rates by the Bank of England.

Manufacturing

The number of manufacturing jobs in the UK has declined from 4.2 million in 1998 to 3.5 million, a fall of nearly 16%. Five years ago, manufacturing accounted for 17% of all employment, but this is now down to 14%. The textile and leather products industries have seen the biggest cutbacks in recent years, losing half their workforces.

Scotland has 10% of its manufacturing jobs in the past two years, according to figures from the Office for National Statistics which show that 270,000 Scots were employed in the manufacturing sector in June, down from 300,000 in the summer of 2001.

Public sector borrowing

Chancellor Gordon Brown borrowed more in the first six months of 2003/04 than in the whole of the previous fiscal year, according to estimates from the Office for National Statistics. The total for 2002/03 was £22.52 billion, and this year’s borrowing has already reached £22.53 billion. However, at £2.8 billion the total for September was down from £3.2 for the same month last year, the first year-on-year fall since April, reflecting a slight rise in tax payments.

Consumer credit

Bank of England figures show that mortgage lending in September increased to its highest level since records began a decade ago. The increase in total borrowing of £10.7 billion for the month included £8.85 billion of mortgages, compared to the previous high of £8.26 billion in July. At £30.92 billion the total value of loans also set a new record, as did the number of new mortgages, up from 123,000 in August to 136,000. Average mortgage figures have trebled in the last three years.

Credit card borrowing also continues to increase, up £765 million in September compared to August’s £738 million.

A survey by financial services group More Th@n found that 62% of respondents did not know what interest rate they were being charged on their credit cards, and only 32% had chosen their credit card provider because it offered a low interest rate.

Consumer spending

Scottish high street sales outperformed the UK average for an unprecedented eighth successive month in September. Like-for-like sales were up by an annual 4.3%, compared to 4.2% for the year to the end of August and growth of 2.6% for the UK as a whole, up from 2.1%.

Research by financial advisers The MarketPlace at Bradford & Bingley found that 42% of Britons place a higher priority on enjoying their money now or paying off debts than saving for retirement, with 30% having no financial plans for retirement at all, and retirement planning only becoming a serious priority after the age of 55.

Small investors

The number of ISA and PEP accounts has grown for the first time since the beginning of 2002, rising from 1.48 million in the second quarter to 1.5 million at the end of September.

Mortgage-selling regulation

With effect from 31 October 2004, any company selling mortgages to UK consumers must be authorised by the Financial Services Authority, and individual advisers who wish to be accredited to sell mortgages must choose either to be authorised directly by the FSA or to work for an authorised firm.

Scottish bankruptcies

Business advisors and accountants Grant Thornton report that the number of Scots going bankrupt this year is likely to set a new record, with 1,657 Scots having been sequestrated in the first two quarters of 2003.

Small companies