Economics

The biggest financial crisis in modern British history heralded an unprecedented bonanza in fees for City lawyers, accountants and advisers, according to the definitive assessment of Treasury spending on the bail-outs.

Barclays is set to award its 22,000 investment bankers pay rises of up to 150% in an effort to beat Government moves to clamp down on multi-million-pound bonuses.

Lloyds Banking Group has launched a record-breaking £13.5bn rights issue at a near-40% discount as part of a massive fund raising to strengthen its balance sheet, reports The Telegraph.

The overall economic picture, from the combined newsflow at macro and individual company level, is one of uneasy stability.

Having recorded further heavy losses in early 2009 to reach a low point in March, share prices have rebounded strongly in recent months.

There is little doubt the tide is turning for one of the most unloved regions. Investor sentiment towards Europe in July, as measured by the Bank of America Merrill Lynch fund manager survey, was at its lowest level since 2003.

With inflation a growing possibility, what are the implications for equities?

Having spent the past six weeks trading in a tight range of 100 points around 4,400, the UK FTSE 100 has recently fallen back to its end of April levels.

Credit markets have staged an exceptional rally in recent months. The US corporate bond market, for instance, registered record relative returns compared to US Treasuries in April and May (based on the Barclays Capital US Credit Bond Index).