The US economy saw its first growth in over a year, rising to an annual rate of 3.5% between July and September.

Experts believe that a major spending plan by the US government which featured a scrappage scheme to encourage the car sales market has been the main cause of the upturn.

Some economists believe that there could be more setbacks lurking ahead, despite the official statistics showing that the recession is over.

A spokesman at the White House announced that recent economic progression was “a welcome milestone” but it would take more time for a full recovery to be recognised.

The US economy had risen 0.9% in relation to the previous three months, whereas the UK economy remained in recession, unexpectedly dropping 0.4%.

Hugh Pym, the chief economics correspondent for the BBC, revealed that the growth rate of 3.5% was greater than the 3.3% predicted by most experts.

He continued:”The sheer scale of the stimulus in the US has made a big difference, it was much bigger in percentage terms than that in the UK.”

“That the US, the powerhouse of the world economy is growing once again, is good news for the global economy has a whole.”

The last time the US economy grew was in the second quarter of 2008, by an annual rate of 2,4%.

The National Bureau of Economic Research will reveal the full extent of the US economic climb from recession when it analyses all the factors.

Some factors were significantly responsible for helping US economy during the third quarter, according to the Commerce Department.

The spending on durable manufactured products rocketed up at an annual rate of 22.3% which was the highest quarterly figure since 2001 and was spearheaded by the ‘Cash for Clunkers’ scheme helping new car sales.

Consumer spending increased on housing products by 23.4%, the greatest quarterly surge in 23 years, and came as a result of an improving housing market.

The big increase is considered by many to be due to the government’s $8,000 tax credit provided to first-time house buyers.

Government spending increased by 7.9% as stimulus spending spread and exports saw their biggest rise since 1996, rising by 21.4%.

Brian Bethune, an economist for HIS Global Insight stated that “it’s good to have the economy growing again.”

“But we don’t think that rate of growth is sustainable because it is distorted by all the government stimulus.”

“The challenge here is to get organic growth - growth that isn’t helped by fiscal steroids.”

However, unemployment is at a rate of 9.8% and a sharp fall came in September in the car sales industry as a result of the popular car scrappage scheme coming to an end in August.

Dean Baker, co-director of the Centre of Economic Policy Research believes that “you can say that the recession is over, but it sure won’t feel like that.”

“There is a lot of downward momentum that isn’t going to go.”

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

According to official figures, the UK experienced an unexpected contraction of 0.4% for the third quarter, showing that the UK is still stuck in the recession.

This quarterly contraction is the sixth consecutive contraction, the worst run of figures that UK gross domestic product (GDP) has experienced since records began 54 years ago.

The GDP of a country represents the value of goods and services produced by a country. The figures released may be altered at a later date, as this is just a first estimate.

The Office for National Statistics (ONS), had been expected to show quarterly growth of 0.2%. However, no growth in retail sales for September and a 2.5% fall in industrial output for August had dented people’s positive expectations.

Experts have revealed that one of the main causes of the contraction was an unexpected drop in the services sector, with distribution, catering and hotels generating some of the worst figures.

Nearby countries France and Germany exited the recession earlier this year, and it is generally considered that the UK’s reliance upon the services sector, and more specifically, the finances sector being the main reason.

The UK economy has now experienced a 5.9% contraction since its high point prior to the recession.

The Bank of England is set to re-think its quantitative easing plan after seeing such a poor result in GDP figures. Quantitative easing involves the Bank of England printing money to buy bonds from companies and banks in an effort to encourage positive activity in the economy.

HSBC’s Bronwyn Curtis spoke with the BBC, revealing that “back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme,”

ING’s James Knightly felt that the data was “awful with no positive news” and “clearly suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, although [it] is not a foregone conclusion.”

It is considered by many experts to be disturbing that measures taken by the government and the Bank of England have failed to make a positive impact. However, David Kern, the chief economist with the British Chamers of Commerce believes that “continued intervention - including help for businesses to access finance, and incentives to promote investment - is still needed.”

“Above all else, business confidence must be nurtured, to ensure that recovery is not further delayed.”

The Office of Fair Trade may be set to investigate home furniture store BrightHouse after complaints about the way people who get in debt are dealt with.

The company lets you buy household items such as washing machines and sofas to pay off weekly instead of in one go with a 29.9% APR charge excluding extras such as optical service cover.

However, lately the behaviour of staff at the stores has been called into question after several complaints of bullying customers who miss repayments.

One customer has several items from the store and had been happy with the company for 6 years, until she missed two repayments recently due to being in hospital for a severe epileptic seizure.

She usually makes her £14.32 repayment every Tuesday, but was forced to miss two payments while in hospital. After she got out of hospital she received a call from the company telling her to pay immediately or a driver would be at her house within the hour to collect the goods.

Another customer tells a similar story, after realising she would not be able to make her weekly repayment, she called BrightHouse a day before it was due. The next day she received a call asking her to borrow the money from friends of family to pay her fee, and continued to ring her all day.

Later that day an employee of the company came to collect her goods, ringing the doorbell continuously until she answered: “As soon as I opened it, he put his foot in. He said ‘I’ve come to collect the goods. Let me in’.”

After refusing and threatening to call the police he answered: “If you don’t let me in, there will be more people coming here. We will go upstairs, and we will get the goods.”

The Truth About Repossession:

According to the law, if you hire purchase an item, you don’t officially own it until the final payment is made. If you do stop repaying, the company does have the right to repossess the goods, but there are rules about how they can do that.

They cannot enter your house without a court order, and yet a former employee of BrightHouse says that’s exactly what he used to do, lying around the truth in order to gain access and gain the goods.

BrightHouse deny that they do this however. Their commercial director refused to talk about individual customers, but said that 96% of customers are happy with the service they provide. He added that repossession is a last resort.

He said: “We would only ever take the goods with the consent of the customer.

“We’re very keen to listen, and to understand where we’re not offering a good a service as we might, and we’re very keen to put that right.”

What Do You Think?

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A Cloaks and Daggers Mission…

The new Banking Act has been passed and will come into force.

This will see an increase in the Bank of England’s intervention powers, and gives them the power to intervene more quickly to help struggling banks and protect investors, behind closed doors, in order to try and maintain the financial stability of the economy.

However, critics are unsure about the secrecy surrounding the Banks intervention, claiming that not knowing what is going on could be detrimental for consumers.

The secrecy would not normally be allowed, but the new Banking Act allows certain decisions that are made to be excluded from disclosure under the Freedom of Information laws.

Currently, if a bank collapses, compensation payouts could take weeks to be processed, leaving customers with money concerns in the mean time, however, the new Act allows consumers to receive compensation within a week should their bank collapse.

The new Act should also make the transfer of a customer from one bank to another easier if their current bank does collapse.

Professional Opinions About The Act…

Editor of the Financial Times, Peter Thal-Larsen, has said that the Act will basically let the financial authorities take action sooner to move savers’ deposits from any failing banks before they tackle the banks other problems.

He said: “the idea is that, if there is a bank that gets into trouble, to insulate it and make the wider impact of that les, but I don’t think they can actually stop banks from getting into trouble in the future.”

Chief Executive of Hermes Equity Ownership Services, Colin Melvin has also said: “we welcome the new Banking Act and the enhancement it will bring to the regulatory framework, including the strengthening of the Bank of England.

“However, we need to do more to stimulate growth and restore confidence and trust in the financial sector.”

The new laws will make the temporary Acts introduced after the collapse of Northern Rock, which was nationalised after confidence in it disappeared, permanent.

At The End Of The Day, Is It Going To Help?

According to BBC business correspondent Joe Lynam, until recently, it was very unusual for banks to apply for emergency funding from the Bank of England because there was stigma attached which caused a fall in confidence levels in the bank.

In fact, it is believed that, 18 months ago, Northern Rocks public appeal for funding from the Bank of England, may have hastened its downfall.

The aim of the new Act is unlikely to stop unstable banks from collapsing, but will let the Bank of England help struggling banks behind closed doors in order to act in the overall best interests of the economy in order to try and prevent a situation similar to that of Northern Rock.

What Do You Think?

Will the new Act work? Is it in the best interests of the economy to keep struggling banks secret, or is it unfair on consumers? Comment here.

If NatWest loses its continuing test case over bank charges, it has said it will refund overdraft fees to customers. These findings come as an internal bank document reveals preparations that banks are making if they lose their case.

The document that has been found says that overdraft fees may have to be refunded, the cost of which could run into millions of pounds overall. Though the bank, which has recently been taken over by the Royal Bank of Scotland, has said it was just drawing up a contingency plan to deal with one possible outcome of the test case.

The RBS NatWest is one of eight banks in total awaiting an Appeal Court judgement as to whether or not the Office of Fair Trading (OFT) can decide if their overdraft charges are unfair.

If the bank is to lose its case, the document reveals that customers can expect to be refunded, saying that a team from the bank are “preparing systems and processes to pro-actively refund charges to the group’s customer base.”

The bank document also says that: “all customer accounts that are due a refund will be calculated as accurately as possible…Any monies will be accurately accounted for and reconciled.”

It adds that the bank aims for “avoidance of group reputational damage and/or loss of funds.”

An RSB spokesperson has said that the document found simply reflects the fact it was obliged by the Financial Services Authority (FSA) to deal with its customers complaints “efficiently and swiftly” if it ended up losing its test case.

He said that “this work stream has absolutely no bearing on how we see the outcome of the test case.

“With an organisation of our size and our different brands, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously as it has done throughout the whole test case process.”

Campaign group Legal Beagle’s spokeswoman Sharon Coleman has said: “we would welcome a pro-active approach if they intend resolving the matter without further appeals.

“Consumers have become increasingly frustrated by the apparent lack of progress in the test case, especially those affected by financial difficulty.”

For the last three years, banks have been besieged by hundreds of thousands of angry customers demanding the return of high charges taken by banks whenever customers go overdrawn without permission.

Last year, eight banks and the OFT agrees to stage a test case in the High Court in an attempt to resolve the legal issues.

In the first round of High Court hearings, at the beginning of this year, the banks lost their case. Mr Justice Andrew Smith said in April that under the 1999 Unfair Terms in Consumer Contracts Regulations (UTCCR), the OFT had the power to decide if banks’ charges were fair.

An appeal to this decision was heard in October of this year, and judgement is expected in the New Year.

HSBC and Lloyds TSB have also revealed that they have a contingency plan in place should they lose that appeal, and there is little doubt that other banks will have measures in place also.

Among the conditions set by the FSA, includes that banks will have to make “preparations for dealing with relevant charges complaints when this direction ends and updating those preparations as the outcome of the test case becomes clear.”