Fears that consumers have been over-extending themselves resurfaced again last week with Lloyds TSB reporting a jump in bad debt charges. While first-half profits increased 9 per cent, the market got a little jumpy when Lloyds said impairment losses on bad loans were up 52 per cent to £670m.
Statistics released by the Bank of England also suggested that consumers were getting nervous. UK lending to households rose in June by the second-smallest amount this year, the bank found.
But it was not all gloom. Paul Gratton, the chief executive of online bank Egg, said concerns about loan losses at UK banks were probably overdone. And Northern Rock, the mortgage lender, was able to post a 10.6 per cent rise in profits.
Away from banks, the booming oil price meant only one thing for BP and Shell: huge profits. But while BP said first-half profit had risen 29 per cent to $10.5bn (£5.9bn), an explosion in March at a Texas oil refinery affected its earnings
Meanwhile, Royal Dutch Shell unveiled half-year profits of £5.8bn, or £1.3m an hour. But it doesn't plan to stop there. Shell plans to increase the money spent on exploring for oilfields to £1bn both this year and next year. Investors had been concerned that Shell wasn't doing enough to replace its falling oil reserves.
While high oil prices have been kind to BP and Shell, they haven't been good news for the world economy. This is despite the US economy growing at an annual pace of 3.4 per cent from April through June, according to government statistics. The prospects for the UK economy, however, appear not to be so bright.
The National Institute for Economic and Social Research predicted last week that economic growth would slow sharply to 2 per cent this year.
There were further concerns on the UK high street when women's clothing retailer Monsoon warned that the recent London bombings had affected its performance.
While retail conditions may be tough, consumers are still buying chocolate and soft drinks. Cadbury Schweppes last week reported its best interim trading performance in a decade, with pre-tax profit reaching £344m.
There was plenty of action in the media sector as Rupert Murdoch's son, Lachlan, quit as deputy chief operating officer at News Corp. Lachlan, 33, was seen as a likely successor to his father but is instead moving to Australia. Pearson, meanwhile, the owner of the Financial Times newspaper, named Glen Moreno as its new chairman to succeed Lord Stevenson. Mr Moreno was a former chief executive at investment company Fidelity. Trinity Mirror, the owner of the Daily Mirror, warned that the advertising outlook remained gloomy.
And Reuters shares fell on Tuesday after chief executive Tom Glocer unveiled his growth strategy. He pleaded for investors to take a long-term view on his plans to reduce costs and increase investment, but the reaction was mixed.Reuse content