Bank report to study pounds 36bn windfall effect

The Bank of England announced yesterday it is to commission a special report on the effect of windfall payments from converting building societies, as two more companies announced soaring sales boosted by de-mutualisation spending.

Mervyn King, deputy governor of the Bank of England, said the bank estimated the total windfalls to be worth pounds 36bn and that its report on the economic effects should be completed "in a month or so".

The comments came as Airtours, Britain's second largest tour operator, said a combination of the building society windfalls and increased buying power of sterling had boosted its summer bookings both for 1997 and 1998.

Separately, Rosebys, the furnishings group credited the windfall factor for soaring sales of beds. In the five weeks from 30 June sales at its Bensons Beds subsidiary were 40 per cent up on a like-for-like basis.

Tim Byrne, Airtours deputy finance director, said: "There can be no doubt that pounds 35bn-pounds 36bn of cash sloshing around the economy must have had an effect, although its very difficult to measure."

Harry Coe, Airtours deputy chief executive, expressed caution on the windfall factor, saying: "We would be disappointed if we didn't get some of that money but it is difficult for us to say how much of our increased bookings are being made for that reason."

Rosebys' chief executive, Mike Rosenblatt, said the dramatic increase in sales was not sustainable and that the recent spate of interest rate rises would start to dampen growth: "I think towards the end of the year those interest rate rises will start to make themselves felt and that it will take the edge off the boom that we are currently enjoying."

Airtours third-quarter results to the end of June showed a 24 per cent increase in profits to pounds 24m. Summer 1997 bookings within the UK tour operating business are 19 per cent ahead of the previous year, with sales of holidays to Turkey, the Western Mediterranean and Florida rising strongly at the expense of Greece. Spain is also proving popular due to the sharp rise in the value of the pound against the peseta. Strong demand for late bookings has led to a 15-20 per cent increase in prices for last-minute holidays.

Bookings for winter 1997-98 are 25 per cent up, with Mr Coe admitting that the windfall payments were probably a factor.

Airtours said the strength of sterling was lowering its costs, which it was passing on to consumers. This would be balanced against the impact of currency factors on overseas profits translation. Airtours shares closed 34p lower at 1195p.

Rosebys reported a 111 per cent increase in interim pre-tax profits to pounds 3.2m. Group like-for- like sales across its Benson Beds, Knightingales and Rexmore chains are 18 per cent up in current trading.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
ebooksA celebration of British elections
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
A voter placing a ballot paper in the box at a polling station
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power