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The latest quarterly survey of the industry showed business volumes and rose sharply for the fourth quarter.

In total, 51% of businesses said they were more optimistic than three months ago while only 7% were less confident.

The CBI said the balance of plus 44% was the strongest showing in five years.

The figure compares with a balance of 29% in the previous survey, published in December.

‘Substantial boost’

The CBI’s head of economic analysis, Doug Godden, said the study showed companies were confident about their demand prospects.

“A year of solid business growth, the revival in the stock market last year and growth in the wider economy have given financial services firms a substantial boost,” Mr Godden said.

But he added that the full impact on confidence of the fatal bomb attacks in Madrid had yet to be seen.

While volumes rose across the sector, sharp could be seen between different business areas.

General insurers, fund managers and building societies all recorded strong growth, while banks and insurance brokers said they had only seen slight growth.

The CBI also said that insurance brokers suffered big falls in profitability, but profits at fund managers, securities traders and general insurers grew the fastest.

A Chinese court is hearing an appeal by Pfizer against the of the Chinese patent for Viagra. The quashed the patent saying it didn’t show that it worked. Pfizer says the authorities simply didn’t understand the research.

If the decision goes against Pfizer, it’s thought it could curb foreign investment in the country from companies frightened of losing patent protection for their .

Ringing around

Hutchison Whampoa, the Hong Kong based trading conglomerate controlled by tycoon Li Ka-shing, has had a tough few months as it has poured more and more resources into developing 3G mobile phone services in a range of countries.

On Thursday it reported a 38% rise in overall 2004 profit, double-digit growth in its ports and retailing operations, but losses at its 3G telecoms arm.

The company is hoping to list its mobile network in Italy this year and may list its UK 3G unit in 2006. Even so the shares are up a mere one- fifth of a percent on the past two weeks.

In Japan, meanwhile, the mobile business of NTT DoCoMo has fallen out of favour with investors over the past two weeks, with shares down 5.4%.

Even though it is the biggest mobile company in the country, it trails rival KDDI in sales of 3G units.

Ups and downs

The Japanese electronics company Canon has somewhat unnerved investors by announcing that it is moving into biotechnology.

It claims to be developing systems for the mass production of DNA chips using the bubble jet technology it uses in its printers, which it thinks will help diagnose cancer and infectious diseases.

Canon’s shares are up a modest 1.4% on the fortnight, as the company changed its charter to incorporate the “production and sales of pharmaceutical products”. The company says it has not yet decided on any specific plan on when and how to commercialise biotechnology products.

In the US the telecoms giant Verizon upped its offer for MCI to $7.6bn on Tuesday and had it accepted.

The market is not totally convinced the Verizon deal is a good one and even though its shares are up 2.8% on the fortnight, at $35.50, they are a good $5 below where they were at the start of the year.

The Financial Services Authority has warned insurers that they will face millions of pounds in fines - unless they start handling complaints about endowments properly.

In a letter sent to the chief executives of larger mortgage endowment firms and financial advisers, the regulator told mortgage endowment providers not to use the Financial Ombudsman Service as an alternative to handling complaints themselves.

Other stories in today’s programme

The history of banking in this country goes back to King Charles I who took the private gold deposited in the Tower of London. Since he walked off with everyone’s gold - people got nervous. They started giving it to goldsmiths to look after. Adam took a look at the evolution of the banking system.

Shoppers chose to stay away, or spend less, in the run up to Christmas than they did last year. But we hit the sales like there was no tomorrow. So what effect did this have on retail figures and why does it matter? Gillian, who has recently been released from Newsnight for good , gave us the answers.

The British effort for the Asian Tsunami is being by the Disasters Emergency Committee (DEC). So far, more than 76m has been pledged. But what exactly happens to this money and how can we be sure it will actually reach those who need it most? We talked to Pat Wilson of the DEC.

Millions have vanished from Turkish bank accounts. But it’s all above board as the government there has knocked six zeros off the Turkish Lira.

The life insurance company, Axa Sun Life, has lowered annual bonus payouts for up to 50,000 investors.

A petrol price war could break out in the UK after two leading supermarkets cut the price of fuel. Asda announced it is shaving 3p off the cost of a litre of unleaded petrol - cutting the price to 76.9p.

The development body is launching an insurance fund designed to enable countries to finance key services in the aftermath of a natural disaster.

Countries set to benefit include the Bahamas, Barbados, Montserrat, Trinidad and Tobago and Jamaica.

Hurricanes are estimated to have cost the Caribbean up to $16bn since 1979.

Reducing risk

Hurricane Ivan, which struck the region in 2004, cost an estimated $800m in losses and raised questions about the speed of the response from the international community.

In this and other similar disasters, it has taken months for donor countries to raise and deliver emergency funding.

One of the gaps in the current approach to natural disaster is after a hurricane or an hits Caroline Anstey, World Bank

The new initiative, set to be unveiled on Monday, would provide a standing fund of up to $50m which countries could draw upon in the event of future incidents.

Countries would have to pay annual premiums into the fund, as well as a one-off entry fee, in order to access any money.

The level of premiums will depend on a country’s risk profile and could range from about $200,000 to $4m, the Bank said.

Funding salaries

The fund’s structure is designed to reduce the risk facing individual countries. World Bank donor nations, such as the US, UK and France, are not expected to provide any direct funding .

“One of the gaps in the current approach to natural disaster is after a hurricane or an earthquake hits, a government is dependent on trying to get support from donors,” said Caroline Anstey, the World Bank’s director for the Caribbean region.

“That period is an extremely important one, to allow the governments to carry on working to pay salaries.”

According to its own forecasts, the World Bank believes hurricanes will hit the region every two and a half years.

The Financial Services Authority (FSA) said the General Electric UK failed to adequately control insurance sales and to treat customers fairly.

PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.

The fine is the biggest imposed by the FSA over PPI selling so far.

We are to see better practice in PPI sales and will crack down where firms fail to treat their customers fairly SA director of enforcement Margaret Cole

The PPI industry is worth an estimated 5.5bn a year.

Watchdogs have been carrying out a widespread investigation into the industry, and earlier this month the BBC learned that 10 banks and lenders would face fines following the probe.

Review

In a statement, the FSA said it had acted as GE Capital Bank had not reviewed its sales procedures, despite widespread evidence which emerged in 2005 that it was failing to meet recommended sales practices.

Failings pointed out by the FSA included:

• Not ensuring that customers had adequate information before signing up for a policy
• Failure to make sure staff were trained properly
• Not or managing information properly
• Failing to contact customers that the bank found had been sold PPIs erroneously in an effort to remedy the situation

The bank has now agreed to take action to resolve the problems.

GE Capital Bank provides many of the store cards that people are offered in High Street shops. About 300,000 shop staff sell insurance for the cards on behalf of the company.

According to the FSA, more than 850,000 policies which included PPI were sold by GE Capital in 2005.

“Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up,” FSA director of enforcement Margaret Cole said.

“Our focus on Payment Protection Insurance will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

It was a short-lived upset, and though investors remain wary, there has been a gradual return to the Turkish market.

“The Turkish economy has shown considerable resilience in the wake of the financial markets’ turbulence earlier this year,” according to a recent International Monetary Fund (IMF) report.

“Domestic demand has slowed, but by less than expected, and there are signs of an upturn in exports that is helping to sustain output.”

Falling inflation

Economic growth is seen as vital in order that Turkey can rise to a level where it can join the European Union on a par with existing members.

Facts and figures about potential EU member Turkey At-a-glance

True, economic growth has slipped this year to an expected 6%, from 7% last year, and the economic output per head remains at less than a third of the EU average.

But Turkey’s GDP per head is not much lower than that in Romania, which is about to become an EU member.

Besides, the rates of both and inflation in Turkey have fallen to high figures - quite an , given that it is only five years since Turkey had an inflation rate of 70%.

And there is no lack of optimism for the future.

Earlier this week, Central Bank President Durmus Yilmaz said Turkey’s rate of inflation should fall below 5.2%, perhaps as far as 1.7%, by 2008.

Excessive spending?

Yet in the short term, inflation worries remain, the IMF points out.

Early this year, the Central Bank predicted a drop to 5% by year-end. Now it warns the rate could climb back into double digits.

IMF’s John Lipsky warns against excessive spending

As such, “inflation remains above the target path”, warns the IMF, as it urges the government to curb spending and the Central Bank to resist any urges to reduce interest rates.

And while the Bank appears to be all ears, with Mr Yilmaz having already raised interest rates sharply to stabilise the lira and vowed to tighten monetary policy further if inflation gallops out of control, the government appears less disciplined.

Two weeks ago, the government announced plans for a 17% increase in its 2007 budget, sparking accusations of irresponsible populist spending ahead of next year’s presidential and general elections.

“Financial markets are showing greater sensitivity to countries like Turkey that have high debt levels, a widening current deficit and are subject to inflationary pressures,” observes John Lipsky, IMF first deputy managing director.

“In this context, it is only natural that financial markets will be paying particular attention to whether fiscal discipline is maintained in the run-up to next year’s elections.”

The IMF, currently considering whether to release the next tranche of a $10bn loan arrangement, stresses that Turkey must step up the fight to hold down inflation.

It wants Turkey to “strengthen tax administration, reform the tax regime, prepare for next year’s launch of the new pension and health insurance systems, and reform the financial sector”.

But Turkey has also come a long way in many areas.

Government debt as a proportion of GDP has fallen sharply since 2001 and is set to fall further, as an extensive programme is going ahead nicely.

Foreign investors are diving into a range of sectors, from telecoms to steel to banking, with land reform expected soon.

Which all adds up to one point only: it is getting harder for those opposed to Turkey’s EU membership ambition to rely on economic arguments in an effort to block its entry.