What's going on?

Projections out on Monday show British firms are set to spend a record amount on share buybacks this year.

What does this mean?

Everyday Brits might be cutting back their spending, but the country�s biggest businesses sure aren�t. In fact, finance chiefs of companies in the FTSE 100 � an index tracking the UK�s biggest firms � are set to spend a record �51 billion ($57 billion) on share buybacks this year (tweet this), which would reduce the supply of shares and, in turn, mean remaining shareholders would each claim a bigger chunk of any profit. After all, they have plenty of cash to play with: the UK�s biggest companies are multinational firms that make a heap of money overseas, and today�s weaker-than-usual pound means foreign profit is worth more when converted back to home currency. Add lower share prices into the mix, and that might be why high-flying execs believe it�s high time to pay some of that bounty back to shareholders.

Why should I care?

Zooming in: Let�s get cynical.
Businesses use their spare cash to reinvest internally, buy other firms, or pay shareholders back. Many executives claim that buybacks � one way to return shareholders� cash � are a vote of confidence, indicating that shares are going for a bargain. But cynics might argue that buybacks are a last resort, and could be a negative long-term signal that a firm�s management has failed to find any growth-fuelling opportunities.

The bigger picture: How the other half live.
British companies gorging on buybacks is a sure sign that they have bucketloads of cash on hand. But you haven�t slipped into an alternate dimension, the country�s economy is still in a tight spot. See, what�s good for business isn�t always good for the country as a whole: while a weaker pound might make companies� overseas profit look heftier, it diminishes consumers� spending power on imported goods. Plus, pumped-up commodity prices mean the biggest energy companies rake it in while everyday folk struggle to fill their tanks.