January

Marks & Spencer staff were warned to expect a cut in their annual bonus after the retailer had a disappointing Christmas. The rest of the sector painted a mixed festive picture as WH Smith issued a profits warning, but Boots, Tesco and Dixons remained in high spirits.

British Airways announced plans to tackle the high level of sick leave among staff as part of a drive to reduce costs by £300m. In a grim month for workers, Boots said 900 head office posts would be lost while Abbey and Axa said it planned to move work to India.

The crisis that hit oil producer Shell during 2004 blew up in early January after it said a review of its energy fields over the previous three months found that proved reserves were a fifth lower than earlier statements.

Life assurer Standard Life said it was considering a stock market flotation in what would be the biggest shake-up in its 178-year history. Energy supplier npower announced increases in household gas and electricity bills and Granada and Carlton Communications received final approval for their £4.5bn merger.

February

Royal Bank of Scotland reported a record profits of £7.15bn. Others to do well included Halifax owner HBoS, with a better-than-expected £3.8bn.

Vodafone conceded defeat in the race for AT&T Wireless after bidding for the US operator went above $41bn. Shareholders breathed a sigh of relief as Vodafone said it could not justify the huge outlay, handing victory to rival Cingular, which became the biggest wireless operator in the US.

Brewer Scottish & Newcastle signalled the end of an era by announcing that its factory in Edinburgh would close with the loss of 170 jobs. It blamed high operating costs and the plant's city centre location for the decision.

Millions of homeowners faced higher borrowing costs after the Bank of England lifted interest rates to four per cent; Norwich Union shut insurance intermediary Hill House Hammond with the loss of up to 1,600 jobs; New Look founder Tom Singh tabled a £699m proposal to take the fashion chain private; Securicor and Danish rival Group 4 Falck announced merger plans.

March

The reserves crisis at oil producer Shell claimed the job of chairman Sir Philip Watts and intensified later in the month following a second downgrade. The Anglo-Dutch company also said it would resume production in Libya.

The Government ruled out giving compensation to policyholders of troubled mutual Equitable Life after a report found the society was the author of its own misfortunes. Lord Penrose said shortcomings in Equitable's management, auditing and regulation contributed to its difficulties.

The FTSE 100 Index suffered its worst session in nearly a year after economic worries and bomb blasts in Spain hit confidence. Shares in Safeway traded for the final time when Morrisons completed the £3bn takeover of its supermarket rival and bakery group Greggs served up record profits, but said consumers may be losing their appetite for its sandwiches.

Chancellor Gordon Brown drew the battle lines for the next election by announcing plans to cut thousands of Whitehall jobs and to use the cash for frontline public services. He also pledged to meet his fiscal rules, despite warning in his Budget that public borrowing would be greater than expected.

April

Rebel shareholders ousted the directors of Channel Tunnel operator Eurotunnel during a heated annual meeting in Paris. More than 5,000 investors turned up to tackle the board over £6.4bn of debt, before voting to install an all-French team of directors.

Tesco rang up another profits record after annual sales reached £33.6bn, which is equivalent to £63,900 a minute. The group, which takes £1 of every £8 spent by UK consumers, benefited from its drive into non-food areas as underlying profits rose 22 per cent to £1.7bn.

More than 100 loss-making Dixons stores were closed after the chain lost patience with its struggling smaller outlets. Dixons was left with 214 larger branches, while it tried new formats, including out-of-town shops.

BAE Systems cut 720 jobs at a shipyard building submarines at Barrow-in-Furness, Cumbria. WH Smith announced a 29 per cent fall in half-year profits, but received bid interest from a private equity firm. A damning report indicated Shell bosses knew about the reserves problems in 2001 and Scottish Courage said Newcastle Brown Ale would no longer be brewed in the city of its name.

May

Bhs owner Philip Green stunned the retail world when he revealed his interest in a takeover of ailing store chain Marks & Spencer. He announced his move only days after M&S said its share of the clothing market had shrunk.

Oil prices ended the month close to $40 a barrel after security fears in the Middle East, including a hostage crisis in Saudi Arabia, rocked confidence among dealers. The highest oil price in 14 years also raised concerns about a potential blow to the UK economy.

Vodafone failed to win over investors, despite announcing annual profits of £10bn. Shares fell six per cent on the day as Vodafone failed to produce its usual forecast-busting results and kept shareholders guessing over whether it was planning a major acquisition.

Shares in no-frills airline easyJet sank 22 per cent after it warned tough competition would affect its summer and autumn season. Royal Bank of Scotland acquired Charter One Financial for £5.8bn in a deal that ensured one quarter of its profits would come from the US and off-licence chain Unwins indicated it may be for sale.

June

The financial services industry was dealt a series of blows after Barclays, Bradford and Bingley, HSBC and Norwich Union announced job losses as part of restructuring plans. Alliance and Leicester also said it would close 46 branches because of the increasing popularity of Internet and telephone banking.

Marks & Spencer, headed by former Arcadia chief executive Stuart Rose, twice rejected takeover proposals from Philip Green, including an £8.4bn offer. However, Mr Green pinned his hopes on securing the support of institutional investors in the US, who owned about 20 per cent of the company.

Energy group Centrica announced it would sell the AA motoring organisation it bought from members for £1.1bn five years ago. The British Gas owner, which later sold the business to private equity buyers for £1.75bn, said it wanted to fund acquisitions in the electricity and gas sector.

The Barclay brothers ended months of uncertainty by buying the Daily and Sunday Telegraph in a £729.5m deal. the Bank of England imposed the first back-to-back interest rate rises since 2000 and National Grid Transco acquired a network of mobile phone masts and broadcasting towers for £1.1bn.

Part two tomorrow.