Fri, 03 Feb, 2012
International debt inspectors believe they have found another €15bn (£12.5bn) black hole in Greece's public finances caused by the deepening recession, delivering the crippled nation another devastating blow. With pressure growing over talks with private investors about the terms of a €100bn debt write-off, officials calculated that to bring the country's debts to a sustainable level at 120% of GDP the international community would need to find an extra €15bn, raising the prospect of a Greek default. Sources told news organisations in Brussels that weak growth will make it even more difficult for Greece to resolve its debt problem, leaving the Eurozone and the International Monetary Fund with the prospect of an even larger bail-out than the €130bn planned, The Telegraph says.
Thu, 02 Feb, 2012
The former chairman of the fashion retailer New Look has said the high street is in an "death spiral" and has recommended re-classing empty shops for residential use. Phil Wrigley, the chairman of the retailer Majestic Wine, also criticised the recent report on the high street by Mary Portas, the self-styled Queen of Shops, as the "right diagnosis, wrong prescription". His views, based on nearly 30 years in the retail sector, come at a time when more than 14 per cent of town centre shops on average are vacant. Mr Wrigley called for the "reinvention" of high streets. He said: "Retailing will never be the same again, but there is much to be gained from facing up to this fundamental, and irreversible, truth. In doing so, we might just create the space in which we can re-cast and revitalise our town centre communities," The Independent reports.
Wed, 01 Feb, 2012
The Ministry of Defence will no longer give UK companies priority over their foreign competitors when buying equipment and weapons for the armed forces.
Tue, 31 Jan, 2012
European leaders agreed on a permanent rescue fund for the Eurozone, and 25 out of 27 EU states backed a fiscal pact for stricter budget discipline in the Eurozone, while a deal on Greek debt is expected in "days". Only Britain and the Czech Republic refused to agree to the fiscal compact, due to be signed in March, that will impose quasi-automatic sanctions on countries that breach European Union budget deficit limits and pledge balanced budget rules will go into national law. Prime Minister David Cameron said further reforms were still needed by Eurozone states to end the debt crisis in the region. I don't think this treaty on its own will sort the Eurozone's problems," he said after the leaders' meeting in Brussels. "There is a fiscal problem but there is also a competitiveness issue," according to The Telegraph.
Mon, 30 Jan, 2012
The chief executive of Royal Bank of Scotland last night bowed to mounting public anger and agreed to give up a £1m bonus. Stephen Hester's move emerged last night hours after it had been announced that Labour was to trigger a Commons vote on his controversial award. Ministers welcomed the decision, which may help contain the Coalition's growing political embarrassment over executive pay at state-owned banks. It may also raise questions about Mr Hester's long-term future at RBS, which he has run since it was rescued by the taxpayer in 2008. Mr Hester was said to have been concerned he was becoming a "pariah". City sources suggested last night that he and members of the bank's board had considered resigning because of the growing row over his remuneration. He had been in line for a bonus of shares worth almost £970,000, on top of his £1.2m salary, The Telegraph reports.
Sun, 29 Jan, 2012
The richest college at the University of Cambridge, Trinity, has invested in the UK's largest retailer by acquiring a 50% stake in a portfolio of Tesco stores worth £440m. It is understood to be the first time the college has invested in supermarkets, although it has a property portfolio worth more than £800m. Trinity uses endowment funds to invest in property and provide extra income for education and research. Its portfolio includes the freehold to land surrounding The O2 arena in London. The college has acquired the 11 stores alongside a Tesco subsidiary in a deal financed through the issuing of a £450m commercial mortgage backed security (CMBS) on Wednesday. The Tesco portfolio includes stores in London, Bradford and Doncaster, as well as a development site in Woolwich, south-east London, The Telegraph reports.
Fri, 27 Jan, 2012
The Treasury will on Friday publish plans for a radical overhaul of financial regulation that will hand the Chancellor new powers to take charge in a crisis, rein in the might of the Bank of England, and provide extra protection for consumers. The new Financial Services Bill will be put to Parliament on Friday morning alongside a memorandum of understanding between the Treasury and the Bank that will set down how the authorities should respond to another financial crisis. It will make clear that responsibility lies with the Chancellor whenever taxpayers' money is put at risk to avoid a repeat of the Northern Rock fiasco when Alistair Darling found he could not order the Bank to act, The Telegraph says.
Thu, 26 Jan, 2012
The threat posed to the British economy from the Eurozone crisis was underlined on Wednesday when Portugal saw its borrowing costs soar to a record high amid market fears that the bailed-out country will not be able to break free of its financial crisis in the near future. The yield, or interest rate, on three-year bonds reached 19.4%, while the rate on 10-year bonds was 14.6%, figures that compare with British rates of less than 2%. Portugal needed a €78bn (£65bn) rescue package last year as its high debt load and feeble growth pushed it towards bankruptcy. A three-year programme of austerity measures and economic reforms is aimed at restoring investor confidence in the country, but a deepening recession, with a 3.1% contraction forecast for this year, is undermining the faith of the markets in Portugal, according to The Guardian.
Wed, 25 Jan, 2012
The Governor of the Bank of England urged against "despair" because "all crises come to an end" as official figures were expected to show that Britain is heading back to recession. Sir Mervyn King said that the economy faced an "arduous, long and uneven" path to recovery but that once it does it will be on a "more sustainable footing than at any point in the past 15 years". He spoke before publication of figures on Wednesday, which forecasters said would show that the economy shrank in the final three months of 2011. A further consecutive quarter of negative growth would mean the country has returned to recession, a "double dip" following the slump of 2008, The Telegraph reports.
Tue, 24 Jan, 2012
British and European Union officials are working to persuade the US Congress to exempt a BP project from new American sanctions aimed at stopping Iran's nuclear programme. The $20bn project in the Caspian Sea, called Shah Deniz II, is intended to reduce European dependence on Russian gas. It is being undertaken by an international consortium headed by the British oil giant. But the Iranian state-owned oil company, Naftiran Intertrade, also holds a 10% stake in the venture, putting it within reach of proposed new sanctions aimed at preventing Western companies from doing business with Iran's energy sector. The project underlines the difficulties Western governments are facing as they try to isolate Tehran without harming their own energy security, The Times says.
Mon, 23 Jan, 2012
Britain, America and France delivered a pointed signal to Iran, sending six warships led by a 100,000 ton aircraft carrier through the highly sensitive waters of the Strait of Hormuz. This deployment defied explicit Iranian threats to close the waterway. It coincided with an escalation in the West's confrontation with Iran over the country's nuclear ambitions. European Union foreign ministers are today expected to announce an embargo on Iranian oil exports, amounting to the most significant package of sanctions yet agreed. They are also likely to impose a partial freeze on assets held by the Iranian Central Bank in the EU. Tehran has threatened to block the Strait of Hormuz in retaliation. Tankers carrying 17 million barrels of oil pass through this waterway every day, accounting for 35% of the world's seaborne crude shipments. At its narrowest point, located between Iran and Oman, the Strait is only 21 miles wide, The Telegraph reports.
Sun, 22 Jan, 2012
Newt Gingrich pulled off a sensational victory in the Republican presidential race on Saturday by taking the South Carolina primary, wrecking the carefully-laid plans of Mitt Romney and setting the stage for a protracted contest. Gingrich, trailing badly behind Romney just a week ago, won after strong performances in televised debates on Monday and Thursday that forced Romney on to the defensive. Gingrich not only won, but did so with a convincing majority. Gingrich took 40% of the vote, Romney 28%, Rick Santorum 17% and Ron Paul 13%. Since 1980, the winner of the South Carolina primary has gone on to take the Republican nomination. But it is the first time since then that three different candidates have won the opening three contests, highlighting the fractured nature of the Republican party in 2012, The Guardian says.
Fri, 20 Jan, 2012
Shares in Google dropped more than 10% in after-hours trading on Thursday, after the web search giant reported record sales but fell short of analysts' expectations. The company grew its full year revenues by 29% and saw quarterly revenues climb 27% year-on-year to $10.58bn (£6.83bn), including $1.06bn from the UK. However, its operating profits grew much more slowly by comparison, climbing to $2.71bn, up just 6% from $2.54bn in the same period last year. Earnings per share were $9.50, below Wall Street's consensus predictions of $10.49. Chief executive Larry Page hailed 2011 as "a great year" for the company, as quarterly revenue "blew past the $10bn mark for the first time," according to The Telegraph.
Thu, 19 Jan, 2012
Traders were unconvinced by a radical proposal by the International Monetary Fund (IMF) to deploy $1tn (£648bn) to stem the European debt crisis and its impact on the global economy. Ms Lagarde said its members recognised the "importance of ensuring adequate fund firepower to help defuse current global economic weaknesses and regional challenges." But neither traders nor economists - nor some key politicians - were prepared to bet on the delivery of the IMF's plan and worried instead about the advancing debt crisis. The yield on 10 year-gilts, which have become a bell-weather of stresses in the Eurozone, fell to a record low of 1.917% before recovering to 1.963% as bondholders sought shelter in UK debt. Stock markets across Europe slid amid more predictions of recession, bail-outs and downgrades, The Telegraph writes.
Wed, 18 Jan, 2012
The Bank of England was plunged into a row with MPs last night after it rebuffed calls for a sweeping overhaul of the way that it is governed. The Bank published a plan for an oversight committee to review the way it makes decisions, as it prepares to take on new powers to monitor and regulate the financial sector. Sir Mervyn King, the Governor, rejected a proposal tabled by the Treasury Select Committee for its governing Court to be replaced by an influential supervisory board with the ability to scrutinise and critique its performance and decisions, according to The Times.
Tue, 17 Jan, 2012
Confidence within the UK's construction industry has "collapsed" with just 5% of small businesses operating in the sector expecting their workloads to increase this year, according to a new report. The Federation of Master Builders' "state of trade survey" found workloads have fallen in each of the past 16 quarters and confidence in the repair, maintenance and improvement (RM&I) market is plunging. Brian Berry, the federation's director of external affairs, said: "The disastrous results for the RM&I market are very alarming." Commenting on the Scottish construction sector, John Hall - Scottish council member with insolvency trade body R3 - said: "Given the continued squeeze on facilities by lenders, it is highly likely that many more businesses in the construction sector will fail in the coming year," The Scotsman says.
Mon, 16 Jan, 2012
China can maintain an annual growth rate of 8% for the next two decades, the World Bank has said, raising hopes that the powerhouse economy will help lead other countries back to growth. Justin Lin, the World Bank's chief economist used a wide-ranging speech in Beijing to issue the upbeat prognosis for the Chinese economy. Economists remain split over whether China can avoid a hard landing in the wake of rampant inflation and rocketing property prices, but Mr Lin said the country's government had the room to use policies to maintain demand and growth. Mr Lin described the country's fiscal position as "sound" and said there was room for significant industrial development, urbanisation and infrastructure development to help drive growth, The Telegraph reports.
