Fiscal Cliff: Obama 'Optimistic' After Talks

Barack Obama has called for "immediate action" to avoid the so-called fiscal cliff after urgent talks with Congressional leaders.

He urged politicians to agree a deal, saying: "The hour for immediate action is here. It is now."

He said he remained "optimistic" that an agreement could be reached to avoid millions of families being hit with big tax increases and spending cuts.

Mr Obama described the hour-long meeting with Congressional leaders as "good and constructive".

He referred to "dysfunction in Washington" and said the American public was "not going to have any patience for a politically self-inflicted wound to our economy".

Surprisingly, after weeks of post-election gridlock, Senate leaders said they hope to reach a compromise that could be presented to lawmakers by Sunday -  little more than 24 hours before the year-end deadline.

Majority leader Harry Reid and Republican leader Mitch McConnell gave a relatively upbeat assessment after what Mr McConnell called a "good" meeting with Mr Obama.

House Speaker John Boehner arrives at the White House for the talks

"I am hopeful and optimistic" of reaching a deal, Mr McConnell said.

Mr Reid promised he would be "going to do everything I can" to make a deal happen, but added: "Whatever we come up with is going to be imperfect."

House Speaker John Boehner appears for the moment to have ceded the struggle to the Senate, saying he would put any agreed bill before his chamber and let the vote proceed. 

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut the US's soaring deficit.

It followed their inability to reach an agreement in 2011.

If Congress cannot agree a deal to rein in government spending, Mr Obama said Congress should allow a vote on a basic package that would keep tax cuts for middle-class Americans while extending unemployment benefits for the long-term unemployed.

The stock market was down again on Friday as the wrangling continued in Washington.

Experts say if the looming tax increases and spending cuts are not scaled back, the recovering but fragile US economy could slip back into recession.

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JD Wetherspoon To Create 1,200 Jobs

The pub chain JD Wetherspoon has announced plans to create 1,200 jobs during 2013 and said the number would have been greater but for the tax regime facing the industry.

The expansion plans will see 30 pubs open in cities across the UK, adding to the firm's current total of 866 pubs and bars.

The company is to invest more than "£35m in areas including Cardiff, Fort William, Selby, Whitby, New Brighton and Fraserburgh.

Wetherspoon chairman Tim Martin said: "We are looking forward to opening the new pubs, many of which will be in areas where Wetherspoon is not yet represented.

"We are also pleased to be creating so many new jobs, especially during a recession."

But he continued: "There is no question that we would open more pubs and create more jobs in 2013 if the increasing tax burden on pubs was reduced."

Mr Martin has criticised successive Governments on tax.

While beer duty increases have hurt pub numbers, he has long argued that supermarkets have an unfair advantage because they do not have to pay the 20% VAT on food that pubs do, meaning more people opt to stay at home.

He blamed an increasing tax take for his decision to limit the company's expansion plans during 2012.

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Online Shopping Surges Over Xmas

Internet retail sales are on course to have risen 30% over the Christmas period as shoppers moved to bag a bargain from home and beat sale queues.

Figures from market data firm Experian suggest Boxing Day set a new British record for online shopping.

According to the report, Britons spent 14 million hours trawling websites on Boxing Day, paying around 113 million visits to online retailers on what became the UK's biggest day for internet shopping.

Experian found that web sales were up by 17% on Boxing Day last year.

The figure had been expected to be higher but the company's digital insight manager, James Murray, said: "With a number of the major retailers bringing their sales forward to Christmas Eve, the impact of that was that Boxing Day was slightly muted and not as prolific as we forecast."

Figures show that Christmas Eve was 86% bigger than last year as a shopping day while Christmas Day was 71% bigger, as shoppers took to websites.

British Retail Consortium (BRC) spokesman Richard Dodd said the dash for discounts was boosted by consumers who were feeling the pinch.

He said: "Customers are under lots of financial pressure and are really keen on seeking out value and taking advantage of bargains."

Robert Goodman, general manager of Kent's Bluewater shopping centre, said: "Boxing Day's momentum has continued into today, with the opening of the John Lewis clearance sale being a major draw."

Waitrose said it had enjoyed a record Christmas season - with Sunday, December 23,proving to be its busiest ever.

Total branch sales excluding petrol for the festive period rose 7.7% between Sunday, November 4, and Christmas Eve.

On a like for like basis, sales were up 4.3% on the equivalent period last year.

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Autonomy Founder Rounds On HP Accusers

Mike Lynch Statement In Full

Updated: 10:42am UK, Friday 28 December 2012

Here is the full statement released by Mike Lynch, Autonomy's founder, in response to HP's regulatory filing in the US on Thursday:

""It is extremely disappointing that HP has again failed to provide a detailed calculation of its $5 billion write-down of Autonomy, or publish any explanation of the serious allegations it has made against the former management team, in its annual report filing today.

Furthermore, it is now less clear how much of the $5 billion write-down is in fact being attributed to the alleged accounting issues, and how much to other changes in business performance and earnings projections. This appears to be a material change in HP's allegations.

Simply put, these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them.

We also do not understand why HP is raising these issues now given that Autonomy reported into the HP Finance team from the day the acquisition completed in October 2011, there was an extensive due diligence process and Autonomy was audited as a public company for many years.

We would particularly make the following points:

:: HP's CFO Cathie Lesjak and her team, plus a number of outside advisors, had access to all Autonomy accounts and documents from October 2011 onwards, and raised no issues.

:: Beginning in November 2011, HP and KPMG reviewed Autonomy's closing balance sheet in detail, and Ernst & Young reviewed Deloitte's audit work papers.

:: Beginning in October 2011, HP studied in detail Autonomy's tax structure and transfer pricing as well as its revenue recognition practices (led by Paul Curtis, HP's worldwide head of revenue recognition).

:: An independent, third-party valuation of Autonomy's assets was carried out in January 2012.

:: Quarterly business reviews were held with Autonomy management, Meg Whitman and Cathie Lesjak to discuss Autonomy's financial performance.

:: HP has continued to sell and account for hardware alongside Autonomy software in the same way that Autonomy did for the year since the acquisition completed.

:: Regarding differences between IFRS and US GAAP accounting standards, which appear to have a role in some of the allegations HP has made, Autonomy's accounting policies were made clear in Autonomy's 2010 annual report.

We also note the statement in HP's annual report that it received confirmation from the U.S, Department of Justice on 21 November 2012 (the day after HP's first public statement), that the Department had opened an investigation. We can confirm that we have as yet had no contact from any regulatory authority. We will co-operate with any investigation and look forward to the opportunity to explain our position.

We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained id in accordance with applicable regulations, fully audited by Deloitte, and available to HP during the due diligence process.

We remain deeply concerned about how this process has been conducted, and believe it is in everyone's interest for it to be resolved as soon as possible."

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Tata Group Says 'Ta Ta' To Boss

The brains behind one of the world's most successful companies has handed over the reins of his vast business empire.

The head of India's Tata Group, Ratan Tata, used his 75th birthday to fulfil his retirement as chairman after steering the group for 21 years and transforming it into a streamlined conglomerate of more than 100 companies which include Jaguar Land Rover and Tetley Tea.

He passed the baton to 44-year old Cyrus Mistry, who brushed his way past reporters as he arrived to take the helm at Tata's headquarters in Mumbai, in a move that typically lacked any fanfare or signal of change for the company.

Mr Tata, a bachelor with no children, generated headlines as the driving force behind the creation of the Nano, billed as the world's cheapest "people's" car as well as for the 2008 purchase of prestige British car brands Jaguar and Land Rover.

From luxury cars to steel, Tata is India's largest group with total combined sales of $100bn (£60bn) in 2011-12, nearly 60% of which came from business outside India, mainly the United States and Britain.

Ratan Tata took control of Jaguar Land Rover in 2008

During Ratan Tata's time at the helm, the organisation went on a global purchasing spree, acquiring major names ranging from Tetley Tea to the Anglo-Dutch steel firm Corus in 2007 for $13.7bn.

In addition, Tata Motors is India's top vehicle maker while Tata Consultancy Services is its largest software outsourcer.

The group's progress over the past two decades has coincided with the rapid economic development of India, which observers say Mr Tata played a major role in.

An editorial in the Hindustan Times read: "The Tata group has been the spearhead of India's integration with the world economy.

"The Tatas are ahead of the pack in aligning corporate governance with international practices and this serves as a springboard for a new generation of the the global Indian manager."

Pradip Shah, chairman of IndAsia Fund Advisors, said: "Tata led the group with vision, drive, tenacity and skill." He added that Mr Mistry's challenge would be "inheriting people and building teams".

The Tata Nano is one of India's best-selling cars

Tata Steel is the world's seventh-largest steel producer but is now having problems with downbeat business conditions in Europe. The group's telecom, power, hotel and finance arms also face difficulties.

Mr Mistry, who was chosen as Mr Tata's successor in November last year, is the the son of Irish citizen Pallonji Mistry, whose construction firm Shapoorji Pallonji is the biggest shareholder of Tata Sons.

He successfully grew his family's construction business turnover seven-fold to almost $1.5bn since he became managing director in 1994.

Mr Tata, now "chairman emeritus" with the group, plans to remain head of the charitable trusts that own two-thirds of main holding company Tata Sons.

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UK Economy: Workers Face A 'Hard Year Of Slog'

A number of reports are warning of a tough 2013 in the jobs market, with one study predicting it will be a "hard year of slog" for even those in work.

Dr John Philpott, director of The Jobs Economist, believes workers can expect longer hours, a continued squeeze on pay and fewer jobs being created.

His analysis suggests job insecurity will remain high, with workers having to maintain a "grin and bear it" attitude.

The study forecasts that the trend in falling unemployment will come to an end with the jobless total increasing by 120,000 to 2.63 million in 2013 because growth in the workforce will exceed the number of jobs being created.

However, youth unemployment would fall below 900,000, while long-term unemployment will remain broadly the same.

The outlook also forecasts that pay deals would continue to be affected by unemployment, with increases lagging behind inflation, leading to wage cuts for workers in real terms.

He said: "Our jobs outlook for 2013 is relatively optimistic in that we expect only a modest rise in unemployment. However, the fact that this can be considered good news merely underlines the harsh reality of current economic austerity.

"GDP may grow somewhat faster but 2013 will be another year of hard slog, with longer hours for those lucky enough to have jobs and a further squeeze on living standards for workers and the jobless alike."

But a separate study painted a slightly better picture for the longer term.

A report for the Chartered Institute of Personnel and Development (CIPD) said that continued growth in employment was likely in 2013, with the number of people in work potentially reaching a historic milestone of 30 million before the next general election in 2015.

Latest figures showed there were 29.6 million people in employment in the quarter to October, an increase of almost half a million on a year earlier.

However, the study also warned that excess capacity had built up in some firms as employers held on to skilled and talented staff, which could lead to weaker employment growth even if the economy picks up.

Mark Beatson, chief economist at the CIPD, said: "The jobs enigma, of strong growth in private sector employment in the absence of sustained economic growth, has been one of the most mystifying economic features of 2012, and if 2012 proved an enigma, the labour market appears equally difficult to pin down for 2013.

"Although the flexibility of the UK labour market is an important factor, the popular focus on under-employment as a major factor in explaining rising overall employment seems overplayed.

"While there are undoubtedly significant numbers of people working fewer hours than they would like, and this is an issue that merits further investigation and consideration by policy makers and employers alike, the numbers have not increased significantly this year, making it a poor explanation on its own for the 2012 jobs enigma.

"On balance, there are likely to be further increases in employment. Rising employment alongside muted growth indicates that employers have significant reserves of skilled labour capacity on which to call to support growth."

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Can China's Baijiu Take On Sake And Tequila?

By Mark Stone, China Correspondent

A British drinks company is taking a gamble by attempting to export baijiu, China's national drink, to the world.

Diageo recently bought Shui Jing Fang, a high-end brand of baijiu based in the Chinese city of Chengdu.

The problem is that while baijiu, a white spirit-based drink, may refresh diners and lubricate business meetings across China, the common perception outside the country is that it is revolting.

However, that doesn't worry Diageo's Asia-Pacific President, Gilberte Ghostine.

He told Sky News: "What you have to remember is that the baijiu expansion has only just started.

"Look at Japan's sake or Mexico's tequila. Sake is consumed in all the Japanese restaurants in the world, not only by Japanese but also by foreigners.

"And if you look at tequila; its expansion started 30 or 40 years ago and now it is being consumed in Western bars."

As a baijiu virgin, I was invited to join a group of diners at a Beijing restaurant.

It was an experience.

Sky's Mark Stone tastes baijiu

The flavour is hard to describe. It is sharp, potent and with a lingering, almost ammonia-like aftertaste. It burns right the way down your throat.

It is usually served at room temperature in a small shot glass and with a meal. It has an extremely high alcohol volume of between 40% and 60% proof.

Most of the encouragement from my fellow diners came from Mr Lee, who clearly loves the stuff. I reluctantly took my fourth shot from him as he explained why he thinks it is so good.

"I often go to parties and drink foreign alcohol and I get a headache afterwards," he said. "I prefer to drink baijiu because I never get a headache.

"I welcome foreigners to drink baijiu... they won't understand real happiness until they do," he insisted.

It is clear that baijiu is a culture in China, not just a drink. In buying into that culture, Diageo hopes to make money that will be pumped back into the British economy.

"When you look at the alcoholic drinks industry in China, you're talking about an industry worth £45bn. Over 50% of that is baijiu. So it is a very important category," said Mr Ghostine.

Shui Jing Fang is now available in 40 airports around the world and in eight domestic markets including the UK.

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Pig Farming Crisis To Push Up Pork Prices

By Emma Birchley, Sky News Correspondent

Supplies of British pork on shop shelves are under threat as pig farmers struggle to stay in business.

Cripplingly high feed costs caused by global wheat and soya shortages have forced many farms to close already.

The problem, according to Essex farmer Fergus Howie, is that most producers are not being paid enough by supermarkets to make a profit.

"It's unsustainable to continue farming pigs when you are losing on every single pig that you produce so pig farmers throughout the country and in Europe and America are packing up and going out of business.

"We are certainly losing about £10 a pig."

Some producers are now being offered deals that enable them to make a small profit, but many of those who are not so lucky have resorted to slaughtering more breeding sows to cut their costs.

Since mid-June an extra 15,500 sows have been slaughtered. That works out at between 3% and 4% of the total UK breeding herd.

The National Pig Association expects the result to be increased prices of bacon and sausages by the autumn.

"Because of the length of the production cycle, we won't see the impact of these numbers going out of the herd for eight to 12 months," said Zoe Davies, the NPA's general manager.

"That's when we will start to see the shortages and the prices probably creep up."

More sows are also being slaughtered across Europe which will add to the shortage of pork. And there are other changes afoot across the Channel that are likely to affect supply.

In 1999, a ban was brought in on small metal crates known as sow stalls in the UK.

Only now are similar welfare rules being brought in across EU. In theory, it should make it easier for British farmers to compete.

But Fergus Howie remains to be convinced that the law will make the difference it should.

"If is is properly implemented it will be a fair playing field but we are really worried that it won't be properly implemented and product will be coming into this country that would be illegal."

At Wicks Manor in Tolleshunt Major, the Howie family make bacon, sausages and ham from their animals and that has helped keep the farm afloat.

But for the farmers relying on a fair price for their pigs, it looks set to be another year of battling to stay in business despite prices rising on the shelves.

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First-Time Home Buyers 'Up 12% In Past Year'

The past 12 months saw 12% more first-time buyers take the plunge into the property market than in 2011, according to a report by the Halifax.

About 216,000 people got their feet onto the property ladder in 2012, the highest number since the credit crunch began.

But it is still almost half the 402,800 people who bought their first home in 2006.

The average age of a first-time buyer has increased to 30, from 29 a year ago, and the typical deposit required is now 20% - compared with the deposit of around 10% put down in 2007.

Halifax said the rise was due to more mortgages coming on the market.

The number available has increased by around a fifth since a multibillion-pound Government scheme was launched in August to kick-start lending to firms and households.

The Government also recently introduced the NewBuy scheme, which helps people to buy a new-build home with a fraction of the usual deposit.

Martin Ellis, housing economist at Halifax, said: "The number of first-time buyers has risen to a five-year high, boosted by the improvement in affordability resulting from the reductions in both house prices and mortgage rates in recent years.

"Conditions for potential first-time buyers, however, remain very difficult with problems raising the necessary deposit and concerns over the economic climate."

He also said that first-time buyers have become increasingly reliant on extra help to give them a push onto the ladder.

The Council of Mortgage Lenders (CML) recently estimated that 65% of this sector of the market had financial assistance in mid-2012, compared with 31% seven years earlier.

First-time buyers in London put down the largest average deposit, at £62,356, while those in the north put down the smallest, at £14,936.

The average deposit needed across the UK is £27,984.

The average house price paid by a first-time buyer increased slightly to £139,921 in 2012 - representing a 3% rise compared with 2011.

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