Eurozone Economy Will Shrink Again, Warns EU

The EU has warned that the eurozone's economy will remain in recession for longer than expected.

In its winter economic forecast, the European Commission (EC) said the economy of the currency bloc - which consists of 17 countries - would shrink by 0.3% this year.

This follows a 0.6% contraction last year, and marks a reversal from the EC's previous prediction of 0.1% growth in 2013.

But it stressed that the eurozone would return to growth in 2014 - when the economy would increase by 1.4%. 

Not all economists were convinced by the EC's forecast, however.

"I'm a little sceptical about their forecast of a pronounced recovery next year," Ken Wattret, European economist at BNP Paribas, told Sky News.

"I think the headwinds to growth in the euro area from the banking system, from fiscal policy, from political uncertainty - I think they're rather persistent."

The EC predicted that Germany's economy would grow by 0.5% this year, but France, - Europe's second-largest economy - will post growth of just 0.1%.

Italy's economy is expected to contract by 1%, and Spain's by 1.4%.

The extended recession will see millions more people lose their jobs, the EC said, with the level of unemployment across the region expected to continue to rise.

Unemployment in the eurozone is forecast to hit 12.2% in 2013 - up from 11.4% last year - which could take the number of people without a job to more than 20 million.

The European Commissioner for economic and monetary affairs, Olli Rehn, said "decisive" policy actions were "paving the way for a return to recovery".

00.02 | 0 komentar | Read More

Exclusive: Lloyds Set To Pay Boss £1.4m Bonus

By Mark Kleinman, City Editor

Lloyds Banking Group is finalising plans to pay its chief executive an annual bonus of approximately £1.4m, although he will not receive it until taxpayers' stake in the bailed-out bank breaks even.

I have learnt that directors of Lloyds will meet early next week to sign off on the plan, which will be announced alongside the full-year results of Britain's biggest mortgage lender next Friday.

Sky News revealed earlier this month that Antonio Horta-Osorio's bonus would be approximately £1.5m, and that he would not receive it until the taxpayer's 39% stake returns to the black, which it will do if Lloyds' share price reaches 73.6p. The shares were trading on Friday morning at around 54p.

People close to Lloyds said that the final figure for Mr Horta-Osorio's bonus, which will be paid entirely in shares, would not be decided until next week and that it was still subject to adjustment, but added that £1.4m was broadly the number proposed by Lloyds' remuneration committee.

Wary of a potential political backlash, Lloyds is understood to have submitted its proposal to pay Mr Horta-Osorio a bonus to UK Financial Investments (UKFI), the body which manages the taxpayer's stake in the bank, in recent days. George Osborne, the Chancellor, has also been informed of the plan.

Lloyds' concern stems from the fact that it was forced to set aside just over £2bn in 2012 to compensate customers who were mis-sold payment protection insurance (PPI) policies.

That figure is certain to increase when Lloyds unveils full-year results next week, with another substantial provision expected to be taken for the fourth quarter of the year.

Although the PPI mis-selling itself took place long before Mr Horta-Osorio was poached from Santander UK, Lloyds was this week fined more than £4m by the Financial Services Authority for shortcomings in the way it handled complaints.

Lloyds is also expected to announce a "material" provision for the mis-selling of interest rate swaps to small businesses in next week's results.

Last year, the Lloyds chief executive waived his annual bonus after taking several weeks of leave as a result of fatigue.

Under the terms of his contract, Mr Horta-Osorio is eligible for an annual bonus worth 225% of his £1.061m salary, equating to about £2.3m. If Lloyds does pay the anticipated figure of about £1.4m, it would equate to roughly 60 per cent of the maximum potential award. The chief executive is also eligible for a long-term share award worth up to £3m, subject to deferral periods, for each year of service.

They added that it was still possible that he would waive the payout although a political backlash looked unlikely, one insider said.

In awarding Mr Horta-Osorio his bonus, Lloyds directors are expected to point towards the progress he has made in reshaping the bank since he took over nearly two years ago. Bad debt charges are expected to have fallen again, with customer service targets also having been met.

Last year, Lloyds announced a statutory loss for 2011 of £3.5bn, a figure which included £3.2bn of PPI compensation provisions. Analysts expect that the bank will report a loss for 2012 of £544m on the same basis, while the underlying performance of Lloyds' business, which strips out one-off charges such as PPI, is forecast to have been profitable to the tune of more than £2bn.

Allies of Mr Horta-Osorio pointed out that Lloyds' shares were the top performer in the FTSE-100 last year, rising by 85 per cent, and among the leading risers in the European banking sector.

The bosses of Barclays and Royal Bank of Scotland have waived their bonuses for 2012 amid various reputational crises. The chief executives of HSBC and Standard Chartered are expected accept their payouts, while the boss of Santander UK has already accepted her multimillion pound award.

Lloyds declined to comment.

00.02 | 0 komentar | Read More

Exclusive: Go Compare Clicks On £450m Sale

By Mark Kleinman, City Editor

Its advertisements are routinely voted among the most irritating on TV, but Go Compare, the price comparison website, is poised to defy its critics with a sale that will catapult its founder in the ranks of Britain's super-rich.

I have learnt that the board of Go Compare, which was founded just seven years ago, has appointed Evercore Partners, an investment banking advisory firm, to oversee a review of the internet aggregator's ownership.

Insiders believe the review will lead to an auction of the company that is likely to value Go Compare at well over £450m.

The price comparison site recorded revenues of £109m and profits of £34.7m in 2011, and recent takeovers in the sector - such as Google's acquisition of BeatThatQuote in 2011 - have valued target companies at roughly four times annual revenues.

Such a deal would crystallise a massive fortune for Hayley Parsons, Go Compare's founder, who established the site in 2006 aged just 32 and who now owns a 23% stake.

Ms Parsons is one of the UK's most successful internet entrepreneurs, having also worked on the development of Confused.com, another price comparison site, while she was employed by Admiral, the insurance company. She left school at 16 with five GCSEs before moving into insurance broking.

Evercore is understood to have been appointed by Go Compare's board only in recent weeks, and a decision about a sale is unlikely for several months, according to insiders.

Potential buyers could include technology companies such as Google or a rival like Comparethemarket or Moneysupermarket.com. Private equity firms are also expected to table offers.

Singer Wynne Evans has become famous for the firm's adverts

Best-known for its adverts featuring the fictitious opera singer Gio Compario, Go Compare recruited esure, the motor insurer, as a shareholder in 2007 to provide it with the funds for spending on marketing activity that was required to achieve widespread brand recognition.

Newport-based Go Compare argues that it was able to stand out in a crowded market as the first such service to offer detailed product information. The site offers data about scores of different product categories ranging from life insurance to phone and energy tariffs.

Reports last year suggested that Grant Thornton had been appointed to conduct a review of Go Compare, but insiders confirmed today that the accountancy firm had been working to assess a valuation for Ms Parsons' stake alone.

A sale of Go Compare is unlikely to be complicated by its split share ownership. Esure, which is expected to announce its intention to float on the London Stock Exchange next week, owns 50% of the company, which it may carve out as it prepares its listing. The balance of Go Compare's shares is held by Ms Parsons and other employees.

People close to the situation dismissed suggestions that esure was interested in buying the other half of Go Compare's shares that it does not already own.

An esure spokesman said today: "Esure owns 50% of Gocompare.com. We are happy with that investment and have no plans to further increase our shareholding."

Go Compare declined to comment.

00.02 | 0 komentar | Read More

YouTube Clicks Included In Billboard Chart

Is A YouTube Click Really Worth It?

Updated: 3:09pm UK, Friday 22 February 2013

With the US singles chart including YouTube views for the first time, music industry insider Steve Redmond asks whether we can expect a similar change to the UK charts.

What are music charts for? - that's the issue thrown into relief by Billboard's historic decision to include YouTube views in the formula it uses to create its Hot 100 chart.

In truth the charts have always had a number of functions. On the one hand they represent an historical record of success in music, on the other - since broadcasters often base programming decisions on charts, giving more airplay to high-charting records - they can also help create further success.

On a business level, the data behind the charts is an important source of market research and analysis.

That's why the Official Charts Company - a joint venture between the Entertainment Retailers Association and the record companies trade association, the BPI - is such an important organisation in the UK.

In the US, Billboard has traditionally relied on more than just sales data for its chart. Radio play has always been a factor.

The UK has always taken a more purist approach, relying solely on sales data. Partly this because we wanted to avoid a small number of radio programmers exercising undue influence over the charts.

Partly it was about simplicity and clarity - Avicii vs Nicky Romero's I Could Be The One is Number One this week because it sold more copies than any other single last week.

The Official Singles Chart is like a weekly general election of Pop, with music fans casting their votes by putting their hands in their pockets and parting with their hard-earned cash.

There are strong arguments in favour of preserving that simplicity. It is worth noting that the UK's Official Singles Chart is far more famous and influential in the UK than Billboard's Hot 100 is in the US.

There is also no indication that the time-honoured sales-based formula is harming sales. Singles sales - predominantly downloads these days - are currently at an all-time high. Nearly 190m were sold last year.

Adding in different kinds of data - such as Spotify streams or YouTube plays - will inevitably make the charts less transparent, and also poses real issues about the methodology. Should a brief click on a YouTube video really count as much as a 99p download? And if not, how many YouTube views should it take - 10? 100? 1,000? - and who's to decide.

The temptation will be to avoid making a decision on the basis that it's just too complicated. But the fact is that the way people are consuming music is changing rapidly. We live in a multichannel world in which music fans are consuming and expressing their preference for music in a host of different ways.

The danger for all charts is that, if they fail to keep up, they may lose their relevance. Do not expect this issue to go away.

:: Steve Redmond is an advisor to a number of organisations in the music industry including the Entertainment Retailers Association.

00.02 | 0 komentar | Read More

Titan's Maurice Taylor Slams France Again

US chief executive Maurice Taylor has blamed the French Government for what he describes as the country's "lack of knowledge" about business.

In his second letter to France's industry minister, the boss of Titan International - which owns Titan and Goodyear tyres - said France's politicians were "out of touch (with) real world problems."

But he acknowledged: "France does have beautiful women and great wine."

His comments are the latest in an ongoing spat, which began when he described the country's workers as lazy.

Following an invitation from France's Industrial Renewal Minister to rescue a loss-making Goodyear factory, Mr Taylor wrote: "The French workforce gets paid high wages but works only three hours.

"They get one hour for breaks and lunch, talk for three and work for three."

Union members outside a Goodyear tyres factory in France

He rejected the offer, adding: "You can keep the so-called workers."

The letter sparked outrage in France, and minister Arnaud Montebourg replied saying: "Your extremist insults display a perfect ignorance of what our country is about.

"Be assured that you can count on me to inspect your tyre imports with a redoubled zeal."

But in the row's latest development, Mr Taylor criticised the government's policies toward enterprise.

"The extremist, Mr Minister, is your government and the lack of knowledge about how to build a business," he said.

The businessman – nicknamed "The Grizz" for his tough negotiating manner - added that he "must be nuts to have the idea to spend millions of US dollars to buy a tyre factory in France paying some of the highest wages in the world.

"Your government let the wackos of the communist union destroy the highest paying jobs," he said.

Last month, Goodyear said it would close its main French plant and cut its workforce in the country by almost 40%, amid falling car demand and increasing labour disputes.

A US State Department spokeswoman played down the spat, describing it as a "private matter".

"We have deep and broad relations, including many successful American businesses operating in France, many successful French businesses operating in the United States," Victoria Nuland said.

The comments come as the European Commission predicted that France - Europe's second-largest economy - will grow by just 0.1% this year.

00.02 | 0 komentar | Read More

Fuel Prices Head For Highest Level Ever

Motorists have been warned that petrol prices may soon reach their highest level ever.

The AA said sterling's slide against the dollar and market speculation could push prices to record levels by Easter.

The warning comes as tanker drivers at the Grangemouth refinery, which supplies Scotland, Northern Ireland and northern England, started a three-day strike in a row over pay and pensions.

The strike, involving 42 Unite members at the refinery near Falkirk, will run until Monday morning with striking workers taking turns to man the picket lines.

The drivers, employed by BP, will then observe an overtime ban when they return but the union plans further strike action if there is no resolution to the dispute.

Average petrol (green) and diesel (red) prices since January

After surging 5p a litre over the past month, the price of petrol at the pumps has gone up a further 1p in the last five days, the AA said.

It revealed that the average cost of petrol in the UK is now 138.32p per litre, with diesel having risen 4.78p from its mid-January price to stand at an average of 145.10p.

The latest figures show that petrol has risen 6.24p since early January, adding £3.12 to the cost of filling a typical 50-litre tank.

The AA said the cost of filling up the 70-litre tank of a Ford Mondeo now costs £4.37 more than it did six weeks ago.

A two-car family's monthly petrol cost has risen £13.25.

Drivers have been caught between the pound weakening against the dollar and soaring wholesale prices, both due to stock market speculation.

Regionally, Yorkshire and Humberside and the north of England are the cheapest for petrol at the moment at 137.6p a litre, with prices in London and Scotland at 137.8p. Northern Ireland is the most expensive at 138.7p.

The picket line outside Grangemouth oil refinery on Friday

Yorkshire and Humberside remains the cheapest region for diesel, averaging 144.2p, while East Anglia, Northern Ireland and southeast England are the most expensive at 145.2p.

AA president Edmund King said: "We're no longer talking of the motorist as a cash cow for tax and speculator greed, but a horse slowly but surely being flogged to death.

"This is the third 10p-a-litre wholesale price surge in 11 months, given extra vigour by currency speculators betting against the pound."

Government revenue from fuel duty has also been hit hard as Britons reduce spending by cutting back on non-essential journeys.

Petrol price breakdown over the past decade

HM Revenue and Customs figures showed that January's UK petrol sales fell to the lowest tracked by the Government in 23 years.

Drivers consumed 1.465 billion litres of petrol last month, down 14 million litres on the previous all-time low set in March last year and nearly 100 million litres below December's consumption of 1.564billion litres.

00.02 | 0 komentar | Read More

Food Bills May Rise Amid Growing Meat Tests

By Tom Parmenter, Sky News Correspondent

Consumers are being warned that food bills may rise if high demand for meat testing continues.

Since the start of the horsemeat scandal, laboratories all over the UK have been inundated with requests to test different meat products.

At Worcestershire Scientific Services laboratory staff have been working early mornings, late nights and weekends to keep up with demand.

Even some of the equipment has been unable to keep up with almost continual testing.

Laboratory manager Paul Hancock told Sky News that funding is tight, explaining: "The FSA do support the laboratory to a degree but things are very very difficult.

"If the consumer wants quality food they have to be prepared to pay for a degree of policing that."

Checking a meat sample for DNA from other species takes three days and costs between £75 to £100 per sample.

The number of labs capable of carrying out proper testing though has fallen over recent years due to funding cuts. In April, Somerset County Council will close its lab.

Those that remain open operate as competitive businesses rather than sharing information, equipment and practices with each other.

Mr Hancock added: "Ten or 15 years ago the labs used to work closely together that relationship has broken down because of commercial activity and that makes life a whole lot more difficult as well."

Meanwhile, France's agriculture ministry has confirmed that horse carcasses from the UK containing the drug Phenylbutazone - known as bute - have probably ended up in the human food chain.

A spokesman for the French agriculture ministry said it was alerted by British authorities that six carcasses had been exported to France in January but that the meat had already been processed.

Some of the meat was recalled but the equivalent of three carcasses have "probably" been eaten, according to officials - although they insist the health risk is "minor".

Bute is an anti-inflammatory treatment for horses which is potentially harmful to humans and is banned from the food chain.

The latest Food Standards Agency results showed six positive results for horse DNA out of 1,133 tested beef products, but so far no UK sample has been found to contain bute.

00.02 | 0 komentar | Read More

Myners: Ex-Minister Courted For Tabloid Role

By Mark Kleinman, City Editor

Lord Myners, former chairman of The Guardian's parent company, has been approached about chairing a new venture that is targeting a foothold in Britain's cut-throat tabloid newspaper market.

I understand that the board of Phoenix Newspaper Publishing has sounded out Lord Myners about chairing the company, which is in talks with Trinity Mirror about a deal to take control of the Sunday People.

Friends of Lord Myners said today that he was "flattered" by the interest from Phoenix but suggested that he was likely to reject the invitation to chair the company.

A City Minister in the last Labour administration, Lord Myners has rebuilt an extensive boardroom career since the 2010 general election.

He is a non-executive director of MegaFon, the London-listed Russian telecoms group, and chairman of the UK activities of Cevian Capital, a well-known activist shareholder.

Among the companies where he has previously held directorships are Land Securities, the property company, and Marks & Spencer.

Phoenix has been trying for more than a year to raise millions of pounds in funding to support the development of a new tabloid title that would target the vacuum left by the demise of the News Of The World.

Dozens of potential investors have been approached about putting money into the vehicle, and insiders say that Phoenix is optimistic that it will secure the necessary backing in the coming months.

The executives behind the venture, who include Sue Douglas, the former Sunday Express editor, and Rupert Howell, the former ITV commercial director, plan to relaunch Trinity Mirror's title as News of the People.

They believe there is an opportunity to pick up many of the estimated 1.3m News Of The World customers who stopped buying a Sunday newspaper when News International closed it during the phone-hacking scandal in 2011.

Last month, Trinity Mirror confirmed the talks with Phoenix, saying: "Trinity Mirror plc confirms that it has been approached by a group of investors who have expressed an interest in working with the Group to invest in and develop the Sunday People.

"Discussions are at a very preliminary stage and there is nothing further to report. A further announcement will be made as and when appropriate."

Phoenix and Lord Myners both declined to comment.

00.02 | 0 komentar | Read More

AAA Credit Rating Lost: Osborne Defiant

George Osborne has come under attack over what Labour calls his "catastrophic economic policy failure" after the UK lost its top-grade AAA credit rating.

International agency Moody's downgraded it by one notch to AA1, citing slow growth and a rising debt burden.

The Chancellor said the coalition would not "run away" from its economic problems and it was determined to stick by its plan for recovery.

The downgrade is a major blow for Mr Osborne, who has been coming under increasing pressure to take action to stimulate the economy.

In the last election, Mr Osborne made safeguarding Britain's credit rating one of his key pledges.

He has used maintaining the rating for government bonds as one of the main arguments for the Government's austerity programme.

The Chancellor insisted the Government was delivering on its commitment to tackle the UK's debt.

He said: "We have a stark reminder of the debt problems facing our country - and the clearest possible warning to anyone who thinks we can run away from dealing with those problems.

"We are not going to run away from our problems, we are going to overcome them."

He added: "In the end, the test of our credibility as a country is there every day in the markets when we borrow money on behalf of this country from investors all around the world.

Moody's said it did not expect Britain's slow recovery to change

"At the moment we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan, we've got to stick to that plan and we are going to deliver that plan."

Labour's shadow chancellor Ed Balls told Sky News: "They (the Government) are paying the price for an absolute catastrophic failure of economic policy and everybody can see that now pretty much other than the chancellor and the prime minister.

"Until they face up to reality, we're just going to have more of the same."

Moody's said Britain's recovery was proving to be significantly slower than previous rebounds from recession and it did not expect the situation to change.

"(There's) increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years," it said.

Moody's is the first of the major credit rating agencies to knock the UK off of its top rating.

The ratings agency also cut the Bank of England's AAA rating by one notch, also to AA1. The US' top credit rating was downgraded by one notch in 2011.

Sky's Economics Editor Ed Conway said: "The fact that Britain has lost its AAA crown for the first time since credit ratings were given to the UK back in the 1970s, it's a really big blow to Britain's reputation.

"It's something of an economic blow, but in a way it's more of a political problem for George Osborne. He made a key part of the Conservative election pledge to safeguard Britain's credit rating."

Moody's said that the British economy is constrained both by the troubled global economy and the drag from businesses and the Government slashing its debt burdens.

"Moreover, while the Government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's believes the risks to the growth outlook remain skewed to the downside," it said.

Labour has insisted that withdrawing demand from the economy has put it more at risk by stunting growth.

Mr Balls said: "This credit rating downgrade is a humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the test of their economic and political credibility.

"In the Budget the government must urgently take action to kick-start our flatlining economy and realise that we need growth to get the deficit down. If David Cameron and George Osborne fail to do so and put political pride above the national economic interest we face more long-term damage and pain for businesses and families."

00.02 | 0 komentar | Read More

Exclusive: RBS Mis-Selling Bill To Add £1.1bn

By Mark Kleinman, City Editor

The state-backed Royal Bank of Scotland (RBS) will next week set aside another £1.1bn to compensate customers for mis-selling products to consumers and small businesses.

I can reveal that the bank is preparing to say in its full-year results announcement next Thursday that it is increasing its provision for mis-selling interest rate swaps by roughly £700m, which will take its cumulative bill to £750m.

City sources say that RBS will also announce that it is raising its payment protection insurance (PPI) mis-selling bill by just over £400m, meaning it will have put aside just over £2.1bn for its part in the industry-wide scandal.

The new provisions will further elevate the total bill for Britain's biggest banks from two of the sector's biggest mis-selling episodes. RBS's new PPI charge will mean that the four major lenders have had to provide more than £11bn for compensation, while its hit on interest rate hedging products will enlarge the industry bill to £1.6bn.

Neither of those figures will, however, include imminent upward revisions in both categories by both HSBC and Lloyds Banking Group, which also report full-year results in the next ten days.

Both RBS and Lloyds, which are 82 per cent and 39 per cent owned by British taxpayers respectively, will report losses for 2012.

RBS is also expected to confirm that it is examining a separation of its US retail banking business, Citizens, through a stock market listing in the US, in a move that over time could raise billions of pounds for the British lender.

George Osborne, the Chancellor, is likely to welcome the move when he appears in front of the Parliamentary Commission on Banking Standards on Monday.

Both Mr Osborne and David Cameron have been increasing the pressure on RBS's management, led by chief executive Stephen Hester, to accelerate the group's restructuring.

Mr Hester is expected to respond next week by pointing to a further retrenchment of its investment banking operations. RBS, he is understood to be preparing to say, will continue to reshape its operations into a British retail bank that is also able to support the international business objectives of core UK clients.

The new provisions for PPI and swaps mis-selling will reflect ongoing claims trends and the recent agreement between the major banks and the Financial Services Authority to offer redress to small business customers according to a defined framework.

Barclays added another £1bn to its own mis-selling tab when it reported its full-year results earlier this month.

The major banks have grudgingly accepted the swaps settlement with the City regulator although they have argued that many of the cases for which they will have to pay compensation should not be categorised as mis-selling.

They have also pointed to the vast numbers of bogus PPI claims they have received, many of which have been paid out anyway. The industry has been discussing the imposition of a time limit on PPI mis-selling claims although at least one major bank is lukewarm about the idea.

00.02 | 0 komentar | Read More