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Monday July 09 newspaper round-up

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- Angela Merkel - Food inflation - Jobs

Deputy Bank of England governor, Paul Tucker, will be grilled by MPs over the Libor scandal and whether regulators decided to turn a blind eye to misconduct. The deputy governor of the Bank of England was warned that UK lenders were manipulating interest rates a year before he allegedly gave Barclays “a nod and a wink” to rig its own, in a call with former chief executive Bob Diamond in 2008.

Paul Tucker will on Monday be grilled by MPs on the Treasury Select Committee (TSC) over the Libor scandal, where he will be asked whether regulators decided to turn a blind eye to misconduct during the banking crisis in the interests of financial stability. Specifically, he is expected to be quizzed about a meeting he chaired of the Bank’s Sterling Money Markets Liaison Group in November 2007, at which several members warned they “thought that Libor fixings had been lower than actual traded inter-bank rates through the period of stress,” according to The Telegraph.

The number of people placed in permanent jobs fell at the sharpest rate in three years last month, prompting fresh fears that the UK’s unemployment toll will hit 3m by the end of the year. Months of uncertainty in the Eurozone, the Greek elections and a worsening debt position in southern Europe are to blame for the “worrying” recruitment figures, according to the report by KPMG and the Recruitment and Employment Confederation (REC), out today. On a scale where anything above 50 represents an increase, the number of permanent job placements in June fell to 46.8, down from 51 the previous month, The Telegraph says.

One of the world’s richest businessmen, with ties to Britain’s political elite, had links with a brutal mafia clan and used contacts in the Russian intelligence services to spy on rivals, according to court testimony obtained by The Times. The allegations were levelled against the aluminium tycoon Oleg Deripaska by a former business associate in a money-laundering trial in Germany. Documents from the case have been made available to this newspaper prior to a clash between Mr Deripaska and a rival oligarch beginning in the High Court in London today.

German president Joachim Gauck has ordered Chancellor Angela Merkel to clarify exactly what she agreed behind closed doors at the EU crisis summit ten days ago, lending a powerful voice to critics dismayed by the surging costs of euro bail-outs.

“She has a duty to explain in great detail what it means, and what it means fiscally. There seems to be a lack of energy in telling the people what is really happening,” he told ZDF television.

President Gauck’s broadside came as markets wait anxiously for a crucial hearing this Tuesday by Germany’s constitutional court on the legality of the European Stability Mechanism (ESM), the EU’s €500bn (£397bn) bail-out fund, The Telegraph writes.

The prices of exchange-traded grains such as corn and wheat took a breather on Friday, but this may not last for long. Sir Mervyn King should be worried. Following another week of grain price rises a report from the US government next week could provide more nourishment for the bulls. Food inflation is once again firmly on the agenda. The prices of exchange-traded grains such as corn and wheat took a breather on Friday, but this may not last for long.

“Corn prices have rallied almost 30% in the past month on continuing weather stresses in the US Midwest,” Colin O’Shea, head of commodities at Hermes Fund Managers, explains.

“This is in vast contrast to the outlook for the crop a few months ago as most people expected record harvests to dampen prices,” The Telegraph reports.

Offshore oil explorers are to be given deeds by the Treasury providing a cast-iron guarantee of tax relief to offset the multibillion-pound cost of dismantling ageing pipelines, wells and platforms in the North Sea. In the coalition’s latest attempt to soothe ruffled feathers among offshore exploration groups, Chloe Smith, the Economic Secretary to the Treasury, will visit Aberdeen today to kick-off a consultation on so-called “decommissioning relief deeds”.

The documents are intended to provide legally binding certainty of tax breaks decades in the future to help with the estimated £35bn cost of dismantling equipment when oil reserves under the sea finally dry up, says The Times.

British listed companies are sitting on a cash hoard worth a total of about £19bn as they hold off from investing due to the shaky economic outlook. Research from corporate financial health monitor Company Watch found that 211 UK-listed non-financial companies are sitting on cash of at least £1m each as worries over the Eurozone and flagging global growth makes them unwilling to invest. Companies in other Western European countries are holding even more money, although nowhere has as many hoarders as Britain. In total, European firms are sitting on £110bn net cash.

Nick Hood, head of external affairs at Company Watch, said firms were choosing cash for security. He said:

“All European economies are affected to some degree by the eurozone crisis and it looks as if the headlong growth of the Bric economies is faltering, so it’s hardly surprising that the bosses of our largest businesses view debt as dangerous and cash as comforting,” The Scotsman reports.

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