Monday newspaper round-up: Merkel, John Lewis, George Osborne
Chancellor Angela Merkel has said Germany would be prepared to consider forgiving Greece some of the emergency loans it has received from the eurozone once the debt-saddled country’s budget tips into surplus.
“If Greece one day handles its revenues again without taking on new debt, then we must take a look at the situation and assess it,” the chancellor told Germany’s Bild am Sonntag newspaper, although she stressed this was “not going to happen before 2014-2015”, even if Greece’s adjustment programme was on track. [Financial Times]
Department store chain John Lewis enjoyed one of its best weeks yet as the recent cold snap combined with the start of the Christmas shopping season to help it outperform the struggling high street. The employee-owned business said sales in the week to Saturday were 9.3% higher than the same week last year at £124.2 million. It was the third best week the retailer has seen, boosting hopes that renewed consumer confidence will give the UK high street a much needed shot in the arm this month. [The Scotsman]
Booed at the Olympics. Author of the worst received budget in memory. In charge when the economy plunged into its first double-dip recession since the 1970s. It has been a year to forget for George Osborne. And it is about to get worse.
The biggest week of the chancellor’s two and a half year stint at the Treasury began on Sunday with a dogged “no turning back” performance on The Andrew Marr Show. It will culminate on Wednesday when he delivers his autumn statement. Although it will be dressed up as prettily as possible with the promise of a £10bn crackdown on tax avoidance, the underlying message will be that Osborne has failed to deliver the new economy – less dependent on the City and living within its means – promised on his debut as chancellor in the Treasury’s inner courtyard one sunny morning in May 2010. [The Guardian]
The Scottish economy has performed as badly as Spain since the financial crisis, according to an influential think-tank that is forecasting Scotland’s recovery will continue to lag behind the rest of the UK throughout next year. The latest Ernst & Young Scottish Item Club report, published today, reveals that Scotland’s overall output has declined by 4% over the last four years.
In its winter forecast, the group of accountants and economists says that 2012 will be the third year in five in which the Scottish economy shrank, and predicts growth of just 0.7% in 2013 – well short of the expected UK figure of 1.2%. [The Scotsman]
Sir Richard Branson could sell his controlling stake in Virgin Atlantic after rival Delta Airlines made a bid for nearly half the business. Delta, the biggest US airline, is understood to have offered to buy Singapore Airlines’ 49% stake in Virgin Atlantic which could, in turn, lead to a bid to take a majority stake away from Branson.
Sources close to the negotiations confirmed weekend reports that Delta has approached Singapore over its stake, but cautioned that there is no certainty that it would bid for control of Virgin Atlantic, which Branson – who owns a 51% stake – launched in 1984. [The Guardian]
One in 25 water bills are not being paid in London, leading to an evaporation in profits at Thames Water. The soaring bad debt problem has arisen as households throughout the capital are braced for a big hike in bills. Britain’s largest water supplier has attracted criticism for its financial arrangements.
It pays no tax but distributes huge dividends to its shareholders, including some of the world’s richest sovereign wealth funds. At the same time, it is preparing to saddle Londoners with a 25% increase in bills to pay for a new taxpayer-funded supersewer. Today, however, Thames is to report a 6% slide in operating profits in the first half of its financial year to £311 million. [The Times]
A failure by the Government to clamp down on executive pay is to blame for the growing wealth gap between fat-cat bosses and the general workforce, according to a report out today. The High Pay Centre think-tank said that despite promises from ministers, the remuneration culture has not changed. Business leaders’ pay rose by an average of 12% in the last financial year, according to the corporate governance specialist Manifest and consultancy MM&K, while the average worker’s wages rose 2.8%. [The Independent]
The head of Brazil’s central bank has praised the appointment of Mark Carney as Governor of the Bank of England, saying the Canadian’s global reputation meant he was the ideal man to steer the economy back into health. Alexandre Tombini said the move will “serve the UK well”, but warned that Europe’s leading economies still faced significant headwinds, and dismissed any hopes of growth in the region’s worst-hit countries next year.
“Mark Carney has done a great job in Canada [where he is currently the central bank’s governor] and is respected across the world,” he said in an interview at the Banco Central do Brasil’s headquarters in Brasilia. [The Independent]
The City of London should be deposed as the euro’s main financial centre so the single currency club can “control” most financial business in the eurozone, France’s central bank governor has said. Christian Noyer of the Banque de France said there was “no rationale” for allowing the euro area’s financial hub to be “offshore”, in a blunt assessment that will fan UK concerns over EU rules being rigged against it. [Financial Times]
Starbucks has become the first multinational to cave in to public anger and political pressure over what MPs called “outrageous” and “immoral” tax avoidance. After months of controversy over its tax affairs in Britain, the US coffee giant admitted it “needed to do more” by agreeing to review accounting practices that reduce its taxable profits. It is now looking to declare larger profits in Britain and thus pay more tax. [The Telegraph]