The Daily Telegraph.
British consumers face a perfect storm of rising inflation, soaring unemployment and a slowing economy if the threat of an oil price spike is realised, al eading group of economists has warned. The Ernst & Young ITEM Club said that should heightened political tensions in the Middle East push the price of oil to $150 (£94) a barrel from its current level above $120, the Government would also be forced to borrow more and there would be a greater risk of an early interest rate hike. The risk of a further spike is being taken very seriously by the Bank of England, whose governor Sir Mervyn King has already warned publicly that disruptions to the supply of oil from Iran or Nigeria would likely push inflation up.
The new owners of gym chain Fitness First are considering plans to place part of the UK estate into a company voluntary arrangement (CVA), potentially putting many hundreds of jobs at risk. Fitness First breached its banking covenants last month and missed a £18.8m interest payment. The company, which employs more that 13,000 people, is backed by private equity firm BC Partners. However, more than 75pc of its debt has been bought by Oaktree and Marathon – giving the pair effective control over the future of the health club group.
Eurozone leaders risk reigniting the sovereign debt crisis unless they agree more funds for the so-called “firewall” designed to calm bond markets, the world’s top banking group warned last night. The Institute of International Finance (IIF), which represents 450 banks and finance houses, said the eurozone must expand the €800bn (£660bn) European Stability Mechanism (ESM) created to fund bailouts of member countries. Such an expansion is the only way to unlock extra money from the International Monetary Fund and finally remove the possibility of a disorderly break-up of the eurozone, the IIF’s managing director, Charles Dallara, said in an open letter addressed to IMF and World Bank leaders.
Thomas Cook, the beleaguered travel operator, appeared to buy itself two more years of breathing space yesterday, announcing that it was close to a £1.2bn deal with its banks. Just months after its last refinancing, the debt-laden operator said it was in “advanced discussions” with its 17 lenders, including Royal Bank of Scotland and Barclays, in a deal that would extend the repayment of its loans by two years until 2015. Britain’s oldest and best-known tour operator is expected to pay dearly for the extension, however. It is thought likely to give the consortium 5 per cent of the company’s shares, pay a higher interest rate and possibly a one-off fee.
The Daily Express.
VIRGIN Atlantic is gearing up to launch its first UK domestic flights with a bid for the 12 pairs of Heathrow slots freed up by the British Airways takeover of Bmi.The airline wants the slots auctioned as one package to provide the best competition for BA-owner I nternational Airlines Group.
North Korea is preparing to carry out a third nuclear test after the planned launch of a ballistic rocket this week, according to South Korea’s spy agency — an act that would provoke a new diplomatic crisis in East Asia. The National Intelligence Service in Seoul has reported that large amounts of soil are being used to fill in a mine at North Korea’s underground nuclear testing site. The information, gleaned from US satellite images, suggests that engineers are burying a nuclear warhead close to the northeastern town of Punggye-ri, where North Korea performed tests in 2006 and 2009.
The poorest families are enduring the steepest price rises in a reversal of last year’s trend, according to new research. Households with an income of less than £8,300 are suffering a 4.2% rate of inflation, according to Alliance Trust. Meanwhile, the highest earning households, those with income of more than £71,000, face an inflation rate of just 3.3%. The official consumer prices index measure of inflation stood at 3.4% for the same month, February. Researchers at the investment trust said that the worse inflationary climate for poor households was a consequence of rising utility and food prices, which form a greater proportion of their weekly budget than is the case for affluent families.
The Daily Mail.
Facebook will hand over $1bn to buy the photo-sharing software company Instagram, owner Mark Zuckerberg announced today. The app, which allows users to alter and post images on their smart-phones and tablets, will be paid for in cash and Facebook stock. Facebook will complete its initial public offering of stock next month. The service – used by 30 million people, including celebrities Hilary Duff, Mandy Moore and Jessica Alba – is increasingly becoming a rival for Facebook, which also relies on people posting pictures. The deal comes just days after the service began offering a version for Android phones in addition to its popular Apple app.