The Dutch prime minister will on Monday launch a bid to salvage his austerity budget amid political chaos that could cost the country its AAA credit rating and plunge Europe’s debt rescue plans into disarray. Mark Rutte, who is a key ally of Germany and the Eurozone’s “hardliners” on financial discipline, has called an emergency cabinet meeting after budget talks collapsed at the weekend. He is expected to resign today and announce snap elections, pushing yet another “core” Eurozone country into political and economic uncertainty. In France, early polls pointed to a victory of Francois Hollande in the first round of the presidential elections setting the stage for a run-off between the socialist challenger and incumbent Nicolas Sarkozy on May 6th. Mr Hollande has pledged to renegotiate the European fiscal pact that binds countries to a 3pc deficit limit by next year, The Telegraph reports.
Ministers have been ordered to prepare up to £16bn of further spending cuts amid warnings that it could take years to get the economy back on track. The plans emerged as former Chancellor Ken Clarke yesterday warned it would take ‘long hard work’ before the economy returns to normal. ‘2012, I think, will undoubtedly be challenging,’ he said. Treasury Chief Secretary Danny Alexander will tell colleagues they must draw up lists of projects that could be axed in an emergency. Whitehall departments will be told to create their own ‘rainy day funds’ so they don’t draw on the Treasury’s national reserves, slashed from £4bn to £2.8bn, The Daily Mail says.
Britain won’t hand over its controversial new £10bn ($15bn) contribution to the International Monetary Fund’s new $430bn war-chest until at least early next year, according to British officials. The Chancellor is insisting that the UK’s loan cannot be made available until a new voting structure likely to give greater power to emerging economies has been fully agreed.That deal depends on the US, the largest IMF shareholder with 16%, which is not expected to consider reforms until well after November’s presidential elections, The Telegraph reports.
Cable & Wireless Worldwide is expected to recommend to shareholders a £1bn takeover bid from telecoms giant Vodafone on Monday. The board of the telecoms business has decided to accept the offer ahead of the midday deadline which was extended from last Thursday by the Takeover Panel. It is thought Vodafone’s offer will value CW&W, which provides telecoms networks to 70% of the FTSE 100 and public sector organisations like the National Health Service, at between 30p and 45p a share. Vodafone was the last remaining bidder for the company following the withdrawal of India’s Tata Communications last week, The Telegraph says.
The spectre of higher borrowing costs loomed large today amid a stark warning that inflation could stay above target for a further three years. Rising oil and commodity prices on the back of money printing programmes in the US and eurozone mean that the Centre for Economics and Business Research (CEBR) is forecasting UK inflation of 2.7% for the fourth quarter of 2012, sharply higher than its previous forecast of 1.7% and well above the Bank of England’s target of 2%. Combined with predictions of a return to economic growth during the first three months of the year, the news could increase pressure on the Bank of England governor Sir Mervyn King and his colleagues on monetary policy committee (MPC) to consider lifting interest rates from their historic low of 0.5%. Andrew Sentance, a former MPC member, yesterday said that rising interest rates “could soon be back on the agenda” because of mounting evidence that the economy is growing, albeit slowly, The Scotsman reports.
The number of young people in Scotland who have been out of work and claiming job seekers allowance for more than 12 months has increased by more than 1,100% in the last five years, according to new figures. The latest Scottish Trades Union Congress (STUC) labour market report showed that in March this year 5,210 Scots aged between 18 and 24 had been receiving the benefit for more than 12 months compared to 415 claimants in December 2007 – a 1155.4% rise. While every other part of the UK has witnessed significant increases, the rise is sharpest north of the Border, according to The Scotsman.
Peter Cummings, the former head of Bank of Scotland’s corporate division, is thought to have been issued with a “seven-figure” fine by the Financial Services Authority (FSA). Last month, a damning report from the City watchdog said the bank was guilty of “very serious financial misconduct” in the run-up to the collapse and £20 bn taxpayer-funded bailout of its parent company HBOS, which is now owned by Lloyds Banking Group. In its interim report, the FSA said the division failed to “take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems” before HBOS’s demise in 2008.The FSA’s report specifically did not name anyone but there was implied criticism of senior individuals, writes The Scotsman.
A Chinese food firm is reportedly in talks about buying cereal business Weetabix. Shanghai firm Bright Food has been in discussions with Lion Capital, Weetabix’s private equity owner, for several weeks, according to the Sunday Times. In 2010, Bright Food considered a £2bn deal to buy United Biscuits, the company behind Hula Hoops and Jaffa Cakes, but the talks fell through, The Daily Mail says.
In a world where takeover talk can centre on anything from iron ore to leather handbags, fish fingers have never been so popular. Hopes of a near-€3bn sale of the Birds Eye owner Iglo Group will rise today when Europe’s largest frozen foods business reports a 7% rise in annual profits. It was buoyed by product launches and a desire by families to eat at home more. Profits rose for the fifth consecutive year, to €325.8m (£267m), with sales of its fish, poultry and vegetables up 3.7%. Total sales for last year rose 1.4% to €1.57 bn. Iglo’s results come weeks after Credit Suisse was appointed by Permira, the group’s private equity owner, to conduct an auction of the business, The Times reports.
One of Britain’s largest shareholder groups has waded into the row over Bob Diamond’s pay, urging its members to oppose the £17.7m compensation package for the Barclays chief executive. Local Authority Pension Fund Forum, which is responsible for assets worth more than £100bn, said in a voting alert sent to members that Mr Diamond’s pay deal for 2011 was “hard to justify, given the bank’s poor performance”. It added that a £5.7m “tax equalisation” payment — made by Barclays to offset the “double tax” impact of Mr Diamond’s relocation from the United States — was “an issue of concern,” writes The Times.