German Chancellor Angela Merkel suffered an electoral setback yesterday as opposition to European austerity measures spread across the continent. The German chancellor may be tempted to rethink her approach after her allies in the country’s largest state, North Rhine-Westphalia, lost 9 per cent of the vote in their worst showing since the Second World War. The result left her in a weaker position for her first meeting tomorrow with François Hollande, the socialist president-elect of France, who has demanded that the EU adopt higher-spending policies to battle the recession, The Telegraph reports.
A “massive” economic impact awaits Britain should the Eurozone fail to contain the turmoil sweeping the Continent, Vince Cable warned yesterday. In the bleakest prediction of the UK’s economic vulnerability to date by a senior minister, the Business Secretary said that there was little Britain could do apart from hope the Eurozone’s economic firewalls were strong enough to stop Greece’s problems from spreading. His intervention came as the fate of the single currency hung in the balance. Greek coalition talks appeared close to collapse last night, more than a week after the country’s inconclusive general election, according to The Telegraph.
Thomas Cook warned its shareholders this weekend that their failure to back two disposals could lead to the firm going into administration. The tour operator has posted documents to shareholders in which it explains the financial importance of the sale and leaseback of part of its aircraft fleet and the disposal of five Spanish hotels. Thomas Cook said its directors were confident that shareholders will deliver the required majority when they vote on the disposals at a general meeting in London on 29 May. Failure to support the fundraising move would jeopardise the company’s £1.4bn deal with lenders, including Barclays and Royal Bank of Scotland, to extend the maturity of its bank loans to 2015. That agreement has been hailed as a key step in strengthening confidence in the holidays firm, which blamed a “number of exceptional external shocks” since 2010 for poor trading, The Scotsman reports.
Half a million people are set to lose disability benefits as the Government pushes ahead with plans to rid the system of abuse and fraud, Iain Duncan Smith says. In an interview with today’s Daily Telegraph, the Work and Pensions Secretary says that he is determined to introduce radical reforms to disability benefits which will see more than two million claimants reassessed in the next four years. Iain Duncan Smith says that the number of claimants has risen by 30% in recent years “rising well ahead of any other gauge you might make about illness, sickness, disability”. Losing a limb should not automatically entitle people to a pay-out, he suggests.
More than 60,000 frontline jobs in the NHS, including those of nurses, are at risk of being axed because of spending cuts, with almost half already gone, according to “stark” figures revealed in a new study. The Royal College of Nursing (RCN) said community nurses were among those facing cuts, which meant that government plans to move care from acute hospitals to community sites were a “façade”. The RCN said 61,000 posts were at risk of being cut across the UK, including nursing and other jobs, with 26,000 already lost in the two years to April, The Scotsman says.
Britain’s business leaders will warn David Cameron that the Government’s attitude to business must change, after they were told to stop complaining. Members of the Prime Minister’s business advisory group will say that the atmosphere surrounding business in the UK is becoming increasingly “toxic”. Mr Cameron’s face-off with the chief executives of major companies, including Sainsbury’s, Centrica and the Prudential, comes at a time when relations between the private sector and the Government are under strain, The Telegraph says.
Germany has drawn up plans to make Britain pay a share of the multi-billion pound clean-up costs if Greece is ejected from the euro, risking a clash with Downing Street. A finance ministry draft shows that Berlin is preparing a fresh bail-out to stabilise the Greek economy and stem EMU-wide contagion after a return to the drachma, should the country reject EU austerity demands. The funds would come from Europe’s rescue machinery but costs would be shared among all 27 EU members – not just the Eurozone – on the grounds that Greece has a right to Brussels crisis funds, like any other member state with its own currency. The scheme aims to contain fallout from a Greek exit and “limit the losses of the European Central Bank” on the country’s bonds, The Telegraph says.
Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout. The comments by members of the European Central Bank’s governing council indicate that the risk of Eurozone fragmentation is being taken increasingly seriously by the region’s policymakers. They mark a significant shift at the ECB, which has previously argued that European treaties do not allow for an exit and that a break-up would cause incalculable economic damage, writes The Financial Times.