David Cameron will face demands from Tory MPs to redraw Britain’s relationship with Europe in the event of a Greek exit from the Eurozone, senior government sources believe. No 10 and the Foreign and Commonwealth Office say that treaties governing the European Union will have to be rewritten after the departure of one of the 17 members of the single currency bloc. This would trigger “aggressive” demands by Tory MPs to hold a referendum on Britain’s EU membership, or pull out of the social chapter, a commitment made by Mr Cameron during his campaign for his party’s leadership. It would also lead to an argument with Mr Cameron’s coalition partners, writes The Times.
Changes to inflation calculations that could save the Chancellor billions of pounds a year — while hurting gilts investors — are being considered. A committee that advises the UK Statistics Authority may recommend an overhaul that could permanently pare back gains in the retail prices index. If the changes are adopted, they could lead to a reduction in interest payments on government bonds that are linked to the RPI. This would help George Osborne to save as much as £3bn a year in interest paid on index-linked gilts, according to calculations from Alan Clarke, an economist at Scotia Capital. A permanently lower rate of RPI inflation would also affect individuals whose incomes are linked to the index, such as pensioners and those covered by RPI-referenced wage bargains, The Times says.
Spanish lender Bankia will reportedly ask the state for more than €15bn to bail it out when its new management team presents a restructuring plan on Friday. Bankia, partially nationalised by the government earlier this month, is the weak spot in Spain’s fragile banking system where loan losses stemming from a 2008 property crash threaten to push the country into seeking international assistance. “The help needed to clean up the bank will be more than €15bn,” a source, who spoke on condition of anonymity, told Reuters. Neither Bankia, the country’s fourth-largest bank with 10% of Spaniards’ deposits, nor the government would comment on the matter. The government said on Wednesday that it would provide any capital outlined in the new management’s recapitalization plan through the state-backed restructuring fund, the FROB, according to The Telegraph.
The chief executive of the world’s biggest copper company Codelco, which is embroiled in a court case with British miner Anglo American, is stepping down. Diego Hernandez has abruptly resigned and will be replaced by chief financial officer Thomas Keller, just as the Chilean state copper giant is striving to end a bitter contract dispute with Anglo. Codelco told Chile’s market regulator Hernandez tendered his resignation, effective June 1, for “personal reasons”. Company sources said Hernandez’s departure was linked to differences with Codelco’s board. There is no link between Hernandez’ resignation and the court case with Anglo, Mining Minister Hernan de Solminihac told state television, The Telegraph reports.
Holiday firm Thomas Cook has appointed a new chief executive from outside the travel industry to lead its turnaround. Harriet Green, who is currently boss of Leeds-based electronic components distributor Premier Farnell, will join at the end of July. She replaces Sam Weihagen, who in August succeeded former chief executive Manny Fontenla-Novoa. Weihagen, who had been the deputy chief, will step down from the board but stay with the group until the end of September “to ensure a seamless transition”. Green, who is also a non-executive director at BAE Systems and a member of David Cameron’s Business Advisory Group, has been chief executive of Premier Farnell since 2006. She now faces the task of rebuilding the fortunes of a company that has issued three profit warnings in the past 18 months and racked up losses of almost £400m last year, The Scotsman says.
Britain’s two biggest drugmakers have joined forces in a £180m research collaboration in the battle against the growing threat from bugs’ resistance to antibiotics. As new drug resistant superbugs such as the “New Delhi” bug have emerged, GlaxoSmithKline and AstraZeneca have teamed up with academics and other Big Pharma companies to tackle antibiotic resistance, which is becoming a major health threat around the world. For example,drug-resistant forms of tuberculosis are spreading at a frightening rate. “You go into hospital for a knee operation or hip replacement and could get infected with bacteria that very few drugs can control,” said Manos Perros, head of AstraZeneca’s infection iMed. “In a world without antibiotics any minor surgery or small wound could be a death sentence,” The Guardian says.
A debate over the merits of “free” banking was raging on Thursday after top banking regulator Andrew Bailey faced criticism after appearing to call for an end to non-fee paying current accounts to prevent mis-selling of financial products. Richard Lloyd, executive director of consumer body Which?, said it was a “myth” that banking was free. “Consumers pay over £9bn a year in fees and lost interest on their current accounts. The idea that if banks charged more, they would stop trying to mis-sell other financial products is completely unfounded,” he said. Bailey is acting head of the body that is to become the Prudential Regulation Authority, which is to be set up in the Bank of England to oversee the banking industry, following the resignation of Hector Sants at the FSA, The Guardian reports.