Germany’s Nobel literature laureate Günter Grass criticised the treatment of Greece in the debt crisis, describing it in a new poem as a “country sentenced to poverty”. The 84-year-old’s latest work, “Europe’s Disgrace”, was published in the daily Sueddeutsche Zeitung. As Greece struggles with austerity and reform programmes demanded by creditors in exchange for rescue loans, and speculation grows that it may leave the 17-nation Eurozone, Grass springs to its defence, and, by implication, criticises his own country’s attitude to it. Günther Krichbaum, the head of the German Parliament’s European affairs committee and a member of Ms Merkel’s conservative Christian Democrats, shrugged off Grass’s words. He said: “His criticism completely bypasses reality – particularly the reality that Greece was helped enormously with enormous efforts, which, in the end, do not come from states but from citizens and their wallets,” writes The Independent on Sunday.
Goldman Sachs is considering breaking up the $2bn (£1.3bn) sale of the Swedish oil group owned by the Saudi billionaire Mohammed al-Amoudi. It is understood that most potential bidders, possibly including the UK pair BP and Shell, for Svenska Petroleum Exploration’s assets are not interested in the whole group, due to its broad geographic spread. The company has offshore production and exploration fields in five west African countries, the Norwegian North Sea and Latvia. An industry source said that bidders, which include private-equity players keen on cashing in on the growing African oil and gas market, had expressed interest in individual countries and regions, says The Independent on Sunday.
The chief executive of the multi-billion pound Lloyd’s of London has publicly admitted that the world’s leading insurance market is prepared for a collapse in the single currency and has reduced its exposure “as much as possible” to the crisis-ridden continent. Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro. In an interview with The Sunday Telegraph he also revealed that Lloyd’s could have to take write-downs on its £58.9bn investment portfolio if the Eurozone collapses. Europe accounts for 18% of Lloyd’s £23.5bn of gross written premiums, mostly in France, Germany, Spain and Italy. The market also has a fledgling operation in Poland.
The Virgin founder, who backed the Tories in the run-up to the 2010 general election, was one of several senior business figures who told the Observer that the Coalition needed a plan to stimulate the economy. Figures released last week showed that the UK economy shrank by 0.3% in the first three months of 2012, plunging the country into a deeper double-dip recession. Sir Richard said the Government needed to provide “action to back the rhetoric”, boosting support for small and medium-sized businesses and promoting entrepreneurialism to reduce unemployment and boost growth. “To get that growth, we need to get behind the small and medium-sized businesses that are the engines of any healthy economy,” he told the newspaper. “They need investment and finance, and that comes from the big banks. The politicians talk of encouraging lending; we need action to match that rhetoric,” according to The Sunday Telegraph.
The UK’s services sector is showing signs of an upturn in fortunes, according to a CBI survey, which has offered some glimmers of hope for George Osborne after a week of gloomy economic news. Despite the uncertainty surrounding the future of the euro, confidence among services businesses such as restaurants and hotels is hardening after slumping in the past nine months, with companies’ expectations for the future improving. Firms anticipate both their activity and their profitability will pick up in the next three months, according to the quarterly survey. Ian McCafferty, the CBI’s chief economic adviser, said: “Despite the continued uncertainty emanating from Europe, there are some signs that conditions in the UK service sector are beginning to improve slightly,” The Sunday Telegraph reports.
Angela Merkel is secretly preparing a six-point plan to revive Greece in the same way that East Germany was modernised after the fall of communism. The German Chancellor’s rescue plan to transform ailing Eurozone countries through privatisation and the relaxation of employment laws will be presented to the European Union for discussion in the coming weeks. It is likely to provoke an outcry in Greece because its core message will be for them to “behave more like the Germans” to build a sustainable future. Mrs Merkel will present her proposals as Germany’s contribution to the call for a European growth strategy championed by François Hollande, the new French President, according to Der Spiegel magazine, The Sunday Times says.
Spain’s stricken Bankia expects to sell off its vast portfolio of industrial holdings, that includes a stake in the parent company of British Airways and Iberia. Jose Ignacio Goirigolzarri, who took over as president of Bankia earlier this month, outlined plans a day after it emerged Spain’s fourth largest saving bank would need a bail-out fund of a further €19bn (£15bn) from the government. Bankia would be “solid, efficient and profitable” after the recapitalisation Mr Goirigolzarri said, adding that the government and Bank of Spain fully backed the plan. Bankia’s parent company owns holdings in several Spanish blue-chip companies including the NH chain, energy company Iberdola and Indra Sistemas, according to The Sunday Telegraph.
Britain could be set for a prolonged recession after building experts warned this weekend that heavy rain in April and May had hit growth in the sector. A further plunge in construction output will deepen economic gloom after revised growth figures last week showed that the sector fell by 4.8% in the first quarter. This was a key reason why overall output fell by 0.3%, against an earlier forecast of minus 0.2%, confirming that Britain is in a double-dip recession. Wet weather, coupled with the layoffs caused by the long Diamond Jubilee Bank Holiday, mean that second-quarter construction figures are likely to be poor, according to Noble Francis, economics director for the forecasting group Construction Products Association. This could condemn the country to another fall in output in the second quarter, adding to pressures on George Osborne to kick-start growth with a move towards ‘Plan B’, The Financial Mail on Sunday reports.
London will this week host a private global summit on the world financial crisis amid mounting pressure on Eurozone economies. No agenda has been published and there will be no communique issued afterwards. ‘It is a private, off-the-record meeting,’ said a source. In the past two days, Spain’s fourth biggest lender, Bankia, said it needed a €19bn (£15bn) bailout and the prosperous region of Catalonia warned that it needed more funding from Madrid. The yield on Spanish government bonds – the government’s likely cost of borrowing – jumped to 6.3%, a figure widely regarded as unsustainable. The summit will be dominated by central bankers including the host, Sir Mervyn King, Governor of the Bank of England. Mario Draghi, president of the European Central Bank, and Zhou Xiaochuan, governor of the People’s Bank of China, have been invited, the Financial Mail on Sunday says.
Satellite broadcaster BSkyB is understood to be considering a move on Britain’s mobile phone market. The FTSE 100 company has discussed buying up a portion of the airwaves put up for sale by Everything Everywhere, the owner of mobile networks Orange and T-Mobile. The spectrum could be used to launch superfast 4G networks. The move would see BSkyB add mobile phone to its television, internet and land-line phone package and would strengthen its position in the face of new competition from the likes of Lovefilm and Netflix, Scotland on Sunday reports.