David Cameron has been warned by one of the country’s leading bankers that the biggest threat to the City is the possibility of Britain leaving the European Union. Peter Sands, the chief executive of Standard Chartered, had a breakfast meeting with the Prime Minister on Monday during which he is understood to have raised concerns over a British breakaway. The warning was sounded amid growing calls from Conservative MPs for Britain to have an “in-out” referendum on the country’s ongoing membership of the European Union. George Osborne, the Chancellor and Mr Cameron’s key election strategist, is understood to be considering offering the pledge of a referendum as the centrepiece of the next Conservative manifesto. Labour is also considering a similar pledge, The Telegraph says.
The price of oil dropped below $90-a-barrel level today as analysts predicted its huge slide in recent weeks was set to continue. Brent crude was trading at $89.84 by mid-afternoon, down more than $1 on the day. The price has crashed from $128 – a fall of 30% – in just three months, with the falls blamed on slowing economic growth in Europe, the U.S. and even China. Analysts suggest it is also the result of increased production and the global stockpiling of oil, with Saudi Arabia now pumping crude at a 30-year peak. The world is now producing 91.1 million barrels per day. The falls will be welcomed by consumers, who have had their spending power squeezed by stagnant wages and rising prices. The consumer prices index, a measure of inflation, fell to 2.8% in May, from 3% in April, largely due to lower crude prices. Further falls in June will help drag CPI down closer to the Bank of England’s target of 2%, The Daily Mail says.
Official forecasts for growth in Britain are based on unrealistic expectations that the private sector, consumer demand and foreign trade will drive a recovery, according to leading ratings agency Standard & Poor’s. S&P said the Office for Budget Responsibility’s expectation that the economy will grow by 0.8% this year and 2% in 2013 may well prove “overly optimistic” given the weak outlook for the British economy. The economy shrank by 0.3% in the first quarter, plunging Britain into its first double-dip recession since 1975. “Given the UK’s fiscal restraint, weak private-sector demand, and softening trade and business conditions, it is unclear what will quickly bring the country out of the doldrums,” said S&P in a research paper, according to The Telegraph.
One of the City’s most powerful fund managers has effectively called on Mick Davis to step down as chief executive of Xstrata as the price of a successful merger with Glencore. David Cumming, the head of UK equities at Standard Life Investments, said that shareholder hostility to retention payments for senior Xstrata managers, including a £29m handout to Mr Davis, meant that the merger was now “in jeopardy”. He said that investors would not be able to support a series of retention deals worth £217m, with no performance conditions attached. As a result, the credibility of Mr Davis is “probably irretrievably shot”, he said, The Times reports.
Microsoft is buying the social network site Yammer for $1.2bn in a deal that will allow the software giant to offer Facebook-like services to corporate customers. Yammer, which was created in 2008 and has five million corporate users at more than 200,000 companies, enables businesses to create private social networks in which employees can chat, share files and collaborate on projects. Microsoft intends to incorporate Yammer into its software products, such as Office, to increase their appeal. The service counts some of the world’s largest companies, including Deloitte, Shell and Ford, among its customers and is reporting strong growth of 250,000 new users per month, The Telegraph explains.
Japanese technology giants Sony and Panasonic are joining forces in a bid to steal a march on their Korean rivals Samsung and LG in the race to develop the next generation of television sets. The two companies are to co-operate on developing screens based on OLED (organic light emitting diode) technology with the aim of establishing mass-production in 2013. Panasonic plans to invest some $373m (£240m) in its Himeji plant in western Japan for a test production line of panels using the technology. Industry observers believe establishing a lead in the market for the sets, widely touted as the successor to liquid-crystal displays (LCD), will depend on being able to produce the screens at a low enough price, The Scotsman reports.
BT Vision will lose £240m on its gamble to buy into Premier League football coverage, analysts have claimed. The telecoms giant made a surprise foray into the market for Premier League rights earlier this month, paying £738m for 114 matches. However, it is forecast to recoup only two thirds of that investment. It originally bid for the rights to all the Premier League matches, worth more than £3bn, and eventually secured 38 matches a season for the three years from 2013. BSkyB, paid £2.28bn for the remaining 116 matches. BT said the games would serve as a “calling card” to help it sell other services, such as its super-fast fibre broadband, and also stem the flow of customers moving their internet and telephone services to BSkyB and Virgin Media, writes The Telegraph.