China’s economy suffered its worst quarter since the global financial crisis after gross domestic product growth shrank to 7.6 per cent, battered by severe weakness in Europe and America. Official figures this morning confirmed widely held fears of a sharp slowdown in the world’s second largest economy, as output for the second quarter slid to its slowest pace since early 2009, falling from 8.1 per cent at the start of the year. It confirms a wave of worrying signs thrown out by the Chinese economy in recent months, including a downturn in the property market, stalling investment, falling orders at factories and a steep drop in exports to Europe and America, The Times says.
MI6 agents have foiled Iran’s attempts to obtain nuclear weapons but the Middle Eastern state will succeed in arming itself within the next two years, the head of the Secret Intelligence Service has warned. Sir John Sawers said that covert operations by British spies had prevented the Iranians from developing nuclear weapons as early as 2008. However, the MI6 chief said it was now likely they would achieve their goal by 2014, making a military strike from the US and Israel increasingly likely. Sir John gave a secret briefing to the Cabinet in March about Iran’s growing military threat but this is the first time his views on the issue have been made public. It is extremely rare for the head of MI6 to disclose details of operations by the intelligence service, The Telegraph explains.
US ratings agency Moody’s downgraded Italy’s government bond rating by two notches, citing the knock-on effects of a possible Greek exit from the Eurozone and Spain’s banking woes. In reducing the rating to Baa2 from A3, Moody’s said that Italy was now “more likely to experience a further sharp increase in its funding costs or the loss of market access” for borrowing to service its budget. The move lowered Italy’s rating to two notches above junk-bond status, and came just before the debt-laden country attempts to raise €5.25bn in a medium- and long-term government bond auction on Friday. On Thursday Italy raised €7.5bn in one-year bonds at a sharply lower rate than previously, indicating improved investor confidence. Moody’s spelt out the challenges both external and internal that face the Eurozone’s third-biggest economy. “The risk of a Greek exit from the euro has risen, the Spanish banking system will experience greater credit losses than anticipated, and Spain’s own funding challenges are greater than previously recognized,” it said, according to The Telegraph.
Barclays is facing growing protests over its attempts to rig Libor with some customers withdrawing money in response to the bank’s admission that it tried to manipulate the world’s key borrowing rate. Leicester City Council has said it will withdraw the £6m it holds on deposit with Barclays, warning it had been “appalled” by the bank’s behaviour. The latest blow for Barclays came as analysts at Morgan Stanley estimated the costs of Libor-related litigation for Britain’s biggest banks. Analysts said Royal Bank of Scotland could face the largest claims of any UK bank with a potential bill of £680m, compared to £625m for Barclays, £224m for HSBC, and £38m for Lloyds Banking Group. The cost across the 12 global banks implicated in the scandal could hit $22bn. Other analysts such as Liberum Capital have forecasted the costs could be even higher. Reacting to the scandal, Leicester deputy mayor Rory Palmer said the council felt “uncomfortable” holding its money with Barclays, The Telegraph reports.
Business chiefs and trade union leaders have joined forces to condemn the coalition’s latest delay in delivering a coherent aviation policy. In a letter to The Times today they say that indecision on airport expansion is leaving Britain lagging behind its international competitors. And they accuse ministers of kicking the issue of new runways “into the long grass”. Sir Richard Branson called the Government’s failure to make a decision inexcusable, adding that every business in Britain was “losing tons of money” because of the absence of “proper airline services”. In its long-delayed aviation strategy, which will be published today, the Government will commit to building a £500m rail link from the West Country to Heathrow, according to The Times.
Central bank policymakers are today expected to throw down an £80bn challenge to Britain’s biggest lenders in an effort to ease the credit squeeze. The Bank of England (BoE) “funding for lending” programme, which has Treasury backing, will offer the money to banks on condition they pass it on to cash-strapped businesses and households in the form of cheaper loans and mortgages. The co-ordinated action – first flagged last month – is part of a raft of measures being taken to boost lending as banks face a worrying new phase in the credit crisis. Worsening conditions in the Eurozone are making it harder and more expensive for banks to borrow, while they have also been hoarding cash to shore-up their balance sheets in the face of economic woes, The Scotsman explains.
Two-thirds of Britons do not have a private pension, the Office for National Statistics (ONS) has said, as experts warned that millions of people will spend their retirements in poverty. The ONS’s Wealth in Great Britain report showed that 64% of people in Britain are saving no money at all for their retirement. Pension experts warned that people are not saving enough for their old age and said that the basic state pension of £107.45 will not enough for them to live off. Joanne Segars, the chief executive of the National Association of Pension Funds (NAPF), said: “It is startling that so few people are saving into a pension of their own and are instead going to rely on one of the worst state pensions in Europe. “Millions of people are set to spend their retirement struggling to get by, and our society needs to face up to this massive issue.” The ONS also said that over a quarter of households in Britain have no private pension wealth at all, The Telegraph explains.