Sir Mervyn King has prepared the ground for George Osborne to abandon a key debt reduction target by saying that it would be “acceptable” to fall short if a global slowdown was responsible. In his first live television interview the Governor of the Bank of England yesterday denied finding the job stressful, said that he had never thought of resigning and rejected suggestions that he had “fired” Bob Diamond as Barclays chief executive. He conceded that there was a “black cloud of uncertainty” hanging over business because of the Eurozone crisis. And admitting that the economy had grown more slowly than predicted, he implied that the Government may miss its target to reduce public debt as a proportion of GDP by 2015. “I am more relaxed about missing targets if it is because the world economy is growing slowly. If it’s because the world economy has grown slowly, so we have in turn grown slowly, then that would be acceptable,” he said, according to The Times.
EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week. According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring they are in place before a bailout is formally requested. One senior European official said negotiations have been conducted directly with Luis de Guindos, the Spanish finance minister. The plan, due to be unveiled next Thursday, will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and spending cuts, The Financial Times reports.
The management of the defence giant BAE Systems has so far met with 600 UK staff face-to-face to persuade them of the merits of its proposed £30bn merger with Airbus-owner EADS.Ian King, chief executive, is holding a series of town hall meetings to reassure employees that the tie-up, which would create a European champion capable of taking on the US’s Boeing, would create more work in the UK in the future. Critics of the deal have argued that British staff could be most vulnerable in any future jobs culls because of the more stringent labour laws in France and Germany, where so many of Airbus’s workers are based. However, BAE has struggled on its own, having been forced to cut 20,000 jobs, many of which were in Britain, over the past five years, The Independent reports.
People watching the £48bn merger expect miner Xstrata to back the revised offer from commodity trader Glencore, in an announcement that could come as soon as Friday morning. The boards of the two FTSE 100 companies were on Thursday said to be locked in separate talks, as they readied for Xstrata to reveal its decision on Glencore’s latest offer. Under the new terms, Glencore is offering 3.05 of its shares for each Xstrata share, handing the Qataris and other Xstrata shareholders more of the combined company. Xstrata’s board have until 7am on Monday under takeover rules to announce their decision, but are expected to make their announcement to shareholders imminently, The Telegraph says.
IG Metall, which represents most of EADS’s 49,000 members in Germany, said that only by pressing ahead with agreed contracts would jobs be preserved. “We want credible pledges from the companies about job security, but we also need credible statements from the governments about military contracts,” said Jürgen Kerner, the union’s defence and aerospace representative. “That will be the only way of keeping plants in use and people in work – in Germany, in the UK and in France,” he said. Both companies have emphasised there is little overlap between defence giant BAE and Airbus owner EADS, suggesting the merger would not result in mass job losses. However, neither company has given definitive assurances on jobs. A combined company would potentially employ 220,000 people worldwide, The Telegraph reports.
Italy’s economy will contract by twice as much as previously forecast this year, hobbling its plans to pare back public borrowing and dealing a blow to the Prime Minister, Mario Monti. Rome yesterday was forced to issue revised predictions showing that gross domestic product will drop by 2.4% in 2012, compared with the 1.2% forecast in April, after the economy performed weakly in the first half of the year. Italian GDP is no longer expected to rebound in 2013, with a further 0.2% slide now pencilled in by official forecasters. Waning growth will eat away at tax revenues and dislodge efforts to cut the budget deficit. Public borrowing will come in at 2.6% this year, up from the 1.7% previously forecast. However, the Economy Minister, Vittorio Grilli, insisted that the country had no plans to ask for European help to pare back its borrowing costs, writes The Times.
The managing director of Carphone Warehouse’s British business has walked out before a restructuring that could result in hundreds of job losses. The Times has learnt that Matt Stringer, a former Marks & Spencer high-flier who took the post last year, has resigned from the company and not lined up a new role. It is the second major departure at the British business within three months. Anthony Hemmerdinger, the retail director, quit to rejoin Sainsbury’s in July after only a year with the mobile phone retailer. The latest departure coincides with a possible restructuring plan, due to be announced early next month, that is expected to result in job cuts at the company’s headquarters in Acton, West London. The offices contain a number of business units such as the fledgling Talk Mobile unit.
Britain’s shale gas reserves could create up to 35,000 jobs and meet 10% of the country’s gas requirements for a century, according to a new report from the Institute of Directors. The publication comes only weeks before ministers are expected to give the go-ahead to more “fracking”, despite growing environmental concerns about the controversial technology. Ed Davey, the energy secretary, gave warning on Thursday that the industry was no “silver bullet” for Britain’s energy needs until more was known about the “scale and costs of shale gas production”. Mr Davey was responding to an article in the Financial Times by Lord Browne, former head of BP, who said fracking offered a “substantial prize” to the UK and could play a “critical role” in terms of energy security, The Financial Times says.