BAE Systems is examining a series of potential acquisitions to bolster its position in the United States in the wake of its failed merger with EADS. While British investors are demanding to see BAE’s top brass on strategy, following the aborted 28bn pound merger, The Times has been told the defence group is considering “doubling down” on its American growth strategy. According to BAE advisers, it will look at buying suppliers in the electronic warfare, services and cyber security sectors to increase its exposure to the growing areas of US defence. Speculation that BAE will become a target for one of the big American defence contractors is doubted by industry experts in Washington because the US Defence Department has an informal ban on consolidation between its prime contractors or main suppliers.
Britain’s £375bn money printing programme has run out of steam and new ways must be found to stimulate the economy, according to Lord Turner, one of the leading candidates for the Bank of England governorship. In comments that will be seen as a strong criticism of the Bank of England’s quantitative easing policy by one of the leading candidates to replace Sir Mervyn King, Lord Turner said printing more money would have a “declining marginal impact” and threatened the stability of the economy. Lord Turner warned that quantitative easing had left Britain facing a “liquidity trap in which replacing private sector holdings of bonds with private sector holdings of money has little impact on behaviour and thus on demand,” The Telegraph reports.
Like a jilted lover, BAE Systems now has to look ahead to life on its own. Among those most keenly affected by the repercussions of the failure of the EADS deal are BAE’s 35,000 UK employees – many of whom face an uncertain future. The main reason for this is the planned rundown in big UK defence programmes, together with a more difficult environment for export orders as military spending worldwide comes under pressure. Many of those in the UK who backed a BAE-EADS marriage did so because they believed an expanded business – with a stronger position in civil aerospace – would have put the British company in a better position to maintain its home workforce at something approaching the current level, The Financial Times explains.
BP faces a major new threat after the president of Azerbaijan accused it of making “false promises” about production volumes and warned it to expect “serious measures”. The oil major made “grave mistakes” that had resulted in an $8.1bn (£5bn) shortfall in the government’s revenues, President Ilham Aliyev said in a dramatic televised attack. The embattled company was accused of failing to meet its output targets at a giant field in the country, which accounts for 4% of its global oil production. The threat to BP’s future in Azerbaijan comes as the company is still struggling to recover from the Gulf of Mexico disaster in the US and facing major uncertainty over the future of its Russian business. Azerbaijan is of key strategic importance to the British company, which is also part of the giant Shah Deniz gas project in the country. The criticism in Azerbaijan relates to the massive Azeri-Chirag-Gunashli (ACG) fields, which BP operates, The Telegraph writes.
International lenders will this weekend discuss an emergency lifeboat worth up to €15bn, aimed at preventing the Greek crisis from pushing vulnerable European countries to the east into deeper recession, The Times has learnt. Heads of institutions including the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development and the European Investment Bank are due to meet on Sunday in Tokyo amid fears about the impact of the euro crisis on countries such as Romania, Albania, Slovenia, Serbia and Macedonia. Erik Berglof, chief economist of the EBRD, told The Times: “The south east Europe recovery plan will be a major co-ordinated effort to help the countries that are most acutely exposed to the spillovers from Greece and the eurozone. Many are in dire straits.”
Greece’s biggest publicly listed company dealt the country’s already battered economy a fresh blow yesterday after announcing plans to move its main listing from Athens to London. Coca-Cola Hellenic, the world’s second biggest bottler of Coca-Cola Company beverages, cited the sharp fall in liquidity on the Athens Exchange since 2007 and rising borrowing costs, after the recent downgrading of its bonds by the credit ratings agencies as factors in its decision. Dimitris Lois, the chief executive, said that the move was also recognition that only 6% of the company’s volumes are from Greece — Russia provides the biggest at 16% — while 95% of its shares are held by international investors, The Times reports.
Some of the world’s biggest oil companies and traders are poised to export substantial amounts of crude from the US for the first time in decades, as booming output there promises to reshape global energy markets. Royal Dutch Shell, BP and Vitol, the world’s largest independent oil trading house, are among the six companies known to have applied to the US government for export licences, the Financial Times has learnt. A surge of exports from the US would affect oil trading patterns between Europe, west Africa and North America. Greater supplies in the Atlantic basin are likely to put pressure on physical prices of other crudes in the region, particularly Brent, the North Sea benchmark.
Norway is to double carbon tax on its North Sea oil industry and set up a £1bn fund to help combat the damaging impacts of climate change in the developing world. In one of the most radical climate programmes yet by an oil-producing nation, the Norwegian government has proposed increasing its carbon tax on offshore oil companies by £21 to £45 (Nkr410) per tonne of CO2 and a £5.50 (Nkr50) per tonne CO2 tax on its fishing industry. Norway will also plough an extra £1bn (Nkr10bn) into its funds for climate change mitigation, renewable energy, food security in developing countries and conversion to low-carbon energy sources, Environmental Finance reported, according to The Guardian.
British Gas is set to increase its gas and electricity tariffs to record levels, adding up to £100 a year to household bills. The country’s biggest power supplier is preparing to reveal as early as today that it is putting up its energy prices in “high single digits” – close to the nine per cent increase from its rival, Scottish & Southern Energy, that comes into force on Monday. The average British Gas dual fuel bill for gas and electricity now stands at £1,260. A five per cent rise would add £63, while an eight per cent increase would be £100. The new higher prices are expected to kick in next month, The Independent says.