French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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Fiscal Cliff: Differences Remain As Deadline Looms

Leaders in the US Senate are attempting to strike a last-minute deal to avoid huge tax hikes and spending cuts set for January 1.

Economists warn the $500bn in fiscal pain due to hit in the New Year could send the country back into recession, and destabilise the global economy in the process.

But despite feverish work behind closed doors by aides to both leaders in the Democrat-controlled Senate on Saturday a deal palatable to both sides is still elusive.

US Senate Majority Leader Harry Reid said has made a counteroffer to a Republican proposal put forward on Saturday but admitted "serious differences" remain.

The two sides have reportedly moved closer on tax increases while Republicans have indicated they could withdraw a contentious proposal to slow the growth of social security retirement benefits.

Senate Republican leader Mitch McConnell said he has asked Vice President Joe Biden to become involved in a last-minute effort to reach an agreement.

He added that there was no single issue blocking an agreement but that "the sticking point appears to be a willingness, an interest, or courage to close the deal".

"I'm willing to get this done, but I need a dance partner," Mr McConnell said.

Both the Senate and the House of Representatives would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks.

Barack Obama, who called congressional leaders to the White House on Friday, addressed the crisis once more as he appeared on NBC's Sunday morning talk show Meet the Press.

Mitch McConnell and Harry Reid still heading in different directions

The President said Republicans were unwilling to see tax rates raised for the richest taxpayers.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way," Mr Obama said.

"But the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected.

"That seems to be their only overriding, unifying theme," he added.

If a comprmise can be found, the two parties will then decide whether to put it to the vote on New Year's Eve in the Senate and then the Republican-controlled House of Representatives.

President Obama has pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought.

"I was modestly optimistic yesterday, but we don't yet see an agreement," the President told NBC in the interview recorded on Saturday. "And now the pressure's on Congress to produce."

At least one senior Republican said he was optimistic of a deal, and a "political victory" for Mr Obama.

Senator Lindsey Graham told Fox News that the odds are "exceedingly good" a deal can be done.

"I don't think people want to go over the cliff," he said.

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

Mr Obama originally insisted on letting the tax cuts expire on households earning more than $250k (£154k) but later upped that threshold to $400k (£246k).

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut America's soaring deficit.

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Fiscal Cliff: Obama 'Optimistic' After Talks

Barack Obama has called for "immediate action" to avoid the so-called fiscal cliff after urgent talks with Congressional leaders.

He urged politicians to agree a deal, saying: "The hour for immediate action is here. It is now."

He said he remained "optimistic" that an agreement could be reached to avoid millions of families being hit with big tax increases and spending cuts.

Mr Obama described the hour-long meeting with Congressional leaders as "good and constructive".

He referred to "dysfunction in Washington" and said the American public was "not going to have any patience for a politically self-inflicted wound to our economy".

Surprisingly, after weeks of post-election gridlock, Senate leaders said they hope to reach a compromise that could be presented to lawmakers by Sunday -  little more than 24 hours before the year-end deadline.

Majority leader Harry Reid and Republican leader Mitch McConnell gave a relatively upbeat assessment after what Mr McConnell called a "good" meeting with Mr Obama.

House Speaker John Boehner arrives at the White House for the talks

"I am hopeful and optimistic" of reaching a deal, Mr McConnell said.

Mr Reid promised he would be "going to do everything I can" to make a deal happen, but added: "Whatever we come up with is going to be imperfect."

House Speaker John Boehner appears for the moment to have ceded the struggle to the Senate, saying he would put any agreed bill before his chamber and let the vote proceed. 

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut the US's soaring deficit.

It followed their inability to reach an agreement in 2011.

If Congress cannot agree a deal to rein in government spending, Mr Obama said Congress should allow a vote on a basic package that would keep tax cuts for middle-class Americans while extending unemployment benefits for the long-term unemployed.

The stock market was down again on Friday as the wrangling continued in Washington.

Experts say if the looming tax increases and spending cuts are not scaled back, the recovering but fragile US economy could slip back into recession.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Fiscal Cliff: Obama 'Optimistic' After Talks

Mr Burns Explains The Fiscal Cliff

Updated: 3:03pm UK, Friday 07 December 2012

The Simpsons character Mr Burns has managed to explain the "fiscal cliff" with a pithy cartoon.

It may be a complex and political concept, but with the use of a simple graph and a man in a car, the unpopular nuclear plant CEO succeeds in explaining the predicament facing the US economy.

Admittedly it may have a certain Republican spin to it, but given that the explanation is made in the Burns mansion where Mitt Romney presidential campaign posters are peeling from the wall, that is no surprise.

According to Mr Burns the "fiscal cliff" is defined simply as this: "Think of the economy as a car and the rich man as the driver. If you don't give the driver all the money he will drive you over a cliff.

"It's just common sense."

He goes on to tell his right-hand man Smithers: "Furthermore, rich people feel things more than the common man."

The fiscal cliff is the $607bn (£378bn) of cuts and taxes that will kick in on January 1 if the Republicans and the Democrats in Congress cannot agree on how to run the US economy.

While the Democrats favour raising taxes for the rich, the Republicans want to retain the tax cuts brought in by George W Bush and say it is government spending that must be curtailed.

Because they failed to agree they made a deal on a package of tax rises and spending cuts, including defence and welfare, that will come into action in the new year unless a solution is found.

Economists have warned that if this happens then it could throw the US back into recession and damage the global financial recovery.

Some financial experts have said that the fiscal cliff is the biggest threat to global recovery, as the rest of the world is looking to the US to lead them out of recession.

Congress is now working to try to find a solution before the December 31 deadline.

If it does not, then Smithers will be driving Mr Burns' car to the top of the graph and over the cliff.

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Online Shopping Surges Over Xmas

Internet retail sales are on course to have risen 30% over the Christmas period as shoppers moved to bag a bargain from home and beat sale queues.

Figures from market data firm Experian suggest Boxing Day set a new British record for online shopping.

According to the report, Britons spent 14 million hours trawling websites on Boxing Day, paying around 113 million visits to online retailers on what became the UK's biggest day for internet shopping.

Experian found that web sales were up by 17% on Boxing Day last year.

The figure had been expected to be higher but the company's digital insight manager, James Murray, said: "With a number of the major retailers bringing their sales forward to Christmas Eve, the impact of that was that Boxing Day was slightly muted and not as prolific as we forecast."

Figures show that Christmas Eve was 86% bigger than last year as a shopping day while Christmas Day was 71% bigger, as shoppers took to websites.

British Retail Consortium (BRC) spokesman Richard Dodd said the dash for discounts was boosted by consumers who were feeling the pinch.

He said: "Customers are under lots of financial pressure and are really keen on seeking out value and taking advantage of bargains."

Robert Goodman, general manager of Kent's Bluewater shopping centre, said: "Boxing Day's momentum has continued into today, with the opening of the John Lewis clearance sale being a major draw."

Waitrose said it had enjoyed a record Christmas season - with Sunday, December 23,proving to be its busiest ever.

Total branch sales excluding petrol for the festive period rose 7.7% between Sunday, November 4, and Christmas Eve.

On a like for like basis, sales were up 4.3% on the equivalent period last year.

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Fiscal Cliff: Obama Calls Leaders To White House

Opinion: President Obama Must Find Diplomacy Skills

Updated: 3:58pm UK, Thursday 27 December 2012

By David Buik, Cantor Index

President Obama and his charming wife Michelle recently posed for Christmas holiday photographs in Hawaii – all chilled out, very avant-garde in their dress and without appearing to have care in the world.

Clearly his advisers were not in concert with his thinking and summoned him back to Washington in response to an uncomfortable poll, where 47% were of the opinion that a solution will not be found before 1st January 2013 to avoid the 'fiscal cliff!'

I do not subscribe to that intense feeling of uncertainty.  However this impasse with the Republican majority in Congress cannot prevail without serious consequences!

Falling off the Fiscal Cliff would mean that $600bn of tax increases would be immediately implemented affecting many from the US middle-class to the tune of $2,000 per annum plus expenditure cuts totalling $100bn, including austerity measures on an already stressed defence budget.

Measures of such magnitude could send the US economy into recession. Many feel that this frustrating level of prevarication or if you prefer political brinkmanship could take 0.5% off GDP in 2013.

There has always been some degree of posturing by Congress when the opposition holds the majority of votes.  However this time around there appears to be an excess of 'bad blood' between the warring parties. Democrat House Minority Leader Nancy Pelosi and Harry Reid, senior majority leader in the Senate, would hardly qualify as candidates for a first class honours degree in diplomacy, always pouring oil on the flames of discontent on any negotiations which are not in line with their thinking.

John Boehner, the GOP's majority leader has not exactly excelled himself either in terms of presentation.  He preens himself like a peacock, without a hair out of place, when updating the media on the disappointing progress of the negotiations, thus irritating the Democrats for the perceived intransigence of the Republicans.

For the market place easily the most disappointing performance of all from these budget negotiations has come from the President himself.  Despite the fact that he has a larger majority than he gained at the Presidential election in 2008, he still has no majority in Congress.  That's a fact of life and unless the constitution is changed, and frankly 'hell has a better chance of freezing over,' an agreement has to be found within the framework of Congress – like it or not.

Let's not mince words.  There is an air of arrogant confidence about President Barack Obama's demeanour.  Unfortunately he has a lousy relationship with the Republicans in Congress, which is almost understandable; but what is unforgivable is the perception that his relationship with the Democrats in Congress is one of aloofness, irritation and indifference.

He may well protest at that allegation – no matter! As Commander-in-Chief it is the President's job to cajole and steer the acceptance of the US government's legislation and policies through Congress.

President Obama has a very strong case that those earning over $250,000 a year should shoulder more of the tax burden.  However what is terrifying to the market place is what seems to be the threat of abrogation of responsibility in dealing with the unacceptable and gargantuan levels of debt.

Objective people accept that in 2008 President Obama took an economic 'hospital-pass' from President George W Bush, which sent the economy in to recession.  Of that there is no doubt. TARP was a successful ruse!  Treasury Secretary Geithner and FED Chairman Bernanke's next little trick, which fell out of 'Pandora's Box' was quantitative easing!

It was a decent temporary solution and it bought time and restored confidence.  However there are only 4 aces in a pack of cards. Geithner and Bernanke may think there are six. Zero interest rates can only last so long.  Eventually someone has to pick up the tab!  Since 2008 the deficit has risen from $9tn to $16t. This is unacceptable.

In my humble opinion debt is the greatest threat to democracy! The US government cannot rely on China to keep buying Treasuries with an insatiable appetite, regardless of liquidity, if the US government does not attend to its responsibilities. 

Governments, banks and Consumers are all-over borrowed.  De-leveraging must be implemented.

If the market and China in particular decides that the debt burden is too great and consequently withdrew their automatic support with yields from 0.25% to 2% rising meteorically, that would send the cost of servicing debt in to orbit. The worst case scenario would be recession, massive unemployment and civil unrest!

President Obama, please avoid possible turmoil and 'go bang a few heads' together diplomatically!

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Boxing Day Sales: Record-Breaking Surge

Boxing Day sales records have been smashed after shoppers sent tills into meltdown across Britain.

Bargain-hunters queued overnight in preparation for stores opening this morning, with thousands pouring through the doors from as early as 6am.

Forecasters said more than £50m would have been taken on London West End's famous shopping destinations of Bond Street, Regent Street and Oxford Street at closing time.

Footfall was up 31.3% on Boxing Day last year in the West End, with sales fuelled by tourists eager to spend. The UK average footfall was up by 21.6%, the retailers' body said.

Hundreds of shoppers poured through the doors when Selfridges opened

On Oxford Street, flagship store Selfridges reported its most successful first hour of trade ever, with £1.5 million rattling through the tills.

Sue West, Selfridges director of operations, said handbags and menswear were among the items flying off the shelves.

"Online sales have been great, but year-on-year people still want to experience the Boxing Day sales," she said.

Leading department store John Lewis announced a record start to its online sale which began on Christmas Eve with hourly orders up 70% on last year.

In its final pre-Christmas trading period John Lewis saw sales of £157.8m, up 26.5% on the same period last year and breaking the £150m barrier for the first time.

Queues formed outside some shops from as early as 1am.

Andy Street, managing director of John Lewis, said: "To be announcing another record-breaking pre-Christmas week along with such a fantastic start to our online clearance is marvellous news."

At Birmingham's Bullring Shopping Centre, thousands were ready and waiting from 12.20am for the off with 350,000 passing through within the next 24 hours.

Manchester's Trafford Centre enjoyed its biggest Boxing Day sale in its history with police drafted in to help manage the crowds - 20,000 were at the out-of-town location by 8am.

The centre's Gordon McKinnon said: "Many retailers have kept stock levels much tighter this year, so the sales will not be stretching on into January."

Kent's Bluewater shopping centre saw about 120,000 visitors pass through its doors, with queues forming at 1am.

Stores reported an influx of shoppers from abroad

The British Retail Consortium had described high-street spending as "acceptable but not exceptional" this festive period, but the Boxing Day sales would add gloss to the figures.

Retailers slashed prices and began early-morning trading in a bid to entice shoppers and compete with online rivals offering weighty discounts.

A strike by London tube drivers about bank holiday pay does not seem to have had too much impact on the sales.

Extra buses were laid on for those travelling to the West End, as well as the Westfield shopping centres in Stratford, east London, and White City, west London, Transport for London said.

Jason Tyrrell from the New West End Company told Sky News: "We were prepared for this strike and had coaches for staff. The shoppers are out in force, but I hope both sides get round the table and sort it out."

Online retailers tried to stay one step ahead of the competition by offering heavy discounts on Christmas Day with Amazon's UK website seeing a 263% rise in sales over the last five years.

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Graphene: Super Funds For Super-Material

Investment funds totalling £21.5m are going to some of Britain's top universities to develop commercial uses for the "super-material" graphene.

Manchester University academics Andre Geim and Konstantin Novoselov won the 2010 Nobel Prize in Physics for demonstrating the remarkable properties of the material.

Graphene is a kind of two-dimensional carbon which is one of the thinnest, lightest, strongest and most conductive materials known to man.

Graphene atoms are arranged in a regular hexagonal pattern similar to graphite, but in a sheet one-atom thick.

A sheet measuring one metre square weighs only .77 milligrams.

The aim is to see the material put to use in a wide array of industrial and everyday applications.

Graphene could deliver potentially lucrative technological breakthroughs in areas ranging from electronics to energy generation and telecommunications.

George Osborne saw Manchester University's graphene research labs last year

The Engineering & Physical Sciences Research Council has identified the most promising graphene-related research projects in British universities to benefit from state funding.

The University of Cambridge has been awarded more than £12m for research into graphene flexible electronics and opto-electronics, which could include things like touch-screens and other display devices.

London's Imperial College will receive over £4.5m to investigate aerospace applications of graphene, working with a number of industrial partners including Airbus.

The other successful projects are based at Durham University, the University of Manchester, the University of Exeter and Royal Holloway.

The universities will be working with industrial partners including Nokia, BAE Systems, Procter & Gamble, Qinetiq, Rolls-Royce, Dyson, Sharp and Philips Research. They will together bring a further £12m to the table.

News of the funding was announced by Chancellor George Osborne, who said: "The Government moved quickly and decisively to make sure this Nobel Prize-winning technology invented here in the UK was also developed here.

"It's exactly what our commitment to science and a proactive industrial strategy is all about - and we've beaten off strong global competition.

"Now I am glad to announce investment that will help take it from the British laboratory to the British factory floor."

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods from Mexico in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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Christmas Day Sees Online Shopping Frenzy

High street doors may have been closed on Christmas Day but online retailers slashed prices ahead of an expected onslaught of consumers hitting the traditional Boxing Day sales.

Amazon's UK website said it has seen sales on Christmas Day increase by 263% over the last five years.

It expected this to be its busiest Christmas Day to date, partly due to the growth in home broadband and the popularity of tablets and smartphones.

The retailer launched its Boxing Day deals a day early, including clearance offers and "lightning deals" for a limited time and quantity of stock.

Shopping frenzies are moving from the high street to the internet

Trends seen on past Christmas Days on Amazon include an 11am rush for last-minute gift cards, the spending of gift cards at midday and sofa surfing at 8.15pm.

Amazon's vice president of EU retail, Xavier Garambois, said: "The digital revolution has certainly played a part in this growth and Christmas Day is our biggest day of the year for MP3 and Kindle book downloads, as many people are buying content from new devices that they have just received.

"It's not just digital items though, we are seeing purchases of everything from baby products to women's clothing rapidly growing on Christmas Day.

"Many customers are shopping on Christmas Day in a way that has previously only been seen in the retail industry on Boxing Day."

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn in the Boxing Day sales.

Furniture Village said visits to its website on Christmas Day last year peaked at 25,000 at 4pm, with that figure increasing to 50,000 on Boxing Day, suggesting that the majority of customers researched products online before buying from high street stores.

Chris Webster, a spokesman for technology analyst Capgemini, said: "Online tills will be ringing all the way from Christmas Eve to Boxing Day, including a massive £300m spent on Christmas morning itself.

"Christmas Day will see a surge in online sales as new tablets and smartphones are put through their paces and vouchers are cashed in for virtual goods such as movies and music."

Meanwhile, high street spending was "acceptable but not exceptional" this festive period, according to the British Retail Consortium.

Head of media and campaigns Richard Dodd said poor accessibility on high streets, a lack of parking and weak consumer demand were to blame rather than an increase in online shopping.

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods from Mexico in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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Christmas Day Online Sales Surge Predicted

Bargain season begins in force today as online retailers slash prices ahead of an expected onslaught of consumers hitting the high street for the traditional Boxing Day sales.

Amazon's UK website said it had seen sales on Christmas Day increase by 263% over the last five years.

It expects this to be its busiest Christmas Day to date, partly due to the growth in home broadband and the popularity of tablets and smartphones.

The retailer is launching its Boxing Day deals a day early, which include clearance offers and "lightning deals" for a limited time and quantity of stock.

Shopping frenzies are moving from the high street to the internet

Trends seen on past Christmas Days on Amazon include an 11am rush for last minute gift cards, the spending of gift cards at midday and sofa surfing at 8.15pm.

Amazon's vice president of EU retail, Xavier Garambois, said: "The digital revolution has certainly played a part in this growth and Christmas Day is our biggest day of the year for MP3 and Kindle Book downloads, as many people are buying content from new devices that they have just received.

"It's not just digital items though, we are seeing purchases of everything from baby products to women's clothing rapidly growing on Christmas Day. Many customers are shopping on Christmas Day in a way that has previously only been seen in the retail industry on Boxing Day."

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn in the Boxing Day sales.

Furniture Village said visits to its website on Christmas Day last year peaked at 25,000 at 4pm, with that figure increasing to 50,000 on Boxing Day, suggesting that the majority of customers researched products online before buying from high street stores.

Chris Webster, a spokesman for technology analysts Capgemini, said: "Online tills will be ringing all the way from Christmas Eve to Boxing Day, including a massive £300m spent on Christmas morning itself.

"Christmas Day will see a surge in online sales as new tablets and smartphones are put through their paces and vouchers are cashed in for virtual goods such as movies and music.

"This year we're as likely to be downloading Queen's Greatest Hits as watching the Queen's speech."

Meanwhile, high-street spending was "acceptable but not exceptional" this festive period, according to the British Retail Consortium.

Head of media and campaigns Richard Dodd said poor accessibility on high streets, a lack of parking and weak consumer demand were to blame rather than an increase in online shopping.

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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Shoppers Queue For Start Of Christmas Rush

By Tadhg Enright, Business Correspondent

Shoppers queued outside stores and car parks were full to capacity at malls across the country on the last full shopping day before Christmas eve.

Today is forecast to be the busiest day of the year in shopping malls and on the high street with customers spending an estimated £2.6m a minute.

The British Retail Consortium expects between £4bn and £5bn to be spent throughout this weekend.

At the Westfield Derby shopping centre, Richard Thornton, marketing and communications manager, said: "It is extremely busy, much busier than it usually is for this time on a weekend and the car parks were extremely busy when I was coming in this morning.

"We're open from 9am until 7pm, and we had about 50 people queuing outside the Pandora jewellery store before it opened this morning."

Peter Beagley, general manager at Glasgow's Braehead shopping centre, said shoppers were queuing outside stores before they opened at 9am.

He said: "By 10am our car parks were full and we had staff on duty directing cars to spaces when they became available."

A spokesman at Sheffield's Meadowhall shopping centre predicted that 120,000 to 130,000 shoppers will pass through the doors today.

"Meadowhall, as expected, is busy," a spokesman said. "It's not mayhem but it is very busy."

Sales at Brent Cross Shopping Centre could be the busiest yet

Tom Nathan, Brent Cross shopping centre manager, said the next four days were likely to be "enormous for us in terms of sales".

He said that gloves and scarves were flying off the shelves. Headphones which double as earmuffs were selling at the rate of one pair every seven minutes.

But the Local Government Association said confidence on the high street remained low.

Its annual Christmas survey found that 84% of town centre managers said confidence among shoppers had either not improved or worsened compared with this time last year.

It also suggested that the particularly cold and wet start to the winter could also be taking its toll on the number of shoppers visiting town centres.

Normally the busiest day of the year is December 23 - the last day before Christmas Eve - but this year that falls on a Sunday when trading hours for bigger shops are restricted by law to just six hours.

Big name retailers including John Lewis, Morrisons and Marks & Spencer failed in a bid to convince the Government to relax the restrictions on Sunday trading tomorrow.

M&S has responded by opening more than 100 of its stores at 12.01am on Christmas Eve morning to help shoppers get their Christmas essentials in time.

An M&S spokesman said: "We know that the days leading up to Christmas are some of the most hectic for our customers.

"Due to Sunday trading rules, we can only open for six hours on one of the busiest days of the year.

"We hope that these early bird hours on Monday will ease the pressure and give busy shoppers a bit more time to pick up Christmas food orders or last minute presents."

Waitrose, part of John Lewis, will also extend Christmas Eve trading hours in two thirds of its supermarkets by opening an hour earlier at 7am and closing an hour later at 6pm.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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Banks Face Break-Up Over Risky Trading

By Poppy Trowbridge, Business and Economics Correspondent

UK banks face break-up if they fail to follow new rules protecting high street operations from riskier trading.

The Parliamentary Commission on Banking Standards today published a report assessing Government-backed legislation that will require lenders to protect customers' banking deposits from potential losses.

While the report suggests ring-fencing will help address the damage done to culture and standards in banking, it may not be enough to stop banks taking advantage of the rules.

Commission chairman Andrew Tyrie MP said: "The legislation needs to set out a reserve power for separation; the regulator needs to know he can use it."

"Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence."

MPs are looking at ways to exert pressure on lenders that fail to comply.

Shadow chancellor Ed Balls told Sky News: "I think people are really frustrated, families, businesses, that banking reform is taking so long.

"In the meantime, our economy has not been growing, small business lending is falling. We've got to get on with it and we've got to get it right.

"The commission says the proposals on the table so far from George Osbourne don't go far enough, they've been watered down, and they also are going to look at the wider issues of standards and culture in the way our banks operate."

Next year, the commission will take further evidence on whether full separation of proprietary trading operations at banks is necessary.

The Government launched an inquiry into banking standards in the wake of revelations that the London Interbank Offered Rate (Libor) had been manipulated by traders.

Barclays and Swiss bank UBS have been fined by authorities for manipulating Libor.

The rate is a reference point for vast ranges of financial contracts around the world worth around £184 trillion.

Mr Tyrie said: "The latest revelations of collusion, corruption and market-rigging beggar belief.

"It is the clearest illustration yet that a great deal more needs to be done to restore standards in banking."

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Women Drivers Face Insurance Premium Rise

By Darren McCaffrey, Sky Reporter

Women drivers could see insurance premiums increase by around 25% as new laws come into force that ban setting prices according to gender.

Researchers believe it could force nearly a quarter of women drivers to give up driving altogether.

The European Court of Justice ruling follows a 10-year legal battle against the proposals by insurers.

It is not confined to car insurance but also covers pensions and life insurance.

Car insurance premiums could increase for young female drivers by an average of around £300 a year.

Those aged between 31 and 35 are also likely to be hit with a rise of around 10%, or £53 a year, according to research from comparison website Confused.com.

Michael Ossei, personal finance expert at price comparison website uSwitch, told Sky News: "What we have found is young women between 18 to 25 years old will be heavily affected by the change.

"What that means from our research (is that) 24% will be taken off the road, not able to drive, while a further 11% say they will have to sell their cars."

Men reaching retirement could also be hard-hit with annuities possibly decreasing by up to 13% a year, while women may see their life insurance policies increase by 16%.

Currently, men usually get a higher pension income than women because, on average, they die younger.

The Government is strongly opposed to the change.

Transport Minister Stephen Hammond told Sky News it was unnecessary and that they were working to manage the impact.

"One of the reasons we are against it (is that) the basic principles of insurance previously has been insurance based on risked rather than just gender-based."

The court ruling is an attempt to end discrimination and to bring about equality between men and women - but it is a decision that will come at a price for many.

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Tax Row: McDonald's Calls For Review Of Law

The managing director of McDonald's in the UK has said Britain's corporation tax rules need to be addressed.

Speaking on Jeff Randall's Christmas Dinner, Jill McDonald warned that the continuing row over the amount of corporation tax companies pay could create a negative image of British business.

"Customers, consumers, want businesses to be doing the right thing," she said.

"I think it is politicians who are creating the laws who need to address and look at those."

She added: "I do think that it's in danger of spinning a little bit out of control because you don't want the conversation to be so negative about business …because, as we know, business is ultimately what's important to help Britain grow again."

McDonald's paid £42m in UK corporation tax last year

She made her comments after a number of companies – including Starbucks, Google and Amazon - were heavily criticised by politicians and campaigners over their tax affairs.

McDonald's, which employs over 90,000 people in the UK, paid £42m in UK corporation tax last year, which Ms McDonald defended as "fair".

"One man's efficient tax planning though is another's tax avoidance so the law does need to be looked at," she said.

"But in McDonald's for example we pay what we would consider to be our fair share of corporation tax."

Paul Walsh, the chief executive of Diageo which has Guinness, Smirnoff and Johnnie Walker among its brands, told Jeff Randall that tax is a complex issue for a global company.

Only 7% of Diageo's total sales were in the UK last year but the company - which is the world's biggest spirits company - paid more than a billion pounds in UK corporation tax.

"I think we run the risk of getting into the debate of 'If you pay tax, everything's fine'," he said.

"What about the company that's investing billions and will get appropriate tax losses and capital allowances?

"They're creating a lot of jobs so be very careful that we don't suddenly get so simplified in our approach that it conspires against what this nation is trying to do - create jobs. "

:: Jeff Randall's Christmas Dinner is broadcast tonight at 7pm on Sky News, and is repeated over the festive period. It is also available on Sky On Demand and the Sky News for iPad App.

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Energy Bill Breakdown Demanded By MPs

Energy firms should be forced to inform every customer what proportion of their bills will contribute to the supplier's profits, MPs are demanding.

The cross-party Energy and Climate Change Committee called for householders to be given a breakdown of their gas and electricity bills.

Their proposal would see annual statements provided by energy companies, featuring details of their operating costs, wholesale prices and profits.

It would also show firms' contributions to environmental levies, the costs of smart meters and investments.

Members of the committee say the shake-up would ensure customers are better informed and help improve competition in the widely-criticised energy market.

Conservative MP and committee chairman Tim Yeo said recent reports of wholesale price-fixing had reinforced the need for greater transparency.

"Trust in energy companies is at rock bottom and consumers don't have the right information to hand to make informed choices about where they get their energy," he said.

"Most consumers simply don't know how to interpret their energy bills and this puts them off attempting to switch suppliers.

"The Government should be doing all it can to increase competition in the energy market and must make it easier for new entrants to join the market."

There are concerns that many energy customers are paying more than they need to because of the bewildering array of tariffs available.

The Government recently announced plans to simplify the options and force energy companies to give their customers the cheapest deal available to them.

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Nissan To Build Luxury Car Model At UK Plant

Car giant Nissan is to build a new luxury model in the UK, creating 1,000 jobs with a £250m investment.

The new global model will be manufactured at the Japanese firm's plant in Sunderland, which employs 6,000 workers.

The car, built under Nissan's Infinity premium brand, is set to be produced from 2015.

It will be developed with help from Nissan's design centre in London and technical centre in Cranfield and then exported around the world, the firm said.

Around 280 of the new jobs will be in Sunderland, with the rest in other sites across the country.

Because of capacity limitations at Sunderland, securing the new Infiniti will mean that a C-segment hatchback previously announced for the plant in April will be manufactured elsewhere, said the company.

The North East plant will build more than half a million cars this year, the first UK manufacturer to achieve this milestone.

The new model will be made at the Nissan factory in Sunderland

Colin Dodge, Nissan's executive vice-president and chief performance officer, said: "This milestone, our first premium product to be manufactured at Sunderland, reconfirms our commitment to UK manufacturing and the ongoing success of the plant which is moving up the value chain.

"Just as important, the new Infiniti, which will be exported around the world, is being developed with help from our London design centre and our European Technical Centre."

Business Secretary Vince Cable, who will attend a ceremony in Sunderland to mark the announcement, said: "Sunderland will be the only place in the world to make this new premium compact car.

"Nissan in the UK goes from strength to strength. Not only will the new car be made here and exported all over the world, the UK has already contributed to its design and development.

"Today's news is a strong endorsement of the quality of Britain's car industry which is creating jobs, taking on apprentices and contributing to building a stronger economy.

"The auto sector is living up to being one of the great success stories of our industrial strategy and a testimony to government and private sector working together in close partnership."

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Investigation Launched Into Comet Collapse

The Department for Business, Innovation and Skills has launched an investigation into the purchase and administration of troubled electrical chain Comet.

The Insolvency Service has been tasked with scrutinising the process following a number of complaints from MPs.

The business was bought for £2 by Hailey Acquisitions, an investment vehicle put together by Henry Jackson of OpCapita, in November 2011.

They were given a £50m dowry from previous owner Kesa Electricals, now known as Darty, to run the retailer, which collapsed just a year later.

Seven weeks after they were appointed administrators, Deloitte failed to find a buyer for the 235-store chain, and closed its remaining 49 outlets.

The collapse of the company, which was founded in Hull in 1933 and employed around 6,895 people, is one of the biggest high street failures since the demise of Woolworths in 2008.

Deloitte said on Monday that it remained in talks with a small number of parties over the sale of internet operations and the brand.

But the firm also confirmed the taxpayer will have to pick up a £49.4m bill for unpaid redundancy and tax payments.

Comet launched a sale following its collapse at the beginning of November

With insufficient funds raised from the winding down of the chain, the Government's Redundancy Payments Service will be required to meet the £23.2m of outstanding redundancy and accrued holiday pay and pay in lieu of notice.

The scale of the problems at Comet was also highlighted in the report, with the chain racking up losses of £95m in the year to April after also seeing revenues slump by £200m compared to a year earlier.

This was followed by a further £31m loss in the subsequent five months as credit insurers lost confidence and withdrew support for the business.

Hailey Acquisitions is expected to get payments of just under £50m as a secured creditor - a shortfall of £95m on the amount owed.

But it has been reported that unsecured creditors, including HM Revenue and Customs which is owed £26.2m, will receive nothing.

Comet was hit by weak high street trading conditions, competition from online rivals and being unable to secure the trade credit insurance needed to safeguard suppliers.

In particular, it was knocked by the lack of first-time home buyers who were key customers for Comet.

Holders of £4.7m of unclaimed Comet gift cards and vouchers are also on the list of unsecured creditors.

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Ministry Of Defence Confirms Airwaves Sell-Off

The Ministry of Defence (MoD) has confirmed plans to sell part of its radio spectrum currently reserved for military purposes.

The sale of the airwaves - used to support superfast 4G mobile broadband - will be the first of its kind by a Government department.

It could bring in around £1bn for the Treasury, The Financial Times reported, although the MoD would not comment on the amount for commercial reasons.

The spectrum up for sale will be below 15 gigahertz - a valuable part of the radio spectrum because of its wide range of applications including radio, television, and data.

Around half of these airwaves are currently controlled by the Government, with the MoD holding around three quarters of this for defence purposes.

Mobile network operators are likely to bid for the spectrum, which will give them the opportunity to launch fourth-generation mobile services.

The announcement follows the Autumn Statement in which George Osborne said he planned to raise a total of £3.5bn from auctioning off other 4G spectrum.

But the Chancellor's decision to add the anticipated income to the nation's accounts was criticised for helping him avoid a rise in UK national debt.

The Minister for Defence Equipment, Support and Technology, Philip Dunne, said he welcomed the move to free-up the "much-needed" spectrum.

"We hope that the sale will help drive the roll-out of new generation networks and universal access to broadband, both of which are vital to the UK's prosperity," he added.

The auction is expected to be completed by the summer of 2014, after the Government's planned sale of other spectrum at the beginning of next year.

Last month, the telecoms regulator Ofcom set a reserve price of £1.3bn for the January sale, although the final figure could be much higher.

In 2000, the auction of 3G brought in more than £22bn for the Treasury, when the reserve price was £500m.

The then Chancellor Gordon Brown also used the proceeds to pay down national debt.

To date, EE, which owns Orange and T-Mobile, is the only mobile network to launch 4G products in the UK.

Its network, which offers speeds up to five times faster than 3G, is now available in London, Bristol, Birmingham, Cardiff, Leeds, Sheffield, Edinburgh, Glasgow, Liverpool, Southampton and Manchester.

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HMRC Missed Calls Cost Taxpayer £136m A Year

Delays in answering phonecalls to HM Revenue and Customs hotlines cost the taxpayer £136m in the last year.

According to the National Audit Office (NAO) report, delays cost customers £33m in call charges while they waited for HMRC to answer the phone and the estimated value of customer time while they waited was £103m.

The NAO said 20 million calls to HMRC hotlines - many of which are 0845 numbers - were not picked up at all last year.

People who did get through were also waiting longer to speak to an adviser - an average of 282 seconds compared to 107 seconds in 2009/10.

In the first quarter of this year, some 6.5 million people were left holding on for longer than 10 minutes.

"Depending on the tariff they pay their phone company, customers are charged once their call is connected even if they are held in a queue," the report said.

"We estimate that if HMRC improved performance to answer 90% of calls and reduced waiting times, it could save customers around £52m a year.

"HMRC currently plans to spend £34m to achieve this level of performance."

The NAO found that there had been some progress since thousands more staff were drafted in, with the 74% pick-up rate significantly higher than the 48% recorded in 2010/11.

However, the report warned that the figures probably underestimated the issue, as calls are counted as answered even if they do not reach an adviser.

Public Accounts Committee chairman Margaret Hodge said: "When people have no choice but to contact the Revenue to discuss their tax affairs, I find it totally unacceptable that HMRC uses costly 0845 numbers and charges people for the privilege of waiting for the department to pick up."

TaxPayers' Alliance chief executive Matthew Sinclair said: "This report exposes a shameful level of service at HMRC.

"Taxpayers will be outraged that HMRC could let 20 million phone calls go unanswered and yet still claim that it is outperforming some arbitrary target."

An HMRC spokesman said: "In 2010/11 we answered 48% of all call attempts, rising to 74% in 2011/12.

"By late 2012 we were answering over 90% of calls to our contact centres. We are well aware that in the past we have not delivered the standard of service to which we are committed.

"We are determined to build on this progress and we have invested £34m so we can deliver on our improvement targets earlier than planned."

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EU Summit: Cameron 'Committed To Saving Euro'

The Prime Minister has made it clear he wants favours in return for signing a deal aimed at increasing economic and monetary union in the European Union.

At the seventh and final EU summit of the year, David Cameron insisted the UK was not in an uncomfortable position, despite refusing to have its banks monitored by a centralised supervisor.

"We did not stand in the way of the eurozone having a banking union ...now there are opportunities for us to seek changes in our (EU) relationship, changes that the British people will be more comfortable with," he said.

"They (the eurozone countries) want to make changes, and we can ask for changes too."

His comments come a day after European finance ministers took a major step towards full banking union by agreeing to create a single supervisor for eurozone banks.

But although the UK will not be subject to the scrutiny - continuing to monitor its own institutions - Mr Cameron insisted that Britain "remains at the heart" of decision making in Europe.

The ECB will oversee all banks in the 17 EU countries that use the euro

"I don't think Britain is in an uncomfortable position at all," he said.

"I think we are in a position where we have opportunities to maximise what we want from our relationship with the European Union.

"The fact is we have a multi-faceted Europe, we have a Europe where countries like Britain are absolutely at the heart of decision making."

Earlier this year, Mr Cameron called for a "new settlement" between the UK and Brussels and on Thursday said his focus was now on getting a "better deal" for Britain.

The banking deal gives the European Central Bank (ECB) oversight for lenders in the 17 EU countries that use the euro - and any other country that wants to opt in.

It also paves the way for Europe's bailout fund to give direct aid to ailing banks - a measure seen as vital to helping the eurozone break free of its debt crisis.

The agreement, which follows months of negotiations, was described by the president of the European Commission, Jose Manuel Barroso, as a "deep and genuine economic and monetary union", which requires "steps towards political union".

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Fuel Poverty Warning For 300,000 More Homes

A further 300,000 people will be pushed into fuel poverty by Christmas because of the latest round of energy price hikes, an advisory body has warned.

The Fuel Poverty Advisory Group (FPAG) said the latest round of energy price rises has increased the average annual energy bill by 7%, taking it to £1,247 for direct debit customers and £1,336 for cash and cheque customers.

These increases are likely to have pushed a further 300,000 households into fuel poverty and estimates have already shown that over nine million households could be living in fuel poverty by 2016.

The lobby group urged David Cameron to take stronger action to ensure there is a more widespread and ambitious effort to tackle "spiralling" fuel poverty levels.

It said the Government should create a cross-departmental group on fuel poverty to ensure a joined-up approach as well as creating a new duty for local authorities to meet fuel poverty targets.

It also advised the Government to carry out an urgent impact assessment of welfare reforms on fuel poverty.

Derek Lickorish, chairman of the FPAG, said: "With a cold winter, welfare reforms cutting incomes, and all at a time of austerity measures and other rising household costs, the plight of the fuel poor has never been more serious.

"Millions are living in misery due to high energy bills. Yet time is running out for the Government to fuel poverty-proof the homes of those on the lowest incomes.

"A toxic cocktail of rising wholesale prices, the high cost of energy reforms and cuts in incomes for many households means fuel poverty levels are set to sky rocket without radical action."

Families are considered to be in fuel poverty when they have to spend more than 10% of their incomes on keeping their homes warm.

The FPAG said that nearly half of the UK's fuel poor households are pensioners, a third contain people with some sort of disability or illness, a fifth contain a child aged five or under and one in 10 house someone aged 75 or over.

The Government recently announced proposals to require energy firms to provide just four tariffs for each fuel and to place all customers on the cheapest price available for their chosen tariff.

But critics have warned that the plans could see an end to cheap deals, stop consumers switching suppliers, reduce competition and push up bills in the long run.

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Open University To Go Global With Online Courses

The Open University (OU) has launched a campaign to take distance learning global - as it attempts to catch up with online course offered by US colleges.

The OU has teamed up with 10 British universities in a venture called FutureLearn.

The plan is to give free virtual lectures that are supplemented by digital learning tools to help promote UK institutions.

OU vice-chancellor Martin Bean told Sky News: "You won't be able to get a degree through FutureLearn but you will be able to get free access to some of the best higher education content on the planet.

"In a world of higher fees where people are taking on more of that responsibility for themselves I think they're going to demand better teaching ... and I'm sure it will help these universities really develop new, innovative and experimental teaching practices."

The decision to go global comes after leading US colleges, including Harvard, MIT, Texas and Georgetown, launched various learning partnerships.

One partnership involving Stanford already has two million users around the world.

Professor Bean admitted: "There's no doubt the Americans have got a little out in front of us on this one."

But he insisted the move would benefit Britain's universities.  

"It strengthens brand and competitiveness, it allows them to experiment and develop new teaching strategies for their students on campus and online," he said.

"And it also creates some revenue opportunities in being able to compete for all of those transnational students that are often in developing parts of the world."

The OU has been running courses since 1971, initially using late night television programmes to supplement course notes.

Supporters see FutureLearn as an important way to put students on a path that may lead to traditional tertiary education - a lucrative sector for colleges.

But there are doubts whether any money can be made from massive open online courses (Moocs), even though one in the US has 160,000 users.

Moocs do not carry degree credits and concerns have been raised about plagiarism and the manpower needed to check the work of tens of thousands of students that may be on a single course.

Money-making concepts have included offering free courses but charging for exams, certificates and tutoring.

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EU Summit: Cameron 'Committed To Saving Euro'

The Prime Minister has made it clear he wants favours in return for signing a deal aimed at increasing economic and monetary union in the European Union.

At the seventh and final EU summit of the year, David Cameron insisted the UK was not in an uncomfortable position, despite refusing to have its banks monitored by a centralised supervisor.

"We did not stand in the way of the eurozone having a banking union ...now there are opportunities for us to seek changes in our (EU) relationship, changes that the British people will be more comfortable with," he said.

"They (the eurozone countries) want to make changes, and we can ask for changes too."

His comments come a day after European finance ministers took a major step towards full banking union by agreeing to create a single supervisor for eurozone banks.

But although the UK will not be subject to the scrutiny - continuing to monitor its own institutions - Mr Cameron insisted that Britain "remains at the heart" of decision making in Europe.

The ECB will oversee all banks in the 17 EU countries that use the euro

"I don't think Britain is in an uncomfortable position at all," he said.

"I think we are in a position where we have opportunities to maximise what we want from our relationship with the European Union.

"The fact is we have a multi-faceted Europe, we have a Europe where countries like Britain are absolutely at the heart of decision making."

Earlier this year, Mr Cameron called for a "new settlement" between the UK and Brussels and on Thursday said his focus was now on getting a "better deal" for Britain.

The banking deal gives the European Central Bank (ECB) oversight for lenders in the 17 EU countries that use the euro - and any other country that wants to opt in.

It also paves the way for Europe's bailout fund to give direct aid to ailing banks - a measure seen as vital to helping the eurozone break free of its debt crisis.

The agreement, which follows months of negotiations, was described by the president of the European Commission, Jose Manuel Barroso, as a "deep and genuine economic and monetary union", which requires "steps towards political union".

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Open University To Go Global With Online Courses

The Open University (OU) has launched a campaign to take distance learning global - as it attempts to catch up with online course offered by US colleges.

The OU has teamed up with 10 British universities in a venture called FutureLearn.

The plan is to give free virtual lectures that are supplemented by digital learning tools to help promote UK institutions.

OU vice-chancellor Martin Bean told Sky News: "You won't be able to get a degree through FutureLearn but you will be able to get free access to some of the best higher education content on the planet.

"In a world of higher fees where people are taking on more of that responsibility for themselves I think they're going to demand better teaching ... and I'm sure it will help these universities really develop new, innovative and experimental teaching practices."

The decision to go global comes after leading US colleges, including Harvard, MIT, Texas and Georgetown, launched various learning partnerships.

One partnership involving Stanford already has two million users around the world.

Professor Bean admitted: "There's no doubt the Americans have got a little out in front of us on this one."

But he insisted the move would benefit Britain's universities.  

"It strengthens brand and competitiveness, it allows them to experiment and develop new teaching strategies for their students on campus and online," he said.

"And it also creates some revenue opportunities in being able to compete for all of those transnational students that are often in developing parts of the world."

The OU has been running courses since 1971, initially using late night television programmes to supplement course notes.

Supporters see FutureLearn as an important way to put students on a path that may lead to traditional tertiary education - a lucrative sector for colleges.

But there are doubts whether any money can be made from massive open online courses (Moocs), even though one in the US has 160,000 users.

Moocs do not carry degree credits and concerns have been raised about plagiarism and the manpower needed to check the work of tens of thousands of students that may be on a single course.

Money-making concepts have included offering free courses but charging for exams, certificates and tutoring.

11.46 | 0 komentar | Read More

EU Summit: Cameron 'Committed To Saving Euro'

The Prime Minister has made it clear he wants favours in return for signing a deal aimed at increasing economic and monetary union in the European Union.

At the seventh and final EU summit of the year, David Cameron insisted the UK was not in an uncomfortable position, despite refusing to have its banks monitored by a centralised supervisor.

"We did not stand in the way of the eurozone having a banking union ...now there are opportunities for us to seek changes in our (EU) relationship, changes that the British people will be more comfortable with," he said.

"They (the eurozone countries) want to make changes, and we can ask for changes too."

His comments come a day after European finance ministers took a major step towards full banking union by agreeing to create a single supervisor for eurozone banks.

But although the UK will not be subject to the scrutiny - continuing to monitor its own institutions - Mr Cameron insisted that Britain "remains at the heart" of decision making in Europe.

The ECB will oversee all banks in the 17 EU countries that use the euro

"I don't think Britain is in an uncomfortable position at all," he said.

"I think we are in a position where we have opportunities to maximise what we want from our relationship with the European Union.

"The fact is we have a multi-faceted Europe, we have a Europe where countries like Britain are absolutely at the heart of decision making."

Earlier this year, Mr Cameron called for a "new settlement" between the UK and Brussels and on Thursday said his focus was now on getting a "better deal" for Britain.

The banking deal gives the European Central Bank (ECB) oversight for lenders in the 17 EU countries that use the euro - and any other country that wants to opt in.

It also paves the way for Europe's bailout fund to give direct aid to ailing banks - a measure seen as vital to helping the eurozone break free of its debt crisis.

The agreement, which follows months of negotiations, was described by the president of the European Commission, Jose Manuel Barroso, as a "deep and genuine economic and monetary union", which requires "steps towards political union".

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