City Figures To Back New Tamara Mellon Brand

By Mark Kleinman, City Editor

Tamara Mellon, the businesswoman who built Jimmy Choo into a globally-prominent fashion brand, is plotting a $25m comeback that will see her name adorning stores in leading cities around the world.

Sky News can exclusively reveal that Ms Mellon has lined up figures including Michael Spencer, the boss of broking firm Icap and former Conservative Party treasurer, and Tommy Hilfiger, the tycoon behind the eponymous fashion business, as investors in her new business.

Expected to be called Tamara Mellon, her lifestyle business will mark an ambitious return to the business world 15 months after she left Jimmy Choo. A non-compete agreement signed when she departed expires this month.

Ms Mellon has set her sights on securing the funds in the hope of replicating her success at the maker of upmarket women's footwear.

Her other backers will include David Ross, co-founder of The Carphone Warehouse, Lord Marland, who recently stepped down as a trade minister in the Coalition government, and Tory Burch, the fashion entrepreneur who is a close friend of Ms Mellon's.

People close to the fundraising said that Ms Mellon was keen to secure a significant amount of British investment for her new venture.

Although she now lives in the US, Ms Mellon is a British citizen and remains a Business Ambassador for the Government, which involved promoting British trade on overseas visits. She also sits on the board of Revlon, the global cosmetics group.

WH Ireland, the City broking firm, is believed to have been assembling the fundraising for Ms Mellon, which is at an advanced stage.

The new venture is understood to include plans for flagship stores selling a wide range of upmarket fashion and other products in London, Los Angeles and New York, with further openings likely as the business expands.

City sources said the fundraising deal could be announced within the next few weeks.

Ms Mellon's track record is impressive, having walked away from Jimmy Choo with an £85m fortune following its sale to Labelux, the Swiss-based fashion label collection, in 2011.

In an interview with The Sunday Times last year, Ms Mellon was candid about leaving the company she had founded and worked for since 1996.

"I didn't like the equity plan that had been put in place. The management team were asked to invest their own money in the business and hold their shares for seven years, which would then be subject to income tax and not come under capital gains. I felt it was unfair," she told the newspaper.

Ms Mellon began her fashion career from the modest foundation of a stall on Portobello Road in London, where she sold T-shirts. She later worked at the UK edition of Vogue magazine, where she met Jimmy Choo, a Malaysian-born Hackney cobbler. She went into business with him, launching a store in Knightsbridge.

The company was a huge success, making big returns for a succession of private equity-owners, although Ms Mellon has since been critical of the buyout industry, telling another newspaper last year:

"What happens in private equity is they come in and they say we're going to be a great partner. We want to hold this long term and we're going to help you nurture and build this brand, [but] the day after signing, they talked about selling the business."

A spokesman for Ms Mellon declined to comment.

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Red Tape 'Strangling Youth Jobs Drive'

Attempts to get more than a million young people into work are being hampered by excessive bureaucracy and central government control, council leaders have claimed.

The Local Government Association (LGA) says a new, more local approach to tackling youth unemployment could reduce the number of young jobless people by a fifth.

In a report it complains of an "overly complicated" system of tackling youth unemployment, with 33 different national schemes covering 13 different age boundaries and costing £15bn a year.

The report says more than 94,000 people completed hair and beauty courses last year, even though there were only 18,000 new jobs in the sector.

By contrast, just 123,000 people were trained for around 275,000 advertised jobs in construction - more than two vacancies for every qualified person, said the LGA.

Young people at a jobs fair

David Simmonds of the LGA, said: "Youth unemployment is a worrying trend for us all, particularly long-term youth unemployment which has doubled since 2008 and continues to grow.

"All the evidence in this report points to the success that local organisations, such as councils, businesses and education providers, can achieve when working together... but this is being hampered by successive centrally-driven government approaches."

He added: "Councils are in a unique position and can play a pivotal role in identifying young people that are likely to slip into periods of long-term unemployment.

"But we need to be given the powers to prevent this happening and help equip future jobseekers with the skills, confidence and real-life experience they need to find work in their area."

The LGA said councils should be the main commissioners of employment programmes aimed at young people, not central government.

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HMV Staff Use Twitter To Reveal Redundancies

HMV staff have used the company's Twitter account to reveal workers at the head office and other non-shop employees are being fired.

The staff used the social media service to inform followers that 190 people were being made redundant.

One staff member tweeted: "We're tweeting live from HR where we're all being fired! Exciting!"

The worker, who was apparently using an iPhone, added: "There are over 60 of us being fired at once! Mass execution, of loyal employees who love the brand.

"Sorry we've been quiet for so long. Under contract, we've been unable to say a word, or - more importantly - tell the truth."

The joint administrators from Deloitte later confirmed the 190 redundancies, most at HMV's office in Eastcastle Street, London, with others in its Marlow head office, a site in Solihull and distribution centres in Canning Town, London, and Birmingham.

Administrator Nick Edwards said: "Since our appointment as administrators over two weeks ago, we have been assessing the financial position of HMV.

"Following this review, a number of redundancies at the head office and distribution centres have been made.

"Although such decisions are always difficult, it is a necessary step in restructuring the business to enhance the prospects of securing its future as a going concern."

HMV called in administrators in early January after suffering dismal Christmas sales, which put more than 4,000 jobs at risk at its 223 stores.

Around 4,000 people work at HMV

It was one of three well-known high street firms that called in administrators in the New Year as Britain's high streets struggled against online sales.

Shortly after taking charge the administrators said the chain would no longer honour gift vouchers and cards, but after a storm of protest from consumers, they said gift cards and vouchers could be redeemed in stores from Tuesday.

Retail restructuring group Hilco UK has acquired HMV's debt, effectively giving it control of the administrator-managed entertainment chain.

The debt purchase has been taken from the books of the struggling retail chain's lenders, Royal Bank of Scotland and Lloyds.

HMV's net debt last October stood at £176m but it struggled to find a niche that would give it an advantage over online retail alternatives.

Administrator Mr Edwards added: "We have been very pleased with the level of interest in the business as a going concern, whilst the response from customers has demonstrated the demand to see HMV remain on the high street.

"Equally, the support received from suppliers has been very positive and has enabled us to continue trading during the administration.

"As a result of all of these factors, I remain hopeful we will be able to secure a future for a restructured business."

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Dragons' Den Star Peter Jones Buys Jessops

Dragons' Den star Peter Jones has bought the brand of collapsed camera retailer Jessops to run it as an online company.

Rob Hunt, joint administrator and partner at PwC, said: "We can confirm that we have sold the brand and certain other assets to a number of buyers including entrepreneur Peter Jones CBE."

Jessops closed all 187 of its stores in earlier this month, but the deal is not thought to include any of them.

The camera retailer was forced to call in the administrators after talks with its lender and suppliers broke down following a poor Christmas.

It had struggled since 2007 after suffering from online competition and a boom in camera phones hitting demand for digital cameras.

Mr Jones, 46, was awarded his CBE in 2009.

He made his fortune after setting up the Phones International Group, which he sold a part of in 2011.

He has appeared on the BBC show Dragons' Den since it started in 2005.

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EU Referendum Debate 'Damaging Economic Growth'

By Ursula Errington, Business Correspondent

An influential group of economists has said the government debate over having an "in or out" referendum over Europe is damaging economic growth.

The London School of Economics Growth Commission also branded Government investment in a long-term growth strategy as "inadequate", "unstable" and "failing".

The commission's 35-page report says the debate over whether to hold a referendum "is analgous to the needless self-inflicted wounds that the US is causing in its debates over the debt ceiling and fiscal cliff".

The co-chair of the panel, Professor John Van Reenen, went further saying: "The idea of leaving the EU would be very, very damaging for the UK, so I personally think the uncertainty around having the referendum is actually going to retard growth and retard investment, so I don't think there is a strong case for having that referendum."

Talks of an "in out" referendum on Europe are damaging to the economy

The report examined the key factors in fostering growth, years and even decades in the future.

The findings of the nine economists are grim. They conclude that years of under-investment in education, infrastructure and innovation has left the UK economy structurally weak, with UK institutions less able to compete globally.

They accuse politicians of "short-termism" when, in their view, investment in promoting long-term growth would reap dividends now by establishing certainty in policy direction in areas such as transport and energy.

The panel identified that the singular greatest influence on economic growth was education, holding up Germany and Finland as exemplary models.

Greater autonomy for schools, longer probation periods and a shift to more "on-the-job" assessment for teachers would help redress systemic imbalances against disadvantaged youngsters.

It concedes radical change to the way teachers are hired, monitored and fired could take 30 to 40 years to achieve.

Apprenticeships were singled out for comment with the report concluding: "Apprenticeships need to be longer, they should pay a training wage (English apprenticeships are relatively highly paid by international standards) and their administration must be radically simplified."

Arguments over Heathrow should be based on economic merits

However, the panel stopped short of advocating a cut in apprentice wages to encourage employers to join the scheme.

It also suggests Maths and English should be a compulsory element of apprenticeships.

To boost action and investment on infrastructure, the panel is recommending a radical re-structure of the current system. It suggests an infrastructure strategy board should be created to take a long-term view impervious to changes in government and ministers. An Independent Planning Commission would have to deliver on that strategy, funded by a specialist "Infrastructrue Bank."

By de-politicising issues such as an extra runway at Heathrow and basing arguments purely on their economic merits, the Growth Commission believes genuine progress would be swift.

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Banks Face Up To Hefty New Mis-Selling Bill

By Mark Kleinman, City Editor

The City regulator will pave the way for Britain's big banks to pay out billions of pounds in compensation over the industry's latest mis-selling scandal.

I have learnt that the Financial Services Authority (FSA) is to set out a revised framework for small business customers (SMEs) to pursue redress for the mis-selling of interest rate hedging products, which were designed to provide insurance against steep rate rises.

Sources said that a crucial element of the FSA announcement would relate to a change in the definition of "sophisticated" customers, or those who would not be eligible to pursue compensation.

The new regime to be outlined by the FSA will alter the bracket of SMEs which will be eligible for compensation by increasing a £6.5m turnover threshold, according to people briefed on the details.

The changes will be an admission that the criteria used during a pilot scheme that ended recently failed to meet the needs of businesses which required the regulator's help.

The methodology was being thrashed out on Wednesday during talks between the FSA and Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, which between them accounted for the overwhelming majority of interest rate hedging product sales.

However, people close to the situation said a deal would be announced at 7am. A number of other banks which participated in the pilot programme are also likely to sign up to the new terms in the near future.

The new framework follows a seven-month pilot scheme involving a small sample of SMEs whose cases had been scrutinised by the banks with the oversight of an independent reviewer. Those reviewers will continue in their roles, potentially racking up huge fees for a small number of accounting and law firms.

Last June, the FSA announced that it had found widespread evidence of mis-selling of products such as swaps, which enabled customers to "fix" interest rates, and collars, which allowed them to limit interest rate fluctuations within a defined range.

"The greatest volumes were sold in the period 2005-2008, before the base rate fell sharply to its current, sustained, historic low," the FSA said in June.

Many SMEs have complained that they were left facing bills of tens or even hundreds of thousands of pounds because of these products.

The major banks have argued that while there were limited cases of mis-selling, most customers understood the risks inherent in hedging products and should not be compensated for costs triggered by the wider financial crisis' impact on interest rates rather than any venality on the part of lenders.

The four banks have now, though, agreed on a set of standards for reviewing thousands more swaps cases during a six-to-twelve month period.

Crucially, the wording of the FSA statement is expected to include a stipulation that the banks will be held liable for "consequential losses" incurred by customers who were mis-sold the hedging products.

While legally difficult to prove, it would mean that SMEs will have the opportunity to pursue significant damages from banks where they can establish that they lost out financially because their capital was wrongly deployed paying for the cost of the swaps.

Further details of the agreement will be announced in the FSA statement.

The FSA and the banks all declined to comment.

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New BlackBerry 10 Gives Hope To Ailing Firm

By Niall Paterson, Media and Techonology Correspondent

Having seen its market share drop by more than half in the last year alone, Canadian mobile handset manufacturer Research In Motion (RIM) is hoping that the launch of the BlackBerry 10 will reverse its fortunes.

Once its handsets prompted such devotion and adulation in its users that they christened it Crackberry.

But in an increasingly competitive marketplace RIM has found itself muscled out by Samsung and Apple, among others.

Its rugged build, keyboard and secure servers made it ideal for business use - and for a younger generation its BlackBerry Messenger Service remains a key way of keeping in touch.

But problems with handsets, coupled with a service outage in 2011 that saw many users locked out of their emails, tarnished the brand.

RIM sold less than 12 million handsets in the last quarter, compared with 47.8 million iPhones and 63 million Samsung devices.

Gareth Beavis, phones editor at TechRadar, believes the BlackBerry 10 can see RIM return as a major player, but argues the company took its eye off the ball.

"In the last seven years we've seen the smartphone rise up from something that people thought was just for businessmen to something that everybody owns," he said.

This phone is seen as RIM's last chance

"In that race people didn't really understand what was going to happen. As much as anything else, Nokia were in the same situation.

"RIM really wanted to believe that its keyboard and email combination was enough for a lot of users.

"It turns out that that can be ported into a touchscreen, into a larger device, it can add media and things that people wanted to do on the go in their pleasure time as much as in business.

"What RIM never really did was capture the person on the street who just wanted a smartphone to do everything.

"It captured the youth market, it got the business market, but eventually there were alternatives to that on Apple and from Samsung ... and it really kind of fell away."

Those who have seen the new BlackBerry are, however, singing its praises. Ramon Llamas, an analyst at IDC, said it was a "really positive step for the company".

He added: "It puts BlackBerry on the same level as Apple, Android and Windows Phone, and brings them into 2013 rather than being stuck back in 2010."

As much as anything, the BlackBerry 10 launch is about reputation management.

Carole Blake, a London-based literary agent, was once a BlackBerry devotee. But following the service outage in 2011, she decided to sever her relationship with her handset - by smashing it with a hammer.

She was at the Frankfurt Book Fair - the "lifeblood of (her) agency" when her BlackBerry stopped working.

"The outages went on for three days - sometimes it was live, sometimes it wasn't," she explained.

The new BlackBerry will be up against phones like the Samsung Galaxy S III

"Once you can't trust something - a person or an object, or particularly a piece of technology - then you don't know whether it's working or not. You don't know whether you've got up-to-date emails or not. It was so infuriating.

"And then of course (there were) all the problems with the handset. The battery would drain in a moment, even though it had been full two moments ago. It would freeze when you were in the middle of an email or a text or a phonecall.

"So it just became too unreliable for business."

Already much is known about the BlackBerry 10 OS.

The first handset is expected to be entirely touchscreen, rather than the more traditional keyboard and screen.

Its message hub, where users can access emails, SMS, Facebook messages and Twitter Direct Messages all in one place, rather than opening separate apps, will please the social media generation.

Security remains key, and the BlackBerry 10 will allow a personal and a work mode - where security settings can be completely customised by an employer, whilst allowing the user freedom to do what they want without any impact on confidential material stored on the work side.

However, smartphone users want plenty of apps for their device - and, for now at least, it will lag significantly behind its main competitors.

The market seems confident the BlackBerry 10 will have an impact, with the company's share price doubling since mid-September - halting a months-long decline.

But it hovers around the $17 (£11) mark, well below a June 2008 high where RIM traded above $140 (£89).

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OFT Fuel Price Probe Findings To Be Released

By Poppy Trowbridge, Business & Economics Correspondent

The Office of Fair Trading today releases its findings on the state of Britain's £32bn retail fuel market.

The regulator must assess whether serious competition concerns exist within the industry and make a call on whether to launch a full-blown investigation.

Brian Madderson, chairman of the Retail Motor Industry Federation's (RMI) petrol division, said: "It's not transparent at all.

"They must make a full-market study under the competition act so that we can see exactly how this market is working."

Motorists see prices at the pump rise rapidly when markets surge.

But there is concern that, when markets move lower, oil and gas companies are not passing on savings to retailers and motorists as quickly as they could.

This prompted the Government to call upon regulators late last year to take up the issue.

The last time the OFT conducted an enquiry into the UK retail fuel market was in 1998.

According to the RMI, the UK wholesale price of petrol has gone up by more than 7p per litre since Christmas.

Around 1.5p of that rise is because the pound has not performed well since. But the RMI says motorists have still been left to face an increase of 5.5p per litre in the space of a just a few weeks.

Asked whether fuel prices were fixed or fair, Malcolm Graham-Wood, oil analyst at VSA Capital Limited, said: "It's an efficient market working as it should do.

"What you are doing in the petrol price at the pump is seeing a reflection of what the oil price was a few months ago, in the last few months it hasn't changed very much."

Projecting how prices might perform in the year to come, he added: "I think the oil price will be relatively stable and I don't see the currency changing very much either. Accordingly, I would have thought the petrol price would be down, not up."

Any investigation that did result in changes to the current system will certainly have consequences for consumers.

But, with Britain's retail fuel market worth around £32bn, it would also have an impact on businesses and the economy as a whole.

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Sugary Drink Tax 'Could Pay For School Meals'

Sugary drinks should be taxed at up to 20p a litre, say health campaigners – with the proceeds helping to pay for free school meals.

Food and farming charity Sustain said the Government could raise £1bn a year from the duty, while also saving lives by cutting excessive consumption of unhealthy drinks.

The report has been backed by more than 60 organisations, including the Academy of Medical Royal Colleges, Friends of the Earth, the National Heart Forum and the Royal Society for Public Health.

Diet-related illness is now costing the NHS £6bn every year, said the report.

Sustain urged Chancellor George Osborne to introduce the duty in his March 20 Budget and to channel most of the cash raised into a Children's Future Fund for programmes to improve children's health.

Money could be spent on campaigns to encourage youngsters to eat more fruit and vegetables, the report said.

The group's campaigns manager, Charlie Powell, said: "Sugar-laden drinks are mini-health time bombs, contributing to dental diseases, obesity and a host of life-threatening illnesses which cost the NHS billions each year.

"We are delighted that so many organisations want to challenge the Government to show it has a public health backbone by including a sugary drinks duty in Budget 2013.

"It's a simple and easy-to-understand measure which will help save lives by reducing sugar in our diets and raising much-needed money to protect children's health."

Sustain chairman Mike Rayner, of Oxford University's Department of Public Health, added: "Just as we use fiscal measures to discourage drinking and smoking and help prevent people from dying early, there is now lots of evidence that the same approach would work for food.

"Our obesity epidemic causes debilitating illness, life-threatening diseases and misery for millions of people. It is high time Government did something effective about this problem."

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Report: Youth Joblessness Rises Fastest In UK

Youth unemployment has increased in the UK at a faster rate than any other country in the G8 since the start of the recession, a new report has said.

A study by the Work Foundation found that the UK now lags only behind Spain and Greece for youth joblessness in OECD countries.

The problem cannot be attributed just to the recession because other countries have fared better, the research group said.

The Government was urged to follow the lead of countries like Germany and Denmark by taking measures including more apprenticeships and increased training.

Lizzie Crowley, the report's author, said: "In many other developed nations, youth unemployment has remained low despite the global downturn.

"However, in the UK youth unemployment as a proportion of 15 to 24-year-olds has increased at a faster rate over the course of the recession than both the European and OECD averages.

"While the reasons for this are complex, it's clear that the UK can learn from the experiences of those countries that have fared much better in terms of youth unemployment.

"The Government should focus on those policies that have been shown to work, cherry-picking the best responses from other countries and adapting them to the needs of the UK labour market."

Unemployment for people aged 15 to 24 had increased in the UK by 35% to 916,000 between 2008 and 2011.

That compares to an average of 15% in the other G8 countries Canada, France, Germany, Italy, Japan, Russia and the United States.

Germany, Russia and Japan had seen a reduction in youth unemployment in the same period.

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Exclusive: Banks' Fury At Mis-Selling Probe

By Mark Kleinman, City Editor

The bosses of Britain's major banks have mounted a coruscating attack on their new regulator as they brace for the outcome of a new mis-selling probe that will result in another multi-billion pound compensation bill for the industry.

I have learned that the chief executives of some of the biggest high street lenders met for secret talks earlier this month, at which they shared profound concerns about the approach of Martin Wheatley, head of the new Financial Conduct Authority (FCA), to the mis-selling of interest rate-hedging products to small businesses.

The bank chiefs are understood to be concerned that Mr Wheatley will ignore recent victories for banks in mis-selling court cases and establish a compensation framework that could cost them as much as £10bn.

One bank executive said: "Repaying customers who have been mis-sold to is right and proper, but he [Mr Wheatley] seems to have an agenda to persecute the banks which goes way beyond that.

"It is getting to the point where investors will have to apply a 'Wheatley discount' to bank share prices."

The banking sector is braced for its latest bruising battle with Mr Wheatley to unfold this week when the Financial Services Authority (FSA) announces the results of a long-running pilot programme aimed at assessing the scale of redress owed to customers who were mis-sold interest rate swaps.

The FCA will be spun out of the FSA later this year.

I understand that Mr Wheatley has written in recent weeks to Royal Bank of Scotland (and possibly other major banks) to warn them that recent court victories will not determine the structure of the complaints resolution regime that will be outlined on Thursday.

In December, RBS won a case in the High Court, which dismissed a claim by a Lancashire hotelier and his business partner who had alleged that the bank had mis-sold them an interest rate swap in May 2005 as a form of insurance against their existing loan liabilities.

The attack by the bank chiefs on Mr Wheatley's handling of the swaps and other conduct-related issues was made during private talks, and is unlikely to be repeated in public.

At least one bank chief executive, however, plans to write to George Osborne, the Chancellor, to warn that the "over-zealous" FCA approach risks grave consequences for the wider economy by eating further into banks' capital reserves.

The interest rate swaps scandal comes in the wake of the payment protection insurance debacle, which has already cost the major banks well over £10bn, and with little prospect of an end to the rise in compensation costs.

Swaps are products which provide a form of insurance in the event that (in this case) there was a steep rise in interest rates during the period covered by the product.

After the banking crisis hit, deep cuts to interest rates left thousands of customers facing bills far larger than the interest they were having to pay.

The banking industry has argued robustly that the fact that some customers were left facing large bills provides in itself no evidence that the swap products were mis-sold.

To date, Barclays has set aside £450m for customer compensation, RBS £50m and HSBC a little over £130m.

Lloyds Banking Group has said the sums involved will be "not material" to it, but it could still involve a tab running to hundreds of millions of pounds.

The banks are not the only stakeholders concerned about the outcome of the swaps probe.

The Financial Times quoted Mike Cherry, national policy chairman of the Federation of Small Businesses, calling for the range of businesses eligible to apply for compensation to be expanded.

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Green Deal Energy Scheme Switched On

A flagship Government scheme aimed at making homes more energy efficient launches today amid claims that hundreds more households than thought have signed up for assessments.

Ministers said the Green Deal would bring about a revolution in energy efficiency - and provide a much needed boost to the economy.

And officials at the Department for Energy and Climate Change (DECC) said anecdotal information from suppliers suggested hundreds of household have been assessed for the Green Deal - but said precise numbers could not be revealed because they were being collated for official statistics.

Reports had earlier suggested just five assessments had been carried out ahead of today's launch, which will see Government-backed loans available for energy efficiency work made available for the first time.

Deputy Prime Minister Nick Clegg said: "The Green Deal will help thousands of homes stay warm for less. Those people will benefit from energy saving improvements - and their energy bills will fall.

"The UK green sector is a success story - it is the sixth largest in the world and has a crucial part to play in building a strong economy. The Green Deal will support thousands of jobs - not just over the next few years, but in the long-term."

The Green Deal involves having a home reviewed by an accredited assessor, who will look at what upgrades can be made and over what time period energy savings would cover the cost of the work.

Green Deal Providers then quote for the work and households can get multiple quotes for some or all of the work. If they proceed, a Green Deal Installer will carry out the work.

The cost is covered by a loan via the Green Deal Finance Company and repayments are added to the cost of the household electricity bill. The company has been created as a not-for-profit institution tasked with the costs of the loan as low as possible.

But Ed Matthews, head of fuel poverty campaign group Energy Bill Revolution, said the Government's plan did not go far enough.

"The Green Deal and Energy Company Obligation, will not stop fuel poverty rocketing in the face of high gas prices," he said.

"We call on the Prime Minister to use money from the Carbon Tax to super-insulate this country's homes. This will provide households with five times more subsidy to insulate their homes and not add a penny more to energy bills.

"It is enough to eliminate fuel poverty and in time cut bills for everyone. It is the just and fair solution."

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UK GDP Falls By 0.3% In Last Quarter

How GDP Is Compiled Really Matters

Updated: 10:21am UK, Tuesday 27 November 2012

By Ed Conway, Economics Editor

I've covered economics for a decade or so, but I confess that until very recently I didn't really know what GDP really is.

I mean, like most of you I knew it was the broadest and most widely-used measure of our economy's health - that it determines whether we're officially in recession or not (two or more quarters of shrinking GDP equals a recession).

I knew it was the sum of everything spent, earned or made in Britain.

What I didn't know was how it's actually put together.

I guess I vaguely assumed - and I don't think I'm entirely alone - that the Office for National Statistics had some kind of electronic hotline into British business, some privileged access to their numbers, which in turn became the Gross Domestic Product number.

Turns out I was monumentally wrong.

For it transpires that GDP - that big number we're all so focused on, the figure that tells us whether we're in a recession or booming, that can end a political career and swing an election - is actually a big, big survey.

I know this because earlier this month I spent some time in the ONS headquarters in Newport with the team who put together this most significant of all numbers.

For the first time, they allowed cameras into their offices to show how GDP really comes into being - and the genesis might well surprise you.

At this point it might be worth explaining why this matters so much: there is arguably no other number out there that can swing the financial markets quite so much, that can influence Britain's feelgood factor, that dominates the headlines and strikes fear into politicians.

And yet there are many people who question whether we can really rely on the numbers.

Some economists argue that the GDP figures in recent months have painted a far more negative picture of the UK economy than is actually the case.

Some argue that Britain never really experienced a double-dip recession - but that this reality will only ever be confirmed many years into the future when the ONS revises those initial estimates.

So how GDP is put together really matters. And it all starts with the pounds in your pockets.

The first estimate of GDP is created from data collected in surveys of tens of thousands of surveys from businesses around the country - whether they're manufacturers, construction firms, retailers or others.

Each month a large sample of them is asked by the ONS to tell them their turnover (how much money is going through the till), along with a few other industry-specific questions which form part of the retail sales, manufacturing output and other releases.

The turnover number is what matters from the perspective of GDP. They fill the relevant questionnaire in and post it to the ONS (they can also submit the data through an automated telephone system).

When those envelopes arrive there the questionnaires are scanned and the numbers go into the ONS' systems.

The problem is that by the time that first estimate needs to be produced, the ONS only has 44% of the relevant data (the rest arrives in dribs and drabs over the following months, hence later revisions). In particular, the ONS only has early responses for the final month of the quarter.

So there are some pretty big gaps to be filled, and the ONS has to make some estimates about what the other data will eventually say when it comes in.

It relies for this on computer models, backed up by assumptions and calculations from the ONS staff themselves. After they make these calls they meet and discuss them in so-called "balancing meetings" - the statisticians ask each other whether the data are reliable and their assumptions have foundation.

During this entire period, those GDP assumptions and the ultimate figure are kept locked up (quite literally - there are safes into which they are put) such that only a dozen or so statisticians actually know the number before it comes out.

So far as anyone knows, there has never been a leak of a number as sensitive as this from the ONS. But 24 hours before the figures are published, selected ministers and officials also get a look.

The figures are revised again a month after that initial release, and then again a month later. During that period, more information has come in from quarterly surveys which measure families' and businesses' incomes, and other spending data.

As I said, GDP can be measured in terms of what we spend, what we earn and what we make - they should all add up to the same number, since what one person buys another person sells. And the extra data furnishes that initial estimate and, occasionally, contradicts it.

The ONS maintains that its record of revisions is acceptable by international standards. It points out that its surveys have far more respondents than those put together by independent competitors.

But some, most notably Kevin Daly of Goldman Sachs, argue that it has a tendency to revise the more distant history so substantially that often periods we thought at the time were slumps were actually booms.

A case in point is the early 1990s - at the time, the ONS said the UK was suffering a double-dip recession.

But by the end of the millennium it had revised its assessment - far from slumping, the UK was actually bouncing back forcefully at that point. When Norman Lamont referred to "green shoots", it turns out he was absolutely right.

Today, the GDP figures have been telling an altogether different story to the unemployment figures, which seem to suggest there never was a double-dip. Based on precedent, we are unlikely to know the definitive story for years to come.

Which implies that the ONS, and the way it puts together this most important of all numbers, will remain in the spotlight for the foreseeable future.

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EasyJet Chair Rake In Departure Lounge

By Mark Kleinman, City Editor

The chairman of easyJet, Britain's biggest airline by passenger numbers and revenues, is to step down this summer after a four-year tussle with the company's founder over its fleet size and strategy.

Sir Mike Rake will leave once a successor has been identified, about three-and-a-half years after he took on the chairmanship.

EasyJet brought forward the announcement of Sir Mike's departure on Saturday afternoon following a leak to Sky News.

A statement had been due to be issued by the company next week but a spokesman said the company had decided to confirm news of Sir Mike's departure after its City advisers were made aware of the leak.

In the statement, easyJet said it had already started a process to recruit a new chairman.

The news of Sir Mike's intention to quit comes days after shares hit an all-time high on the back of a surge in more profitable business travellers using the airline. It also benefited from capacity cuts by rival carriers during the winter months.

That solid performance has not appeased Sir Stelios Haji-Ioannou, who - alongside a number of family members - is easyJet's largest investor.

Last week he threatened to sell his shareholding if the company proceeded with a major new aircraft order.

EasyJet is poised to join the FTSE 100 following its next quarterly review in March, which will mean that Sir Mike chairs two companies in the blue-chip index.

He is also chairman of BT, and was a leading candidate to replace Marcus Agius at the helm of Barclays following the bank's £290m fine for Libor rate-rigging.

"In advance of the forthcoming [annual general meeting] I wanted to make my position clear," Sir Mike said. 

"easyJet has by any definition enjoyed a period of success and profitable growth in the last three years. 

"As this takes the airline to the threshold of entry to the FTSE 100 it is the right time for me to stand down.

"Carolyn McCall and her management team have developed and implemented the right strategy for the airline which is already bearing fruit wth record profits, a healthy share price and strong dividends.

"The airline is now well positioned to continue to deliver profitable growth and returns for all its shareholders."

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