In brief: Will RBS be nationalised ? Plus shops and tourist trade hit by Olympics and new loan scheme will hit savers.
FINANCIAL TIMES
Nationalising RBS on the table
By Kiran Stacey and Sharlene Goff
Senior government figures are discussing the possibility of buying out private investors in Royal Bank of Scotland and fully nationalising it amid mounting frustration at banks’ failure to lend to British businesses.
Cabinet ministers are having conversations about whether to spend around £5bn buying up the 18 per cent of the bank the government does not own, although George Osborne, the chancellor, is opposed.
The fact that ministers and officials are considering the proposal, which would mean taxpayers taking full responsibility for the bank’s toxic debts, shows how exasperated they have become at the barriers they believe banks are placing on lending.
Some at the top of government believe the Treasury’s various schemes to free up credit, the latest of which was launched on Wednesday, have not worked, and forcing RBS to lend more is the only way to push the banks into action.
bbc.co.uk
No-frills savings plans outlined by the UK Treasury
Plans to create a template for "no-frills" savings products in a bid to simplify the market have been outlined by the UK government. The Treasury wants a simple brand for an easy access savings account, a longer-term savings account and life insurance.
Providers will use the same terms and conditions, but can compete on price, service and value. The aim is for products to be simple to compare, encouraging people to save.
However, a similar scheme introduced by the previous government failed to take off.
A final report on the plans for simple financial products will be published in February.
However, the initial recommendations suggest that the branded products have the same terms and conditions to ensure there are no catches for customers. There would be no introductory bonuses to the simple savings accounts.
THE TIMES
Loan scheme will hit Britain’s savers in the pocket
By Patrick Hosking, Financial Editor
Britain’s savers could be disadvantaged by the Government’s new flagship loan-support scheme launched yesterday, a leading building society chief has warned.
Savings rates are likely to be lower than they would have been otherwise as lenders will be able to rely on £80 billion of cheap state funding, rather than have to compete for retail deposits.
“Yet again, savers could be the victims,” David Cutter, chief executive of the Skipton, Britain’s fourth-biggest building society, said. Savers have already been casualties of the credit crunch, seeing deposit rates crash to low levels in the past four years as base rate was reduced to its lowest for three centuries.
But in the first half of this year, rates began to creep up as banks started to compete more aggressively for the nation’s savings. Mr Cutter said that that improvement could be reversed by the Funding for Lending Scheme...
CITY A.M.
UK Economy hit by fresh blows
By Ben Southwood
The UK’s recession looks set to deepen even further after manufacturing output fell in July at its fastest rate for more than three years, according to an influential survey published yesterday.
It came as fears mounted that the Olympics are failing to deliver the boost that some economists had hoped for – and in fact are reducing the overall levels of activity in the UK’s struggling economy.
Official data shows the economy has contracted for the last three quarters, but analysts had argued falling unemployment showed those official numbers could be excessively pessimistic, with factors like the Jubilee bank holidays distorting the picture.
But the new survey data have shattered hopes, and show that the recession could even be deepening further.
Markit’s PMI (purchasing managers’ index) for July crashed to 45.4 in July, from 48.4 in June – well below the 50 mark which shows no change in output, indicating an accelerating fall.
“The July PMI survey suggests the domestic market shows no real signs of renewed life, while hopes of exports charting the course to calmer currents were hit by our main trading partner, the Eurozone,” said Rob Dobson, senior economist at Markit.
DAILY EXPRESS
Trade from Lake District to the West End “wrecked by Olympics”
By Giles Sheldrick
Businesses across the UK have added their voice to companies in the capital complaining that the Olympics are wrecking trade, it emerged last night.
Parts of the country which usually see a spike in tourists at this time of year are deserted with hotel and restaurant bookings well down.
Trade in London’s West End has dropped since the start of the Games after Londoners scrambled to leave before millions of people turned up.
At the other end of the country in the Lake District it’s a similar story, with visitor numbers completely dried up.
Predictions of widespread transport chaos in London meant people stayed away in droves, according to experts
DAILY MAIL
House prices falling at their fastest rate for three years... And double-dip will push them down further
By Becky Barrow, Business Correspondent
House prices are dropping at their fastest pace for three years and economists warn the double-dip recession will push them down even further.
Nationwide, the biggest building society, published figures yesterday showing the average value of a home has dropped by 2.6 per cent since July last year.
This is the biggest annual fall recorded since August 2009 and follows a drop in values every month since December, except for February. Last month the average property lost 0.7 per cent of its value.
The Nationwide’s figures also reveal the extraordinary slump in average prices since they peaked in October 2007 at £186,044.
Today the same property is worth £164,389, a fall of £21,655 which is almost the equivalent of what a typical British worker earns in a year.
THE GUARDIAN
Bundesbank warns over eurozone crisis as ECB prepares to meet
By Ian Traynor, Europe Editor, Graeme Wearden in Helsinki and Helena Smith in Athens
European politicians and central bankers were at odds on Wednesday on the eve of a crucial meeting of eurozone policymakers that has encouraged speculation about "unlimited firepower" for bailout funds to resolve the crisis.
While Mario Monti, the Italian prime minister, spoke hopefully of the eurozone's bailout fund being granted a banking licence and access to endless funding from the European Central Bank, Jens Weidmann, head of Germany's powerful Bundesbank, strongly opposed radical action.
The 23-strong governing council of the ECB will meet on Thursday in Frankfurt for the first time since the ECB chief, Mario Draghi, declared a no-holds-barred fight to save the euro last week in London.
Draghi's pledge to "do whatever it takes" to save the currency and the confidence he voiced that "it will be enough" triggered a euro rally over the past week and curbed bond market pressure on Spain and Italy.
THE TELEGRAPH
Pressure on Spain to bow to bail-out
By Ambrose Evans-Pritchard, International Business Editor
The frantic diplomacy comes as investors wait nervously to see if German-led officials on the ECB’s governing council will stand behind the bank’s chief, Mario Draghi, who triggered a euphoric stockmarket rally last week with hints of intervention in the Spanish and Italian bond markets.
"The situation is dramatic: markets will react very badly if the ECB doesn’t deliver,” said Dmitris Drakopoulos from Nomura, ahead of the ECB’s crucial policy meeting tomorrow. The bond markets are continuing to signal deep alarm, with safe-haven flows into German two-year debt pushing yields to minus 0.08pc.
Former ECB governor Athanasios Orphanides said Mr Draghi had boxed himself into a corner. “Expectations are now so high, the ECB will have to announce something,” he said.
THE SUN
Internext
By Rhodri Phillips
Booming online sales are helping fashion chain Next defy the High Street slump, it said yesterday. It has outshone rivals like Marks & Spencer as sales jumped 4.5 per cent for the first six months of the year.
Sales through the Next Directory catalogue, 85 per cent of which are online, were up 13.3 per cent. Next raised its profit expectations for the year to between £575million and £620million on the back of its strong results.
Chief executive Lord Simon Wolfson told Sun City: “Online has driven the sales numbers. It has become massive for us. “More people are shopping online and we have improved our delivery services. You can order up to 9 o’clock at night and get delivery the next day.”
THE INDEPENDENT
Fed says US economy has slowed, but not enough to take steps
By Stephen Foley
The Federal Reserve dashed hopes for an early dose of extra monetary stimulus to boost the sluggish US economy, sticking to its existing programme of bond pur-chases but promising to "closely monitor" developments.
The central bank's Federal Open Market Committee pushed off a decision on whether to launch a new round of bond buying, a tactic called quantitative easing that is designed to push down market interest rates to make it easier for homeowners to refinance their mortgages and small businesses to get loans for expansion.
Doveish members of the committee have argued publicly for more action to stimulate the economy, but their concerns were reflected only in language recognising the disappointing pace of recovery.
THE SCOTSMAN
Ryanair chief Michael O’Leary lands bumper bonus
Ryanair boss Michael O’Leary has seen his pay package soar to fresh heights after steering the budget airline to record profits last year.
The outspoken chief executive pocketed an 18 per cent increase in his take home pay to €1.3 million (£1m) in the year to 31 March.
O’Leary’s basic salary rose to €768,000 from €595,000, while his bonus jumped to €504,000 from €440,000. He also holds about 51 million shares in the company, which are worth about €203m.
Ryanair posted a record profit of €503m, up 25 per cent on the previous 12 months, but expects profits to be lower this year, at between €400m and €440m after being hit by rising fuel prices.
And finally...
THE GUARDIAN
Boss-onomics: Australia's finance minister inspired by Bruce Springsteen
By Julia Finch
Where might finance ministers find economic inspiration? The works of John Maynard Keynes, perhaps? Paul Krugman or Nouriel Roubini? Not Australia's treasurer Wayne Swan. The man named Finance Minister of the Year in 2011 by Euromoney magazine turns instead to the Boss.
Swan has named Bruce Springsteen as one of his economic heroes. "You can hear Springsteen singing about the shifting foundations of the US economy which the economists took much longer to detect, and which of course everyone is talking about now," Swan said in a lecture to members of the ruling Labor party...
He quoted the lyrics "Poor man wanna be rich/ Rich man wanna be king/ And a king ain't satisfied/ 'Til he rules everything", then launched into something of Springsteen discography to prove his point about Springsteen's economic nous.
