In brief: Recession deepens, £8.75m pay off for Jerry del Missier and a warning that pork & chicken are set to become luxury items
THE GUARDIAN
Shock 0.7% fall in UK GDP deepens double-dip recession
By Larry Elliott, Economics Editor
Britain's economic output collapsed by 0.7% in the second quarter of 2012 as the country's double-dip recession extended into a third quarter.
Across-the-board weakness in manufacturing and construction coupled with the loss of output caused by the extra bank holiday to mark the Queen's diamond jubilee were responsible for the setback, according to data from the Office for National Statistics.
Analysts in the City had expected a 0.2% drop in gross domestic product in the three months to June and were stunned by the scale of the fall in activity. The decline followed the 0.3% fall in the first three months of 2012 and a 0.4% decline in the final quarter of 2011.
Construction output dropped by 5.2% between the first and second quarters of 2012, with industrial production falling by 1.3% and service sector output by 0.1%
The first double-dip recession since the mid-1970s – when the UK was beset by high inflation and rising unemployment – meant GDP in the second quarter of 2012 was 0.8% lower than in the same three months of 2011.
THE TELEGRAPH
George Osborne under attack as Britain's recession deepens
By Robert Winnett, and James Kirkup
The economy shrank by 0.7 per cent between April and June, the Office for National Statistics said. It is now smaller than when the Coalition came to power in 2010.
Since then, the Chancellor has pursued a strict policy of austerity – “Plan A” – in an attempt to bring down the deficit, leading to accusations that he has not done enough to stimulate growth.
Wednesday’s fall was worse than expected and means that Britain is firmly back in recession, with negative growth for the past nine months.
Amid a growing clamour from business groups for radical action, one senior Conservative figure admitted that the economy was likely to be in “intensive care” for another two years.
Vince Cable, the Business Secretary, called for a “Plan A plus” as he suggested that austerity alone was not enough to bring the country out of recession.
THE TIMES
PM’s ‘invest in GB’ plea as recession deepens
Roland Watson and Sam Fleming
David Cameron will plead with business leaders today to plough money into Britain as he attempts to use the Olympics to drag the country out of its worst double-dip recession.
The Prime Minister will pitch for business before 180 of the world’s leading chief executives, seeking to use London’s moment in the spotlight to secure a lasting economic legacy.
“Invest in Britain, partner with Britain,” he will urge, his upbeat message contrasting sharply with yesterday’s growth figures which showed that the recession was deepening.
The economy contracted by 0.7 per cent between April and June, much worse than the 0.2 per cent decline forecast by City analysts and marking the steepest quarterly fall since 2009.
DAILY EXPRESS
Greece runs out of cash on August 20
Fears are intensifying among ministers that the British economy is being paralysed by the continuing eurozone crisis, Government sources have revealed.
Officials are warning that Greece will run out of money by August 20, plunging Europe into an even deeper slump.
David Cameron is understood to be receiving daily reports detailing how the beleaguered country’s economy is deteriorating.
The Athens government may have to refinance bonds worth billions and is on the brink of pleading for yet another bail-out to stay solvent.
THE SUN
Costa bomb
BT shares fall, giants hit in Spain hell
By Steve Hawkes, Business Editor
The euro crisis hit home yesterday as BT blamed the pain in Spain for a slowdown in one of its biggest businesses.
Shares in the telecoms giant sank three per cent, wiping £560million off its market value, as it revealed Spanish companies and government departments are cutting back on new orders. The warning came as car giant Ford, drugs group Glaxosmithkline and camera maker Canon blamed Europe for slowdowns of their own.
BT boss Ian Livingston said clients around the world are being more cautious — with the biggest problems in southern Europe.
The slump sparked a nine per cent fall in revenues at BT Global Services between April and June.
THE INDEPENDENT
Disgraced Barclays chief banks £9m payoff
By James Moore
Barclays was engulfed in scandal again last night after reports emerged of an £8.75m payoff to the most senior executive to authorise the false submission of Libor interest rates. Jerry del Missier resigned last month but is said to have arranged the payoff in the days before his departure. The move stands in stark contrast to a decision by his boss, Bob Diamond, to give up deferred bonus payments worth up to £20m. Last night a political storm was brewing over the payment, which Barclays repeatedly refused to deny. "We're making no comment," a spokesman said.
DAILY MAIL
Pay chief Alison Carnwath is latest director to quit Barclays
By JAMES SALMON
The controversial director who signed off an £18million pay package for former Barclays boss Bob Diamond has become the fourth senior executive to quit in the wake of the Libor-rigging scandal.
Alison Carnwath, the non-executive director who heads up the remuneration committee, resigned citing ‘personal reasons’.
The news emerged just hours before reports of a £8.75million payoff for former chief operating officer Jerry del Missier.
cityam.com
US Treasury secretary: Libor fiasco is fault of the British
By Julian Harris
American authorities did all they could to warn British regulators over flaws in the Libor system, as far back as 2008, the defiant US Treasury secretary Timothy Geithner told politicians in Washington DC yesterday.
Geithner faced a grilling in front of the House financial services committee, yet insisted that US regulators warned the Bank of England about Libor manipulation, and said that the failures of governance occurred on this side of the pond.
“I personally raised this with the governor of the Bank of England, and I sent him a very detailed memorandum recommending a series of changes,” Geithner said, adding that the British Bankers’ Association (BBA) was incapable of policing the London inter-bank offered rate, known as Libor.
www.bbc.co.uk
BBA 'warned weekly' about Libor says former rate-compiler
By Ian Pollock
Personal finance reporter, BBC News
The British Bankers Association was given weekly warnings in 2008 that the process of setting the Libor interest rates was being distorted.
A former member of the Libor compilation team at Thomson Reuters says it regularly warned senior BBA staff about the problem.
Its reports regularly highlighted the implausible rate submissions of several banks involved in the Libor process.
The BBA denied these had amounted to warnings of wrong-doing.
THE SCOTSMAN
Olympic bounce for retailers led by supermarket expansion
By Peter Ranscombe
Retailers offered a rare ray of light amid the economic gloom this morning as it emerged that just 4 per cent of shops expect to shed staff in the months head, down from 25 per cent at this stage last year.
Optimism has been buoyed by Mary Portas’ scheme to breathe fresh life into high streets and by Sunday trading hours south of the Border being relaxed for the Olympics, according to the British Retail Consortium’s (BRC) quarterly jobs study.
Today’s survey flies in the face of recent downbeat data, with figures earlier this month from insolvency trade body R3 suggesting that a quarter of shops and one-fifth of hotels in Scotland could go bust in the year ahead.
The BRC’s report found that the equivalent of more than 12,600 full-time posts had been created in the retail sector in the three months to 30 June, with supermarkets leading the charge.
FINANCIAL TIMES
Pork and chicken set to join luxury list
By Gregory Meyer in New York
Pork and chicken will join beef on the menu of expensive meats as drought and US ethanol policy combine in a corn “disaster”, the head of the world’s largest pork producer has said.
The cost of the main ingredients in animal feed, corn and soyameal, have set records this month as the worst drought in half a century and extreme heat damages crops in the US, the world’s main surplus producer.“Beef is simply going to be too expensive to eat. Pork is not going to be too far behind. Chicken is catching up fast,” said Larry Pope, chief executive of Smithfield Foods. “Are we going to really take protein away from Americans?”
“I’ll use the word catastrophe – that’s my definition,” Mr Pope told the Financial Times in an interview. Meat producers feel immediate pressure when feed prices surge.
THE GUARDIAN
GlaxoSmithKline chief apologises after company fined for mis-selling
By Julia Kollewe
GlaxoSmithKline chief Sir Andrew Witty has expressed regret for the "unacceptable" mistakes which led to a record $3bn (£1.9bn) fine for mis-selling drugs in the US, and vowed that a company-wide overhaul would prevent a repeat. Witty was "very sorry that we have had to deal with the echoes of the past". He said: "We're determined this is never going to happen again."
It took Witty, who became chief executive in May 2008 and previously headed GSK's European operations, four years to deal with the legal cases in America, which involved three of its bestselling drugs.
Britain's biggest pharmaceutical company sold the antidepressant Paxil for unapproved use on children and pushed Wellbutrin for sexual dysfunction and weight loss, uses for which it was not approved. In the case of Avandia, GSK failed to flag up concerns about heart risks to the regulator. The company also lavished entertainment on doctors, such as golf lessons and fishing trips, to entice them to promote its medicines.
