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December 7 - 13 2011

News

The Telegraph

μNews

PAGES 2-13

μWorld News PAGES 14-17

μComment PAGES 18-21

μ Letters

PAGE 20

μObituaries PAGES 22-23

μ Features

PAGES 26-27

μCulture

μExpat Life

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μPuzzles

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PAGES 28-31

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PAGES 33-37

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PAGES 40-48

OBITUARIES P22

WORLD NEWS P14

An end to isolation Hillary Clinton meets Aung San Suu Kyi in Rangoon

Ken Russell Often-outrageous film director who shocked and delighted

EXPAT LIFE P32

CULTURE P30

’I Woz Ere’ How run-down estate in Coventry inspired artist George Shaw

Hindered by Interpol Lobbyist’s long and bitter battle over sovereignty of West Papua

LOTTO 30/11

LOTTO 03/12

23 13 24 25 26 30 1 30 35 47 48 49

Bonus Ball 4

Bonus Ball 8

There were no winners of Saturday’s £7.2m jackpot and no one won Wednesday’s £2.2m prize

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The Telegraph

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inherently unstable, “they had a point”, he admitted.

Because Britain is not in the euro, it is not “sharing the burden”, Mr Delors said. However, he claimed that the UK is “just as embarrassed as the Europeans by the financial crisis”, not least because some of the measures put in place to deal with the crisis pose a threat to British interests.

For example, he said, the creation of a common “Eurobond” underwritten by all eurozone governments and traded in Paris and Frankfurt would be a “big worry” for the City of London. “I can see Mr Cameron’s worries,” he said.

Such is the scale of the crisis, he warned, that “even Germany” will struggle to find a solution. “Markets are markets. They are now bedevilled by uncertainty.”

The Prime Minister was in

Paris last Friday for talks with President Nicolas Sarkozy before this week’s EU summit. The meeting will begin discussions about changing the union’s basic treaties in response to the debt crisis.

Chancellor Angela Merkel of Germany insisted last Friday that such a treaty change was necessary and hailed what she described as concrete steps towards the creation of a “fiscal union”.

British diplomats are increasingly concerned that the 17 governments using the euro could try to strike an agreement on new rules between themselves, effectively excluding non-euro countries such as Britain.

Mr Cameron suggested that the fundamental economic reforms needed in response to the euro crisis did not require any treaty change, setting up a potential clash with Mrs Merkel.

Jacques Delors said EU leaders were doing ‘too little, too late’

GROVER

PAUL

Despite British worries about the treaty change process and Mr Delors’s pessimistic analysis, financial markets are increasingly optimistic that EU leaders are edging towards a deal to support the eurozone.

The FTSE 100 jumped 62.95 points to 5552.29 last Friday. British shares rose by 7.5 per cent last week, the biggest weekly rise in almost three years.

European markets also closed up, with the Dax in

Germany gaining 0.74 per cent and the Cac 40 in France up 1.12 per cent.

Earlier, Asian markets closed slightly higher, with Japan’s Nikkei index up 0.5 per cent and Hong Kong’s Hang Seng 0.2 per cent higher.

Full interview at telegraph.co.uk/europe Autumn Statement reports: Pages 10-11 Comment: Pages 18-20 Business: Pages 33 & 35

By Robert Winnett and Bruno Waterfield in Brussels BRITAIN has entered a second credit crunch, Downing Street said last week, as America was forced to intervene to stop the eurozone crisis leading to a global financial collapse.

The US Federal Reserve spearheaded a scheme by central banks around the world, including the Bank of England, to lend money to ailing European banks that were struggling to borrow.

The emergency action to stop the international financial system from freezing up again was prompted by rumours that a European bank was facing difficulties and could not raise money. Panic started to spread through the German bond markets, which threatened to result in a credit freeze for European banks.

British banks have been warned by the Financial Services Authority, the City watchdog, that they must make preparations for the collapse of the single currency.

Last week, Downing Street sources insisted that the global economy was not facing a “Lehman’s moment”, in reference to the collapse of the American investment bank in 2008. However, a spokesman for the Prime Minister said: “Clearly there is a very serious situation in the financial markets at this time. We are experiencing a credit crunch and that central bank action is about trying to mitigate the effects of that credit crunch. They are ensuring they have the capacity to take action.”

The eurozone debt crisis has led to growing fears in financial markets about the stability of major European banks. Investors, particularly US money-market funds, are increasingly worried that the European banks are exposed to huge losses on loans they have made in Greece, Italy and other indebted eurozone countries.

The intervention last Wednesday by central banks led to a sharp increase in

‘One bulb goes out and the whole thing is useless.

It’s like the euro’

stock markets around the world.

Last Wednesday, before the New York stock market opened, regulators invoked special powers that would have enabled them to suspend trading if share prices were to begin swinging wildly. The Federal Reserve said it was intervening even though “US financial institutions currently do not face difficulty obtaining liquidity in short-term funding”, because of fears that the euro crisis could derail markets in America and Asia.

In a statement, the Bank of England said: “The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.”

In another day of turmoil in Brussels, European finance ministers also admitted that they had failed to raise enough funds for a rescue fund to prop up the single currency.

Olli Rehn, the European Commission vice-president responsible for economic affairs, warned that a summit of Europe’s leaders on Friday was now crucial.

Herman Van Rompuy, the EU’s president, said that Europe’s governments needed to “confront” a looming catastrophe.

Alain Juppé, the French foreign minister, raised the stark prospect of a return to violent conflict on the Continent.

“It is an existential crisis for Europe,” he said. “We have flattered ourselves for decades that we have eradicated the danger of conflict inside our continent, but let’s not be too sure.”

Following a meeting of EU finance ministers in Brussels last Wednesday, details began to emerge of an ECB and International Monetary Fund deal to help rescue distressed euro countries. A bail-out fund would be only half as big as originally promised, €625 billion (£535 billion) rather than €1.2 trillion. Wolfgang Schäuble, the German finance minister, signalled that Germany was ready to relax opposition to European Central Bank involvement in protecting the euro via IMF interventions.

“We are prepared to increase the resources of the IMF through bilateral loans. Naturally, it is the central banks in the end,” he said.