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February 1 - 7 2012
μWorld News PAGES 14-17
μComment PAGES 18-21
μObituaries PAGES 22-23
μExpat Life PAGES 31-32
WORLD NEWS P16-17
Spring into summer Egypt’s first freely elected parliament for 50 years is sworn in
Confessions of a super-tutor Meet the man who will teach your children – for £1,000 an hour
Things are looking up Tom Chivers on why astronomy has become all the rage
The players of games Paul Hayward on Radio 4’s new 30-part history of British sport
8 2 26 30 39 45 10 12 25 28 31 40
Bonus Ball 46
Bonus Ball 01
There were six winners of Saturday’s £3.9m jackpot and two winners of Wednesday’s £2.4m prize
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Continued from page 1
he urged bankers to take a responsible approach to pay and perks.
Addressing business leaders in Brighton, Sir Mervyn said: “After the steepest downturn in output since the 1930s, the UK economy is in the process of rebalancing … the path of recovery is likely to be arduous, long and uneven. The position of the world economy, especially in the euro area, is serious.”
However, he claimed there was reason for optimism.
“There is no reason to despair,” he said. “All crises come to an end, and businesses will find ways to trade with each other and meet the needs of consumers.
“Helped by the right policy actions, the UK and world economies can and will recover. And when they do so, they will be on a more sustainable footing than at any point in the past 15 years.”
His call for positivity followed complaints from businesses that previous warnings about the fragility of the economy had been selfdefeating because consumers had been put off spending. However, he did appear to suggest that the economic gloom would last some considerable time.
Sir Mervyn said that household borrowing had come to an “abrupt halt” in 2008-2009 as householders realised they had too much debt. “The unavoidable result was a lower level of spending,” he said. “Households as a whole have been net savers, rather than net borrowers, for each of the past three years.”
He added: “The continuing need for banks, households and nations to reduce their indebtedness is part of the broader story of the unwinding of the imbalances in the world economy as a whole. Rebalancing the world economy, and the UK economy within it, is not proving to be a smooth process.”
After the three main party leaders gave speeches on the future of capitalism, Sir Mervyn urged politicians to “maintain support” for a market economy and an “open world trading system”.
“They provided the basis
‘I’m afraid your jumper experienced negative growth in the last quarter’
for the great prosperity experienced since the Second World War,” he said.
Mr Clegg, in his speech to the Resolution Foundation, said: “In just three years, real household incomes have fallen by some 5 per cent – one of the biggest squeezes since the 1950s, since the records began. Household budgets are approaching a state of emergency and the Government needs a rapid response.”
The Coalition already plans to increase the level at which income tax becomes payable, from £7,475 to £10,000 by 2015. The tax-free threshold was expected to rise by about £630 annually.
But Mr Clegg now believes that is not quick enough and that tax breaks and allowances, such as the loophole that lets the wealthy avoid stamp duty on expensive properties by selling them through offshore companies, must be targeted.
“I want the Coalition to go further and faster in delivering the full £10,000 allowance, because the pressure on family finances is reaching boiling point,” Mr Clegg said. “There is now an urgent need to… rebalance our tax system so it rewards work and encourages ordinary people to drive growth.”
Ed Balls, the shadow chancellor, said: “The time has come for David Cameron and George Osborne to realise that their economic gamble – cutting spending and raising taxes too far and too fast – has backfired, and to heed the advice of the independent IMF.”
By Robert Watts Deputy Political Editor THE Chairman of the Royal Bank of Scotland has waived a share award worth as much as £1.4 million, raising pressure on Stephen Hester, the bank’s chief executive, to do the same with his bonus of almost £1million.
Sir Philip Hampton, who oversees the board of the majority state-owned bank, felt it would not be appropriate to receive this year’s share payment, part of a “golden hello” package when he joined in 2009.
At the weekend, RBS privately stressed the difference between the share award waived by its chairman and its chief executive’s bonus.
Mr Hester is set to receive about £963,000 in shares on top of a £1.2 million salary. However, the share award is only 60 per cent of the maximum he could have received and is not payable for three years.
Mr Hester agreed with ministers when he joined RBS in 2008 that he would be viewed as a private sector worker, not as a public sector worker on Civil Service pay.
David Cameron defended Mr Hester’s pay. “The fact is, Stephen Hester was brought in by the last government, a contract signed by the last government to turn round RBS – a bank that had got itself into a complete mess,” he said.
“The Government has made its views known and that is why his bonus was cut in half compared with last year. But we do have to bear in mind that the alternatives to what’s happening now could be even more expensive if you had a whole new team coming into RBS.”
George Osborne, the Chancellor, has also defended Mr Hester, claiming that he is paid “a lot less” than his peers at other banks and is successfully shrinking the size of RBS’s workforce and liabilities. Others who back Mr Hester say it would be difficult to find anyone of similar experience to replace him on a similar amount of money.
RBS has increased lending to all businesses in the past year and complied with almost all of its targets under the deal between the big banks and the Government on pay and lending. Supporters of Mr Hester argue that if the bank blocked his bonus, it would publicly suggest he had failed at a time when he is felt to be turning RBS around.
Mr Hester could also receive up to 12million shares as a bonus for his work in 2012. This would be worth more than £3million, based on the bank’s current share price.
Lord Oakeshott, the Liberal Democrat peer who last year
‘Will sir be lining his own pockets ?’
‘Would you inform the Prime Minister that I turned down an extra chocolate Hobnob’
resigned from his party’s front bench claiming the Coalition was too soft on banks, said: “This is weak leadership all round. Cameron and Osborne for cowering behind Labour’s bonus contract and Mr Hester if he collects it.”
Business, page 33
By Kamal Ahmed and Robert Watts THE European Union is to gain dramatic powers to control tax and spending in crisis-hit eurozone countries under a deal to save the currency.
The EU will have to agree the national budgets of heavily indebted countries under a deal due to be signed last Monday at a summit in Brussels attended by David Cameron.
The move will mean Greece losing control over its budget, after Germany and the International Monetary Fund (IMF) laid down increasingly harsh conditions for the indebted nation to receive its second £100 billion eurozone bail-out. With the country on the brink of default, Christine Lagarde, the managing director of the IMF, welcomed the new fiscal compact. Mrs Lagarde, speaking at the World Economic Forum in Davos, said: “In addition to having a monetary zone, the eurozone needs to develop this fiscal consolidation compact that is currently under work and that we hope will be validated on Monday at the leaders summit.”
Last Saturday, George Osborne, the Chancellor, said Britain may give more money to the IMF – a move opposed by Tory Eurosceptics.