UK coalition government
The US and UK are warning that Nato will increase airstrikes against Libya to levels not yet seen during the two month old conflict, as the pageantry of President Barack Obama’s state visit to the UK turns to issues of life and death, the FT reports. Speaking on a day when Nato aircraft carried out their most intensive attacks on Libyan targets to date, Ben Rhodes, Mr Obama’s deputy national security adviser, said Mr Obama and David Cameron, the UK prime minister, would make clear at a meeting at 10 Downing Street on Wednesday that the alliance would increase pressure on Col Gaddafi still further.
Weekend headlines from the FT and other UK media:* From The FT,- UK company liquidations rise 3.7%- RBS Insurance pledges big profit increases- Horta-Osório may be most ruthless bank CEO- IAG adds to airline warnings over fuel costs- Rank considers £585.8 million offer from Guoco- National Express investors support chief
Britain and France were rebuffed by a number of Nato states on Thursday as the two nations pleaded with alliance members to supply more combat aircraft for attack missions against Colonel Muammer Gaddafi’s ground forces, the FT reports. At a meeting of Nato foreign ministers in Berlin, the UK and France implored a range of countries – including Italy, Spain, the Netherlands, Sweden, Greece and Turkey – to provide aircraft that could conduct precision strikes on Col Gaddafi’s tanks and artillery. But in a development that triggered dismay at Britain’s Ministry of Defence, it emerged that none of these countries seemed likely to provide jets for these kinds of attacks on Col Gaddafi’s forces in the near future. Instead, the bulk of ground attacks on Col Gaddafi’s forces will continue to be conducted by the UK and France, with four other Nato members – Belgium, Canada, Denmark and Norway – carrying out a similar role.
David Cameron, UK prime minister, held hastily convened talks with Nicolas Sarkozy, French president, in Paris on Wednesday night to explore how to break the military stalemate in Libya that is keeping Muammer Gaddafi in power, reports the FT. As the leaders examined military options with their defence chiefs, Britain announced it would step up support for opposition forces by supplying the rebels with 1,000 units of body armour. It is the first time that the UK has given equipment to rebels on the ground, apart from 100 satellite phones at an early stage of the conflict.
Weekend headlines from the FT and other UK media:* From The FT,- US exchanges in $11bn NYSE bid- Electrical retailers fear overload- Retired chiefs, Daniels, Rose and Varley, eye chairs- Standard Life sets out new targets- Domiciles create problems for UK shareholders- Report rejects reversing Lloyds-HBOS deal- UK reform offers blueprint for range of services- Avocet switches its focus to West Africa- Court slashes Hays price-fixing fine- 3i adds to downbeat UK outlook- BP expands in Indonesian methane fields- Xstrata agrees record thermal coal contract- UK must not shy from bank reform- Deltex, China Shoto lead small cap risers- Sugar swing whets Real Good Food demand
Foreign ministers from almost 40 countries met in London on Tuesday to set out options for Libya’s long-term political future if Muammer Gaddafi loses power, reports the FT. As the Nato-led coalition continued to support rebel operations in Libya, David Cameron, UK prime minister, opened the conference citing reports that Gaddafi was pounding Misrata, the main rebel holdout in the west, with attacks from land and sea. Hillary Clinton, US secretary of state, said coalition military strikes on Libya would continue until Gaddafi fully complied with UN demands to cease violence against civilians and pull forces out of occupied cities. Bloomberg adds on Wednesday that rebel forces beat a retreat amid Gaddafi’s onslaught.
There wasn’t a lot of sunshine to melt the avalanche of UK economic data released on Tuesday. Revised UK Q4 GDP (-0.5 per cent rather than -0.6 per cent) and the UK Q4 current account deficit (-2.9 per cent compared to -2.4 per cent in Q3) came as little surprise. It’s too early to say what impact the poor growth figure will have into 2011 — and of course these so-called final GDP estimates will continue to be updated over the next few years.
UK chancellor George Osborne will this week offer Budget sweeteners to low earners, motorists and holidaymakers but has ruled out giveaways or any slackening in the pace of cuts, reports the FT. The chancellor said on Sunday he had no need to inflict further pain through tax rises or spending cuts, suggesting he believes new measures in the March 23 Budget will be broadly fiscally neutral. But his room for manoeuvre is constrained, even though this year’s deficit is likely to undershoot the official forecast of £148.5bn by £8bn, according to the Ernst & Young Item Club, an independent forecaster. Economists say the Office for Budget Responsibility will cut its 2011 economic growth forecast from 2.1 to 1.8% and from 2.6 to 2.1% in 2012. Osborne is also negotiating with the Ministry of Defence to fund operations in Libya. one analyst told Sky News.
France, Britain and the US received the green light to conduct air strikes against Colonel Gaddafi’s forces in Libya after the UN Security Council approved a resolution authorising “all necessary measures’’ to protect civilians under threat from the Libyan regime, reports the FT. As Gaddafi threatened an imminent assault on the rebel stronghold of Benghazi, the UN Security Council passed a resolution endorsing the launch of a no-fly zone to halt government troops approaching the city and endorsed “all necessary measures” – code for military action – to protect civilians against attacks from the regime’s forces. Following the vote, US president Barack Obama, UK leader David Cameron and French prime minister Nicolas Sarkozy met to co-ordinate “next steps”, said the White House.
Weekend headlines from the FT and other UK media:* From The FT,- Putin unaware of TNK-BP claim on Rosneft deal- Oil millions still flow for Gaddafi- KBC sells Centea arm to Crédit Agricole- Beijing aims for slower, greener growth- Fiberweb makes £25 million cash call- Brulines prepares to fall below forecasts- Crest prepares for takeover by Varde- Renault chief under government fire- EADS accepts deal loss to rival Boeing- Eurotunnel plunges to €57 million loss- Ocado defies slowdown as sales rise 25%- Alworths heads for change of ownership- Bright Food in second round of Yoplait bids- Lansley U-turn over NHS price competition- Shareholders hone tactics for BSkyB battle- Forbes family to sell house and artwork- Huawei nears clearance on Tube deal- Traders stay loyal to LSE in spite of outage- Bankers fear cocos are another crisis in the making- Infrastructure India jumps in value- Rajaratnam’s Galleon phone calls to be used in insider trial- UBS’s Grübel waives 2010 bonus
Itochu, the Japanese conglomerate, has acquired Kwik-Fit, the UK automotive specialist, for £637m ($1bn) from PAI Partners, its French private equity owner, reports the FT. The deal will be Itochu’s biggest investment in the UK and follows its acquisition of tyre retailer Stapletons in 1994. The price includes £457m of debt from a bank syndicate led by Barclays. Kwik-Fit is the UK’s market leader in Ministry of Transport testing and car servicing, although it has a market share of just 5%, and trades from 673 UK centres, plus 550 in France and 180 in the Netherlands. It also has a 20% share of the UK tyre market. The sale to a trade buyer is seen as a coup for PAI, which bought Kwik-Fit for £800m in 2005.
The chief executive of UBS has attacked the UK government for its public neglect of the City of London, warning that tougher regulations will see Britain and the rest of Europe cede investment banking business to Asia and the US, reports the FT. Oswald Grübel, the veteran banker who has led the Swiss bank back from the brink over the past two years, told the FT that “only behind closed doors” did the British government admit it wanted to “keep the City”.His remarks echo the views of many bankers who complain the UK government’s recent Project Merlin peace deal with UK banks did nothing to convert of banker-bashing into a pro-City stance.
The Pentagon is deploying naval and air forces around Libya as the US and UK governments step up efforts to force Muammer Gaddafi from power, including the possible establishment of a no-fly zone, reports the FT. David Cameron, UK prime minister, said. on Monday that the UK would work with its allies “on plans for a military no-fly zone”. Meanwhile, US secretary of state Hillary Clinton told a UN meeting in Geneva that nothing was “off the table” as long as the Libyan government ‘continued to threaten and kill Libyans”. A Pentagon spokesman said US military planners were working on “various contingency plans” and repositioning forces to provide flexibility once “a decision is made”.
The Pentagon is deploying naval and air forces around Libya as the US and UK governments consider tougher measures to force Muammer Gaddafi from power, including the possible establishment of a no-fly zone, reports the FT. “We must not tolerate this regime using military force against its own people,” David Cameron, UK prime minister, said. “In that context I have asked the Ministry of Defence and the Chief of the Defence Staff to work with our allies on plans for a military no-fly zone.” “Nothing is off the table so long as the Libyan government continues to threaten and kill Libyans,” added Hillary Clinton, US Secretary of State, at a UN meeting in Geneva. According to Colonel David Lapan, a Pentagon spokesman, US military planners are working on “various contingency plans … [and] repositioning forces to be able to provide for that flexibility once decisions are made”. The military manoeuvering coincided with US and UK efforts to ratchet up financial pressure being brought to bear on Colonel Gaddafi, whose forces remain in control of Tripoli, the capital.
UK inflation and growth are massively uncertain. They’re massively uncertain in part because UK fiscal austerity is massively front-loaded, and likely to be rather painful. Sharp rate increases would then be tricky for home-owners who’d already be squeezed, for instance.
In case you missed these stories, weekend headlines from the FT and other UK media:* From The FT,- GPG shares rise on news of sell-down plan- Kinder Morgan IPO raises $2.9bn- Rentokil chief mulls Intertek role- Foreign banks snub UK government’s £300 million request- M&B picks Burke to replace Lovering- TNK-BP ‘likely’ to seek role in BP deal- Thomas Cook bonuses fuel investors’ anger- JJB plans fresh round of store closures- Whittaker has more to offer than the rococo- Stadium funding secure, says West Ham United- Carillion to buy insulation group Eaga
Multimillionaires who are prepared to invest their money in Britain will find it easier to make a home in the UK under government plans to relax immigration rules for the super-rich, reports the FT. The Home Office will shortly propose changes to “investor visas” to encourage more rich people to live and invest in the UK. The move comes as the government slashes foreign student numbers in an attempt to reduce yearly net migration to the “tens of thousands” – amid protest from universities reliant on income from overseas students. The coalition has also cut by 20% the number of skilled workers British business can bring in from outside the EU; and only 1,000 highly skilled workers without a job offer will be allowed to migrate to the UK, each year, compared with 14,000 a year ago.
The Financial Services Authority (FSA) has today announced its proposed Annual Funding Requirement (AFR) for 2011/12. The AFR for 2011/12 is £500.5m, up from £454.7m in 2010/11, a gross increase of 10.1% in overall funding. The increase will be borne by larger firms, reflecting the resources applied to intensive supervision of high impact firms… (Note — net of discounts after fines, companies will actually be paying 2 per cent less to the FSA than in the last AFR.)
As we have discovered in recent weeks there’s a greater chance of getting blood from a stone than a UK-listed company voluntarily confessing to M&A activity. So it’s to Serco’s credit that it has has attempted to set the record straight following reports which claimed the outsourcing firm had made a $2bn offer for SRA International, a US security, defence and health services company.
In case you missed it: weekend headlines from the FT and other UK media:* From The FT,- UK banks face ring-fence for retail arms- Stobart joins calls to cut UK fuel duty- Bric-like branding is a dangerous path to take- Oil traders indicted over alleged kickbacks- UK banks unfazed by Project Merlin’s spell- Petra Diamonds eyes main market after buying mine- Barclay brothers add to luxury portfolio with Misland move- Verizon to take $600 million pension benefits charge- Partners hold key to John Lewis success- Warner move to set industry tone- GSK’s US sales tactics undergo radical change
The government remains committed to defence kit and support spending despite reductions in the military budget, reports Reuters. The news agency also reports that Britain plans to increase the proportion bought from small and medium-sized firms. Junior defence minister Peter Luff said the government would spend about £50bn pounds on kit and support over the next four years on deals, following on from about £13bn pounds in defence industry deals last year.
Is Bob Diamond — currently under the kosh at the UK Treasury Select Committee at pixel time — getting the wrong end of the stick? At least in terms of Barclays’ lending habits? Or, more importantly, are the UK government’s own policies getting in the way of a UK bank lending revival — in terms of new mortgages, anyway?
News Corp will shortly make its case to the UK government for its proposed £7.8bn-bid for satellite broadbaster BSkyB, reports Reuters, citing a memo seen on Monday. The UK’s culture minister is considering whether such a merger would concentrate too much media power in the hands of Rupert Murdoch’s News Corp, which also owns the mass-selling Sun and News of the World tabloids and the Times. The UK communications regulator Ofcom has sent a report, yet to be published, to the Department for Culture, Media and Sport on the likely effect on media plurality of the proposed merger. News Corp was to brief a parliamentary committee on Wednesday about its bid but a memo sent on Monday said the meeting was cancelled due to the company’s discussions with the government on the matter.
The UK’s two partially state-owned banks are quietly seeking investor interest in UK government holdings of their stocks, reports the WSJ, citing people close to the matter. RBS and Lloyds Banking Group, which are 84% and 42% taxpayer owned, respectively, as well as other investment banks, have been encouraging investor interest in the two banks’ stock to pave the way for the sale of shares held by the UK Treasury. In some cases, the discussions involve sovereign-wealth funds in China and Singapore. The UK government invested £65.8bn ($102.3bn) in the two banks during the financial crisis, and they are now approaching investors with the tacit approval of UK Financial Investments, the government agency that independently manages the government’s holdings.
UK prime minister David Cameron and China’s vice-premier Li Keqiang on Monday agreed trade deals worth £2.6bn, in what Downing Street described as an “important step change” in their trade relationship, reports the FT. Among the 15 separate deals, which will help the government meet its goal of doubling annual trade in goods and services with Beijing by 2015, were an agreement to increase sales of Jaguar Land Rover vehicles to China; an oil exploration agreement between BP and oil giant Cnooc, and a framework deal between PetroChina and private UK company Ineos on refining joint ventures.
David Cameron and Li Keqiang China’s vice-premier, have agreed trade deals between the UK and China worth £2.6bn, in what Downing Street says is an “important step change” in Britain’s trade relationship with one of the world’s fastest-growing economies, reports the FT. As Britain gave an elaborate welcome to the man who is expected to become Chinese prime minister in 2013, the UK and China signed some 15 separate deals which will help the government meet its goal of doubling the annual trade in goods and services with Beijing by 2015. Among the most significant agreements approved on Monday were a move to increase sales of Jaguar Land Rover vehicles to China; an announcement by BP and the China National Offshore Oil Corporation on deepwater exploration in the South China Sea; and a framework deal between PetroChina and the private British company Ineos to form refining joint ventures.
UK private equity firms have returned to dealmaking faster than many people expected this year, as the value of UK buy-outs almost quadrupled from the previous 12 months, reports the FT. With private equity accounting for a record 75% of all UK M&A deals in the first nine months of this year, buy-out bosses have rediscovered their Keynesian “animal spirits” faster than corporate chief executives in the wake of the financial crisis, boosting the value of all private equity deals from £4.7bn ($7.3bn) last year to £18.2bn this year, according to new research from the Centre for Management Buy-out Research at Nottingham University.
JPMorgan Chase will move its European investment banking base to the former UK headquarters of Lehman Brothers at London’s Canary Wharf, in a £500m ($775m) deal that counters fears of a shift by banks away from the UK capital, reports the FT. JPMorgan opted to buy the former Lehman tower instead of building a new £1.5bn headquarters in Canary Wharf. The move eased speculation that the US investment bank was considering reducing its UK commitment, amid growing tensions between banks and the UK government over the industry’s bonus pay-outs and related issues. The FT’s Lombard column says the deal, in light of fears that JPMorgan was even considering leaving London, should prompt “relief rather than jubilation”.