Economy may be recovering - Major

16 September 2012 Last updated at 08:11 ET

Sir John Major tells Andrew Marr UK economic recovery begins "from the darkest moment"

The British economy may have passed its "darkest moment" and an economic recovery may be under way, former Prime Minister Sir John Major has said.

He said falling unemployment and a rising stock market indicated Britain was now on a "slow road to recovery".

Sir John also urged Tory MPs to rally round David Cameron's leadership and dismissed suggestions Boris Johnson could mount a leadership challenge.

He said the Conservative Party had learnt regicide was "not a good idea".

Speaking on the BBC's Andrew Marr Show on the 20th anniversary of Black Wednesday - the day Britain had to pull out of the European Exchange Rate Mechanism - Sir John said that Britain may already have weathered the worst of the economic storm.

He likened the current economic situation to that of the early 1990s when Chancellor Norman Lamont predicted he could see the "green shoots" of recovery - a comment that was seen as a major gaffe that jarred with people's everyday experience of falling living standards.

'Long-running sore'

Sir John said: "Normal Lamont was taken to pieces by commentators for suggesting there were green shoots. But in retrospect we can see that Norman was right.

"Recovery begins from the darkest moment. I'm not certain, but I think we have passed the darkest moment."

Continue reading the main story

David Cameron is prime minister. He is going to remain prime minister and he is going to contest the next election"

End Quote Sir John Major

"There are some oddities in the figures at the moment: Why in the depths of this recession is employment growing? Why is industrial production going up? Why has the stock market risen?

"There are things happening out there that will become apparent and we don't quite know why or how. My guess - and this is something a minister can't say but I can - is that in due course we will find that we passed the bottom."

The former prime minister, who negotiated Britain's opt-out from joining the euro, said he thought the eurozone crisis would lead to a two-tier Europe - with closer integration for euro members.

He said the process could take up to 10 years and would spark a UK referendum on Britain's relationship with the European Union.

"What you're now seeing, out of failure and not success, is the euro core looking to integrate further, much more towards a federal structure," he said.

"That offers an opportunity for us to clean up one of the long-running sores of British politics, which is our relationship with the rest of Europe."

Amid speculation that some Tory MPs are unhappy with David Cameron's leadership, Sir John - who faced questions over his leadership as prime minister - backed Mr Cameron to lead the Conservatives into the next election.

'Attractive and able'

It was not surprising, he said, for people to be critical of the leadership when "times are tough" and divisions within a party were "an inevitability of politics".

"I would have thought that if the Conservative Party has learned anything in the last 20 years, it's learnt that regicide is not a good idea," he said.

He praised Mayor of London Boris Johnson - whose popularity is seen as having increased following the Olympics - as a "very attractive and able and intelligent politician" who is doing a "supremely good job" in London.

But, he added: "Boris isn't in Parliament. Boris hasn't said he wishes to become prime minister - quite the reverse.

"The belief that suddenly everything is going to change - you're going to have a leadership challenge and you're going to have a replacement of the prime minister - I think isn't in the real world.

"David Cameron is prime minister. He is going to remain prime minister and he is going to contest the next election and I very much hope he's going to win it."

16 Sep, 2012

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Panasonic in China factory halt

16 September 2012 Last updated at 23:35 ET

Japanese electronics maker Panasonic has suspended some of its operations in China after anti-Japan protesters attacked two of its factories.

The firm said its factory in Qingdao will remain shut until 18 September.

The attacks are a part of wider protests that have spread across China and hurt other firms, including Toyota.

They started after Japan said it had agreed a deal to buy a chain of disputed islands in East China Sea from their private Japanese owner.

A spokesperson for Panasonic told the BBC that the firm would continue to monitor the situation over the next two days.

17 Sep, 2012

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UK's 'top piracy city' revealed

17 September 2012 Last updated at 00:44 By Dave Lee Technology Reporter

Manchester has been named the piracy capital of the UK, according to a new study seen exclusively by the BBC.

The research said there were more illegal downloads per person in the city than any other in the country, followed by Nottingham and Southampton.

The statistics, from monitoring service Musicmetric, conclude that in the first half of 2012, UK users illegally shared over 40 million albums and singles.

An industry group said the data showed piracy "remains a significant problem".

The data, collected independently by Musicmetric and seen exclusively by the BBC, is believed to be the biggest analysis of its kind to be conducted.

It monitored the global activity of BitTorrent files - a method of obtaining files by downloading from many users at the same time.

The data's release came as measures to attempt to curb illegal downloading began to take hold, such as the blocking of popular piracy websites and the relegation and removal of search results from Google.

Musicmetric's findings said that singer Ed Sheeran was the most pirated act in the UK for the first half of 2012, followed by hip-hop duo Rizzle Kicks and Barbadian megastar Rihanna.

The data suggested that Ed Sheeran's 2011 album + (Plus) was illegally downloaded an average of 55,512 times every month, and was the most popular download in over 460 towns and cities in the UK.

Legal UK sales of his album in the first half of 2012 hit the 448,000 mark - making it the fourth most popular album behind releases from Adele, Emeli Sande and Lana Del Rey.

Download nation

Globally, the research suggested that the UK is a significant on the world stage as a country of illegal music downloaders.

The country was placed second in the world in terms of pure volume of illegal activity, with Musicmetric logging 43,263,582 downloads in the first six months of this year.

The US topped the list, with 96,681,133 downloads tracked in the same period.

Italy (33,158,943), Canada (23,959,924) and Brazil (19,724,522) made up the remainder of the top five.

Rihanna's latest album - Talk That Talk - was found to be the world's most pirated release - Musicmetric tracked 1,228,313 downloads for the title in the first half of 2012.

In its analysis of the UK's data, Musicmetric has estimated that 345 million individual tracks made up the torrent files downloaded by British music fans.

According to the British Phonographic Industry (BPI), the UK's music industry body, the figures were having a "significant effect on investment in new music".

"According to their data, there are more illegal downloads in the UK still than there are legal purchases," the BPI's chief executive Geoff Taylor told the BBC.

"[It] compares to about 240 million tracks that were sold legally. A lot of people are getting very rich from stealing other people's things.

"That's wrong, and we think that musicians deserve to be paid for what they do, just like everyone else."

However, Loz Kaye, leader of the Pirate Party UK - who will be attempting to become Manchester's next MP in the next election - said the complaints of record labels is "protectionism".

"We need to remove the barriers for actual artists to connect with their business and their fans," he told the BBC.

"The truth is, why [music industry figures] are complaining so much is that with a properly functioning internet, and a properly functioning economy, the big players are no longer necessary."

17 Sep, 2012

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Small firms in 'finance struggle'

16 September 2012 Last updated at 22:30 ET

Small firms are struggling to raise the money they need to expand, according to a survey by business leaders.

The Federation of Small Businesses (FSB) found that 42% of those who applied for a loan said they were turned down.

The FSB said that while companies were weathering the recession well, business confidence was declining.

The British Bankers' Association said lenders were continuing to provide credit to customers.

They were also helping customers find alternative sources of funding if the banks could not provide it themselves, the association added.

Nearly two thirds of those in the FSB survey said they thought finance was unaffordable.

About half the 2,600 respondents wanted to expand in the coming 12 months, the survey found.

But the survey suggested the number of refusals had increased - from 40.6% to 42.4% on the previous quarter.

Continue reading the main story

The message is clear - businesses want to grow and invest but they need a helping hand to do so"

End Quote John Walker Chairman, Federation of Small Businesses

The FSB said that, while many small firms would like to expand their businesses, access to funding was proving frustrating.

The federation claimed that a lack of credit had contributed to a marked drop in confidence, and said it welcomed the government's plan to set up a state-owned business bank.

But it warned that the proposals needed to be carefully thought through.

FSB chairman John Walker said: "It isn't surprising that confidence fell back into negative territory as the recession entered its third quarter as growth flatlines.

"The message is clear though - businesses want to grow and invest but they need a helping hand to do so. It is frustrating that bank finance is still difficult to get.

"No matter what is said about demand, more than 40% of applicants have been refused in each quarter this year. This has to change if growth aspirations are to be met."

17 Sep, 2012

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Boots agrees deal with China firm

16 September 2012 Last updated at 22:07 ET

Alliance Boots, one of Europe's biggest pharmacy chains, has agreed a deal to buy a stake in a Chinese firm as it looks to expand in the country.

Boots said it will acquire a 12% stake in Nanjing Pharmaceutical Company Limited, for 560m yuan ($88m; £56m).

China, the world's second-largest economy, is home to more than 1.3 billion people, making it an attractive destination for foreign firms.

Nanjing is the fifth-biggest pharmaceutical distributor in China.

Boots, which first entered the Chinese market in 2008, said that it was aiming at a 20-30% share of the Chinese pharmaceutical distribution market.

"In 10 years, I hope we will be one of the major players in China or we will be, together with other companies, part of one of the major players in China," Stefano Pessina, executive chairman of Alliance Boots, was quoted as saying by the Reuters news agency.

Nanjing operates distribution centres in 12 cities in China and has sales of around 20bn yuan.

Once finalised, the deal will make Alliance Boots the second-largest shareholder in Nanjing.

"We believe that this strategic investment marks an important step in our long term development in Asia," said Mr Pessina.

17 Sep, 2012

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Income levels 'to rise next year'

16 September 2012 Last updated at 10:27 ET

UK households will see a rise in real income levels next year for the first time since the onset of the financial crisis, a study suggests.

Taking inflation into account, incomes are set to rise by 0.5% in 2013, according to the Centre for Economics and Business Research (CEBR).

But they will drop by 0.2% this year, the group said.

Households have struggled in recent years with low or no wage rises and relatively high inflation.

Falling inflation

Many people have seen wage freezes during the economic downturn, with inflation rising sharply between September 2009 and September 2011 to stand at 5.2%, as measured by the Consumer Prices Index.

It has fallen steadily since then to 2.6%, apart from a small rise in the rate of inflation last month.

Unemployment also rose sharply during the downturn, from 1.61 million in May 2008 to 2.59 million in July 2012.

The CEBR said real levels of income would start to pick up as inflation fell further, with middle and low-income families benefiting the most.

Middle-income households would see incomes rise by 1% next year, with lower-income families seeing a rise of 1.5%.

The richest households would see incomes rise by 0.7%, the research estimated. This is because of a drop in top executives' pay and bonuses and the scaling back of some tax allowances.

Similar increases would be seen across the board in 2014 and 2015, it suggested.

'Retail boost'

The CEBR said improvements in real income levels would have a knock effect for struggling retailers.

Over the next 12 months, it predicted retail sales volumes to rise by 2.5%.

"After four barren years, there is finally a glimmer of light at the end of the tunnel for retailers," said CEBR economist Daniel Solomon.

"Conditions will still be tough, just slightly easier than before."

Many retailers have struggled during the UK economic downturn. The economy is officially back in recession after contracting for the past three quarters.

16 Sep, 2012

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Greece euro exit 'catastrophic'

16 September 2012 Last updated at 08:15 ET

Greek Prime Minister Antonis Samaras has reiterated his belief that exiting the euro would be a "catastrophe" for his country.

In an interview with the Washington Post, he called again for more time for Greece to implement spending cuts.

There are indications creditors are considering giving Greece more time.

His comments come as a leading German politician said Germany was unlikely to agree to further help for Greece beyond that which has already been agreed.

'More time'

Greece is currently trying to finalise a package of 11.5bn euros ($15.1bn; £9.3bn) of spending cuts over the next two years.

The measures are needed to qualify for the next 33.5bn-euro instalment of its second 130bn-euro bailout.

Mr Samaras said Greece had to "make sure that we abide by what we have signed because we believe that what they call a 'Grexit' is not an option for us. It would be a catastrophe."

However, he did say that Greece would benefit from more time to implement further austerity measures.

"Instead of the [cuts package] taking place over two years, it would be best if it were to take place over four years.

"We are talking about an extension to 2016," he said.

On Friday, at a Eurogroup finance ministers meeting in Nicosia in Cyprus, International Monetary Fund (IMF) head Christine Lagarde hinted that Greece's creditors may be receptive to giving the country more time.

"Greece has already produced a huge effort but will have to continue to do so," Ms Largade said.

"The target when it comes to achieving debt sustainability is very high, so there are various ways to adjust. Time is one that needs to be considered as an option."

'Not stupid'

The European Union, the European Central Bank and the IMF are due to report next month on whether Greece has met the conditions laid down for the next instalment of its second bailout.

Greece was given a 110bn-euro package in May 2010 and a further 130bn euros in October 2011, along with a 100bn-euro debt write-off.

A prominent German politician suggested that once the second bailout had been paid out in full, another would not be forthcoming.

"I can't imagine that a further package for Greece would get a majority in the Bundestag, or in the governing coalition," said Rainer Bruederle, parliamentary leader of the Free Democrats Party.

"We Germans are helpful, but we're not stupid."

16 Sep, 2012

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Road charge for foreign lorries

16 September 2012 Last updated at 00:54 ET

Foreign lorries are to be charged up to £1,000 a year to use British roads - in a bid to benefit domestic hauliers.

The fee will also apply to UK-based lorries - but this will be offset by an equivalent cut in vehicle excise duty.

The move is designed to create a "level playing field" for British lorry drivers, as they have to pay for using roads in Europe.

The AA said it was concerned the system could lead to a universal road charging scheme for all motorists.

The government will publish draft legislation next month and ministers said the charge would be brought in by the end of the current parliament at the latest.

The amount of the charge would depend on the size of the vehicle and is expected to raise a total of £20m a year.

'Boosting growth'

Transport Secretary Patrick McLoughlin said: "These proposals will deliver a vital shot in the arm to the UK haulage industry.

"It is simply not right that foreign lorries do not pay to use our roads, when our trucks invariably have to fork out when travelling to the continent.

"By introducing charges we will create a level playing field, increasing UK competitiveness and boosting growth."

British hauliers who operate in Europe face a variety of road tolls and charges while continental lorries can use British roads for free.

Road Haulage Association chief executive Geoff Dunning said it was a "happy day" for the industry.

"We have been campaigning for years to see a system introduced which will lessen the financial advantage currently enjoyed by our European neighbours," he said.

"UK hauliers travelling to mainland Europe have to pay road charges but foreign-registered vehicles travelling to the UK pay nothing."

16 Sep, 2012

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Cuts rallies in Madrid and Lisbon

15 September 2012 Last updated at 18:34 ET

Thousands of protesters demonstrate on the streets of Madrid

Tens of thousands of people have rallied in Spain and Portugal in protest at spending cuts and tax rises in the debt-hit countries.

In Madrid, public sector workers from all over Spain blocked the capital's Plaza de Colon square and nearby roads.

Protests were held in Lisbon and across Portugal, with one person reportedly attempting to set himself on fire.

The Spanish and Portuguese governments say the austerity measures will lead to economic recovery.

'Drastic reduction'

Many of the protesters - including teachers, nurses and firefighters - were ferried to Madrid in buses by trade unions and other workers' rights groups who organised the rally.

The crowds chanted anti-government slogans, blew whistles and waved banners that read "Enough!" and "They are sinking the country!"

"There is no area of my work which has not been affected by the cuts," a 52-year-old doctor from Valencia, who only named himself as Jorge, was quoted as saying by Reuters.

"It's a drastic reduction in the quality of service for patients, it's terrible," he said, adding that his own salary had shrunk by about 30% because of the austerity measures.

But the government of Prime Minister Mariano Rajoy insists that the cuts are necessary to save the eurozone's fourth largest economy.

"These sacrifices are absolutely unavoidable if we are to correct the difficult economic climate we are experiencing," Economy Minister Luis de Guindos said.

"We are laying the foundations for a recovery," he added.

In July, the government announced a 65bn-euro (£60bn; $80bn) package of public sector wage cuts and tax rises - part of a deal with eurozone leaders to help rescue Spain's troubled banks.

Madrid has also accepted a loan of up to 100bn euro loan for the country's banks and is set to announce a further series of economic reforms by the end of September.

In Portugal, big rallies were mostly incident-free in Lisbon and Porto but, in the capital, tomatoes were thrown at offices belonging to the IMF and there were reports of scuffles between protesters and police.

In the northern town of Aveiro, one demonstrator was taken to hospital after trying to set himself alight in protest against government policies, reports say.

Portugal's RTP television quoted firefighters as saying his life was not in danger.

Portugal has already cut public sector wages and raised taxes to reduce its budget deficit and deal with its economic crisis.

The country agreed a 78bn-euro bailout deal and recently passed the latest review of its spending cuts.

For many, the last straw was an announcement a week ago that employees will pay sharply higher social security contributions from next year, even as employers' contributions are cut, says the BBC's Alison Roberts in Lisbon.

Even prominent figures in the ruling parties have come out against a measure that would seem to hit the poor at least as hard as the rich, our correspondent says.

16 Sep, 2012

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Stock markets rise on US stimulus

14 September 2012 Last updated at 18:01 ET Continue reading the main story

Global stock markets have risen after the US Federal Reserve moved to pump more money into the economy.

The Paris market rose 2.3%, while UK and German indexes closed up 1.5%. Wall Street ended the day 0.4% higher.

It followed the Fed's decision on Thursday to inject $40bn (£25bn) a month into the US economy.

But fears over the global economy persisted as the International Monetary Fund and European Central Bank denied they were in bailout talks with Spain.

Eurogroup finance ministers are meeting in Nicosia in Cyprus for talks on measures to end the current eurozone debt crisis.

On Friday, Jean-Claude Juncker, head of the Eurogroup, announced that the new eurozone rescue fund would be up and running by the end of October.

The European Stability Mechanism (ESM) - originally due to launch in July - would control up to 700bn euros ($920bn; £566bn).

The ESM is an essential part of a European Central Bank plan to buy bonds from indebted governments such as Spain and Greece in order to bring down their cost of borrowing.

Countries such as Spain would need to make a formal request to the ESM for help before the ECB could intervene.

However, IMF chief Christine Lagarde and an ECB spokesperson strenuously denied reports that they were in talks with Spain about a rescue: "I can assure you we are not," Ms Lagarde told reporters in Nicosia.

Mr Juncker added that there would be no decision on the next steps in Greece's EU and IMF bailout before the end of October.

However, there were indications that Greece may be given more time to pay its debts.

"Greece has already produced a huge effort but will have to continue to do so," Ms Largade said.

"The target when it comes to achieving debt sustainability is very high, so there are various ways to adjust. Time is one that needs to be considered as an option."

Continue reading the main story

They're saying that the punch bowl, the fuel for the economy, isn't going away - it's going to be here as long as you need it"

End Quote Tony Fratto Hamilton Place Strategies

Federal Reserve action

The plan to buy up US mortgage debt will continue until further notice, the Fed said on Thursday. The central bank also kept interest rates at below 0.25%.

The aim is to reduce long-term borrowing costs for firms and households.

On Friday, Hong Kong's Hang Seng added 2.7% and Japan's Nikkei 225 rose 1.8%.

Investors hope the Fed's measures will revive growth in the US economy, the world's biggest and a key market for Asian and European exports.

The Fed's promise that the quantitative easing programme was open-ended and would continue until the US economy showed signs of recovery has bolstered confidence, said analysts.

"They're saying that the punch bowl, the fuel for the economy, isn't going away - it's going to be here as long as you need it," said Tony Fratto, managing partner at Hamilton Place Strategies, a policy consulting firm.

'Obstacles removed'

In a research note from HSBC, analysts said that the Fed "is trying to convey to financial market participants that they can count on low interest rates and accommodative monetary policy for a long time and not to expect a reversal of policy in reaction to modest improvement in GDP growth or in the unemployment rate".

Yields on Spanish and Italian bonds also fell, easing pressure on borrowing costs for the two heavily-indebted nations.

On Friday, Italy's 10-year borrowing rate fell under the 5% mark for the first time since March.

However, the depth of Spain's problems were underlined on Friday with official data showing that public debt has reached a record 75.9% of gross domestic product, fuelling doubts over the country's ability to manage its finances.

There was fresh speculation in the European media that the ECB and IMF would discuss a bailout for Spain during a meeting of finance ministers that took place in Cyprus on Friday.

However, at a news conference after the meeting, Ms Lagarde denied the suggestion. Earlier, an ECB spokesman said: "The reporting is unfounded. No negotiations are ongoing."

There were also suggestions that the meeting would discuss a bailout of Spain. However, any immediate decision looks unlikely after the country's economy minister said on Friday that the government was working on a new set of structural reforms.

Luis de Guindos said a new plan should be ready by the end of September. Olli Rehn, European commissioner for monetary affairs, added that the Spanish plan would have "very clear commitments and precise timetables".

'Across the board'

There have been growing fears about the global economy, with a weak recovery in the US and the continuing debt crisis in the eurozone.

US unemployment, which has topped 8% for three years, is likely to be a key battleground in the upcoming presidential elections.

The slowdown in China's economy, the world's second-largest and one of its biggest drivers of growth since the global financial crisis, has fanned those fears.

Prompted by these concerns, policymakers in these regions have been taking measures to try to spur a fresh wave of growth.

The Federal Reserve's announcement came days after the ECB announced its new unlimited bond-buying programme.

Meanwhile, China has cut its interest rates twice since June to bring down borrowing costs for businesses and consumers. Beijing has also lowered the amount of money that banks need to keep in reserve three times in the past few months to encourage further lending.

15 Sep, 2012

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