Swinney unveils spending plans

20 September 2012 Last updated at 09:30 ET

Scottish Finance Secretary John Swinney has started to outline his spending plans for 2013/14.

It is understood that the minister, who is presenting his budget to Holyrood, will signal an end to the public sector pay freeze.

Mr Swinney has said his plans will be a "relentless pursuit of economic growth", despite UK government cuts.

Opposition MSPs earlier warned the economy must be at the heart of the budget.

Continue reading the main story

• Follow as-it-happens video and text coverage of John Swinney presenting his 2013/14 budget to MSPs at Holyrood. The page will be live on the site from 14:30.
• Watch a special BBC 2 Scotland budget programme starting at 14:30.

The freeze on public sector pay for those earning more than £21,000 was implemented in the 2011/12 financial year and was due to come to an end in March 2013.

Mr Swinney has direct control over pay when it comes to Scottish government workers and staff at quangos, but local authority employees negotiate directly with council bosses.

The minister will tell MSPs how much money will be allocated to schools, the NHS, housing and other devolved areas from a total cash budget of £28.4bn.

Ahead of his budget address, he said: "At a time when we face significant economic challenges this government is focussed on jobs, economic growth, protecting public services and supporting Scotland's household budgets.

"The government has argued consistently that we need to have a strong programme of capital investment to support investment in the Scottish economy, in particular the construction sector."

Scottish Conservative finance spokesman, Gavin Brown, warned though that the budget had to put the economy centre stage and not just pay "lip service" to it.

Growth and fairness

He said: "In the past the SNP has simply talked about prioritising the economy without actually doing it. It is time for them to stop harming areas that help economic growth such as housing and colleges, and stop introducing Scotland-only taxes such as the damaging retail levy."

Labour's finance spokesman Ken Macintosh said he wanted to see a budget for jobs, growth and fairness.

He added: "It is scandalous that rather than putting in place a substantial employment programme, the SNP have now laid off more than 30,000 public sector workers in little more than a year.

"John Swinney needs to stop hiding behind Westminster or trying to blame our local authorities and start taking responsibility for his own budget decisions."

20 Sep, 2012

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US manufacturing growth 'modest'

20 September 2012 Last updated at 09:39 ET

Growth in the US manufacturing sector remained "modest" during September, according to a closely-watched survey.

The Markit Flash US Manufacturing Purchasing Managers' Index (PMI) was unchanged from August's figure of 51.5. A reading above 50 implies growth.

While manufacturing output continued to rise, "growth was only marginal and the weakest for three years", Markit said.

Input price inflation reached a four-month high, the survey found, but there was a slight increase in employment.

New domestic orders continued to rise, but the number of export orders experienced its steepest fall since October 2011.

The index score for new export orders was 47.9, down from 48.8 in August, reflecting poor economic data from China and the eurozone.

Earlier on Thursday, separate PMI surveys indicated that China's manufacturing sector declined for the 11th month in a row in September, although the rate of decline slowed.

Meanwhile activity among eurozone firms suffered its steepest contraction since June 2009, the PMI survey for the region found.

Stimulus measures

The PMI data follows earlier reports from the US Labor Department that initial claims for state unemployment benefits fell by 3,000 last week to a seasonally-adjusted figure of 382,000.

The four-week moving average of new claims rose by 2,000 to 377,750, its highest level since June.

The Federal Reserve, led by Ben Bernanke, recently announced another round of quantitative easing to help stimulate the US economy.

It intends to buy $40bn (£24.7bn) worth of mortgage-backed securities every month until the jobs market recovers.

The US unemployment rate has been over 8% for three years and currently stands at 8.1%.

20 Sep, 2012

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TNK-BP Rosneft deal edges closer

20 September 2012 Last updated at 07:49 ET

BP, the British oil giant, is reportedly close to selling its 50% stake in Russian joint venture TNK-BP to Rosneft, the state-owned oil company.

Under the terms of the deal, BP would take a 12.5% stake in Rosneft worth about $10bn (£6.2bn) plus $15bn in cash, said Russian newpaper Kommersant.

BP and Rosneft are keen to explore the Russian Arctic for oil together.

On Tuesday, Russian President Vladmir Putin held talks with both firms.

But a BP spokesman told the BBC: "Talks with all interested parties are continuing. No formal offers have been received, so any figures being bandied about are pure speculation at this stage."

According to other reports, Rosneft has been sounding out US banks for loans to finance the deal.

Strained relations

TNK-BP is jointly owned by Alfa Access Renova (AAR) and BP, after a deal struck in 2003.

On 1 June, BP said it was putting its half of the TNK-BP business up for sale after relations with its fellow shareholder became strained.

Then in July, AAR expressed an interest in increasing its share of the joint venture to 75%, valuing the extra 25% at about $10bn.

This gave it "preferred bidder" status and triggered a 90-day period in which no other interested party would be allowed to conclude a deal with BP.

This period ends mid-October.

Last year, AAR, which is owned by four Russian-born billionaires led by tycoon Mikhail Fridman, was unhappy with BP's attempt to form an exploration alliance with Rosneft and secured a High Court injunction blocking the plan.

TNK-BP is important to BP financially as it accounts for almost a third of the London-based oil firm's total crude production and about 10% of its net income.

Rosneft directors had a board meeting on 17 September at which they agreed to call an "extraordinary meeting" of shareholders, to be held on 30 November in Khabarovsk, Russia.

Item five on the agenda will be "approval of related party transactions" - a possible reference to the TNK-BP deal.

20 Sep, 2012

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Spain in successful bond auction

20 September 2012 Last updated at 05:55 ET

Spain's borrowing costs eased at the country's latest bond auction where it raised 4.8bn euros (£3.84bn) after selling three and 10-year bonds.

There was strong demand for the 10-year bonds, with investors bidding for nearly three times the amount on offer.

The average yield was 5.66%, down from 6.65% at the previous auction, and below the 5.95% average for the year.

The government's borrowing costs have fallen since the European Central Bank announced its bond-buying plan.

"Overall the auctions today were taken comfortably," said Nick Stamenkovic of Ria Capital Markets, "but a sustainable decline in yields really depends on the Spanish government coming up to the plate and asking for a sovereign bailout."

Investors bid for 1.6 times the amount of three-year bonds on offer, with an average yield of 3.85%, slightly higher than the year average of 3.82%.

This auction follows an earlier round of fundraising on Tuesday, when the Spanish government raised 4.6bn euros in 12- and 18-month loans on the bond markets.

On 6 September, ECB president Mario Draghi unveiled details of a bond-buying plan aimed at easing the eurozone's debt crisis.

Under the plan, the ECB would agree to buy a potentially unlimited amount of bonds of debt-stricken eurozone members on the condition that these countries made a formal request for bailout funds and stuck to the terms of any deal.

The German Bundesbank remains opposed to the idea.

20 Sep, 2012

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Eurozone business activity falls

20 September 2012 Last updated at 05:20 ET

Activity among eurozone firms suffered its steepest contraction since June 2009, according to a survey.

The Markit Flash Eurozone Purchasing Managers' (PMI) Composite Output Index fell to 45.9 in September from 46.3 in August, its lowest level for 39 months.

The composite figure combines services and manufacturing activity, and a figure below 50 indicates contraction.

Markit said the results indicated the eurozone was heading back into recession.

The services PMI activity index fell from 47.2 to 46, but the manufacturing PMI output index rose to 45.5 from 44.4 in August.

"The eurozone downturn gathered further momentum in September, suggesting that the region suffered the worst quarter for three years," said Chris Williamson, Markit's chief economist.

"The flash PMI is consistent with GDP contracting by 0.6% in the third quarter and sending the region back into a technical recession."

However, while there were falls in production and new orders across the eurozone as a whole, Germany's rate of decline slowed "substantially".

"Services even saw a marginal upturn in activity for the first time since May," the report said.

But employment fell for the ninth consecutive month across the eurozone, with French payroll numbers being cut at the fastest rate since November 2009.

Chinese manufacturing

Earlier, the flash PMI manufacturing measure for China had indicated another fall in output in the sector, adding further to eurozone woes.

The survey of factory managers found that while the rate of decline had slowed, manufacturing still fell in September for the 11th month in a row.

The HSBC flash China manufacturing PMI rose from 47.6 in August to 47.8 in September.

China has given the go-head for infrastructure projects worth more than $150bn (£93bn).

20 Sep, 2012

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Homes market 'flat like economy'

20 September 2012 Last updated at 05:23 ET

Activity in the UK housing market was subdued in August as the economy was flat and household confidence low, lenders have said.

Gross mortgage lending fell slightly from £12.7bn in July to £12.6bn in August, the Council of Mortgage Lenders (CML) said.

This was 4% lower than August last year, the lenders' group said.

It predicted that new schemes to encourage lending could inject some life into the market.

These included the NewBuy scheme, which aims to match newly built properties in England with buyers unable to offer a large deposit.

More significant, the CML argued, would be the Funding for Lending scheme, in which the Bank of England will lend money at below-market rates to the financial institutions in order for them to lend the funds to potential homeowners and businesses.

"The scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so," said CML chief economist Bob Pannell.

"While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment. Unfortunately, it will be towards year-end before any initial assessment of its impact can be reached."

But there have been some reservations about the scheme.

"The Funding for Lending scheme is bold but there has also been a fair bit of bluster," said Ashley Brown, director of mortgage broker Moneysprite.

"It may have triggered some activity but unfortunately none of it has been in the right areas. It has seen better deals for the people who do not really need them, and little of note for those that do."

In the meantime, the CML is reporting a slow market at present.

"This should not be a big surprise, during a period when the UK economy is pretty flat and household confidence is in the doldrums," Mr Pannell said.

20 Sep, 2012

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UK retail sales hit by Olympics

20 September 2012 Last updated at 04:51 ET

Retail sales in the UK fell during in August as people put off shopping to watch the Olympics, figures show.

Sales fell 0.2% in August from July, according to the Office for National Statistics (ONS).

The ONS said lower sales were driven by a fall in online sales as consumers watched the Olympics instead of shopping on the internet.

However, sporting goods stores saw a sales boost from the Olympics and the new football season.

Analysts said the weak overall sales figure underlined persistent worries over the strength of the economy.

"With retail sales there may have been a lot of distortions due to the Olympics and the risks are to the downside... there is no sign the UK will bounce back strongly," said Paul Robson, currency strategist at RBS.

20 Sep, 2012

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Wen set for final China-EU summit

20 September 2012 Last updated at 00:35 ET

China's premier Wen Jiabao is to take part in his last EU-China summit before handing over power later this year.

His talks in Brussels with senior EU figures, including European Council President Herman Van Rompuy and foreign policy chief Catherine Ashton, are expected to focus on economic issues.

Beijing has previously expressed concerns about Europe's economic slowdown and offered to help.

Mr Wen is seen as having played a key role in building Chinese-EU relations.

Bilateral trade has more than quadrupled under his nine-year premiership.

The EU is now China's largest export market and the world's second-largest exporter to China.

'Consolidating relations'

There have been trade disputes between the partners - such as a recent EU decision to investigate allegations that Chinese manufacturers are dumping solar panels by selling them at below market value.

But EU officials believe these disputes must be seen in the context of a broad and growing economic relationship, says the BBC's Chris Morris in Brussels.

The Chinese government has also repeatedly expressed concern about Europe's faltering economy, which continues to struggle through a eurozone debt crisis.

There had been hopes that China would invest some $3 trillion (2.3 trillion euros; £1.85 trillion) of its foreign exchange reserves in European bailout funds - although pressure has now been eased by a European Central Bank decision to buy up government bonds.

In this context, the BBC's Chris Morris in Brussels says this summit will be all about consolidating relations rather than taking big decisions.

Europe's leaders, he says, have their eye on China's leadership change, which only happens once every decade and could bring new challenges in relations between these major economic powers.

20 Sep, 2012

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Marikana miners return to work

20 September 2012 Last updated at 02:25 ET

Miners in South Africa are returning to work at the Marikana platinum complex, which was the scene of violent protests in which 44 people died.

Striking miners reached an agreement with owners Lonmin on Tuesday. It will see their salaries rise by up to 22%.

Lonmin is hoping to recover some of the big losses it incurred during the six-week stoppage.

An investigation is under way into the deaths of the miners, 34 of whom were shot by police.

The strikes have spread to other mines in South Africa, one of the world's biggest producers of precious metals.

Spreading strikes

On Monday, President Jacob Zuma said the disruption had cost the industry $548m (£337m) in lost output.

On Wednesday, police fired rubber bullets and tear gas to disperse protesters near a mine owned by Anglo American Platinum (Amplats), the world's largest platinum producer.

Amplats had re-opened its mines on Tuesday after they were closed last week.

Last week, the government announced it would clamp down on the protests.

The Marikana miners had been demanding a monthly salary of 12,500 rand ($1,513; £935) - they currently earn between 4,000 and 5,000 rand.

As well as a pay rise of 11-22%, they will get a one-off payment of 2,000 rand to help cover the weeks of not being paid while they were on strike.

Analysts had warned that the Lonmin deal could encourage other miners to down tools to obtain pay hikes.

Some 15,000 miners at Gold Fields' Dreifontein Gold Mine remain on strike.

20 Sep, 2012

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Sky 'fit and proper', says Ofcom

20 September 2012 Last updated at 02:21 ET

Media regulator Ofcom has decided Sky is a "fit and proper" company to hold a broadcasting licence.

Ofcom was investigating the satellite broadcaster in the wake of the phone hacking scandal that engulfed Rupert Murdoch's News Corp media empire.

News Corp owns 39% of BSkyB, and James Murdoch, Rupert's son, was chairman until he stepped down in April.

Ofcom said, however, that "should further evidence become available" it would look at the issue further.

In a statement, Ofcom said: "In July 2011, in light of the public debate about phone hacking and other allegations, Ofcom confirmed that it had a duty to consider whether Sky was fit and proper to continue to hold its broadcast licences.

"Ofcom considers that, on the evidence currently available and having taken into account all the relevant factors, Sky is fit and proper to hold its broadcast licences.

"Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfil its duty."

Last May, the Commons media committee concluded that Rupert Murdoch was "not a fit person" to run a major international business. However, four of the 10 committee members disagreed, as the MPs split on party lines.

20 Sep, 2012

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