Business Management Europe

Does Dyson have the answers?

Tue, 09 Mar 2010 11:42:00 +0000

Dyson's created by Sir James Dyson are one of Britain's best known products, but are they the answer to rebuilding Britain's manufacturing and technology industries? A radical set of proposals aimed at rebuilding these key industries has been published by the vacuum cleaner entrepreneur.

The Dyson report Ingenious Britain - commissioned by the Tories last year - seeks to set out a long-term vision for high-tech industry in the country, with the goal of making the UK the largest exporter of high-tech products in Europe.

The report has called for an overhaul of the start-up funding, a re-routing of the research and development (R&D) tax credits and fresh funding for science and technology in education.

Conservative leader David Cameron has pledged to look at each recommendation with a view to adopting them as policy if the Tories win the general election.

"Backing British engineering and inspiring new talent"

In his report, Dyson stated, "Backing British engineering and inspiring new talent must start with the government. We need to make decisions on big projects like high-speed rail or nuclear power and get on with it. Big projects inspire engineers and universities and children. Instead we get bogged down with endless reports and bickering."

Among the reforms, Dyson has called for the R&D tax credits - many of which have been targeted for scrapping by George Osborne - to be redirected to technology start-ups. He said: "Nearly 70 percent of the tax breaks are claimed by banks and the service industry. These should be scrapped but the ones for hi-tech development should be boosted from 140 percent to 200 percent."

He also recommended boosting the Enterprise Investment Scheme (EIS) relief for 'angel' investors that support technology companies, and a government-guaranteed business loan scheme to encourage more lending by banks to innovative businesses, the British paper The Telegraph reports.

Dyson said change had to start from school. "There is a serious shortage of science teachers," he said. "Children want the challenge of difficult tasks - just look how much better they are than their parents on a computer."

Sir James has called for Government money to be channelled into science education. His suggestions include better pay for science, technology and maths teachers to attract more higher-calibre staff. He has also called for better support in universities and particularly for graduates. One suggestion is to provide engineering undergraduates with industry-sponsored scholarships of GBP£2000 each. Another is that post-graduate research students should have their pay increased from GBP£13,000 a year to GBP£23,000 a year.

Sir James said: "Change must start with the Government."

Jodie Humphries

Jodie Humphries graduated from Bath Spa University with a BA Hons in Creative Writing in 2008. She has worked for GDS Publishing for the digital group since July 2009. She has previous experience with writing for the web, running her own website since April 2007.

Will Germany help Greece?

Fri, 05 Mar 2010 11:26:00 +0000

The question on many people's lips is whether Germany, the biggest economy in the European Union, will step in to help Greece, the country in the European Union with the biggest deficit. It's what many are going to be asking as Greek Prime Minister, George Papandreou, meets Germany's Chancellor Angela Merkel in Berlin.

Despite the speculation that the country will step in to help Greece, many oppose the aid of a country who has for years misreported budgets to hide their growing debt. In fact, a recent poll has shown that 71 percent of Germans think the EU should not help Greece at all. It is known that German's are big savers, not big spenders.

The Germans were even seen to be reluctant to pledge 440 billion euros to prop up their own banks and companies, they do not see why they should dig even deeper into their pockets to rescue the profligate Greeks.

Chancellor Merkel has warned that the euro is in the most difficult phase since its creation.

The belt-tightening measures introduced by Greece, including tax rises and spending cuts, have gone down very badly with public sector workers, but could reduce the risk of Greece needing help.

Plans for Greece

Political allies of Chancellor Merkel has even suggested that Greece should consider selling some of its uninhabited islands to cut its debt. Dotted in the blue waters of the Aegean are some of the country's most valuable assets - about 6000 islands, of which only 227 are inhabited. Many of them are privately owned by the world's rich.

One speculative plan would involve KfZ, Germany's state development bank, buying Greek bonds as part of an effort by the EU or the 15 countries that share the euro with Greece, the BBC states.

In the next few days, Mr. Papandreou will also meet President Nicolas Sarkozy of France and US President Barack Obama.

Mr. Papandreou has indicated he might go to the International Monetary Fund if the EU fails to help.

But with support for her centre-right coalition slipping before the May regional election in North Rhine-Westphalia - Germany's most populous state - Chancellor Merkel has reassured voters that she will not use taxpayers' money, nor breach the "no bail-out clause" in the EU's Maastricht Treaty.

"Germany cannot pay everything," says Michael Fuchs, deputy parliamentary leader of Chancellor Merkel's Christian Democratic Union (CDU).

Jodie Humphries

Boost for Lego

Thu, 04 Mar 2010 14:34:00 +0000

2009 was a strong year for Danish toymaker Lego as it saw its profits growing strongly as there was a re-surge in the products popularity. Generating the largest profits for the company was its Star Wars and Lego City products.

Pre-tax profits rose 55.9 percent from 2008 to 2887 million Danish Kroner (GBP£351 million). During 2009, Lego increased its global market share to 4.8 percent, with its strongest growth in English-speaking markets.

The Denmark-based company said it was optimistic that the sales growth would continue in 2010.

"Based on the good results in 2009 and our sales during the first months of 2010, we also expect sizable growth this year," Vig Knudstorp said.

Renewal on deal

Also, developers TT Games in conjunction with Warner Bros Interactive, have secured a renewal of their deal with Lego Systems for the development of video games based on Lego properties until 2016.

TT Games is the publisher and developer behind hit LEGO video game franchises including, LEGO Star Wars, LEGO Batman and LEGO Indiana Jones.

"We look forward to carrying on our excellent collaboration with the LEGO Group in building extraordinary LEGO video game franchises, with both Warner Bros. and third party IP, that continue to resonate with consumers," said Tom Stone, managing director of TT Games Publishing. "There is a tremendous future for LEGO games, and we are looking forward to working with all of our partners over the coming years."

The Lego video game franchise is so popular, it has sold 50 million copies across all platforms worldwide.

The company also completed a reversal of previous outsourcing projects, and brought all of its factory production back in house, the BBC reports.

2009 saw Lego investing in its factories in Mexico, the Czech Republic and Hungary.

The firm began in a carpenter's workshop in 1932 and founder Ole Kirk Christiansen chose the name for his creation by combining the first two letters of the Danish words "leg godt", meaning "play well".

Lego claims that children across the globe spend five billion hours a year playing with its bricks.

Jodie Humphries

Greece makes further cuts

Wed, 03 Mar 2010 14:25:00 +0000

The Greek Prime Minister George Papandreou has announced an additional 4.8 billion euros of deficit cuts as he tries to convince European allies and investors that he can reduce the region's biggest budget gap.

The measures to be introduced will include higher tobacco, alcohol and sales taxes that seek to raise 2.4 billion euros in revenue, said Deputy Citizen Protection Minister Spyros Vougias after a Cabinet meeting in Athens to pass the plan.

The government will also cut by 30 percent, three additional salary payments civil servants receive at holiday times, a move union leaders have already warned will spark further protests, Business Week reports.

Greece is trying to reduce its deficit after EU leaders called for Papandreou to adopt additional cuts before allies would come to its aid. The announcement comes as Papandreou prepares to meet Germany's Angela Merkel on 5 March and French President Nicolas Sarkozy on 7 March to discuss its finances. Greek bonds advanced for a fourth day today on the prospect that the deficit measures might lead to EU help.

Today's measures are the equivalent of two percentage points of GDP, about half Greece's pledged deficit reduction for this year. The package includes raising the main value added tax to 21 percent from 19 percent and increasing alcohol and tobacco taxes for a second time this year. Civil servants will also see the reduction in benefit payments increased to 12 percent from the 10 percent in the original plan.

Greek bonds gained for a fourth day today, with the yield on the benchmark 10-year bond falling 12 basis point to 6.03 percent.

"If our country doesn't manage to borrow with similar terms as is normal for a European Union country, then the consequences will be something more than catastrophic," Papandreou said in a speech.

Jodie Humphries

Jobs at risk over Orange merger

Tue, 02 Mar 2010 11:18:00 +0000

The European Commission approved the merger of Orange and T-Mobile yesterday after the Office of Fair Trading withdrew its request to conduct an in-depth investigation of the deal.

The combined company will have market share of about 37 percent, with almost 30 million customers, pushing O2 into second place in the UK and Vodafone into third.

Now that the path has been cleared for the merger to create Britain's biggest mobile phone operator, comes the worry of thousands of job losses. As the merged company looks to cut costs of GBP£3.5 billion, analysts are predicting that it could mean the loss of up to 2000 jobs.

Currently, neither Tom Alexander, who runs Orange and will become chief executive of the enlarged company, nor Richard Moat, head of T-Mobile in the UK, will comment on the prospect of job losses.

Mr. Alexander said that the company would start to trade as a single entity early next month, at which point the two management teams would formulate a cost-savings strategy, The Times reports.

Facing job losses

It's being feared that the majority of job losses will be felt by back-office staff, while retail staff may be less drastic than originally feared due to both the Orange and T-Mobile brands being maintained for at least 18 months. Despite predictions that some shops may close in areas where both networks have outlets, Mr. Alexander floated the possibility of creating larger stores encompassing the two brands. "Where there are T-Mobile and Orange shops next to each other, it may make more sense to have one bigger store," he said.

The merger has been granted on the terms that steps are taken to protect the UK's smallest network operator, 3. The group must also sell off a quarter of its spectrum on the 1800 MHz band, one of three frequency bands currently used by UK mobile providers.

The new telecoms giant would control 84 percent is this bandwidth, which is part of the radio spectrum used for web surfing on mobile phones and is crucial to the government's plans for the country's future technological development, the BBC reports.

The Commission said France Telecom - owner of Orange - and Deutsche Telekom - owner of T-Mobile - could merge their UK units if they agreed to amend "an existing network sharing agreement" with 3 "to ensure that there remain sufficient competitors in the market."

Jodie Humphries

Sweden to boost auto industry

Mon, 01 Mar 2010 13:57:00 +0000

To boost Sweden's struggling auto industry, a venture-capital firm created by the Swedish government is aiming to make at least a dozen investments this year as it becomes hard to secure financing from private-equity groups.

More than 50 companies have now come to Fouriertransform AB looking for money, Chief Executive Officer Per Nordberg said to Business Week. Fouriertransform made its first investment in October and wants to buy stakes in one or two companies a month, he said.

Fouriertransform received three billion kronor last year and has used a total of 260 million kronor to four private companies and NovaCast Technologies AB, a publicly traded manufacturer of tool and die products for car parts.

"The Swedish auto industry is facing a serious crisis," Nordberg said. "Many companies have great ideas but are basically at a standstill."

According to Aleksandar Zuza, an auto analyst at IF Metall, the industry's main union in Sweden, as many as 40,000 automotive workers out of a pre-crisis 140,000 have lost their jobs. About half the losses have been at suppliers, he said. Truckmaker Volvo AB has cut positions, so have Volvo Cars and Saab Automobile.

"Everyone is very hesitant about the auto sector because of how it has been hit by the crisis," said Katarina Vestlund, a spokeswoman for Nordic Capital.

Considering opportinities

While Nordic Capital considers all opportunities, Vestlund said that it hasn't made automotive investments since late 2008, when global car sales plunged and credit became more difficult to obtain.

Fouriertransform seeks an average annual minimum investment return of 15 percent to 18 percent, Nordberg said.

Fouriertransform's goal is reasonable because it targets "the most attractive, interesting companies," Investment Director Christian Zeuchner said.

NovaCast, based in Tyringe in southern Sweden, is offering two board seats and 33 percent of the shares to Fouriertransform in return for a 40 million-krona investment, pending approval at the 22 April annual general meeting.

"We think they will contribute a lot with their auto industry expertise and contacts," NovaCast Chief Executive Officer Hans Svensson said.

NovaCast's net loss almost doubled last year to 43.2 million kronor. Its stock has trailed the OMX index of major Swedish stocks in the last 12 months, rising 30 percent compared with a 52 percent surge in the index. The company signed an agreement with the government firm this month.

"Strengthen our capital base"

"Last year was tough for everybody in this industry, and it's no secret we needed to strengthen our capital base," Svensson said. "This is a good capital injection that allows us to move forward with bigger projects."

Fouriertransform may get more money to invest, though current government plans don't include additional funding. Investments will typically have a five-to-eight-year span, with little or no return the first few years, Nordberg said.

Other companies receiving money include Effpower AB, which develops battery technology and is partly owned by a unit of truckmaker Volvo. Norstel AB, a developer of components for hybrid vehicles, also is getting funding.

"We're happy that suppliers are getting capital, and it's even better if it comes with competence," said Zuza, the union analyst.

Jodie Humphries

Superman Vs Batman: The multi-million dollar battle

Fri, 26 Feb 2010 20:01:00 +0000

While a summer isn't complete these days without a superhero blockbuster bringing in millions of dollars to the box office, this week has seen two of DC's most popular comic book heroes earning big bucks back where they all started - in their first issues.

Earlier in the week, Superman's debut in a 1938 edition of Action Comics No 1, which originally sold for 10c, was sold by a private seller to a private buyer for $1 million, taking the title of the most expensive comic book in the world.

However this morning, the comic book world was shaken with news that the debut issue of Batman, 1939 copy of Detective Comic No 27, had been sold for more than $1 million at an auction in Dallas, placing the Caped Crusader above the Man of Steel in the wealth ranks.

Speaking to the BBC, Barry Sandoval, of auction house Heritage, claimed it was the biggest price on record for a comic book.

"It pretty much blew away all of our expectations," he said. "We can really say that Batman has nosed out Superman, at least for now."

Super-profits

With comic book heroes now a major business, with Disney studios buying Marvel's entire backlog of characters to make films from, and superhero film adaptations regular tent-pole movies for studios, investment in comics has never been more profitable. Shirrel Rhoades, former publisher and executive vice president of Marvel Comics, added that the two sales were likely to keep prices buoyant.

"We're probably seeing a little bit of a feeding frenzy," he said, adding that comic books are seen as a sound investment.

With that in mind, if you have the following comic books, it would probably be best to lock them away. Apart from the above two, the most valuable comic books are;

Superman No.1 – $671,000: The first comic book dedicated to Superman was published in 1939.

All-American Comics No.16 – $430,000: Published in 1939, this edition was the first comic book to feature Green Lantern.

Detective Comics No.1 – $405,00: Originally an anthology comic, Detective Comics #1 (March 1937) featured stories in the "hard-boiled detective" genre popular. The series went on to feature Batman and Superman.

Marvel Comics No.1 – $367,00: Published in October 1939, the first-ever Marvel Comic included the first appearance of Carl Burgos' android superhero the Human Torch.

Batman No.1 – $359,000: The first comic book in his self-titled series, and the first in which Robin appeared, was released in the spring of 1940.

More Fun Comics No.52 – $316,000: More Fun was a 1935-1947 American comic book anthology. The No.52 issue introduced The Spectre for the first time.

Flash Comics No.1 – $289,000: Many DC Comics characters make their first appearances in Flash Comics, including The Flash and Hawkman. This, the first issue, was published in 1940.

Amazing Fantasy No.15 – $280,000: Spider-Man debuted on the cover in August 1960. Sales proved to be one of Marvel's highest at the time and The Amazing Spider-Man was quickly launched.

With a third Batman film directed by Christopher Nolan currently being planned, and a new Superman script being penned by The Dark Knight's writer David Goyer, the profitability of these characters is expected to only go up over the next few years.

Superman, in particular, provides a lucrative revenue for DC Comics and Warner Brothers Studios, who own the film rights. Numerous spin-offs such as Lois and Clark and Smallville, not to mention a host of merchandise, has seen the Superman franchise valued at over a $1 billion in recent years.

To quote Steve Younis, editor of the Superman Homepage, "You're talking about everything from action figures, peanut butter, magnets, T-Shirts, coffee mugs, posters, keyrings, waste paper baskets, calendars [...] you name it, they've slapped an "S" on it in the 70-plus years that Superman has been around."

With a Green Lantern film coming out next year, directed by Casino Royale's Martin Campbell, and Robert Downey Jr returning for Marvel's Iron Man sequel this summer, you can also expect the value of those characters to also increase, but for now - at least in terms of profit - it seems Superman and Batman rule the comic world.

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Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

Weather hits German business confidence

Fri, 26 Feb 2010 15:42:00 +0000

German business confidence has fallen for the first time in nearly a year as the coldest weather in 23 years hit Europe's largest economy.

The Munich-based Ifo institute reported its business climate index slipped from 95.8 in January to 95.2, suggesting that after its early escape from recession last year, Germany's economy was seeing only lacklustre growth or even a contraction at the start of 2010.

Disruption in the construction, retail and leisure industries caused by low temperatures and snow is likely to have set back further an economic turnround that had already shown signs of losing momentum in the final months of last year.

Data from Italy and France didn't fair much better, adding to the eurozone's economic woes with French household spending and Italian consumer confidence both falling sharply at the start of the year, Financial Times reported.

The unexpected reversal of Ifo's upward trend was the result of a deterioration in businesses' assessment of current conditions, which is likely have been hit by the exceptionally severe winter weather. January's temperatures were the lowest since 1987, and much of the country has been covered in snow throughout February.

As well as hitting the construction industry, "consumers apparently preferred to enjoy the snow and the sun in the mountains ... instead of heading for shopping centres," said Alexander Koch at UniCredit in Munich.

Germany's turnaround

Fears that Germany's turnround was being hit by knock-on effects of the crisis over public finances in Greece "seem premature", added Carsten Brzeski at ING.

Purchasing managers' indices last week showed German manufacturing continued to expand this month. Nevertheless, the latest Ifo reading was still consistent with other evidence that the economic recovery across the 16-country eurozone has slowed down, effected by weaker performances in southern Europe.

After the global collapse in economic confidence which followed the failure of Lehman Brothers investment bank in September 2008, Germany's economy was one of the first to return to growth, due to exports.

But the export-led recovery stalled at the end of last year, with domestic demand hit by the phasing out of government subsidies for new car purchases. Earlier this month Axel Weber, Bundesbank president, warned that the bitter winter could mean that GDP in the first quarter of this year remained unchanged or even contracted.

"The economic recovery is expected to continue when winter is over," Ifo president Hans-Werner Sinn said.

Jodie Humphries

Should Iceland join the EU?

Thu, 25 Feb 2010 16:05:00 +0000

The European Commission has recommended that the EU open membership talks with Iceland, saying that the island already holds many values in common with the EU.

Despite the "opinion" from the EU's executive arm, the approval is needed from EU governments before talks can start.

Seven other countries want to be able to join the EU, but only three have opened formal negotiations - Croatia, Macedonia and Turkey. Croatia is farthest advanced in the process and could join as early as next year.

Correspondents say Iceland could end up jumping the queue - and it hopes to join in 2012. But EU officials say "fast-track" membership is not on offer.

A big hurdle is the lack of a deal so far to repay the Netherlands and UK for huge debts incurred when Iceland's online bank Icesave collapsed in 2008, in which the Icelandic krona lost about half its value in the financial crisis.

The UK and Dutch governments paid out 3.8 billion euros to savers who lost money when Iceland's online bank Icesave went bust.

Almost a quarter of the 323,000 Icelandic population signed a petition against a repayment plan, prompting the country's president, Olaf Ragnar Grimsson, to veto it last month. No deal has been reached yet on a new plan.

Support

What Iceland needs though, is support. Without Dutch and British, Iceland has no chance of joining the EU, the BBC's Dominic Hughes reports.

"Iceland is on the whole well prepared to assume the obligations of membership in most areas," the Commission opinion says.

But in some areas, Iceland will have to make "serious efforts" to conform with EU legislation, it says, including: fisheries; agriculture and rural development; the environment; free movement of capital; financial services and taxation.

The commission says Iceland's government deficit rose to 14.4 percent of gross domestic product (GDP) in 2009, and gross public debt was 130 percent of GDP - way above EU target levels.

Parliment vote

Last July, Iceland's parliament voted to apply to join the EU. In 2008, more than 54 percent of Iceland's imports came from the EU and 76 percent of its exports went to the EU, the commission says.

Iceland is already well integrated with the EU's single market as a member of the European Economic Area (EEA). The EEA, which includes all 27 EU member states, extends EU single market rules to Iceland, Liechtenstein and Norway without them being EU members.

Icelandic Foreign Minister Ossur Skarphedinsson welcomed the EU recommendation, saying: "I appreciate the confidence in Iceland expressed by the EU Commission in this balanced, constructive and broadly speaking very positive report."

Correspondents say Iceland could end up jumping the queue - and it hopes to join in 2012. But EU officials say "fast-track" membership is not on offer.

Jodie Humphries

Greece shut down

Wed, 24 Feb 2010 13:53:00 +0000

As the strikes take hold in Greece, more and more of the country is being affected as hundreds of thousands of people protest against the proposed cuts to try and resolve the countries 12.7 percent public deficit.

EU governments are looking for guarantees that Papandreou, elected in October, will slash spending before they spell out what help they may offer.

The government has pledged to cut this to 8.7 percent this year, and also reduce the 300 billion euro national debt, by freezing public sector salaries, raising the retirement age to 63 by 2015, and increasing taxes on petrol, alcohol and tobacco.

Under proposals adopted by finance ministers from the 16 nations that share the euro, the Greek government will have to take additional measures to cut its deficit if it fails to satisfy the European Commission next month. These may include higher value-added tax, a levy on luxury goods, higher energy taxes and spending cuts.

Unions

Greece's unions have shut down transportation, medical and educational facilities, in what is a second 24-hour strike aimed at Prime Minister GeorgePapandreou's drive to cut the European Union's biggest budget deficit.

Air-traffic controllers, customs and tax officials, train drivers, doctors at state-run hospitals and school teachers walked off the job to protest government spending cuts that will freeze salaries and hiring and cut bonuses. Journalists also joined the strike, creating a media blackout.

"People on the street will send a strong message to the government but mainly to the European Union, the markets and our partners in Europe that people and their needs must be above the demands of markets,"Yiannis Panagopoulos, president of the private-sector union GSEE, told NET TV yesterday. "We didn't create the crisis."

Half a million civil servants already held a one-day strike on 10 February. Now they have joined forces with GSEE, which represents two million workers, after EU warnings that Papandreou's government needs to bring in new taxes and make more spending cuts if it fails to rein in the largest budget gap of all 27 EU member states. Unions are set to hold rallies in Athens and other cities and towns.

Papandreou's government needs to sell 53 billion euros of debt this year, the equivalent of 20 percent of gross domestic product.

Isolation

Due to the strikes today, almost 500 international and domestic flights have been canceled, a spokeswoman for Athens International Airport, told Business Week.

The Athens metro, which carries 650,000 commuters to work each morning, isn't running nor are the capital's trams. Passenger ferries and other vessels will remain docked until the end of the strike.

Greece is on lock-down, but how many strikes is it going to take for the country to take notice that its citizens aren't happy?

Jodie Humphries

Loss for BAA

Tue, 23 Feb 2010 16:22:00 +0000

BAA, the UK airports operator, has reported a significant loss for the whole of 2009, as the forced sale of Gatwick and falling passenger numbers hit the company.

The operator posted a pre-tax loss of GBP£821.9 million, much worse than the GBP£324.2 million loss it made in 2008.

The sale of Gatwick cost the company GBP£277.3 million and pension deficits cost GBP£217.8 million, while passenger numbers were down almost four percent, at 85.9 million.

BAA sold Gatwick last year for GBP£1.5 billion, which fell short of expectations.

Despite the big loss, the firm said operational performance was improving and the organisation added that it would be spending GBP£1 billion this year on upgrading its airports.

"Our financial performance remains resilient, especially at Heathrow. We expect 2010 to present further economic challenges for the industry as a whole, and we will remain focused on improving our efficiency and the service we offer customers," said Colin Matthews, chief executive of BAA.

Heathrow airport

Passenger numbers at Heathrow declined by 1.5 percent to 65.9 million. This compares with an average fall of 5.6 percent at the next four largest airports in Europe, according to BAA.

But, Heathrow, the world's busiest international airport, generated its highest level of income from retailing since duty-free for European travellers was abolished in 1999. The airport made GBP £351.5 million from retailers last year - an increase of seven percent from the year before. Retail income per passenger rose by 6.7 percent to GBP£4.93

The surge in retail sales came as the value of sterling fell against other currencies, which made British goods comparatively cheaper for foreigners passing through the airport.

The company is rebuilding Terminal 2 as part of plans to reduce passenger congestion and improve services.

Heathrow has been criticised for long delays and poor service but a reduction in passenger numbers and increased investment resulted in an improvement in standards last year.

At Stansted, passenger traffic fell by 10.7 percent to 20 million.

Sale

The operator, which is owned by Spain's Ferrovial, was also ordered to sell Stansted and one of Glasgow or Edinburgh by the Competition Commission, but has been given permission by the Competition Appeal Tribunal to appeal the decision.

The Competition Commission is now appealing against the Tribunal's findings, the BBC state.

BAA owns six airports, also including Aberdeen and Southampton.

Jodie Humphries

Is France better for starting developments?

Mon, 22 Feb 2010 16:12:00 +0000

According to Hammerson Plc, the part owner of London's Brent Cross shopping centre, it's better to start a development in France than it is in the UK due to the fact that the economy has weathered better during the financial crisis.

Hammerson will start redeveloping 54-60 rue du Faubourg Saint-Honore in Paris and begin building the larger Terrasses du Port shopping centre in Marseilles this year at a combined cost of about GBP£430 million, the company said.

"There is better tenant demand, so schemes are more viable. It's a simple decision," Chief Executive Officer David Atkins said on a conference call with journalists after the company reported a narrower loss in 2009. "France has come through the recession in better shape than the UK."

France vs. UK

The French economy is large, diversified and more self-contained than many of its eurozone partners and so has been hurt less by global events.

France's economy emerged from recession in the second quarter of 2009, growing 0.6 percent during the final three months of the year. Stronger exports and consumer spending, as well as government stimulus packages, contributed to the growth.

Britain, in contrast, has only just emerged from the recession, when it registered quarterly growth of just 0.1 percent in the final three months.

The UK recession began in the April-to-June quarter of 2008, and was the longest UK recession on record. During 18 months of recession, public borrowing increased to an estimated GBP£178 billion, while output slumped by six percent, the BBC reported at the beginning of the year.

It was said that the UK's move out of recession was greatly attributed to the government's car scrappage scheme, which encouraged consumer spending.

France and Germany may have been less hard hit than the UK by the global economic slowdown because their financial sectors, which were at the heart of the crisis, account for a smaller proportion of their economies.

Hammerson

Hammerson is one of the bidders for the Cap 3000 shopping centre that family-owned retail chain Galeries Lafayette SA is seeking to sell, Atkins said. About 34 percent of Hammerson's GBP£5.14 billion of assets were in France at the end of 2009, with the rest in the UK.

In London, which is recovering faster than the rest of the UK commercial real estate market, Hammerson will only start construction on projects when it gets a commitment from a tenant to lease the building, Atkins said, Business Week reports.

It's too soon to start Hammerson's other development projects in the UK.

"We need more stability in the retail business before we have confidence to start retail schemes," Atkins said. And this may not be until 2011 at the earliest.

Jodie Humphries

Difficulties for SME's

Thu, 18 Feb 2010 13:17:00 +0000

Despite the recession being declared over in many countries, small and medium sized businesses in the eurozone are still finding it difficult to obtain finance.

A European Central Bank (ECB) survey of small and medium sized businesses (SMEs) conducted in collaboration with the European Commission, between 19 November and 18 December 2009, found that rejections of bank loan applications rose significantly in the second half of last year compared with the previous six months.

"In the second half of 2009, around one-third of SMEs reported an increase in the level of interest rates charged on bank loans," the Frankfurt-based ECB said in a report. "In addition, SMEs reported on balance a deterioration in the terms and conditions other than interest rates in the second half of 2009."

The report adds to the evidence that a weakened banking sector is constraining economic growth, with the effects of the global financial crisis still feeding through into individual lending decisions. The larger role played by bank loans in the region, especially forSMEs that cannot raise funds from capital markets, makes the eurozone more vulnerable to the US to a loan drought, the Financial Times reports.

Economic recovery

The results coincided with further signs that the economic recovery is losing momentum, with Germany's economy failing to grow in the final three months of last year.

"Although we have passed through the deepest valleys of the depression, worries about the labour market, budget deficits and the euro have not lessened," said Wolfgang Franz,ZEW economic institutes' president. Last week, gross domestic product data showed the eurozone economy expanded just 0.1 percent in the fourth quarter of last year, with Germany stagnating. Looking ahead, German economic activity could "move sideways, with only minor ups and downs", Mr. Franz added.

The ECB launched its survey of financing conditions facing SMEs last September. After the first survey, Jean-Claude Trichet, the Bank's president, seized on results showing that in the first half of last year, 77 percent of SMEs had received in full or part the bank loans they had sought, as a sign that credit was continuing to flow into the real economy. But in the final six months of last year, that figure deteriorated to 75 percent. Moreover, the share of SMEs saying bank loans had been rejected rose from 12 percent to 18 percent.

Loan applications

Among the large eurozone countries, the rejection rate for loan applications rose from six percent to 15 percent in Germany, and from nine percent to 18 percent in Italy. The rate was highest in Spain, where it rose from 20 percent to 25 percent. In France the rejection rate fell from 12 percent to seven percent.

Around 20 percent of eurozone SMEs expected access to bank loans to deteriorate in the first six months of 2010, compared with only 14 percent expecting an improvement.

"At the time of the survey, around half of the SMEs expected their access to internal and external financing sources to remain unchanged in the first half of 2010," the ECB said in the report. "The percentage of SMEs expecting a deterioration in their access to bank loans and trade credit in the first half of 2010 continued to be somewhat larger than the percentage of SMEs expecting an improvement."

Jodie Humphries

Greece told to tighten its belt

Tue, 16 Feb 2010 14:43:00 +0000

Greece has been told by the eurozone chief that it must make tougher spending cuts and new taxes, including a tax on luxury goods and cars, or face sanctions.

The chief, Jean-Claude Juncker told Deutschlandfunk German radio that Greece must understand that other eurozone members are not prepared to pay for its mistakes.

The warning comes only days after the European Union vowed to help Greece, as the bail-out talks prove unpopular, despite the fact that Greece's deficit has sent the euro to a nine-month low recently.

Mr. Juncker - chairman of the 16 nations that share the single currency and also Luxembourg's prime minister - has said Greece agreed to outline additional cuts in March if necessary, the BBC state.

"Greece must know that taxpayers in Germany, Belgium, the Netherlands and Luxembourg aren't ready to correct the failings of Greek budgetary policy," said Juncker, who is currently attending a meeting of EU finance ministers in Brussels.

He added that further measures would be imposed if Greece's debt reduction plans were not shown to be on target by 16 March.

A problem for Greece

Greece's debt crisis is "first and foremost a Greek problem and an internal Greek problem," Mr. Juncker said. "The financial markets are completely wrong if they think they can destroy Greece."

Without giving exact details of what they plan to do, Europe's leaders pledged to help Greece last week.

"We won't abandon Greece," French Finance Minister Christine Lagarde announced to reporters. "It's clear that we are all in this together."

Greece is trying to reduce its huge public deficit from 12.7 percent - more than four times what single currency rules allow. During 2010, the country has pledged to reduce this to 8.7 percent under a plan which involves major cuts in public spending. But those plans are hugely unpopular with the Greek public and massive strikes have already been scheduled.

Greece's Finance Minister George Papaconstantinou said that he wanted the other eurozone nations to release details of their planned bail-out for his country to ease market fears that the country could default on its debts.

Yet, Mr. Juncker said it would be "unwise" to publicly detail "the measures we are putting in place".

Mr. Papaconstantinou has said repeatedly that his country isn't asking for financial help from Brussels. Ministers and bank officials from the eurozone continue to meet in Brussels on Tuesday to discuss measures.

Jodie Humphries

Should the government raise VAT?

Mon, 15 Feb 2010 09:58:00 +0000

A survey of more than 400 businesses by the British Chambers of Commerce (BCC) has found that three-quarters of companies believe that a double-dip recession is likely unless the government finds measures to control the budget deficit.

Despite the survey finding confidence is low in the economic recovery in the UK, in what can be described as a controversial move, the BCC is recommending that the next government should increase value-added tax by one percent to 18.5 percent, in order to be able to scrap a one-point rise in national insurance contributions, which is planned for 2011.

It is highly unusual for a business organisation to suggest raising taxes, but the BCC's poll shows its members think a VAT increase would be far less damaging than a rise in NICs - which it considers a "tax on jobs" - as a way of cutting the budget deficit, the Financial Times states.

More than a third thought a VAT rise would be the least damaging option, compared with just six percent for a national insurance increase. If one percent was put on VAT, it would raise GBP£4.5 billion in annual revenue for the Treasury compared with GBP£5.1 billion for the rise in NICs.

Reducing the deficit

Forty-one percent of companies said the incoming government should make reducing the budget deficit its number one priority, while 22 percent want slashing red tape to be the top priority and 13 percent want the focus to be on making the tax system more competitive.

David Frost, the BCC's director-general, said: "Businesses clearly believe that the economy is far from being out of the woods. Political parties cannot take an upturn for granted and companies will continue to need support going forward."

The lack of a plan to deal with the GBP£178 billion budget deficit is a major concern to businesses.

"Businesses have got through the last two years by making painful but decisive decisions. They expect government to do the same while promoting a business-led recovery."

After the election, the next government has to get a serious grip on the public finances and escalating debt, Mr. Frost said.

"Raising a damaging tax on business, like NICs, will be counterproductive. It will mean fewer jobs and less tax revenue in the long-term. While businesses fully understand the need to bring down the UK's deficit, they are clearly saying that using VAT would be a less damaging way to achieve this," he said.

Is the Eurozone in danger?

Fri, 12 Feb 2010 14:32:00 +0000

2009 saw economies in Germany and France emerging from the recession. Then 2010 hit and it was announced that the UK had emerged from recession in the last three months of the year. As global economies started to look up, it should have brought joy to the world, but it appears there are even more hurdles to overcome as Greece battles against its fiscal deficit, and news surfaces that the German economy failed to grow between October and December last year. Put simply, is the Eurozone yet again in danger?

Germany, along with France, emerged from the recession in the summer of last year, but the German national statistics office has said, "The recovery of the German economy lost momentum at the end of 2009."

Germany's GDP remained unchanged in the fourth quarter of last year, falling below forecasts of 0.2 percent growth and far below third quarter output which rose by 0.7 percent.

It was thought that Germany will be expected to put up most of the money and after years of misleading Greek statistics, fiddles and broken promises of reform.

The figures emerged after Angela Merkel, the German Chancellor, refused to commit to a bailout of Greece at a one-day European summit in Brussels. Instead, EU leaders made a general pledge to take "determined and co-ordinated action if needed" to prop up the euro.

Greece

At the end of last year Greece was embroiled in the most serious fiscal emergency to hit the Eurozone since the single currency was launched 10 years ago.

At the time, the finance minister, Giorgos Papaconstantinou, said, "We are bringing forward some of the measures and specific initiatives [...] as we see the need to send even stronger signals than we have been sending [to calm international markets]."

The socialists announced that they would have to reduce the deficit from 12.7 percent of GDP to 9.1 percent by cutting expenditure, increasing revenues and cracking down on widespread tax evasion, a correction, says Papaconstantinou, of "roughly €8 billion". The public sector, which employs about 700,000, will be dramatically scaled back.

Moving to 2010 and Greece has been hit by massive strikes and street protests over moves to cut public spending as part of an austerity plans as it battles a 12.7 percent budget deficit.

The International Monetary Fund (IMF) has joined the EU in supporting Greece. John Lipsky, managing director of the IMF, said: "We stand willing and able to support Greece in ways that the Greek authorities think is appropriate."

Jean-Claude Trichet, President of the European Central Bank (ECB) weighed in to help in Greece's efforts and drawing up "necessary additional measures". He said: "I confirm that the ECB will work with the European Commission in monitoring the implementation of the recommendations by Greece."

Despite these offers of help, Alistair Darling firmly ruled Britain out of providing monetary support to Greece.

He said: "It is really for Greece to try and resolve its problems, for Greece to deliver on all the promises that it has made," he said. "The euro area is managing that area and they will be discussing this...with a view to trying to resolve the matter and I am sure we'll be able to make progress."

Euro effected

As a result, the economy is struggling and there are fears over the euro as it starts to fall.

In the last two months, the euro has fallen seven percent over the concern that Greece's fiscal problems will spread to the rest of Europe.

Europe is being called on to support Greece to prevent the fiscal crisis from descending into a full economic collapse.

But if Greece's economy continues to deteriorate, who's to say we're not going to see a repeat of Ireland's financial crisis, where all three of the country's major banks collapsed, following their difficulties in refinancing their short-term debt and a run on deposits in the UK. Relative to the size of its economy, Iceland's banking collapse is the largest suffered by any country in economic history.

The financial crisis has had serious consequences for the Icelandic economy. The national currency fell sharply in value, foreign currency transactions were virtually suspended for weeks, and the market capitalisation of the Icelandic stock exchange dropped by more than 90 percent. Who's to say that this can't happen in Greece if powerful countries like Germany and England are reluctant to help it?

Germany may have its own problems, but if Greece falls, it could bring the Eurozone down with it. And let us not forget, Greece isn't the only country still in recession.

With governments phasing out incentives and unemployment at 10 percent, the highest in more than 11 years, Europe's recovery is showing signs of waning. Expansion in service and manufacturing industries slowed in January and investor confidence fell for the first time in seven months in February.

Effects of the recession still visible

Thu, 11 Feb 2010 11:56:00 +0000

The UK may have been declared as being out of the recession, but the effects of it are still clearly visible. A new report from Local Data Company (LDC) has found that one in eight shops in Britain's town centres are standing empty.

The report found that the worst affected locations include Margate, in Kent, where 27 percent of shops are empty, and Wolverhampton, in the Midlands, where vacancy rates have hit 24 percent.

Overall, 12.4 percent of shops in Britain were empty at the end of December, according to the LDC, which analysed almost 700 locations and for the first time included town-centre shopping developments.

The south and east, including London, showed a 33 percent increase in vacancy rates in the second half of 2009, with average vacancy of just around nine percent.

In 2009, the number of empty shops in the UK almost trebled, however the rate in the second half slowed notably from the opening six months - when vacancy rates rose from 5 percent to 10 percent - giving hope that the worst effects of the downturn have been felt.

British Property Federation Retail Summit

However, speaking at the British Property Federation (BPF) Retail Summit, where the findings were announced, Liz Peace, chief executive of the BPF, said: "The fact of the matter is that Brits now do a lot more shopping over the web, so we're seeing a fundamental reshaping of high streets. We must encourage councils to make it easier for people to convert shops and people must accept that we won't go back to the high streets of yesteryear," the British paper The Telegraph reports.

As people continue to avoid the high street and do the majority of their shopping from the comfort of their home, town centres are going to continue standing empty. By shopping on theinternet , people avoid the temptation that is associated with browsing through shopping centres, they're able to go to a website and select a purchase without having to walk through rows of other items.

Will product placement be a blessing?

Wed, 10 Feb 2010 13:06:00 +0000

In America, product placement is a common occurrence, but in the UK and Denmark - the only EU countries not participating in the advertising scheme - placement has previously not been allowed. But now, under legislation passed yesterday, product placement will be seen on British television for the firs time, in the hope of reviving the flagging luck of the likes of ITV.

Watching American television and films, it's clearly obvious when a product has been shoehorned in by a company paying good money to see a particular actor use their brand, in the hope it will encourage consumers to switch to their product. As such, the worry in the UK is that audiences will be subjected to crass advertisements in their favourite drama and entertainment shows.

In fact, critics of the proposals say that product placement is unlikely to generate new revenues for broadcasters, merely diverting funds from existing advertising budgets.

U-turn

Culture Secretary Ben Bradshaw's move to allow product placement is another U-turn by Labour after his predecessor Andy Burnham opposed the adverts. Bradshaw sought to ease critics' fears by saying the placement of alcohol, tobacco and fat or sugar-laden foods will not be allowed.

The Culture Secretary said the move was "crucial" for commercial broadcasters who need government support after their revenues have been devastated in the recession and by the growth of the web. He added: "Adherence to our current position in which UK TV programme making cannot benefit at all from the income potentially to be generated by product placement would lead to continuing damage to its finances."

Adverts will also be banned in BBC licence-fee funded programmes as well as news current affairs, consumer and religious shows, the British paper The Daily Mail states.

Industry body ISBA says it has serious concerns about the "blacklist" of products.

ISBA media and advertising director Bob Wootton says: "ISBA does not see the need for the Government to have further gold-plated the existing system by bolting on this blacklist of banned categories of advertising to the protections the EU has already given to sensitive content like children's programmes."

Investment

"While we do not necessarily agree with the restrictions placed on certain categories, it is a step in the right direction as it will deliver additional revenue for investment in original content in the UK," an ITV spokeswoman said.

Analysts estimate the lifting of the ban will boost ITV's annual revenue by between GBP£25 million and GBP£100 million. ITV had suffered a 15 percent drop in traditional TV advertising sales in its first-half to GBP£108 million.

The aim of product placing is to increase the money being invested into programmed on the likes of ITV, but only time will tell if the plan does work to increase advertising revenue, or if it just has a knock-on effect on the standard type of TV advertising, where companies abandon them for the new form of advertising.

Guardian Media Group sell regional arm

Tue, 09 Feb 2010 16:11:00 +0000

A new deal has seen Trinity Mirror agree to buy GMG Regional Media from the Guardian Media Group for GBP£44.8 million.

The deal, announced this morning, will make Trinity the dominant media player in the north-west of England and ends the century-old link between the Guardian and the regional press from which it sprang.

Trinity Mirror is one of the UK's largest newspaper publishers, with five national newspapers, over 120 regional newspapers and 400 plus digital products. It employs over 6500 people in more than 68 locations in the UK. The move will see Guardian Media Group being able to secure its flagship Guardian daily newspaper, as well as help secure the future of its national titles.

GMG Regional Media publishes 32 newspapers, including the Manchester Evening News and 21 other titles in the north-west of England, plus 10 titles in the south of England, including the Reading Post and the Surrey Advertiser. The transaction, which is due to be completed on 28 March, will not include the Manchester-based local TV station Channel M and two local newspapers in Woking.

Sly Bailey, the chief executive of Trinity Mirror, Britain's biggest regional newspaper publisher, said buying the 32 newspapers and about 44 websites would help build scale in its digital business.

"GMG Regional Media is a perfect strategic fit for our group. This acquisition, which includes the Manchester Evening News with its proud and rich journalistic heritage, together with the weekly titles and associated websites, extends our reach across print and online and is a further step towards our strategic goal of creating a multi-media business of real scale."

For the deal, GMG is receiving GBP£7.4 million, with the remaining GBP£37.4 million in value coming from Trinity Mirror releasing GMG from a long-term contract for printing MEN Media newspapers at its Oldham press.

The deal will give Trinity Mirror control of the MEN Media division, consisting of flagship newspaper the Manchester Evening News and free daily Metro, as well as 20 other papers in the North West of England, Brand Republic reports.

Executive changes

The acquisition will result in a number of executive changes, including the departures of GMG Regional Media chief executive Mark Dodson and MEN Media managing director Ruth Spratt.

GMG has appointed David Sharrock, who is currently the chief operating officer of GMG Regional Media, as managing director of MEN Media.

Carolyn McCall, chief executive of Guardian Media Group, said, "GMG is mandated to secure the future of the Guardian in perpetuity, and we have a strong portfolio which has to be in the right shape to achieve that goal. The group board and the Scott Trust have made the decision to sell in light of these strategic objectives.

"GMG Regional Media is a good business and a publisher of important newspapers. However, we believe Trinity Mirror, as one of the UK's biggest regional publishers, is best placed to develop this business in a market that is likely to consolidate further. We are therefore confident that this decision is in the best long-term interests of the regional business and its staff, as well as delivering real value for the group."

Following the completion of the deal, S&B Media will be managed as part of Trinity Mirror's existing publishing business in the South of England.

Trinity has spent much of the past 18 months reviewing its regional operations, resulting in the closure of a number of papers and radical changes to others.

In October it announced the Birmingham Post would go weekly and its afternoon paper, the Birmingham Mail, would switch to mornings, with 80 job losses as a result.

BSkyB reduces ITV stake

Tue, 09 Feb 2010 14:00:00 +0000

After the controversy surrounding the purchase, BSkyB have announced that they have sold the majority of their stake in ITV.

The sale of the stake went for around GBP£196 million - representing around a GBP£350 million loss for the company.

The broadcaster placed 404 million shares - representing a 10.4 percent stake in the company - with Morgan Stanley at 48.5p a share. Sky said it would retain its remaining shareholding of just under 7.5 percent for the medium term and remained a "committed shareholder."

Morgan Stanley sold the shares to institutions for 49.5p, British paper The Guardian states.

End of the battle

The sale represented the end of a two-year legal battle by Sky to hang on to the shares, which it bought in November 2006 to block a potential takeover ofITV by cable company NTL, which is now part of Virgin Media.

In a statement, the company said: "Sky intends to retain its residual 7.5 percent investment in ITV for the medium term and to remain a committed shareholder of ITV."

Sky acquired 696 million shares for GBP£940 million at 135p a share. Since their purchase, ITV's share price plunged to a low of less than 20p, but has since recovered.

The satellite broadcaster has already factored in the loss in value of the past 18 months, writing down the worth of the stake to 20p a share for accounting purposes. In July 2008 the company wrote down the value of the stake byGBP£616 million in a non-cash accounting impairment charge. Last year BSkyB made a GBP£191 million writedown.