Category Archives: Today’s Newspaper Roundup

British taxpayers could suffer a 2bn pound loss on Northern Rock but it should be seen as the cost of securing financial stability, according to the National Audit Office. The Government’s spending watchdog said the Coalition was correct to seek an early sale of the nationalised lender, which resulted in the sale last year of Northern Rock’s so-called “good bank” to Sir Richard Branson’s Virgin Money for an initial sum of 747m pounds. The NAO expects the taxpayer to lose 480m pounds of its original 1.4bn pound investment in Northern Rock, but said the figure could rise to as much 2bn pounds in real terms by the time the assets are fully wound down, The Telegraph reports.

One of Britain’s leading high street banks has been downgraded by the ratings agency Moody’s. Santander UK, which has more than 25 million customers and more than 1,400 branches had its credit rating … read more

Mariano Rajoy pleaded for an urgent “defence of the euro project” yesterday as Madrid was close to being locked out of international markets by “astronomical” borrowing costs. The prime minister of Spain called for European leaders to publicly back the so-called ‘sinner states’ amid fears that contagion from Greece could trigger a highly-anticipated Spanish banking crisis and then a bail-out. Mr Rajoy told state television there was “a serious risk we will not be able to borrow – or borrow at astronomical prices” unless they succeeded in bringing down the debt levels and regaining market confidence. “All these measures are to get out of the hole we find ourselves in,” he said, according to The Telegraph.

Homeowners will be hit by fresh increases in mortgage rates as the storm in the Eurozone hammers Britain’s financial system. The Bank of England has warned of an extended squeeze on household incomes, saying … read more

As leaders in Athens accepted the need for a new general election to end a national stalemate, the International Monetary Fund said Europe’s leaders should prepare for the possibility of a Greek departure from the single currency. Christine Lagarde, head of the IMF, warned she was “technically prepared for anything” and said the utmost effort must be made to ensure any Greek exit was orderly. The effect was likely to be “quite messy” with risks to growth, trade and financial markets. “It is something that would be extremely expensive and would pose great risks but it is part of options that we must technically consider,” she said. Raising tensions still further, Germany warned Greek voters that the wrong result in next month’s election will force their country out of the single currency, according to The Telegraph.

David Cameron is considering ordering billions of pounds in extra welfare cuts proposed in … read more

The new left-wing star of Greek politics is gambling that the European Union cannot afford to kick Greece out of the euro. Alexis Tsipras of the Radical Left Coalition (Syriza), which took a surprise second place in the May 6 election and is expected to win a rerun, wants to rip up the harsh terms of Greece’s international bailout agreement while remaining in the common currency. After a week of high drama, he refused again last night to join a power-sharing government with pro-bailout parties, accusing them of wanting to implement a “criminal” agreement. Syriza brushes off threats by European policymakers that Greece will be forced from the euro if it reneges on the bailout deal. “We really believe that at this moment a possible exit of the Greek economy from the Eurozone would have a very, very big cost for the Eurozone as a whole,” Gabriel Sakellaridis, Syriza’s economic … read more

German Chancellor Angela Merkel suffered an electoral setback yesterday as opposition to European austerity measures spread across the continent. The German chancellor may be tempted to rethink her approach after her allies in the country’s largest state, North Rhine-Westphalia, lost 9 per cent of the vote in their worst showing since the Second World War. The result left her in a weaker position for her first meeting tomorrow with François Hollande, the socialist president-elect of France, who has demanded that the EU adopt higher-spending policies to battle the recession, The Telegraph reports.

A “massive” economic impact awaits Britain should the Eurozone fail to contain the turmoil sweeping the Continent, Vince Cable warned yesterday. In the bleakest prediction of the UK’s economic vulnerability to date by a senior minister, the Business Secretary said that there was little Britain could do apart from hope the Eurozone’s economic firewalls were strong enough to … read more