House Prices Show Surprise 0.5% Rise In UK

House prices in Britain have risen by more than expected in January, putting a halt to their annual decline, according to Nationwide.

But the building society stressed that low numbers of first time buyers - which account for around 40% of all housing transactions - remain a "cause for concern".

The data revealed that house prices rose by 0.5% in January, and were flat when compared to January 2012 - meaning there was no decline for the first time since last February.

It takes the average house price in the UK to £162,245.

The number of first time buyers remains low - at around 20,000 a month, compared to an average of 32,000 before the financial crisis.

Despite the improved mortgage market, first-time buyers still need a deposit of around 20%, compared with 10% before the credit crunch, Nationwide said.

It described the figures as concerning, but said although the economic environment remained difficult, "there are encouraging signs" that conditions for first-time buyers are improving.

The Bank of England's efforts to boost lending will help these buyers by keeping down the cost of credit and boosting its availability, the building society said.

The scheme, launched in August, allows banks and building societies to access more than £80bn of cheap finance if they maintain or increase lending to households and businesses.

"While activity in the housing market remains muted by historic standards, there have been tentative signs of a pickup in activity in recent months," Nationwide's chief economist Robert Gardner said.

"The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pickup in lending activity.

"Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves."

The figures follow data from the Bank of England which showed that the highest number of mortgages were approved last month since January 2012.

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Ryanair Loses EU Fight Over Ash Cloud Row

By Robert Nisbet, Europe Correspondent

A court has ruled Ryanair flouted EU law by refusing to pay out cash to a customer left stranded by the Icelandic volcanic ash cloud three years ago.

Denise McDonagh from Ireland was due to fly back to Dublin from Faro on April 17, 2010, but was trapped in Portugal for a week after the eruption closed down much of European airspace for nine days.

She ran up hotel, meal and refreshment bills of 1,130 euro (£940), and submitted them to the airline when she returned to Ireland.

But the company refused to reimburse her, claiming the consequences of the eruption were so unexpected they could not count as 'extraordinary circumstances'.

Ms McDonagh pursued her claim through the Irish courts, which then sent the case to the European Court of Justice in Luxembourg, which is the highest court in the EU for interpreting and enforcing EU laws.

Last March the Advocate General Yves Bot ruled in the plaintiff's favour, which has now been upheld by the court.

And its judges have ordered Ryanair to cover the costs she incurred.

Their decision could also have an impact on prices in the budget airline market.

Ryanair had refused to reimburse Denise McDonagh

The court ruling said: "EU law does not recognise a separate category of 'particularly extraordinary' events, beyond 'extraordinary circumstances', which would lead to the air carrier being exempted from all its obligations under the regulation."

The court also ruled that the regulation did not set a monetary limit on the care airlines based in the EU should give to passengers in such cases.

The ruling continued: "It is precisely in situations where the waiting period occasioned by the cancellation of a flight is particularly lengthy that it is necessary to ensure that an air passenger can have access to essential goods and services throughout that period."

However the court did give some relief to the airlines, by stating that they "may pass on the costs incurred as a result of that obligation to airline ticket prices".

More than 100,000 flights were cancelled and eight million passengers stranded after the Icelandic volcano erupted, spewing a massive cloud of ash that caused the world's biggest airspace shutdown since the Second World War.

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FSA Reveals Scale Of New Mis-Selling Scandal

Britain's biggest banks could be facing a bill running into billions of pounds for the latest mis-selling scandal to hit the industry.

The city regulator, the Financial Services Authority, has been investigating interest rate swaps, a complex financial product which was supposed to protect businesses against rising interest rates.

Instead, they left many customers in dire financial straits with heavy debts.

The FSA has revealed that more than 90% of interest rate swaps were possibly mis-sold to small businesses.

On Wednesday, Sky News City Edtior Mark Kleinman revealed that the City regulator had set out a revised framework for small business enterprises (SMEs) to pursue possible redress.

The swaps were traditional variable rate loans combined with complex interest rate movement bets that were sold on by banks' investment divisions for massive profits.

The unregulated swaps were promoted as a type of insurance at "no cost" to shield small businesses against adverse interest rate changes, but subsequently became major liabilities.

Britain's scandal-hit banking industry now faces another hefty compensation bill after the review of the complex products.

Britain's so-called big four banks have been embroiled in the swap scandal

The FSA said a significant proportion of the 173 cases examined were likely to result in redress being due to the customer.

The potential scale and cost of the new scandal comes in the wake of mis-selling of  payment protection insurance - known as PPI - to homeowners.

Banks have prepared to payout more than £10bn over the PPI scandal.

It is thought that as many as 40,000 of the interest rate swaps could have been mis-sold to small businesses since the end of 2001 after the FSA highlighted "serious failings" in the sale of the products last summer.

The FSA announced that the UK's four big banks - Barclays, HSBC, Lloyds and Royal Bank of Scotland - have agreed to start work on reviewing individual sales and providing compensation.

The FSA has also been reviewing sales of swaps by Allied Irish Bank, Bank of Ireland, Clydesdale and Yorkshire banks, the Co-Operative Bank, and Santander UK.

It expects to confirm by February 14 that these banks can launch their own reviews.

Martin Wheatley, chief executive designate of the Financial Conduct Authority, said he hoped the FSA's actions will ensure a fair and reasonable outcome for small and unsophisticated businesses.

He added: "Small businesses will now see the result of the review as the banks look at their individual cases.

"Where redress is due, businesses will be put back into the position they should have been without the mis-sale. But it is important to remember that this review is firmly focused on the particular circumstances of each sale.

"These will determine whether there were failings in the sales process and, if so, whether redress is due."

It is thought the cost of compensating businesses could total as much as £1.5bn across the sector, with Barclays, HSBC and RBS having already set aside around £630m to cover potential claims.

The FSA has now released new guidelines for banks to differentiate between sophisticated firms that knew what they were buying and small firms which did not understand the products.

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Fuel Prices: Cost At Pump 'Is Fair'

The UK road fuel sector is "working well" according to a report into the the UK's £47bn market by the Office of Fair Trading.

The regulator said high prices at the pumps were because of increasing crude oil prices and taxes - not a lack of competition.

In the 10 years between 2003 and 2012, petrol prices increased from 76p per litre (ppl) to 136ppl, and diesel rose from 78ppl to 142ppl.

But the OFT stressed that over this period, taxes and duties rose by 24ppl and crude oil went up 33ppl.

It said has not identified any evidence of anti-competitive behaviour at a national level - where competition was strong - but admitted there could be some issues at a local level.

The regulator also found "very limited evidence" that oil and gas companies do not pass on lower crude oil prices to retailers and motorists as quickly as they could.

It comes amid concerns that pump prices rise quickly when the wholesale price of crude oil goes up but fall more slowly when it drops.

The chief executive of the OFT, Clive Maxwell, said: "We recognise that there has been widespread mistrust in how this market is operating.

"However, our analysis suggests that competition is working well, and rises in pump prices over the past decade or so have largely been down to increases in tax and the cost of crude oil."

The report did find that fuel is often significantly more expensive at motorway service stations - in August, prices were on average 7.5ppl more for petrol and 8.3ppl higher for diesel.

It expressed concern that drivers could not view prices before pulling into a service station, and said the Department for Transport should consider introducing new road signs displaying prices.

But the report also says that - pre-tax - the UK has some of the cheapest road fuel prices in Europe.

As a result of its findings, the regulator will not launch a full investigation into the road fuel market - despite calls for one from campaigners.

Quentin Willson, from campaign group FairFuelUK, said UK consumers would be disappointed by the OFT's findings.

"Every motorist and business in Britain instinctively knows that 'something's not right'," he said.

"The Americans and the Germans are holding inquiries – why aren't we?

"The OFT appears to have failed to address the key issues of why diesel is more expensive than unleaded in the UK when this is not the case in Europe, why falls in the oil price take so long to be reflected at the pump and why there are such variations in price."

But oil analyst Malcolm Graham-Wood from VSA Capital welcomed the report.

"This totally concurs with our own view that there is no collaboration and that retail petrol prices in the UK fairly reflect the price of crude oil ... for better or worse," he said.

"Groups like FairFuelUK seem to think that just because petrol prices vary from different areas that this is due to collaboration and  price fixing which is patently not the case."

More follows...

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Exclusive: Ex-HMRC Head Joins HSBC Crime Fight

By Mark Kleinman, City Editor

HSBC is to recruit a line-up of heavyweight figures including Britain's former top taxman to oversee a new effort to combat financial crime following the bank's $1.9bn settlement of money-laundering allegations late last year.

I have learnt that Dave Hartnett, former head of Her Majesty's Revenue & Customs (HMRC), and Bill Hughes, former head of the Serious Organised Crime Agency, are among a group that will head a new financial crime committee that will be set up to ensure tighter compliance with tightening global regulations.

The formation of the committee, which will report directly to Douglas Flint, HSBC's chairman, and Stuart Gulliver, its chief executive, is expected to be announced today, according to insiders at the bank.

It follows HSBC's settlement in December of allegations by US regulators that it had moved billions of dollars in cash from its affiliate in Mexico to the US despite concerns raised with HSBC that the money could only have involved proceeds from illegal drugs. The $1.9bn fine was the largest ever handed out to a bank.

Mr Gulliver said at the time of the settlement:

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes.

"Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."

Under the terms of the settlement, HSBC's business in the US is subject to strict supervision over a five-year period, although it averted the worst-case scenario of being stripped of its licence to operate there.

The creation of the financial crime sub-committee will be presented by the bank as an attempt to demonstrate its determination to prevent a repeat of the Mexican scandal.

HSBC, which declined to comment, is also understood to have been in talks with Nick Fishwick, a former MI6 officer, about joining the financial crime committee, although the final line-up was unclear on Wednesday morning.

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Tax Deadline: 1.8m Still To File Returns

By Pete Norman, Sky News Online

Nearly two million people have still to file their self-assessment tax returns before tomorrow's deadline, Sky News has learned.

Although a total of 8.8 million returns have so far been filed, a further 1.8 million must get their online returns in before Thursday's midnight deadline to avoid being hit with an automatic penalty.

The £100 fine for filing of the document on February 1 or later is imposed even if workers have already paid any tax due for the year or no tax is liable.

An HM Revenue and Customs (HMRC) spokesman told Sky News: "If you still haven't sent in your tax return, you've got until tomorrow to file to avoid a penalty – and please also make sure to pay what you owe."

The Tax Office said that on Tuesday a total of 321,000 people filed the returns – at a rate of 13,375 an hour.

In recent years HMRC has bolstered its online data facilities to try and keep pace with online filing.

There has been a near-doubling of people filing tax returns over the internet during the past five years.

In January 2008, 45.9% of the 9.3 million returns were filed online and the figure topped 80.9% of 10.5 million returns by last January.

HMRC recently revealed that on Christmas Day 1,548 people also filled in forms while another 4,685 people filed on Boxing Day.

On January 31, 2012 a technical fault left deadline day self-assessment taxpayers unable to check their payment status.

Sky News understands the fault was caused by outside payment service providers and not internal Tax Office systems.

The glitch occurred as HMRC was inundated with returns on deadline day.

Days later HMRC said that a total of 90.4% of taxpayers had met that self-assessment deadline.

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Yahoo! Reveals Search Focus As Revenue Rises

Yahoo! has reported better than expected results for the fourth quarter as it outlined plans to boost its search engine.

Strong search advertising sales helped revenues at the internet company grow for the first time in four years - by 2% year-on-year to $1.3bn (£830m).

Shares in the company rose following the results, despite an 8% fall in profit from a year earlier to $272m (£173m).

But chief executive Marissa Mayer, who took the helm in July, said the company still had a long way to go.

"While the road to growth is certain, it will not be immediate," the former Google engineer and executive said.

Looking ahead, the company expects revenues of between $4.5bn (£2.87bn) and $4.6bn (£2.93bn) this year - which would mean an annual growth rate of 0.7% to 3%.

Marissa Mayer became Yahoo!'s third boss since September 2011

Ms Mayer unveiled plans to focus on improving Yahoo! search.

"There is a big push we want to make on search - we have lost some share and want to regain that share," she said.

In 2009, Yahoo! signed a 10-year deal with Microsoft which sees Bing power its search functions, but leaves Yahoo! free to personalise query results.

The company also outlined plans to overhaul many of its other online services to boost the amount of time users spend on its websites.

As a result, it warned investors to expect "an investment phase" in the first half of 2013, which would hit profit.

Ms Mayer said she was proud of Yahoo!'s results - the first full-quarter results she has overseen at the company.

"During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo! Mail and Flickr," she said.

"At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the company."

These changes include the introduction of free smartphones and food by Ms Mayer.

She became Yahoo!'s third boss since September 2011 when she took the helm, following a rocky period at the company.

Former chief executive Scott Thompson resigned after less than six months following questions about his academic credentials, while co-founder Jerry Yang cut ties with the company.

Shares in Yahoo! have risen by around 30% since Ms Mayer took over, reaching their highest levels since 2008.

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French City Sells Off Its Wine Cellar For Aid

A French city has sold off thousands of bottles of treasured wine from its cellar to help pay for local social services.

Dijon auctioned 3,500 bottles of Burgundy and raised 151,620 (£130,000) for its emergency aid for social action.

The sale was authorised by the socialist mayor of the city, Francois Rebsamen, as a way of filling funding shortfalls.

The city was renowned for the wines offered at formal banquets and as three-bottle mementoes given to visiting VIPs.

Charity wine auctions are common in Burgundy, like this one in Beaune

"The tradition was for the mayor to offer its prestigious guests - ambassadors, foreign delegations, and ministers - a set of three bottles when they are received at the town hall," Mr Rebsamen said.

The mayor said that the stock was so large that it may not have been able to give them all to guests.

"There were many old wines and I'm not sure I would have found the opportunity to offer them," Mr Rebsamen said.

While 80% of the raised funds will go to social care the remainder will be spend on reapairs to the cellar, the mayor said.

The city has retained nearly 300 cases of fine wine in its cellar.

Sunday's four-hour auction at the former palace of the Duke of Burgundy attracted hundreds of bidders and watchers, with one bottle going for 4,800 euros (£4,100) - nearly five times the estimate.

Mayor Francois Rebsamen and President Francois Hollande

The bottle of 1999 Vosne-Romanée Premier Cru Cros Parantoux Henri Jayer, was bought by a "mysterious Chinese" man named Wang Dongming, according to website Infos-Dijon.

President Fracois Hollande's government has warned regional authorities that they must be prepared to burden share as budget cuts take effect.

"We did not need the funds for the city budget but I thought it was a beautiful idea for social help," mayor Rebsamen said.

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Demand For High Street Shops Is Falling

Demand for retail space continues to drop, according to new research, fuelling fears about the future of the UK's high streets.

Rental values are also predicted to fall further as the amount of unoccupied floor space rises, a survey by the Royal Institution of Chartered Surveyors (RICS) revealed.

During the last three months of the year, fewer businesses looked to rent retail premises resulting in a steady increase in empty sites across the country, it said.

This fall does not take into account the collapse of three high street stalwarts in recent weeks.

HMV, Jessops and Blockbuster have all called in administrators since the start of 2013, and electrical retailer Comet collapsed in November last year.

London surveyors reported the largest falls in demand since the middle of 2009, although Wales and the Midlands fared better - with the amount of interest from potential occupants staying the same.

Shopping centre owner British Land said demand for its premises had risen

Simon Rubinsohn, RICS' chief economist, said the end of last year was an "incredibly tough period" for the UK's high streets.

"Sadly, this downbeat picture doesn't look like changing any time soon with demand for retail space continuing to drop and more empty premises set to blight the country's town centres," he said.

However there was an increase in demand for office space and industrial units in the last quarter of 2012 - albeit from low levels. 

"Only time will tell as to whether this is a genuine sign of recovery, it is encouraging that appetite is gradually growing in these areas as businesses look to expand," Mr Rubinsohn added.

But not all types of retail spaces have experienced the same fall in demand. 

British Land - which owns premium retail parks, shopping centres and department stores - said it had experienced a rise in lettings and leases.

In a management statement the company reported "encouraging levels of demand across the business both from existing and new occupiers".

"So despite subdued economic growth, weak consumer spending and an increased level of retailer administrations, occupancy across our UK estate remained high with administrations low," it said.

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Dreamliner: Checks Fail To Find Battery Fault

Boeing 787 Dreamliner Timeline

Updated: 10:17am UK, Monday 28 January 2013

The turbulent history of the Boeing 787 Dreamliner:

Jan 30, 2013: Amid revenue loss forecasts of $500m to $5bn, Boeing CEO to address investors.

Jan 28, 2013: Investigators widen battery examination to sub-contractors of lithium ion battery maker GS Yuasa

Jan 21, 2013: Safety officials start probe of lithium ion battery maker GS Yuasa

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines

Jan 18, 2013: US Federal Aviation Administration (FAA) officials arrive in Japan to examine a 787 and its melted battery pack after an All Nippon Air (ANA) emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Toyota's Record Sales Make It Top Carmaker

Toyota has reported vehicle sales of 9.75 million in 2012 - an increase of more than 22% on the year before.

The Japanese company beat its own estimate - of around 9.7 million cars - to overtake rivals General Motors (GM) and Volkswagen to become world's number one carmaker.

Toyota's overseas sales jumped 19% last year, while in Japan - where the economy is struggling - sales recovered by 35%.

The company lost the top-selling title in 2011 after two years at the top following the earthquake in Japan and floods in Thailand which disrupted its supply chain.

It was also hit by negative publicity after a number of embarrassing car-safety recalls in the US involving millions of vehicles.

Toyota's Prius is the world's best-selling hybrid car

The company, which makes the Prius hybrid and Lexus luxury model, hopes to beat last year's record-high figures in 2013, forecasting sales of 9.91 million vehicles group-wide.

The world's number two carmaker - Detroit-based GM - sold 9.28 million vehicles, up almost 3% on the previous year.

It had been the top-selling company for more than seven decades before losing the title to Toyota in 2008, but regained it again in 2011.

Germany's Volkswagen came third with sales up 11.2% at 9.07 million vehicles.

Toyota played down the significance of the rankings.

"Rather than going after numbers, we hope to make fine products, one by one, to keep out customers satisfied," spokeswoman Shino Yamada said.

"The numbers are just a result of our policy and our policy will continue unchanged."

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Pensions Schemes Shut 'At Fastest Rate Ever'

Companies have closed final salary pension schemes to new staff at the fastest rate on record, according to new research.

The National Association of Pension Funds (NAPF) said only 13% of final salary pensions were open to new joiners last year, a fall of a third from 2011.

It was the biggest reduction since comparable figures started in 2005, when almost half of private sector schemes were open to all employees.

The association's annual survey also showed that the defined benefit funds were increasingly closing to workers already in them.

Higher liabilities created by quantitative easing and low gilt yields have prompted a "barrage" of closures, said the NAPF.

Chief executive Joanne Segars said: "The pressures on final salary pensions have proven too great for many businesses.

"Those starting a new job in the private sector have next to no chance of getting a final salary pension.

"What was once the norm is now a very rare offer, and those who are currently saving into one may find it gets closed."

Although two million private employees are in the schemes a new automatic enrolment system will bring millions of workers into a new pension type that will dominate in the private sector, the association added.

Paul Kenny, general secretary of the GMB union, said: "The recently announced state pension reforms will cost private sector employees about £1bn in extra tax and will further accelerate the juggernaut of final salary closures.

"Many employers aren't interested in providing for a dignified retirement for their workers. The new requirements for automatic enrolment will provide a minimum framework, but this won't be enough."

A Department for Work and Pensions spokesperson said: "Millions of people still benefit from final salary schemes, but their increasing costs means that over the decades many have closed to new members.

"Automatic enrolment into a workplace pension will see many millions more people saving for their retirement, with a contribution from the employer.

"We are working with the industry to ensure that pensions people will be enrolled in continue to be high-quality, low-cost, and we encourage all those who can to go beyond the minimum contribution to ensure they get a retirement income that meets their aspirations."

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UK GDP Falls By 0.3% In Last Quarter

How GDP Is Compiled Really Matters

Updated: 10:21am UK, Tuesday 27 November 2012

By Ed Conway, Economics Editor

I've covered economics for a decade or so, but I confess that until very recently I didn't really know what GDP really is.

I mean, like most of you I knew it was the broadest and most widely-used measure of our economy's health - that it determines whether we're officially in recession or not (two or more quarters of shrinking GDP equals a recession).

I knew it was the sum of everything spent, earned or made in Britain.

What I didn't know was how it's actually put together.

I guess I vaguely assumed - and I don't think I'm entirely alone - that the Office for National Statistics had some kind of electronic hotline into British business, some privileged access to their numbers, which in turn became the Gross Domestic Product number.

Turns out I was monumentally wrong.

For it transpires that GDP - that big number we're all so focused on, the figure that tells us whether we're in a recession or booming, that can end a political career and swing an election - is actually a big, big survey.

I know this because earlier this month I spent some time in the ONS headquarters in Newport with the team who put together this most significant of all numbers.

For the first time, they allowed cameras into their offices to show how GDP really comes into being - and the genesis might well surprise you.

At this point it might be worth explaining why this matters so much: there is arguably no other number out there that can swing the financial markets quite so much, that can influence Britain's feelgood factor, that dominates the headlines and strikes fear into politicians.

And yet there are many people who question whether we can really rely on the numbers.

Some economists argue that the GDP figures in recent months have painted a far more negative picture of the UK economy than is actually the case.

Some argue that Britain never really experienced a double-dip recession - but that this reality will only ever be confirmed many years into the future when the ONS revises those initial estimates.

So how GDP is put together really matters. And it all starts with the pounds in your pockets.

The first estimate of GDP is created from data collected in surveys of tens of thousands of surveys from businesses around the country - whether they're manufacturers, construction firms, retailers or others.

Each month a large sample of them is asked by the ONS to tell them their turnover (how much money is going through the till), along with a few other industry-specific questions which form part of the retail sales, manufacturing output and other releases.

The turnover number is what matters from the perspective of GDP. They fill the relevant questionnaire in and post it to the ONS (they can also submit the data through an automated telephone system).

When those envelopes arrive there the questionnaires are scanned and the numbers go into the ONS' systems.

The problem is that by the time that first estimate needs to be produced, the ONS only has 44% of the relevant data (the rest arrives in dribs and drabs over the following months, hence later revisions). In particular, the ONS only has early responses for the final month of the quarter.

So there are some pretty big gaps to be filled, and the ONS has to make some estimates about what the other data will eventually say when it comes in.

It relies for this on computer models, backed up by assumptions and calculations from the ONS staff themselves. After they make these calls they meet and discuss them in so-called "balancing meetings" - the statisticians ask each other whether the data are reliable and their assumptions have foundation.

During this entire period, those GDP assumptions and the ultimate figure are kept locked up (quite literally - there are safes into which they are put) such that only a dozen or so statisticians actually know the number before it comes out.

So far as anyone knows, there has never been a leak of a number as sensitive as this from the ONS. But 24 hours before the figures are published, selected ministers and officials also get a look.

The figures are revised again a month after that initial release, and then again a month later. During that period, more information has come in from quarterly surveys which measure families' and businesses' incomes, and other spending data.

As I said, GDP can be measured in terms of what we spend, what we earn and what we make - they should all add up to the same number, since what one person buys another person sells. And the extra data furnishes that initial estimate and, occasionally, contradicts it.

The ONS maintains that its record of revisions is acceptable by international standards. It points out that its surveys have far more respondents than those put together by independent competitors.

But some, most notably Kevin Daly of Goldman Sachs, argue that it has a tendency to revise the more distant history so substantially that often periods we thought at the time were slumps were actually booms.

A case in point is the early 1990s - at the time, the ONS said the UK was suffering a double-dip recession.

But by the end of the millennium it had revised its assessment - far from slumping, the UK was actually bouncing back forcefully at that point. When Norman Lamont referred to "green shoots", it turns out he was absolutely right.

Today, the GDP figures have been telling an altogether different story to the unemployment figures, which seem to suggest there never was a double-dip. Based on precedent, we are unlikely to know the definitive story for years to come.

Which implies that the ONS, and the way it puts together this most important of all numbers, will remain in the spotlight for the foreseeable future.

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EasyJet Chair Rake In Departure Lounge

By Mark Kleinman, City Editor

The chairman of easyJet, Britain's biggest airline by passenger numbers and revenues, is to step down this summer after a four-year tussle with the company's founder over its fleet size and strategy.

Sir Mike Rake will leave once a successor has been identified, about three-and-a-half years after he took on the chairmanship.

EasyJet brought forward the announcement of Sir Mike's departure on Saturday afternoon following a leak to Sky News.

A statement had been due to be issued by the company next week but a spokesman said the company had decided to confirm news of Sir Mike's departure after its City advisers were made aware of the leak.

In the statement, easyJet said it had already started a process to recruit a new chairman.

The news of Sir Mike's intention to quit comes days after shares hit an all-time high on the back of a surge in more profitable business travellers using the airline. It also benefited from capacity cuts by rival carriers during the winter months.

That solid performance has not appeased Sir Stelios Haji-Ioannou, who - alongside a number of family members - is easyJet's largest investor.

Last week he threatened to sell his shareholding if the company proceeded with a major new aircraft order.

EasyJet is poised to join the FTSE 100 following its next quarterly review in March, which will mean that Sir Mike chairs two companies in the blue-chip index.

He is also chairman of BT, and was a leading candidate to replace Marcus Agius at the helm of Barclays following the bank's £290m fine for Libor rate-rigging.

"In advance of the forthcoming [annual general meeting] I wanted to make my position clear," Sir Mike said. 

"easyJet has by any definition enjoyed a period of success and profitable growth in the last three years. 

"As this takes the airline to the threshold of entry to the FTSE 100 it is the right time for me to stand down.

"Carolyn McCall and her management team have developed and implemented the right strategy for the airline which is already bearing fruit wth record profits, a healthy share price and strong dividends.

"The airline is now well positioned to continue to deliver profitable growth and returns for all its shareholders."

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Payday Loan Sites' Dirty Tricks To Boost Traffic

By Jason Farrell, Sky Correspondent

A Sky News investigation has found that some payday loan brokers have benefitted from hacking into websites to divert the history and status of a legitimate business to their domain.

This increases their ranking on Google, and the tactic has given unregulated brokers access to online traffic worth millions of pounds.

The findings come as the Office of Fair Trading (OFT) prepares its report into dirty tricks in the market, due to be published in February.

Every month, tens of thousands of potential customers use Google to search for payday loans.

The search engine has a complex algorithm based on a website's history and credibility which tries to ensure that users are directed to the most appropriate websites.

However, Google's natural listings system can be tricked. Sky News found three payday websites that were stealing the credibility of other websites to boost their ranking. The target victim sites included a music business, a graduate website and even a church website.

In November last year, Sky News discovered established music licencing website Ricordi was one of several domains that began ranking highly for selling payday loans on the front pages of Google. Clicking on the link diverted the user to a payday broker's site.

Dr Joseph Somerhalder says brokers have been 'stealing identities'

Web analyst Dr Joseph Somerhalder from search optimisation company Chillicow explained what was happening.

He told Sky News: "They hack into the website. They optimise the website for something that it is not about such as payday loans. Then they wait for the right moment, and then they forward all the history and all the credibility from the old website, the legitimate business, into the illegitimate business."

He added: "It's a bit like stealing your identity online. They take the website's identity and history and they point it somewhere else."

Ricordi is owned by Universal Music Group. A spokesperson for the company said: "We recently discovered the unauthorised access to our Ricordi UK website. UMG takes the protection of its sites very seriously and has implemented measures to prevent a recurrence of this type of event."

But other companies may not be aware of the hacking. Using web analysis software, we found that over 10,000 websites have been compromised by this technique on one server alone.

Sky News spoke to the owners of UK graduate website Gradfunding which was also in the process of being hijacked.

Dr Luke Blaxill, director of the website, said he was also trying to deal with the problem.

"To get rid of this we are going to have to rewrite every bit of code on the website and transfer it to a new server."

The payday loan intrusion meant his company was starting to fall down the listings for its own business operations and it could lose years of building up an online reputation.

Dr Blaxill said: "It has taken years for us to get to the position that we are in this particular market and for that effectively to be almost rewritten overnight by a scammer, is a real problem."

Gradfunding was among the target victim websites

Raiham Islam from Jar Applications, which fixed the problem for Gradfunding, told Sky News: "What they did was inject a malicious code into the web server, and the files trick Google by the method of cloaking.

"They then bomb the site with payday loan links to increase its ranking for payday loans and redirect the traffic to their scam website. That's when the hacker starts making money."

During the investigation we found church website Canada had been hacked for this purpose. We also discovered 21,000 payday loan links had been pointed at a Bonsai society website.

There are concerns these tactics leave UK loan customers exposed to unscrupulous, unregulated brokers.

Over the last two months Sky News conducted test searches on Google for payday loans which produced websites high in the natural listings that were in breach of OFT regulations.

Several had no consumer credit licence, a requirement for any loan broker and lead generator.

Some websites claimed to be 100% secure, but actually had no data protection when customers entered their bank details. This exposes customers to fraud and identity theft.

We also found many websites broke legal requirements on transparency to customers, such as failing to prominently display a representative APR or an address where the company can be contacted.

Sky News found three payday websites involved in dirty tricks

Some legitimate lenders in the industry have told us they are aware of the problem. Many of them advertise on Google's pay per-click service as an alternative to the natural listings.

One lender who did not want to be identified suggested the price of Google's sponsored links have gone up because demand has increased with legitimate companies struggling to get on the natural listings.

"Google could solve this problem by tightening up their algorithm" he suggested. "But they have no incentive to do so. We're all having to use the sponsored listings to get any traffic to our websites."

He added: "But customers don't realise that some companies on the natural listings don't have a consumer credit licence, which means they don't have to tell the customer how much they're going to pay back, which feeds into some of the problems we're seeing at the moment of customers not able to pay back their loans."

Google says its key motivation is to try to direct customers to the best websites.

A spokesman told Sky News: "As part of our on-going effort to reduce webspam and return high-quality websites to our users, we are constantly improving our search algorithm to better detect and decrease rankings for sites that we believe are violating Google's quality guidelines and engaging in webspam tactics to manipulate search engine rankings."

For legal reasons we are not naming the websites linked to hacking but we have passed our evidence to the OFT, which told us: "The OFT is clear regarding the standards it expects from those businesses that it regulates and has publicised an extensive suite of guidance documents. We take very seriously any evidence tending to show that businesses are not meeting the standards set out in our guidance.

"The guidance for credit brokers and intermediaries states that creditors should satisfy themselves that persons they deal with are appropriately licenced. Accepting leads from unlicensed sources would raise concerns about a lender's fitness to hold a consumer credit licence."

At one point during our investigation we found the highest ranking website on Google was a four-day-old domain registered to a field in California.

Just a few days in this position can earn the web owner tens of thousands of pounds. Yet this site was in breach of several regulations and displayed nothing on the website to suggest it was licenced to sell loans in the UK.

Last November, the OFT opened formal investigations into the tactics used by an number of payday lenders. But if the regulator wants to properly police the market, it seems it is going to have to work with Google.

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UK GDP Falls By 0.3% In Last Quarter

How GDP Is Compiled Really Matters

Updated: 10:21am UK, Tuesday 27 November 2012

By Ed Conway, Economics Editor

I've covered economics for a decade or so, but I confess that until very recently I didn't really know what GDP really is.

I mean, like most of you I knew it was the broadest and most widely-used measure of our economy's health - that it determines whether we're officially in recession or not (two or more quarters of shrinking GDP equals a recession).

I knew it was the sum of everything spent, earned or made in Britain.

What I didn't know was how it's actually put together.

I guess I vaguely assumed - and I don't think I'm entirely alone - that the Office for National Statistics had some kind of electronic hotline into British business, some privileged access to their numbers, which in turn became the Gross Domestic Product number.

Turns out I was monumentally wrong.

For it transpires that GDP - that big number we're all so focused on, the figure that tells us whether we're in a recession or booming, that can end a political career and swing an election - is actually a big, big survey.

I know this because earlier this month I spent some time in the ONS headquarters in Newport with the team who put together this most significant of all numbers.

For the first time, they allowed cameras into their offices to show how GDP really comes into being - and the genesis might well surprise you.

At this point it might be worth explaining why this matters so much: there is arguably no other number out there that can swing the financial markets quite so much, that can influence Britain's feelgood factor, that dominates the headlines and strikes fear into politicians.

And yet there are many people who question whether we can really rely on the numbers.

Some economists argue that the GDP figures in recent months have painted a far more negative picture of the UK economy than is actually the case.

Some argue that Britain never really experienced a double-dip recession - but that this reality will only ever be confirmed many years into the future when the ONS revises those initial estimates.

So how GDP is put together really matters. And it all starts with the pounds in your pockets.

The first estimate of GDP is created from data collected in surveys of tens of thousands of surveys from businesses around the country - whether they're manufacturers, construction firms, retailers or others.

Each month a large sample of them is asked by the ONS to tell them their turnover (how much money is going through the till), along with a few other industry-specific questions which form part of the retail sales, manufacturing output and other releases.

The turnover number is what matters from the perspective of GDP. They fill the relevant questionnaire in and post it to the ONS (they can also submit the data through an automated telephone system).

When those envelopes arrive there the questionnaires are scanned and the numbers go into the ONS' systems.

The problem is that by the time that first estimate needs to be produced, the ONS only has 44% of the relevant data (the rest arrives in dribs and drabs over the following months, hence later revisions). In particular, the ONS only has early responses for the final month of the quarter.

So there are some pretty big gaps to be filled, and the ONS has to make some estimates about what the other data will eventually say when it comes in.

It relies for this on computer models, backed up by assumptions and calculations from the ONS staff themselves. After they make these calls they meet and discuss them in so-called "balancing meetings" - the statisticians ask each other whether the data are reliable and their assumptions have foundation.

During this entire period, those GDP assumptions and the ultimate figure are kept locked up (quite literally - there are safes into which they are put) such that only a dozen or so statisticians actually know the number before it comes out.

So far as anyone knows, there has never been a leak of a number as sensitive as this from the ONS. But 24 hours before the figures are published, selected ministers and officials also get a look.

The figures are revised again a month after that initial release, and then again a month later. During that period, more information has come in from quarterly surveys which measure families' and businesses' incomes, and other spending data.

As I said, GDP can be measured in terms of what we spend, what we earn and what we make - they should all add up to the same number, since what one person buys another person sells. And the extra data furnishes that initial estimate and, occasionally, contradicts it.

The ONS maintains that its record of revisions is acceptable by international standards. It points out that its surveys have far more respondents than those put together by independent competitors.

But some, most notably Kevin Daly of Goldman Sachs, argue that it has a tendency to revise the more distant history so substantially that often periods we thought at the time were slumps were actually booms.

A case in point is the early 1990s - at the time, the ONS said the UK was suffering a double-dip recession.

But by the end of the millennium it had revised its assessment - far from slumping, the UK was actually bouncing back forcefully at that point. When Norman Lamont referred to "green shoots", it turns out he was absolutely right.

Today, the GDP figures have been telling an altogether different story to the unemployment figures, which seem to suggest there never was a double-dip. Based on precedent, we are unlikely to know the definitive story for years to come.

Which implies that the ONS, and the way it puts together this most important of all numbers, will remain in the spotlight for the foreseeable future.

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BlackBerry Crumble? New Phones May Save Brand

BlackBerry's latest smartphones could see it return to glory after several years in decline, according to experts.

Parent company Research In Motion (RIM) plans to launch two handsets, the Z10 and X10 on Wednesday. Pictures leaked online purporting to be the Z10 show a touchscreen phone along similar lines to the iPhone. The X10 is believed to be more of a classic BlackBerry, with a Qwerty keyboard.

A new tablet device is also in the pipeline.

The new BlackBerry 10 (BB10) handsets and software could lead to the firm's "resurrection", one expert says, after it saw its popularity wane in favour of phones like Apple's iPhone and Samsung's Galaxy S3.

Malik Kamal-Saadi, principal analyst with Informa, who has used the device ahead of the launch, says it has high specifications that allowed users to do "good stuff in a couple of clicks", which would appeal to both businesses and consumers.

He said the new operating system (OS) on the two expected handsets was a "trump card" that could see it win back customers lost through the poor performance of the previous BlackBerry 7 phones.

"The 'experience' is very attractive for business users and consumers. BB10 has what is needed to seduce back in both developed markets (Europe and North America). I haven't seen anything like it in terms of the experience," said Mr Kamal-Saadi.

Ernest Doku, technology expert with uSwitch.com, said: "For RIM and BlackBerry, it is very much the resurrection of the BlackBerry brand.

"Consumers have been waiting a long time to see what they were coming up with. They have fallen to the wayside but a lot of signs are pointing to this being their return to relevance in the smartphone market."

But some question whether the latest BlackBerry launch, delayed from last year, is too little too late.

Russell Feldman, associate director for technology and telecoms consulting at YouGov, said: "We know that right now RIM is in a poor situation, and so there is definitely a lot of pressure for the BlackBerry 10 to deliver.

"According to SMIX UK, our consumer smartphone tracker, two-thirds of RIM's current customers do not expect to get a BlackBerry again, with most opting to switch to an iPhone.

"It needs to be a decent system to at least get critics on its side, and it then could have the potential to take share away from others. However, RIM may have left it too late."

Blackberry was the market leader in 2007, but the launch of the iPhone and Android smartphones has reduced its market share to around 5%.

RIM is also paying for a US Superbowl advert to help promote its new products.

The event attracts one of the biggest TV audiences of the year in America and companies pay millions of dollars for advertising time.

The battle for domination of the mobile and tablet market has become increasingly heated in the past 18 months, with Apple's competitors taking it on with a series of new products.

Samsung's Galaxy smartphones have outsold the iPhone for a fourth consecutive quarter, according to recent figures.

While Nokia and Microsoft have joined forces to launch two new phones which run on the Windows operating system.

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Latest GDP Drop Puts Pressure On Osborne

A lot of people suspected the news would not be good. It turns out it was even worse than expected.

Britain's economy is shrinking once again - and far deeper into negative territory than was anticipated.

That 0.3% decline in the fourth quarter of 2012 leaves Britain's gross domestic product 3.3% shy of its 2008 peak.

It's deeply embarrassing for the Chancellor, who told Sky News earlier today that despite this setback it was "a reminder that Britain faces a very difficult situation.

"We have problems at home but there are also problems abroad. You can either run away from them - and the British public understand there is no overnight solution and we are heading in the right direction."

But according to the Shadow Chancellor, Ed Balls, the figures are the "moment when David Cameron and George Osborne's complacency is completely exposed".

And it leaves the UK even further shy of its international counterparts. In Canada, the US, Germany, China and plenty of other major countries, GDP has already rebounded to the level it was before the crisis.

Britain, on the other hand, remains below that peak - even five years after the crisis started.

The National Institute for Economic and Social Research defines a depression as a "period when output is depressed below its previous peak."

IMF chief economist Olivier Blanchard said Osborne needs to change his plan

By that definition, Britain is still stuck in a depression - and this depression is longer than any in recorded economic history: even the 1930s.

In the end, this is the challenge for George Osborne. Britain's total capacity to produce wealth - which is in essence what GDP measures - has diminished substantially during this crisis. That, when it comes down to it, is what lies behind the squeeze so many families are facing on their incomes.

And the economy's inability to regain meaningful growth is something that should concern the Chancellor. There is now growing pressure (even more than the significant amount there was before) for him to reconsider his fiscal plans.

It isn't merely Nick Clegg: the International Monetary Fund's chief economist, Olivier Blanchard, believes that having warned Mr Osborne multiple times that he needs to be ready to change course if the UK economy disappoints, that moment has now come.

Whether this pressure will be enough to force Mr Osborne to change course is another question. He has been so forthright about the need for austerity all the way through the crisis that it would surely be politically humiliating to do an about-turn now.

And indeed, the evidence is that the austerity practiced in the UK hasn't actually been as aggressive as the Chancellor has made it sound.

However, the Chancellor refused to answer whether he agreed or disagreed with Mr Blanchard's advice.

Pointing to alternative support from the former IMF chief economist he said: "You're going to get economists disagreeing. I'm absolutely clear: we have the right plan. It was not a plan that was going to deliver results overnight." 

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Samsung Q4 Profits Surge 76% Over Smartphones

Samsung has seen its quarterly profits soar by 76%, boosted by the popularity of its Galaxy smartphones, which have outsold the iPhone for a fourth straight quarter.

Net profit for the final quarter of 2012 totaled 7.04 trn South Korean won (£4.1bn), up from 4.01trn a year earlier. 

Sales for the final quarter of 2012 rose 19% over the previous year, and operating income jumped 89%.

Samsung, which overtook Apple as the top smartphone maker last year, said increased sales of the phones were the key source of its profit growth.

Its operating profit from the division that makes and sells smartphones and tablets more than doubled to 5.44trn won in Q4, up from 2.56trn a year earlier.

Most analysts believe Samsung shipped more than 60 million smartphones, including the Galaxy S III and Galaxy Note II, during the three months ending in December, which would put the year's smartphone sales at more than 200 million.

On Wednesday, Apple said it sold 47.8 million iPhones in the quarter.

Hong Kong-based research firm Counterpoint Research said Samsung took 33% market share in the fourth quarter, compared with Apple's 21%.

But Samsung said that it now expects earnings to decline during the current quarter, because of seasonally low demand for consumer electronics, post-Christmas.

The company said the growing strength of the South Korean won may harm profits, with margins reduced as a result.

Unlike Samsung, Apple is keeping its iPhone price high

However, analysts believe that Samsung could be little affected by market demand thanks to its variety of products that range from affordable to expensive devices.

Samsung, which makes dozens of handset models a year and customises them for mobile operators, also sells cheaper smartphones.

Apple, on the other hand, which keeps its iPhone price high, might see iPhone sales plateau in coming years as more consumers snap up cheaper Android phones.

Still, Apple's business has been more profitable because of the high price of the iPhone, which generates a larger profit per sales.

Samsung is expected to introduce a new flagship smartphone in its Galaxy S series as early as April, which analysts say will shore up its bottom line.

The company said consumers seeking to replace its current handset and get a faster wireless connection will drive the demand for new models, easing concerns that sales would slow because of smartphone saturation in developed markets.  

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Beer Sales Slump Blamed On Tax Policy

Beer sales in Britain have plunged for the eighth year in a row.

Figures show that 381 million fewer pints were drunk in 2012 compared to the year before.

And the British Beer and Pub Association (BBPA) blames the Government's "damaging" tax policy.

The association has joined campaign groups in calling for a review of the beer duty escalator, which was introduced in 2008 and sees tax on beer increase by 2% above inflation each year.

More than 100,000 people have signed a petition in protest at the extra tax, urging the Chancellor to announce in the March Budget that it will be scrapped.

Pub beer sales slumped by 4.8% in the final quarter of 2012 compared with a year earlier, with total beer sales down by 4.7% over the year.

Beer sales in supermarkets fell by 7.5% in three months to Dec 2012

Sales of beer in supermarkets and shops fell by 7.5% in the final three months of 2012 compared to the previous year, while sales in pubs, bars and restaurants were down by 4.8%.

Overall, beer sales have fallen every year since 2005.

Brigid Simmonds, chief executive of the BBPA, said: "These figures show that the Government needs to stop its full-on tax assault on our vital beer and pub industry.

"We've had tax hikes of 42% since March 2008, which is hugely damaging and completely unacceptable for such an important manufacturing sector.

She added: "Instead, we could be protecting and creating jobs at a time when the country most needs it."

Beer sales support around a million jobs and generate almost £8bn in tax revenues, according to the BBPA.

A Treasury spokesman said: "Getting the deficit under control has meant tough choices.

"Although we have not made any changes to the alcohol duty plans we inherited from the previous Government, pubs are benefiting from action we've taken to support businesses, including a cut in employers' national insurance contributions, the business rates holiday and reductions in corporation tax."

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UK GDP Falls By 0.3% In Last Quarter

The UK's national output has fallen by 0.3% in the fourth quarter, according to the Office for National Statistics.

The contraction of gross domestic product (GDP), which was worse than most forecasts, compared to a 0.9% rise in the previous three months.

Britain now appears closer to its third recession in four years, or the so-called triple-dip recession.

GDP is seen as the broadest measure of a country's economic output, and the figure undergoes regular revision as more data reaches statisticians.

The ONS said GDP contracted partially on lower output from the North Sea resource producers and manufacturers.

Mining and quarrying were hard hit in the last quarter

Mining and quarrying also suffered its biggest fall in output since records began in 1997.

Quarries supply a range of other sectors including construction, railways and road-building - including pothole repairing.

The ONS also said it was the biggest contraction in Government and other services sector since the second quarter of 2008.

The figure now raises more concerns over the economic policy of the coalition Government.

On Thursday it defended its austerity programme against criticism from the International Monetary Fund's chief economist.

The economy is now 3.3% smaller than its peak in Q1 2008, recovering only about half the output lost during the financial crisis - a worse performance than other major economies.

The disruption to North Sea oil and gas fields was partially attributed to a maintenance programme which saw the shut down of certain key pumping infrastructure.

This knocked 0.18% off GDP, while slightly smaller amounts of damage were done by a fall in factory output and in the 'Government and other services' category.

Britain's high streets have been hit by four major chain collapses recently

In the third quarter this sector was boosted by the London Olympics effect on sports and recreation services.

At the start of 2013 one-off factors, such as January's snow, may seal the fate of an economy on a knife-edge between growth and contraction, with major retailer John Lewis already warning that snow had hit sales growth.

Some experts believe the country can still avoid the feared return of recession.

Experts on the Sky News Money Panel had mixed feelings on the results and risk of triple-dip, ahead of the results.

Ross Walker, UK economist at RBS Global Banking & Markets, said: "I think a formal triple-dip will be narrowly avoided.

"The early signs of chaos around the January snow fall threatened to tilt the balance of risks the other way but, anecdotally, the disruption to the wider economy does not seem as bad as initially feared."

James Daley, money editor at Which?, added: It's quite possible that Britain is heading for a triple dip recession - though I think the importance of this could be overplayed.

"The economy has effectively been flatlining for almost four years now - with the odd quarter or two of growth quickly offset by a few quarters of contraction.

North Sea infrastructure maintenance adversely affected the GDP

"Sadly, there are still no greenshoots of recovery, and with many of the public sector cuts still working their way through, 2013 looks set to be another tough year for consumers."

Asked how the retail sector could be improved, Louise George from Peter Popple's Popcorn, said: "(The Government) could offer more funding and support for small and medium-sized enterprises (SMEs).

"So that they are able to grow their businesses and are able to offer lower prices to consumers through economies of scales of having more cashflow."

Anthony Thomson, the founder and former chairman of Metro bank also warned of the disparity between SMEs and and large firms.

"We continue to be a two-speed economy in the business sector. Small businesses are still keeping their heads down and hoarding cash," Mr Thomson said.

"There is credit available for them if they want it but they are being very cautious. Big businesses are using the incredibly low interest rate environment to tap the bond market, bypassing traditional bank lending."

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Wake Up On Tax, Cameron Tells Companies

David Cameron has declared that companies who want to do business in Britain must pay their fair share of tax in a strident speech at Davos.

The Prime Minister said abuse of tax systems was "an issue whose time has come" and that he wanted to make sure individuals and companies "pay their fair share".

He vowed that Britain would use its presidency of the G8 group of rich nations to push for global action against tax evasion and "aggressive" tax avoidance by firms and the super-rich.

At the World Economic Forum in Switzerland, he told an audience of CEOs and investors: "I am a low-tax Conservative but I'm not a companies-should-pay-no-tax Conservative."

"Individuals and businesses must pay their fair share," he insisted as he urged world leaders to ramp up their efforts. "This is a problem for all countries not just for Britain," he said.

In some of his strongest language about the issue to date, Mr Cameron turned on businesses using intricate mechanisms to minimise their payments.

"Any businesses who think that they can carry on dodging that fair share or that they can keep on selling to the UK and setting up ever-more complex tax arrangements abroad to squeeze their tax bill right down - well, they need to wake up and smell the coffee because the public who buy from them have had enough," he said.

The Prime Minister did not mention any companies by name but both Starbucks and Google have recently come under fire for manipulating transfer prices to shift profits into low tax jurisdictions.

Starbucks and Google both insist that they fully comply with UK tax law but the revelations about their payments, among those of other firms, sparked a major backlash last year.

"There's nothing wrong with sensible tax planning, and there are some things governments want people to do that reduce tax bills, such as investing in pensions, start-up businesses or charities," Mr Cameron said.

"But some forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues and it's time to call for more responsibility and for governments to act accordingly."

During a brief question and answer session, Mr Cameron shrugged off concerns that his stance on tax, coupled with his position on Britain and the European Union, would deter investors.

He insisted the changes in Europe could not be ignored and pointed to low corporation tax rates in Britain as a boost for businesses.

"I think Britain has a great offer for businesses. We are cutting our tax rates and going to be one of the most tax competitive countries anywhere in the world," he said.

"It is a perfectly fair argument to make to say we will cut our tax rates and be competitive but in return we do ask that people pay their fair share."

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Sony Fined Over Playstation Hack Attack

Sony has been fined £250,000 by the data watchdog over a cyberattack breach that compromised the personal information of millions of PlayStation users.

The Information Commissioner's Office (ICO) issued the penalty after it found the attack on the Sony PlayStation Network in April 2011 could have been prevented.

Personal information including customers' payment card details, names, addresses, email addresses, dates of birth and account passwords were exposed.

Sony temporarily shut down the network, a system that links gamers worldwide in live play, after discovering the massive security breach.

David Smith, ICO deputy commissioner and director of data protection, said: "If you are responsible for so many payment card details and log-in details, then keeping that personal data secure has to be your priority.

"In this case that just didn't happen, and when the database was targeted - albeit in a determined criminal attack - the security measures in place were simply not good enough.

The company said at the time that personal data from 77 million users of Sony's PlayStation network had been compromised, and users were all asked to change their passwords following the breach.

After the fine was announced the electronics giant responded and a spokesman said: "Sony Computer Entertainment Europe (SCEE) strongly disagrees with the ICO's ruling and is planning an appeal.

"Criminal attacks on electronic networks are a real and growing aspect of 21st-century life and Sony continually works to strengthen our systems, building in multiple layers of defence and working to make our networks safe, secure and resilient.

"The reliability of our network services and the security of our consumers' information are of the utmost importance to us, and we are appreciative that our network services are used by even more people around the world today than at the time of the criminal attack."

The ICO's Mr Smith added: "There's no disguising that this is a business that should have known better."

"It is a company that trades on its technical expertise, and there's no doubt in my mind that they had access to both the technical knowledge and the resources to keep this information safe."

The ICO added that following the breach, Sony rebuilt its network platform to ensure that the personal information it processes is kept secure.

Sony faced heavy criticism over its handling of the network intrusion, as it did not notify consumers of the breach until a week after it began investigating unusual activity.

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Spain: Unemployment For Under 25s Hits 60%

Unemployment in Spain for people under the age of 25 has now reached 60%, according to officially released figures.

Overall, Spain's unemployment rate has risen to its highest level since measurements began in the 1970s, as a prolonged recession and deep spending cuts have left almost six million people out of work at the end of last year.

The nationwide jobless total rose to 26% in the fourth quarter of 2012, or 5.97 million people, according to the National Statistics Institute.

That is up from 25% in the previous quarter, and more than double the European Union average.

Spain sank into its second recession since 2009 at the end of 2011, after a burst property bubble left millions of low-skilled labourers out of work and sliding private and business sentiment gutted consumer spending and imports.

Efforts by Prime Minister Mariano Rajoy's government to control one of the eurozone's largest deficits through billions of euros of spending cuts and tax hikes have fuelled anger and dampened demand.

When Mr Rajoy took office in late 2011 there were 5.27 million jobless in Spain.

The economic downturn put an average of 1,900 out of work every day through 2012 and with the recession expected to last at least until the end of 2013, net job creation is unlikely this year.

In comparison to the Spanish unemployment rate, Britain's jobless level for those aged 16-24 was 20.5% in the period September to November in 2012.

That level was unchanged compared with the previous quarter and down 1.7% compared with a year earlier.

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Google Sees Its Annual Revenue Top $50bn

Search giant Google has hit a new annual revenue high and an increase in profit, despite ploughing more money into developing smartphone and tablet technology.

"We ended 2012 with a strong quarter," Google co-founder and chief executive Larry Page said.

"We hit $50bn (£31bn) in revenues for the first time last year; not a bad achievement in just a decade and a half."

The fourth quarter profit was up 6.7% from a year earlier at $2.89bn (£1.8bn), and for the full year it grew 10% to $10.74bn (£6.8bn).

Revenue in the quarter that ended December 31 was up 36% from the same period a year earlier at $14.4bn (£9bn). For the year revenues grew to $50.2bn.

Google shares jumped more than 5% to $738.20 (£466) in after-market trading following the release of the earnings figures, which topped most Wall Street estimates.

Google dominates the US online advertising market, which grew 14.9% to $10.58bn in the final three months of last year, according to eMarketer.

The market tracker estimated that Google takes than 41% of digital ad revenue in the US and "holds more share than any other company" when it comes to online, display and mobile advertising.

Google has sought to spread the use of its Android technology

However, cost-per-click prices were down 6% from the fourth quarter of 2011, and up 2% on the third quarter of 2012.

In a conference call with financial analysts, Google executives stressed how the company is connecting with people on smartphones and tablets, and cautioned that it would take time to get newly-acquired Motorola Mobility on course.

Mr Page said he was excited about progress Google has made in handling search queries spoken to mobile devices and described the online Play shop for music, books, applications and other digital content as "on fire."

Google's mapping service programme tailored for Apple gadgets running on the iOS platform have been a hit, Mr Page said, adding that its search and email programmes are also popular on Apple devices.

"We now live in a multi-screen world - in fact, we feel naked without our smartphones," Mr Page said.

"Devices have been one of our biggest bets in the last few years, along with the software that goes with these devices."

In an indirect shot at the Apple iPad Mini launched late last year, Mr Page said Google's Nexus 7 "continues to define the seven-inch tablet category."

Google has been shedding unwanted Motorola Mobility assets since it completed its $12.5bn takeover of the company last year.

The move was seen as a grab for patents to protect Google's Android mobile operating system from legal attacks.

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JP Morgan Boss Says Sorry For 'London Whale'

The boss of JP Morgan has apologised for the $6bn (£3.8bn) loss caused to the investmet bank by the so-called London Whale trades.

JPMorgan Chase & Co chief executive Jamie Dimon said sorry to shareholders, calling it a "terrible mistake," but said the bank has moved on and is still highly profitable.

"If you're a shareholder of mine, I apologise deeply," Mr Dimon said at a presentation at the World Economic Forum in Davos, Switzerland.

"But we had record results and life goes on."

Despite the losses totalling $6.2bn from the bad trades last year, the bank still managed to earn a record $21.3bn (£13.4bn) in 2012.

The complex, but legitimate, derivatives trades were incurred by its chief investment office in London, overseen from a New York executive.

The losing trades were made in JP Morgan's London office

JP Morgan said its 2012 writedown was mostly felt in the first half, although there was a continuing "modest loss" from the trades in its third quarter.

While revenue from its fixed income trading revenue rose, helped by the Federal Reserve programme to buy mortgage debt, revenue from mortgage lending rose 36% as the US housing market continued its recovery from the bubble that started deflating five years ago.

The bank's trading hit came as the London team took bets that were designed to protect it by hedging against its other investments, but the strategy dramatically backfired.

The revelation hit banking shares across the world in May and heightened calls for more regulation in the UK.          

JPMorgan Chase still remains the largest US bank, with $2.36trn (£1.5trn) in assets as the end of last year.

Its chief investment office has since been restructured and traders and executives involved with the bad trade - referred to as the "whale" trade after the nickname of a London-based trader involved - were dismissed.

After an internal review, Mr Dimon's bonus for 2012 was cut in half from $22m (£14m) to $11m.

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Unemployment: UK Jobless Total Down 37,000

Unemployment fell by 37,000 in the three months to the end of November, with the total figure of those out of work standing at 2.49 million.

The number of people claiming jobseeker's allowance last month also fell by 12,100 to 1.56 million, the Office for National Statistics (ONS) said.

Average earnings increased by 1.5% in the year to November, but were 0.3% down on the previous month, according to the ONS.

Almost 30 million adults were in a job in the quarter to last November, up by more than 500,000 on the previous year.

The figure, giving an employment rate of 71%, is the highest since records began in 1971. The unemployment level is also at its lowest since spring 2011.

It was the 10th consecutive fall and was coupled with another cut in the number of people claiming jobseeker's allowance, which was down by 12,100 last month to 1.56 million - the lowest since June 2011.

The number of people classed as economically inactive, including those looking after a relative or who have given up looking for a job, fell by 13,000 to just over nine million.

Part-time employment fell by 23,000, but this was offset by a 113,000 increase in the numbers employed full-time in the three months to November.

Data from the ONS also showed a 26,000 increase in the number of women out of work for up to six months, to reach 571,000, which may reflect changes to the benefits system resulting in more single mothers looking for work.

The number of job vacancies in the economy increased by 10,000 to almost half a million at the end of last year, the highest number for four years.

Other figures revealed that the number of self-employed workers has increased by 7,000 to 4.2 million, while unpaid family workers fell by 1,000 to 111,000.

Long-term unemployment has also fallen, down by 10,000 for those out of work for more than two years, to 434,000, and by 5,000 for people unemployed for at least a year, to 892,000.

But the number of 16 to 24-year-olds out of work increased by 1,000 to 957,000, the first rise since last summer, although youth employment showed an increase of 12,000 as more students seek work.

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TweetDeck: Twitter Bosses Sent Closure Letter

By Pete Norman, Sky News Online

Sky News has obtained a letter sent to one of Twitter's UK companies by the business regulator, giving it written warning of impending closure.

Cardiff-based Companies House sent the letter to the two American directors of TweetDeck, at their registered London address.

The letter, dated January 22, stated: "The Registrar of Companies gives notice that, unless cause is shown to the contrary, at the expiration of 3 months from the above date the name of TweetDeck Ltd will be struck off the register and the company will be dissolved."

The letter sent by Companies House on January 22

The two directors are also top executives of the social media giant's San Francisco-based parent firm, Twitter Inc.

Dick Costolo is the social media giant's chief executive and Alex Macgillivray is general counsel and head of trust and policy.

TweetDeck is a platform used by 'power users' of Twitter and helps integrate the programme with other social media platforms, but has repeatedly failed to file compulsory accounts.

It was bought from British founder Iain Dodsworth in May 2011 for a reported £25m, but has not filed any accounts to Companies House since that time.

TweetDeck missed account filing deadlines last September and again last month.

In December Sky News revealed that both of the social media giant's British firms, TweetDeck and Twitter UK Ltd, had been fined £375 each by Companies House for separate filing oversight.

Twitter UK, which is controlled through a Dublin-based parent firm, subsequently filed its abbreviated accounts for 2011, revealing a profit of £16,500.

Twitter CEO Dick Costolo (l) and general counsel Alex Macgillivray

But TweetDeck has still not delivered accounts and has now been fined £750 and is now at heightened risk of closure and legal action.

According to Companies House, more than 2.7 million firms are actively registered and 99.1% are up to date in their filings.

Approached by Sky News, Twitter Inc declined to address the issue of continued regulatory filing problems in Britain.

Asked if it had plans to wind-down its UK subsidiary, a Twitter spokesperson said in a statement: "TweetDeck gives the Twitter experience more flexibility and allows advanced users to gain valuable insight into what's happening at this moment on Twitter.

"The TweetDeck team has been steadily innovating and improving the product, and we expect to see much more of that to come."

Last week Companies House informed the London Gazette of "a proposal to strike off" TweetDeck from the register.

TweetDeck has failed to file its compulsory accounts

The London Gazette is the official Government journal of record and allows officials at HM Revenue and Customs, along with creditors, to see firms at risk of being dissolved.

There is no suggestion TweetDeck has any outstanding tax liability.

Corporate solicitor Maung Aye, of Mackrell Turner Garrett, told Sky News: "It is particularly important for globally recognised companies to ensure that members of their group comply with any requisite filing deadlines set by the Companies Act 2006 and any other relevant legislation, to the extent it applies to them.

"What can be perceived by the directors as a relatively minor issue such as the late filing of a company's accounts, can potentially have very serious consequences including the directors of the offending company being prosecuted and ending up with a criminal record and the company being subject to a fine."

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Public Sector Net Borrowing Up By £600m

Public sector net borrowing rose to £15.4bn in December - £600m higher than in the same month in 2011.

The Office for National Statistics (ONS) data, which excludes financial interventions like bank bailouts, were slightly higher than the £15.2bn expected by economists.

It comes after an unexpected increase in November, when borrowing rose to £17.5bn - up £1.2bn from in 2011 - as a result of falling energy company profits.

The figures take total borrowing so far this financial year (excluding a one-off transfer of Royal Mail pension assets) to £106.5bn - £7.2bn higher than in the same period in 2011.

The tax and spending watchdog, the Office for Budget Responsibility (OBR), said it expects borrowing to hit £108.5bn in 2012/13, but some economists are unconvinced.

National Australia Bank's Tom Vosa said he was unsure how the Government planned to meet their borrowing requirement this year.

"The good news is that it suggests the public sector essentially has supported the economy in the fourth quarter and ahead of GDP data on Friday," he said.

"But overall, without further downward revision to borrowing data or a significant increase in income in January, it's difficult to see how the Government will meet its borrowing targets."

Martin Beck, economist at Capital Economics, added that the figures confirmed the Government's fiscal consolidation plans were still off track.

He expects borrowing for the financial year to come in above the OBR's forecast at £113bn.

However, a Treasury spokesman said the figures underlined that the recovery in the Government's finances was taking time but the economy was healing.

On Friday the ONS is expected to reveal that output contracted in the final quarter of 2012, which - combined with the borrowing figures - would put further pressure on the UK's AAA credit rating.

Currently, all three of the major credit ratings agencies now have the UK on negative outlook.

ING economist James Knightley said: "The question is how long the UK can hold on to its AAA status.

"With the US and France having been downgraded by one ratings agency in the past couple of years, another disappointing UK borrowing number and a widely expected contraction in GDP on Friday will intensify the threat of the UK suffering the same fate."

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HMV: Hilco Throws Lifeline To Retail Chain

Retail restructuring group Hilco UK has acquired the debt of HMV, effectively giving it control of the administrator-managed entertainment chain.

More follows...

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Dreamliner Fire: Investigation Widened

Boeing 787 Dreamliner Timeline

Updated: 1:50am UK, Saturday 19 January 2013

The turbulent history of the Boeing 787 Dreamliner:

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines.

Jan 18, 2013: US Federal Aviation Administration (FAA) officials arrive in Japan to examine a 787 and its melted battery pack after an All Nippon Air (ANA) emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Corporation Tax Bill Shrinks At Top Companies

Tax Office Moves To Wind-Up Late Pay Firms

Updated: 11:33am UK, Monday 21 January 2013

HM Revenue and Customs' attempts to shut down companies which are late to pay tax have jumped by 57% in a year, according to a new survey.

Business advisory firm Wilkins Kennedy said HMRC presented 5,302 petitions to wind up companies in the year ending March 31 last year, compared to 3,367 in the previous period.

As a result the Tax Office is adopting a tougher stance to late-paying business, the survey suggests.

After firms enter "compulsory liquidation" following a winding up order, a liquidator can be appointed to sell off assets to generate cash to pay creditors.

HMRC can use the wind-up orders to reclaim debts from businesses that cannot pay their tax.

According to the research, HMRC has toughened its approach to struggling businesses compared to recent years.

Anthony Cork, partner at Wilkins Kennedy, said: "When businesses run into trouble, often one of the first things they do is try to delay tax payments to help manage their cash flow - this puts businesses on a collision course with HMRC.

"HMRC does not like being used as a 'lender of first resort', and is keen to dispel the image that it is a soft touch or that the unauthorised late payment of taxes is an acceptable way for a business to resolve cash flow problems."

Government pressure on the Tax Office has increased in recent years as receipts have fallen post-global financial crisis, with further reduction from the collapse in interest rates - with the base rate now sitting at an historic low.

Fraud prosecution capability into tax evasion - estimated at £14bn by HMRC - has also increased following the merger of the Crown Prosecution Service (CPS) with the Revenue and Customs Protection Office.

In a speech due to be given on Tuesday evening, director of public prosecutions Keir Starmer is expected to say: "Working together, HMRC and the CPS have now demonstrated that it is possible successfully to prosecute not only individuals, groups and organised criminals who evade tax or excise duty, but also those who set up sophisticated but dishonest tax avoidance schemes.

Meanwhile, Wilkins Kennedy said that the jump in winding up petitions coincides with HMRC's continued tightening of access to the 'Time to Pay' business scheme that was expanded during the recession.

Late last year electricals chain Comet went into administration owing an estimated £26m in unpaid VAT and payroll taxes.

HMRC winding-up petitions have also been placed on several sporting entities in recent years, including Chester City and Rangers.

Mr Cork added: "Businesses need to be very careful about getting on the wrong side of HMRC - these figures show HMRC has become increasingly unwilling to compromise in its pursuit of missing taxes."

But the Tax Office told Sky News that action is only taken after significant consideration is taken into each firm's circumstances.

"HMRC's aim is not to wind up companies or make individuals bankrupt, but to collect, as efficiently as we can, the debts that are due," an HMRC spokesman said.

"HMRC only initiates winding up or bankruptcy action where it believes this is the best course of action to protect the interests of the Exchequer in respect of a particular debt. We do not take such action lightly.

"Anyone who is struggling to pay an HMRC debt should call us. HMRC has an outstanding track record in supporting those who are experiencing genuine difficulty paying their debts, and this approach will continue."

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