Post Office Staff On Strike Over Closures

Thousands of staff in the country's biggest post offices are striking in a row over jobs, pay and closures.

Members of the Communication Workers Union (CWU) in around 370 so-called Crown offices were mounting picket lines in protest at plans to close or franchise 70 branches.

The union said the walkout was "solidly" supported by thousands of its members, with picket lines set up outside post offices across the country.

The Post Office said that out of the 370 Crown branches, 10 were closed all day and more than 250 closed at lunchtime.

But it said that the 166 Crown branches that have external ATMs will be fully stocked for customers to withdraw cash on Saturday.

The union organised the strike because it believes 800 jobs are at risk and also staff had not received a pay rise for two years.

The Post Office put forward the restructuring plan because Crown branches were losing £40m a year and accused the union of ignoring the "harsh realities" the company faces.

Dave Ward, the CWU's deputy general secretary, said: "Our post office members are standing up against destructive plans which would slash 20% of the Crown network and are simply asking for fair treatment and job security.

"The Post Office's plans are short-sighted and would rob the network of the most productive offices while simultaneously putting hundreds of jobs at risk and potentially damaging local economies.

"We'd like to see a better vision for a successful network which maintains services in the heart of communities alongside quality jobs."

The strike follows a ballot of workers in which 88% of those who voted demanded action.

Kevin Gilliland, network and sales director at the Post Office, said: "We regret any disruption to services the CWU's call for strike action may cause to customers. Crown branches are currently losing £40m per year and this is being subsidised by public money. This cannot continue.

"The Post Office is transforming its network to improve customer experience and in turn bring in new business. We are committed to the Post Office remaining a key part of UK high streets and our plans ensure this will happen."

He said the closures - which do not apply to smaller sub-Post Offices - affect less than 1% of the total network. At the same time as closing some branches, the Post Office was planning to improve the 300 other Crown offices.

The union said it was receiving strong public support for its campaign, with petitions circulating in areas affected by the proposals.

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Cyprus Bank Deposits 'To Lose 60% Of Value'

Savers with more than 100,000 euros in the Bank of Cyprus could lose up to 60% of their deposits, two senior officials have warned.

The Central Bank official and the Finance Ministry technocrat said sums held at the country's largest lender will  lose 37.5% of their value after being converted into bank shares.

And the pair said the deposits could lose up to 22.5% more in value, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.

Both figures were speaking to the Associated Press on condition of anonymity because they are not authorised to publicly discuss the issue.

Cyprus' President Nicos Anastasiades

It comes after Cyprus agreed on Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros (£8.5 billion) in loans from the eurozone and the IMF.

Cypriot President Nicos Anastasiades defended the bailout deal, saying it had contained the risk of national bankruptcy.

"We have no intention of leaving the euro," the conservative leader told a conference of civil servants on Friday in the capital, Nicosia.

"In no way will we experiment with the future of our country," he said.

Cypriots have expressed anger at the price attached to the rescue - the winding down of the island's second-largest bank, Cyprus Popular Bank, also known as Laiki, and an unprecedented raid on deposits over 100,000 euros.

Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.

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Cyber Currency Surge Amid Eurozone Crisis

By Siobhan Robbins, Sky News Reporter

As the eurozone is rocked by the crisis in Cyprus, a cyber currency called Bitcoin has seen a surge in popularity from people looking for an alternative place to invest their money.

Bitcoins are basically virtual money which can be earned or bought. They were created four years ago by a hacker who remains anonymous.

There are no banks to control them, people just exchange them directly with each other over the internet. That makes them difficult to tax, trace or freeze.

In the last month, the Bitcoin has more than doubled in value.

It is claimed the surge is partly down to people in cash-strapped countries including Spain and Greece turning to Bitcoins in the hope of protecting their money.

Amir Taaki has helped develop the Bitcoin since it was created by a hacker

Amir Taaki, who has helped to develop it in the UK, told Sky News he believes it is a purer alternative to traditional banks.

"There are so many things that are wrong and broken with banks. Primarily, the biggest problem is I have to trust them and I have no other option.

"Bitcoin is a basic system where I can choose how much trust I put in other people.

"There is no central bank or central authority controlling it. Everyone that participates in the network is upholding the network and it's not a theoretical concept but a billion dollar market with charts and graphs and people are using it.

"Because it's decentralised and runs off a mathematical algorithm it means it can't be corrupted."

The premises where the digital currency is being developed

The huge spike in value makes it an attractive investment for some, but currency experts like Simon Smith from FxPro warns against that.

"It's totally unsafe. They might as well burn their money in a pile as far as I'm concerned. Yes, Bitcoin has doubled in value over the last month but it has every sign of being a bubble."

Bitcoin has reached an all-time high, trading at almost £60. Its market value is now more than £500m.

Some restaurants and shops already accept Bitcoin as payment and its supporters claim that in the future it will be dispensed from ATMs like pounds and euros.

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Weather: Economy Hit By Spring Snowstorm

By Nick Martin, Sky News Correspondent

Britain's fragile economy has been hit hard as a result of the spring snowstorm with some businesses reporting a slump in trade.

Some high street retailers say the cold snap kept customers away during what should have been the run-up to a busy Easter weekend.

Kingfisher, the owner of B&Q, reported a 13% drop in trade, while Next said it had seen a fall in sales during the bad weather.

Experts say the costs to the economy of the unseasonable weather could run into billions of pounds and threaten to impact on economic growth figures.

Some towns were cut off by the snow for up to a week making trading difficult on the high street.

In the Derbyshire town of Bakewell, which was badly affected by the snow, businesses were hoping the cleared roads would encourage locals and tourists back into the town.

Zoe McBurnie, owner of the Bakewell Tart and Coffee Shop, told Sky News that takings had dropped by £10,000 in just one week.

"The recession hasn't been too bad to us but the snow has been completely devastating.

"One minute you're busy and the next there's no-one coming in because the town is cut off by snow."

Some of the biggest losses were on farms where hundreds of livestock, including sheep, lambs and cattle, were claimed by the snow drifts.

On Nigel Birch's farm near Monyash in the Peak District, three calves lay dead on the yard, victims of the worse snowstorms there for 50 years.

Hundreds of sheep had to be taken inside and fed on expensive corn feed whilst stocks of silage were running low.

As lambing season enters full swing, newborns were left shivering in freezing conditions and had to be kept under heat lamps.

"This has been a very difficult week - one I want to forget," Mr Birch said.

"We've lost cattle, we're paying for new hay, feed and silage and in the end I think this spell will cost us between £5,000 and £10,000."

Tourism was also badly affected as roads became impassable and families chose to cancel holidays.

Nikki Dick, a B&B owner, said her diary was empty as guests were reluctant to book or could not get to her because of blocked roads.

"If I look at last year's diary for the same time it is full. This year we have a few bookings, but after that there's nothing.

"People have panicked and thought they're best to stay away.

"But the snow has been cleared, and we're all here open for business," she said.

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Cyprus Banks: President Makes Rallying Call

Cyprus' president has called on the country to "share the burden" of its financial crisis - as bank withdrawal limits remained at 300 euros.

President Nicos Anastasiades made a rallying call for understanding as queues formed outside banks on the Mediterranean island.

The banks reopened on Thursday for the first time since closing on March 16 to prevent people from draining their accounts at the height of the crisis.

The country has imposed daily withdrawal limits of 300 euros (£250) for individuals and 5,000 euros (£4,200) for businesses.

The limits are the first so-called capital controls that any country has applied in the eurozone's 14-year history. 

Depositors wait for the opening of a branch of Laiki Bank in Nicosia

Speaking at a civil servants union convention on Friday, Mr Anastasiades said: "The deal we agreed on, after the dramatic hours we all lived through last week, is without doubt painful.

"Everyone will have to make sacrifices as our financial situation, in the violent way in which it has developed, will oblige all of us to share the burden."

Despite the turmoil of the past weeks and harsh conditions of the rescue, Mr Anastasiades stressed that his country's future lay firmly within the euro.

"We are not going to leave, I stress, from the euro ... We will not, I stress, endanger the future of our country with dangerous experimentation."

Meanwhile, queues formed outside some banks just after opening time, but most were gone by mid-morning.

Financial strains are building on families and businesses, and the recession in Cyprus is likely to deepen.

Cyprus' banks became much bigger than the country's government could afford to rescue - more than seven times the size of the country's economy.

On Monday, Cyprus agreed to make the banks' bondholders and big depositors contribute to the rescue in order to secure 10 billion euros (£8.4bn) in loans from the eurozone and the International Monetary Fund.

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Cyber Currency Surge Amid Eurozone Crisis

By Siobhan Robbins, Sky News Reporter

As the eurozone is rocked by the crisis in Cyprus, a cyber currency called Bitcoin has seen a surge in popularity from people looking for an alternative place to invest their money.

Bitcoins are basically virtual money which can be earned or bought. They were created four years ago by a hacker who remains anonymous.

There are no banks to control them, people just exchange them directly with each other over the internet. That makes them difficult to tax, trace or freeze.

In the last month, the Bitcoin has more than doubled in value.

It is claimed the surge is partly down to people in cash-strapped countries including Spain and Greece turning to Bitcoins in the hope of protecting their money.

Amir Taaki has helped develop the Bitcoin since it was created by a hacker

Amir Taaki, who has helped to develop it in the UK, told Sky News he believes it is a purer alternative to traditional banks.

"There are so many things that are wrong and broken with banks. Primarily, the biggest problem is I have to trust them and I have no other option.

"Bitcoin is a basic system where I can choose how much trust I put in other people.

"There is no central bank or central authority controlling it. Everyone that participates in the network is upholding the network and it's not a theoretical concept but a billion dollar market with charts and graphs and people are using it.

"Because it's decentralised and runs off a mathematical algorithm it means it can't be corrupted."

The premises where the digital currency is being developed

The huge spike in value makes it an attractive investment for some, but currency experts like Simon Smith from FxPro warns against that.

"It's totally unsafe. They might as well burn their money in a pile as far as I'm concerned. Yes, Bitcoin has doubled in value over the last month but it has every sign of being a bubble."

Bitcoin has reached an all-time high, trading at almost £60. Its market value is now more than £500m.

Some restaurants and shops already accept Bitcoin as payment and its supporters claim that in the future it will be dispensed from ATMs like pounds and euros.

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Deloitte Boss Blames Law For Tax Avoidance

The chief executive of one of the big four accountancy firms, Deloitte, has blamed UK law for the money lost as a result of tax avoidance.

Speaking on Jeff Randall Live, David Sproul admitted that the problem with the tax system is "mainly the law".

He said: "There's clearly tax practices that take advantage of the rules that the Government has brought in.

"The real question is the extent to which that is accepted. And I think there's no question that business recognises that what is acceptable has changed."

As an example of a practice no longer deemed acceptable, he cited the way banks used trust arrangements to pay bonuses to employees that meant they avoided national insurance and allowed them to defer the tax on those bonuses.

"That was widely accepted and was at the time widely used, we would have advised clients on it at the time. But we would not do that now."

In the middle of the Government's stringent austerity programme, large companies that have avoided paying tax legally have prompted much public anger and protests in recent times. Ministers are also anxious to do what they can to bolster the UK's public finances in the gloomy economic climate.

In his recent Budget, Chancellor George Osborne announced a series of measures to clamp down on aggressive tax avoidance and evasion in a bid to deliver an extra £4.6bn to the Exchequer.

The new initiatives included the immediate closure of 10 loopholes; the naming and shaming of those who promote tax avoidance schemes; and a new focus on offshore tax evasion through agreements with havens such as the Isle of Man, Guernsey and Jersey.

Mr Osborne also announced a tightening of the rules for companies that choose to arrange loans, which do not attract tax, for their directors or shareholders in place of taxable salaries or dividends.

Mr Sproul said "a lot" of the current tax gap was "at the small business and sole trader end".

"Some of it clearly is at the large business end and goes to some of the points (the Chancellor) is talking about," he added.

He denied claims that accountancy firms like his own used alleged staff shortages at HM Revenue and Customs to their advantage.

"The complexity (of the tax system) is what creates the problem, not the fact that HMRC may or may not have too few staff."

Mr Sproul welcomed the Chancellor's focus in this month's Budget on making the UK's tax regime more competitive, including the move to cut corporation tax to 20% from 2015. That was "very attractive, very important and does create jobs", he said.

He added that the reason "there is not a flood of companies coming to the UK now is not about the tax system, it's about the broader uncertainty in the economy".

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Weather: Economy Hit By Spring Snowstorm

By Nick Martin, Sky News Correspondent

Britain's fragile economy has been hit hard as a result of the spring snowstorm with some businesses reporting a slump in trade.

Some high street retailers say the cold snap kept customers away during what should have been the run-up to a busy Easter weekend.

Kingfisher, the owner of B&Q, reported a 13% drop in trade, while Next said it had seen a fall in sales during the bad weather.

Experts say the costs to the economy of the unseasonable weather could run into billions of pounds and threaten to impact on economic growth figures.

Some towns were cut off by the snow for up to a week making trading difficult on the high street.

In the Derbyshire town of Bakewell, which was badly affected by the snow, businesses were hoping the cleared roads would encourage locals and tourists back into the town.

Zoe McBurnie, owner of the Bakewell Tart and Coffee Shop, told Sky News that takings had dropped by £10,000 in just one week.

"The recession hasn't been too bad to us but the snow has been completely devastating.

"One minute you're busy and the next there's no-one coming in because the town is cut off by snow."

Some of the biggest losses were on farms where hundreds of livestock, including sheep, lambs and cattle, were claimed by the snow drifts.

On Nigel Birch's farm near Monyash in the Peak District, three calves lay dead on the yard, victims of the worse snowstorms there for 50 years.

Hundreds of sheep had to be taken inside and fed on expensive corn feed whilst stocks of silage were running low.

As lambing season enters full swing, newborns were left shivering in freezing conditions and had to be kept under heat lamps.

"This has been a very difficult week - one I want to forget," Mr Birch said.

"We've lost cattle, we're paying for new hay, feed and silage and in the end I think this spell will cost us between £5,000 and £10,000."

Tourism was also badly affected as roads became impassable and families chose to cancel holidays.

Nikki Dick, a B&B owner, said her diary was empty as guests were reluctant to book or could not get to her because of blocked roads.

"If I look at last year's diary for the same time it is full. This year we have a few bookings, but after that there's nothing.

"People have panicked and thought they're best to stay away.

"But the snow has been cleared, and we're all here open for business," she said.

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Facebook: Frank Gehry Campus Gets Approval

Facebook has been given permission to go ahead with Frank Gehry's vision for a second campus at its California headquarters.

Facebook founder Mark Zuckberg met Gehry (left) during the design stage

Thousands more people will be employed at the Menlo Park site near its current Silicon Valley base.

The 433,555 sq ft building will have a rooftop park and be built on a 22-acre site.

Gehry, one of the world's most prominent architects, is known for the likes of Bilbao's Guggenheim Museum and the Walt Disney Concert Hall in Los Angeles.

The design features a rooftop park and will blend into the landscape

His creative partner told the local council that Facebook thought initial designs were too "flashy", reports the Palo Alto Daily News.

"They asked us to make it more anonymous," said Craig Webb.

"Frank was quite willing to tone down some of the expression of architecture in the building ... Our intent is that it almost becomes like a hillside, with the landscape really taking the forefront."

The company says 2,800 engineers will eventually work at the new site.

Frank Gehry is perhaps most famous for Bilbao's Guggenheim Museum

A tunnel will also connect the new campus with Facebook's existing building.

"It will be a large, one room building that somewhat resembles a warehouse," said Everett Katigbak, Facebook's environmental design manager, in a blog post last year.

"Just like we do now, everyone will sit out in the open with desks that can be quickly shuffled around as teams form and break apart around projects.

LA's Disney Concert Hall also bears Gehry's distinctive style

"There will be cafes and lots of micro-kitchens with snacks so that you never have to go hungry.

"And we'll fill the building with break-away spaces with couches and whiteboards to make getting away from your desk easy."

Facebook's expansion has seen the company grow from a Harvard dorm-room to a worldwide company with nearly 5,000 employees and more than a billion users.

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TV Dragon Breathes New Life Into Jessops

TV Dragon Peter Jones has told Sky News he is taking a risk by relaunching collapsed high street camera chain Jessops but will give it his "best shot".

The entrepreneur snapped up the brand when the company went into administration in January with debts of more than £80m, leaving almost 1,500 staff out of work when its 187 stores were shut.

Jessops was then a casualty of not only its business model but of the consumer spending squeeze combined with stiff online competition and the boom in camera phones which hit demand for digital cameras.

It was the first of several chains to fail after Christmas, which resulted in more than 6,000 retail jobs being lost.

HMV, Blockbuster and Republic were among the brands that fell into administration.

Jessops had collapsed in January after a dismal Christmas

Mr Jones has invested £4m in the relaunch of Jessops, which will have a heavy focus on boosting its online presence to catch up with the soaring growth in internet retailing.

Products sold over the web will be price-matched to the stores - something that did not happen under Jessops' previous ownership.

The entrepreneur has taken on hundreds of staff, many of them former Jessops employees, and will open the first of more than 30 stores today in London and Birmingham.

Two Jessops stores will open today in London's Oxford Street and Birmingham, with four others opening over the Easter weekend in Manchester, Aberdeen, High Wycombe and St Albans.

The stores had been reconfigured, Mr Jones said, to create a more interactive, customer-friendly experience while each site will include a Jessops Academy, offering photography courses and training.

"We've got a real chance of making it a success... The big thing about Jessops is the fact there is not another retailer in the country that has such experienced passionate staff when it comes to camera equipment sales... That makes a big difference."

He concluded: "We have to keep it lean and mean."

Mr Jones made his fortune after setting up the Phones International Group, which he sold a part of in 2011.

He has appeared on the BBC show Dragons' Den since it started in 2005.

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RBS: Another IT Glitch Hits Customer Accounts

Royal Bank of Scotland has suffered another IT failure which has affected two million of the group's customers ahead of the Easter weekend.

Users of the NatWest, RBS and Ulster Bank mobile app found they were locked out of the service from early this morning.

The company has apologised and said it is working to fix the problem, which it confirmed was affecting both personal and business customers though Android operating system users could now access their accounts.

There are more than two million active users of the app among RBS and NatWest personal banking customers alone, with 13 million log-ins taking place each week.

Customers vented their anger at being let down again by the group's technology with one Twitter user writing: "No access to my iPhone app think it's time to change banks!"

App users have taken to Twitter to vent their frustration

A statement from RBS Group said: "We are aware of a technical problem this morning which is preventing customers from logging in to our mobile banking applications.

"We are working to fix the problem and apologise to customers for the inconvenience caused. No other systems are affected."

The latest IT issues came to light just three weeks after a hardware fault prevented RBS Group customers from using cash machines and also affected online and telephone banking services.

The group had earlier taken a £175m hit as a result of IT chaos last summer which left NatWest, RBS and Ulster Bank customers locked out of their accounts. The bulk of the redress costs related to Ulster Bank, where the problems took weeks longer to clear up.

Last October, NatWest had to suspend a feature on its mobile phone app called GetCash, after the service was subject to a spate of so-called "phishing" attacks by fraudsters.

The GetCash service, which allows customers to withdraw cash without using a debit card, was later re-instated after security was bolstered.

Earlier this month the bank announced a new mobile banking feature for RBS/NatWest customers called Pay Your Contacts, which allows them to send payments of up to £100 to anyone with a Visa card, by entering their mobile number.

A spokeswoman for consumer group Which? said all the problems would raise wider questions about how robust and up to date banks' IT systems were.

She said: "Consumers and businesses alike rely on mobile banking services to access their accounts and consumers will rightly want to be assured that their money is accessible and safe at all times."

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Cyprus Banks Reopen With Capital Restrictions

By Tom Parmenter, Sky News Correspondent in Cyprus

Cyprus' banks have opened their doors after the longest enforced bank holiday in Europe's history.

Queues grew outside branches across the country, with no signs of panic as employees limited the number of customers allowed in at any one time.

But many residents expressed anger at the country's controversial bailout - which requires Cyprus to raise 5.8bn euros (£4.9bn).

Banks are giving customers information about the capital restrictions

"They have stolen our money," Mr Lucas told Sky News.

"I have been working for 60 years. I am 80 years old. I cannot work again for my living - they have cut the lot.

"Our money, our social insurance - they have cut them. How are we going to live?"

Another Cypriot, Stelios, came out of the bank empty handed.

"I tried to get my February wages and they gave me a piece of paper only," he said.

"I have two children in the army and they asked for money - I don't have money to give them.

"The Government didn't pay anybody. My old parents didn't get their pension."

The British security firm G4S deploys 180 guards to banks across Cyprus

Cash withdrawals and other transactions are subject to tough restrictions, introduced by the country's Finance Ministry in an effort to avoid a run on the banks.

The country's crippled banking system was effectively closed down on March 16 while the terms of the 10bn euro (£8.5bn) bailout were agreed and implemented.

Large depositors face losses of as much as 40% of their savings as part of the deal, leading to fears that customers would attempt to withdraw large amounts of money when the banks reopened.

As a result, strict capital controls include a withdrawal limit of 300 euros (£253) a day and a ban on cashing cheques.

Travellers leaving the country can only take up to 1,000 euros (£845), or the equivalent in foreign currency, with them in cash - significantly less than expected.

Demonstrations against austerity measures continued in Cyprus on Wednesday

Police and security staff were deployed to maintain order at branches, and G4S guards called in to work alongside police officers and other security firms across the country.

The giant global firm was the contractor that failed to meet their promises over security at the London Olympics prompting the British military to step in.

G4S's managing director in Cyprus, John Arghyrou, told Sky News: "I feel we have the resources, I feel extremely confident as a security company that we can undertake and meet the requirements of our customers."

With just 860,000 people, Cyprus has around 68bn euros (£57bn) in its banks.

This outsized financial system attracted deposits from foreigners but has struggled since investments in neighbouring Greece went sour.

More follows...

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Holiday Bookings Up As Wintry Weather Lingers

Britons have been rushing to book sunshine holidays in the wake of record summer rainfall and prolonged wintry weather, according to Europe's biggest tour operator.

TUI Travel told investors summer bookings were up by 9% in the UK over the six months to March 31 compared to the same period last year.

TUI, whose brands include Thomson, First Choice and Gulliver Travel, said it continued to see "very strong" trading despite a 4% increase in its average summer prices at a time of constrained consumer spending.

It said demand was driven by its online business and direct distribution - with online accounting for 40% of its sales in the UK.

The company said: "This is against a backdrop of uncertainty in the eurozone, highlighting that demand for the annual holiday remains resilient against a weak macro-economic environment."

TUI's strong trading comes amid a turnaround battle at rival Thomas Cook, led by new chief executive Harriet Green, which is resulting in 2,500 job losses among its 15,500-strong UK workforce.

Just under 200 of its high street travel agencies are to close as part of the reforms, but it too has seen recent growth in bookings.

Shares in TUI Travel rose 6% on opening after the company said it expected 7%-10% growth in underlying annual operating profit.

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Vince Cable Attacks Bank Capital Ruling

By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has attacked plans to force Britain's banks to raise up to £25bn to strengthen their balance sheets, warning that it would slow the pace of economic recovery.

Speaking exclusively to Sky News, Mr Cable said the ruling by the new Financial Policy Committee (FPC) of the Bank of England was counterproductive.

The FPC said this morning that unrecognised future losses on bad loans and future provisions for product mis-selling meant there was a vast black hole in capital buffers across the banking sector.

But Mr Cable criticised the new committee, and said his view was echoed by Mark Carney, the Canadian who takes over as Governor of the Bank of England in June.

"The idea that banks should be forced to raise new capital during a period of recession is an erroneous one. This FPC exercise will prolong the time it takes for the British economy to recover by further depressing already-weak SME lending," Mr Cable told me.

"I believe the weight of the argument is in favour of counter-, not pro-cyclical, lending measures, and I rather suspect that the new Governor of the Bank of England shares this view."

Mr Cable's remarks - the most strident he has made to date on the issue - threaten to ignite a new Coalition row over banking reform just days before responsibility for regulating the industry formally returns to the Bank of England.

The Business Secretary pointed out that he had "a direct stake" in the debate over bank capital, as weak lending figures highlight the difficulty of increasing lending to small and medium-sized businesses (SMEs).

His comments also betray Mr Cable's frustration that the FPC's verdict will further entrench a mindset among senior bankers that they should accelerate the deleveraging of their institutions' balance sheets.

A succession of Treasury schemes, including the National Loan Guarantee Scheme and Funding for Lending have failed to kickstart SME lending, intensifying the pressure on George Osborne, the Chancellor.

The FPC's findings will now be digested by the major banks during boardroom discussions over the next 24 hours. Lenders ranging from Barclays and Nationwide will have to agree funding plans with the new Prudential Regulation Authority but are unlikely to make full statements to investors until these plans have been agreed.

The FPC has a remit to monitor risks in the financial system. Today's verdict on bank capital shortfalls is expected to be viewed in the City as an attempt to adopt a cautious approach amid ongoing problems in the Eurozone and escalating penalties for mis-selling payment protection insurance and other products.

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Banks Warned Over £25bn Capital Shortfall

Cable Attacks Bank Capital Verdict

Updated: 10:50am UK, Wednesday 27 March 2013

By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has attacked plans to force Britain's banks to raise up to £25bn to strengthen their balance sheets, warning that it would slow the pace of economic recovery.

Speaking exclusively to Sky News, Mr Cable said the ruling by the new Financial Policy Committee (FPC) of the Bank of England was counterproductive.

The FPC said this morning that unrecognised future losses on bad loans and future provisions for product mis-selling meant there was a vast black hole in capital buffers across the banking sector.

But Mr Cable criticised the new committee, and said his view was echoed by Mark Carney, the Canadian who takes over as Governor of the Bank of England in June.

"The idea that banks should be forced to raise new capital during a period of recession is an erroneous one. This FPC exercise will prolong the time it takes for the British economy to recover by further depressing already-weak SME lending," Mr Cable told me.

"I believe the weight of the argument is in favour of counter-, not pro-cyclical, lending measures, and I rather suspect that the new Governor of the Bank of England shares this view."

Mr Cable's remarks - the most strident he has made to date on the issue - threaten to ignite a new Coalition row over banking reform just days before responsibility for regulating the industry formally returns to the Bank of England.

The Business Secretary pointed out that he had "a direct stake" in the debate over bank capital, as weak lending figures highlight the difficulty of increasing lending to small and medium-sized businesses (SMEs).

His comments also betray Mr Cable's frustration that the FPC's verdict will further entrench a mindset among senior bankers that they should accelerate the deleveraging of their institutions' balance sheets.

A succession of Treasury schemes, including the National Loan Guarantee Scheme and Funding for Lending have failed to kickstart SME lending, intensifying the pressure on George Osborne, the Chancellor.

The FPC's findings will now be digested by the major banks during boardroom discussions over the next 24 hours. Lenders ranging from Barclays and Nationwide will have to agree funding plans with the new Prudential Regulation Authority but are unlikely to make full statements to investors until these plans have been agreed.

The FPC has a remit to monitor risks in the financial system. Today's verdict on bank capital shortfalls is expected to be viewed in the City as an attempt to adopt a cautious approach amid ongoing problems in the Eurozone and escalating penalties for mis-selling payment protection insurance and other products.

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Cyprus Crisis: Banks Shut Until Thursday

The closure of Cypriot banks has been extended until Thursday, despite the bailout deal with Brussels to avert the nation going bankrupt.

Depositors had been told that banks, with the exception of the two biggest lenders Bank of Cyprus (BoC) and Laiki, would re-open on Tuesday.

But a decision was taken by the Cypriot central bank overnight to keep all branches closed while officials completed the restructuring of the biggest banks and introduced wider capital controls to prevent a possible run on deposits.

The chairman of the BoC later resigned in protest at the bailout condition that it would have to absorb Laiki's debts.

The 10bn euro (£8.5bn) rescue was secured when politicians agreed to seize cash from bank depositors with more than 100,000 euros in their accounts.

It amounted to a hit of up to 40% on the money held by such people banking with BoC and Laiki, finance minister Michalis Sarris told BBC radio, cash that will be swapped for shares in the lenders.

Unemployment and poverty levels are expected to soar in Cyprus

The country's president had earlier assured his people the rescue package he struck with the EU and International Monetary Fund was in their best interests, despite the prospect of years of financial pain ahead.

Nicos Anastasiades agreed to close down Laiki as part of the demanded reforms of the Cypriot financial sector - brought to the brink of collapse by its investments in neighbouring Greece.

The capital controls, preventing people moving funds out of the country, could last for a number of weeks.

Cash machine withdrawals remain restricted while the branch shut-down is said to be hammering businesses, which have been without access to their funds for more than a week.

European leaders said a chaotic national bankruptcy that might have forced Cyprus from the euro and upset Europe's economy had been averted by the rescue - though investors in other European banks were alarmed by the precedent of losses for depositors in Cyprus.

The raid on uninsured Laiki depositors is expected to raise 4.2bn euros of the 5.8bn the EU and IMF had told Cyprus to raise as a contribution to the bailout, according to Dutch finance minister Jeroen Dijsselbloem.

The politician, who heads the so-called Eurogroup of finance ministers, also spoke of the need for lenders to banks to accept the potential risks of their failure in future - seen as support for using the Cypriot bailout model as a blueprint.

The comment - which has been widely criticised - had a knock-on effect by raising the cost of insuring holdings of bonds issued by other banks, notably in Italy and Spain. Global equity markets and the euro also retreated.

While Russia was angered that Russian depositors of Cypriot banks would suffer huge losses, President Vladimir Putin has ordered officials to restructure a loan Moscow granted to Cyprus in 2011.

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Cyprus Facing 30% Unemployment Amid Crisis

By Tom Parmenter, Sky Correspondent, in Nicosia

Cyprus is facing a recession so deep that 30% of people may find themselves unemployed.

The EU bailout means massive restructuring of the financial system, the inevitable loss of many investors and thousands of people seeing their jobs disappear.

Professor Hari Tsoukas, a business analyst, told Sky News: "Unemployment is likely to at least double from 14% to at least 25% and possibly up to 30%. Not so long ago it was just 5%.

"It is a huge challenge now facing the Cypriot people, we have been resilient before and we will need all that again," he added.

For a week now people have been rationed to how much they can withdraw from cashpoints.

Wages have not been paid, businesses have been unable to pay suppliers and the whole economy has seized up.

Banks have been closed since March 16 but Cyprus' president Nicos Anastasiades has said they will reopen on Thursday.

A woman and child beg for money in Nicosia

However, he added that the island will introduce some limits on transactions to prevent a huge outflow of money.

Politicians have been struggling to come up with a plan that would raise enough funds to qualify for an international bailout.

In a televised address to the country, the president said: "The central bank will implement capital controls on transactions. I want to assure you that this will be a very temporary measure that will gradually be relaxed."

He did not specify what limitations would be imposed on transactions.

He said he had taken "painful decisions to save the country from bankruptcy" and pledged Cyprus "would find its feet again".

It follows a bailout deal which reports suggest could see Bank of Cyprus savers with deposits above 100,000 euros (£85,000) hit with a levy of "around 30%".

In a smart fourth floor apartment, Sky News met one Cypriot woman prepared to show us where she has been stashing her money.

Fearful of losing control of her cash by leaving it in the bank she now has a daily routine of hiding it in drawers or cupboards around her bedroom.

She didn't want to be identified but said: "You just want to know your money is safe, this is quite small scale but it is all I can do."

Her flat was burgled last year so she is taking no chances - every time before she leaves home for over an hour she collects together her growing stash of notes and takes it with her stuffed in her handbag.

She hates having to do it but while banks remain closed some people feel they have little option but to take control of their own money.

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Virgin 'To Bid For' East Coast Rail Line

The Department for Transport has invited companies to bid for the East Coast rail franchise, which is expected to be privatised in less than two years.

Virgin is expected to be among the parties interested in taking over the key line, which runs between London and Scotland, according to Sky sources.

The route has been run in the public sector since 2009 when the recession caused National Express to pull out.

Now Transport Secretary Patrick McLoughlin has unveiled plans to put it back in private hands by February 2015.

Mr McLoughlin announced a new approach to rail franchising following last year's botched West Coast deal - which was scrapped after flaws were found in the process.

The 13-year franchise was initially awarded to FirstGroup, which won a bidding war with the incumbent company Virgin Trains.

Sir Richard Branson's Virgin will run the West Coast line until April 2017

But a string of mistakes by Department for Transport staff saw the deal cancelled and led to two independent reviews into the rail franchising process.

Virgin will continue to run the West Coast service - which it has controlled since 1997 - until the new franchise date, which has been pushed back from November next year to April 2017.

Mr McLoughlin said the new franchise process will deliver improvements to services and bring long-term certainty to the market.

"Above all, in future franchise competitions we are placing passengers in the driving seat by ensuring that their views and satisfaction levels are taken into account when deciding which companies run our railway services," he said.

"Franchising has been a force for good in the story of Britain's railways, transforming an industry that was in decline into one that today carries record numbers of passengers."

But rail unions - angry at plans to privatise the East Coast line again - stressed that the private sector had twice given up the franchise.

RMT's general secretary Bob Crow said hundreds of millions of pounds of taxpayers' money had been wasted on the "franchising circus".

"Instead of learning the lessons of the privatisation disasters on the East and West Coast main lines and across the rest of the network, the Government has this morning given the green light to a whole new wave of profiteering that will have the train companies laughing all the way to the bank," he said.

"The proposed reprivatisation of the East Coast, after the public sector rescued the service following two private failures, proves conclusively that the political class have learnt absolutely nothing when it comes to our railways."

Manuel Cortes, leader of the TSSA rail union, added: "The £50m West Coast line fiasco revealed that private franchises are a shambles.

"So they go and privatise the only successful publicly-owned franchise, the East Coast line."

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Eurostar Profit Boosted By More Foreigners

A boost in the number of non-EU passengers helped Channel Tunnel high-speed train company Eurostar more than double operating profits last year.

Carrying an increased number of American, Brazilian and Australian travellers, Eurostar saw its operating profit rise from £25m in 2011 to £52.3m in 2012.

In total, the company carried 9.9 million passengers last year compared with 9.7 million in 2011.

Sales revenue, though, was affected by exchange rate movements during the year and was fractionally down - reaching £799m in 2012 compared with £803m in 2011.

Passenger numbers were strong after the Olympics, with traffic up 5% in the last three months of last year compared with the October-December 2011 period.

While business passenger numbers remained flat last year, the leisure travel market rose 3%.

Non-EU passenger numbers grew 8% in 2012, as value improved for foreigners amid weakening of both the pound and euro against key currencies.

Eurostar chief executive Nicolas Petrovic said: "Despite the challenging economic climate, we delivered a strong performance in 2012.

"The combination of the Olympic Games and the Jubilee gave London a major boost - showcasing the city as a prime travel destination.

"Growth in traveller numbers was particularly strong in the fourth quarter of the year as European and international travellers flocked to the capital."

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India Car Ads: Ford Sorry Over Women In Boot

Ford has apologised after car adverts in India showed women bound and gagged in the boot of vehicles.

The car manufacturer said it "deeply regretted" a series of adverts for the India-manufactured Ford Figo. 

One of the adverts shows a cartoon of Italy's ex-Prime Minister Silvio Berlusconi flashing a Victory sign with three women captive in the boot.

Another depicts Paris Hilton driving with the Kardashian sisters - bound and gagged.

The tag line on both reads: "Leave your worries behind with Figo's extra-large boot."

The adverts were created in India, a country still reeling from a series of shocking sex attacks on women, including the gang rape of a student on a Delhi bus.

A salesman with customers and the Figo in a Mumbai showroom

They appeared online on the Ads of The World website but have been pulled before featuring on any other paid sites.

Ford said: "We deeply regret this incident and agree with our agency partners that it should have never happened. 

"The posters are contrary to the standards of professionalism and decency within Ford and our agency partners. Together with our partners, we are reviewing approval and oversight processes to help ensure nothing like this ever happens again."

Advertising agency WPP said it regretted the ads, which should never have been created in the first place.

In a statement to The Huffington Post, WPP said: "We deeply regret the publishing of posters that were distasteful and contrary to the standards of professionalism and decency within WPP Group.

"These were never intended for paid publication and should never have been created, let alone uploaded to the internet.

"This was the result of individuals acting without proper oversight and appropriate actions have been taken within the agency where they work to deal with the situation."

Mr Berlusconi is currently on trial for allegedly paying a 17-year-old girl for sex when she attended some of his parties. Both deny any wrongdoing.

The Figo - manufactured in Chennai, India - launched in 2010.

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Cyprus Bailout Deal Wins Eurozone Approval

Deposits above 100,000 euros (£85,000) in the Bank of Cyprus will be hit with a levy of "around 30%" under the EU bailout deal, a government official has confirmed.

Spokesman Christos Stylianides told state radio that the charge would be paid as the second largest Greek Cypriot lender is destined to be wound up.

But Russia, which is the source of many large uninsured accounts in Cyprus, reacted angrily on Monday to the levy news.

"The stealing of what has already been stolen continues," Russian Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.

Christine Lagarde and the German finance minister at the Eurogroup

The island's deal has allowed Cyprus to secure a last-minute 10bn euro (£8.5bn) EU and International Monetary Fund (IMF) approved bailout by eurozone ministers, saving the country from a banking system collapse, bankruptcy and eurozone departure.

Markets across Europe reacted positively in mid-morning trading.

The second-largest bank, Popular Bank of Cyprus - known as Laiki - will effectively be shut down and split into a "good bank" and a "bad bank".

Sub-100,000-euro deposits in Laiki will be safeguarded and transferred to the Bank of Cyprus, the so-called "good bank", while those above the 100,000-euro limit, which under EU law are not insured, will be frozen and hit with the levy of around 30% to resolve the debt crisis.

Angry Greek Cypriots have taken to the streets

The move will yield some 4.2bn euros (£3.6bn) overall - the bulk of the 5.8bn euros (£4.9bn) Cyprus needed to raise as part of the bailout conditions.

It followed fraught negotiations between Cypriot President Nicos Anastasiades and the troika of creditors - the IMF, European Commission and European Central Bank.

"We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers, said.

"We believe that this will form a lasting, durable and fully financed solution," IMF chief Christine Lagarde said.

President of the European Council, Herman Van Rompuy, added: "I welcome the agreement reached by the Eurogroup and the Cypriot authorities early this morning.

Banks have been closed this past week

"The agreement is essential to ensure a sustainable future for Cyprus in the euro area. This is first and foremost true for its people, who are living through times of great uncertainty."

After the eurozone's finance ministers' approval, several national parliaments, such as Germany's, must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole programme to be approved by mid-April.

Cyprus' outsized banking sector was crippled by exposure to crisis-hit Greece and has been used as a haven for foreign funds.

In a vote on Tuesday, the country's 56-seat parliament dismissed a levy on depositors as "bank robbery".

The country's finance minister Michael Sarris then spent three fruitless days in Moscow trying to win help from Russia. The two countries share historic religious ties.

Cypriots were outraged by the original proposal and have been queuing at cash machines ever since the government ordered banks to close last weekend.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

Gas stocks were reportedly just 10% full at Britain's largest storage facility on Thursday night, compared to 49% this time last year.

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Graphical comparison year-on-year of gas in the UK (graph: Utilyx)

Andrew Horstead of the energy consultancy Utilyx told the Times: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Matt Osborne, risk manager at energy consultancy and brokerage firm Inenco, told Sky News that wholesale prices had spiked about 20% overnight, prompting the industry to respond quickly.

County Durham after the latest batch of snow

On Friday morning gas prices for within-day delivery then jumped more than 50% above Thursday's close following the closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

Downing Street said Prime Minister David Cameron is "confident" that the UK's gas needs will continue to be met.

A spokesman said:  "The absolute key thing on this is that supplies are not running out.

It was so warm last March people flocked to beaches and parks

"The gas market is how we source our supplies and that market continues to function well.

"The Prime Minister's key concern is that gas supplies continue. It is absolutely clear that supplies are not running out."

Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: "Absolutely confident."

Scrub fires near Newport in Wales last March

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

But a Department of Environment and Climate Change (DECC) spokesperson insisted that "gas supplies are not running out".

The Chancellor's Budget revealed further gas fracking support

The spokesperson said: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."

However, the gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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Thousands Of Jobs Saved As Blockbuster Bought

The troubled DVD and games rental chain Blockbuster has been bought, saving 2,000 jobs and 264 UK stores.

Administrators from accountants Deloitte said restructuring specialists Gordon Brothers Europe had purchased the company for an undisclosed sum.

Blockbuster collapsed in January amid competition from internet firms and the digital streaming of movies and games.

Joint Administrator Lee Manning, said: "Having identified a profitable core portfolio of stores we are pleased to have achieved this sale for creditors.

"Together with the previously announced store sales more than half of the original estate has been secured for ongoing use.

"This transaction provides Blockbuster a future in the UK and we owe a special vote of thanks to all the company's employees, suppliers and customers for helping us rescue the business."

Commenting on the acquisition, Frank Morton, the CEO of Gordon Brothers Europe, said: "We are delighted to announce the acquisition of Blockbuster.

"We acknowledge the industry is in transition; we know that we have a challenge ahead but there is still a market to be served.

"Blockbuster has a strong brand affinity and we believe that with the right mix of new product offering, new technologies, strategic management and marketing, we can bring new life to this high street staple.

"We look forward to working with employees, suppliers, landlords and other stakeholders to make this happen."

Blockbuster had struggled to adapt to the changing market amid rivalry from internet retailers including Netflix, Amazon's LoveFilm and iTunes, which now offers a movie rental service.

The devastating impact of the internet on Britain's high streets had already been laid bare by the demise of camera chain Jessops and electricals group Comet, which also cited competition from online players as a major reason for their decline.

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Cyprus Agrees 20% Tax On Bank Deposits

Politicians in Cyprus have reportedly agreed a new one-off levy on savers in order to secure a European bailout.

The measures, yet to be confirmed by the country's President, include a 20% tax on savers with deposits over 100,000 euros at the country's largest bank, the Bank of Cyprus.

A 4% tax on deposits over 100,000 euros would be levied at other banks, a senior Cypriot official told Reuters.

Cyprus has to raise 5.8bn euros by Monday or face being kicked out of the single currency.

Eurozone finance ministers are due to meet on Sunday evening to see if the numbers Cyprus has agreed with its international lenders add up.

Bank workers shout during a protest outside the presidential palace

Cypriot President Nicos Anastasiades tweeted: "We are undertaking great efforts. I hope we have a solution soon."

The conservative leader, barely a month into the job and wrestling with Cyprus's worst crisis since a 1974 invasion by Turkish forces split the island in two, was due to lead a delegation to Brussels, also on Sunday, to meet heads of the "troika" - the EU, the European Central Bank and International Monetary Fund - in a sign a deal might be near.

Government officials held talks throughout Saturday at the finance ministry with troika lenders. Angry demonstrators outside chanted "resign, resign!"

Its outsized banking sector crippled by exposure to crisis-hit Greece, Cyprus needs to raise the 5.8bn euros in exchange for a 10bn euro EU lifeline to keep the country's economy afloat.

But in a vote on Tuesday, Cyprus's 56-seat parliament rejected a levy on depositors, big and small, as "bank robbery", and the country's finance minister Michael Sarris spent three fruitless days in Moscow trying to win help from Russia, whose citizens have billions of euros at stake in Cypriot banks.

Rebuffed by the Kremlin, Mr Sarris said earlier on Saturday that talks with the troika were centred on a possibly levy of up to 25% on savings over and above 100,000 euros at failing Bank of Cyprus.

However, the situation remains fluid and other options, including a "voluntary haircut" in exchange for equity that would not require parliamentary approval, are said to still be on the table.

Ordinary Cypriots were outraged by the original proposal, and have been besieging cash machines ever since bank doors were closed last weekend on the orders of the government to avert a massive flight of capital.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

Gas stocks were reportedly just 10% full at Britain's largest storage facility on Thursday night, compared to 49% this time last year.

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Graphical comparison year-on-year of gas in the UK (graph: Utilyx)

Andrew Horstead of the energy consultancy Utilyx told the Times: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Matt Osborne, risk manager at energy consultancy and brokerage firm Inenco, told Sky News that wholesale prices had spiked about 20% overnight, prompting the industry to respond quickly.

County Durham after the latest batch of snow

On Friday morning gas prices for within-day delivery then jumped more than 50% above Thursday's close following the closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

Downing Street said Prime Minister David Cameron is "confident" that the UK's gas needs will continue to be met.

A spokesman said:  "The absolute key thing on this is that supplies are not running out.

It was so warm last March people flocked to beaches and parks

"The gas market is how we source our supplies and that market continues to function well.

"The Prime Minister's key concern is that gas supplies continue. It is absolutely clear that supplies are not running out."

Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: "Absolutely confident."

Scrub fires near Newport in Wales last March

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

But a Department of Environment and Climate Change (DECC) spokesperson insisted that "gas supplies are not running out".

The Chancellor's Budget revealed further gas fracking support

The spokesperson said: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."

However, the gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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City Titans Back Crunch Stock Market Probe

By Mark Kleinman, City Editor

The City's most powerful investor group is launching a probe into the effectiveness of Britain's stock markets amid deepening concern that 'short-termism' is damaging the country's wider economic interests.

I have learnt that the Association of British Insurers (ABI), whose members own about 20% of the blue-chip FTSE-100 index, has begun consulting with leading City firms over what is set to be one of the most important inquiries in its history.

People close to the ABI said the investigation would examine a string of issues which have provoked controversy in the City in recent years, including the functioning of the market for new share sales.

The number of initial public offerings (IPOs) has dwindled since the financial crisis of 2008, partly because of mistrust between the private equity groups attempting to sell their portfolio companies and stock market investors.

The ABI inquiry is being headed by Robert Talbut, chairman of its investment committee and a senior fund manager at Royal London Asset Management, and Robert Hingley, the group's director of investment affairs.

Sky News understands that the ABI has drafted in Angus Bogle, a former executive at Citi, the investment bank, and Fidelity, the fund management giant, to oversee the probe.

Meetings have been scheduled with leading fund managers and investment banks in the coming weeks, with the aim of producing a series of recommendations in a report later this year.

The ABI, whose largest members include Legal & General, Prudential and Standard Life, will also look at the tax treatment of debt and equity; assess ways to improve the market for equity investment in support of longer term growth; and examine shifts in the composition of investors' portfolios in recent years.

Perceptions of investor short-termism have become a hotly-debated political issue, particularly after a spate of foreign takeovers of major listed UK companies, culminating in the takeover of Cadbury by Kraft Foods of the US in 2010.

Last year, John Kay, an economist, published a report commissioned by Vince Cable, the Business Secretary, in which he recommended an end to quarterly company reporting and the establishment of an investor forum to encourage more effective engagement with public companies.

Mr Cable said at the time: "Many of us feel that in the past, our public companies and investors have focused on short-term profit at the expense of long-term value.

"The behaviour of many banks in the run up to the financial crisis is an extreme example of this quick buck mentality, but there is clearly a wider problem."

Some senior ABI figures are understood to have felt that Professor Kay's review did not go far enough, prompting the lobbying group to launch its own probe.

Earlier this month, Labour published a separate review which recommended reforms to executive pay packages and changing the rules governing overseas takeovers of British companies.

The ABI, which declined to comment on its investigation, is one of the most influential lobbying groups in British business. Late last year it published a report in which it warned that reforms to the regulation of the banking industry risked making the UK's biggest lenders uninvestable.

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Cyprus Leaders Head To Brussels For Talks

Cyprus Bailout: Threat To Savings

Updated: 7:36am UK, Saturday 23 March 2013

By Ashish Joshi, Sky News Correspondent

Finally late into Friday night - an agreement on Plan B, meaning Cyprus has moved one giant step towards securing a Brussels bailout.

It includes a solidarity fund pooling together state assets and the granting of power to the Government to control bank capital.

The latter move is to prevent a run on the banks when their doors finally open on Tuesday.

There will also be a restructuring of the country's banks and a savings tax on Cypriot savers.

The details of the tax have still to be finalised, but the framework is in place.

It could mean savings over 100,000 euros held in Bank of Cyprus accounts being taxed up to 20%, according to one source close to the negotiations.

The same source said if that proposal is rejected there will be a plan to impose a tax of around 10% on all Cypriot bank accounts over 100,000 euros.

The threat of savers being hit hangs over the heads of people like Loizos Michael.

The 60-year-old tailor worked hard for 35 years, building up a good business.

He was looking forward to a wealthy retirement. Not anymore. Times are hard.

Speaking from his small tailor's shop in central Nicosia, Mr Michael said: "With the banks being closed, it is hard because I don't have a credit card and so cash flow is a problem.

"Even filling your car with petrol needs thinking about.

"Cypriots have always been workers by nature and nobody could have imagined that unemployment would be so high.

"This has hit us hard in the pockets."

Cyprus is weathering a storm - the likes of which this Mediterranean island has never faced in her young history.

Mr Michael said he knew things were getting bad, but expected solutions to be found to avoid ordinary people having to suffer.

"I expected something better. But now, it looks like the problem has been brewing for some time," he said.

"There used to be some people talking about the crisis, but now everyone's talking about it.

"I think things are harder now than just after the war. After the war of '74 people could still find work. Now, there is just no work so people have no money. What can we do?"

In the 1990s, Cyprus boasted a dynamic, booming economy, but it grew and unchecked.

An overbloated banking sector exposed to Greek debt has crippled the country's economy.

Now people like Loizos Michael must pay the price. He and the rest of Cyprus will soon find out exactly how much that is going to be.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

According to The Times Britain's gas stocks were just 10% full on Thursday night, compared to 49% this time last year.

County Durham after the latest batch of snow

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Andrew Horstead, of the energy consultancy Utilyx. told the newspaper: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

It was so warm last March people flocked to beaches and parks

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

A Department of Environment and Climate Change (DECC) spokesperson told Sky News: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage.

Scrub fires near Newport in Wales last March

The gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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Cyprus Delays Bailout Vote Amid Russian Rebuff

An emergency session of the Cyprus parliament to race through a raft of bills aimed at raising billions of euros to secure an international bailout has been delayed, according to local media.

The session, which was to have started at 8.00am GMT, was held off as the parliamentary finance committee re-examined the crucial bills.

The delay comes as Russia rejected an approach from the Greek Cypriot government to help finance a restructure of the island's troubled banking sector.

Cyprus' finance minister left Moscow empty-handed on Friday morning after Russia turned down appeals for aid, leaving the island to strike a bailout deal with the EU before Tuesday or face the collapse of its financial system.

The chief of ailing Cyprus Popular Bank, the island's second largest, slammed the government's proposed "Plan B" to win the EU bailout, saying an earlier plan to tax deposits would have been preferable.

Protesters clash with police over the bank closures

"Although we knew the gravity of the situation, and the initial proposal of the eurogroup was painful, it ensured the future of the banking sector," Takis Phidias told state radio.

The original terms of a rescue plan for Cyprus proposed by the troika of international lenders would have slapped a levy of up to 9.9% on bank deposits to raise 8.5bn euros (£7.23bn).

The Russian rebuff has left Cyprus looking increasingly isolated, with the deadline looming to find billions of euros demanded by the EU in return for a 10bn euro (£8.5bn) bailout.

It was overwhelmingly rejected by the southern Cyprus parliament, leaving the government scrambling to put together a Plan B.

Banks in Cyprus closed their doors last Friday and will stay shut until next Tuesday, but as rumours spread that the Popular Bank would never re-open, customers rushed to cash machines to withdraw what they could - prompting it to limit daily withdrawals at 260 euros (£220).

Germany's Angela Merkel has hardened her approach to Cyprus

Meanwhile, key European officials have strengthened their tone over the Cypriot manoeuvrings

German Chancellor Angela Merkel told politicians she wanted Cyprus to remain in the eurozone but the island had yet to realise that its business model was dead, according to parliamentary sources.

Germany's finance minister said in an interview that the EU was ready to help but the burden must be shared by Cyprus' financial sector otherwise the island's economy will collapse under debt.

"The perception that this (Cyprus) problem can be solved only by taxpayers in the eurozone without the participation of major creditors of Cypriot banks cannot be accepted by Europe's citizens," Wolfgang Schaeuble said.

:: European Central Bank governing council member Marko Kranjec has said he was sure that Slovenia's troubled bank sector would not follow in the footsteps of Cyprus.

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Investors To Deliver Peace Time Ultimatum

By Mark Kleinman, City Editor

Two leading shareholders in Standard Chartered, the emerging markets bank, are poised to issue an ultimatum about the future of Sir John Peace, its chairman, following an embarrassing climbdown over US sanctions-busting offences.

Sky News has spoken to major investors in the bank - which has continued to trade strongly through recent difficulties with US regulators - who said yesterday's humiliating retraction of comments made by Sir John earlier this month meant that changes to his portfolio of interests had now become "essential".

Standard Chartered yesterday issued a statement in which it apologised for Sir John's suggestion that its breach of US sanctions rules which meant it processed prohibited trades with Iran were "clerical errors" and had not been "wilful".

Sir John is the only person to chair three companies in Britain's blue-chip share index, sitting at the helm of both Burberry, the fashion group, and Experian, the credit checking organisation.

His comments at a press conference earlier this month angered the US authorities to such a degree that Sir John was summoned to a meeting in Washington yesterday along with Peter Sands, the bank's chief executive, and Richard Meddings, its finance director. It followed a $667m settlement between Standard Chartered and the regulators late last year.

The remarks appear to have crystallised a view among some Standard Chartered shareholders that juggling three demanding roles has left Sir John with too little time to devote to the chairmanship of one of the world's largest banks.

"We would prefer the conversation to be held in private before we go public, but there is little doubt that the time has come for him to either focus on the bank role or keep the others and leave Standard Chartered," one major investor said.

"It is essential that he [Sir John] gets a grip on things, and this week's events compound our sense that he cannot do that when he is chairing three FTSE companies," said another.

The two investors said they would press to hold discussions with Standard Chartered shortly about the issue.

The growing hostility towards Sir John from a number of influential shareholders raises the prospect of a revolt against him at Standard Chartered's annual meeting, although a person close to the bank said that soundings from shareholders in the last 24 hours had been "positive" about his chairmanship.

"It [Sir John's workload] has never been an issue that has been raised with us by our major shareholders either in the past or in the last 24 hours," a Standard Chartered spokesman said.

The disgruntled investors are City institutions and do not include Temasek Holdings, the Singaporean state investment company that is Standard Chartered's largest shareholder with an 18% stake.

An ally of Sir John's said that the performance of each of the companies that he chairs had been strong throughout his time on those boards.

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Cyprus Handed ECB Ultimatum On Bailout

Cyprus Asks Russia For Help

Updated: 9:32am UK, Thursday 21 March 2013

The vote rejecting the EU offer had hardly been cast before Cyprus's finance minster was in the air.

Michael Sarris dashed to Moscow in a desperate search for another bailout plan to save his country.

The flight route was no surprise - Moscow is heavily invested in Cyprus. Another name for Limassol could be Moscow-On-Sea.

The Mediterranean island offers the safety of Europe, favourable business conditions including low taxes and not too many probing questions about the source of the income.

That explains why an estimated 20bn euros of Russian money is parked here.

It also explains why Moscow and Cyprus have a shared interest in saving the island's economy. 

After attending the first round of talks with his Russian counterparts Mr Sarris said:  "There were no offers, nothing concrete.

"We are continuing discussions. We are happy with a good beginning and we are looking forward to continuing these discussions over the next few hours. Thank you very much."

Cyprus is desperate for the cash.

Banks have been shut since the weekend and may stay closed until next week.

Russia will try and extract as much as it can from the desperate Cypriots, which could include a share in Cyprus's energy rich future.

Some experts believe Cyprus could be sitting on natural gas reserves worth up to 300bn euros.

It would also give Russia great political satisfaction to have one of its companies operating inside Europe, according to Russian economist Alexander Orlov.

"Currently Europe cant't fulfil its need for natural gas. Libya and Algeria are too politically unstable," he said.

"Cyprus would be ideal as it's close to mainland Europe and it can be delivered by pipeline."

Cyprus already owes Russia money, but is looking for another 5bn euros - that is the amount it needs in addition to the 10bn bailout offer from Europe. 

But taking on more debt will not please Europe. That is why it came up with the controversial plan to tax Cypriot savings. 

It still wants Cyprus to fund a so called bail-in, but it is suggesting a more targeted approach.

German Chancellor Angela Merkel has proposed a potentially more palatable proposal: "The members of the Eurogroup would appreciate that investors below 100,000 euro are not included.

"However, investors over 100,000 euro should support the banking industry so that the banking industry will be sustainable."

But this again would mean Russian investments being taxed by Brussels, which will certainly factor in to any further negotiations.

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Budget: George Osborne Defends Economic Plans

George Osborne has defended his Budget as he pointed to Cyprus and warned Britain's problems "could be a lot worse".

In an interview on Sky News, the Chancellor insisted the public understood he had to take tough decisions to secure the country's future.

"People know that it is a difficult situation out there but it is a situation that could be very much worse for Britain if we didn't take these decisions," he said.

New figures showing public borrowing down to £2.8bn in February - the lowest for the month since 2008 - provided a chink of light for Mr Osborne on Thursday.

But Labour continued to attack his "aspiration nation" Budget, warning it does not do enough to boost growth and questioning its central plan for a major new mortgage scheme.

Shadow chancellor Ed Balls said: "You could have people on very high incomes going into buy-to-let or buying a second home and getting a taxpayers' guarantee up to £600,000. The devil is in the detail there."

Appearing on Sky News, Mr Balls added: "The Chancellor said 'I will secure the recovery, I will keep the AAA credit rating'. It's all gone. It's a long hard road to nowhere with this Chancellor at the moment."

But Mr Osborne accused the Opposition of having no "serious economic alternative" and resorting to "personal abuse" instead of setting out its own plans.

George Osborne and Ed Balls bumped into each other in Millbank

He said: "It is a tough economic situation and of course if it is a difficult job dealing with that situation but it is a job the whole British people is facing at the moment.

"I think the British public understand there is not a simple or easy answer to our country's problems but just the painstaking work of putting right what went wrong."

MPs are debating the details of the Budget in the House of Commons today.

Central to Mr Osborne's plans are the moves to stimulate the housing market but his measures have sparked fears of a new debt-fuelled boom.

The Government is set to plough billions into boosting home ownership by underwriting the mortgages of hundreds of thousands of people.

Interest-free loans lasting five years and worth up to 20% of the value of new build homes under £600,000 will be available.

And from next January, taxpayers' money will be used as a guarantee for home buyers who can only pull together small deposits.

Mr Osborne claimed on Thursday that the measures would help boost the flat housing market and provide jobs in construction as new homes were built.

He insisted: "It doesn't mean a return to five or six years ago when you had those big 125% Northern Rock mortgages.

"It is just saying to people if you can get together a decent deposit, we are going to help you buy a home. People are being robbed of that at the moment because of the problems in our financial markets."

In his Budget, there were further tax breaks for drinkers, drivers and working parents.

There was a 1p cut in the price of beer as the beer duty escalator was also scrapped, and a planned fuel duty hike was cancelled.

Small businesses will be boosted by a new employment allowance which will save employers £2,000 on their National Insurance bills.

And plans to raise the income tax threshold have been brought forward to 2014, meaning earnings up to £10,000 will be tax free.

But those announcements could not disguise the dismal economic figures and forecasts that showed the austerity era will last a decade.

The Chancellor with a couple who bought a flat using shared equity

Official growth forecasts for this year have been cut in half to 0.6% because the recovery is so weak, and next year's figure has also been downgraded.

The independent watchdog the Office for Budget Responsibility (OBR) also warned that the decline in borrowing seen in the first years of the coalition "no appears to have stalled".

Public borrowing predictions for every year to 2017/18 have been revised upwards, putting the total £55.7bn higher than it was just three months ago.

The OBR expects Britain to narrowly escape an unprecedented triple-dip recession, predicting a small increase in GDP in the first quarter of this year.

But debt is not set to fall as share of national income until two years after Mr Osborne's original 2014 target.

It is due to peak at 85.6% of GDP - equal to a massive £1.58tn - in 2016/17 - an increase of 6.4% on previous forecasts.

Labour condemned Mr Osborne as a "downgraded Chancellor" who was simply offering "more of the same" and some experts criticised him for not going far enough to boost growth.

Research for consumer group Which? carried out immediately after the Budget found 89% of voters backed the rise in the personal tax allowance and 87% supported the fuel duty move.

But it also suggested that a third of the public now feel less confident about the prospects of the economy this year, and 28% feel less confident about their own finances.

Some 59% said the Government should rethink its economic plan and 44% expect their personal finances to worsen over the coming year.

In another blow to Mr Osborne, hours after his Budget was delivered peers inflicted a major defeat on the Government over its "shares for rights" plan.

Former Civil Service chief Lord O'Donnell linked the plans to slavery and ex-Tory minister Lord Forsyth of Drumlean said they were "ill-thought through, confused and muddled".

:: Shadow chancellor Ed Balls will be among the guests on Jeff Randall Live on Sky News tonight at 7pm.

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Retail Sales Rebound In February

Strong demand for tablets have helped retail sales increase by more than expected in February.

Excluding fuel, retail sales rebounded by 1.9% when compared to January, and by 3.3% on the year, according to the Office for National Statistics (ONS).

The jump in both volume and amount spent follows subdued year-on-year retail sales growth rates since September 2012.

Strong sales at computer equipment retailers and department stores helped drive February's rise, and online also performed well, the ONS said.

Spending online accounted for 9.7% of all retail spending, excluding fuel, in February. The average weekly spend on the internet was £540m - an increase of over 10% when compared with February 2012.

It comes after disappointing start to 2013, when sales plunged as a result of heavy snow across swathes of the UK.

Deloitte's UK head of retail, Ian Geddes, said February's figures were good news for the sector - but warned that caution should be exercised because New Year sales often continue into February.

He added: "The period measured does not include the last week of February when poor weather hit, so next month's figures may be affected."

The data comes a day after Chancellor George Osborne unveiled his Budget - but Mr Geddes said it provided "little respite" for the troubled high street.

"Any retailer expecting consumers to have more money in their pockets as a result of this Budget may be disappointed," he said.

But he added that the reduction of the corporation tax rate would "significantly benefit" UK-based retailers, which represent some of the largest UK corporation tax payers.

The data comes as clothing retailers Next and Ted Baker reported full-year financial results.

Both companies said sales had increased in 2012, and joined a number of other companies - including Zara, Sports Direct and Asos - in reporting strong results despite the difficult economic conditions.

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Exclusive: Barclays Risks New Bonuses Row

By Mark Kleinman, City Editor

Barclays will risk stoking fresh anger over bank pay on Wednesday when it releases details of share awards worth millions of pounds to its top executives.

I have learnt that the bank will make a stock exchange announcement this afternoon in which it will say that the head of its investment bank, Rich Ricci, is receiving millions of pounds-worth of shares - despite having waived his annual bonus for 2012 over the Libor-rigging scandal.

The share awards relate to allocations made in previous years as part of deferred long-term incentive plans, and cover the executives on Barclays' board and its top-level management committee.

Among the others who will receive big share awards today are Antony Jenkins, Barclays' new chief executive and Chris Lucas, its outgoing finance director.

The timing of Barclays' announcement - coming on the same day as George Osborne's Budget statement - leaves the bank open to accusations that it is attempting to conceal the potentially-controversial share payouts.

A Barclays insider pointed out that it had an obligation to make a stock exchange announcement when share awards vest and said that the date had been set "well before the timing of the Budget was announced".

Another source said that Barclays might decide to bring forward the announcement because of the leak to Sky News.

Today's payouts do not form part of the £1.8bn that Barclays awarded in bonuses for 2012. That figure was disclosed alongside the bank's annual results last month, in which Mr Jenkins pledged to rebalance the distribution of rewards between employees and investors.

Barclays announced a series of measures aimed at showing restraint in its remuneration report, including reducing its bonus pool by £450m to take account of Libor fines and the rising compensation bill for payment protection insurance and other product mis-selling.

Barclays declined to comment.

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