Greece Votes In New Law To Axe 15,000 Jobs

A law that will allow the dismissal of 15,000 civil servants has been passed by the Greek parliament as part of austerity measures imposed by the country's international creditors.

After heated debate during an emergency session, 168 deputies voted for the bill late on Sunday, with 123 voting against and one abstaining.

The opposition proved powerless to stop cuts the government insisted were needed to keep the country afloat.

On Monday the Greek finance minister also said the Eurogroup Working Group will meet to approve a 2.8bn-euro (£2.3bn) aid tranche.

The newly agreed Greek law overturns what had been a guarantee of a job for life for workers in a notoriously bloated civil service.

Around 800 people turned up outside the parliament to protest against the measure in a demonstration called by trade unions.

The bill provides for the dismissal of 15,000 civil servants by the end of 2014, including 4,000 this year, to meet terms set by Athens' creditors for billions in bailout loans.

Civil service trade confederation Adedy condemned what it called the "politicians who are dismantling the public service and destroying the welfare state".

Private union GSEE said the bill would only worsen Greece's dire unemployment rate, which currently stands at 27%.

Slashing an unwieldy public service is a condition set by Greece's so-called "troika" of creditors - the International Monetary Fund, European Union and European Central Bank - to unlock loans of 8.8bn euros (£7.4bn).

The EU and IMF have committed a total of 240bn euros (£200bn) in rescue loans since 2010, with the heavily indebted country obliged to pursue austerity measures in exchange for the international aid it needs to avoid bankruptcy.

The new law will speed dismissal procedures, which previously made it impossible to sack civil servants and saw the public sector swell over the years as every new administration brought in its own people.

Employees who have been disciplined for corruption or incompetence and those working for one of dozens of shuttered government agencies will be the main targets.

The law, which was written in a single article to force politicians to adopt all its provisions together, also extends weekly working hours for teachers, opens a number of professions to competition and reduces a controversial property tax by 15%.

Another section creates new payment terms for unpaid taxes, intended to help the government recover billions of euros owed by indebted companies and households.

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UK Gas Hit As Norway Pipeline Supply Cut

Gas supplies to Britain dropped by 13% on Monday because of a gas field problems in Norway.

Britain, Europe's most traded gas market, saw inflows drop to 71 million cubic metres (mcm), as flows through the Vesterled pipelined dropped to zero.

The cut has been blamed on an outage preventing gas transportation from the North Sea's Oseberg field.

Norway's gas output could be reduced by 21mcm per day until May 6 due to problems at Heimdal riser platform, gas system operator Gassco said.

Norway operates a significant portion of the North Sea gas sector

On March 22, gas prices for within-day delivery jumped more than 50% above the previous day's close following closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

It is unclear of the exact cause behind the latest outage.

The cut comes at the same time that British business and unions made a joint call to safeguard UK gas supplies for industry.

The British Chambers of Commerce (BCC), the TUC and the British Ceramic Confederation joined forces to make the plea.

Dr Adam Marshall, director of policy and external affairs at the BCC, said: "Large-scale investment in plant is often dependent on stability and having confidence in the future.

"How can these industries be expected to create jobs and wealth if there are serious concerns about the fuel on which they depend?

The Chancellor urged gas fracking support in the Budget to help diversity

He added: "The Government has to work with suppliers to come up with a way of protecting provision and ironing out damaging price volatility. Significant investment in storage has to be investigated as a matter of urgency."

Statoil-operated Oseberg field, as well as Huldra, Skirne and Vale fields deliver gas to Heimdal field, which is now mainly a processing centre for other fields.

As a result of the outage at Heimdal, gas deliveries through the Vesterled pipeline to St. Fergus gas terminal in Britain could be reduced by 10 mcm per day until May 6, Gassco said.

The St Fergus terminal, operated by Total, is located 35 miles north of Aberdeen on the north-east coast of Scotland.

UK gas storage levels came under significant strain during winter

It receives and processes gas from over 20 North Sea fields providing around a fifth of the UK's daily gas requirements.

The 32-inch Vesterled pipeline, originally built to transport gas from the Frigg field, was extended in 2001 to the Heimdal riser platform in the Norwegian sector of the North Sea.

This enabled the continued export of existing resources in the Norwegian sector to St Fergus. The pipeline is owned by the Gassled partnership.

It is a consortium of 12 entities which is led by Petoro AS, which manages the Norwegian state's direct financial interest.

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IMF Warns Asian Economies Of Overheat Risk

The International Monetary Fund has warned about massive capital flows into Asia and urged the region's leaders to guard against overheating economies.

The IMF said it was "carefully" monitoring the situation across a range of countries.

The level of the inflows - which have sent Asian stocks and property prices skyrocketing - are close to or above historical trends in most economies including those in Southeast Asia, the IMF said.

"We are seeing financial pressures - you may call them imbalances, or the risk of imbalances - rising," IMF Asia and Pacific department director Anoop Singh said.

"And because these can worsen quickly, they certainly are being monitored very carefully.

"Therefore the challenge policymakers face is how to guard against the potential build-up of national imbalances while continuing to deliver appropriate support for growth."

Indonesia's capital Jakarta has boomed with its greatest growth in 15 years

The IMF's warning comes as it launched a regional economic outlook, which maintained projections that the will grow 5.7% this year.

"Our basic point is that national stability concerns in Asia are generally rising and ... are close to, or above trend in most economies, including in the Asean (Association of Southeast Asian Nations) region," he said.

"And therefore monetary policymakers need to be ready to spot early and decisively to emerging risks of overheating."

The IMF did not name any economy at risk of overheating, but stock markets in Indonesia, the Philippines and Thailand have recently seen steep increases.

Property prices in economies like Hong Hong and Singapore have also been climbing steeply, prompting the governments to introduce cooling measures.

Thailand suffered heavily in the last mass capital outflow, in the 1990s

In its report the IMF said the inflows have generally "not been excessive so far" but could could reach levels difficult to manage.

Large flows of funds from industrialised economies into the region where they can get higher returns, and easy domestic credit due to low interest rates, have pushed asset prices sharply higher.

The warning comes as memories of the great capital outflow from Asia dim.

Thailand, Indonesia and other Asian countries suffered dramatic capital withdrawals in the late 1990s as foreign investors hurriedly sought new havens for funds.

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Spain Slashes Economic Growth Forecasts

The Spanish government has forecast that the economy will contract by more than expected in 2013, but will return to growth next near.

The country's deputy prime minister said its gross domestic product (GDP) would shrink by 1.3% in 2013 - down from the 0.5% contraction previously forecast.

But Soraya Saenz de Santamaria said Spain's economy is expected to return to growth of 0.5% in 2014, and will expand by 0.9% in 2015.

At a press conference following the adoption of a new economic plan for the country, she said that no major new reforms, tax hikes and spending cuts were needed to meet the new targets.

The forecasts come a day after protestors took to the streets of Madrid

She added that the government - which had to backtrack from its promise to cut taxes next year - was still aiming to cut some taxes in 2015.

The economy minister, Luis de Guindos, said the deficit-reduction strategy had been agreed with the European Commission and other eurozone officials.

"2014 will be the year of recovery," he said.

The deficit is now forecast to reach 6.3% of GDP in 2013 - well above earlier targets - but would fall to 2.7% by 2016, Mr de Guindos added.

The unemployment rate - which hit a record high of 27.2% in the first quarter of this year - is expected to fall back to 26.7% in 2014, and 25% in 2015.

It comes as protests broke out in Madrid on Wednesday following the release of the latest jobs data.

Around 1,000 people took to the streets in the latest demonstration against the country's austerity measures and tax hikes that have left many without jobs.

The country's economy has been struggling to show signs of recovery since the collapse of its once-booming property market in 2008.

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US Economy Misses Forecasts In Last Quarter

The US economy has expanded at a rate below that forecast by economists, the latest official figures have shown.

Although economic growth regained speed in the first quarter, it was not as much as expected, heightening fears the already weakening economy could struggle to handle deep government spending cuts and higher taxes.

Gross domestic product (GDP) expanded at 2.5% annualised rate in the first three months of 2013, according to the Commerce Department.

The figure was up on the previous quarter, after growth nearly stalled at 0.4%.

The latest increase, however, missed economists' expectations for a 3% growth pace.

Part of the acceleration in activity reflected farmers' filling up silos after a drought last summer decimated crop output.

Removing inventories, the growth rate was reduced to a tepid 1.5%.

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Winston Churchill To Appear On New £5 Notes

Former British prime minister Sir Winston Churchill is to appear on the next banknotes, it has been announced.

Bank of England Governor Sir Mervyn King revealed the image of Churchill which will be used to members of his family at his former home, Chartwell, on Friday.

Sir Mervyn said: "Our banknotes acknowledge the life and work of great Britons. Sir Winston Churchill was a truly great British leader, orator and writer.

"Above that, he remains a hero of the entire free world. His energy, courage, eloquence, wit and public service are an inspiration to us all. I am proud to announce that he will appear on our next banknote."

The Churchill banknote is due to be issued as a £5 note for use during 2016.

The design on the reverse of the note will include a portrait of Churchill from a photograph taken in Ottawa by Yousuf Karsh on December 30, 1941 and a view of Westminster and the Elizabeth Tower from the South Bank looking across Westminster Bridge.

The image of the Elizabeth Tower will feature the hands of the Great Clock at 3pm - the approximate time on May 13, 1940 when Churchill declared in a speech to the House of Commons: "I have nothing to offer but blood, toil, tears and sweat." This declaration is quoted beneath the portrait.

In the background, there will be the Nobel Prize medal which Churchill was awarded in 1953 for literature, together with the wording of the prize citation.

Sir Mervyn King with Lady Soames, Churchill's only surviving child.

Sir Mervyn, due to retire later this year, suggested the new note could become known as a "Winston" - and that the spirit of Churchill's inspirational "blood, toil, tears and sweat" speech was just as important during today's times of economic difficulty as during the War.

He said: "We do not face the challenges faced by Churchill's generation. But we have our own.

"And the spirit of those words remains as relevant today as it was to my parents' generation who fought for the survival of our country and freedom under Churchill's leadership."

Churchill's image replaces that of Elizabeth Fry, the philanthropist and penal reformer, who appears on current notes first issued in 2002.

These will be phased out over two or three years, leaving no notes featuring the face of a famous woman - other than the Queen.

The choice of Churchill reflects the fact that, though a political figure, he is widely revered across the spectrum as the man who saved Britain in its darkest hour from the fearful advance of Nazism across Europe.

Another war hero, the Duke of Wellington, is the only other prime minister to have featured on a banknote image - the old £5 phased out in the 1990s.

Speaking in the grounds of Chartwell, Sir Winston's grandson, Mid Sussex Tory MP Nicholas Soames, said featuring on a bank note would have given the former wartime prime minister great pleasure.

He said: "He was an extraordinary man and his ability to capture the mood and the people's mood was one of his great gifts as a statesman.

"The design of the bank note, the quotation and the whole idea behind it is so appropriate and fitting, and my grandfather would have been truly very proud."

Churchill had a long parliamentary career during which he served as home secretary and chancellor before a spell in the political wilderness in the 1930s when he warned of the increasing threat of German rearmament.

In May 1940, he replaced Neville Chamberlain as prime minister in the newly-formed National Government. His leadership and brilliant oratory were credited with helping to steer Britain to victory.

Defeated by Labour in the 1945 general election, he served again as prime minister from 1951 to 1955, when he retired aged 80. Churchill died in 1965 and was given a full state funeral, the first commoner to receive such an honour since Gladstone in 1898.

He was also the first commoner to feature on a British coin - the 1965 crown or five-shilling piece.

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Spain's Jobless Rise 'Worse Than Feared'

Spain's unemployment rate soared to 27.2% in the first quarter of the year, worse than economists had predicted.

The official figures revealed that the number of those without jobs surpassed six million for the first time - with 237,400 people added to the grim unemployment statistics over the period taking the total to 6.2 million.

Economists had expected the unemployment rate to grow from 26% in the final quarter of 2012 to 26.5%.

The figures were released by the country's National Statistics Institute against a backdrop of recession, which is expected to continue throughout 2013.

The Spanish economy, the eurozone's fourth biggest, contracted by 1.4% last year, the second worst yearly slump since 1970

The Bank of Spain has predicted a 0.5% fall in GDP during the first three months of 2013 while the International Monetary Fund's recent World Economic Outlook report expects a contraction of 1.6% over the 12 months.

Spain's problems stem from the collapse of its once-booming real estate sector in 2008, which resulted in a facility of up to 100 billion euros (£85bn) in rescue funds being made available by its eurozone partners.

The government has launched a series of financial and labour reforms and pursued a raft of spending cuts and tax increases that have managed to reduce a swollen deficit but been blamed for choking economic growth.

Despite the measures, Spain had the highest budget deficit among the 17 European Union countries that use the euro in 2012.

Its Budget, due to be announced on Friday, is expected to focus less on austerity and include more measures to stimulate activity in the economy.

A key fear behind Spain's soaring unemployment crisis is that it is damaging the country's prospects by consigning a generation of young people to financial hardship.

The official statistics agency for the European Union, Eurostat, said earlier this month that youth unemployment in Spain had topped almost 56%.

Analysts expect the Budget to try and address the issue, despite the spending constraints faced by Mariano Rajoy's government, as he took office in December 2011 on the back of a core pledge to create jobs.

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UK Car Production Falls As Demand Drops

Production fell across Britain's car making industry in the first quarter, according to industry figures, but output is expected to recover.

The Society of Motor Manufacturers and Traders (SMMT) said the number of vehicles made fell by 2% to just over 393,410 over the first three months of 2013.

In March, manufacturing slumped by 6.3%, with only around 126,900 cars produced.

The production of commercial vehicles was badly hit over the month - down by 18.7% in March - and engine production fell by 6%.

It comes as data from the Office for National Statistics showed that the UK economy avoided a triple dip recession, with growth of 0.3% in the first quarter of the year.

But the recovery was driven by a strong services sector, not production - which only rose by 0.2%.

The SMMT said an early Easter weekend and weak demand across Europe for new cars hit demand in recent months.

But the organisation's interim chief executive said that, looking ahead, things were likely to improve.

"Despite ongoing difficult market conditions, UK automotive manufacturing is expected to grow overall in 2013 and beyond, fuelled by significant investment from global automotive companies," he said.

Britain has so far managed to buck the trend of falling demand for new cars across Europe, with sales rising for the 13th successive month in March.

Over the month, car registrations in the UK increased by 5.9% when compared to the same month in 2012.

In contrast, they fell in Germany - Europe's biggest car market - by over 17% and were 16.2% lower in France.

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UK Economy Avoids Triple-Dip Recession

The UK economy returned to meagre - but better than forecast - growth in the first quarter of 2013, averting the prospect of a triple-dip recession.

According to the first estimate of gross domestic product (GDP) by the Office for National Statistics (ONS) there was overall growth of 0.3% in the period - driven by the service sector, although construction remained in the doldrums.

A contraction in GDP would have given the UK two consecutive quarters of negative output and plunged the country back into recession, delivering a savage political blow to Chancellor George Osborne.

GDP had shrunk by 0.3% in the final three months of 2012 but the new figures pointed to a recovery in services output, with the motor industry particularly strong.

The ONS measured growth in the sector at 0.6%, driven by a 1.1% increase in the wholesale and retail distribution, hotels and restaurant trades sector.

Industrial output was lifted by the biggest rise in the mining and quarrying sector since 2002 as some North Sea oil and gas platforms came back on line after repairs that had depressed production in the final quarter of 2012.

The figures also showed that the impact of the long cold winter was not as bad as feared, with weather-hit trading on the high street offset by a boost in energy demand as households ramped up their heating.

George Osborne believes the UK economy is now making progress

However, manufacturing output remained weak at -0.3% over the period while construction contracted by 2.5%.

Mr Osborne took to Twitter to give his reaction, saying: "Today's figures are an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress.

"The deficit is down by a third, businesses have created over a million and a quarter new jobs and interest rates are at record lows.

"We all know there are no easy answers to problems built up over many years, and I can't promise the road ahead will always be smooth but by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future."

The performance will relieve some of the pressure on the Chancellor to rethink his austerity policy, following recent warnings that the UK is a "crisis economy" and last week's ratings downgrade.

IMF chief economist Olivier Blanchard told Sky News last week that Mr Osborne was "playing with fire" with his economic strategy.

Following the latest GDP figures, shadow chancellor Ed Balls accused Mr Osborne of presiding over the UK's slowest recovery for 100 years.

Ed Balls has again called on the Chancellor to change course

He said: "These lacklustre figures show our economy is only just back to where it was six months ago and continue the picture of flat-lining we have seen since the last spending review.

"This stagnation in our economy is the reason why people are worse off than when this Government came to office.

"If we're to have a strong and sustained recovery, and catch up all the ground we have lost over the last few years, we need urgent action to kickstart our economy and strengthen it for the long-term - as Labour and the IMF have warned.

"The longer we continue to bump along the bottom the more long term damage will be done. Britain's struggling families and businesses cannot afford another two years of this."

Business reaction to the GDP figures was largely positive with the chief economist at the Institute of Directors, Graeme Leach, saying it was a crucial time for some better news.

He said: "Despite the squeeze on real earnings and the negative impact on confidence from the euro crisis, money supply growth has picked up and with more money sloshing around there has been more growth.

"We shouldn't get too excited about 0.3% quarterly growth but it does provide relief from all the doom and gloom."

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Barclays Profits Fall 25% Amid Restructuring

Barclays endured a 25% fall in first quarter profits as £514m of restructuring costs weighed heavily.

The bank reported an adjusted pre-tax profit for the three months to March of £1.79bn, down from £2.4bn a year ago, just below analysts' expectations.

The investment bank made a profit of £1.3bn in the first quarter, up 11%, and accounted for almost three-quarters of group profit.

Barclays said group profits were dented by the charge to cover Project Transform - new CEO Antony Jenkins' plan to axe 3,700 jobs, prune the investment bank and reform the bank's culture after a series of scandals.

Investment bank chief Rich Ricci is the best-rewarded at Barclays

He is aiming to make the lender the 'Go-To' bank on the high street following the PPI and interest rate swap scandals and Libor interbank lending rate-rigging.

Mr Jenkins confirmed an additional £500m in restructuring costs were expected to be found over the remainder of the year.

He said: "While there remains much to do to build a stronger and more resilient Barclays, we are completely focused on executing our Transform programme and are making good early progress."

Most of the costs incurred so far were in its European operations, where it has cut almost 2,000 jobs, and the investment bank, where it is axing 1,800.

The bank last week announced a fresh shake-up of its senior staff, including the departure of its head of investment banking, in the wake of last year's Libor scandal.

Rich Ricci and Tom Kalaris, who runs its wealth-management arm and US business, were both appointed by former boss Bob Diamond.

Under their watch, the Libor system was found to have been open to abuse, with some traders lying about borrowing costs to boost trading positions or make the bank seem more secure.

Barclays was later fined £290m by regulators for manipulating the rate.

Mr Ricci - Barclays' best-paid banker - recently revived the debate about remuneration in the sector when it was confirmed he was getting a £17m share payout under the terms of his contract.

It was part of a £40m windfall to be shared between nine executives.

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Co-Op Deal To Buy Lloyds Branches Collapses

Lloyds Banking Group's sale of more than 600 branches to the Co-operative Group has fallen through.

The Co-op - which pulled out of the £800m deal - said it was "not in the best interests of the Group's members" at the present time.

"This decision reflects the impact of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general," the company said in a statement.

It comes after Sky's City Editor Mark Kleinman highlighted doubts about the takeover plans in February.

The UK's financial regulator had concerns over the Co-op Bank's capital position, he said.

Lloyds is being forced to dispose of the branch network - known as Project Verde - by European regulators in return for the £20bn of state aid it received at the height of the 2008 banking crisis.

The part-nationalised bank now intended to sell the network through an initial public offering (IPO).

If the deal had gone ahead, the Co-op bank would have doubled in size

Lloyds' chief executive, Antonio Horta-Osorio, said the company was disappointed by the Co-Op's decision.

"However, we are well advanced in our plans to bring the Verde business to the UK high street during the summer through the TSB Bank, and will now proceed with the option to IPO the business, subject to the necessary approvals," he said.

"The TSB Bank will be an attractive retail and commercial bank that will have around 630 branches across the UK, a strong management team and will be a real challenger on the high street."

If the deal had been completed, the Co-op would have doubled in size with around 1,000 bank branches across the UK - making it a viable competitor to the "Big Four" lenders - Lloyds,HSBC, Barclays and Royal Bank of Scotland (RBS).

The executive director of Which?, Richard Lloyd, said the deal's collapse was "very bad news" for the retail banking market.

"The Co-op's decision is a setback to the Government's efforts to tackle the unhealthy dominance of our biggest banks," he said.

"This would have given more choice to consumers who are sick and tired of shoddy service and unfair fees and put more pressure on the big banks to work for customers, not bankers."

It comes after Santander UK withdrew from a deal to buy 316 RBS branches in October last year.

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Govt Courts Buyout Firms Over Royal Mail Deal

By Mark Kleinman, City Editor

The Government is courting some of the world's biggest private equity groups about a potentially controversial plan to acquire a major stake in Royal Mail.

I have learnt that advisers to the Coalition have in recent weeks begun reaching out to the buyout firms - which include CVC Capital Partners, the owner of Formula One motor racing - to gauge their interest in an investment in Royal Mail.

Insiders said on Wednesday that the private equity firms being courted also included Carlyle Group, which bought the defence research firm QinetiQ from the then Labour administration in 2003, and Kohlberg Kravis Roberts, the US-based firm whose British investments include the parent company of Boots.

Lazard and UBS, the investment banks overseeing the discussions with the buyout firms on behalf of ministers, are understood to be informing them that a deal with a private equity investor is "a Plan B route" that would only be formally pursued if a flotation of Royal Mail is ruled out.

Michael Fallon, the Business Minister, has made it clear that the Government has not ruled out any options for injecting private capital into Royal Mail, which it argues is essential as part of efforts to modernise the company's systems and processes.

An initial public offering (IPO), possibly as early as this autumn, has emerged in recent months as the preferred route for ministers. A decision to hand at least 10pc of Royal Mail to employees has now been enshrined in legislation, and would remain the case however the Government elects to offload a major interest in the company.

Any eventual proposal to sell a stake in Royal Mail to a private equity group would, though, inevitably spark opposition from the CWU, the main postal workers' union, which is resisting the move to inject private capital.

The extent of interest among the private equity firms being sounded out about a deal is unclear.

CVC has an extensive track record in the European postal services sector, and is in the advanced stages of planning an IPO of bpost, the Belgian postal group.

The firm, which also owns a stake in the Danish postal service, was also the furthest advanced party in discussions to acquire Royal Mail during the most recent attempt to privatise it in 2009. The then Business Secretary, Lord Mandelson, abandoned that effort when it became clear that a sell-off would not deliver value for taxpayers.

Royal Mail is expected to be valued at between £2bn and £3bn this time around, having transformed its business prospects by shedding jobs, returning to profit in its core letters business, and shedding its historic pension liabilities under a deal with the Government.

Carlyle is also thought likely to be interested because of the significant profits it made on its QinetiQ investment between 2003 and 2007.

Earlier this week, Sky News revealed that a further debate was taking place in Whitehall about whether the 13,000 employees of Royal Mail's European parcels arm, GLS, should be included in a share distribution plan.

A private contractor is being hired to administer an employee share ownership scheme, although it is unclear whether that will involve tens of thousands of postmen and women being handed free shares or being invited to subscribe to discounted shares.

A BIS spokesman said: "No decisions have been taken on the form or timing of the sale of shares in Royal Mail."

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Public Sector Borrowing Falls Slightly

The total amount of public sector net borrowing has fallen to £120.6bn over the last financial year, according to the Office for National Statistics.

The figure was slightly lower than the previous tax year's £120.9bn and the independent Office for Budget Responsibility's forecast.

Borrowing also fell in March - by £1.6bn on a year earlier to £15.1bn - as spending cuts across Government departments kicked in.

The totals exclude the cost of bank bailouts, cash transfers from the Government's quantitative easing programme and a boost from the Royal Mail pension assets.

Chancellor George Osborne is likely to welcome the figures after a difficult week in which his austerity programme was criticised by the International Monetary Fund.

Fitch Ratings also became the second agency to strip Britain of its triple-A credit rating.

A Treasury spokeswoman said: "Though it is taking time, the Government is fixing this country's economic problems.

"The deficit is down by a third, a million and a quarter new private sector jobs have been created and interest rates are at near-record lows, benefiting households and businesses."

But Deutsche Bank's UK economist George Buckley said the UK's public finances remained a concern.

"We've seen another downgrade over the past week ... it's going to take a long time to get back to where the Government would like it to be in terms of the underlying fiscal deficit," he said.

The falls in borrowing - although "encouraging" - come after three years of austerity, he said, adding: "There's a long way to go yet."

Investec's Victoria Clarke said: "The Chancellor just made it in under the OBR's forecast, albeit by the skin of his teeth.

"The bigger test will be if he can continue to meet the forecasts for the years ahead, and we think it's looking vulnerable because of the weakness of the euro area, which could decrease tax revenues and mean higher spending pressures."

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Asda Creates 2,500 Jobs Amid Online Boom

Asda is to create 2,500 jobs this year as it shifts investment to its growing multichannel business, with stores supporting its internet and smartphone channels.

The company said it would spend £700m on new and existing stores and its supply chain, with its website also benefiting from the investment.

The news was announced as the retailer confirmed a 4.5% lift in total sales, including petrol, to £22.8bn in 2012.

Andy Clarke, president and CEO of Asda, said: "I'm proud that in the continuing and very challenging trading environment we were able to increase total sales by 4.5% last year. This shows that we are continuing to get it right for customers.

"By focusing on their needs through accelerating our investment in the technology and infrastructure to make shopping more convenient, customers can shop for what they want, when they want it."

Asda, which claims to be Britain's second biggest online grocer, said previous investment in its web-based operations had paid off with double-digit growth and was the primary reason for its new capital spend.

The retailer increased its home shopping capacity with the opening of a third purpose-built 'picking centre' in Nottingham last month, creating more than 600 new jobs.

As part of its wider plans, its 'Click and Collect' business, where customers can order online and collect from a store, will soon include same day delivery on food.

The retailer is planning to open 10 more new stores, including four new small format supermarkets, five superstores and one new non-food outlet.

The latest grocery share figures from Kantar Worldpanel, for the 12 weeks ending 14 April, show how intense competition has become with Waitrose, Aldi and Lidl all recording record market shares.

Within the big four, Sainsbury's was found to have delivered the strongest growth with 5.4% and was the only one to increase market share, now at 16.9%.

Tesco's market share currently stands at 29.9%, Asda's at 17.5% and Morrisons' at 11.5%.

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HSBC Cuts Over 1,100 British Jobs

HSBC has announced further redundancies in Britain as part of the bank's three year rivival plan.

It said 3,166 positions in the UK would be affected by the cost-cutting exercise - but that just over 2,000 would be redeployed, resulting in 1,149 jobs losses.

It comes after 2,200 UK job cuts a year ago at the bank, which employs just over 47,000 staff in Britain.

The cuts will mainly come from HSBC's wealth management division, as it starts to move advisors to its consumer retail banking business in June.

The head of HSBC Bank, Brian Robertson, said: "I understand change is always unsettling, particularly for those directly affected.

"However, I also firmly believe what we are proposing is essential in  order  for  us  to fulfil our customers' expectations.

"With the banking behaviour of our customers continually evolving we must change our business to  meet  their  needs. 

He added that affected employees would be offered new roles where possible and he was confident "a significant majority" would remain at the bank.

More follows...

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Dreamliner: Boeing Installs New Batteries

Boeing 787 Dreamliner Timeline

Updated: 12:07pm UK, Monday 22 April 2013

The turbulent history of the Boeing 787 Dreamliner:

Apr 22, 2013: The batteries in five All Nippon Airways Dreamliners and two Japan Airlines jets are replaced

Apr 19, 2013: The Federal Aviation Administration approves Boeing's battery modification plans

Apr 3, 2013: Company says it has completed more than half of its battery tests

Mar 25, 2013: Boeing says its first test flight with the new lithium-ion battery went according to plan.

Mar 15, 2013: Boeing unveils modifications to its 787 batteries, saying the Dreamliner is "absolutely safe"

Mar 12, 2013:  FAA approves Boeing's certification plan for a new battery system for the aircraft

Mar 7, 2013: US National Transportation Safety Board says it has failed to identify the cause of the Jan 7 fire

Feb 28, 2013: Boeing says it has found a "permanent" solution to fix problems with Dreamliner batteries

Feb 25, 2013: All Nippon Air (ANA) confirms all of its fleet will remain grounded until the end of May

Feb 8, 2013: Boeing confirms it has sent letters to airlines expecting imminent deliveries of possible delays

Feb 7, 2013: US Federal Aviation Administration (FAA) allows limited test flight of the grounded Dreamliner

Feb 5, 2013: Japanese official reveal CT scans of failed batteries does not reveal fire cause

Feb 4, 2013: Boeing requests FAA approval for test flights of grounded model

Jan 30, 2013: Amid revenue loss forecasts of $500m to $5bn, Boeing CEO addresses investors and downplays impact

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: FAA officials arrive in Japan to examine a 787 and its melted battery pack after an 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 Administration (FAA) 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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Pret A Manger Creates 500 New UK Jobs

Pret A Manger has said it will create 1,000 new jobs this year - including 500 in the UK - following a "strong" performance in 2012.

But the company is likely to face calls for the majority of the new positions to go to British workers - having been criticised in the past for hiring high numbers of foreign workers.

The sandwich chain reported a 17% hike in sales last year to £443m, and said profits were also up by 17% to £61.1m.

It opened 36 new shops in 2012 - including 19 in the UK, two in Hong Kong and four in Paris - taking its total to 320.

And it continued to expand in the US, launching 11 new stores and adding: "There is every sign that as we build critical mass there that this will prove a successful market for us."

Despite the global economic uncertainty, Pret said it had maintained "robust growth" in the first quarter of this year and planned to open 50 new shops over 2013.

It also unveiled plans to expand its National School Leaver Programme - which encourages younger people to work for Pret when they leave full-time education.

Chief executive Clive Schlee said 2012 was a strong year for the company.

"We continued to invest in our core values, improving our menu, launching innovative employment schemes and building and refurbishing shops in all our markets," he said.

"We opened in Paris and in a fourth US City, Boston, and we gave more money to our charities than ever before."

The first Pret was opened in London in 1986 by co-founders Sinclair Beecham and Julian Metcalfe.

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Bosses Demand A Better Deal With The EU

Hundreds of British business leaders have called on the coalition to negotiate a better deal for Britain with the European Union.

David Cameron has vowed to claw back powers and then offer voters a choice of staying in the EU in a referendum by the end of 2017 if the Tories return to power in 2015.

The new Business for Britain campaign backs his approach on renegotiation and calls for a cross-party "national drive to renegotiate the terms of Britain's membership of the EU".

Ocado chairman Sir Stuart Rose and Next boss Lord Wolfson are among the 500 people signed up to the campaign, supported by small firms as well as blue chip companies.

They said: "As business leaders and entrepreneurs responsible for millions of British jobs, we believe that the Government is right to seek a new deal for the EU and for the UK's role in Europe.

"Far from being a threat to our economic interests, a flexible, competitive Europe - with more powers devolved from Brussels - is essential for growth, jobs and access to markets.

Ocado chairman Sir Stuart Rose is one of the signatories

"We therefore welcome the launch of Business for Britain's campaign for real change in the EU and urge all political parties to join in committing themselves to a national drive to renegotiate the terms of Britain's membership of the EU."

The group's co-chairman Alan Halsall, boss of pram maker Silver Cross, said: "Business for Britain has been formed because many would have you believe that business doesn't want politicians to try and renegotiate a better deal from Europe.

"But we know that jobs and economic growth depend on a more flexible, looser relationship with the EU. Just as Business for Sterling stopped Britain joining the Euro, Business for Britain will get us this better deal."

JML founder John Mills added: "This campaign is not about taking political sides or backing the right horse - it's about doing what's best for British business.

"I have been a member of the Labour Party for 40 years, others supporting the campaign are supporters of different political parties or none at all.

"The important part is that the signatories to Business for Britain want to show the country that business does not fear Britain's politicians seeking a better deal from Brussels."

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George Osborne Urged To Rethink Economic Plan

Lagarde's Support For Osborne

Updated: 4:29pm UK, Saturday 20 April 2013

By Ed Conway, Economics Editor

A few weeks ago, eagle-eyed Twitter users would have noticed a rather unusual tweet from one household name to another.

"Welcome to Twitter @George_Osborne," read the public message from @Lagarde, "see you in two weeks at the 2013 IMF/WB spring meetings in Washington, DC".

It was, it turns out, the only personal tweet that Christine Lagarde sent to any other finance minister in the run-up to this past week's Spring Meetings in Washington DC.

This is no coincidence. Lagarde and Osborne really are good friends. They talk regularly (and not just on Twitter); they have a genuinely warm personal and professional relationship.

Osborne was the first major finance minister to endorse Lagarde for her post as managing director of the International Monetary Fund and she, in turn, has always been steadfastly and publicly supportive of his economic policy.

Last summer, Lagarde made a personal appearance at the UK Treasury to unveil the Fund's annual assessment of the British economy, and endorsed the Osborne economic plan.    

She memorably said that when she tried to imagine what the public finances would have looked like without the Chancellor's austerity measures, "I shiver."

Even as the Fund's professional assessment of the UK economy's health turned negative, Lagarde's support for Osborne has remained unwavering.

Earlier this week in Washington, the IMF chief economist, Olivier Blanchard (who, like Lagarde, is French) said Osborne would have to reduce the pace of his spending cuts, adding that the Chancellor was "playing with fire".

The World Economic Outlook said, in black and white, that "greater near-term flexibility in the path of fiscal adjustment" was necessary in the UK – economese for "you need to consider plan B".

And yet when asked about Britain, Lagarde offered a far more equivocal verdict: there was "nothing new" in the Fund's assessment that the UK should be ready to change course if and when economic growth disappointed - though she conceded that "the growth numbers are not particularly good."

This difference in tone has been useful for the Chancellor. When asked in a press briefing about Blanchard's criticism, Osborne quoted Lagarde's comments at length, saying that the chief economist was "just one voice".

However, the reality, according to a range of Fund insiders, is quite the contrary. They point out that the institutional IMF view is far closer to Blanchard's opinion than Lagarde's. That it is Lagarde who is the outlier.

In fact, some Fund officials were privately aghast when they heard Lagarde claim in that press conference that there was "nothing new" in the Fund's position on the UK.

One told me that within the Fund some were muttering that Lagarde's good relationship with the Chancellor - and her consequent efforts to be diplomatic - were undermining the overall message: that Britain must change course.

However, if there were any doubt about the Fund's true position, it has now been laid to rest by Lagarde's deputy, David Lipton. In an interview with Sky News, he said, explicitly, that when it comes to Britain's budget, "the pace of consolidation ought to be reconsidered".

The precise numbers, he signalled, would have to wait until the Fund's official survey begins next month, but the verdict could hardly be clearer.

The intervention is particularly significant given who it has come from. Lipton is not a household name; he is not on Twitter. But not only is he Lagarde's deputy, he is the man who will take her place to unveil the ominous findings of the IMF assessment in London next month. It's enough to make George Osborne shiver.

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Arsenal Co-Owner Is Now UK's Richest Man

Britain has a new richest man - Russian co-owner of Arsenal Football Club Alisher Usmanov has taken the top spot from the previous Rich List number one Lakshmi Mittal.

Mr Usmanov, who has a near-30% stake in Arsenal, is worth £13.3bn, putting him into the top spot of the 25th annual Sunday Times Rich List.

Researchers found the 1,000 richest people in Britain have wealth totalling almost £450bn.

There are now a record 88 billionaires among the country's wealthiest 1,000 individuals and families, up from 77 billionaires in 2012 and just nine in 1989.

The combined wealth of the top 200 people in the 2013 Sunday Times Rich List is £318.2bn, a more than eightfold rise on the £38bn for the combined wealth of the 200 people featured in the first Rich List in 1989.

In 1989, the Queen was Britain's richest person.

Russian businessman Mr Usmanov started off making plastic bags, but went on to found a business empire with numerous interests.

As well as Metalloinvest, the country's biggest iron ore producer, he owns a stake in mail.ru, the largest internet company, and has a big holding in MegaFon, a mobile phone operator that listed on the London and Moscow stock markets last year.

Uzbekistan-born Mr Usmanov, 59, also owns Sutton Place, the former Surrey home of the late oil baron J Paul Getty, as well as a £48m mansion in north London.

He shares a passion for sport with his wife, Irina Viner, 64, head coach of Russia's rhythmic gymnastics team, whom he met when he was a young fencer.

Second in the list is Ukrainian Len Blavatnik, the highest riser in the list in wealth terms.

Mr Blavatnik is now worth £11bn, an increase of £3.4bn on last year.

Odessa-born Mr Blavatnik, who owns Warner Music, received £2bn last month for his stake in TNK-BP, when company was sold to state-owned Russian oil company Rosneft.

After eight years at the top of the Sunday Times Rich List, steel magnate Lakshmi Mittal has dropped down to fourth place.

Mr Mittal is now only worth £10bn, making him the biggest faller in wealth terms.

The 40% stake Mr Mittal and his wife Usha hold in the steelmaking giant ArcelorMittal has plummeted from £28bn at its peak to £5.95bn.

The highest placed UK-born person in the 2013 Sunday Times Rich List is The Duke of Westminster, ranked eighth and worth £7.8bn. The Duke's interests are mainly in London land and property.

Chelsea Football Club owner Roman Abramovic was fifth with £9.3bn.

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Darling: 'How Long Will Osborne Lumber On?'

The outstanding question in British politics is how long the Government will "lumber on" with failing economic policies, according to Alistair Darling.

The former Labour Chancellor said his party was right to sit and wait to see what George Osborne's strategy actually becomes.

He told Sky News' Murnaghan programme Mr Osborne had lost credibility and insisted Labour would be "very wise" to "wait and see what he actually comes up with".

Mr Darling highlighted the latest ratings downgrade, the IMF's comments and the Treasury Select Committee's criticism of housing policy as three major blows to the current Chancellor's policies this week alone.

He said: "What you saw last week were more and more people saying (Mr Osborne's) policy isn't working.

"I've been saying that for the last three years, and it was pretty unfashionable to do so, but what you're now seeing are respected figures inside and outside the UK calling into question the strategy.

"The big question is how long does the present Government simply lumber on simply hoping something will turn up.

"I don't think my Labour colleagues need to take a position (on spending) until we see what the present Government is proposing - we don't actually know what they are doing.

"It's very difficult to plan ahead in any sort of sensible way. I think what we are better doing at the moment is concentrating our fire on the Government."

Mr Darling, who came under fire from his own side while Chancellor for predicting in 2008 this would be the worst downturn in 60 years, said Mr Osborne's plans had always been "fraught with difficulty" and now been "blown completely off course".

"It is manifestly obvious it is simply not working," Mr Darling added.

His comments came as it emerged that Britain is expected to narrowly dodge a triple-dip recession, although experts continue to label the UK a "crisis economy".

Most analysts are predicting gross domestic product (GDP) to have edged up 0.1% in the first three months of the year, which would mean the economy has avoided returning to recession.

The latest figures will be released on Thursday.

Incoming Bank of England governor Mark Carney added to fears last week by branding the UK a "crisis economy" alongside stricken eurozone countries and Japan.

His brutal assessment, made on the fringes of the International Monetary Fund's Washington meeting, came as IMF chief Christine Lagarde also voiced concerns over the UK economy, saying its growth numbers were "not particularly good".

Just days earlier the IMF cut UK growth forecasts from 1% to 0.7% for 2013 and 2014's projection from 1.9% to 1.5% as it said the private sector was being hampered by a lack of credit and economic uncertainty.

Also on Friday, ratings agency Fitch cut the UK's creditworthiness from the top AAA rating to AA+.

David Riley, managing director of Fitch, told the Murnaghan show Britain's "economic recovery has been very weak, almost non-existent".

He said: "It's not just about the austerity, the bottom line is the private sector borrowed too much in the UK, it's been very hard to rebalance the UK economy."

Mark Field, Tory MP for the City of London, told the show: "The big test isn't so much what the IMF say but what the markets say. The one lesson is that we have kept our interest rates very low."

A Downing Street a spokesman said: "Clearly from the Prime Minister's perspective these are very, very tough times.

"We are having to deal with the biggest peace-time deficit ... but the path that we are taking is the right one."

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Google And Microsoft Report Soaring Revenues

Tech firms Google and Microsoft have reported strong quarterly growth amid shifting strategies for both.

Google's core internet business net revenue grew 23% in the first quarter as profit climbed to $3.35bn (£2.2bn), despite a trend toward cheaper ads on smartphones and tablets.

"We had a very strong start to 2013, with $14bn (£9.1bn) in revenue, up 31% year-on-year," Google chief executive Larry Page said.

Shares of Google, which reached an all-time high of $844 (£550) in March, were up 1.5% to $777.75 (£505) in after hours trading on Thursday.

Microsoft was revenue rise in the quarter by 18%, year-on-year

Meanwhile, Microsoft's strategy of selling more long-term software contracts to big business customers cushioned the blow from plummeting PC demand and also lacklustre demand for Windows 8.

Net income was $6.1bn (£4bn) for the fiscal third quarter, which ended in March, up 18% from $5.1bn (£3.3bn) the same period last year. Revenue was $20.5bn (£13.3bn), up 18% year-on-year.

The boost comes as personal computer sales fell 14% in the first three months of the year, just as Microsoft tried to ramp up sales of the latest iteration of Windows.

But the company's ability to keep hold of big customers rescued its third-quarter results.

"Microsoft has successfully transitioned into an enterprise software company and these results show that," Fort Pitt Capital analyst Kim Caughey Forrest said.

"Because the strength of server and tools and the actual way they sell licences to business is making up for the missing PC sales."

In effect, Microsoft no longer relies on a new PC to make money from software - only 20% of the company's product revenue comes from computer makers paying fees to put Windows on their machines.

Google's Android operating system is used on Samsung smartphones

About 45% comes from multiyear agreements with customers - generally big companies - paying millions for three-year access to Windows and Office software.

The software giant is also working with manufacturers to produce a line of small touch-screen devices powered by Windows, apparently intended to compete with tablets like the iPad Mini and Amazon Kindle Fire.

Google has also stepped up its strategic shift, to mobile advertising spurred by its Android operating system leaping past Apple iPhone and iOS software to power some 70% of devices.

Google improved its cost-per-click (CPC), a critical metric that refers to the price advertisers pay the search giant, in the first quarter.

The CPC rate declined 4% year-on-year in the first quarter, following a 6% decline in the fourth quarter.

"It's classic Google. There's plenty of things to like and some things not to like," BGC Partners analyst Colin Gillis said.

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GSK Hit By 'Abuse' Claim By Consumer Watchdog

GlaxoSmithKline has been accused by the competition watchdog of paying off firms to delay the launch of cheap versions of its antidepressant treatment - in a move that denied the NHS "significant" cost savings.

The Office of Fair Trading (OFT) has alleged that GSK offered "substantial" payments to Alpharma, Generics and Norton Healthcare, to hold off from supplying rival medicines to its blockbuster Seroxat treatment.

GSK's rivals were attempting to supply a generic paroxetine product in competition to Seroxat, but it accused each of infringing its patents and to resolve the disputes, they effectively agreed to be paid off, according to the OFT.

The alleged actions by all the firms involved are a potential infringement of competition law, while GSK is also accused of abusing its dominant position in the market.

Ann Pope, senior director of services, infrastructure and public markets at the OFT, said: "The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers.

"It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case."

The OFT said the firms will now be asked to respond to its allegations before deciding if competition law has been infringed.

Seroxat is one of the company's best-selling medicines, but has been hit by generic competition in recent years, with sales falling 14% in 2012 to £374m.

Sales of the drug fell by nearly a fifth in the final three months of last year alone and Brentford-based GSK has been embroiled in controversy before over its Seroxat treatment.

Also known as Paxil, GSK was fined $3bn (£2bn) in 2012 in the biggest healthcare fraud in US history after it admitted paying medics to prescribe the drug for children although it was not intended for under 18s, while it also pushed its Wellbutrin drug for uses for which it was not approved.

On Friday morning the company responded to the OFT claims and said: "GSK supports fair competition and we very strongly believe that we acted within the law, as the holder of valid patents for paroxetine, in entering the agreements under investigation.

"These arrangements resulted in other paroxetine products entering the market before GSK's patents had expired.

GSK added: "We have cooperated fully with the Office of Fair Trading in this investigation, which covers activities that happened between 2001 and 2004. The paroxetine supply agreements under investigation were terminated in 2004."

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New Round Of Fuel Price Cuts For Motorists

Petrol: The Pump Price Conundrum

Updated: 10:35pm UK, Wednesday 30 January 2013

By Ursula Errington, Business Correspondent

So, the OFT says motorists aren't being ripped off, that the price of petrol on our forecourts is fair and isn't the result of collusion or price-fixing.

Outraged motoring groups still aren't convinced.

The reality is, I don't think anyone knows how to work out the relationship between crude oil and pump price.

From the moment crude oil is pumped out of the ground to when we hand over our money at the till to pay for a topped-up tank, the price of the commodity has been influenced by multiple markets all subject to their own supply and demand idiosyncrasies.

I last worked in oil trading about a decade ago and back then the relationship between the price of Brent crude oil and pump prices was deemed to be pretty sketchy.

Assiduous analysts, whose job it was to structure financial instruments to hedge the bank's customers with exposure to fluctuations in the oil market, pored over oil prices and pump price data looking for a concrete correlation on which to base a safe hedging instrument.

Judging by the collective sighing, teeth-gnashing and head-in-hand gestures, it proved both time consuming and difficult.

Broadly a six-week time lag was identified between a movement in the crude oil price to a correlating adjustment in the pump prices back then but it was considered too statistically patchy to appeal to clients.

So why is it so difficult to find a relationship between the price of oil and the pump price drivers pay?

Firstly, pricing crude oil itself is pretty complicated. Before the black stuff is even out of the ground its anticipated value has been traded on the futures market for weeks, months or years before.

On any one day the oil price is set by taking a combination of a weighted average and straight average up to two months in the future, of all the trades over 600,000 barrels executed on the electronic trading platform the Intercontinental Exchange (ICE).

So it is fair to say that part of the oil price is set by traders who are speculating, who have no intention of allowing their futures contracts to mature and "go physical" (i.e. become related to an actual cargo of oil) but who are buying and selling futures contracts depending on their day-to-day view of the multiplicity of variables effecting the market.

This need not be considered a bad thing. Speculative traders aren't just plucking figures out of the air, they are working on the basis of fine-tuned mathematical models used to assist them in weighting all the factors in play - an outlandish speculative trade based on few decent indicators wouldn't be in their interest at all.

Crucially, these traders add a huge volume of trades to the market, which actually means that big distortions in one trader's view are evened out across the average when the price is set. 

Then there is the shipping market to get the stuff to shore. Highly volatile and as prone to geo-political influences as the commodity itself, shipping deals are opaque because they are over-the-counter and are often based on long-term trading relationships.

The economics of refining are also unhelpfully complex, predominantly because optimising refinery operations is tricky.

Refinery margins (the difference in price between the wholesale value of the products coming out of the refinery and the crude oil from which they were derived) have been surging for many companies of late because of a relative drop in the cost of crude oil and solid demand for products but unscheduled refinery outages, workers on strike, storage costs, changes in the quality of the crude itself - all these things will impact the margin within hours.

And then there's the cost of haulage and the variables at petrol station level, such as a franchise owner's credit rating, local forecourt wars and location.

All of that and we still have some of the cheapest fuel in Europe, according to the OFT.

But it's not over yet - the taxman must also have his share. In the 10 years from 2003 to 2012, prices at the pump increased from 76p per litre (ppl) to 136ppl for petrol and from 78ppl to 142ppl for diesel. Nearly 24ppl of that increase was because of tax and duty.

Is it any wonder then that trying to compare the price of crude oil and the pump price proves a largely fruitless task?

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Retail Sales Drifted As March Snow Fell

The coldest March since 1962 stopped shoppers hunting down spring ranges, resulting in a 0.7% fall in overall retail sales.

The Office for National Statistics (ONS) figures said that left sales 0.5% lower on the year.

Despite the early Easter holiday, non-food sales tumbled by 4% in March and this was only partly offset by the biggest rise since March 2009 in non-store retailing, which includes online shopping.

Online sales accounted for 10.4% of all spending, compared with 8.8% a year earlier.

The information suggests that consumers stayed away from stores and carried out only essential food shopping, preferring to stay indoors in the warm.

Other earnings reports - and those of individual retailers - have been mixed.

While the British Retail Consortium found 3.7% annual growth in the value of retail sales, the ONS measured it at just 0.1%.

Early on Thursday, Debenhams blamed snow in January for a 5.4% dip in profits in its first half.

Debenhams stock is up sharply on Thursday

Britain's second biggest department store group forecast a better second half of the year after making a pre-tax profit of £120.3m in the 26 weeks to March 2.

That was in line with guidance given in a March profit warning when the firm said snow in January had dented sales.

Chief executive Michael Sharp said: "We expect to make further progress in the second half, despite consumer sentiment remaining weak and challenging market conditions."

Many retailers have been finding trading tough as consumers, whose spending generates about two-thirds of gross domestic product, continue to face a squeeze on incomes at a time of record household energy prices and other higher costs.

The soggy summer of 2012 followed by the cold winter also held back sales though most economists are now tipping the UK to avoid a triple-dip recession.

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Top Barclays Bonus Banker Rich Ricci Departs

Barclays has announced that its controversial investment banking boss, Rich Ricci, is to step down this month and retire from the UK bank in June.

The move followed months of speculation that he would leave after the arrival of new Chief Executive Antony Jenkins and outrage last month over a giant share payout.

Mr Ricci - a key lieutenant of former CEO Bob Diamond who quit amid the Libor rate-rigging scandal - was awarded £17m of shares as part of a £40m windfall among nine top executives at the bank.

The awards stoked the continuing row over bankers' pay though Barclays argued they were linked to previous pay policies as part of deferred long-term incentive plans.

Barclays confirmed that Tom Kalaris, head of the bank's wealth management business, would also leave the bank on June 30.

Eric Bommensath and Tom King would become co-chief executives of corporate and investment banking from May 1, Barclays said.

The shake-up represents a further departure from the past as Mr Jenkins aims to make Barclays the 'go to' lender following several scandals to shake the industry following the financial crisis.

Barclays settled with UK and US regulators last June over its traders' manipulation of the interbank borrowing rate while it has also set aside £3.5bn to settle claims relating to Payment Protection Insurance and interest rate swap mis-selling.

Commenting on Mr Ricci's pending departure Mr Jenkins said today: "We are very grateful to Rich for his major contribution to Barclays over the past 19 years, during which time he has played a significant role in building our Investment Bank into the success it is today... We wish him well for his retirement."

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Irish Regulator Swoops For Air Traffic Stake

By Mark Kleinman, City Editor

Ireland's aviation regulator has emerged as a surprise contender to buy into one of the largest shareholders in Britain's air traffic control operator.

I understand that the Irish Aviation Authority (IAA) has expressed an interest in the process through which a number of major airlines are planning to sell their interests in National Air Traffic Services (NATS).

It is not clear whether the IAA, which describes itself as "a commercial semi-state company", would make a cash payment to acquire an interest in The Airline Group, the consortium of carriers which owns 42pc of NATS, or whether it would be structured differently.

In a statement issued to Sky News, an IAA spokesman said:

"The IAA is a partner organisation with [NATS] in the EU Single Sky. Both organisations manage Irish and UK airspace in a co-operative partnership manner and we are also partners with NATS in the Borealis Grouping in Europe. The IAA is a profitable air traffic control (atc) provider, deploying Europe's most advanced technology and also has the lowest charges for ATC services in Europe. The IAA has expressed an indicative interest in formalising its partnership with NATS via the current share sale, but no final decisions have yet been made as the process is in its very early stages."

The UK Government, which owns 49pc of NATS, had for some time been contemplating the sale of about half of its stake, with the aim of raising roughly £250m.

Those plans have now been shelved amid concerns of an outcry about the sale of such a sensitive asset, and ministers are unlikely to sanction the sale of any of the state's shareholding in the near future.

NATS handles roughly 5300 flight movements every day and employs 5000 people, who collectively own about 5pc of the company.

Instead of airlines selling their stake in NATS itself, the selling carriers plan to offload their stakes in the Airline Group plc, meaning that as an entity it will have different shareholders but continue to hold 42pc of the airspace controller.

Sky News has learnt that the airlines have decided against selling more than 49.9pc of the Airline Group to external investors, meaning that the Airline Group will continue to exert a decisive influence over the strategy and decision-making of NATS, according to insiders.

Thomas Cook, TUI and Lufthansa are expected to sell out their positions in The Airline Group, with Virgin Atlantic possibly selling up to half of its stake. That would leave British Airways and easyJet among the carriers which continue as economic stakeholders in NATS.

Rothschild, which had previously been advising the Airline Group, is now advising the carriers which are exiting the group.

A number of pension funds from Canada, 3i, the private equity group, and overseas air traffic controllers such as DFS in Germany, are all likely to bid for the selling airlines' stakes.

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American Airlines Grounds Fleet After Glitch

American Airlines was forced to ground all its flights for several hours because of a glitch in its computer reservation system.

The airline asked the US Federal Aviation Administration to halt all its departures from midday on Tuesday until just before 5pm Eastern time, causing thousands of passengers to be stranded at airports and on planes.

Flights in the air were allowed to continue to their destinations, but planes on the ground could not take off.

The airline blamed its computerised reservation system, which is used for much more than booking flights.

Airlines use such systems to track passengers and bags, monitor who has boarded a plane and to update flight schedules and gate assignments and file flight plans.

As of mid-afternoon, American and its American Eagle offshoot cancelled more than 700 flights and another 765 flights were delayed, according to tracking service FlightAware.

Irate travellers quickly took to social media to flood the airline with complaints.

Twitter user Malcolm Freberg posted: "I'm literally in a cab to airport to fly American Airlines. Cussword-profanity-cussword. There'd better be a bar this side of security."

And Edgar Casillas tweeted that his parents had been stranded in Chicago on their way to Spain to celebrate their 30th wedding anniversary.

However, at least one American customer was delighted with the situation.

Tweeted Sarinne Mirachian, who was stuck in California: "@AmericanAir I love you guys so much. I get to stay in LA one more week because of you guys! My favourite airline hands down."

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Tesco Confirms US Exit And Profit Fall

Tesco has confirmed its first fall in annual profits for 20 years and writedowns totalling more than £2.5bn as it moves to concentrate on improving its UK supermarket business.

The retailer confirmed the closure of its loss-making Fresh & Easy operation in the United States, with a resulting £1.2bn writedown a major factor behind its 51.5% fall in pre-tax profit to £1.96bn in the year to February 13.

Tesco was also hit by costs related to its turnaround plan for the UK while its bank's exposure to the payment protection insurance scandal grew to £115m.

A writedown of £804m was also confirmed on the value of its UK property portfolio as it scrapped more than 100 store developments to focus on store revamps, convenience stores and improved delivery to online customers.

A £495m 'goodwill impairment' relating to its operations in Poland, the Czech Republic and Turkey was announced too.

Philip Clarke has signalled an end to 'store wars' by halting new building

Tesco's chief executive Philip Clarke said that the actions would put the company "back on the right track" to deliver long-term growth for shareholders though its share price took a 2.8% hit when trading opened in London.

He continued: "The large stores we have are great and we are doing a lot of work to make them more vibrant and relevant for today's customers, but we won't need many more of them because growth in future will be multi-channel - a combination of big stores, local convenience stores and online."

The group said fourth quarter sales at British stores open over a year, excluding fuel and VAT, grew 0.5% - a slowdown from growth of 1.8% in the six weeks to January 5.

Mr Clarke admitted that sales over the past few months had been impacted by the horsemeat scandal as customers steered clear of frozen meat products.

Tesco apologised in January for horsemeat in some of its burgers

Tesco had to withdraw four products from sale amid the crisis, but said the effect on overall sales was minimal and stressed that trading was now "back to normal".

While still well ahead of its supermarket rivals in terms of market share, Tesco has been facing a greater challenge from the likes of Asda, Morrisons and Sainsbury's.

They had been investing in their UK operations at a time when Tesco had concentrated on diversifying its business.

Last year, Mr Clarke pledged a £1bn investment to upgrade its stores and customer service offering - at one stage taking personal charge of the turnaround plan.

Capital expenditure fell by 19% or £0.7bn to £3bn in the financial year.

Recent surveys have suggested the supermarket chain is still struggling to win round customers, with a study by Which? in February suggesting that Tesco was the most complained-about.

Researchers Espirito Santo said this week that customer perceptions of Tesco had deteriorated since November, with the horsemeat scandal a contributory factor.

It found that views on Tesco's quality, prices, promotions and overall value for money had all fallen while a net 16% of Tesco customers chose to shop more elsewhere because of horsemeat.

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Jobless Total Up As Income Squeeze Tightens

The unemployment total has risen for the second month in a row while average pay increases were found to be at their weakest on record.

The Office for National Statistics (ONS) said the number of people without work rose 70,000 in the three months to the end of February to reach 2.56 million - pushing the jobless rate up to 7.9%.

The number of people in work fell by 2,000 over the period to just under 30 million - the first time the figure has dipped since autumn 2011.

There were 900,000 out of work for more than a year, an 8,000 increase on the three months to November, while the number of unemployed 16 to 24-year-olds rose by 20,000 to 979,000.

However, those claiming unemployment benefit fell by 7,000 in March.

While the jobless figures suggested a reversal in the resilience of the UK labour market amid the UK's weak economic growth, it was the pay statistics that will most worry those who are seeking a pick-up in consumer spending to boost output.

Pay, excluding bonuses, rose by 1% between November and February compared to a year earlier which was the smallest on record, the ONS said.

With CPI inflation currently measured at an annual rate of 2.8%, the pay figure demonstrates that prices are continuing to rise at a faster pace than wage growth at a time when energy bills and many other costs have soared.

Employers have been limiting pay increases as a way of managing to keep hold of staff amid the flat-lining economy.

The move has been cited by some economists as a key reason why unemployment levels fell last year: companies wanting to be ready for when recovery came.

While the Government hailed falling jobseeker's allowance claims it admitted there was much still to do to help get people back to work.

GMB union general secretary Paul Kenny said: "The Chancellor should heed IMF advice to change course to grow the economy to end this needless waste of human talent."

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Boston Blasts Knock Stock Market Values

The apparent terrorist attack on the Boston Marathon has intensified the recent 'run for cover' on world stock markets.

There had already been a rush to dump gold before the blasts while oil took a fresh tumble amid an earlier world sell-off on fears of slowing economic recovery.

The Dow Jones closed 1.8% lower while Asian markets also lost value overnight as commodity stocks fell. European markets also opened lower.

In London, the FTSE 100 dropped 0.5% at the start of trading.

The effect of the attack on Boston, while seen to be a temporary shock, added to the gloom as fears grew that an end was in sight for Federal Reserve support for the US economic recovery.

Prices Correct At 9.20am

The sell-off in markets was triggered by the Chinese government's report on Monday that annualised growth in the world's second-largest economy slowed to 7.7% in the first quarter from 7.9% in the final quarter of last year.

Growth was expected to accelerate slightly to 8%.

Gold endured its sharpest drop in price over two days since 1983 on Monday, with the cost of a troy ounce falling to $1,350 before recovering slightly early on Tuesday.

Brent crude oil tumbled below $100 a barrel overnight as weaker Chinese growth was seen as hitting demand.

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Inflation Steady Despite Car Insurance Rises

The headline measure of inflation remained steady in March as a reduction in the pace of fuel cost rises offset a sharp increase in car insurance prices.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) stayed at an annual rate of 2.8%.

Some economists had predicted an increase to 3%.

A 5.8% rise in car insurance premiums - partly a result of rising whiplash claims and an EU ban on setting premiums by gender - were found to have piled further pressure on household budgets, though slower rises in diesel and petrol prices helped cancel out the effect.

Petrol prices rose by 2.2p a litre against 3.3p a litre a year earlier, the ONS said, while diesel increased by 1.9p a litre compared with 2.6p last March.

Rising car insurance premiums were an inflationary pressure in March

Rises in the cost of books and digital cameras were also offset by lower inflation for sofas and armchairs.

Separate ONS figures also showed that factory gate inflation rose by an annual rate of just 2%, the smallest increase since July, on the back of falling oil prices.

Easing rises in producer prices challenge expectations that CPI will rise significantly in the coming months.

Many forecasts see CPI toping 3.5% by mid-summer - a result of higher water, gas and electricity bills - but it remains to be seen whether the lower oil prices of recent weeks can be sustained, to help bring down wider costs in the economy.

Supermarkets have been cutting fuel prices, with the latest drops in effect from Tuesday, however the weak pound has also led to higher prices for imported goods.

There has been little sign so far that sterling's weakness has significantly benefited demand from exporters amid the sluggish economic recovery across the world and confidence in the UK has remained lacklustre.

Rises in DVD prices contributed to stubborn inflation

However, a survey of chief financial officers (CFOs) at top UK firms by business services firm Deloitte found private sector confidence may be starting to return.

It showed that the cost and availability of credit, and attractiveness of bank lending, was at its best level for five years while there was a rise to 34% of CFOs who said now was a good time to take risk on to balance sheets.

Their perceptions of macroeconomic and financial uncertainty dropped to their lowest level for two and a half years, the study said.

Ian Stewart, chief economist at Deloitte, said: "Despite the gloomy coverage around the UK Budget and the crisis in Cyprus, CFOs believe that that the level of economic and financial risk facing their businesses has declined.

"Corporate appetite for risk is not far off the peaks seen in early 2011 when Europe looked set for a sustained recovery."

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Mining Mega-Merger 'Cleared By China'

Shares in FTSE 100 'mega-merger' miners Glencore and Xstrata have risen strongly on hopes their tie-up could soon be fully cleared.

Traders cited a media report that Xstrata's takeover by commodities trader Glencore had cleared the final regulatory hurdle in China for a 6% rise in Xstrata's value.

Glencore, which declined to comment, saw its stock rise 5.2%.

It was later confirmed that conditional clearance had been achieved from China's ministry of commerce.

Prices correct at 11.12am

It said on its website that Glencore would have to begin selling off assets in its Las Bambas copper mine in Peru within three months and provide copper, zinc and lead concentrates to Chinese clients every year during the period of 2013 and 2020 as conditions of the approval.

Glencore was expected to agree to the concessions.

The deadline for the deal to be completed has been extended a number of times, with the delays being consistently blamed on the pace of China's deliberations over its blessing.

Shareholders formally approved the tie-up last year but only after Glencore offered revised terms.

A controversial "golden handcuffs" retention plan for the miner's key managers, that would have paid out £140m, was rejected.

If the deal goes ahead, it would create the world's fourth-biggest natural resources firm.

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Gold Sell-Off Amid Fears Over Chinese Growth

Gold has sunk to its weakest level in two years as investors continue to sell off commodities, worried that disappointing Chinese data signalled a setback for the global economy.

Other key commodities, including oil and copper, have also hit multi-month lows over rising concerns.

In early Monday trading on the FTSE 100, the top ten fallers were all commodity and mining firms.

Brent crude traded 2.23% down, gold -4.23%, silver -8.89% and platinum -2.94%.

Gold price dropped before a slight recovery just before 11.30am on Monday

Monday's drop continued from Friday's selling as fears were raised about central banks turning away from stimulus packages, as gold fell below the psychologically important $1,500-per-ounce (£980) barrier.

Gold fell more than 3%, after sliding 5.3% on Friday, as investors further slashed their bullion holdings on concern that central banks are bent on halting stimulus measures this year, cutting gold's appeal as a hedge against inflation.

Holdings on global gold exchange-traded funds hit their lowest in more than a year.

Goldman Sachs has been forced to drop its gold futures forecast for the second time this year, and Cyprus said it would unload 10 tons of reserves to help fund its bank bailout - the biggest sovereign sale for several years.

Chinese construction has consumed huge quantities of steel and copper

China's economy grew 7.7% in the first quarter, undershooting market expectations for an 8% expansion.

The growth rate has frustrated investors hoping the world's second largest economy would rebound after posting its weakest expansion in 13 years in 2012.

US job creation fell 60% between January and March

China's weaker than forecast GDP growth is backed by slower increase in industrial production and fixed-asset investment, despite strong lending growth in March.

"There are questions about the trend of bottoming in China's economy and whether it can re-accelerate above 8% this year in a sustainable way," Vishnu Varathan, market economist at Mizuho Corporate Bank, said.

The Chinese data comes after soft US retail sales and consumer sentiment numbers raised doubts about the economic recovery momentum, driving down commodities and equities on Friday.

US job growth has dropped from nearly a quarter of a million in January to just 88,000 in March.

Oil prices continue to slide as pump prices come under downward pressure

"What we now see is panic selling, perhaps triggered by the Fed's stimulus view," Dominic Schnider, analyst at UBS Wealth Management, said.

"The Fed has given the signal that there's a possibility to reduce QE (quantitative easing) and that took a lot of trust out of gold.

"And people recognise that an environment where you have no inflation is a powerful driver to get out of the metal."

Oil futures were also hit hard after the Chinese and US data stoked investors' concerns of economic slowdown in the world's top two oil consumers.

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Tesco Investors Urge Clawback Over US Failure

By Mark Kleinman, City Editor

Leading shareholders in Tesco are demanding changes to the company's boardroom pay practices as it prepares to terminate its loss-making American misadventure.

Some of the retailer's biggest investors are keen for Tesco to introduce more stringent clawback measures that would allow it to more easily reclaim bonuses paid to executives for past performance.

Tesco will confirm plans to withdraw from the US market alongside its annual results on Wednesday. The closure or sale of Fresh & Easy is expected to incur a charge of approximately £1bn, in addition to similar losses already accumulated at the six year-old business.

According to last year's annual report, the supermarket group's existing pay policies enable it to exercise "clawback for deferred share awards under the annual bonus plan and long-term incentive (PSP) awards to allow the committee to scale back awards in the event that results are materially misstated."

However, the "material misstatement" of results covers a narrow set of circumstances that many shareholders believe should be broadened to encompass situations such as Tesco's US withdrawal.

Deferred shares worth more than £11m awarded to Sir Terry Leahy, the former chief executive, will be forfeited because of the decision to abandon Fresh & Easy, The Daily Telegraph reported today.

Philip Clarke, Sir Terry's successor, and other senior colleagues are also expected to miss out on bonuses for 2012 as a consequence of the US failure.

"The company is taking a very substantial hit on this," one leading shareholder said. "It is not enough to simply not award potential bonuses. An element of past bonuses also need to be clawed back."

The sentiment from investors is unlikely to escalate into a full-blown row with Tesco over its pay policies at the retailer's annual meeting, but it highlights the extent to which shareholder groups want clawback to become an entrenched feature in executive contracts beyond the banking industry.

Tesco declined to comment.

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Minimum Wage To Be Increased This Year

The national minimum wage is to increase by 12p an hour from October, the Government has announced.

The rate for 18 to 20-year-olds will rise by 5p to £5.03, and by 4p to £3.72 for 16 and 17-year-olds.

Ministers said they had rejected a recommendation from the Low Pay Commission that the rate for apprentices should be frozen, announcing a 3p an increase to £2.68 an hour.

Business Secretary Vince Cable said: "The independent Low Pay Commission plays a crucial role in advising the Government when setting the national minimum wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.

"We are accepting its recommendations for the adult and youth rate increases, which I am confident strikes this balance. However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.

"Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people.

"Therefore, I am not taking forward the LPC's recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates. We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board."

Tim Thomas, of the manufacturers' organisation the EEF, said the announcement meant "a delicate balance between the need for an element of pay progression and the limitations employers face in accommodating pay rises".

He said: "The modest increase in the apprenticeship rate is unlikely to negatively affect apprenticeship recruitment and of much greater importance is the raising of apprenticeships standards, better information and advice to students and ensuring that apprenticeships are truly employer-led and employer-driven."

TUC general secretary Frances O'Grady said: "Boosting the incomes of the low paid goes straight into the economy and wage-led growth must be part of the recovery so we would have liked to have seen minimum wage rates go up further ... even if the Government has rightly rejected calls for a freeze.

"But we are pleased that ministers have increased the apprenticeship rate. This sends a positive signal about the importance of apprentices.

"We will continue to press ministers for more action to ensure the minimum wage is properly enforced - particularly for apprentices where there is considerable evidence that many miss out. It is time to get tough with wage-cheat employers who break this law.

"We will continue to urge the many employers who can afford it to implement a full living wage for their staff."

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Floods: UK Insurers Avoid Covering Risky Homes

By Becky Johnson, North of England Correspondent

People whose homes have been devasted by flooding fear they will be unable to get insurance in future as talks between the Government and insurers have so far failed to reach an agreement.

At present insurers are required to provide cover at reasonable rates provided the Government continues to strengthen flood defences, but this agreement - known as the Statement of Principles - is due to expire in June this year.

In St Asaph in North Wales more than 400 homes were deluged when the River Elwy burst its banks last November. So far, the majority of people have still been unable to return to their houses.

James Alcock stands in his kitchen after flood water recedes

John Wynn Jones who is a local councillor and whose own home was flooded told Sky News: "What we are finding is that because people are so concerned about getting insurance, as well as clearing up after the floods themselves, people are actually considering not moving back into their homes.

"They don't want to get back into their properties and then find out they can't get insurance or the premiums are now so high they can't afford it.

"There's one lady who was insured and ... they've told her they won't be able to renew her policy. When she's questioned it, they've told her 'you no longer fulfil our criteria'. It hasn't been explained to her why but she says the only thing that's changed is she has now been flooded.

"Another resident has had to shop around. Her existing premium had been £200 a year and the best deal she can get now is £1,200 a year. Someone else was told they'd only get a policy with a £10,000 excess.

"People are desperate to have the cover but a lot of people are saying they don't have the money to pay so they'll end up living in uninsured properties."

A fireman helps a member of the public in Aberfoyle

Aidan Kerr, head of property at the Association of British Insurers (ABI), said: "We continue discussions with Government on the model we have developed to safeguard the availability and affordability of flood insurance for those at high risk.

"With flooding the biggest natural risk the UK faces, it is important we have consensus on managing the risk going forward, which includes sustained and targeted flood defence investment and sensible planning decisions."

A spokesperson for the Department for Environment, Food and Rural Affairs told Sky News: "We want to get an agreement on insurance that provides a lasting solution and secures affordability and availability of flood insurance for policy holders.

"Constructive negotiations are ongoing and Government is meeting with the ABI regularly."

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