UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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Retailers Geared Up For 'Busiest Day'

By Tadhg Enright, Business Correspondent

As the last full shopping day before Christmas Eve, today is expected to be the busiest day of the year on high streets and in shopping centres.

The British Retail Consortium expects between £4bn and £5bn to be spent throughout this weekend.

Researchers at the credit card company, Visa, have forecast sales to peak this afternoon between 2pm and 3pm.

At Brent Cross Shopping Centre in north London, management think today could be their busiest on record and extra security and traffic staff have been deployed to help customers.

Centre manager Tom Nathan told Sky News: "Everything shows us that when Christmas is on a Tuesday and the schools only broke up yesterday that today is going to be enormous because people haven't had the chance to go and do their full Christmas shop.

"So combine that with buying the turkey - and today is the start of the big turkey run - and today is going to be a huge one I think."

But the Local Government Association said confidence on the high street remained low.

Its annual Christmas survey found that 84% of town centre managers said confidence among shoppers had either not improved or worsened compared with this time last year.

It also suggested that the particularly cold and wet start to the winter could also be taking its toll on the number of shoppers visiting town centres.

Sales at Brent Cross Shopping Centre could be the busiest yet

Normally the busiest day of the year is December 23 - the last day before Christmas Eve - but this year that falls on a Sunday when trading hours for bigger shops are restricted by law to just six hours.

Big name retailers including John Lewis, Morrisons and Marks & Spencer failed in a bid to convince the Government to relax the restrictions on Sunday trading tomorrow.

M&S has responded by opening more than 100 of its stores at 12.01am on Christmas Eve morning to help shoppers get their Christmas essentials in time.

An M&S spokesman said: "We know that the days leading up to Christmas are some of the most hectic for our customers.

"Due to Sunday trading rules, we can only open for six hours on one of the busiest days of the year.

"We hope that these early bird hours on Monday will ease the pressure and give busy shoppers a bit more time to pick up Christmas food orders or last minute presents."

Waitrose, part of John Lewis, will also extend Christmas Eve trading hours in two thirds of its supermarkets by opening an hour earlier at 7am and closing an hour later at 6pm.

Sky News visited one of its four regional distribution centres at its head office in Bracknell, Berkshire, and saw staff working to deliver twice the normal volume of food to its stores.

They will be working 24 hours a day between now and 6am on Christmas Eve to ensure Waitrose shelves remain stocked.

But management are disappointed for them and their customers that trading will be curtailed on December 23 which is usually their most important shopping day.

Waitrose supply chain director David Jones told Sky News: "If you can imagine what you'd normally take in trading over 14 hours and shrinking that into six hours, it's quite challenging as you walk around the supermarket.

"You're trying to get people through checkouts and we would have loved to have had the opportunity to trade for a longer time."

Mr Jones will be taking time out from his executive duties to man the tills in his local branch over Christmas.

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BT Slapped With £95m Refund Bill

BT has been told it must repay almost £95m to corporate customers following a row over high speed data provision.

The regulator Ofcom ruled the company had overcharged for Ethernet services and must hand back £94.8m to communication providers BSkyB - the owner of Sky News - Talk Talk, Virgin Media, Verizon UK and Cable & Wireless.

Ethernet services are mainly used by businesses and provide dedicated broadband capacity between different locations.

Ofcom said it received the first complaint in 2010 that the charges levied by BT were "not cost orientated".

It had continued to receive related claims ahead of today's decision, the regulator stated.

BT, which said in November that its second quarter revenues had been hit by a triple whammy of recession, regulation and rain, has two months to decide if it will appeal the decision.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9%, by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy, and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was trading down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems, but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium, are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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4G Auction: Seven Firms To Compete For Space

There will be two relative strangers to mobile users among the firms bidding in next year's 4G auction.

Ofcom announced there would be seven companies competing for space in what will be the biggest ever sale of the UK's mobile airwaves.

The regulator said the auction, which kicks off in January, will herald "better, faster and more reliable mobile broadband connections" for consumers across the UK.

EE, which was formed from the merger of Orange and T-Mobile, already has access to 4G and was the first to offer a 4G network in the UK by using old 2G capacity, but is bidding for more space.

Vodafone, Hutchison 3G and O2 parent firm Telefonica will also be competing while it is understood that BT is more interested in bolstering its wi-fi services than in becoming a major mobile phone player.

The intentions of PCCW, which owns Hong Kong Telecom, and UK network supplier MLL Telecom are less clear but MLL confirmed that its interest was limited to one of supporting mobile firms rather than becoming an operator itself.

Ofcom said the auction, which kicks off next month, will herald "better, faster and more reliable mobile broadband connections" for consumers across the UK.

Its chief executive Ed Richards said: "The 4G auction will be a competitive process that will dictate the shape of the UK mobile phone market for the next decade and beyond."

It is expected to raise up to £3.5bn for the Treasury.

The bidders will be competing to buy airwaves in two separate bands - higher frequency 2.6 GHz and lower frequency 800 MHz - with around 28 lots of spectrum up for grabs in total.

Experts suggest that, for the typical user, download speeds of initial 4G networks will be at least five to seven times faster than those for existing 3G networks.

This means a music album that takes 20 minutes to download on a 3G phone will take just over three minutes on 4G.

4G is also expected to revolutionise other high-bandwidth data services such as streaming high-quality video or watching live TV.

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High Street Could Lose Xmas Shopping 'War'

Fears that consumers are reining in their spending ahead of Christmas were fuelled after the latest retail figures showed a 0.1% rise in retail sales in November.

It comes after a much-worse-than-expected drop in October when retail sales volumes fell 0.8% month-on-month.

Household goods showed their strongest monthly rise since 2010, mainly driven by tablet computer sales.

Across all retailing, an estimated £7.3bn was spent weekly in November, around the same as last year.

But, despite the small increase, the Federation of Small Businesses (FSB) has urged shoppers to support independent high street retailers, or risk losing them for good.

For the FSB, it is a case of "use them or lose them".

Consumers are encouraged to "shop local this Christmas"

It said the small shops are being swallowed up by the aggressive dominance and predatory pricing strategies of supermarkets, which for example can offer free parking to their advantage.

The FSB also blamed spiralling VAT and rents and, on many streets, increasing business rates. 

It added the Valuation Office Agency's (VOA) appeals process for business owners and tenants seeking rate relief is too slow, and that some are forced to wait years.

According to the Competition Commission, since 2000 there has been a steady growth of 3% in new supermarkets owned by the UK's five largest retailers.

But, in contrast, the All-party Small Shops Group warned, should the present rate of decline continue, most of the UK's smaller retailers could be forced to close by 2015.

In its 2008 report, the Parliamentary Enterprise Group repeated that warning. 

Mr Allan, chairman of FSB Merseyside, West Cheshire and Wigan, said: "Our high streets are in a dilapidated state. Small shops are struggling with mounting overheads and other issues and the rate at which they are closing is worrying.

"Yet, it is local independent traders who offer the best quality, choice and service and it is up to us to support them."

Big supermarkets have the advantage of offering free parking

He added: "The message to consumers in this region is to shop local this Christmas. The future of small shops is in our hands - we either use them or lose them."

Meanwhile, global information and insights company Nielsen has said the UK's leading supermarkets will be relying on strong advertising in the final weeks of Christmas after the slowdown in sales last month.

It said the end of November saw a significant increase in TV and Press advertising, particularly around wines, spirits, beers and seasonal products ahead of Christmas.

During the four weeks ending December 2, Tesco was the highest spending supermarket on TV and Press at £11.8m, just ahead of Asda at £11.2m, then Sainsbury £7.3m and Morrisons £7.1m - all figures lower than at this stage last year.

Nielsen's UK head of retailer insight Mike Watkins said: "Because shoppers are planning visits to take advantage of the many offers available this year we, therefore, expect continued use of media spend across all channels in the next few days to encourage them into store and to buy any remaining indulgences at the same time."

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Santander Selling Store Cards Giant

By Mark Kleinman, City Editor

The provider of store cards to retailers including Arcadia Group, Debenhams and Laura Ashley is in talks to be sold in a move that will see millions of customer accounts transferred to the ownership of a major American hedge fund.

I have learned that Santander UK is in advanced negotiations to sell its store-cards portfolio to SAV Credit, the fast-growing consumer finance provider which owns the Aqua and Marbles credit card brands.

Talks between the two companies have been underway for some time, and a deal could be announced as soon as next month, according to insiders.

The agreement will affect the holders of as many as seven million store cards issued under some of Britain's biggest high street brands, including Dorothy Perkins, Top Man and House of Fraser.

People familiar with the deal said that Santander UK had decided to offload the store cards unit partly because of the reputational risks associated with the business, which has faced intense criticism over the inflated interest rates charged by many card providers.

It is unclear how much SAV Credit will pay to acquire the business. Approximately half of the 7m store-card accounts included in the transaction are dormant, insiders say.

Santander UK acquired the cards business of GE Money, then one of Britain's biggest providers of retailer credit, in 2009.

Following the sale of the business, the management of SAV Credit will become the custodians of one of the largest portfolios of card customers in Britain.

SAV's credit card brands have around 500,000 accounts and £500m in assets, according to the company's website.

The Santander UK deal will form part of an aggressive expansion by SAV since its takeover by Varde Partners, the US investment firm that owns the housebuilder Crest Nicholson, last year. Earlier this week, SAV announced the purchase of Church House Trust, a tiny mortgage and savings bank, from Virgin Money.

Santander UK and SAV Credit declined to comment.

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Libor Rate-Rigging: UBS Pays £940m Penalty

The Swiss bank UBS is to pay £940m, including £160m to regulators in Britain, to settle Libor rate-rigging investigations.

The fines, which amount to the second biggest penalty paid by a bank in the wake of the £1.2bn money laundering settlement announced by HSBC in the US last week, relate to manipulation of yen Libor and euroyen contracts.

The Financial Services Authority (FSA) said the case was "all the more serious" as UBS had attempted to manipulate Libor submissions at other banks, making corrupt payments to reward brokers for their efforts.

The FSA's report revealed incriminating conversations between UBS traders and brokers, saying they would "play the rules" and "return the favour".

One trader said: "I need you to keep it (the six-month Japanese Libor rate) as low as possible ... if you do that ... I'll pay you, you know, $50,000, $100,000 ... whatever you want ... I'm a man of my word."

The Libor scandal cost Bob Diamond the top job at Barclays

Bankers, the FSA said, also referred to each other in congratulatory terms, such as "the three muscateers (sic)", "Superman", and "Captain caos (sic)".

The £940m fine goes to regulators in the US, UK and Switzerland and the bank said it could not rule out further penalties in future.

The total comes to more than three times the $290m fine levied on Barclays in June for rigging the Libor benchmark rate used to price financial contracts around the globe from home loan rates to complex derivatives.

UBS said today that around 40 people have left or been asked to leave the bank as a result of the Libor investigation and it now expected to report a loss of up to £1.7bn for the fourth quarter as a result of the case.

Chief executive Sergio Ermotti added: "We deeply regret this inappropriate and unethical behaviour.

"No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity."

In its statement, the FSA said UBS made "corrupt payments" of £15,000 per quarter to brokers for at least 18 months to reward them for helping the Swiss bank manipulate global interest rates.

It said that at least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice.

Kweku Adoboli lost UBS £1.4bn

The regulator recorded at least 2,000 requests for inappropriate submissions and said many more would have been made orally.

Tracey McDermott, FSA director of enforcement and financial crime, said: "They manipulated UBS's submissions in order to benefit their own positions and to protect UBS's reputation, showing a total disregard for the millions of market participants around the world who were also affected by Libor and Euribor."

The FSA had already fined UBS £29.7m for failings which allowed a rogue trader to rack up losses of £1.4bn in an unrelated case.

Kweku Adoboli was jailed for seven years in November after being found guilty of fraud.

The Libor scandal, which is expected to engulf other banks including RBS, has resulted in pledges to reform how the rates are set.

The British Banking Authority, which currently oversees Libor, has agreed to give up that responsibility as part of the changes.

A criminal investigation in the UK, led by the Serious Fraud Office, resulted in its first arrests last week,

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