Friday newspaper round-up: Greece, Oil, BoE

24th Feb 2012 06:56

Germany's ruling parties are to introduce a resolution in parliament blocking any further boost to the EU's bail-out machinery, vastly complicating Greece's rescue package and risking a major clash with the International Monetary Fund. European solidarity is not an end in itself and should not be a one-way street. Germany's engagement has reached it limits," said the text, drafted by Chancellor Angela Merkel's Christian Democrats and Free Democrat (FDP) allies. "Germany itself faces strict austerity to comply with the national debt brake," said the declaration, which will go to the Bundestag next week. Lawmakers said there is no scope to boost the EU's "firewall" to €750bn, either by increasing the new European Stability Mechanism (ESM) or by running it together with the old bail-out fund (EFSF), The Telegraph writes.Crude oil surged to record levels in euro and sterling terms yesterday, compounding the forces threatening to drive European economies back into recession. Traders buying Brent crude in euros had to pay €93.55 per barrel, surpassing highs seen during the oil price surge of mid-2008. For those trading in sterling, oil was also around new highs at more than £79 a barrel. The rising cost of oil in the two currencies may push up import prices and could potentially derail fragile recoveries, analysts said, according to The Times. Britain better get used to weak growth and a bumpy recovery as that is the best the economy can expect over the next four to five years, a former Bank of England rate-setter has warned. Andrew Sentance, whose term on the Monetary Policy Committee expired last year, described "the current phase of disappointing growth and volatility" as "the new normal", at the Institute of Economic Affairs' annual conference on Thursday. Mr Sentance argued that in 2007 Britain came to the end of its second period of "long expansion" since the Second World War and, like in the 1970s, is in the midst of nine years in which average annual growth will be less than 1%. He added that, "I hope that a more sustained growth dynamic will emerge in the second half of the decade," The Telegraph reports.Royal Bank of Scotland "deliberately" doubled its loss for last year to £2bn in what Stephen Hester, the taxpayer-backed lender's chief executive, admitted was a sign of "Alice in Wonderland" accounting. Mr.Hester said the bank, which is 83% owned by the state, had been "spooked" by the severity of the Eurozone crisis into taking "an extra £1bn" of losses for 2011. "We got spooked by the dangers of the Eurozone so we deliberately spent an extra £1bn that we hadn't planned on in losses to go even faster than we had planned in reducing risk. "You can say to me it's a slight Alice in Wonderland world, where extra losses is a good thing and I completely appreciate the difficulty in the communication of that, but those are the facts," said Mr.Hester, according to The Telegraph. The chief executive of the Synchronica mobile messaging company bought 800,000 shares in the business three weeks after it received a takeover approach that it had not revealed to the market. Angus Dent spent £490,000 on the shares on November 30 at 6.125p each. The shares have since doubled to 12.4p largely as a result of an approach from rival Myriad regarding a possible takeover. Synchronica issued that statement on January 3. However, the offer document posted on the website of Myriad, a Swiss company, shows that it first approached its British rival on November 10. Mr Dent told The Times that the two businesses had met earlier in 2011 at the company's offices in Tunbridge Wells. He said that the company then received a letter in early November that constituted "a vague approach" that was firmly rebuffed.Hammerson is expected to announce a dramatic exit from the London office market today. The Times understands that the property group will detail a plan to sell its entire office portfolio in the capital within the next three years to focus on retail property in Britain and France when it reports full-year results today. In what will be regarded as a seismic shift in the quoted property sector, it is believed that Britain's third-largest property company has taken the decision because it wants to focus its capital and expertise on what it consider it does best ? retail.AB