Monday newspaper paper round-up: Spending review, BHP/RIO, Betfair

18th Oct 2010 06:38

George Osborne is planning further big cuts in welfare spending this week, as part of an audacious drive to prove that the coalition can match Labour's pre-election pledge to protect key frontline services.The chancellor wants to squeeze the welfare budget, releasing cash for spending on those areas that Labour had promised to protect from the cuts: hospitals, schools, overseas aid and the police, the FT reports.BHP Billiton and Rio Tinto have formally abandoned their Australian iron ore joint venture after being told by regulators in Europe, Australia and Asia that their proposal would not be approved. The decision to walk away from the venture, announced in June last year and estimated by analysts to be worth $116bn, had been widely expected after the proposal to create the world's top iron ore exporter encountered stiff resistance from the steelmaking industry, the FT reports.Britain is at risk of a Japanese-style "lost decade" unless banks step up lending and companies increase investment and add to their workforces, a leading economics group has warned. In its latest forecast for the economy, Ernst & Young's ITEM club said that the UK should avoid a double-dip recession, but it said that the outlook remained uncertain and that its forecast was dependent on companies spending and hiring, the Times reports.The Asian insurance giant that Prudential failed to snatch in a controversial takeover bid this summer is to go ahead with what will be the world's second-largest flotation this year. Mark Tucker, the former Pru chief who now runs AIA, said that the $20bn (£12.5bn) float would help to "unleash the potential" of the company and promised to use the listing to become the "pre-eminent life insurance provider in the Asia-Pacific region" in a clear challenge to his former company, the Times reports.CQS, one of London's biggest hedge funds, is to announce plans to float a new fund on the UK stock market - the usually low-profile firm's first public offering. The move is the second hedge fund listing in the space of a week and follows that of the $31bn (£19.4bn) Brevan Howard, Europe's largest hedge fund, which on Thursday said it was to float a version of its £1bn Credit Catalysts fund, the FT reports.State workers are prepared to strike in the event of a pay cut and changes to their pensions, a major report revealed. Some 49%of state workers surveyed by the Chartered Institute of Personnel and Development agreed with the statement "workers have to do what's necessary to protect their jobs and if that disrupts public services, that's the price of living in a democratic society", compared with just 27% of those in the business world, the Telegraph reports.Lord Freud, Minister for Welfare Reform, has accused "unscrupulous" landlords of ripping off the housing benefit system and exploiting low-income families. Private landlords will pocket almost £8.5bn from the taxpayer this year through housing benefit - more than a third of the total £21.5bn bill, according to figures from the Department for Work & Pensions (DWP), the Telegraph reports.Equitable Life policyholders have been left stunned after it emerged that the Government was poised to offer up to £1.5bn in compensation ? less than a third of what they believe they deserve. Emag, the influential campaign group, described the figure, leaked late last week, as a "cynical pre-emptive strike" by the Treasury to undermine the findings of a report by the Public Administration Select Committee and fresh testimony from Ann Abraham, the Parliamentary Ombudsman, the Times reports.A group of influential hedge fund managers with assets of about $100bn has launched a stinging attack on central banks and regulators for bailing out stricken financial institutions. The critics, which include credit market experts at investment banks, have also warned that injecting cash into weak economies ? a process known as quantitative easing ? increases the risk of a financial crisis, the Times reports.Last-minute negotiations between Terra Firma, the private equity owner of EMI, and investment bank Citigroup have failed to avert a courtroom showdown between the two City giants. The £7bn clash of the titans will see Guy Hands of Terra Firma giving evidence against his former advisor and friend, the Citi deal-maker David Wormsley, the Telegraph reports.Guardian Media Group (GMG) and the private equity investor Apax hope to raise up to £2bn from the sale of the Auto Trader publisher Trader Media Group (TMG), with the two companies eyeing a possible deal within the next 18 months, the Independent reports.Shares in Betfair, the world's largest online betting exchange, are set to be priced at close to £14 when they debut on the stock market this week - valuing the company at nearly £1.5bn. City sources say there has been huge demand among institutions for the issue, with the initial public offering expected to be oversubscribed when it is launched on Friday, the Independent reports.