Monday newspaper round-up: Bundesbank, IAG, Recession

12th Dec 2011 06:52

Germany's Bundesbank has raised serious objections to EU summit plans to shore up Italy and Spain by channelling up to €200bn (£170bn) from central bank reserves through the International Monetary Fund (IMF). (...) "The money cannot migrate into some sort of special pot that is used exclusively for Europe. That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out," he told the Handelsblatt newspaper. Mr Dombret said the Bundesbank's share of any such IMF package would be €45bn and is "inherently risky". It would require an indemnity of some kind from the German parliament. This in turn would breach the €211bn ceiling already set by the Bundestag on EU bail-outs, The Telegraph reports.Voters overwhelmingly back David Cameron for blocking a pact to toughen European Union treaties without any new safeguards for the City of London, a poll for The Times has revealed. In the first authoritative measure of the public mood since the Prime Minister stunned his EU counterparts in Brussels, almost six in ten people (57 per cent) declared that the Prime Minister was right to veto the proposals. Only 14 per cent opposed the move. Half of the Liberal Democrat voters at last year's general election (49 per cent) agree with Mr Cameron's decision, as does a greater proportion of Labour voters. This suggests that the two parties will find it hard to gain much public support for their critical stance, writes The Times. Consumers in Central London have spent 10% less than last year on a major, traffic-free Christmas shopping day in another setback for struggling retailers, early estimates suggest. (...) While signs of belt-tightening among consumers will be worrying for beleaguered retailers, the New West End Company said sales for the total weekend are estimated to have been £280m, £50m higher than last year, because roads were closed to traffic on Sunday for the first time. John Lewis, which has 29 department stores in the UK, said that consumers were still spending heavily on Christmas items. Its nationwide sales rose 2% year-on-year in the past week to a record £124.5m, according to The Telegraph. The battle for control of bmi British Midland has intensified with Virgin Atlantic starting due diligence to buy the ailing airline. The Times understands that Virgin has made an indicative offer and signed a "terms of agreement" contract with Lufthansa, bmi's owner, so that it can analyse the airline's books. International Airlines Group, which owns British Airways, said last month that it had reached an agreement in principle to buy loss-making bmi from Lufthansa but Virgin has been determined to gatecrash that deal. Banking sources said that the indicative offer from Virgin was lower than the IAG offer but Sir Richard Branson's airline is banking on being able to complete a deal quickly without the regulatory scrutiny that would accompany a BA-bmi merger. Hewlett-Packard has held talks with Google about using its software for mobile devices, as the world's largest PC maker plots a comeback in the battle over tablet computers. Speaking to The Times, Meg Whitman, the new chief executive of HP, said that the company was exploring a number of strategies in a renewed effort to take on Apple and its bestselling iPad tablet computer. In what would be a big strategic change for the company, she said that HP was considering adopting Google's software for its future tablet devices. HP, the largest vendor of personal computers, has been one of the few important manufacturers that has sought to remain independent ? like Apple with its iPad ? hoping to retain ownership of the hardware and software for its flagship tablet machines. Britain is on the verge of entering a deep recession that could last until the summer of next year, a leading bank is warning. In what will come as a huge blow to the Chancellor, Standard Chartered said that Britain's ailing economy would contract by 0.7% in the final three months of 2011 and by 0.9% and 0.5% in the first two quarters of 2012. This will be driven by the continued squeeze on incomes, the tightening of fiscal policy, low confidence and the hit to exports from a recession in Europe. The highly respected bank, which was one of the first institutions to predict the onset of the last recession, expects the economy to grow by only 0.7% this year and then to contract by 1.3% next year. If this scenario materialises, it will be particularly embarrassing for the Government, which said last month that the country would manage to stave off recession despite the growing eurozone debt crisis, The Times reports. AB