Monday newspaper round-up: Osborne, Libya, RBS...

21st Feb 2011 06:50

George Osborne expects the Bank of England's interest rate committee to disregard last week's VAT-induced jump in prices, arguing that his Budget cuts would allow rates to be kept "lower for longer". Asked whether the decision to raise VAT to 20% had made the Bank's fight against inflation more difficult, the Chancellor said: "Any monetary authority, and certainly one with the competence and capability of the Bank of England, can see through temporary increases in price levels and look to permanent threats to inflation," the Times reports. In the first comments by a member of the Libyan regime since security forces fired on thousands of mourners in Benghazi, the oil-rich nation's second city, Seif al-Islam Gaddafi, the influential younger son of Muammer Gaddafi, blamed the crisis on a foreign "plot against Libya" and warned that if the violence continued the country would descend into civil war. Appearing on state television, he accused the media of exaggerating events, including the death toll, in a five-day uprising that poses the greatest threat to his father's 42-year rule, the FT reports. Royal Bank of Scotland is to push ahead with the sale of £1.6bn of unwanted legacy loans from the boom years in commercial real estate. The move comes as the bank prepares to report this week in its full-year results that disposals from its remaining £150bn of non-core banking business remain on track. RBS has asked a small number of private equity groups to sign a non-disclosure agreement to open the process to firm bids for the £1.6bn of legacy loans. These include Lone Star, Starwood Capital and Blackstone, which all have the experience and balance sheet to manage large portfolios of debt, according to people familiar with the matter, the FT reports.Millions of households face an inflation-busting rise in water bills this week, with some increasing by up to 8.5 %. The hikes will mean some average annual charges are likely to exceed £500 for the first time. Ofwat will set water and sewerage bills for England and Wales on Friday, with new prices taking effect from April, the Telegraph reports.British households are more pessimistic about the economic outlook than at any time since the depths of the recession in 2009, with younger people fearing the effects of a further economic slowdown, a survey reveals today. The Markit research organisation says that its Household Finance Index (HFI) has dropped to its worst level in two years, with expectations of inflation remaining high. It comes as the Office for National Statistics prepares to release revised figures on economic growth during the last quarter of 2010 later this week, and as the nation's chartered accountants report weak confidence among businesspeople about the immediate future, the Independent reports.A radical break-up of Network Rail will be announced imminently in a move that could pre-empt government plans to overhaul the company over the next two years. David Higgins, who took over as chief executive just three weeks ago, will unveil plans to devolve Network Rail's power to nine regional units in a bid to force through efficiency savings worth hundreds of millions of pounds, the Telegraph reports.The fight against financial crime is being lost in a territorial fight between government departments, and breaking up the Serious Fraud Office could make the situation worse, lawyers fear. The agency's investigative function is set to be merged with a new National Crime Agency, while the Crown Prosecution Service will take over the handling of complex fraud cases under plans being considered by the Government, the Times reports.London is expected to have the largest "meaningful" jump in GDP of any city in the world between now and 2025 because of booming financial services, according to new research from Citigroup. Strong growth in the square mile and increased tourism will result in London leapfrogging Chicago to become the "mega-city" with the fourth-largest economy by the middle of the next decade, despite the fact that the size of its population is not expected to grow, the Telegraph reports.Workers at Eaga Group are threatening to take their employee shareowning trust to court, claiming that they are owed tens of thousands of pounds apiece in the £306m takeover of the company by Carillion. This month Carillion announced a recommended cash takeover of the home insulation company, with a share alternative, after securing the support of the Eaga Partnership Trust, which owns 37% of the business, the Times reports.Tim Steiner, the chief executive and co-founder of Ocado has cashed in shares in the online grocer for the first time, taking advantage of their recent surge to raise more than £5m, the Times reports.