Sunday newspaper round-up: Be afraid, Greece&Qatar, Dexia

2nd Oct 2011 16:24

Shale gas will not solve Britain's energy problems, argues this weekend´s edition of The Economist. Nonetheless, the magazine concedes that exploration outfit, Cuadrilla´s, apparent recent discoveries in Blackpool may turn out to constitute a considerable bounty. However, the size of the find is still disputable, and then there are a myriad of possible negative environmental consequences that those finds could lead to. Those include the possible contamination of water resources from incorrectly regulated 'hydraulic fracturing' (the technology used to access those natural gas reserves). As well, in so far as they contribute to lower prices the new resources may create a disincentive to adopt cleaner technologies and reduce consumption. "Be afraid: In dark days, people naturally seek glimmers of hope. (...) But those hopes are likely to fade, for three reasons. First, for all the breathless headlines from the IMF/World Bank meetings in Washington, DC, Europe's leaders are a long way from a deal on how to save the euro. The best that can be said is that they now have a plan to have a plan, probably by early November. Second, even if a catastrophe in Europe is avoided, the prospects for the world economy are darkening, as the rich world's fiscal austerity intensifies and slowing emerging economies provide less of a cushion for global growth. Third, America's politicians are, once again, threatening to wreck the recovery with irresponsible fiscal brinkmanship. Together, these developments point to a perilous period ahead," writes this week´s The Economist."John Swinney, the Finance Secretary, has been accused of "picking the pockets" of the big four retailers in Scotland as new figures show that they are facing a 22% rise in rates under the Scottish Government's proposed "son of Tesco tax". Property specialists have also lambasted the proposed levy as "madcap" because retailers could wiggle out of paying by giving up selling tobacco. Taking this drastic move could leave a massive gap in the Scottish Government's budget which expects to raise £110m from the levy to fund health and social programmes," reports Scotland on Sunday."Qatar Holding, the sovereign wealth fund, has acquired a 9.9% stake in the London and Toronto-listed gold miner European Goldfields from Greek construction group Ellaktor and one of its directors, Dimitrios Koutras. It will also provide a $600m loan facility. The seven-year facility attracts a 7% rate of interest. European Goldfields' shareholders will also be offered a further $150m of loan notes at the same rate. The funds stake in the firm could eventually rise to 30% and take the total value of the deal to $1bn. The Qataris intend to invest as much as $5bn in Greece and have eyed the former Athens airport at Hellenikon. It is up for sale as part of a five-year privatisation drive worth €50bn (£43bn). The deal, subject to shareholder approval, was ratified at a meeting between George Papandreou, the Greek prime minister, and Sheikh Hamad Bin Khalifa Al-Thani, the ruling Emir of the state of Qatar, on Saturday," says The Telegraph on Sunday. "David Cameron will say that the Government will support entrepreneurs and risk-takers in sharp contrast to Ed Miliband's speech last week when the Leader of the Opposition said that the state should make judgments between "good" and "bad" businesses. In his speech on Monday, George Osborne will say that the UK can put itself on the road to recovery and is a "can do" country. (...)In an interview with The Daily Telegraph yesterday, Mr Osborne came close to ruling out tax cuts for the lifetime of the Parliament and announced plans to prevent workers with less than two years' service from taking their employers to an industrial tribunal for unfair dismissal. The CBI welcomed the move," according to the Sunday Telegraph. Tesco has increased the cost of a significant number of products despite promising the biggest shake-up of its pricing strategy for 20 years with its 'Price Drop' campaign. Britain's biggest supermarket chain has increased the price of about 12% of its fastest-selling products, according to a survey by Financial Mail. (...) The Grocer magazine this weekend provided evidence that Tesco has failed to overtake Asda and has been in difficulties fending off Sainsbury's. The magazine's regular survey comparing the price of 33 items across major supermarkets showed Tesco as only third-cheapest, £4.67 dearer than Asda overall and 79p more expensive than Sainsbury's.The eurozone crisis entered a new phase this weekend with France and Belgium racing to rescue a large continental bank. (...) It has been crippled by the collapse of the inter-bank lending markets and large exposures to Greece. Stephen King, the chief economist at HSBC, believes a collapse of the single currency would lead to "hyperinflation" in Europe's struggling periphery countries and "economic collapse" in core countries, such as France and Germany. In his opinion, "(...) Lehman was bad enough for the world (...) a break-up of the euro would be far worse. It must not be allowed to happen." One rescue proposal is for Dexia to be merged with the French state lender Caisses des Dépôts. Dexia's management has been attempting to arrange a deal with Banque Postale, the financial arm of the French postal service," writes The Sunday Times. "ENRC is planning to launch an informal search for a chairman just days after a corporate governance review confirmed the incumbent's position. The FTSE 100 miner last week revealed a newly reshaped board that was meant to draw a line under bitter disputes and a coup that led to the dismissal of two directors. Among those who kept their job was Johannes Sittard, the chairman. Some investors were displeased that he stayed on," explains The Sunday Times. Among those though to be candidates to replace Mr. Sittard is Brian Gilbertson, the former chief executive of BHP Billiton, and he seems to have the backing of Ivan Glasenberg. Sittard could be gone by the end of the year, said sources cited by the newspaper. It is thought that Alexander Mashkevich, one of the founding billionaires who had launched his own bid to take the chairmanship, has pledged to hold off for at least a year, adds the Sunday Times.AB