Tuesday newspaper round-up: Mervyn King, Tesco, BAE

3rd May 2011 06:11

High debt levels pose "massive" economic challenges that would be exacerbated by higher interest rates, the Governor of the Bank of England said. Speaking yesterday at the European Parliament in Brussels, Mervyn King warned that a rise in long-term interest rates would have "severe" consequences, says the Telegraph.Berkshire Hathaway, the company run by Warren Buffett and one of Tesco's biggest shareholders, has raised doubts over whether Britain's biggest retailer can be a success in the US. "I'm not critical, I just think it's difficult to be a new boy," said Charlie Munger, the billionaire vice-chairman of Berkshire, the Telegraph reports.BAE Systems has secured a six-year contract extension worth an estimated £60million to provide maintenance support to the Royal Navy's Falklands protection ship HMS Clyde. The new arrangement to 2018 builds on an existing five-year agreement, which has kept the vessel ready for use by the Navy more than 99 per cent of the time. Since 2007, HMS Clyde has carried out a protection role which previously required two ships, reports the Daily Express.The typical household will see its disposable income fall by 2% this year, the equivalent of £780, one of Britain's best-known economists warned today, and will have to wait until 2015 to see its finances recover to the peak seen at the end of 2009. Roger Bootle, a former government adviser who now works with Deloitte, the accountancy firm, predicted that 2011 would be the worst year for household finances since 1977 - and added that if interest rates were to rise, British families would not have seen conditions deteriorate so badly since 1952, the Independent writes.However, the Independent also reports that business confidence has rebounded by the strongest margin since May 2009, according to the latest Lloyds Bank Corporate Markets Business Barometer. However while there's confidence in manufacturing, sentiment in retailing has slumped. More than half of businesses - 54% - said that they were more optimistic about economic prospects than three months ago. In March the figure was just 45%. Meanwhile, 24% of businesses said they were less optimistic, down from 44% in March, the paper writes.Senior banking regulators are starting to press for a new international standard to assess lending risk in order to ensure that the drive to strengthen the global banking system is not defeated by fragmented national standards. UK regulators, in particular, are urging reform of the way in which risk-weighted assets are calculated. RWAs form the denominator of the key measure of banks' capital strength - the so-called core tier one ratio - with equity as the numerator, the Financial Times reports.A long-delayed report by the City watchdog into the collapse of Royal Bank of Scotland has hit a legal stumbling block. The Financial Services Authority is expected to admit defeat in efforts to publish its controversial report into RBS, which it had originally pledged to release in March. Taxpayers are still waiting to see the results of an investigation into what went wrong, including an examination of the behaviour of Sir Fred Goodwin and other top executives. Yet two and a half years after the banking crisis unfolded, sources close to the affair believe the draft report is still a long way from publication, reports the Daily Mail.