Wednesday newspaper round-up: Mervyn King, Heating oil, O2...

26th Jan 2011 06:41

Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again.The UK's "uncomfortably high inflation" is of more concern to the Monetary Policy Committee (MPC) than the surprise fall in gross domestic product, Mervyn King said on Tuesday night. Families will see their disposable income eaten up as they "pay the inevitable price" for the financial crisis, warned. With wages failing to keep pace with rising inflation, workers' take- home pay will end the year worth the same as in 2005 ? the most prolonged fall in living standards for more than 80 years, he claimed, the Telegraph reports.Economists warned of a double-dip recession last night as ministers responded to "shockingly bad" statistics by insisting that there was no Plan B to the Government's cuts, teh Times adds. The Governor of the Bank of England said that inflation could rise as high as 5% in the next few months and that people would feel a "squeeze in living standards" throughout the year, the Times reports.The International Monetary Fund maintained its forecasts for UK growth - but warned of the "serious blow" to the world economy that could emerge if overheating in China and other fast-growing economies is not dampened. The IMF is forecasting oil prices up from an average of $79 a barrel to $90 a barrel this year. Food prices will remain high, said the fund, until after the 2011 crop season, the Independent reports.Asian and Middle-East investors have thronged to buy the first issue of AAA-rated bonds by the eurozone's new bail-out fund, marking a key moment in the evolution of Europe's monetary union. The auction of €5bn (£4.3bn) of five-year bonds to fund the first stage of the Irish loan package was nine times subscribed, reflecting appetite for bonds ranked with core German or French debt but offering higher returns. The yield was 2.89%, compared with 2.31% for Bunds, the Telegraph reports.Consumer complaints about high prices for heating oil this winter have led the Office of Fair Trading to launch inquiry into the UK's domestic market. The watchdog said it would investigate heating oil and liquefied petroleum gas (LPG) suppliers, who provide energy to 2.5m people not connected to the gas grid, the Telegraph reports.The Government will announce the first big review of its relationship with monopoly suppliers in more than four decades today as it tries to save taxpayers' money. The review will be led by the Ministry of Defence, which spends about £9bn a year with companies on a non-competitive basis. Equipment such as nuclear submarines can usually be bought only from a single supplier, so contracts have to be negotiated without the benefit of competitive pressure to keep costs down, the Times reports.Four industrial and mining companies from Russia are set to list in London within the next few weeks, the first in a string of companies from the country rushing to raise an estimated $15bn-$20bn (€11bn-€14bn) this year. The companies are taking advantage of a narrow window before the state steps in with its own capital raisings. Since the start of the week, Hydraulic Machines & Systems, Russia's leading pump manufacturer, and Koks, a pig iron and coking coal group, have announced price ranges for their upcoming listings. Steel pipe maker Chelpipe is to announce its range as early as today, the FT reports.Barack Obama offered to work with US business and his political opponents to reform corporate tax in a State of the Union address that mixed dire warnings about the US's future with faith that the country could renew itself. "We are poised for progress," the US president said. "But to win the future, we'll need to take on challenges that have been decades in the making." Mr Obama laid out a broad agenda that included $400bn in proposed cuts to the budget over 10 years, the FT reports.The mobile operator O2 will today launch an ambitious drive to install Wi-Fi hotspots across the UK, bringing it into conflict with broadband rivals BSkyB and BT. The announcement of its Wi-Fi division will mark what the company calls the first "truly free, public Wi-Fi platform" in the UK, available not just to its customers, but anyone else who wants to use it, the Independent reports. John Gunn is back. One of the most controversial businessmen of the 1990s, who oversaw the construction and then demise of British & Commonwealth, has re-invented himself as a would-be thorn in the side of the Big Five bus companies. Yesterday, Mr Gunn's AIM-listed minnow Rotala took control of Preston Bus after the Competition Commission ruled out of order its acquisition in 2009 by Stagecoach ? one of the heavyweights of the industry alongside FirstGroup, Go-Ahead, Arriva and National Express, the Times reports.A former nurse who won a £2.2m settlement after claiming she was victimised by male colleagues has been suspended from a company she founded amid allegations of serious accounting irregularities. Kate Bleasdale, who hit the headlines last decade after saying that male colleagues sent her inappropriate e-mails and ogled her, has been suspended from Healthcare Locums, which supplies medical staff to fill short-term contracts. Diane Jarvis, its chief financial officer, has also been suspended, the Times reports.