Wednesday newspaper round-up: UK recession, Mitchells & Butlers, Vedanta

27th Jan 2010 06:31

There are growing fears that Britain could tip back into recession after figures showing that the economy staggered to growth at the end of last year. The tiny 0.1% uplift achieved from October to December ? far worse than most City economists expected ? threw Labour and Conservative election tactics into confusion. Gordon Brown's hopes of hailing a lasting recovery were dashed amid signs that the next three months could be as difficult as the last, the Times reports.Sir Brian Pitman, the veteran retail banker, is to become chairman of Virgin Money, in a move that will take the newly licensed group a step further in its assault on the UK's established high street banks. The appointment of the former chairman of Lloyds TSB could come as early as today, according to people close to the situation. It would be a coup for Virgin Money, which is hoping to launch a fully fledged banking service later this year, the FT reports.The racing tycoons JP McManus and John Magnier have waded into the fight at Mitchells & Butlers (M&B) by calling for those responsible for the £500m of hedging losses to be pursued for the money. Elpida, the duo's investment vehicle, has written to the board of the pub company before tomorrow's annual meeting confirming that it will vote its 17.6% holding "to achieve a new independent board", thereby aligning itself with Joe Lewis, the billionaire trader at the centre of the spat, the Times reports.The Church of England will decide this week whether to maintain its investment in the controversial FTSE 100 listed mining group Vedanta Resources, after coming under pressure to sell its £2.5m stake in the group. Members of the Church's Ethical Advisory Group will hold their first session since visiting the miner's operations in India last year. Its advice will be passed to the Church's investment managers who will then decide whether or not to withdraw the cash, the Independent reports.First Capital Connect said last night that it would pay passengers additional compensation after three months of disruption and cancelled trains. FCC), owned by First Group, the transport group, is trying desperately to resurrect its franchise after a torrid three months, which ended last week with Lord Adonis, the Transport Secretary, threatening to remove the operator's franchise and effectively put the train service into public ownership, the Times reports.The Governor of the Bank of England has warned that it must be made "very clear" to financial institutions that "radical reform is on the table". Mervyn King told MPs on the House of Commons Treasury Select Committee that for Britain to house a banking system that is "five times GDP" and reliant on the taxpayer for support is "simply not credible". Giving evidence on the debate over whether banks should be allowed to be "too big to fail", Mr King strongly suggested that Britain should follow the radical overhaul of the banking system announced by President Obama last week, the Telegraph reports.The Serious Fraud Office has charged two former executives at Torex Retail in connection with the collapse of the Aim-listed software group. The SFO charged Edwin Dayan, former chief technology officer, and Christopher Ford, former finance director of subsidiary Xn Checkout Limited, with conspiracy to defraud, false accounting and misleading an auditor, the Telegraph reports.Saab, the Swedish carmaker, has been saved from closure after General Motors (GM), its American parent company, announced an eleventh-hour agreement to sell it to Spyker, a little-known Dutch company. GM, which has been seeking to off-load its loss-making Saab operations for a year, will receive $74m in cash for Saab and will retain preferred shares in the carmaker worth $326m and representing less than 1% of voting rights. The group said it had also received a third, undisclosed, consideration, the Times reports.Britain's water companies may have to cut thousands of jobs as executives draw up plans to meet stringent new price controls set by Ofwat, the industry regulator. A deadline for Britain's 21 water companies to appeal against the Ofwat ruling ? which sets the amount that they can charge households and invest in network upgrades over the next five years ? expired last night. All but a handful have chosen to accept the settlement, triggering what industry experts believe will be a string of redundancies to cope with sharply reduced investment, the Times reports.The housing market was given a further boost yesterday when the British Bankers' Association released figures showing that the number of mortgages approved jumped to the highest level for more than two years in December. During November 60,518 loans for people buying a new home were in the pipeline, the highest level since March 2008 and more than double the record low of 27,162 seen in November of that year, the Independent reports.Greece is wooing China to buy up to €25bn of government bonds, a move that underlines Beijing's growing financial power, as Athens struggles to fund soaring public debt. Goldman Sachs, the US investment bank, has been promoting a Greek bond sale to Beijing and the State Administration of Foreign Exchange (Safe), which manages China's $2,400bn foreign exchange reserves, said people familiar with the issue, the FT reports.