Wednesday Newspapers: Brussels, ratings agencies, Eurozone break-up

16th Nov 2011 06:39

David Cameron faced a deepening rift with Germany over the future of Europe last night, while at home Nick Clegg scorned the Prime Minister for his hopes of looser links with Brussels. (...) Mr Cameron plans to visit Brussels as well as Berlin on Friday to argue the case for new protections for the City from EU directives. He will seek clarity from Herman Van Rompuy, the European Council President, on whether a new EU treaty will be required for the 17 Eurozone countries to forge closer fiscal links. A new treaty would require UK approval, although most Eurozone countries want to agree new rules among themselves, which would avoid the need for an Irish referendum, writes The Times.The Bank is expected to cut its 2011 and 2012 growth forecast to about 1% from its August forecast of about 2% when it publishes its latest quarterly Inflation Report on Wednesday. Sir Mervyn King, the Bank's Governor, is likely to emphasise there are serious downside risks to the UK growth outlook because of the threat posed by the eurozone's continued problems. (...) It will emphasise that inflation could potentially fall even more sharply, undershooting the target, given the current risks to the UK and global economies. "It is likely that the Bank of England's quarterly Inflation Report for November will imply that more quantitative easing will be enacted over the coming months and that interest rates will stay down at 0.5% until well into 2013, and very possibly beyond," said Howard Archer, chief UK economist at IHS Global Insight.It was once a day for dozing off excess and conjuring new and ever more ingenious uses for leftover turkey. But now only one supermarket group wants to keep it that way ? and it is looking increasingly lonely. Wm Morrison is resisting the stampede among stores to open on Boxing Day, leaving only it and the John Lewis partnership in the traditionalists' corner. Christmas is potentially a vulnerable period for Morrisons, which, unlike Asda, Tesco and Sainsbury's, stocks only a modest range of non-food goods. In a move to prevent customers defecting to rival supermarkets, where they can also do their Christmas shopping, it is running a £25-off scheme for loyal shoppers, says The Times.Yell chairman Bob Wigley has taken the unusual step of buying the bonds of the indebted directories company as it attempts to convince lenders to accept changes to its debt's terms. Mr Wigley bought Yell senior debt on Tuesday with a face value of $1m (£625,260) for about £200,000, as well as increasing his stake in the struggling company with the purchase of shares worth £100,485. The former investment banker said he was convinced Yell had "huge potential" and could "manage its debt structure".The European Commission will crack down on credit rating agencies, forcing them to report how they assign ratings and making them liable for compensation when mistakes are found, but plans to introduce temporary bans on sovereign debt ratings under bailout circumstances had to be put on hold. Many of the ideas have run into stiff resistance, with leading rating firms claiming they are impractical, politically motivated, and that they damage the quality and independence of ratings. A Moody's spokesman said the proposals were "inconsistent with the objectives of stabilising credit markets" adding that the rules would "disrupt access to credit and increase market volatility," The Telegraph reports.George Osborne may have to unleash a fresh round of austerity measures in order to bring the UK's budget deficit under control, a respected think tank will warn today. Fresh forecasts show the UK's debt mountain will only fall to £100 billion in 2015-16 from £122bn this year, according to the Centre for Economic & Business Research (CEBR). That £100bn debt pile would be more than double the £46bn prediction for 2015-16 from the independent Office of Budget Responsibility set up by the coalition government, The Scotsman report. The prospect of a Eurozone breakup intensified on Tuesday night as borrowing costs around the region soared and the Dutch prime minister said it should be possible to expel some members from the currency union. Investors are rapidly losing hope that a solution to the sovereign debt crisis will be found, and their fear was demonstrated by rising bond yields - the rate of interest governments have to pay to borrow - across almost all single-currency countries. The Dutch premier, Mark Rutte, stoked fears that a collapse could become a reality as he aired the prospect of countries being ejected, albeit as a last resort, explains The Guardian. AB