Staff cuts planned for Treasury |
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| Economy | |
| Written by Catherine Murray | |
| Tuesday, 31 August 2010 | |
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Morning business news, Tuesday 31 August: Osborne plans budgets, Tesco, new pension laws, airline shares. George Osborne is planning to cut staff numbers at the Treasury by about one-quarter and scale back his department’s role as he attempts to lead by example in the search for sweeping spending cuts across Whitehall. The chancellor will reconvene the public spending "star chamber" this week and hopes to settle a number of departmental budgets – including justice, transport, environment and culture – by mid-September, the FT reports. Tesco tries town regenerationTesco secretly bought a town centre through a front company and let it become essentially derelict as it tried to secure a landmark regeneration deal, The Times has learnt. Britain’s biggest supermarket group won applause from councillors and local people three years ago when it bought the centre of Linwood, in Renfrewshire, and promised to redevelop its crumbling 1960s shopping precinct. Employers contribute less to pensionsStaff will be forced to pay more to maintain their company pensions because of new rules that will see employers contributing less, actuaries have warned. Under laws introduced by Labour, employers will have to enrol all their staff into a company pension scheme from 2012, unless workers specifically opt out. A study by the Association of Consulting Actuaries says many of Britain’s largest employers believed the change would force them to scale back the generosity of these schemes, the Telegraph reports. RAF air-refuelling tankers deal questionedA £10.5bn plan to buy air-refuelling tankers for the Royal Air Force is being reconsidered by the government after concerns were raised over the value of the deal. Ministers could scrap the project or sell one third of the aircraft to France after it emerged that the consortium supplying the aircraft spent £100m on a hanger and infrastructure, the Times reports. Property prices still fallingProperty prices fell again in August as the number of first-time buyers continued to dwindle, new housing research out today shows. Asking prices dropped by 0.3% during the month, following a 0.1% decline in July, according to research by the Hometrack property intelligence company, the Times reports. Japanese market instabilityStock and currency markets swung wildly throughout the day in Tokyo as the Japanese Government and central bank threw together a set of emergency plans to revive the economy, defeat deflation and stop the yen’s rise in its track. Early optimism sent the Nikkei 225 benchmark index soaring by more than 3%, breaking back above the 9,000-point level it tumbled miserably through last week. But, when it did emerge, the Bank of Japan’s plan to expand its low-interest bank funding programme was less dramatic than investors had hoped, and about half of the morning’s gains were unravelled, the Times reports. USA disposable income downAmericans' disposable income fell last month for the first time since January, according to a report on Monday from the Department of Commerce. After taking taxes and inflation into account, average incomes across the country dropped 0.1%. Separate figures showed that heavy discounting by car dealers helped consumer spending climb a stronger-than-expected 0.4%, the Telegraph reports. Genzyme rebuffs Sanofi-AventisGenzyme, the US biotech company, has rebuffed an $18.5bn (£12bn) cash offer from French pharmaceutical giant Sanofi-Aventis. Henri Termeer, Genzyme chief executive, wrote to Christophe Viehbacher, Sanofi chief executive, saying the board unanimously rejected what he called an "opportunistic takeover proposal", the Telegraph reports. Unrealistic stock market valuationsInvestors’ anger over the performance of stock market listings this year is rising after the fall of shares in a number of high-profile offerings below their sale price. More than half the big initial public offerings in Europe this year are trading below their issue price, according to data from Dealogic, prompting claims from institutional investors that companies are being sold at unrealistic valuations, the FT reports. Airline share prices upAirline share prices have risen more than 70% from their lowest point at the beginning of last year, outperforming the broader equity market, as investors bet on a strong recovery in the highly cyclical aviation business. As larger carriers reported stronger results amid growing passenger traffic, airline stocks climbed 73% from the bottom of the cycle in the first quarter of 2009, the International Air Transport Association said in its latest financial monitor report, the FT reports. Competition on two of the busiest transatlantic routes is also set to intensify with Delta Airlines applying to run services from London's Heathrow airport to Boston and Miami. The US carrier's move follows the regulators' decision to allow British Airways (BA) and American Airlines to operate a joint business across the Atlantic. Delta in turn is now seeking permission from both the European Commission and US Department of Transportation to run twice-daily flights on the Boston and Miami routes, the Telegraph reports. Public purse will benefit from bank salesThe taxpayer stands to make up to £27bn from the emergency bailout of Britain's banks when the government's stakes in Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (RBS) (LON:RBS) are sold, estimates suggest. The public purse can expect to benefit from £19bn of share price gains, another £2bn in fees for guaranteeing bank bonds, plus £5bn in fees for the Asset Protection Scheme (APS) and £1bn in loan fees, according to calculations by the trade magazine The Banker, the Independent reports. |
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