Toy maker Hornby warns on profits

27 January 2012 Last updated at 18:00 GMT Hornby is best known for its model railways but it also owns Scalextric and Airfix Hornby, the model train and Scalextric maker, has issued a profits warning after sales of its train and slot-car racing sets were hit.

The company said "fragile consumer confidence" in the run up to Christmas had left UK sales below last year.

Hornby, which also owns the Airfix and Corgi brands, said its full-year profits were now likely to be below expectations.

The news hit Hornby's share price, which ended the day down 18%.

However, Hornby said its new London 2012 products were being well-received.

It said it had already taken steps to broaden its product range, focussing on more affordable items, including a range of Corgi die-cast models of commonplace vehicles that will sell at £1.99.

Continue reading the main story New products for this year include Scalextric Star Wars, and a pre-school range based on a new TV series "Ollie the Little White Van".

Other plans include a range of collectible horse models, aimed at girls and female adult collectors, that will include one based on the popular film and play "War Horse".

It is the second year in a row that Hornby has endured disappointing Christmas trading. Last year sales were held back by the freezing weather.

Hornby's chairman Neil Johnson, said: "It is proving extraordinarily difficult to predict sales accurately in these turbulent markets."

Numis Securities cut its profits forecast for the current financial year by about a quarter to £5m

Call for IMF funds from UK and US

27 January 2012 Last updated at 13:46 GMT Christine Lagarde says she has not spoken to a world leader who has not commented on the eurozone crisis as a priority

The US and UK should provide more cash to the IMF, the European Union's Economic Commissioner, Olli Rehn, has said.

Eurozone states are providing an extra 150bn euros (£125bn; $194bn) to boost its ability to intervene in a crisis.

However, the US and UK have so far refused to make additional contributions.

The UK government has said it wants any increase in resources to involve all G20 nations.

"We need stronger European firewalls, we also need support from our American and British friends in the sense that we need to increase the resources of the IMF," said Mr Rehn at the World Economic Forum (WEF) in Davos.

Mr Rehn stressed Europe also needed to strengthen its own "financial firewalls".

Two trillion

European leaders are meeting on Monday to discuss both a new fiscal treaty and the details of a permanent bailout fund - the European Financial Stability Mechanism (EFSM).

Speaking to the BBC's Stephanie Flanders, the IMF head, Christine Lagarde, said $2tn (£1.28tn) would need to be raised for the eurozone in the next two years.

The money is necessary to provide loans to any eurozone countries that run into difficulty.

She said $1trn had already been raised by the IMF and EU, but a further trillion remained to be raised.

She said she expected half of this extra money to come from EU leaders when they meet on Monday.

The remainder would come from increased funds for the global lender.

"Half could be committed by additional resources from the IMF because the problem is not just within the eurozone. There will be collateral damages if things go wrong outside the eurozone and the IMF is really here for that," she said.

Colour of money

Speaking to British business leaders at the summit, UK Chancellor George Osborne said further UK support for the IMF depended on eurozone leaders establishing their own fund.

"IMF resources to support individual countries cannot be a substitute for further credible steps by the eurozone to support their currency," he said.

"In other words, the world needs to see the colour of their money before it contributes any more."

His US counterpart, Treasury Secretary Timothy Geithner, suggested his country and others such as China may be prepared to contribute more if certain conditions were met.

"If Europe is able to find the political will to build a more effective firewall then you are going to see the IMF, the major shareholders in the IMF and emerging economies very supportive of those efforts," said Mr Geithner.

Osborne unveils UK financial bill

27 January 2012 Last updated at 14:19 GMT George Osborne says the new bill will make it clear who is in charge of regulating the financial system The Chancellor George Osborne has revealed details about the Financial Services Bill that will overhaul regulation of the sector.

It will give the Chancellor the power to veto decisions made by the Bank of England when dealing with bank bailouts and other interventions.

One aim is to prevent a repeat of the Northern Rock collapse.

The bill will replace the so-called Tripartite structure, introduced by the previous Labour government.

The structure was made up of the FSA, the Treasury and the Bank of England, a system George Osborne said was "incoherent" and "without clear lines of accountability".

One major change will see the abolition of the Financial Services Authority.

The bill will create three new bodies, the first two within the Bank of England, to regulate financial services:

the Financial Policy Committee (FPC), which will have overall responsibility for financial regulation and monitoring the risks of the financial sector to the economy. It will oversee, and have the power to instruct, two new financial watchdog.the Prudential Regulation Authority (PRA), which will take over responsibility for supervising the safety and soundness of individual financial firms.the Financial Conduct Authority (FCA), which will be tasked with protecting consumers from sharp practices, and making sure that workers in the financial services sector comply with rules.

"The Financial Services Bill will overhaul the failed system of financial regulation which allowed such dangerous levels of leverage to emerge," Mr Osborne said in a speech at the World Economic Forum (WEF) in Davos.

"Everyone was so focused on ticking off a regulatory checklist that nobody felt it was their responsibility to use their judgment."

'Clear lines'

The Chancellor said that lack of clarity meant the Royal Bank of Scotland was allowed to take over the Dutch bank ABN Amro when the credit markets had already frozen up, something which ultimately led to its £45.5bn bailout.

He added: "We are putting in place clear lines of accountability, and restoring that crucial element of judgment."

The bill means that, during "normal" times, the Bank of England will be responsible for regulation and stability and accountable to Parliament.

But in a crisis, when taxpayers' money is at risk, both the responsibility and the power to act will rest with the Chancellor of the day.

This system would mean there would be no ambiguity about who was in charge, according to Mr Osborne.

Sarah Brooks, the director of financial services at Consumer Focus, said the plans were good news for personal finances.

"Particularly welcome steps include early interventions on banning products," she said.

"This should help stop many of the issues which have been endemic in this market in recent years. Transferring responsibility for credit over to the Financial Conduct Authority is also a good common-sense move."

The Financial Services Bill must go before parliament before it becomes law.

Separately, in a BBC interview at the WEF in Davos, the head of the International Monetary Fund, Christine Lagarde, said the government's austerity package, which was implemented in response to the debt crisis, was "the right thing to do".

"Under the current circumstances, the policy in place that consists of letting the automatic stabilisers move without readjusting and tightening the principles is the right thing to do," she said.

Lenders face tougher regulation

27 January 2012 Last updated at 15:08 GMT The plans are part of the Financial Services Bill which covers regulation of the sector Payday lenders and other providers of short-term credit will face much tougher regulation when a new watchdog starts work.

The Financial Conduct Authority (FCA) will be able to impose unlimited fines on lenders that break the rules.

The current maximum penalty that can be levied by the Office of Fair Trading is £50,000.

The plans were unveiled as part of the Financial Services Bill that has been presented to Parliament.

The Consumer Finance Association (CFA), which represents businesses offering short-term loans, has argued that the industry is already "highly regulated".

Consumer protection

Under the new watchdog, which is expected to start work next year, lenders will face more rigorous checks before they can set up in business. This will include greater scrutiny when applying for a licence to lend money and hold consumers' funds.

Unlike the present system, applicants will have to show a business plan and outline how they intend to treat customers.

There will be more resources devoted to investigating their tactics once they start lending.

The watchdog will also be able to set binding conditions on firms, such as banning specific products that harm consumers' interests.

The FCA also assumes the consumer protection role of the current Financial Services Authority, charged with trying to make sure that scandals such as pension, endowment and payment protection insurance mis-selling do not happen in future.

"It will be a more proactive regulator, empowered to tackle problems before consumers are harmed and able to respond much more quickly to market developments," said Mark Hoban, Financial Secretary to the Treasury.

US says trade anxieties worsening

28 January 2012 Last updated at 19:08 GMT US trade representative, Ron Kirk, has warned the US public increasingly feels global trade costs jobs, making it hard to sell any new world deal.

"More and more Americans... believe that we have swapped jobs for cheaper T-shirts and iPads," he said.

Europe and the US have increasingly turned to bilateral trade agreements.

However World Trade Organisation (WTO) chief Pascal Lamy told a Davos meeting that said bilateral agreements could damage the world economy.

The WTO talks have been stalled for more than a decade because of differences between developed nations and fast-growing economies such as China, Brazil and India.

No support

Mr Kirk said compromise at those talks - where developed and developing countries are arguing over the levels of trade tariffs - would only be possible if the public supported world trade.

"The principles on which the statement 'trade is good for the world' have not been visited for some time," he told a session at the World Economic Forum gathering in Switzerland.

Unless politicians around the world explained why they thought trade would bring jobs and help consumers fight rising prices, then a global agreement could not be reached, he said.

"Than it becomes easier, frankly, to just do something practical [and make bilateral agreements]... rather than continue adding to our balance of trade by signing onto agreements to which the American public believes there's no benefits for us."

Scattered

But the comments appeared to attract criticism from the director-general of the WTO who said such country-to-country deals could be damaging.

He said that in such negotiations the "balance of forces" would lie with the major powers, such as the US, EU and China.

In addition, bilateral trade deals that set special standards - such as vehicle emissions - could fragment the global market, driving up the cost of trade and hurting the economy, he argued.

"At the end of the day, you will scatter the market place with bilateral regulatory regimes which business will not like because its dis-economies of scale, so this is where the problem lies."

US election

Trade, especially with China, has emerged as an important issue in the early stages of the US presidential election.

The US has a massive trade deficit with China, importing goods worth four times as much as China buys from the US.

Republican presidential candidate Mitt Romney has said President Obama has not done enough to tackle China's theft of US patents and wants the country punished as a "currency manipulator".

It is argued that China holds down its exchange rate to make its goods cheaper, hurting US growth and jobs.

The White House has promised the establishment of a trade enforcement unit to tackle unfair practices.

The issue is also increasingly controversial in Europe.

European representative Karel De Gucht told the Davos meeting that the problem was that Europe was increasingly competing with countries such as Brazil, India and China on trade.

"If it were possible to negotiate an agreement between the major developed economies and the Brics, we would get to something, but at this moment in time it cannot be bridged," he said.