Hungarian airline Malev collapses

3 February 2012 Last updated at 11:21 GMT Malev is part of the Oneworld airline alliance, which also includes British Airways The Hungarian national airline Malev has folded after its financial situation became unsustainable.

"At 0500 GMT... after 66 years of almost continuous operation Malev will no longer take off," it said.

It came after the European Commission ordered Malev to repay various forms of state aid received from 2007 to 2010.

The sums involved amounted to 38 billion forints (130m euros; $171m; £108m), a sum equal to its entire 2010 revenue.

"Despite its best interests the owner can no longer provide financial resources for the operation of the airline in the wake of the condemning decision of the European Commission," an airline statement said.

The European Consumer Organisation, which "defends the interests of all Europe's consumers", said the news came after Spanair's collapse in the very same week.

"This development is yet more incontrovertible proof that the current update of European legislation on air travel must incorporate a mandatory guarantee against airline bankruptcies," it said.

'Inherited skeletons'

The carrier employs 2,600 people and is responsible for close to half of all air traffic at Budapest Liszt Ferenc airport.

Part of the Oneworld airline alliance, which also includes American Airlines and British Airways, Malev has a leased fleet of 22 passenger aircraft.

In 2010 it posted a loss of 24.6bn forints, although an improved 2011 figure had been predicted.

Chief executive Lorant Limburger said the immediate reason for the collapse was the demand for upfront payments by its suppliers.

Prime Minister Viktor Orban said on state radio that two Malev planes were still overseas, one in Tel Aviv, the other in the Irish Republic.

The premier said those planes were not allowed to take off because of Malev's debts.

He told radio station MR1-Kossuth that Malev may possibly be relaunched "if we manage to get rid of the inherited skeletons".

On Thursday, Hungary's government appointed a receiver to the airline to try to protect it from creditors' claims.

Hungarian newswire MTI had said that 64 Malev flights were scheduled to fly from Budapest on Friday.

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Olympics 'boosting' Scots tourism

2 February 2012 Last updated at 19:26 GMT Tourism chiefs are hoping for a knock-on rise in business around London 2012 Tourist bookings for Scotland around the time of the London Olympics are rising, it has been claimed.

One online travel website said bookings for Edinburgh and Glasgow in July were 30% higher than last summer.

Demand for parts of the Highlands and the Hebrides is said to be even stronger, up by as much as 300%.

Some London 2012 visitors are booking on to other parts of the UK and VisitScotland is also targeting others looking to escape the extra "bustle".

The Scottish Tourism Forum has said visitors to the Olympics were primarily drawn by the event itself and could displace "normal" tourists discouraged by perceptions of congestion and inflated prices.

VisitScotland said it would "tactically target" those looking to get away from the "hustle and bustle" of the south east during London 2012.

Online site Expedia said it was seeing increased searches for parts of Scotland around the time of the Olympics, partly down to staycations and partly down to overseas visitors.

Andy Washington, the firm's managing director in the UK and Ireland, said: "For July this year you have got the Olympics, and people aren't just going to come to London.

"Even if people do come to London, they'll be looking to get out to the rest of the UK. So we are seeing big growth of over 30% for July departures coming to Glasgow and Edinburgh."

Mr Washington said at least 40% of inbound tourism to Scotland was coming from Asia.

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UK recession looms, says report

3 February 2012 Last updated at 00:02 GMT The UK economy could rebound in 2013 if the eurozone crisis is resolved, Niesr said The UK economy will enter recession in the first half of the year as households continue to cut back, an influential think tank has warned.

The National Institute of Economic and Social Research (Niesr) said the government should temporarily ease its spending cuts to promote growth.

It expects the economy to shrink 0.1% in 2012, but to grow 2.3% in 2013 if the eurozone debt crisis is resolved.

Niesr said, however, that deficit cuts had bolstered market confidence.

The UK is already close to another recession - defined as two consecutive quarters of economic contraction - after official figures in January showed that the economy shrank by 0.2% in the final three months of 2011.

In its UK and World Economy Forecast Niesr said: "We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand."

Niesr said economic conditions will not improve in the short term, as both the private the public sectors are still focused on paying off debts. "Over the near term we do not expect economic conditions to improve," the report said.

The think tank predicted that inflation would fall sharply, with the consumer price index down to 2.2% this year and 1.4% in 2013.

But there were grim forecasts on unemployment, which Niesr expects will rise to about 9% this year, from 8.4% in the three months to November, and will remain above 7% in 2014.

"Unemployment at this elevated level for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs," the report said.

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As Niesr have said, the government's commitment to deficit reduction has helped maintain market confidence. ”

End Quote Treasury spokesman Niesr suggests relaxing the government's austerity programme. "The UK economy currently suffers from deficient demand; the current stance of fiscal policy is contributing to this deficiency. A temporary easing of fiscal policy in the near term would boost the economy," the group said.

Little scope

More investment would not derail the chancellor's long term fiscal goals, Niesr said.

On Monday, the Institute of Fiscal Studies said the government could safely cut taxes temporarily, without worrying that the Bank of England would raise rates in response.

But the IFS that there was little scope for big or long-term tax cuts, which risked undermining investor confidence.

"The chancellor faces his third budget with the economy and public finances in considerably weaker shape than he had hoped a year ago," said Paul Johnson, director of the IFS.

Last month, Chancellor of the Exchequer George Osborne said he would continue with the coalition government's efforts to reduce the deficit, despite criticism that it is choking off recovery.

A Treasury spokesman said: "As Niesr have said, the government's commitment to deficit reduction has helped maintain market confidence.

"They expect the government to meet its fiscal mandate and for the UK economy to grow more strongly than the euro area this year and next."

Meanwhile, Niesr forecast global growth of 3.5% for 2012, led by China and India, and 4% in 2013. It forecast US economic growth of 2% this year.An independent Scotland could be more constrained on economic policy than at present, a study has suggested.

Scottish independence

The report also considered the monetary and fiscal policy choices facing Scotland if it leaves the union.

Niesr concluded that retaining sterling would be "sensible" for Scotland, but warned that currency union could restrict fiscal policy.

The Scottish government said the report "validates" its aim to retain sterling and insisted Scotland would be in a "healthier" financial position.

The report said that it is "doubtful" whether the Bank of England would extend lender-of-last-resort facilities to Scottish institutions, something First Minister Alex Salmond has argued for.

Niesr adds: "With a pro rata transfer of existing UK public debt, Scotland would enter independence heavily indebted with no insurance from fiscal risk sharing or fiscal transfer mechanism with the rest of the UK.

"Even with a favourable settlement on future oil revenues, its fiscal balances are likely to be volatile with large deficits in some years as a result of its dependence on oil revenues," the report said.

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Apple overturns Motorola's ban

3 February 2012 Last updated at 16:10 GMT Apple's German online store showed that all 3G models of its iPad 2 were unavailable for purchase Apple has been granted a temporary suspension of a sales ban imposed on some of its products in Germany.

Motorola Mobility had forced Apple to remove several iPad and iPhone models from its online store earlier today after enforcing a patent infringement court ruling delivered in December.

An appeals court lifted the ban after Apple made a new licence payment offer.

However, Germany-based users may still face the loss of their push email iCloud service after a separate ruling.

Patent consultant Florian Mueller, who attended the review, said that the suspension may only last a few days or weeks - but that Apple's revised proposal had been enough to allow it to restart sales.

"The Karlsruhe higher regional court believes that Apple's new offer needs to be evaluated before this injunction can enter into force again," he wrote on his blog.

"A suspension like this is available only against a bond, but Apple is almost drowning in cash and obviously won't have had a problem with obtaining and posting a bond."

He said that the bond amount was likely to have been about 120m euros ($158m, £100m).

Unresolved

A statement from Apple said: "All iPad and iPhone models will be back on sale through Apple's online store in Germany shortly.

"Apple appealed this ruling because Motorola repeatedly refuses to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago."

However, Motorola signalled that it would try to restore the ban.

"We are pleased that the Mannheim court has recognized the importance of our intellectual property and granted an enforceable injunction in Germany against Apple Sales International," a statement said.

"Although the enforcement of the injunction has been temporarily suspended, Motorola Mobility will continue to pursue its claims against Apple."

Pulled products

The sales ban relates to Motorola's patent for a "method for performing a countdown function during a mobile-originated transfer for a packet radio system".

Motorola licenses the patent to other companies on Frand (fair, reasonable and non-discriminatory) terms.

Frand-type patents involve technologies that are deemed to be part of an industry standard. In this case Motorola's innovation is deemed crucial to the GPRS data transmission standard used by GSM cellular networks across the world.

Companies must offer Frand-type patents for a reasonable fee to anyone willing to pay.

Apple had previously said it would be willing to pay the fee going forward, but the two firms dispute how much Apple should pay for failing to license the technology up until now. Missed payments are not covered by the "reasonable" rule, and Motorola is able to demand a more expensive price.

Apple's iPhone 3G, iPhone 3GS and iPhone 4 had all been affected - but not its newer iPhone 4S. All 3G models of the iPad were involved, but not their wi-fi-only counterparts.

Email technology

The separate push email ban would only come into effect if Motorola decided to enforce a second judgement that Apple's iCloud and MobileMe infringed another of its innovations.

The patent relates to two-way communications between pagers and other devices and was granted in 2002.

If Motorola decides to enforce the judgement some iPhone users in Germany would lose the ability to automatically receive emails as soon as they have been sent. Instead they would either have to manually check their accounts or set their devices to periodically check for updates.

This patent is not deemed to be critical to an industry standard, so the firm does not have to license the technology to Apple even if the iPhone-maker offered to pay.

Apple said that it believed the patent involved was invalid, adding that it was appealing against the decision.

Although the two cases only apply to Germany they may have implications for other European lawsuits. EU rules say different countries' courts can reach different conclusions, but must explain why.

Mr Mueller Mr Mueller notes on his blog that Apple has brought patent claims of its own against Motorola in Germany, and that Motorola also faces a lawsuit filed by Microsoft which is due to be considered next Tuesday.

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Service sector sees strong growth

3 February 2012 Last updated at 11:01 GMT The upturn in services suggests the economy is not headed for recession The UK's dominant service sector grew at its fastest rate since March 2011 in January, according to a key survey.

The Markit/CIPS services purchasing managers' index (PMI) rose from 54 to 56. Any figure above 50 indicates growth.

Markit also reported the biggest monthly rise in business optimism since the survey started 15 years ago.

The data will reduce fears of a new recession, following a contraction in the economy at the end of last year.

An increase in new business also drove employment in the sector to rise at its fastest pace since March 2008, the survey found.

The service sector accounts for more than 70% of the UK's economic output.

Recession 'unlikely'

"All [this] points to a resounding revival of UK economic growth in January," said Chris Williamson, chief economist at Markit.

"A slide back into recession is now looking increasingly unlikely. The economy could well expand at close to trend rate - around 2-2.5% per annum - in the first quarter if business conditions hold up in the next two months," he added.

The data follows a similar survey showing the UK's manufacturing sector returned to growth in January, with overall activity at its highest level for eight months.

The results will be closely analysed by the Bank of England when it meets next week.

Risks

The Bank had been expected to expand its quantitative easing programme to provide extra credit to the economy.

"The recent upturn in some of the key indicators should make for an interesting policy debate at next week's Bank of England meeting," said Philip Shaw from Investec.

"Our feeling is that there are still big downside risks out there. And the BoE's own inflation forecast is so low in the medium term, it would take a big shift to the upside to remove the case for more easing," he said.

However, the data contradicts the latest forecast from the National Institute of Economic and Social Research (NIESR).

The think tank predicted the UK economy would shrink by 0.1% in 2012.

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RBS boss calls for pay correction

3 February 2012 Last updated at 12:40 GMT Sir Philip Hampton, chairman of RBS: Mr Hester "entitled" to bonus

The chairman of the 82% taxpayer owned Royal Bank of Scotland (RBS6) has said banker pay has been "high for too long" and needs to be "corrected".

Sir Philip Hampton defended his decision to award a bonus to chief executive Stephen Hester.

Speaking to the BBC he said the board "underestimated" the public reaction that later caused Mr Hester to turn down his bonus.

RBS needed to be run by the "best people" on "competitive" pay, he said.

"Stephen Hester has one of the most challenging and demanding jobs, I think literally, in world business," said Sir Philip.

But he said the public hostility to bonuses had prompted the board to think again about how they provided staff with incentives.

"We are a commercial organisation competing in extremely competitive markets, I think its highly unlikely that we'll have the best possible people to do that if we don't pay appropriate amounts," he said.

"Now the amounts are high by absolute standards but by relative standards what Stephen Hester is getting is not high at all, in fact its quite low."

'Dislocation'

However, Sir Philip accepted that pay needed to come down in the industry as a whole.

"Essentially, particularly in the banks, particularly in the investment banks, shareholders have done pretty badly and employees have done pretty well. That needs to be corrected," he said.

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Bankers have made personal fortunes over the past decade, while anyone unfortunate enough to own shares in their institutions has been consigned to near penury.”

End Quote Robert Peston Business editor, BBC News Sir Philip said business people in general were "very aware" of the politics surrounding pay and of a "dislocation" between top business people and ordinary people.

He said elements of campaigns against inequality were "perfectly reasonable."

"Where I have more reservations is where the debate becomes hysterical rather than analytical or reasonable and I think we saw something of a witch hunt, something of a mob mentality around an issue," he said.

Social responsibility

Sir Philip's comments came as the Labour leader, Ed Miliband, called for a culture of "one nation banking" in which financial institutions are not "isolated" from the rest of society.

Mr Miliband had called for the government to block the bonus to Mr Hester and will press for a vote on bonuses in parliament next week.

Other top bankers have also warned about pay.

On Thursday, the chief executive of Deutsche Bank warned of a "social time bomb" from rising wealth and income inequality.

He suggested top earners have a "social responsibility" towards philanthropy.

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