Producer prices rise in January

10 February 2012 Last updated at 10:24 GMT There are worries that rising oil prices could increase factory gate inflation UK producer prices rose 0.5% in January from December as the cost of alcohol, fuel and clothes rose, figures show.

In the year to January 2012 output inflation was 4.1%, down from a rate of 4.8% in December and the lowest annual rate since November 2010.

Input cost inflation also slowed, falling to an annual pace of 7% in January against 8.9% in December.

However, Scotia Capital economist Alan Clarke said the figures were "on the high side of expectations".

Some policymakers have warned that a renewed spike in oil prices could keep overall inflation up, and January's data showed that a price rise in crude oil was the main driver of the rise in input prices.

The Bank of England has forecast that consumer price inflation will fall this year from the current rate of 4.2% and dip below its 2% target towards the end of 2012.

Separately, Office for National Statistics construction data confirmed that the sector shrank by 0.5% in the fourth quarter, when the overall economy also contracted.

Sainsbury's relaxes freeze advice

10 February 2012 Last updated at 04:40 GMT Sainsbury's hopes the move could stop over-cautious consumers binning perfectly good food Sainsbury's is removing advice to freeze food "on day of purchase" from its labels and informing customers it can be done up until the use-by date.

The UK's third-largest supermarket chain believes 800,000 tonnes of food a year could be saved from the bin.

The move, in conjunction with the Waste & Resources Action Programme (Wrap), was welcomed by the government as "good news for hard-pressed family budgets".

The average UK family wastes up to £50 worth of perfectly good food a month.

The supermarket will advise freezing food as soon as possible, any time up until the use-by date.

"There is no food safety reason why it cannot be frozen at any point prior to the use-by date," said Beth Hart, head of product technology for fresh and frozen.

Continue reading the main story 7.2 million tonnes of household food waste is thrown away annually in the UK4.4 million tonnes of food binned annually could have been eatenThe environmental impact of avoidable household food waste is around 17 million tonnes of CO2e - equivalent to the emissions of one in five cars on UK roads the average family wastes £680 of food a yearthe total value of food wasted in the UK each year is £12bn

Source: Waste & Resources Action Programme (Wrap)

"As one customer pointed out to me while discussing the previous labelling, 'How does the product know which day I purchased it on?"'

Research by Wrap has found that 60% of people believe food has to be frozen on the day it is bought - a view reinforced by current labelling.

"Now we can all look in our fridges and know that we can freeze most items which are about to go out of date and enjoy them at a later time," said Andrew Parry, Wrap consumer food waste prevention manager.

Environment Minister Lord Taylor said: "This is good common sense by Sainsbury's and it's good news for hard-pressed family budgets."

New deals as stamp duty holiday ends

11 February 2012 Last updated at 00:01 GMT By Susannah Streeter Business reporter, BBC News Stuart Smith renovates homes but cannot afford to buy one First-time buyers are being urged not to rush into hasty property transactions just to benefit from the stamp duty holiday which is due to end next month.

Those buying a home worth less than £250,000 are exempt from paying the normal 1% stamp duty until 24 March.

The tax band is being reintroduced because the Chancellor George Osborne believes the holiday has been ineffective in letting more people buy a home.

Instead the government is introducing other incentives to persuade lenders to offer loans to potential buyers.

Property market commentator Henry Pryor says people should not buy a home now just to beat the deadline.

''People must remember that the value of property can go down as well as up," he says.

"House prices over the last 12 months have fallen by 1.2% according to the Land Registry.

"If they were to continue to fall at that sort of rate or more, as some commentators are suggesting, then clearly the saving you are going to make will be wiped out very swiftly,'' Pryor adds.

'Frustrating'

Incentivising first-time buyers is seen as key to revitalising the housing market and creating construction jobs.

After the credit crunch many banks started demanding hefty deposits from mortgage borrowers of 20% or more.

The challenge for many first-time buyers has been building up that level of deposit, particularly with rents being so high.

Stuart Smith from Bristol renovates houses for a living and would like to buy his own property.

"It's really frustrating because I have so many ideas about what I could do to my own home if I owned one, but I spend my time doing work on other people's," Smith says.

"It's just getting that deposit together which is so difficult.''

New scheme

Last year the government launched the FirstBuy scheme.

Do not rush to buy just to beat the reintroduction of the 1% stamp duty, Henry Pryor warns

It lends people part of their down-payments, interest-free for five years, but only if they buy newly built homes.

Next month another initiative is being launched.

Under the NewBuy Guarantee scheme, lenders will be able to offer 95% mortgages on new homes without taking on all of the risk if the borrower defaults.

This insurance scheme will mean that lenders will be guaranteed to lose less money than before if the borrower eventually fails to repay all their loan.

A spokesman from the Department of Communities and Local Government explained how it would work.

''If buyers can't meet the shortfall developers step in, having put aside 3.5 per cent of property price into an indemnity fund.

"If that does not cover it, the government's liability is 5.5% of the cost of the home,'' he said.

Shared ownership

More lenders are already offering better deals to buyers with only 10% to put down, but the interest rates offered are higher than for those deals with larger deposits.

Shared ownership schemes are an option and some need a deposit of just 5%.

Borrowers pay a mortgage on the share of the property purchased and also pay rent on the share they do not own.

The main drawback of shared ownership schemes is that you are limited in the properties available.

The fact that you might have to buy a brand new home may also put people off, says Melanie Bien, a mortgage finance expert.

''It can also be more difficult to sell at the end if you want to move up the ladder and we have have found people who are trapped in those homes and can't buy a bigger property because their share their value has not gone up," she says.

Saving is hard

Another shared equity mortgage concept is awaiting approval by the Financial Services Authority (FSA).

Melanie Bien warns that the new schemes target buyers of newly built homes

This could appeal to people who may want a larger property but do not want to increase their monthly payments.

It would only be available to people who already have a 20% deposit.

But under the scheme an investment firm, Castle Trust, would contribute another 20% of the down-payment.

That would mean applicants would only need to take out a mortgage for 60% of the property's value.

However, when the property is sold, they would have to give the firm 40% of any increase in the property's value.

The deal has not yet been approved by the FSA.

But even if it is, such products still will not help the average first- time buyer.

Stuart Smith recognises that there are deals around which could help him buy a new build home.

But he wants to buy an older property to renovate and add value to, to give him a buffer in case house prices continue to fall.

''Paying rent at the same time as saving for a deposit is really hard, I really hope a lender will come up with a deal soon which will help us buy a property we can really call our own," says Stuart.

Downgrade for most Italian banks

10 February 2012 Last updated at 19:48 GMT Unicredit is among the 34 banks downgraded by Standard and Poor's The credit ratings agency Standard and Poor's has downgraded its assessment of almost all of Italy's major banks.

The review involves 34 of the 37 banks covered by the agency.

Italy's biggest financial institutions, including UniCredit, Intesa Sanpaolo, Banco Popolare, Banca Nazionale del Lavoro and Mediobanca, are among them.

A credit rating affects the price of borrowing and the move follows S&P's two-notch downgrade of the Italian government's creditworthiness.

But despite the sovereign downgrade, which typically makes borrowing more expensive, Italy's Prime Minister Mario Monti's austerity plan has helped to bring down Italy's 10-year borrowing rate closer to 6% from 7% for much of last year.

The action came too late to prompt share price reaction as it came after the market closed.

Greek MPs pass austerity package

13 February 2012 Last updated at 01:33 GMT The BBC's Mark Lowen: "It was some of the worst violence Athens had seen for months"

Greece's parliament has passed a controversial package of austerity measures, demanded by the eurozone and IMF in return for a 130bn-euro ($170bn; £110bn) bailout to avoid default.

The vote was carried by 199 votes in favour, with 74 MPs voting against.

Coalition parties expelled over 40 deputies for failing to back the bill.

The vote came amid violent scenes in capital, Athens, and elsewhere, with protesters outside parliament throwing stones and petrol bombs.

Police fired tear gas and several buildings were set on fire in Athens.

Dozens of police officers and at least 37 protesters were injured, 23 suspected rioters were arrested and a further 25 detained, AP reports.

PM Lucas Papademos urged calm, saying violence had no place in a democracy.

Lawmakers have also approved a related deal to write off 100bn euros of Greek debt held by private banks.

Despite a rebellion by some MPs from parties in the ruling coalition, the result was expected, reports the BBC's Mark Lowen in Athens.

Continue reading the main story Chris Morris BBC News, Athens

Late into the night, buildings in Athens were burning. It was clear that in some areas of the city police had effectively lost control, if only for a short time.

Violence has occurred during votes before, but buildings have not been set ablaze for some time. Every event chips away at the confidence that the state is holding things together.

Emotions were also running high in parliament, with no-one voting for the plan with much enthusiasm. Greeks on the streets feels that the country cannot bear any more austerity. The eurozone's strategy for its survival is feeling the full force of public anger.

Pasok, the largest party, and its coalition ally New Democracy - which have both backed the bill - account for more than 230 deputies out of a total of 300.

Following the vote the parties announced they had each expelled about 20 of the rebel MPs.

'Vandalism'

There is mounting public anger in Greece and a feeling that the impact on ordinary people is beyond the value of the bailout, says our correspondent.

Some reports say as many as 80,000 people joined demonstrations in Athens, with another 20,000 protesting in Thessaloniki.

Violent protests also spread to other Greek town and cities, including the holiday islands of Corfu and Crete, according to Reuters.

Running battles with police were still continuing in parts of the capital late on Sunday.

Protesters hurled flares and chunks of marble torn up from the square. Some had tried to break through a cordon of riot police around the parliament.

Several historic buildings, including cafes and cinemas, were in flames. Syntagma Square - in the heart of Athens - is cloaked in a hail of tear gas, our correspondent says.

Ioannis Simantiras, 34, said the protesters were boxed in by the police.

"Nobody could get away from the gas," he told the BBC.

"When it engulfed everybody, and everybody was choking the police drew back and opened up a corridor for us away from the parliament - that's when everybody made a run for it."

The austerity measures include:

15,000 public-sector job cutsliberalisation of labour lawslowering the minimum wage by 20% from 751 euros a month to 600 eurosnegotiating a debt write-off with banks.

Mr Papademos had earlier said Greece did not have the luxury of such protests in such difficult times.

"Vandalisms, violence and destruction have no place in a democratic country and won't be tolerated," he said in a speech in parliament before the vote.

"From you and your vote it will depend if Greece will remain in the euro or if it will be driven to an unruly default," he said.

"By voting for this economic programme and opening the road for the loan agreement you will set the foundations for the reform and recovery of the economy."

Continue reading the main story Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money. Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget. The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics. Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers. There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes. The EU, IMF and European Central Bank agreed 229bn euros ($300bn; £190bn) of rescue loans for Greece. Prime Minister George Papandreou quit in November 2011 after trying to call a referendum. Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain. Under Prime Minister Lucas Papademos, Greece is trying to negotiate a big write-off of private debts and secure a second bail-out of 130bn euros ($170bn, £80bn) before a 20 March deadline. BACK {current} of {total} NEXT "The question is not whether some salaries and pensions will be curtailed, but whether we will be able to pay even these reduced wages and pensions," Finance Minister Evangelos Venizelos said, according to AP.

"When you have to choose between bad and worse, you will pick what is bad to avoid what is worse."

New Democracy leader Antonis Samaras said: "The dramatic events in the centre of Athens harm Greece and hurt all the Greek people.

"We have seen scenes that must not happen again in the future. I ask every Greek to show prudence, patriotism, calm, and unity," he added.

Earlier this week several ministers from the coalition government, including two from Pasok, quit their jobs in protest at the measures.

The leader of the far-right Laos party effectively withdrew his party from the coalition, announcing its 15 deputies would not back the austerity measures.

George Karatzaferis complained that Greeks were being "humiliated" by Germany, through its influence over the eurozone negotiations.

The eurozone bloc wants a further 325m euros in savings for this year and also insists that Greek leaders give "strong political assurances" on the implementation of the packages.

Greece cannot service its huge debt, and there are fears that a default could endanger Europe's financial stability and even lead to a break-up of the eurozone.

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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.

Continue reading the main story

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.