Britain faces another £50bn of spending cuts and tax rises to cover the costs of age-related care and put the national debt under control, the International Monetary Fund has warned. A “second generation” of UK austerity measures, which the IMF suggested should be completed before 2030, would outstrip programmes in both Greece and Portugal. Only the US, Japan and Ireland are facing a larger adjustment among advanced economies. To bring public debt down from 82.5pc to 60pc of GDP and pay for rising health and pension costs, the UK will need “a fiscal adjustment strategy” over the next 18 years equivalent to 11.3pc of national output, or roughly £170bn, according to IMF estimates. By comparison, the existing £123bn austerity program is equivalent to 7.5pc of GDP, The Telegraph reports.
After years spent putting an ill-deserved gloss on poor results, Yahoo! has changed its tune, by declaring its best performance in three years as unsatisfactory. Scott Thompson, who became chief executive in January, said the company was not growing fast enough, despite surpassing analysts’ expectations. “I’m not satisfied by the pace of top line growth and I won’t be satisfied until it is at least in line with the market,” he told analysts, adding that the commercial performance of its display advertising business had not kept pace with improvements in the technology that underpins it. Yahoo! grew first-quarter revenues to $1.08bn, putting it slightly ahead of the analysts’ consensus of $1.06bn, and marking the first year-on-year increase since 2008, The Telegraph reports.
Mario Monti is set to cut Italy’s economic growth forecasts for 2012 in a move that will cast doubt on the viability of his austerity programme in the face of the advancing debt crisis. The technocrat prime minister is expected to admit that Italy’s economy is likely to shrink by as much as 1.2% this year – far more than the 0.4% contraction the government forecast, according to a leaked draft of official documents. Mr Monti, who is struggling to implement the tough austerity measures, is due to hold a cabinet meeting in Rome ahead of making the announcement, according to The Telegraph.
The departure of a single member from the euro could trigger a “full-blown panic” that rips the entire single currency apart, according to alarming analysis by the International Monetary Fund. In its starkest examination of the euro crisis to date, the Washington-based body urged strong euro members, such as Germany, to dig deeper into their wallets in an attempt to shore up the single currency, warning that a disintegration of the euro would have worse consequences than the Lehman Brothers crash. The Fund also said that austerity alone was not enough to strengthen leading economies, in words seized upon by the Labour Party, which has attacked George Osborne for prioritising cutting the deficit over pro-growth policies, says The Times.
A Canadian has been informally approached as a potential candidate to replace Sir Mervyn King as Governor of the Bank of England next year, according to reports last night. Mark Carney, who is Governor of the Canadian central bank and also heads the Financial Stability Board, which overseas global financial regulation, is understood to have been contacted by a member of the Bank’s Court, its supervisory body. Foreigners are rarely appointed as heads of central banks and the potential appointment of Mr Carney would be a radical move aimed at shaking up the Bank in the aftermath of the financial crisis, writes The Times.
The Bank of England will be told by MPs today to look into the impact that its £325 bn money-printing operations and low interest rates are having on savers. The Treasury Select Committee believes that “loose” monetary policy is penalising many households and is demanding that the Bank provide detailed estimates of the overall benefits and losses to pensioners and younger savers. The Bank should also improve efforts to explain the benefits of its monetary policy to the public, the committee says in a wide-ranging report. The demands come amid widespread anger from retirees, who say that their annuities are being dragged down by low interest rates, The Times reports.
Chris Sangster, chief executive of Scotgold Resources, said yesterday that the miner was confident of securing the necessary £22m of financing to begin drilling for gold and silver at its Cononish mine. The Aim-quoted company is understood to be in discussions with a range of financial institutions with a view to raising the funds needed to begin developing the project by the end of this year. It is also believed that the firm may consider a share placing to raised additional funds. If all goes to plan, the first production of gold is expected during the fourth quarter of 2013, making it Scotland’s only commercial gold mine. Shares in Scotgold rose by as much as 10 per cent in early trading after it published a report saying there could be nearly £66m worth of gold in its mine at Cononish, in the Loch Lomond and the Trossachs National Park.
