The heatwave that has had much of the United States sweltering this summer is expected to cause severe damage to crop production in the US Midwest and push up food prices across the globe. The US Department of Agriculture cut its estimate for the corn crop yesterday by 12 per cent in response to a drought that affects 56 per cent of America and is the worst for 24 years. Commodities traders warned that vast swaths of corn would be completely lost if there is no rain within the next 48 hours. There was some relief yesterday afternoon as updated weather forecasts suggested that parts of the Midwest could receive rainfall today. Corn prices have risen by 40 per cent in the past three weeks because of fears about the impact of the drought on the US crop, which is by far the largest in the world, The Times reports.
The Government is failing on its pledge to stimulate the economy through infrastructure projects and could lose Britain key investments by delaying vital decisions, according to more than 20 leading figures in the construction industry. The heads of some of the country’s biggest building groups have called on the Government, in a letter published in The Daily Telegraph today, to use the construction industry to stimulate the economy. The letter, signed by the chief executives of companies including Mace, Carillion, Severfield-Rowen, and Costain, says: “Even within current public sector spending restraint, there is more that could be done to stimulate construction and create growth – by speeding up decision making and finding new ways of financing construction projects. The construction industry has a part to play in this and is ready to deliver.”
Sir Mike Rake has sounded out investors about becoming chairman of Barclays and has told them he will quit the boards of easyJet and BT to do it. Barclays’ polo-playing senior non-executive director has told institutional investors he is ready to take over from Marcus Agius as chairman, The Daily Telegraph has learned. Shareholders believe that Barclays are also “working on a plan” towards his becoming chairman. On institutional investor said: “Sir Mike has made it clear he would do the job if required – and that appears to be Barclays’ plan too.” He added: “Barclays have indicated they want to appoint a permanent chairman quickly so they can get on a find a chief executive. Sir Mike fits the bill.”
Senior executives at HSBC have been called before the United States Senate to apologise for lapses in the bank’s money laundering controls. Stuart Gulliver, the chief executive, wrote to employees yesterday to explain what was happening and admit that the bank’s procedures had been inadequate.“It is right that we are held accountable and that we take responsibility for fixing what went wrong,” he told staff. HSBC has been under investigation in the US for several years in relation to its money laundering controls. Regulators have accused the bank of failing to police transactions that could have been linked to drug trafficking and terrorism. The bank has previously warned investors that it could face a “significant” fine as a result of these investigations. Analysts predict damages could reach hundreds of millions of dollars, The Times says.
Lloyds could have to pay out more than £1bn over claims it was involved in the manipulation of Libor, according to City analysts. In a note to clients this morning, analysts at broker Liberum Capital warned the market reaction to Lloyds’ potential exposure had been “too sanguine” and said the bank could face having to pay out at least £1.5bn. Liberum said investors were under the “mistaken impression” that because of the relatively small size of Lloyds’ derivatives book, which at £2.1tn is less than a tenth the size of Barclays’, the bank was “relatively insulated from this issue,” The Telegraph writes.
Britain’s export-led recovery has been jeopardised by the appreciation of the pound to a three-and-a-half year high against the euro, undoing the advantages gained by slashing interest rates and launching quantitative easing. Sterling has risen to its highest level against the euro since November 2008, when rate cuts began in earnest, on fears about the resilience of the single currency. The strengthening pound, which is now not far off its €1.35 highs of early 2008, is making UK exporters less competitive. The eurozone is a key trading partner, accounting for 40pc of all goods exported from the UK. In April, the trade deficit soared due to a slump in exports, although the gap was narrowed slightly in May. Ross Walker, UK economist at Royal Bank of Scotland, said that the main factor behind Britain’s persistent trade deficit was the weakness of demand in the Eurozone, but he added that the strengthening currency “is certainly not helping,” The Telegraph explains.
Riot police and protesting miners clashed in Madrid yesterday as the Spanish prime minister Mariano Rajoy announced further austerity measures. Fearing for their livelihoods, they had trudged day and night across the country to bring their protest to the capital and today the anger of Spain’s coal miners spilled over into violence on the streets of Madrid. As the miners marched down the city’s main boulevards, chanting, waving banners, brandishing sticks and setting off fire crackers amid clouds of thick smoke, they were confronted by riot police. Some threw and bottles at the police who were trying to contain them. Volleys of rubber bullets were fired into the crowds in response, with dozens of protestors led away in handcuffs, some with blood streaming down their faces. More than 20 people were injured, including police officers, demonstrators and onlookers, according to The Telegraph.
