Business news and markets: as it happened, April 25, 2013 – Telegraph.co.uk

16.51 A raft of disappointing earnings have dampened trader sentiment
today, with the FTSE 100 closing up just 10.83 points, or 0.2pc, at
6,442.59. The surprisingly positive GDP number fo the UK has had
little impact on trading today, according to William Nicholls, a
dealer at spread-betting group Capital Spreads:

The better than expected GDP figure of 0.3pc for the most recent quarter
brought good and bad news. Yes, the UK has avoided the triple-dip recession,
and yes, George Osborne has put a temporary gag on his doubters, and yes, it
is now slightly cheaper to go on holiday. However, the companies we work for
are now going to find it marginally harder to sell their products abroad
given the strengthening of Her Majesty’s finest. So let’s call it a draw and
appreciate that we must feel lucky compared to the majority of other
European nations, particularly after Spain posted unemployment at 27pc.

The result of all this quite rightly translates into no change for the FTSE
today.

16.39 Robert Peston, the BBC’s business editor, has just posted a blog
on why the Treasury
is still holding on to the bad bits of RBS:

As I understand it, the Treasury looked at a break up of this sort just a
couple of years ago.

And the primary reason it did not want to go ahead is that it would have to
find a way to fund these assets, these loans and investments: the amount
owed to RBS in this stagnant pool of assets is matched by funds RBS has
borrowed; so the government would have to borrow to cover the written down
value of the bad banks’ assets.

The amount of new gilts it would have had to issue a couple of years ago to
set up the bad bank was prohibitively great. But by the end of this year,
the funding requirement would be “just” £40bn.

However that is a large amount of additional borrowing for a government
struggling to reduce its annual deficit, or borrowing needs, from an
unsustainably large £120bn.

And there might be an unfortunate precedent for the Treasury if it were
prepared to borrow £40bn to sanitise RBS, because its critics might question
why it won’t do the same to finance substantial new infrastructure projects.

16.15 Cyprus is to begin debating the island’s €10bn bail-out deal next
Tuesday, state TV has reported.

The cabinet approved the rescue deal on Wednesday, with government spokesman
Christos Stylianides saying “ratification of the loan agreement is
expected after April 26.”

It is not known whether a vote will be held on the same day. However, if MPs
reject the proposals, it could throw the whole bail-out into doubt.

Akel with 19 seats, and Edek with 5 seats in the 56 seat Cypriot
parliament, have voiced anger over the high cost to Cyprus of the
deal, which has surged from €7.5bn to €13bn, putting the teetering economy
under more pressure. The government needs 29 votes to push the bill through.

15.47 Barclays‘ remuneration plan has been approved by shareholders,
with 94.7pc voting in favour.

The bank said 5.3pc voted against the pay plan, but this is well below the
26.9pc who rejected the resolution a year ago.

15.22 Back with Europe, another member of the ECB’s executive board
– Joerg Asmussen – has been talking on the topic of austerity. He urged
governments to push on with budget consolidation and reform. He said:

Delaying fiscal consolidation is not an easy way out. If it were, we would
have taken it. Delaying fiscal consolidation is no free lunch. It means
higher debt levels. And this has real costs in the euro area where public
debts are already very high.

His comments were sharply at odds with those of David Lipton of the IMF.
He said:

There is … a risk that Europe could fall into stagnation, which would
have very serious implications for households, companies, banks and other
bedrock institutions,” IMF First Deputy Managing Director David Lipton
told a conference in London.

To decisively avoid that dangerous downside, policymakers must act now to
strengthen the prospects for growth.

15.15 The Serious Fraud Office has just confirmed that it has
launched a criminal investigation into ENRC. We mentioned at 14.59 that
there had been inklings this afternoon that an investigation was in the
offing.

15.11 Benoit Coeure, a member of the European Central Bank, has been
speaking at an event in Brussels today. He claimed that depositors in the
eurozone have not pulled out their savings even after some large depositors
were forced to take losses in bailing out Cyprus. He said:

We don’t see stress on deposits, we are not seeing stress on deposits since
the Cypriot decisions and resolution. Concerns and worries are legitimate
and they have to be addressed, but we are not seeing deposit stress in the
euro area.

14.59 Louise Armitstead has more details on those reports we
mentioned at 13.30 about shares
in Eurasian Natural Resources Corporation falling amid suggestions
that the Serious Fraud Office have started an formal investigation into
bribery allegations at the miner. She writes:

The SFO is expected to confirm that it has taken over an internal
investigation by the mining giant into allegations made by a whistleblower
relating to its operations in Africa and Kazakhstan. Shares dropped more
than 3pc this afternoon.

The investigation was being led by Mehmet Dalman, the chairman of ENRC who
resigned from the company unexpectedly this week. “I believe I have achieved
all that I can as chairman of ENRC and it is therefore appropriate to hand
over the reins to new leadership,” said Mr Dalman on Monday.

Since falling earlier this afternoon, ENRC has now bounced back by 1.8pc.

14.39 Trading has kicked-off in the US, and it’s been a fairly muted
start to the session. The Dow Jones Industrial Average is flat and
has edged up less than a point, mirroring the FTSE 100, which is down
just five points this afternoon.

On a seperate note, the experts at Investec have examined the
possibility of a rate cut by the ECB next week. Speculation of
further easing by the central bank has driven European equity markets higher
in recent days, but the Investec economists don’t think one is coming just
yet:

The ECB meets in Bratislava next week with its next monetary policy
announcement due at 12.45pm on Thursday (2 May) and President Draghi’s press
conference following at 1.30pm. We judge that the ECB is on the verge of
reducing the main refinancing rate either in May or June, but on balance we
suspect that move is more likely to come at the June meeting. Hence, whilst
a very close call, we see the ECB maintaining the refi rate at 0.75pc, the
deposit rate at zero and the marginal lending rate at 1.5pc.

14.35 Telegraph correspondent Robert Watts has been
rounding up some of the political reaction to today’s GDP figures. He writes
that business secretary (pictured above) Vince
Cable has warned of “serious issues” facing the economy –
despite the 0.3pc rise in GDP. John Mann, a Labour MP on the House of
Commons Treasury Committee, warned that today’s figures confirmed “the
Japan-isation of the British economy”. The MP said told the BBC:

In Japan, their economy stagnated – sometimes it went down to below zero,
sometimes just above it, but it kept on this very low-growth trend and kept
there for 15 years and it’s been a disaster for Japan.

We are in the same cycle and breaking out of it will need a change of
policy. It’s the trend that’s the problem, that we have this continuous
virtually-no-growth trend and we are falling further and further behind our
competitors.

14.13 Ambrose Evans-Pritchard reports that Japanese
investors are repatriating funds from around the world at an accelerating
pace, dashing hopes that stimulus from the Bank of Japan will flood
global asset markets with newly-printed money. Ambrose writes:

Fresh data from Japan’s finance ministry showed that large banks, insurers,
and pension funds sold a net $8.7bn in foreign bonds and stocks last week,
bringing the total to $35bn over the last six weeks.

Analysts had expected the big institutions to start chasing global assets
in a revival of the “yen carry trade” after dramatic policy shift
by the Bank of Japan’s new team under Haruhiko Kuroda, but the
fondly-awaited “wall of money” has yet to materialise.

Instead, Tokyo’s behemoth funds are cashing windfall gains abroad generated
by the 20pc slide in the yen since July, rotating the profits into assets at
home.

“We have looked at the flow data and contrary to high hopes our
clients have not bought a single Italian or Spanish bond,” said an
analyst at one Japanese bank.

14.07 David Lipton, the International Monetary Fund‘s First
Deputy Managing Director, has been speaking in London today. He praised “important
steps” taken by eurozone governments to combat the region’s
long-running crisis.

However he added that there are “crucial reforms that Europe still needs
to adopt if it is to place the crisis in the rearview mirror and finally
return to growth and job creation. That process is by no means assured, but
it is attainable.”

13.51 On the other side of the Atlantic, Harley-Davidson has
posted sharply higher profit. The motorbike maker, which has been revamping
its manufacturing operations in recent years to cut costs, posted a
first-quarter profit of $224.1m, up from $172m a year ago.

The rise in profits came despite a 13pc fall in sales of its motorcycles in
the US and Canada. Sales were also lower in Europe, the Middle East and
Africa.

13.42 A taster of what’s happening over on Gerard
Lyons’ live webchat with Telegraph readers about the outlook for
Britain’s economy.

Asked if it is still possible we could get stuck in a Japanese-style lost
decade, Boris Johnson’s chief economic adviser answered:

Japan’s buble burst in 1989. But from 1990 to 1997 employment in Japan kept
rising (like the UK now) and then Japan had its “Lehman’s moment”
in 1997-98, the economy continued to see land prices fall, finally bottoming
about 2006 and for the last two decades Japan has under-performaned. Is it
possible we could suffer a bad fate in the UK – Yes, is the answer, but I
don’t think we will. I think the UK is suffering from a lack of demand, a
lack of lending and from a lack of confidence. We – like the US and others –
have learnt some from Japan’s performance. So I think we will avoid the
worst case of Japan.

Do join the webchat and put your question to Gerard.

13.37 Data from the other side of the pond shows that the number of Americans
filing new claims for unemployment benefits fell last week. Initial
claims for state unemployment benefits dropped 16,000 to a seasonally
adjusted 339,000.

Those figures should offer some reassurance that the bottom is not falling out
of the labour market despite signs of slower growth.

13.30 Ben Martin writes: Shares in Eurasian Natural Resources
Corporation have come under pressure this afternoon following a
Bloomberg report that the Serious Fraud Office has opened a formal
investigation into allegations of bribery. That has knocked ENRC shares 2pc
to the bottom end of the FTSE 100.

13.22 Gerard Lyons, Boris Johnson’s chief economic adviser, is taking
your questions now in our live webchat.

13.14 George Obsorne has been speaking
to Sky News about the GDP figures. He described them as an “encouraging
sign” that the economy is healing. But the Chancellor doesn’t “for
a second pretend it’s an easy road ahead”. He says we will have to go
on making difficult decisions and build an economy that’s fit for the
future.

12.55 Andy Haldane, the Bank of England’s director of financial
stability, has been speaking at a summit hosted by The Economist. He
has said that forcing banks to hold adequate levels of capital won’t hamper
their ability to feed credit to the economy.

“This argument makes no logical sense whatsover,” said Mr Haldane. “The
only way we will get credit channels working properly is by having a banking
system that is adequately capitalised.”

12.50 It’s almost time for the Telegraph’s
live webchat with Gerard Lyons, Boris Johnson’s chief economic
adviser. Is Plan A working? Does a credible Plan B exist? Put your questions
to Gerard from 1.15pm.

Readers can submit their questions to Gerard by:

• Emailing financewebchat@telegraph.co.uk

• via Twitter by tweeting @telefinance

• or by using the Twitter hashtag #askgerard.

You can also submit questions during the webchat.

12.43 Christopher Williams, our technology correspondent,
reports that Google’s
rivals have begun to weigh in on the detail of concessions it has
offered to European competition watchdogs, as the search engine aims to
avoid costly litigation.

The European Commission has published the detail of the proposed deal for the
first time. In response to accusations that it abuses its dominance of the
general web search market, Google would take measures such as display links
to three rival specialised search services close to its own services.

But, critics have described the proposals as “half-hearted”.

12.33 At 10.56, we promised you a blog from Ambrose Evans-Pritchard
on the GDP figures. Here
it is.

12.28 On another German note, the country’s government has
insisted today that it could “look to the future with optimism”,
despite recent underwhelming economic data. “2013 will be a good year,”
economy minister Philipp Roesler said, unveiling a slight upgrade in
Berlin’s growth forecast for the current year to 0.5pc from a previous
prognosis of 0.4pc.

“We have every reason to look to the future with optimism. The German
economy is picking up. It is leaving the winter behind it. The labour market
is keeping up its momentum, with employment set to rise and unemployment
expected to fall,” Mr Roesler said.

12.19 Back with the individual movers in the London stock market, Ben
Martin writes: The precious metals miners, which took a drubbing
last week following the plunge in the gold price, are on buoyant form today.
A 1.7pc rise in the spot gold price has helped Randgold Resources
advance 4.3pc – the biggest riser on the FTSE 100 – while both Centamin,
up 6.8pc, and Petropavlovsk, 5.5pc higher, are among the
best-performers on the mid-cap index. Traders also said the miners were
benefiting as investors rotated back into the sector from more defensive
stocks.

12.13 Let’s return to continental Europe for a moment. Angela Merkel (pictured
below), Germany’s chancellor, has said that the European Central Bank
would have to raise interest rates if it were looking at Germany alone. But
she added that the bank was in a difficult position because economic
performance varies widely across the eurozone. Mrs Merkel said at a banking
conference:

The ECB is obviously in a difficult position. For Germany it would actually
have to raise rates slightly at the moment, but for other countries it would
have to do even more for more liquidity to be made available and especially
for liquidity to reach corporate financing.

If we want to get back to a bearable interest rate level, then we have to
get over this internal division of the euro zone.

Her unusually outspoken comments come as the central bank appears to be closer
to lowering interest rates than at any time since it last cut them in July
2012. It could shave a quarter point off rates next week.

12.04 Although Britain has avoided a technical recession, how do you
feel the economy is doing? Do you feel like things are improving, or do you
feel like the 2008 recession never ended? Vote in our poll and let us
know:

Britain may not be in a technical recession, but how do you feel?

11.52 At the Barclays AGM, it sounds like the board are being
taken to task by her lady in a 70s. She has told the board that she is
giving away her house to a children’s charity and challenges them to do the
same, according to a tweet from Jill Treanor of The Guardian.

11.45 If you read Jeremy Warner‘s blog on the GDP figures
(mentioned earlier at 10.42), you might also like to watch his views on that
surprise economic expansion:

11.39 Back to the Barclays AGM and Sir David Walker says the
bank is “on a journey” when it comes to accounting standards:

11.30 Let’s round up a bit more reaction to those GDP figures
out this morning, which showed a surprise 0.3pc expansion in economic output
during the first quarter. What do businesses make of the figures?

Colin Stanbridge, chief executive of the London Chamber of Commerce,
said:

It is welcome news that the UK economy has not fallen back into technical
recession, as a return to contraction could have stymied the rising levels
of confidence that businesses have been reporting over the last few
quarters.

However, if it was not clear already, these latest figures highlight the
fact that growth prospects across the UK economy remain stagnant at best.
With the forthcoming Comprehensive Spending Review it is essential that the
Chancellor makes bold choices to re-prioritise spending towards those areas
that will drive growth, such as infrastructure investment and international
trade.

John Cridland, director general of the CBI, commented:

What Britain’s economy now needs to see in the coming months is a recovery
in manufacturing output, helped by a brighter global outlook.

The Government must build on these emerging signs of confidence by getting
behind Britain’s entrepreneurs and exporters.

Graham Leach, chief economist at the Institute of Directors, said:

The GDP figures are good news just when we needed it. Despite the squeeze
on real earnings and the negative impact on confidence from the euro crisis,
money supply growth has picked up and with more money sloshing around there
has been more growth. We shouldn’t get too excited about 0.3 per cent
quarterly growth, but it does provide relief from all the doom and gloom.

11.21 Harry Wilson, the Telegraph’s banking editor, tweets that Barclays‘
chief executive (pictured above) has been applauded at the AGM:

11.18 Earlier today (at 09.19), we mentioned that Barclays today
published its response to the Salz Review. The bank is also hosting its AGM
today and Jill Treanor of the Guardian tweets that a large snake of
investors were waiting to get in. Antony Jenkins, Barclays’ new chief
executive, was also chatting to shareholders before the formal meeting
started at 11, she says. Barclays’ chairman is addressing the meeting and
Jill tweets:

11.06 Here’s what Ed Balls MP, Labour’s shadow chancellor, had
to say about the GDP figures. He claims the figures show the economy is only
just back to where it was six months ago:

These lacklustre figures show our economy is only just back to where it was
six months ago and continue the picture of flatlining we have seen since the
last spending review. David Cameron and George Osborne have now given us the
slowest recovery for over 100 years.

This stagnation in our economy is the reason why people are worse off than
when this government came to office. They took an economy that was starting
to grow strongly, with falling unemployment and a falling deficit, and
delivered stagnation, rising unemployment and £245 billion more borrowing
than planned. The government’s economic policies have failed and Britain’s
families and businesses continue to pay the price.

11.00 On the stock market, Ben Martin writes: While shares in
Admiral, AstraZeneca and Unilever are all under pressure in the wake of
their latest trading updates, British American Tobacco appears to
have pleased with its progress report. BATS shares have climbed 2pc this
morning – one of the biggest risers on the FTSE 100 – after the
company reported a 5pc rise in sales, excluding currency fluctuations, in
the first quarter, ahead of market estimates. Analysts at Panmure Gordon
reiterated their “buy” recommendation on the stock today:

The impressive pricing performance in Q1 demonstrates to us the attraction
of BATS. We expect the company to deliver c.11pc adjusted earnings-per-share
growth in [the 2013 full-year].

10.56 And back to GDP. Ambrose Evans-Pritchard has just filed a
blog, which will be live very shortly. As a taster, he will say that “fiscal
prime-pumping” has averted a triple-dip. And “lest anybody draw
the idotic conclusion that Britain’s 0.3pc rebound in the first quarter
validates ‘naked’ austerity'”, Ambrose will present three points that
suggest otherwise…

10.47 Stepping away from GDP for a moment, Jim O’Neil is to step down
as chief executive of UKFI, the company which manages the
Government’s shareholding in Royal Bank of Scotland and Lloyds Banking
Group. He is moving to a senior role at Bank of America Merrill Lynch.

Mr O’Neil said: “I wish to thank my colleagues at UKFI as well as
everyone at HM Treasury, Lloyds, RBS and UKAR for all of their support. I
look forward to watching UKFI’s continued progress. It has been a privilege
to work on behalf of taxpayers during such a challenging period for the
banking sector.”

10.42 The Telegraph‘s Jeremy Warner has written an
instant reaction to the surprise rise in GDP. He writes that they show growth
is triumphing over fiscal austerity:

The Chancellor would have performed a little jig when he learned of the
first quarter GDP figures. With output up 0.3 per cent, Labour has been
denied the prize of a triple dip recession. What is more, the figures
confirm the pattern established over the last year or so of a very slow
upward trend in the economy. The emphasis here has to be on the “very”,
but none the less this is not quite the “flat lining” economy
which the shadow Chancellor, Ed Balls, delights in calling it.

Services and government spending have once more saved the day, with
construction and manufacturing again showing some shrinkage. Not for the
first time, the idea that fiscal “austerity” is proving a
significant drag on output is contradicted by the raw data.

10.33 And to see just how pronounced sterling’s ascent has been
this morning, our graphics team has pulled togther this chart showing the
pound’s performance:

10.26 If you want to read all the details of the ONS release on GDP,
you can get it here;
and you can watch the announcement here:

10.21 Sterling is now up just over 1pc against the dollar to
$1.5435.

Commenting on the pound’s ascent, Chris Redfern, senior dealer at Moneycorp,
said:

The markets expected a moderate return to growth, and Sterling had
appreciated ahead of the announcement.

But such a strong rebound promptly sent it skywards. The Pound leapt to a
two-month high against the Dollar and a three-week high against the Euro.

…

Compared to the Eurozone’s five straight quarters of declining output, the
UK’s economy – and Sterling’s prospects – are both looking up again.

10.16 Deloitte’s chief economist, Ian Stewart, points out though that
the outlook for the rest of the year is not very sunny. He writes:

The UK has dodged a triple dip recession in the first quarter and shown
surprisingly positive growth, helped by expansion in the service sector.

But these numbers are less impressive and less important than they seem.
GDP growth is erratic and first estimates of growth are often prone to large
revisions.

The big picture is of an economy that has grown by just 0.4% in the last 18
months. The UK economy is past the worst, but the outlook is still for
choppy, sluggish growth through the rest of this year.

We’ve rounded up further City reaction to the GDP figures here.

10.10 Continuing the optimistic theme, our economics editor Philip
Aldrick tweets:

10.08 Having earlier feared that the GDP figures would prove an
anti-climax (see 09.28), Michael Hewson of CMC Markets tweets:

10.06 There’s relief all round that these figures are better than
hoped, but the rate of economic activity is far lower than before the
crisis hit. The ONS points out that before the sharp fall in 2008 and 2009,
the economy peaked in the first quarter of 2008. The lowest level was seen
in 2009. According to the ONS, GDP in the first quarter of 2013 is estimated
to be 2.6pc below the peak in the first three months of 2008.

09.59 This handy chart from the ONS highlights the contribution made
from different industries to the overall GDP change. You can see clearly
here that the contribution from services is markedly greater:

09.54 Echoing that point about the IMF, Ed Conway of Sky News points
out that with the IMF arriving in Britain next week, these figures
will help strengthen Osborne’s hand:

09.50 Rob Carnell of ING says that following the recent spat with the
International Monetary Fund over the UK’s austerity plans, George Osborne
can allow himself a “moment of smugness” following the much better
than expected 0.3pc increase. Rob does add some caveats:

Admittedly, these preliminary figures are based on scant real data, and are
subject to average revisions of around 0.4%QoQ, so it may turn out that
despite this, the UK really is in its third technical recession after all
the revisions are through. But hopefully this will not be the case, and we
can look forward to some more growth in the quarters ahead as the funding
for lending scheme helps re-invigorate both mortgage lending and SME
lending.

He concludes:

This better UK data is “one in the eye” for the IMF, which recently and
publically criticised the UK government’s deficit reduction approach, and is
also a thumb to the nose for the ratings agencies, which have largely blamed
the UKs growth performance for recent downgrades. We do not expect this GDP
result to let the Bank of England off the hook. There is clearly still work
to be done. The economy’s recovery path is still very shallow. But this
release might delay any further increase in the asset purchase scheme,
though we still expect more QE in the months ahead.

09.46 Unlike sterling, the FTSE 100, which is focused to a great
extent on the international economy, is little moved by the surprisingly
positive UK GDP figure and is down 15 points. However, it’s worth noting
that the mid-cap FTSE 250, which is considered as having much greater
exposure to the domestic economy, is up 50 points, or about 0.4pc, this
morning.

09.44 The ONS says that by far the largest contribution to GDP growth
came from services, which grew by 0.6pc. Production grew by 0.2pc,
largely due to mining and quarrying. That helped offset a fall in construction,
which fell by 2.5pc.

Commenting on the Arctic spring we’ve all endured, the ONS said:

At this stage the snowfall and cold weather during Q1 2013 appears to have
had a limited impact on GDP growth. The strongest evidence was that it
reduced retail output in January and March 2013 but boosted demand for
electricity and gas in February and March, which increased output in the
energy supply industries.

09.38 The pound has shot up on the back of that surprise rise in GDP. Sterling
is up 0.9pc to $1.5401 – a two-month high – and against the euro, it’s
up 0.73pc to €1.1816.

09.36 Here’s what George Osborne had to say on Twitter about
those figures:

09.34 A little more detail on those GDP figures. The Office for
National Statistics has said that Britain’s GDP rose 0.3pc in the first
quarter of the year. That comes after GDP shrank 0.3pc
quarter-on-quarter in late 2012 and beats expectations for a 0.1pc rise.
Year-on-year, GDP was 0.6pc higher, the strongest rise since the end of
2011.

09.30 A surprise after all! UK has defied recession, with economy
growing 0.3pc in the first quarter.

09.28 Michael Hewson of CMC Markets is clearly not expecting many
surprises from the GDP figures:

09.26 Back in London’s stock market, traders have driven shares in
motor insurer Admiral down 1.6pc after the group disappointed with
its first-quarter numbers. Admiral reported a 6pc fall in group revenue,
with UK car insurance turnover slipping 9pc. Numis analyst Nick
Johnson decided to keep his “reduce” recommendation unchanged this
morning:

The dividend yield of 6.6pc suggests better value but lack of earnings
cover means the yield is completely exposed to earnings setbacks.

09.24 Still with banking, Santander, Spain’s biggest bank, has
this morning revealed that first-quarter profit fell 26pc as revenues in its
home market, Brazil and the UK slipped. Net income fell to €1.21bn from
€1.63bn in the same period a year earlier.

09.19 Barclays’ Salz Review response, whose front cover is emblazoned
with the word ‘Integrity’, also says that the bank intends to develop “open,
transparent, cooperative” relationships with regulators globally.

09.16
Barclays has this morning published its response to the Salz Review.
This report into the bank’s cultural failings was published earlier this
month. At the time, Philip
Aldrick wrote:

Barclays trashed its reputation by letting an overpaid cadre of investment
bankers “lose a sense of proportion and humility” and by refusing to comply
with the spirit of financial regulation, a seminal report into the bank’s
cultural failings has found.

Anthony Salz, a corporate lawyer and investment banker who led a review
commissioned by the bank in the wake of the Libor rigging scandal last July,
said in his report: “We could not avoid concluding that pay contributed
significantly to a sense among a few that they were somehow unaffected by
the ordinary rules.

“A few investment bankers seemed to lose a sense of proportion and
humility… We concluded that the reputational problems stem in part from
the perception that, at least in the UK, some bankers have appeared
oblivious to reality.”

Today, Barclays has said that it will work on compensation, including a “rigorous
review of remuneration” for high earners. Its remuneration committee
will also consider more simplicity and transparency in LTIP awards.

09.03 Sterling is keeping its head above water ahead of this morning’s
GDP figures. The pound is marginally higher against the dollar at $1.5290.
But if the GDP figures show the economy has contracted, analysts reckon the
pound could be vulnerable. Richard Driver, an analyst at Caxton, told
Reuters: “There’s a surprising confidence in the market that UK GDP
will rise by 0.1pc or better. Even if it is a flat reading, I think sterling
will take a battering and fall by at least a cent.”

08.53 Andrew Oxlade, our personal finance editor, reports this morning
that MPs
have demanded a ban on ‘damaging’ pension fees. Andrew writes:

Employees saving into company pension schemes are being needlessly hit with “damaging”
hidden charges, say MPs.

The Work and Pensions Committee said the the fees can wipe huge chunks off
a retirement pot and should be banned.

Currently employers can pass on the costs of financial advice given to them
to help them choose and manage a pension scheme on to their employees, in
the form of extra “consultancy” charges.

An investigation by Which? last month warned these fees could wipe out 50
per cent of savings in some cases. The consumer group submitted an example
to the committee where an initial charge to each scheme member of £600 was
made over 12 months followed by an ongoing £60-a-year charge.

08.47 Rescue workers are still searching
for survivors in the rubble of the Rana Plaza building (pictured
below) in Bangladesh, which collapsed yesterday. Four garment
factories occupied six of the building’s eight floors, including New Wave
Style, which lists retailers such as Primark among its customers.

In a statement released on their website, a Primark spokesman said:

The company is shocked and deeply saddened by this appalling incident at
Savar, near Dhaka, and expresses its condolences to all of those involved.

Primark confirms that one of its suppliers occupied the second floor of the
eight storey building, which housed several suppliers to the garment
industry making clothing for a number of brands.

Primark has been engaged for several years with NGOs and other retailers to
review the Bangladeshi industry’s approach to factory standards. Primark
will push for this review to also include building integrity.

Meanwhile Primark’s ethical trade team is at this moment working to collect
information, assess which communities the workers come from, and to provide
support where possible.

08.38 Ben Martin, our markets reporter, writes: Suffering the heaviest
fall on the FTSE 100 is consumer goods giant Unilever, down
2.3pc. The group posted first-quarter organic sales growth of 4.9pc that
came in below analyst expectations of 5.6pc and is weighing on the shares
this morning. Here is Oriel Securities take on the numbers:

Unilever’s Q1 matched the pattern of recent results with strong double digit
emerging markets growth (57pc of revenue) and a sluggish performance in
mature markets. As expected, unfavourable currency movements prompted
reported sales to be flat in the quarter.

Another notable blue-chip faller is drugmaker AstraZeneca, which has
lost 0.9pc after reporting weak first-quarter numbers of its own (see
7.50).

But a riser to watch is Vodafone, 1.2pc better in early trade. Reuters
is reporting that Verizon Communications, the British company’s
partner in the US, is gearing
up for a possible bid to buy-out Vodafone’s 45pc stake in their joint venture.Traders
are not unfamiliar with this story, as rumours and speculation have swirled
around a potential deal for months.

08.35 Still on a European note, The
Guardian has published today the results of a poll suggesting that public
confidence in the European Union has fallen to historically low
levels in the six biggest EU countries. The Guardian writes:

Figures from Eurobarometer, the EU’s polling organisation, analysed by the
European Council on Foreign Relations (ECFR), a thinktank, show a
vertiginous decline in trust in the EU in countries such as Spain, Germany
and Italy that are historically very pro-European.

The six countries surveyed – Germany, France, Britain, Italy, Spain, and
Poland – are the EU’s biggest, jointly making up more than two out of three
EU citizens or around 350 million of the EU’s 500 million population.

The findings, published exclusively in the Guardian in Britain and in
collaboration with other leading newspapers in the other five countries,
represent a nightmare for Europe’s leaders, whether in the wealthy north or
in the bailout-battered south, suggesting a much bigger crisis of political
and democratic legitimacy.

The newspaper continues that the most dramatic fall in faith in the EU has
occurred in Spain, where the banking and housing market collapse, bailout
and unemployment have conspired to produce 72pc “tending not to trust”
the EU.

08.24 Back with those Spanish unemployment figures, showing that
the jobless rate soared to a record 27.2pc in the first quarter, Jamie
McGeever of Reuters tweets this chart of Spanish unemployment going
back nearly 40 years, which he rightly calls “depressing”:

08.16 The opening bell has rung in London and stock market trading is
underway, with investors pushing the FTSE 100 higher in early deals.
The blue-chip index, which has been bolstered in recent days by market hopes
of further easing from the ECB, has advanced 24 points, or 0.4pc, to 6,456
and the mid-cap FTSE 250 has put on 44 points to 13,939. Yesterday’s
poor reading from Germany’s IFO survey of business confidence has fuelled
expectations the central bank will lower rates. Here is what Ian Williams, a
strategist at Peel Hunt, had to say about it this morning:

ECB rate cut speculation has intensified in the wake of the weak German IFO
reading. April’s headline reading slipped back to 104.4 (from 106.7), with
both the current and expectations measures lower in response to a cocktail
of concerns at home and abroad, most obviously the Cyprus crisis and the
slowdown in the Chinese economy.

08.15 Rebecca Clancy writes that Spain’s unemployment figures
are out and show that the jobless rate soared during the first quarter to a
new record 27.2%, up from 26% and far more than the expected 26.5%.

08.05 And you can read Brian Binley MP‘s full comment,
written for Telegraph.co.uk, here.

08.04 Well, this is just what George Osborne needs to hear as he
crunches his cornflakes ahead of the GDP figures this morning. The
Telegraph‘s Christopher Hope reports that Brian
Binley MP has claimed that a “cautious and timid” Osborne
has damaged the economy by not taking bolder measures three years ago.
Christopher writes:

Brian Binley MP, vice-chairman of the Business, Innovation and Skills
Committee, accused the Chancellor of being too “timid” at taking
measures to restore economic growth.

Mr Binley’s outspoken criticism comes hours before the Office for National
Statistics discloses today whether Britain has entered an unprecedented
triple dip recession when it publishes economic output figures for the first
three months of 2013.

…

Writing on telegraph.co.uk, Mr Binley praised Mr Osborne as “a very
bold and capable politician. He prides himself on his acumen and tactical
instincts. He has been especially adept at confronting the inadequacies of
the response of our opponents to the situation which we face.

“He has managed the Treasury in the context of a coalition government
with a far greater degree of natural flair than many of his Cabinet
colleagues have managed in their own departments. Our Chancellor is not a
man usually found lacking in confidence or ability.”

But he added: “That is precisely why it is so curious that he has
proven to be so timid on the one, over-riding issue so fundamental to the
life of this Parliament: restoring economic growth.”

07.56 In case you missed it last night, here’s the latest comment from Ambrose
Evans-Pritchard. He argues that Italy
needs a Churchillian leader to fight the ‘war damage’ of EU
austerity. Here’s a taster:

Incoming prime minister Enrico Letta is no doubt a decent, steady,
honourable technocrat. He has good intentions. He vowed on Wednesday to lead
the charge against austerity in Europe.

Yet it is hard to imagine a man less inclined to throw down the gauntlet
and force a radical change in EU policy before Italy’s economy chokes to
death. He grew up in Strasbourg. He wrote his PhD on EU community law.

He is just as wedded to the EU Project as the man he replaces, ex-EU
commissioner Mario Monti, who surrounded himself in Rome with Brussels
emigres still on the EU payroll.

07.50 Back with corporate news, Rebecca Clancy reports that
AstraZeneca’s pre-tax profits fell 36pc in the first quarter as it lost the
exclusivity on several large drug products. She writes:

Britain’s second largest drug maker reported a drop in profits to $1.3bn in
the first three months of the year, down from $2bn over the same period in
2012, according to its latest results.

Revenue also declined in the first quarter, falling 13pc to $6.39bn, down
from $7.4bn the previous year.

Patent expiries took a heavy toll on the company, with the biggest damage
caused by loss of exclusivity on antipyschotic medicine Seroquel and heart
drug Atacand in many markets, and on cholesterol fighter Crestor in Canada.

The group reiterated its expectation for a mid-to-high single digit
percentage fall in revenue this year, with earnings declining significantly
more due to increased operating costs.

07.44 Never mind Britain’s economic growth, figures out overnight show
that South Korea’s economy expanded at its fastest pace in two years
in the first quarter. Data showed that the economy grew by a seasonally
adjusted 0.9pc from a weaker fourth quarter of 2012; compared with a year
earlier, it grew by 1.5pc – a pace unchanged from the fourth quarter.

Although the economy is growing, a consumer downturn and concern over exports
– both of which help fuel the South Korean economy – have compelled the
country’s government to produce a $15.5bn extra budget and stimulus package.

Before the financial crisis took its toll, South Korea’s economy used to grow
at 4pc or more.

07.36 Sticking with consumer goods, British American Tobacco has
also updated on trading. The maker of Dunhill and Lucky Strike said it was
confident earnings would rise this year after it reported a 1pc rise in
volumes of its premium brands like Kent in the first quarter of this year.

The world’s second biggest cigarette maker said that revenues had grown by 1pc
at current rates of exchange. Nicarando Durante, the company’s chief
executive, described it as a “good performance against a backdrop of
fragile economic conditions persisting in many parts of the world”.

07.30 Let’s take a look at some of the corporate results out this
morning. Unilever, which makes Dove soap, Persil detergent and Ben &
Jerry’s ice cream, said turnover increased by 0.2pc to €12.2bn in the first
quarter of the year.

Paul Polman, Unilever’s chief executive, said:

Emerging markets delivered double digit growth for the eighth successive
quarter and represented over 57pc of our turnover. This strong performance
reflects the impact of our successful innovations, the introduction of our
brands into new markets, improved product quality and competitive in-market
execution.

Despite the very cold spring, ice cream sales ticked up slightly. Unilver
makes Magnum ice cream (pictured below), which it says is now a €1bn
brand.

07.24 Once the GDP figures have been released and you’ve had time to
digest them, join our
live webchat at lunchtime with Gerard Lyons. Boris Johnson’s chief
economic adviser will be taking your questions from 1.15pm on Britain’s
economic health.

Readers can submit their questions to Gerard by:

• Emailing financewebchat@telegraph.co.uk

• via Twitter by tweeting @telefinance

• or by using the Twitter hashtag #askgerard.

You can also submit questions during the webchat.

07.13 Looking ahead to what’s happening today, the main event will be
the release of Britain’s latest GDP figures at 9.30am.

We will find out then if the country’s stagnant economy has slipped back into
recession. Economists estimate that the economy will have eked out growth of
0.1pc in the first three months to March, according to a poll by the
newswire Reuters.

That would avoid a second quarter of contraction – the definition of a
recession – after it shrank by 0.3pc in the last three months of 2012.

07.10 And on our business pages, we lead with James Quinn‘s
story that Lloyds
Banking Group contacted European regulators about the possibility of a
six-month extension to dispose of its 632 branch estate before the
Co-operative Group pulled out of the £750m deal to buy it.

He writes:

In an interview with The Daily Telegraph following the collapse of the
deal, Lloyds chief executive Antonio Horta-Osorio admitted that the bank had
previously spoken to “all the relevant authorities” as it sensed the deal
would not be done before the November 2013 deadline imposed by the European
Commission.

In a series of comments on the ill-fated deal, Mr Horta-Osorio did not say
when exactly the approach to the EC was made, but intimated that he believed
an extension is likely to be granted. It will give Lloyds breathing room to
complete the separation of the branch business – known internally as Project
Verde – from its existing business and prepare it for a stock market float,
expected in the first quarter of 2014.

07.05 And the business pages…

The Financial Times reports that Starbucks
has launched a US offensive to protect and expand tax breaks on
foreign profits – just months after its tax structure provoked a political
backlash and public relations crisis in the UK.

Its Companies & Markets section leads on Permira
underlining how the private equity industry is shrinking by
revealing it has amassed just €2.2bn for a new fund, taking it only halfway
towards a fundraising target that is a fraction of its last pool of capital.

The Guardian writes that George
Osborne’s hopes of injecting fresh competition into high street banking
were dashed on Wednesday after the Co-operative Group pulled out of talks to
buy 632 branches from Lloyds Banking Group.

The Times leads with bankers on Wednesday playing
down suggestions that the Funding for Lending scheme would deliver a
dramatic boost to small business lending – only hours after the Bank
of England had launched a long-awaited revamp.

The Independent reports that the Co-operative Bank has pulled out of a
£750m deal to buy more than 600 branches from Lloyds Banking Group in a move
critics described as “false start” for the high street banking revolution.

07.00 Now for a look at this morning’s papers…

Robert Winnett reports in The Daily Telegraph that GPs
are being blamed for a crisis in out-of-hours health care. He writes
that the Health Secretary will warn today that the failure of GPs to provide
out-of-hours care has forced millions of extra patients to attend hospital
accident and emergency departments, where they do not get the medicines,
checks or support they need.

The Times leads with David Cameron bringing Boris Johnson’s brother,
Jo, into Downing Street as head of No 10’s policy unit. The Orpington MP is
the younger brother of the London Mayor.

On the Independent‘s front page, their health editor Jeremy Laurance
reports that one million children who missed out on the MMR vaccine around a
decade ago are to be targeted in a national campaign to raise the level of
protection against measles.

The Guardian leads with a poll suggesting that public confidence in the
European Union has fallen to historically low levels in the six biggest EU
countries, raising fundamental questions about its democratic legitimacy
more than three years into the union’s worst ever crisis

06.55 Good morning and welcome to our new daily business and markets
live blog, your one stop shop for all the breaking business stories of the
day.