French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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Norovirus Cruise: 'Outbreaks' On Two Ships

More than 400 passengers and crew have been sick with vomiting and diarrhoea as suspected norovirus hits two cruise ships sailing in the Caribbean.

Both luxury liners, the Queen Mary 2 and the Emerald Princess, reported the outbreak to the Centres for Disease Control, following guidelines that come into play when more than 2% of the passengers and crew are laid low.

The US public health agency said it was still conducting lab tests to determine the pathogen, but it said norovirus was suspected.

On Cunard's Queen Mary 2, which left New York on December 22 for a 10-day cruise, 194 passengers and 11 crew members of the more than 3,800 people were reported ill, the CDC said.

And on the Emerald Princess, owned by Princess Cruises, which returned to Fort Lauderdale on December 27, 189 passengers and 31 crew members of the more than 4,400 people on board fell sick, the CDC said.

The CDC said both liners had taken steps to stem the outbreak, including cleaning and disinfecting more often, as well as keeping passengers informed.

Passengers were told to avoid the buffet

But Sue Hayes, from Arkansas, said she was on the Emerald Princess and her husband fell ill. She has been critical of how the crew members handled the crisis.

"It started just a couple of days into the cruise and has affected so many that the staff can't keep up with what they have to do for those who are sick," she said on Facebook.

"I have to phone to get the room cleaned because there aren't enough staff to even get clean towels and the room stewards are not allowed to come into the room.

"I have gone and got food for him because it may be a long time to get it delivered, like two hours after scheduled."

Some people who said they were on the Queen Mary 2 said on Cruise Critic that they were advised to avoid the buffet because of the sickness and that infected passengers were being kept in their rooms.

"I have never felt as sorry for the staff as I do now. They are working round the clock battling this situation," Andiamo said on the blog.

"It is serious, but in my opinion it is being handled very well.

"The festivities continue and those of us who have avoided this virus continue to enjoy the many offerings we come to expect and appreciate.

"For those passengers who have been exposed, they are confined to their cabins until declared safe to come out."

Sky News contacted both Cunard and Princess Cruises for comment but both companies said no one was available to comment.

Similar outbreaks hit two P&O luxury liners - the Azura and the Oriana - earlier this month.

More than 200 people fell ill on the Emerald Princess

The cruise ship infections come as norovirus is thought to be behind the deaths of four people in a hospital in Japan.

The patients, aged between 80 and 97, died of breathing problems and pneumonia last week after suffering vomiting and diarrhoea, said officials at Denentoshi Hospital in Yokohama.

Almost 100 other people have been infected at the hospital since Tuesday.

Norovirus has been sweeping the UK and has led to the closure of dozens of hospital wards.

The Health Protection Agency said there could have been more than a million cases in the UK this season.

The number of cases has risen earlier than expected this year, following an as-yet unexplained trend seen across Europe and other parts of the world.

Norovirus symptoms include sudden vomiting, diarrhoea, or both, a temperature, headache and stomach cramps. The bug usually goes away within a few days but can be contagious for a couple of days after vomiting has ended.

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Fiscal Cliff: Differences Remain As Deadline Looms

Leaders in the US Senate are attempting to strike a last-minute deal to avoid huge tax hikes and spending cuts set for January 1.

Economists warn the $500bn in fiscal pain due to hit in the New Year could send the country back into recession, and destabilise the global economy in the process.

But despite feverish work behind closed doors by aides to both leaders in the Democrat-controlled Senate on Saturday a deal palatable to both sides is still elusive.

US Senate Majority Leader Harry Reid said has made a counteroffer to a Republican proposal put forward on Saturday but admitted "serious differences" remain.

The two sides have reportedly moved closer on tax increases while Republicans have indicated they could withdraw a contentious proposal to slow the growth of social security retirement benefits.

Senate Republican leader Mitch McConnell said he has asked Vice President Joe Biden to become involved in a last-minute effort to reach an agreement.

He added that there was no single issue blocking an agreement but that "the sticking point appears to be a willingness, an interest, or courage to close the deal".

"I'm willing to get this done, but I need a dance partner," Mr McConnell said.

Both the Senate and the House of Representatives would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks.

Barack Obama, who called congressional leaders to the White House on Friday, addressed the crisis once more as he appeared on NBC's Sunday morning talk show Meet the Press.

Mitch McConnell and Harry Reid still heading in different directions

The President said Republicans were unwilling to see tax rates raised for the richest taxpayers.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way," Mr Obama said.

"But the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected.

"That seems to be their only overriding, unifying theme," he added.

If a comprmise can be found, the two parties will then decide whether to put it to the vote on New Year's Eve in the Senate and then the Republican-controlled House of Representatives.

President Obama has pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought.

"I was modestly optimistic yesterday, but we don't yet see an agreement," the President told NBC in the interview recorded on Saturday. "And now the pressure's on Congress to produce."

At least one senior Republican said he was optimistic of a deal, and a "political victory" for Mr Obama.

Senator Lindsey Graham told Fox News that the odds are "exceedingly good" a deal can be done.

"I don't think people want to go over the cliff," he said.

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

Mr Obama originally insisted on letting the tax cuts expire on households earning more than $250k (£154k) but later upped that threshold to $400k (£246k).

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut America's soaring deficit.

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Fiscal Cliff: Obama 'Optimistic' After Talks

Barack Obama has called for "immediate action" to avoid the so-called fiscal cliff after urgent talks with Congressional leaders.

He urged politicians to agree a deal, saying: "The hour for immediate action is here. It is now."

He said he remained "optimistic" that an agreement could be reached to avoid millions of families being hit with big tax increases and spending cuts.

Mr Obama described the hour-long meeting with Congressional leaders as "good and constructive".

He referred to "dysfunction in Washington" and said the American public was "not going to have any patience for a politically self-inflicted wound to our economy".

Surprisingly, after weeks of post-election gridlock, Senate leaders said they hope to reach a compromise that could be presented to lawmakers by Sunday -  little more than 24 hours before the year-end deadline.

Majority leader Harry Reid and Republican leader Mitch McConnell gave a relatively upbeat assessment after what Mr McConnell called a "good" meeting with Mr Obama.

House Speaker John Boehner arrives at the White House for the talks

"I am hopeful and optimistic" of reaching a deal, Mr McConnell said.

Mr Reid promised he would be "going to do everything I can" to make a deal happen, but added: "Whatever we come up with is going to be imperfect."

House Speaker John Boehner appears for the moment to have ceded the struggle to the Senate, saying he would put any agreed bill before his chamber and let the vote proceed. 

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut the US's soaring deficit.

It followed their inability to reach an agreement in 2011.

If Congress cannot agree a deal to rein in government spending, Mr Obama said Congress should allow a vote on a basic package that would keep tax cuts for middle-class Americans while extending unemployment benefits for the long-term unemployed.

The stock market was down again on Friday as the wrangling continued in Washington.

Experts say if the looming tax increases and spending cuts are not scaled back, the recovering but fragile US economy could slip back into recession.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Pig Farming Crisis To Push Up Pork Prices

By Emma Birchley, Sky News Correspondent

Supplies of British pork on shop shelves are under threat as pig farmers struggle to stay in business.

Cripplingly high feed costs caused by global wheat and soya shortages have forced many farms to close already.

The problem, according to Essex farmer Fergus Howie, is that most producers are not being paid enough by supermarkets to make a profit.

"It's unsustainable to continue farming pigs when you are losing on every single pig that you produce so pig farmers throughout the country and in Europe and America are packing up and going out of business.

"We are certainly losing about £10 a pig."

Some producers are now being offered deals that enable them to make a small profit, but many of those who are not so lucky have resorted to slaughtering more breeding sows to cut their costs.

Since mid-June an extra 15,500 sows have been slaughtered. That works out at between 3% and 4% of the total UK breeding herd.

The National Pig Association expects the result to be increased prices of bacon and sausages by the autumn.

"Because of the length of the production cycle, we won't see the impact of these numbers going out of the herd for eight to 12 months," said Zoe Davies, the NPA's general manager.

"That's when we will start to see the shortages and the prices probably creep up."

More sows are also being slaughtered across Europe which will add to the shortage of pork. And there are other changes afoot across the Channel that are likely to affect supply.

In 1999, a ban was brought in on small metal crates known as sow stalls in the UK.

Only now are similar welfare rules being brought in across EU. In theory, it should make it easier for British farmers to compete.

But Fergus Howie remains to be convinced that the law will make the difference it should.

"If is is properly implemented it will be a fair playing field but we are really worried that it won't be properly implemented and product will be coming into this country that would be illegal."

At Wicks Manor in Tolleshunt Major, the Howie family make bacon, sausages and ham from their animals and that has helped keep the farm afloat.

But for the farmers relying on a fair price for their pigs, it looks set to be another year of battling to stay in business despite prices rising on the shelves.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Fiscal Cliff: Obama 'Optimistic' After Talks

Mr Burns Explains The Fiscal Cliff

Updated: 3:03pm UK, Friday 07 December 2012

The Simpsons character Mr Burns has managed to explain the "fiscal cliff" with a pithy cartoon.

It may be a complex and political concept, but with the use of a simple graph and a man in a car, the unpopular nuclear plant CEO succeeds in explaining the predicament facing the US economy.

Admittedly it may have a certain Republican spin to it, but given that the explanation is made in the Burns mansion where Mitt Romney presidential campaign posters are peeling from the wall, that is no surprise.

According to Mr Burns the "fiscal cliff" is defined simply as this: "Think of the economy as a car and the rich man as the driver. If you don't give the driver all the money he will drive you over a cliff.

"It's just common sense."

He goes on to tell his right-hand man Smithers: "Furthermore, rich people feel things more than the common man."

The fiscal cliff is the $607bn (£378bn) of cuts and taxes that will kick in on January 1 if the Republicans and the Democrats in Congress cannot agree on how to run the US economy.

While the Democrats favour raising taxes for the rich, the Republicans want to retain the tax cuts brought in by George W Bush and say it is government spending that must be curtailed.

Because they failed to agree they made a deal on a package of tax rises and spending cuts, including defence and welfare, that will come into action in the new year unless a solution is found.

Economists have warned that if this happens then it could throw the US back into recession and damage the global financial recovery.

Some financial experts have said that the fiscal cliff is the biggest threat to global recovery, as the rest of the world is looking to the US to lead them out of recession.

Congress is now working to try to find a solution before the December 31 deadline.

If it does not, then Smithers will be driving Mr Burns' car to the top of the graph and over the cliff.

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Pig Farming Crisis To Push Up Pork Prices

By Emma Birchley, Sky News Correspondent

Supplies of British pork on shop shelves are under threat as pig farmers struggle to stay in business.

Cripplingly high feed costs caused by global wheat and soya shortages have forced many farms to close already.

The problem, according to Essex farmer Fergus Howie, is that most producers are not being paid enough by supermarkets to make a profit.

"It's unsustainable to continue farming pigs when you are losing on every single pig that you produce so pig farmers throughout the country and in Europe and America are packing up and going out of business.

"We are certainly losing about £10 a pig."

Some producers are now being offered deals that enable them to make a small profit, but many of those who are not so lucky have resorted to slaughtering more breeding sows to cut their costs.

Since mid-June an extra 15,500 sows have been slaughtered. That works out at between 3% and 4% of the total UK breeding herd.

The National Pig Association expects the result to be increased prices of bacon and sausages by the autumn.

"Because of the length of the production cycle, we won't see the impact of these numbers going out of the herd for eight to 12 months," said Zoe Davies, the NPA's general manager.

"That's when we will start to see the shortages and the prices probably creep up."

More sows are also being slaughtered across Europe which will add to the shortage of pork. And there are other changes afoot across the Channel that are likely to affect supply.

In 1999, a ban was brought in on small metal crates known as sow stalls in the UK.

Only now are similar welfare rules being brought in across EU. In theory, it should make it easier for British farmers to compete.

But Fergus Howie remains to be convinced that the law will make the difference it should.

"If is is properly implemented it will be a fair playing field but we are really worried that it won't be properly implemented and product will be coming into this country that would be illegal."

At Wicks Manor in Tolleshunt Major, the Howie family make bacon, sausages and ham from their animals and that has helped keep the farm afloat.

But for the farmers relying on a fair price for their pigs, it looks set to be another year of battling to stay in business despite prices rising on the shelves.

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Online Shopping Surges Over Xmas

Internet retail sales are on course to have risen 30% over the Christmas period as shoppers moved to bag a bargain from home and beat sale queues.

Figures from market data firm Experian suggest Boxing Day set a new British record for online shopping.

According to the report, Britons spent 14 million hours trawling websites on Boxing Day, paying around 113 million visits to online retailers on what became the UK's biggest day for internet shopping.

Experian found that web sales were up by 17% on Boxing Day last year.

The figure had been expected to be higher but the company's digital insight manager, James Murray, said: "With a number of the major retailers bringing their sales forward to Christmas Eve, the impact of that was that Boxing Day was slightly muted and not as prolific as we forecast."

Figures show that Christmas Eve was 86% bigger than last year as a shopping day while Christmas Day was 71% bigger, as shoppers took to websites.

British Retail Consortium (BRC) spokesman Richard Dodd said the dash for discounts was boosted by consumers who were feeling the pinch.

He said: "Customers are under lots of financial pressure and are really keen on seeking out value and taking advantage of bargains."

Robert Goodman, general manager of Kent's Bluewater shopping centre, said: "Boxing Day's momentum has continued into today, with the opening of the John Lewis clearance sale being a major draw."

Waitrose said it had enjoyed a record Christmas season - with Sunday, December 23,proving to be its busiest ever.

Total branch sales excluding petrol for the festive period rose 7.7% between Sunday, November 4, and Christmas Eve.

On a like for like basis, sales were up 4.3% on the equivalent period last year.

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JD Wetherspoon To Create 1,200 Jobs

The pub chain JD Wetherspoon has announced plans to create 1,200 jobs during 2013 and said the number would have been greater but for the tax regime facing the industry.

The expansion plans will see 30 pubs open in cities across the UK, adding to the firm's current total of 866 pubs and bars.

The company is to invest more than "£35m in areas including Cardiff, Fort William, Selby, Whitby, New Brighton and Fraserburgh.

Wetherspoon chairman Tim Martin said: "We are looking forward to opening the new pubs, many of which will be in areas where Wetherspoon is not yet represented.

"We are also pleased to be creating so many new jobs, especially during a recession."

But he continued: "There is no question that we would open more pubs and create more jobs in 2013 if the increasing tax burden on pubs was reduced."

Mr Martin has criticised successive Governments on tax.

While beer duty increases have hurt pub numbers, he has long argued that supermarkets have an unfair advantage because they do not have to pay the 20% VAT on food that pubs do, meaning more people opt to stay at home.

He blamed an increasing tax take for his decision to limit the company's expansion plans during 2012.

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Fiscal Cliff: Obama Calls Leaders To White House

Opinion: President Obama Must Find Diplomacy Skills

Updated: 3:58pm UK, Thursday 27 December 2012

By David Buik, Cantor Index

President Obama and his charming wife Michelle recently posed for Christmas holiday photographs in Hawaii – all chilled out, very avant-garde in their dress and without appearing to have care in the world.

Clearly his advisers were not in concert with his thinking and summoned him back to Washington in response to an uncomfortable poll, where 47% were of the opinion that a solution will not be found before 1st January 2013 to avoid the 'fiscal cliff!'

I do not subscribe to that intense feeling of uncertainty.  However this impasse with the Republican majority in Congress cannot prevail without serious consequences!

Falling off the Fiscal Cliff would mean that $600bn of tax increases would be immediately implemented affecting many from the US middle-class to the tune of $2,000 per annum plus expenditure cuts totalling $100bn, including austerity measures on an already stressed defence budget.

Measures of such magnitude could send the US economy into recession. Many feel that this frustrating level of prevarication or if you prefer political brinkmanship could take 0.5% off GDP in 2013.

There has always been some degree of posturing by Congress when the opposition holds the majority of votes.  However this time around there appears to be an excess of 'bad blood' between the warring parties. Democrat House Minority Leader Nancy Pelosi and Harry Reid, senior majority leader in the Senate, would hardly qualify as candidates for a first class honours degree in diplomacy, always pouring oil on the flames of discontent on any negotiations which are not in line with their thinking.

John Boehner, the GOP's majority leader has not exactly excelled himself either in terms of presentation.  He preens himself like a peacock, without a hair out of place, when updating the media on the disappointing progress of the negotiations, thus irritating the Democrats for the perceived intransigence of the Republicans.

For the market place easily the most disappointing performance of all from these budget negotiations has come from the President himself.  Despite the fact that he has a larger majority than he gained at the Presidential election in 2008, he still has no majority in Congress.  That's a fact of life and unless the constitution is changed, and frankly 'hell has a better chance of freezing over,' an agreement has to be found within the framework of Congress – like it or not.

Let's not mince words.  There is an air of arrogant confidence about President Barack Obama's demeanour.  Unfortunately he has a lousy relationship with the Republicans in Congress, which is almost understandable; but what is unforgivable is the perception that his relationship with the Democrats in Congress is one of aloofness, irritation and indifference.

He may well protest at that allegation – no matter! As Commander-in-Chief it is the President's job to cajole and steer the acceptance of the US government's legislation and policies through Congress.

President Obama has a very strong case that those earning over $250,000 a year should shoulder more of the tax burden.  However what is terrifying to the market place is what seems to be the threat of abrogation of responsibility in dealing with the unacceptable and gargantuan levels of debt.

Objective people accept that in 2008 President Obama took an economic 'hospital-pass' from President George W Bush, which sent the economy in to recession.  Of that there is no doubt. TARP was a successful ruse!  Treasury Secretary Geithner and FED Chairman Bernanke's next little trick, which fell out of 'Pandora's Box' was quantitative easing!

It was a decent temporary solution and it bought time and restored confidence.  However there are only 4 aces in a pack of cards. Geithner and Bernanke may think there are six. Zero interest rates can only last so long.  Eventually someone has to pick up the tab!  Since 2008 the deficit has risen from $9tn to $16t. This is unacceptable.

In my humble opinion debt is the greatest threat to democracy! The US government cannot rely on China to keep buying Treasuries with an insatiable appetite, regardless of liquidity, if the US government does not attend to its responsibilities. 

Governments, banks and Consumers are all-over borrowed.  De-leveraging must be implemented.

If the market and China in particular decides that the debt burden is too great and consequently withdrew their automatic support with yields from 0.25% to 2% rising meteorically, that would send the cost of servicing debt in to orbit. The worst case scenario would be recession, massive unemployment and civil unrest!

President Obama, please avoid possible turmoil and 'go bang a few heads' together diplomatically!

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Boxing Day Sales: Record-Breaking Surge

Boxing Day sales records have been smashed after shoppers sent tills into meltdown across Britain.

Bargain-hunters queued overnight in preparation for stores opening this morning, with thousands pouring through the doors from as early as 6am.

Forecasters said more than £50m would have been taken on London West End's famous shopping destinations of Bond Street, Regent Street and Oxford Street at closing time.

Footfall was up 31.3% on Boxing Day last year in the West End, with sales fuelled by tourists eager to spend. The UK average footfall was up by 21.6%, the retailers' body said.

Hundreds of shoppers poured through the doors when Selfridges opened

On Oxford Street, flagship store Selfridges reported its most successful first hour of trade ever, with £1.5 million rattling through the tills.

Sue West, Selfridges director of operations, said handbags and menswear were among the items flying off the shelves.

"Online sales have been great, but year-on-year people still want to experience the Boxing Day sales," she said.

Leading department store John Lewis announced a record start to its online sale which began on Christmas Eve with hourly orders up 70% on last year.

In its final pre-Christmas trading period John Lewis saw sales of £157.8m, up 26.5% on the same period last year and breaking the £150m barrier for the first time.

Queues formed outside some shops from as early as 1am.

Andy Street, managing director of John Lewis, said: "To be announcing another record-breaking pre-Christmas week along with such a fantastic start to our online clearance is marvellous news."

At Birmingham's Bullring Shopping Centre, thousands were ready and waiting from 12.20am for the off with 350,000 passing through within the next 24 hours.

Manchester's Trafford Centre enjoyed its biggest Boxing Day sale in its history with police drafted in to help manage the crowds - 20,000 were at the out-of-town location by 8am.

The centre's Gordon McKinnon said: "Many retailers have kept stock levels much tighter this year, so the sales will not be stretching on into January."

Kent's Bluewater shopping centre saw about 120,000 visitors pass through its doors, with queues forming at 1am.

Stores reported an influx of shoppers from abroad

The British Retail Consortium had described high-street spending as "acceptable but not exceptional" this festive period, but the Boxing Day sales would add gloss to the figures.

Retailers slashed prices and began early-morning trading in a bid to entice shoppers and compete with online rivals offering weighty discounts.

A strike by London tube drivers about bank holiday pay does not seem to have had too much impact on the sales.

Extra buses were laid on for those travelling to the West End, as well as the Westfield shopping centres in Stratford, east London, and White City, west London, Transport for London said.

Jason Tyrrell from the New West End Company told Sky News: "We were prepared for this strike and had coaches for staff. The shoppers are out in force, but I hope both sides get round the table and sort it out."

Online retailers tried to stay one step ahead of the competition by offering heavy discounts on Christmas Day with Amazon's UK website seeing a 263% rise in sales over the last five years.

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Graphene: Super Funds For Super-Material

Investment funds totalling £21.5m are going to some of Britain's top universities to develop commercial uses for the "super-material" graphene.

Manchester University academics Andre Geim and Konstantin Novoselov won the 2010 Nobel Prize in Physics for demonstrating the remarkable properties of the material.

Graphene is a kind of two-dimensional carbon which is one of the thinnest, lightest, strongest and most conductive materials known to man.

Graphene atoms are arranged in a regular hexagonal pattern similar to graphite, but in a sheet one-atom thick.

A sheet measuring one metre square weighs only .77 milligrams.

The aim is to see the material put to use in a wide array of industrial and everyday applications.

Graphene could deliver potentially lucrative technological breakthroughs in areas ranging from electronics to energy generation and telecommunications.

George Osborne saw Manchester University's graphene research labs last year

The Engineering & Physical Sciences Research Council has identified the most promising graphene-related research projects in British universities to benefit from state funding.

The University of Cambridge has been awarded more than £12m for research into graphene flexible electronics and opto-electronics, which could include things like touch-screens and other display devices.

London's Imperial College will receive over £4.5m to investigate aerospace applications of graphene, working with a number of industrial partners including Airbus.

The other successful projects are based at Durham University, the University of Manchester, the University of Exeter and Royal Holloway.

The universities will be working with industrial partners including Nokia, BAE Systems, Procter & Gamble, Qinetiq, Rolls-Royce, Dyson, Sharp and Philips Research. They will together bring a further £12m to the table.

News of the funding was announced by Chancellor George Osborne, who said: "The Government moved quickly and decisively to make sure this Nobel Prize-winning technology invented here in the UK was also developed here.

"It's exactly what our commitment to science and a proactive industrial strategy is all about - and we've beaten off strong global competition.

"Now I am glad to announce investment that will help take it from the British laboratory to the British factory floor."

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Whisky: China's Rich Pay £200k For One Bottle

By Mark Stone, China Correspondent

A Scottish whisky house has opened up a club in Beijing and is successfully selling whisky at prices ranging from almost £2,000 to a staggering £200,000 a bottle.

Johnnie Walker House is described by Diageo, the company behind the venture, as "the world's largest embassy for luxury Scotch whisky, providing consumers with bespoke experiences to immerse themselves into the world of whisky and Johnnie Walker".

The opening night of the four-storey emporium to scotch was an incongruous affair.

Bagpipes, kilts and the occasional Scotsman mixing with Beijing's mega-rich and A-list celebrities - a stone's throw from the heart of this Communist country, Tiananmen Square.

It is an odd mix until you do the maths because this is a story of simple economics; a British company harnessing an opportunity.

The Chinese like whisky brands with a strong history

The Chinese love whisky and the wealthy Chinese will, it seems, pay anything for it.

"The starting price for a bottle of Johnnie Walker Scotch through the Johnnie Walker House is $3000," Diageo's Asia-Pacific President Gilberte Ghostine told Sky News.

"It starts at $3000 a bottle and goes up to $300,000 a bottle. And people are paying that."

We meet Mr Ghostine in the Blending Room, an intimate corner of the club where whisky bottles line the walls and the floors are clad with copper.

It is a place where clients can decide on their own bespoke blend of the brand.

"We have done lots of work to understand our customers here in China," Mr Ghostine said.

Scottish whisky makes up 40% of foreign spirit imports into China

When you listen to the statistics Mr Ghostine quotes, Diageo's investment in China makes perfect sense.

"Eighty percent of Chinese millionaires are below 45 years old. So it's a younger profile than in the US, for example, where only 35% of their millionaires are below 45," Mr Ghostine explains.

He added: "The Chinese have an interest in brands with real heritage, history, provenance, craftsmanship and real substance. And this exactly what we have."

Upstairs, in one of the three busy bars, we bump into Jim Beveridge, Johnnie Walker's masterblender, a Scottish chemist turned whisky connoisseur whose job it is to do the blending for the millionaires.

"The whiskies used for Johnnie Walker Black Label were distilled 12 years ago and I wouldn't have dreamed back then that they would now be consumed in this way in this kind of market," he said, sipping on his favourite blend.

The wealthy are spending their money on premium goods

Scotch whisky makes up 40% of international spirit imports into China.

Combine that with the fact that they have the money to buy the very best, and the result for the Scottish and UK economy is extremely positive.

Mr Ghostine said: "It is definitely great for Scotland. Today the Scotch whisky industry is very important for the UK.

"Every second £134 is being generated by Scotch whisky for the UK and the potential is huge.

"There is a big correlation between Gross Domestic Product growth in emerging markets and Scotch whisky.

"The Scotch whisky category is 50% of international spirits market in the whole Asia-Pacific region, and so the potential is very big."

It doesn't take long to find the sort of people who are buying the whisky. Zhao Yong Yao is an advertising executive in her mid-fifties.

We watch as she samples different blends, slowly and thoughtfully.

"I think Chinese would like it. Look at my friends, they all like it. And they also can drink a lot," she said.

"Since China had opened her doors over the past few years, Chinese people have earned a lot of money and at the same time they now know how to enjoy high quality goods.

"I like whisky because it represents British culture."

After our interview, Mrs Zhao reveals that she only started drinking alcohol six months ago. She is Diageo's perfect client: rich and with a new taste for the very best Scotland has to offer.

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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Boxing Day Sales: Millions Of Shoppers Expected

Shops up and down the country are expected to be swamped by millions of bargain-hunters after an early push by online retailers.

Up to 7.1 million shoppers are expected to hit the Boxing Day sales with one in 10 venturing out for a deal before 9am, according to research from Green Flag.

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn.

A poll for the website found almost four million Britons (8%) plan to head to the high street on Boxing Day in addition to more than five million (10%) who will be searching online.

However, figures from one survey, by comparison website Pricerunner, suggested that almost half (47%) of those questioned were not planning on buying anything in the post-Christmas sales.

Consumers in London could struggle to get to the shops as Tube drivers prepare to strike over a dispute about bank holiday pay.

Extra buses will be laid on for those travelling to the West End, as well as the Westfield shopping centres in Stratford, east London, and White City, west London, Transport for London said.

Online retailers tried to stay one step ahead of the competition by offering heavy discounts on Christmas Day with Amazon's UK website seeing a 263% rise in sales over the last five years.

Analysts Experian predict that Christmas 2012 will be the "biggest and busiest ever" for online retailers in the UK, with visits to retail websites expected to reach 126 million today, up 31% on 2011 and consumers predicted to spend £472.5m online.

But there was more gloom for the high street in the run-up to Christmas with shoppers preferring to buy presents online, according to Business recovery group Begbies Traynor.

The British Retail Consortium (BRC) said high street spending was "acceptable but not exceptional" this festive period – blaming it poor accessibility to high streets and weak consumer demand rather than online shopping.

Richard Dodd of BRC said: "There are a lot of myths around online retail. 10% of overall retailing over the year comes from online shopping and actually it presents lots of opportunities for the retail sector."

A Begbies Traynor report said almost high-street 140 firms were in a critical condition in the fourth quarter, meaning they are on the brink of collapse, while more than 13,700 were in "significant" distress - up 35% during the three months to December 17.

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Pop-Up Shops Benefit From Empty High Street

By Lisa Dowd, Midlands Correspondent

With 20 shops closing every day on Britain's high streets, some premises are being temporarily rented out for as little as £1 a week to pop-up businesses.

One in six premises now stands empty compared with one in 20 at the start of the recession, according to retail research firm the Local Data Company.

So could pop-up shops help alleviate the situation?

"I've heard of examples of some shops going for as little as £1 a week because the landlord is saying to himself, I think these people have got a good product and if I give them a month or two at a cheap rate they may want to stay longer and then I can charge a commercial rate, " said Jerry Blackett from Birmingham Chamber of Commerce.

In Birmingham's Great Western Arcade, No 22, a jewellery shop showcasing the talent of young, local designers, moved into premises which had stood empty for months.

Silversmith and mentor Kerry O'Connor said: "We pay rates and all the bills and we get a reduced rent.

"It works both ways that we can stay here potentially as long as we want but likewise if somebody comes along who wants to take on a proper lease we could get kicked out within a month."

No 22 is paid for by European funding and a local council who are keen to help fledgling businesses and promote Birmingham as a centre of jewellery excellence.

"The pop-up encourages people to come to the arcade and see something new," said Carol Alderson from Birmingham City Council.

"We've put out flyers around the city, we've emailed, lots of people have gone on the website, it encourages new people into the arcade which should have a knock-on effect on the other businesses with people coming into the pop-up shop."

Designer Karen Collis said: "It's a brilliant opportunity to showcase my work for the first time really because I only graduated in June so I can test the market to see if people like the stuff that I'm making and also there's the opportunity to sell, I sold a piece yesterday, it was exciting."

Pop-ups come and go quickly, so it's not known how many are trading, or their impact.

But those involved with No 22 recognise that no-one benefits from premises standing empty.

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Christmas Day Online Sales Surge Predicted

Bargain season begins in force today as online retailers slash prices ahead of an expected onslaught of consumers hitting the high street for the traditional Boxing Day sales.

Amazon's UK website said it had seen sales on Christmas Day increase by 263% over the last five years.

It expects this to be its busiest Christmas Day to date, partly due to the growth in home broadband and the popularity of tablets and smartphones.

The retailer is launching its Boxing Day deals a day early, which include clearance offers and "lightning deals" for a limited time and quantity of stock.

Shopping frenzies are moving from the high street to the internet

Trends seen on past Christmas Days on Amazon include an 11am rush for last minute gift cards, the spending of gift cards at midday and sofa surfing at 8.15pm.

Amazon's vice president of EU retail, Xavier Garambois, said: "The digital revolution has certainly played a part in this growth and Christmas Day is our biggest day of the year for MP3 and Kindle book downloads, as many people are buying content from new devices that they have just received.

"It's not just digital items though, we are seeing purchases of everything from baby products to women's clothing rapidly growing on Christmas Day.

"Many customers are shopping on Christmas Day in a way that has previously only been seen in the retail industry on Boxing Day."

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn in the Boxing Day sales.

Furniture Village said visits to its website on Christmas Day last year peaked at 25,000 at 4pm, with that figure increasing to 50,000 on Boxing Day, suggesting that the majority of customers researched products online before buying from high street stores.

Chris Webster, a spokesman for technology analyst Capgemini, said: "Online tills will be ringing all the way from Christmas Eve to Boxing Day, including a massive £300m spent on Christmas morning itself.

"Christmas Day will see a surge in online sales as new tablets and smartphones are put through their paces and vouchers are cashed in for virtual goods such as movies and music.

"This year we're as likely to be downloading Queen's Greatest Hits as watching the Queen's speech."

Meanwhile, high street spending was "acceptable but not exceptional" this festive period, according to the British Retail Consortium.

Head of media and campaigns Richard Dodd said poor accessibility on high streets, a lack of parking and weak consumer demand were to blame rather than an increase in online shopping.

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods from Mexico in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BT Slapped With £95m Refund Bill

BT has been told it must repay almost £95m to corporate customers following a row over high speed data provision.

The regulator Ofcom ruled the company had overcharged for Ethernet services and must hand back £94.8m to communication providers BSkyB - the owner of Sky News - Talk Talk, Virgin Media, Verizon UK and Cable & Wireless.

Ethernet services are mainly used by businesses and provide dedicated broadband capacity between different locations.

Ofcom said it received the first complaint in 2010 that the charges levied by BT were "not cost orientated".

It had continued to receive related claims ahead of today's decision, the regulator stated.

BT, which said in November that its second quarter revenues had been hit by a triple whammy of recession, regulation and rain, has two months to decide if it will appeal the decision.

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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Retailers Geared Up For 'Busiest Day'

By Tadhg Enright, Business Correspondent

As the last full shopping day before Christmas Eve, today is expected to be the busiest day of the year on high streets and in shopping centres.

The British Retail Consortium expects between £4bn and £5bn to be spent throughout this weekend.

Researchers at the credit card company, Visa, have forecast sales to peak this afternoon between 2pm and 3pm.

At Brent Cross Shopping Centre in north London, management think today could be their busiest on record and extra security and traffic staff have been deployed to help customers.

Centre manager Tom Nathan told Sky News: "Everything shows us that when Christmas is on a Tuesday and the schools only broke up yesterday that today is going to be enormous because people haven't had the chance to go and do their full Christmas shop.

"So combine that with buying the turkey - and today is the start of the big turkey run - and today is going to be a huge one I think."

But the Local Government Association said confidence on the high street remained low.

Its annual Christmas survey found that 84% of town centre managers said confidence among shoppers had either not improved or worsened compared with this time last year.

It also suggested that the particularly cold and wet start to the winter could also be taking its toll on the number of shoppers visiting town centres.

Sales at Brent Cross Shopping Centre could be the busiest yet

Normally the busiest day of the year is December 23 - the last day before Christmas Eve - but this year that falls on a Sunday when trading hours for bigger shops are restricted by law to just six hours.

Big name retailers including John Lewis, Morrisons and Marks & Spencer failed in a bid to convince the Government to relax the restrictions on Sunday trading tomorrow.

M&S has responded by opening more than 100 of its stores at 12.01am on Christmas Eve morning to help shoppers get their Christmas essentials in time.

An M&S spokesman said: "We know that the days leading up to Christmas are some of the most hectic for our customers.

"Due to Sunday trading rules, we can only open for six hours on one of the busiest days of the year.

"We hope that these early bird hours on Monday will ease the pressure and give busy shoppers a bit more time to pick up Christmas food orders or last minute presents."

Waitrose, part of John Lewis, will also extend Christmas Eve trading hours in two thirds of its supermarkets by opening an hour earlier at 7am and closing an hour later at 6pm.

Sky News visited one of its four regional distribution centres at its head office in Bracknell, Berkshire, and saw staff working to deliver twice the normal volume of food to its stores.

They will be working 24 hours a day between now and 6am on Christmas Eve to ensure Waitrose shelves remain stocked.

But management are disappointed for them and their customers that trading will be curtailed on December 23 which is usually their most important shopping day.

Waitrose supply chain director David Jones told Sky News: "If you can imagine what you'd normally take in trading over 14 hours and shrinking that into six hours, it's quite challenging as you walk around the supermarket.

"You're trying to get people through checkouts and we would have loved to have had the opportunity to trade for a longer time."

Mr Jones will be taking time out from his executive duties to man the tills in his local branch over Christmas.

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Banks Face Break-Up Over Risky Trading

By Poppy Trowbridge, Business and Economics Correspondent

UK banks face break-up if they fail to follow new rules protecting high street operations from riskier trading.

The Parliamentary Commission on Banking Standards today published a report assessing Government-backed legislation that will require lenders to protect customers' banking deposits from potential losses.

While the report suggests ring-fencing will help address the damage done to culture and standards in banking, it may not be enough to stop banks taking advantage of the rules.

Commission chairman Andrew Tyrie MP said: "The legislation needs to set out a reserve power for separation; the regulator needs to know he can use it."

"Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence."

MPs are looking at ways to exert pressure on lenders that fail to comply.

Shadow chancellor Ed Balls told Sky News: "I think people are really frustrated, families, businesses, that banking reform is taking so long.

"In the meantime, our economy has not been growing, small business lending is falling. We've got to get on with it and we've got to get it right.

"The commission says the proposals on the table so far from George Osborne don't go far enough, they've been watered down, and they also are going to look at the wider issues of standards and culture in the way our banks operate."

Next year, the commission will take further evidence on whether full separation of proprietary trading operations at banks is necessary.

The Government launched an inquiry into banking standards in the wake of revelations that the London Interbank Offered Rate (Libor) had been manipulated by traders.

Barclays and Swiss bank UBS have been fined by authorities for manipulating Libor.

The rate is a reference point for vast ranges of financial contracts around the world worth around £184 trillion.

Mr Tyrie said: "The latest revelations of collusion, corruption and market-rigging beggar belief.

"It is the clearest illustration yet that a great deal more needs to be done to restore standards in banking."

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CRB Check Rules To Be Relaxed By Home Office

Millions of employees and volunteers will no longer have to apply for a new criminal records check every time they apply for a job, the Home Office announced today.

Individuals will only need to apply once to the Disclosure and Barring Service (DBS) for a certificate and then organisations will be able to use a new online service for an instant check to find out whether the document is still valid.

Unpaid workers will be able to use the online service for free when they apply for different opportunities, while paid employees will have to pay an annual subscription fee.

Individuals who require a DBS check, which can take up to 28 days to complete, currently have to re-apply for a certificate every time they change jobs or move workplace.

The move is part of an overhaul of the criminal checks process by the Government.

The service will be managed by the DBS, which launched at the start of the month when the Criminal Records Bureau (CRB) and Independent Safeguarding Authority (ISA) were merged.

It is part of a first wave of public services to be moved online by the Government by 2015, which will also include the National Apprenticeship Service, tax self-assessment and registering intellectual property.

Moving services online will save taxpayers up to £1.2bn by 2015 and around £1.7bn a year thereafter, the Cabinet Office said.

Volunteering England (VE), which led a campaign against charging unpaid workers to use the new online criminal checks system, said making the service free for volunteers would give them a "hugely important boost".

VE chief executive Dr Justin Davis Smith said: "This is particularly significant when charities and public services are looking to sustain the enthusiasm for volunteering created by the Olympics and Paralympics."

Junior and locum doctors who need a new check every time they move hospital, agency workers registered with a multiple agencies and volunteers working with more than one organisation are among those who could use the service when it launches next spring.

Criminal information minister Lord Taylor of Holbeach said: "It is a 21st century service that will deliver real benefits to employers and volunteers without compromising on public safety."

However, Nick Pickles, director of civil liberties campaign group Big Brother Watch, said the need for reform goes "far beyond" making services available online.

He said: "Safety by database still seems to be the popular mindset across Whitehall and far more needs to be done to restore the system to a common sense balance.

"Until there are legal protections against the over-zealous use of CRB checks and proper reform so cautions and information not tested in court does not ruin people's careers, the CRB system will continue to undermine civil liberties."

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BAE Strikes £2.5bn Deal With Oman

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and 8 Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

The deal safeguards around 6,000 jobs in the UK at BAE's two sites in Lancashire.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the UAE on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

More follows...

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Tax Row: McDonald's Calls For Review Of Law

The managing director of McDonald's in the UK has said Britain's corporation tax rules need to be addressed.

Speaking on Jeff Randall's Christmas Dinner, Jill McDonald warned that the continuing row over the amount of corporation tax companies pay could create a negative image of British business.

"Customers, consumers, want businesses to be doing the right thing," she said.

"I think it is politicians who are creating the laws who need to address and look at those."

She added: "I do think that it's in danger of spinning a little bit out of control because you don't want the conversation to be so negative about business …because, as we know, business is ultimately what's important to help Britain grow again."

McDonald's paid £42m in UK corporation tax last year

She made her comments after a number of companies – including Starbucks, Google and Amazon - were heavily criticised by politicians and campaigners over their tax affairs.

McDonald's, which employs over 90,000 people in the UK, paid £42m in UK corporation tax last year, which Ms McDonald defended as "fair".

"One man's efficient tax planning though is another's tax avoidance so the law does need to be looked at," she said.

"But in McDonald's for example we pay what we would consider to be our fair share of corporation tax."

Paul Walsh, the chief executive of Diageo which has Guinness, Smirnoff and Johnnie Walker among its brands, told Jeff Randall that tax is a complex issue for a global company.

Only 7% of Diageo's total sales were in the UK last year but the company - which is the world's biggest spirits company - paid more than a billion pounds in UK corporation tax.

"I think we run the risk of getting into the debate of 'If you pay tax, everything's fine'," he said.

"What about the company that's investing billions and will get appropriate tax losses and capital allowances?

"They're creating a lot of jobs so be very careful that we don't suddenly get so simplified in our approach that it conspires against what this nation is trying to do - create jobs. "

:: Jeff Randall's Christmas Dinner is broadcast tonight at 7pm on Sky News, and is repeated over the festive period. It is also available on Sky On Demand and the Sky News for iPad App.

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Ryanair: Airline Bottom Of Which? Survey

Ryanair is the least popular short-haul airline, according to a new survey that gave the carrier its lowest approval rating ever.

The Irish firm received an overall satisfaction score of just 34% in a table put together by consumer magazine Which? from its members' votes.

It was 16th and last in the table, which was compiled from views of passengers on a home-bound flight in the 12 months to October.

On Ryanair, Which? said: "We were inundated with comments about Ryanair - many about its extra charges.

"This partly accounts for the paltry one-star ratings for baggage allowance, boarding arrangements, seat allocation, and food and drinks."

Ryanair boss Michael O'Leary is known for his controversial comments

Which? said it was the first time Ryanair had been at the bottom of its survey, adding that its customer score was the airline's worst to date.

The most popular short-haul airline was Swiss, with an overall score of 82% and a maximum five-star score on a number of the rating categories.

These included check-in process, baggage allowance, seating allocation and airline staff.

Second in the table was Turkish Airlines with a score of 78%, with German carrier Lufthansa third, Aer Lingus fourth and KLM fifth.

Only airlines which received at least 30 responses were considered.

Swiss's results were based on 59 responses, Turkish Airlines on 38, Lufthansa 74 and Aer Lingus 65.

Ryanair's results were based on 563 responses. In 15th place was Thomas Cook Airlines with a score of 36%, with Thomson Airways 14th on 45% and Monarch 13th with 47%.

Swiss's customers spoke of the staff's "politeness and great service", while Turkish Airlines was the only carrier to get more than three stars in the food and drink category.

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