BA Owner Faces Strike Threat Over Job Cuts

Staff at Spanish airline Iberia have rejected a restructuring plan that involves 4,500 job cuts and are willing to strike, labour unions said.

The threat of industrial action comes after IAG - the company formed by merging BA and Iberia - revealed an operating profit of just £13.5m in the nine months to September 30.

In addition to cutting nearly a quarter of the workforce, IAG has proposed a staff salary cut of 25-35% for three years.

"We are willing to take any necessary action," the airline unions said in a statement.

The results show Iberia is the weak link in the group, making a standalone operating loss of £209m in the period, while BA contributed operating profits of £228m.

On a pre-tax basis, taking wider cost pressures into account, the group made a loss of £134m in the nine months.

IAG shares have shed 40% of their value since the group's formation in 2011.

Iberia is Europe's leading carrier to Latin America, but it has been battling against increased competition from low-cost airlines and high-speed trains, labour disputes and Spain's deep economic crisis.

It is bleeding cash as revenues fail to cover its high operating costs, with a 15% spike in fuel costs.

"Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future," IAG chief executive Willie Walsh said in a statement.

Mr Walsh is no stranger to battles with trade unions and took on employees of BA over reforms when he was boss of the UK flag carrier.

He has also been a vocal critic of the British Government's aviation policy and said it was a "disgrace".

A BA aircrew strike in 2010 cost the airline up to £7m per day, but Mr Walsh used contract pilots and retrained ground staff on planes.

Mr Walsh stood firm on an airline's decision to withdraw travel perks from striking cabin crew, but staff called the ploy "bullying tactics".

Mr Walsh rejected suggestions the withdrawal of concessions was a "punishment" or an attempt to "break the union".

He added: "We told them about the consequences if they went on strike."

IAG's transformation plan for Iberia includes the fleet being downsized by 25 aircraft and routes cut by 15% in 2013, to concentrate on longer haul, profitable destinations.

Iberia head Rafael Sanchez-Lozano said: "It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability.

"Unless we take radical action to introduce permanent structural change the future for the airline is bleak."

Whilst the possibility of strikes by Iberia staff now loom, passengers booked from Heathrow to Madrid should feel secure, Business Travel News editor-in-chief Malcolm Ginsberg.

"Previously Iberia operated out of Terminal 3 at Heathrow but have now joined sister carrier British Airways in Terminal 5," he told Sky News.

"From a practical point of view if an Iberia flight is cancelled at short notice it should be relatively easy to transfer to British Airways - providing they have space."

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Treasury Gets £35bn Windfall From QE Interest

The Treasury is to receive a £35bn boost as part of a deal with the Bank of England that will effectively reduce public debt.

Chancellor George Osborne and Bank Governor Sir Mervyn King have agreed that the BoE will give the Treasury interest earned through its £375bn economy-boosting programme known as quantitative easing (QE).

The cash - currently on the BoE's books - will flatter the public accounts by reducing the budget deficit, while also acting as a "small loosening of monetary conditions" equivalent to taking more QE action, according to the Bank.

The announcement comes a day after it decided not to extend QE at its monthly policy-setting meeting.

The Treasury said the agreement was in line with similar practices surrounding QE in the United States and Japan.

In a letter to Mr Osborne, Sir Mervyn stressed the cash transferred to the Government would likely need to be paid back to the Bank in the future.

The move comes at an apt time for Mr Osborne as he faces pressure on his plans to cut borrowing.

But JP Morgan Chase economist Malcolm Barr said it was "still likely" that the Chancellor will need to push back debt reduction targets in his upcoming autumn statement.

Shadow chief secretary to the Treasury Rachel Reeves said it was a "smoke and mirrors" deal.

"Instead of changing course and taking action to create the jobs and growth we need to get the deficit down. The Chancellor seems to think he can just be bailed out in the short term by money from the Bank of England," she added.

Under the arrangement, £11bn is expected to be handed to the Treasury this year, with the remaining £24bn paid in four instalments over the next financial year.

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Olympic Stadium: Dismay Over Delayed Future

By Enda Brady, Sky News Correspondent

Olympic and Paralympic champions have voiced their dismay at news that the stadium may not open fully until the summer of 2016.

Four bids are still being considered as full-time tenants at the Stratford venue, but each bid will require significant and time-consuming modifications.

Dennis Hone, chief executive of the London Legacy Development Committee, revealed this week that it will not re-open until August 2015 at the earliest and probably not before August 2016.

Olympic champion Jessica Ennis told Sky News it was important the stadium was opened to the public without delay.

She said: "I've some amazing memories of the stadium, like a lot of other athletes.

"I'd love to see it opened to the public as soon as possible."

Leyton Orient FC are among four bidders to use the stadium in Stratford

Paralympic double gold medallist Hannah Cockroft said it was vital to speed up the process so that the goodwill generated by the success of London 2012 could be tapped into.

"The danger is that if it's not opened fully to the public for four years then that interest will wane," she said.

"It's an amazing venue and people want to see it, they want to be a part of it. I really hope they sort this out, they have to."

A transformation project costing nearly £300m is currently under way at the site and is expected to last up to 18 months.

The park itself will be opened to the public on July 27 next year, one year to the day the Games opened in London.

Maria Miller, Secretary of State for Culture, Media and Sport, told Sky News: "The stadium is vital for the legacy of the Games, but the important thing is to get the right tenant in."

The four bidders are West Ham United FC, Leyton Orient FC, a Formula One venture and the University College of Football Business - an academic institution owned and run by Burnley FC.

A final decision is expected in the first half of 2013, or possibly sooner.

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Bank Of England Adopts QE 'Wait And See'

The Bank of England (BoE) has announced it will not pump more money into the UK economy this month.

The move follows the country's official exit from recession - but the BoE will be watching the recovery closely.

It was a decision widely expected by economists following the positive GDP performance in the third quarter of the year.

The bank's Monetary Policy Committee (MPC) confirmed at midday there was no extension to its programme of Quantitative Easing (QE) following its latest meeting.

The MPC has made £375bn of asset purchases to date amid the effort to boost money supply in the UK economy following the financial crisis.

Forecasters had initially predicted that total would be boosted by £50bn but the 1% growth in the economy measured over the three months to September largely silenced such talk.

Nevertheless, the MPC will be closely scrutinising the economic statistics over the next few weeks amid signs of a mixed picture.

A recent run of weak purchasing managers' surveys for the services, manufacturing and construction sectors in October have given credence to expert warnings that the underlying picture is much bleaker than the GDP numbers suggest.

The MPC decision - which also confirmed the base rate of interest at its historic low of 0.5% - preceded that of the European Central Bank which also left the eurozone's benchmark interest rate steady at 0.75%.

The Bank of England's move was predicted by all five members of the Sky News Money Panel.

Ross Walker, Senior UK Economist at RBS, said: "Recent data show a modest improvement - GDP, employment, revisions to the public finances -and MPC rhetoric suggests a waning enthusiasm towards further QE.

"Monetary policy appears to be transitioning away from quantitative- and towards credit-easing. "The Funding for Lending Scheme (FLS) is becoming the MPC's principal focus and there remains little sense that a Bank Rate cut is a serious runner at this time."

On the subject of the FLS, James Daley, editor of Which? Money was concerned the money got to the people who really needed it.

"We know that some of this money has been used by banks to lend to low risk, better off customers who are not the people who most need support," he said.

"Thousands of people are trapped on their bank's standard variable rate - and are unable to get a better deal as no one will take them. It's these mortgage prisoners who should be being helped out by the Funding for Lending Scheme."

Anthony Thomson, the founder of Metro Bank, ruled out more QE for at least the next six months. He said: "As the economy starts to improve, albeit tentatively, we will see further growth in GDP and this will reduce the need for further stimulus of this nature, and the impetus will move to providing credit to SMEs."

Louise George, the owner of Peter Popple's Popcorn, admitted she was concerned about growth. "Although the recession is officially over - there hasn't been a huge growth spurt and for our business it is still tougher to sell a premium product when people are still watching what they spend."

She called on the Chancellor to provide more support to small firms in his Autumn Statement next month.

Sir Martin Sorrell, chief executive of FTSE 100 advertising giant WPP, echoed her wish for a Government strategy to help smaller companies.

He said: "I think the Coalition Government is doing the right thing - trying to get revenue and costs into balance in the short term and starting to put together a more comprehensive long term strategy.

"The one thing that I think still needs to be done is articulating the overall growth strategy. "Lord Heseltine has tried to do this recently but still more needs to be done.

"The UK is in better shape now than it was a couple of years ago but we still do not have a comprehensive view on the future strategy. "I think the Autumn Statement is a big opportunity to identify the key growth levers and lift people's eyes from their boots to the horizon.

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Collapsed Comet 'Massive' Sale Slated Online

Customers who rushed to a sale at Comet have expressed disappointment over the level of discount.

The electronics retailer had announced a "massive stock liquidation" ahead of store closures as early as next week, but angry shoppers took to Twitter to complain about the price reductions.

Scott Houston said: "Comet 'Firesale' is no more than 10-15% off. Prices aren't even competitive with online prices. Time wasted."

And Matt Arthur tweeted: "Anyone thinking of going to the Comet 'liquidation sale', don't bother. 10% off audiovisual, 20% off kitchen appliances, still cheaper online."

Ajay Deshpande added: "If you are looking for cheap electrical goods then don't go to the Comet 'sale'!"

The sale was announced on Comet's website

In response, a spokesman for administrator Deloitte said: "The discounts are gentle. It's not a hard sale."

The sell-off, which began at 9am on Thursday, is only available in its 236 stores, with customers unable to buy products online. 

But some customers did manage to bag a bargain, with Alex Pegg tweeting: "In-pulse (sic) buy of the day, an Apple ProBook (£100 off from Comet)".

The electrical chain said gift vouchers would be accepted on sale items, following the temporary suspension of the tokens over the weekend. 

Comet is expected to confirm store closures next week following the sale

But it warned customers it would not offer refunds, and any items ordered before the company went into administration that have not been paid for will not be delivered. 

Comet's administrator Deloitte is in the process of winding down the business following its collapse on Friday, which leaves 6,600 jobs hanging in the balance.

But rival Dixons, which owns Currys and PC World, postponed hiring 3,000 Christmas staff by a week to allow Comet staff to apply.

It said it was "amazed" by the number of Comet employees that had enquired about positions so far.

Deloitte is attempting to find a buyer for the business and would not comment on speculation over store closures - although reports suggest stores could start to be closed next week.

If the chain does collapse, it will become one of the biggest high street casualties since Woolworths in 2008.

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BA Owner IAG Hit By Iberia Performance

IAG - the company formed by merging BA and Iberia - made an operating profit of just £13.5m in the nine months to September 30.

The results show Iberia is the weak link in the group, making a standalone operating loss of £209m in the period, while BA contributed operating profits of £228m.

IAG has announced a transformation plan for Iberia, which will result in 4,500 job losses at Iberia.

Iberia's fleet is being downsized by 25 aircraft and its routes are being cut by 15% in 2013, to concentrate on those which are most profitable.

More follows...

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Supermarkets Cut Petrol Prices By Another 2p

Three supermarket chains have cut their petrol prices again, reducing the cost of fuel by 2p at pumps across the nation.

Asda was the first to announce the discount, which follows similar reductions towards the end of last month.

It will now charge 137.7p for a litre of diesel and 131.7p for unleaded petrol on its forecourts.

Sainsbury's and Tesco followed suit, saying they would also slash 2p off their prices.

Welcoming the move, the president of roadside recovery group AA, Edmund King, said: "Once again the supermarkets have led the way on fuel price reductions.

"We have said there is scope for price cuts given wholesale price falls and welcome the move and hope all the other retailers follow."

He said that many people are cutting back on the number of car journeys they make because of the high cost of fuel.

"This reduction will go a little way towards helping families and businesses keep mobile," he added.

Asda's petrol trading director, Andy Peake, said his company was "leading the way" in reducing the price at the pump.

"Unlike other retailers, our price cuts benefit everyone across the country, meaning that no one filling up at Asda will be forced to play a postcode lottery," he said.

A Tesco spokesman said: "As Britain's biggest petrol retailer with 490 forecourts, more motorists will make savings at the pumps at Tesco than at any other fuel retailer."

And Sainsbury's head of fuel, Richard Crampton, said: "With Christmas on the horizon, we know that this can be an expensive time of year so we're delighted to announce that we will be lowering our petrol and diesel prices."

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Violence As Greece Passes Austerity Measures

Greek police have used water cannon and tear gas to quell violent protests, as politicians voted to impose fresh austerity cuts.

Around 100,000 protesters marched to the main square outside the parliament building in Athens to protest the £10.7bn cuts and reforms essential to unlock further monetary aid.

The measures are for 2013/14 and include new, deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life.

The violence broke out after protesters tried to break through a barricade to enter the parliament building.

TV footage showed smoke and small fires around the building as protesters threw petrol bombs and police responded with stun grenades.

Prime Minister Antonis Samaras is expected to win a close decision, despite intense opposition.

"Today we must confirm Greece's new credibility," Mr Samaras said. "We choose whether we want to stay in the eurozone ... or return to the drachma. That is the choice."

But Panagiotis Lafazanis, of the main opposition Syriza, said: "You are throwing people onto to the street, people who need a few more years till they get their pensions.

"What will happen to them? Will they starve? This is an illegal and unconstitutional law."

Public transport has been halted, schools banks and government offices were shut down and rubbish is piling up on the streets on the second day of a nationwide strike.

Parliament staff had delayed the vote after going on strike to protest against wage cuts.

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World Stock Markets Fall After Obama Victory

Four More Years: A City Expert's View

Updated: 6:25am UK, Thursday 08 November 2012

By David Buik, Cantor Index

There is a considerable school of thought that Barack Obama was rather an insipid and ineffectual Commander-in-Chief and that his first term achieved very little.

Maybe it would be no bad thing to reflect on what did happen in the US and the world at large over the past 4 years and what he did achieve in his first four years as well as what he abjectly failed to do.

As they say in the trade, President Obama inherited a horrific 'hospital pass' from George W Bush in the form of a savaged economy, which was heading vertically in to a vortex of deep recession courtesy of the sub-prime lending crisis, which took the US financial sector to the brink of disaster, triggering 'bail-outs' orchestrated by Hank Paulson, Bush's Treasury Secretary, for Bear Stearns, AIG, Freddie Mac and Fannie Mae, but NOT Lehman, which clearly exacerbated the magnitude of the crisis.

This financial meltdown manifested itself thanks to the breathtaking and irrationally exuberant incompetence of the FED Chairman Alan Greenspan, who recklessly encouraged banks to lend money indiscriminately without adequate regulation.

Consequently, shortly into his Presidency, Obama was forced to agree a recommended $789bn 'bail-out support fund' for the financial sector, implemented by the new FED Chairman Ben Bernanke.  This rescue act was the start of quantitative easing.  At the end of November 2008 the DOW had dropped to 8829. Once QE had been introduced it rallied sharply and today it stands at circa 13000 – up 47%.

QE provided financial institutions with cheap money which underwrote the value of equities.  However there is no doubt that Wall Street was not the flavour of the month for the man in the street – never has been; never will be!

Unfortunately equity markets are not necessarily a reliable barometer of economic activity.  Unemployment was at 7.9% in November 2008 and steadily rose to 10% by October 2009.  Since then it has slowly, but not resolutely fallen back to 7.9%.

The $50bn auto industry bail-out in 2009 probably saved 150,000 jobs and also certainly stopped the President losing the support of Ohio. However unemployment remains a huge problem and the rate of 7.9% is probably distorted as so many people have stopped applying for jobs in dismay.  So the real rate is probably nearer 13%.  Then of course there is the housing market, which is slowly improving from a completely trashed base level, though many people remain under water with negative equity.

President Obama has some way to go before he implements his healthcare/Obamacare and pension ideals against virulent opposition from the GOP in Congress.

Easily the most worrying aspect of the US economy is the manner the budget deficit has grown since 2008 – from $9 trillion to $16 trillion.

In the long-term this is totally unacceptable, particularly as the US is so reliant on outside support for Treasuries, particularly from China. If this support were to be withdrawn or even cut, it could have a very adverse effect on the cost of funding for the US, thus severely damaging the recovery process as well as increasing unemployment dramatically.

Very important changes are shortly being made in China's government.  It will not be long before China overtakes the US as the most important economy in the world.  President Obama will need to improve his relationship with China, cutting back on the jingoistic rhetoric on currency and trade protection. He should try negotiating!

President Obama has proved to be an extremely abrasive and divisive politician.  The Democrats lost their majority in Congress on 2010 and Obama failed to find any common ground with the Republicans, which resulted in the government failing to get through its legislative programme. I cannot see that impasse changing.

The 'fiscal cliff' will appear over the horizon at the end of December.  Common ground has to be found over public expenditure cuts and taxation increases need to be agreed.  The President's interpersonal skills for dealing with his opponents need sharpening up. If not - There will be trouble in River City!" The President was very lucky to be up against a Republican candidate, who never really caught the public's imagination.  He has a chance to redeem himself!

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M&S 'Taking Action' As Profits Take A Tumble

Marks and Spencer has reported a fall in underlying pre-tax profit to £297m for the first half of this year and pledged further moves to drive sales.

The chain, which is 18 months into a three year transformation plan, blamed pressure on consumers' disposable incomes and volatile trading conditions - hit by bad weather - for the figure, which compares with a £307m profit over the same period last year.  

But sales across the 128-year-old group were up 0.9% at £4.7bn - driven by a strong performance in its food division and internationally.

In its UK stores, however, sales were flat in the second quarter with a 1.6% rise in food partially offsetting a 1.8% fall in general merchandise sales. 

It follows a 6.8% slump in general merchandise sales in the first quarter as a result of the wet summer weather and problems with stock availability, which left stores short of bestselling womenswear lines.

The group's chief executive, Marc Bolland, told Sky News: "We have repaired our womenswear position strongly over the second quarter.

"The issues we had were with merchandising and stock, we're now bucking the trends."

He added: "The first quarter was a difficult quarter as we explained three months ago, the second quarter has improved quite strongly."

Marks and Spencer, which has 730 stores in the UK and 390 overseas, said it was "well set up" for its busiest time of the year.

"As we approach the all-important Christmas period, we have better than ever Christmas products, to help our customers enjoy a special Christmas at home," Mr Bolland said.

Primark has been one of the high street's best performing stores

Marks and Spencer's aiming to transform itself into an "international multi-channel retailer" by boosting its website and making it easier to buy products on smartphones and tablets. 

Mr Bolland said this strategy was making "strong progress", with growth across its multi-channel business.

Retail analysts Conlumino described the results as a "mixed bag".

"While the overall half year numbers look anaemic, there has been a material uplift in fortunes since the first quarter," managing director Neil Saunders said, adding that it is too early to say whether the group is on the path to sustainable growth.

"M&S has still underperformed the market in fashion and growth in general merchandise remains elusive on a like-for-like basis.

"All of this points to the fact that M&S still has plenty of issues to resolve and there is still much work to be done."

The results came as Associated British Foods revealed that revenue across its 230 Primark stores had grown by 17%.

The clothes retailer has been one of the best performing stores on the high streets in the UK, Ireland and Spain because of its low prices and quick adoption of fashion trends.

The group, which also includes Twinings, Silver Spoon and Ryvita among other brands, reported a 17% rise in full-year profit.

Following "exceptional performance", the company said its adjusted pre-tax profit was £974m and revenue was up 11% to £12.3bn.

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Pay Gap In Reverse As Women Work 'For Free'

The gender pay gap is so large that women will effectively work the rest of the year for free, it is claimed.

A study by the campaign group Fawcett Society suggests that, rather than improving, the pay and jobs prospects of women are going into reverse amid the Government's austerity measures.

Chief executive Ceri Goddard said: "At the same time, women's unemployment stands at a 24-year high and growing numbers of women have been forced into low paid, part-time and insecure  employment - underemployment.

"Far from slowly moving forward, we now face going into reverse. If Government wants to avoid an unprecedented backwards step on its watch, they must take more action."

The conclusions were released as separate research for the Chartered Management Institute (CMI) found that the average female company executive earns more than £400,000 less than a male counterpart over her career.

According to the Institute, the average gender pay gap for UK executives is more than £10,000 annually.

It also claimed that women receive less than half the bonus payments given to men and 4.3% of female executives were made redundant in the past year, 1.1 percentage points more than male bosses.

It found that while women now make up 57% of company executives only 40% are departmental heads and fewer than one in four are chief executives.

The survey of more than 38,000 executives revealed a "substantial" gender pay gap at the higher end of the executive career ladder, the Institute said.

"A lot of businesses have been focused on getting more women on boards but we've still got a lot to do on equal pay and equal representation in top executive roles," said CMI chief executive Ann Francke.

"Women make up almost three out of four at the bottom of the ladder but only one out of four at the top."

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Burberry's Profit Falls, But Brand 'Strong'

Burberry reports a fall of almost 30% in profit in the first half of this year, but insists its brand "remains strong".

It said pre-tax profit over the six months to the end September was £112m - which includes one-off items worth £61m - compared with £159m for the same period in 2011.  

Last month the luxury fashion firm reassured investors that sales had steadied towards the end of its second quarter, after issuing a shock profit warning in September.

Its first-half revenue was £883m - up 8% at constant exchange rates - but growth slowed to 5% in the second quarter, compared with 11% in the first.

The exception items included a one-off charge related to the termination of a fragrance and beauty licence deal, as Burberry plans to bring its perfume business in-house. 

Chief executive Angela Ahrendts said this marked a "significant brand and business opportunities.

"Our global teams are excited to partner with long-standing distributors, suppliers and customers to optimise these under-penetrated categories," she said.

"One consistent brand expression, leveraged across all categories, will underpin future growth in the beauty division and our existing core business."

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Romney Win 'Could Boost Dow By 500 Points'

The Dow Jones industrial index might be boosted by up to 500 points if Republican presidential hopeful Mitt Romney wins the election, it has been claimed.

The Centre for Economic Business Research (CEBR) said the bounce could occur before Mr Romney, who has trailed Democrat candidate Barack Obama in some polls, implemented his new policies.

"A President Romney has promised a radical departure, with bigger budget cuts and tax cuts," CEBR head Douglas McWilliams said.

"And he would be perceived as pro-business which might boost the financial markets."

Mr McWilliams added: "I would be surprised if a President Romney changed the economy as much in the short term as his policy platform suggests.

The CEBR believes Congress may be divided irrespective of the winner

"Though there would be an initial market bounce of perhaps 500 points on the Dow because a Romney victory is not priced in."

The CEBR believes that quantitative easing (QE) – the injection of liquidity into the financial system – has been effective in boosting a return to modest growth.

"What is different is that in the US, QE has worked; in the UK it has been much less effective," Mr McWilliams said.

"Bank lending in the US is growing for both business and households. Even property lending, which for a long time had been in the doldrums and was holding back the US economy is growing."

Mr McWilliams, a former chief economic adviser to the CBI and chief economist for IBM UK, said US growth may accelerate by its newly exploited source of cheap energy - shale gas.

"The country is gradually becoming self-sufficient in energy which is very cheap by Western standards," he said.

"Because of increased drilling, oil is a fifth cheaper than in Europe while shale gas is available at the equivalent of a quarter of the price of oil."

However, the competitive edge given by the cheap gas is set to be exploited by key competitor China, which is could hold the world's biggest reserves of shale gas.

Shale gas extraction has been trialled on a small scale in Britain

The Chinese government has announced a subsidy to spur the industry and it hopes to use shale gas for at least 6% of the market by 2015.

While Mr Obama has needed to broach the issue of tax rises within a divided Congress, Mr Romney has urged tax cuts to spur future growth – a concept the CEBR believes could be innovative amid a record deficit.

"In the longer term there is more scope for a President to make a difference and we could see the option of low spending and low taxation applied in a major Western economy," Mr McWilliams said.

"It could prove an exciting experiment."

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BRC: Retail Sales Fall Ahead Of Christmas Rush

Retail sales have grown at their slowest pace for almost a year as shoppers stick to buying only essential items, according to new research.

Like-for-like sales were down 0.1% in October, compared with the same period last year, a study by the British Retail Consortium (BRC) and professional services group KPMG showed.

Meanwhile, total sales were up 1.1%, against a 1.5% rise the year before - the slowest growth in total sales, excluding Easter, since November 2011.

It follows a surprise hike in September when like-for-like sales were up 1.5% and total sales were up 3.4%, which the BRC's director general described a "something of a false dawn".

"October's poor performance wasn't a one off," Stephen Robertson said.

"Year-to-date average growth hasn't outpaced inflation meaning overall sales volumes going backwards."

October's online sales were especially poor, he said, adding that the last three months include the two weakest growth rates recorded in four years.

"Falling consumer confidence means people are limiting spending to essential items and are cautious about committing to big-ticket and discretionary buying," he said.

"This underwhelming showing means there's all to play for as Christmas approaches."

KPMG's head of retail, David McCorquodale, said that although official figures last month showed the UK was out of recession, consumer confidence has not yet bounced back.

"Retailers are holding less stock than a year ago and may choose to be cautious with pre-Christmas sales in order to protect margins," he added

"However, the disappointing sales figures for October indicate that winning share of the Christmas wallet will be just as competitive over the next two months as it was last year."

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Marks And Spencer Reports Fall In Profit

Marks And Spencer has reported a fall in underlying pre-tax profit to £297m for the first half of this year.

The chain blamed pressure on consumers' disposable incomes and volatile trading conditions - hit by bad weather - for the figure, which compares with £307m profit over the same period last year.  

But sales across the 128-year-old group were up 0.9% at £4.7bn driven by strong performance in its food division and internationally.

In its UK stores, however, sales were flat in the second quarter, with a 1.6% rise in food partially offsetting a 1.8% fall in general merchandise sales. 

It follows a 6.8% slump in general merchandise sales in the first quarter as a result of the wet summer weather and problems with stock availability. 

The group's chief executive, Marc Bolland, said it had taken steps to address these issues, "and as a result, we delivered an improved performance". 

"We are pleased to report a better performance across the business in the second quarter," he said.

"As we approach the all-important Christmas period, we have better than ever Christmas products, to help our customers enjoy a special Christmas at home."

Eighteen months ago, Marks and Spencer launched a plan to transform itself into an "international multi-channel retailer" by boosting its website and making it easier to buy products on smartphones and tablets. 

Mr Bolland said this strategy was making "strong progress", with growth across its multi-channel business.

Retail analysts Conlumino described the results as a "mixed bag".

"While the overall half year numbers look anaemic, there has been a material uplift in fortunes since the first quarter," managing director Neil Saunders said.  

"It remains too early to call whether M&S is back on the path to sustainable growth.

"M&S has still underperformed the market in fashion and growth in general merchandise remains elusive on a like-for-like basis.

"All of this points to the fact that M&S still has plenty of issues to resolve and there is still much work to be done."

More follows...

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HSBC Hit By £500m Money Laundering Charge

By Mark Kleinman, City Editor

HSBC will tomorrow prolong the latest wave of financial penalties for Britain's banks by setting aside hundreds of millions of pounds more to cover settlements for breaching anti money-laundering rules.

I have learned that HSBC will raise the likely bill for fines from US authorities to as much as $1.5bn (£935m) in its third-quarter results, a move that will underline the growing seriousness of the probes into the conduct of one of Britain's biggest lenders.

The revised estimate will mean HSBC allocating $800m (£500m) to potential penalties in its accounts for the three months to the end of September following a $700m (£437m) hit disclosed in its half-year results in July, analysts say.

The expected fines relate to inadvertent breaches by HSBC of anti-money laundering procedures in its Mexican operations which are now under investigation by a string of powerful US watchdogs.

If the eventual settlement does reach as high as $1.5bn, it would be one of the largest punishments ever meted out to a British bank.

News of the fine comes just days before the US presidential election and in the wake of public concerns from British regulators over the handling of banking misconduct inquiries by their American counterparts.

In its interim results in July, HSBC said the $700m charge was its "best estimate of the aggregate amount of fines and penalties that are likely to be imposed in connection with these matters. There is a high degree of uncertainty in making this estimate, and it is possible that the amounts when finally determined could be higher, possibly significantly higher."

Since then, the bank is understood to have held further discussions with US regulators, which have prompted it to increase its estimate of the prospective fines.

Regulatory sources familiar with the discussions on both sides of the Atlantic said that HSBC continued to possess no definitive guidance about the timing or scale of settlements with the relevant authorities.

At a US Senate sub-committee hearing in July - during which David Bagley, HSBC's Head of Compliance, resigned - the bank admitted that it had fallen short of the required standards in processing transactions in Mexico. Days later, it was fined $27.5m (£17m) by Mexican regulators over the failings, which potentially gave drug-lords, terrorists and other criminals a gateway into the US banking system.

The investigations sparked by the Mexican offences prompted Stuart Gulliver, HSBC Chief Executive, to launch an overhaul of the bank's compliance operation.

Since the summer, it has hired Robert Werner, former Director of the US Treasury's OFAC, as head of global standards assurance, a new role in the group. It also recruited Preeta Bansal, a senior official in the Obama administration, as global general counsel for litigation and regulatory affairs.

Mr Gulliver, who took over the running of HSBC in 2011, after the offences in Mexico took place, said in July that it was right that the bank be held accountable for them.

"We are profoundly sorry for our mistakes, and are committed to putting them right. With a new strategy and senior leadership team in place since the start of 2011, we are introducing new processes and structures to help us manage risk and ensure more effective compliance in the future."

HSBC is not the only UK-based bank to have fallen foul of US regulators in recent months.

Barclays paid £290m in June to settle with authorities in the UK and US over evidence that traders had attempted to rig the key interbank interest rate Libor.

Standard Chartered, the emerging markets bank, paid $340m (£212m) to the New York state Department of Financial Services after being accused of concealing illicit Iranian transactions. The department's handling of the probe led Sir Mervyn King, Governor of the Bank of England, to issue a rare public rebuke. Standard Chartered remains in talks to settle with other US bodies.

On Friday, Stephen Hester, Chief Executive of the taxpayer-backed Royal Bank of Scotland (RBS), said he expected to begin settlement talks over Libor-fixing in the near future.

The quarterly results of Britain's banks have been overshadowed by the escalating cost of historic misconduct, principally relating to the mis-selling of payment protection insurance (PPI). Between them, Barclays, Lloyds Banking Group and RBS set aside a further £2.1bn for PPI compensation in the third quarter, with HSBC expected to add a comparatively modest sum to that total.

Beyond fines and penalties, however, HSBC's quarterly results are expected to depict a bank in rude health. Analysts at Deutsche Bank say that it will report approximately $5bn in third-quarter profits, although that figure does not include PPI and money-laundering provisions.

Mr Gulliver has shed almost 40 HSBC-owned businesses since he took over, and has adopted a more pragmatic approach to the shape of its international operations, focusing on disciplines such as trade finance, where it has a competitive advantage.

HSBC refused to comment today.

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Ryanair Sees Profit Soar 10% In First Half

Ryanair has reported an after-tax profit of 596m euro (£477m) for the first half of 2012, up 10% on the same period last year.

The budget airline's results beat analysts' expectations thanks to a surge in passenger numbers over the summer and a lower fuel bill. 

It said traffic was up 7% - 48m passengers flew with Ryanair over the period - and fuel costs were lower than forecast because of a saving programme.

The Dubin-based company, known for its low cost tickets, added that average fares were up, helping to boost revenue by 15% to 3.1bn euros (£2.48bn).

Chief executive Michael O'Leary said: "Profits exceeded our expectations driven by a combination of strong summer bookings, particularly post the Olympics, a 6% rise in average fares, and lower than forecast fuel bill due to the successful implementation of our fuel savings programme."

More follows...

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Delicate Diplomacy On Cameron Gulf Arms Tour

David Cameron is starting a three-day tour of the Gulf and Middle East today in a bid to cement major UK arms sales and bolster relations with allies in the region.

The Prime Minister will personally spearhead a push to persuade the United Arab Emirates to buy 60 of BAE's Typhoon jets over French rivals in a deal reported to be worth upwards of £3bn.

On Tuesday, he will travel to Saudi Arabia - Britain's biggest trading partner in the region - which is also considering adding to its fleet of aircraft.

Downing Street said the visit - Mr Cameron's second to each country as premier - was part of a wider effort to build a "reinvigorated partnership" between Britain and the region's leaders.

Reinforced military ties are seen as crucial amid continued fears over Iran's nuclear ambitions and the threat Tehran could seek to badly disrupt oil supplies by blocking the Straits of Hormuz.

Mr Cameron will fly first to a military airbase near Dubai where a number of RAF Typhoons are stationed to promote the aircraft to military and political figures from the UAE.

He will also hold talks with the Crown Prince of Abu Dhabi and Prime Minister of the UAE on the potential for a joint work on the next generation of military aerospace equipment.

The Government hopes to secure deals for 100 Typhoons to be sold to the region in the coming year - worth at least £6bn to British firms.

Mr Cameron faces a tough balancing act, however, as he attempts to secure billions in investment from the oil-rich states while addressing concerns about the human rights records of their regimes.

The Arab Spring has led to an increased focus on largely autocratic rule in many states, including crackdowns on pro-democracy and other protest movements.

The Government has been criticised for failing to condemn abuses and accused of continuing to sell military equipment with insufficient guarantees it would not be used in repression.

But Saudi officials reacted angrily to an "insulting" inquiry into it by the Commons foreign affairs committee, warning it would be "re-evaluating" relations.

"We want to work together with the Gulf countries towards a future that is rich in prosperity, strong in defence and open in its handling and pursuit of political and economic reform," Downing Street said ahead of the visit.

On Wednesday, Mr Cameron will make a short visit to the Middle East before flying home for talks with German Chancellor Angela Merkel at Downing Street ahead of the crunch EU budget summit.

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RBS Confirms £1.2bn Loss After PPI Hit

RBS has confirmed it made a loss before tax of £1.2bn in the third quarter, compared with a profit of £2bn for the same period last year.

As revealed by Sky's City Editor, the bank has set aside a further £400m for the mis-selling of payment protection insurance, meaning the scandal has cost it £1.7bn to date.

This provision took the total compensation bill for Britain's four largest lenders past the £10bn mark.

The 82% taxpayer-owned bank also said it had taken a further hit of £50m to cover costs relating to the summer's massive IT failure - which saw many RBS, NatWest and Ulster Bank customers locked out of their accounts.

It takes its bill for the meltdown to £175m.

The bank also expects to face "material fines" in relation to how Libor and other interest rates were set, it added.

RBS is under investigation by US and UK authorities over the rate-rigging scandal and is expected to be one of the next banks to settle after Barclays was fined £290m in June.

"The group expects to enter into negotiations to settle some of these investigations in the near term and believes the probable outcome is that it will incur financial penalties," RBS said.

It added that it had dismissed "a number of employees for misconduct" after investigations into rate setting.

But the group's core banking operations - if the mis-selling and IT charges are stripped out - performed well, with operating profit for the three months reaching £1bn.

A decline in charges on bad debt helped boost performance at the bank, which said its restructuring would be complete in the next 18 months.

As part of this plan, the number of employees was down by 9,900 from a year earlier, resulting in a 5% fall in staff costs compared to the previous quarter.

The bank described the collapse of the sale of 316 branches to Santander as "disappointing".

As a condition of RBS' state bailout, the European Union ordered it to offload the branches by the end of next year. RBS said it did not expect this to change and so had restarted efforts to sell them.

The group's chief executive, Stephen Hester, said it now needed to focus on improving its reputation.

"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully," he said in a statement.

"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank's safety and soundness has advanced so well."

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Car Insurance Cost Fall 'Will Not Last'

Car insurance premiums are said to have gone into reverse gear by £360 (13.6%) for young drivers - but there are concerns costs could rise dramatically after next month's EU gender ruling.

Insurance comparison site Confused.com has advised 17 to 20-year-old drivers to take advantage of "today's preferential rates" but warned them to avoid 2013's predicted price hikes by "shopping around".

Average comprehensive car insurance prices now stand at £757 as of this year's third quarter, compared to £843 for last year's third quarter - a significant year-on-year fall of £87 (10.3%).

Car insurance prices actually fell for all age groups, particularly young female drivers, but predictions from the Treasury indicate that young female drivers could see rises of up to 24% after the EU gender ruling becomes law on December 12.

After this date women and men cannot be priced differently for insurance meaning women will no longer directly benefit from being statistically less risky drivers as far as insurers are concerned.

This predicted insurance price rise could affect female drivers throughout various age groups, according to the Treasury data.

Sharon Flaherty, editor of Confused.com, told Sky News: "At the moment women pay less than men and statistically this is because on average they are less of a risk on the roads than young male drivers.

"However the bad news is that on December 21 the law change will mean that men and women have to be judged as exactly the same on the roads.

"Women will effectively be charged more because statistically they will no longer be allowed to be rated as safer on the roads."

Women aged 26-30 years are forecast an 18% price hike once the gender directive takes effect. Female drivers aged 31-35 are expected to suffer a 10% price rise.

Smaller price rises are expected for women aged 36-40 who are predicted to experience a 3% rise, and 41 to 45-year-old female drivers are only expected to receive a 1% price rise for their future car insurance policies.

Women on average saw their premiums shrink by 11.7% over all in the third quarter.

For spouses of either gender the average premium cost for a joint insurance policy is a lot less than average costs for solo drivers.

Male drivers insured plus spouse are quoted on average £432, compared to £907 as insured only driver, for women it costs an average of £787 for insured only driver cover, but just £418 for women who have a spouse on their policy.

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Comet Collapse: Gift Vouchers Suspended

Gift vouchers for stricken electrical retailer Comet have been suspended, the chain's administrator has confirmed.

Deloitte, which was appointed on Friday, has launched an "urgent" search for a buyer to protect some 6,600 jobs at the 236-outlet chain.

But, as a consequence, of administration gift vouchers have been suspended even though all Comet stores remain open and the group's staff will continue to be paid.

A spokesman for Deloitte said: "We are assessing the position with regard to gift vouchers, to establish whether it is possible for the company to accept them in future.

"But in the meantime stores have been instructed not to accept payment by means other than credit card or cash.

"If ultimately it is not possible for customers to redeem gift cards at Comet, then they will have an unsecured claim against the company, and the administrators will be pleased to provide the appropriate forms for customers to make such a claim if and when that eventuality arises."

The collapse of Comet marks one of the biggest high street casualties since the demise of Woolworths in 2008 and comes a month after the failure of JJB Sports.

Neville Kahn, joint administrator and restructuring services partner at Deloitte, said on appointment: "Our immediate priorities are to stabilise the business, fully assess its financial position, and begin an urgent process to seek a suitable buyer which would also preserve jobs.

"We appreciate the co-operation and support from the management, staff, customers, landlords and suppliers at what is clearly a very difficult time."

Deloitte said Comet had been hit by weak high street trading conditions, competition from online rivals and being unable to secure the trade credit insurance needed to safeguard suppliers.

"The inability to obtain supplier credit for the peak Christmas trading period means that the company had no realistic prospect of raising further capital to build up sufficient stock to allow it to continue trading," Deloitte added.

In particular, it was knocked by the lack of first-time home buyers, which had been key customers for Comet.

Its administration comes just months after Comet was taken over by investment firm OpCapita, which bought the chain in February.

The UK's high street electrical market has come under huge pressure as cash-strapped shoppers put off purchases of big-ticket items such as TVs and large appliances, as online rivals take a bigger slice of the sector.

The spokesman said extended warranties previously purchased remain unaffected by the administration and remain valid.

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