Latest GDP Drop Puts Pressure On Osborne

A lot of people suspected the news would not be good. It turns out it was even worse than expected.

Britain's economy is shrinking once again - and far deeper into negative territory than was anticipated.

That 0.3% decline in the fourth quarter of 2012 leaves Britain's gross domestic product 3.3% shy of its 2008 peak.

It's deeply embarrassing for the Chancellor, who told Sky News earlier today that despite this setback it was "a reminder that Britain faces a very difficult situation.

"We have problems at home but there are also problems abroad. You can either run away from them - and the British public understand there is no overnight solution and we are heading in the right direction."

But according to the Shadow Chancellor, Ed Balls, the figures are the "moment when David Cameron and George Osborne's complacency is completely exposed".

And it leaves the UK even further shy of its international counterparts. In Canada, the US, Germany, China and plenty of other major countries, GDP has already rebounded to the level it was before the crisis.

Britain, on the other hand, remains below that peak - even five years after the crisis started.

The National Institute for Economic and Social Research defines a depression as a "period when output is depressed below its previous peak."

IMF chief economist Olivier Blanchard said Osborne needs to change his plan

By that definition, Britain is still stuck in a depression - and this depression is longer than any in recorded economic history: even the 1930s.

In the end, this is the challenge for George Osborne. Britain's total capacity to produce wealth - which is in essence what GDP measures - has diminished substantially during this crisis. That, when it comes down to it, is what lies behind the squeeze so many families are facing on their incomes.

And the economy's inability to regain meaningful growth is something that should concern the Chancellor. There is now growing pressure (even more than the significant amount there was before) for him to reconsider his fiscal plans.

It isn't merely Nick Clegg: the International Monetary Fund's chief economist, Olivier Blanchard, believes that having warned Mr Osborne multiple times that he needs to be ready to change course if the UK economy disappoints, that moment has now come.

Whether this pressure will be enough to force Mr Osborne to change course is another question. He has been so forthright about the need for austerity all the way through the crisis that it would surely be politically humiliating to do an about-turn now.

And indeed, the evidence is that the austerity practiced in the UK hasn't actually been as aggressive as the Chancellor has made it sound.

However, the Chancellor refused to answer whether he agreed or disagreed with Mr Blanchard's advice.

Pointing to alternative support from the former IMF chief economist he said: "You're going to get economists disagreeing. I'm absolutely clear: we have the right plan. It was not a plan that was going to deliver results overnight." 

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Apple Overtaken By Exxon As Most Valuable Firm

Apple has been overtaken as the most valuable company in the world - by its old rival Exxon Mobil - after the iPhone and iPad maker saw its stock price fall.

Exxon Mobil is now the largest US publicly-traded company by market value - roughly a year after losing the title to Apple.

Apple's stock has kept on declining since it released its earnings report on Wednesday.

It dropped 2% on Friday to $441.30 (£279.36) for a market capitalisation of $414.5bn (£262.4bn).

Exxon Mobil, meanwhile, gained 13 cents to $91.48 (£57.91) and has a market capitalisation of $417bn (£264bn).

Apple's earnings results suggested that its phase of fast growth - which is rare for a company of its size - may be coming to an end.

On Thursday, the stock saw its biggest one-day percentage drop since 2008.

Apple's market capitalisation has now fallen by about $250bn (£158bn) - roughly the market value of Google - since hitting a high last September, when the stock traded above $700 (£443).

Exxon Mobil runs the Mobil chain of petrol stations as well as refineries

Apple first surpassed multinational oil and gas firm Exxon in the summer of 2011.

The two companies swapped places that autumn, until Apple surpassed Exxon for good in early 2012 before their latest reversal of fortunes.

"Apple was clearly a momentum stock," said Kim Forrest, a senior equity research analyst at Fort Pitt Capital Group.

"Whenever the numbers behind momentum stocks stop, the momentum players are out and the stock tumbles."

Nevertheless, Apple still managed to ship a record 47.8 million iPhones in the December quarter, up 29% from a year earlier.

However, that lagged behind the 50 million phones that analysts on average had projected.

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UK GDP Falls By 0.3% In Last Quarter

How GDP Is Compiled Really Matters

Updated: 10:21am UK, Tuesday 27 November 2012

By Ed Conway, Economics Editor

I've covered economics for a decade or so, but I confess that until very recently I didn't really know what GDP really is.

I mean, like most of you I knew it was the broadest and most widely-used measure of our economy's health - that it determines whether we're officially in recession or not (two or more quarters of shrinking GDP equals a recession).

I knew it was the sum of everything spent, earned or made in Britain.

What I didn't know was how it's actually put together.

I guess I vaguely assumed - and I don't think I'm entirely alone - that the Office for National Statistics had some kind of electronic hotline into British business, some privileged access to their numbers, which in turn became the Gross Domestic Product number.

Turns out I was monumentally wrong.

For it transpires that GDP - that big number we're all so focused on, the figure that tells us whether we're in a recession or booming, that can end a political career and swing an election - is actually a big, big survey.

I know this because earlier this month I spent some time in the ONS headquarters in Newport with the team who put together this most significant of all numbers.

For the first time, they allowed cameras into their offices to show how GDP really comes into being - and the genesis might well surprise you.

At this point it might be worth explaining why this matters so much: there is arguably no other number out there that can swing the financial markets quite so much, that can influence Britain's feelgood factor, that dominates the headlines and strikes fear into politicians.

And yet there are many people who question whether we can really rely on the numbers.

Some economists argue that the GDP figures in recent months have painted a far more negative picture of the UK economy than is actually the case.

Some argue that Britain never really experienced a double-dip recession - but that this reality will only ever be confirmed many years into the future when the ONS revises those initial estimates.

So how GDP is put together really matters. And it all starts with the pounds in your pockets.

The first estimate of GDP is created from data collected in surveys of tens of thousands of surveys from businesses around the country - whether they're manufacturers, construction firms, retailers or others.

Each month a large sample of them is asked by the ONS to tell them their turnover (how much money is going through the till), along with a few other industry-specific questions which form part of the retail sales, manufacturing output and other releases.

The turnover number is what matters from the perspective of GDP. They fill the relevant questionnaire in and post it to the ONS (they can also submit the data through an automated telephone system).

When those envelopes arrive there the questionnaires are scanned and the numbers go into the ONS' systems.

The problem is that by the time that first estimate needs to be produced, the ONS only has 44% of the relevant data (the rest arrives in dribs and drabs over the following months, hence later revisions). In particular, the ONS only has early responses for the final month of the quarter.

So there are some pretty big gaps to be filled, and the ONS has to make some estimates about what the other data will eventually say when it comes in.

It relies for this on computer models, backed up by assumptions and calculations from the ONS staff themselves. After they make these calls they meet and discuss them in so-called "balancing meetings" - the statisticians ask each other whether the data are reliable and their assumptions have foundation.

During this entire period, those GDP assumptions and the ultimate figure are kept locked up (quite literally - there are safes into which they are put) such that only a dozen or so statisticians actually know the number before it comes out.

So far as anyone knows, there has never been a leak of a number as sensitive as this from the ONS. But 24 hours before the figures are published, selected ministers and officials also get a look.

The figures are revised again a month after that initial release, and then again a month later. During that period, more information has come in from quarterly surveys which measure families' and businesses' incomes, and other spending data.

As I said, GDP can be measured in terms of what we spend, what we earn and what we make - they should all add up to the same number, since what one person buys another person sells. And the extra data furnishes that initial estimate and, occasionally, contradicts it.

The ONS maintains that its record of revisions is acceptable by international standards. It points out that its surveys have far more respondents than those put together by independent competitors.

But some, most notably Kevin Daly of Goldman Sachs, argue that it has a tendency to revise the more distant history so substantially that often periods we thought at the time were slumps were actually booms.

A case in point is the early 1990s - at the time, the ONS said the UK was suffering a double-dip recession.

But by the end of the millennium it had revised its assessment - far from slumping, the UK was actually bouncing back forcefully at that point. When Norman Lamont referred to "green shoots", it turns out he was absolutely right.

Today, the GDP figures have been telling an altogether different story to the unemployment figures, which seem to suggest there never was a double-dip. Based on precedent, we are unlikely to know the definitive story for years to come.

Which implies that the ONS, and the way it puts together this most important of all numbers, will remain in the spotlight for the foreseeable future.

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Petrol Price Rise On Way As 'Floodgates Open'

Petrol prices are set to rise by up to four pence a litre in the next few days, retailers have predicted.

The rise was forecast by the Petrol Retailers Association (PRA), and would add around £2 to the cost of filling a typical family car.

It comes as forecourts pass on increased wholesale costs to motorists.

"Independent retailers have been soaking up this increase at the expense of already tight margins because they know how hard the motorist is squeezed," said PRA chairman Brian Madderson.

But he warned: "The floodgates will have to open soon."

The AA's Edmund King criticised the predicted rises

The AA forecast a smaller rise of about 2.5 pence per litre, as it accused the industry of failing to pass on falls in wholesale prices as quickly as increases.

The Office of Fair Trading will decide next week whether to launch an investigation into the fuel market.

AA president Edmund King told the Daily Telegraph: "Another new year, another new round of pump price rises after the industry failed to pass on fully wholesale price savings.

"The insight we are now getting on wholesale price movements rams home the need for this information to be out in the public domain immediately."

Throughout the whole of 2012, the average price of a litre of petrol rose by 2.75p.

Despite a fall in fuel demand across northern Europe, and an apparent glut of petrol capacity, wholesale costs have risen steeply in the four weeks since Christmas.

Industry figures show the daily average selling prices in the UK have risen by less than one pence per litre for both petrol and diesel since January 1.

Mr Madderson also said that George Osborne should abandon plans to increase fuel duty from September.

"If fuel costs continue to rise as our sluggish economy and loss of AAA credit rating weaken the pound sterling against the US dollar, the Chancellor must abandon plans to increase duty ... when he presents his Spring Budget.

"Householders and businesses will be hard pressed to cope with market fluctuations let alone more Government tax intervention."

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Microsoft Reveals Year-On-Year Profit Dip

Windows 8 has helped Microsoft to post record revenues in the past quarter, but its profits are down slightly from the same period a year ago.

Profits dipped 3.7% from 12 months ago to $6.38bn (£4.04bn), which was better than many had forecast.

Revenues rose 2.7% to $21.46bn (£13.59), a record for the US tech giant.

Microsoft said the boost in revenues came from pre-sales and upgrades of Windows 8, and gains in business software and other segments.

The second fiscal quarter statement, however, did not offer specific sales data for the Surface tablet - launched late last year by Microsoft - or its new Windows Phone 8 system.

"Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," said Steve Ballmer, chief executive.

"With new Windows devices, including Surface Pro, and the new Office on the horizon, we'll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need."

The profit amounted to 76 cents (48 pence) per share - one cent better than the Wall Street consensus.

Microsoft shares traded down 1.4% in after-hours exchanges.

Citi analyst Walter Pritchard said Microsoft was on target.

"This was the first time in memory we haven't seen disappointment in the Windows line," he said.

Raimo Lenschow at Barclays said the results were "essentially in line with investors' low expectations."

The analyst said Microsoft shares would "pull back only modestly" and that investors will be "looking for further detail on what management expects for Windows 8 moving forward" and sales figures for the Surface.

Windows remains the dominant platform for personal computers, but Microsoft has lost ground to Google and Apple in newer devices which use rival operating systems.

The company's search and online services have struggled, but its Xbox is the hottest gaming system in the industry.

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Nick Clegg Suggests Coalition Cut Too Deeply

Deputy Prime Minister Nick Clegg has appeared to admit that the coalition cut spending too deeply when it took power.

Speaking ahead of the release of figures that are expected to show a fresh contraction in the UK economy, he said ministers had "comforted" themselves at the time that the reduction was in line with plans drawn up by the previous Chancellor, Labour's Alistair Darling.

In an interview with The House magazine, he said: "If I'm going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government.

"I think we comforted ourselves at the time that it was actually no more than what Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment.

"But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible."

Bank of England governor Sir Mervyn King has predicted a weaker quarter

Rachel Reeves, shadow chief secretary to the Treasury, said: "This is the first admission that this Government has made serious mistakes on the economy."

Some experts believe gross domestic product (GDP) - released later today - will have fallen by 0.1% in the final quarter of 2012.

If the economy then contracts in the current quarter the nation would be officially back in recession.

Hopes of a rebound are fading after a snow-hit start to 2013, which some estimate cost Britain more than £500m-a-day in lost output.

A fourth-quarter downturn would be a sharp reversal of the 0.9% recovery seen in the third quarter, when output was fuelled by one-off factors such as the Olympics and as the economy clawed back activity lost during the Queen's Diamond Jubilee holiday.

Bank of England governor Sir Mervyn King has already warned that the quarter would be "considerably weaker", while the IMF believes the UK contracted by 0.2% overall in 2012.

It also expects expansion of just 1% during this year.

Today's figures from the Office for National Statistics (ONS) represent the initial estimate of GDP and are subject to revision over subsequent months.

But the run of gloomy economic indicators increases the threat to the UK's prized AAA rating, with all three major ratings agencies placing the country on negative outlook.

Construction has so far been the only bright spot, according to recent industry surveys, with activity surging to a 15-month high in December.

But it accounts for only 10% of the economy and the far bigger services sector has not fared so well.

The first official estimate of fourth-quarter GDP will not include overall household consumer spending figures, which will be taken into account in the second estimate.

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Apple Reports Quarterly Revenue Of $54.5bn

Apple sold 47.8 million iPhones in the last quarter of 2012 and its revenues rose to $54.5bn (£34.4bn) - but the numbers fell short of its targets.

Revenue for the first fiscal quarter of 2013 - the key Christmas shopping period from October 1 to December 31 last year - came in at a record $54.5bn (£34.4bn), but less than the $55bn (£34.7bn) forecast by Wall Street.

Earnings of $13.1bn (£8.2bn) remained flat compared to the year before, marking the first time tech giant had not boasted double-digit increases in earnings for several years.

Shares of the computing giant fell in after-hours trading, at one point plunging more than 10%.

Some analysts had expected iPhone sales to be around 50 million and revenues to be slightly higher.

Net profit came in at $13.1bn (£8.7bn).

The results are likely to rekindle questions over what Apple has in its product pipeline, and what it can do to attract new sales and maintain its rocket-like growth.

CEO Tim Cook succeeded Steve Jobs

It was the third quarter that Apple has missed revenue expectations.

Competition from Samsung and signs that the smartphone market may be close to saturation have slowed Apple's growth.

Questions remain over the company's ability to innovate after the death of iconic co-founder Steve Jobs.

But chief executive Tim Cook said he was "thrilled" with the figures and insisted the company continued to focus on innovation.

"We're thrilled with record revenue of over $54bn and sales of over 75 million iOS devices in a single quarter," Mr Cook said.

"We're very confident in our product pipeline as we continue to focus on innovation and making the best products in the world."

Apple also sold 22.9 million iPads in the quarter, in line with expectations.

But only 4.1 million Mac laptop and desktop computers were snapped up compared to 5.2 million in the same period a year ago, while Apple shifted 12.7 million iPod portable media players this year in contrast to 15.4 million during last year's first quarter.

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Cameron To Target Tax Avoidance In Davos Speech

David Cameron will call for greater international cooperation to crack down on tax avoidance in a speech to the World Economic Forum later.

The Prime Minister will urge world leaders to work together to tackle problems with evasion and avoidance which allow multinational companies and the super-rich to keep their tax bills down.

The issue is a key focus for Mr Cameron during Britain's presidency of the G8 leading economic powers.

Downing Street said he would also use his speech at the Swiss ski resort Davos to talk about trade and transparency.

His spokesman said he would not be talking about Europe in the wake of his landmark promise of a referendum on Wednesday.

The World Economic Forum brings together top politicians from around the globe with leading business figures, economists and lobbyists.

On Wednesday, the left-wing Labour MP Dennis Skinner said it was "gruesome" for the Prime Minister to be "heading out of austerity-riddled Britain to wine and dine at Davos with 50 top bankers who helped to create the economic crash, several hundred tax avoiding millionaires".

Responding in the Commons, Mr Cameron said: "To be fair, I think when you see the speech I'm going to be making in Davos, in which I will be arguing we need greater transparency over tax, we need greater responsibility over the tax avoidance and tax evasion issues, we need greater transparency about companies and the land issue.

"You may even find there are some things I'm going to say you might agree with."

In the most significant speech of his premiership so far, Mr Cameron announced on Wednesday that Britons will be able to vote to leave the European Union by the end of 2017 if the Conservatives win the next general election.

He promised to negotiate a new settlement with Brussels and then stage a straight in-out referendum on British membership if he stays in power.

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easyJet Sees Revenue Up 9% In Last Quarter

Low cost air carrier easyJet has seen total revenue for the last three months of 2012 rise by 9.2%, up to £833m.

Total revenue for its first quarter reporting period, ending December 31, was £833m.

The airline also reported that passenger numbers were up 6.2% in the same period, to 13.7 million.

More follows...

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Rolls-Royce Job Cuts: Union Says 400 Face Axe

Aerospace firm Rolls-Royce has confirmed it is in consultation over job cuts at one of its plants, after a union said nearly 400 workers are at risk.

Rolls-Royce sent an internal memo to its staff to detail its proposals, according to the Unite union.

The plan puts 378 defence jobs at risk at its Ansty plant, near Coventry, Unite said - nearly half of its 800-strong workforce.

The union blamed defence spending cuts by the Government and said Rolls-Royce was planning to shut the plant in the next few years.

Rolls-Royce said in a statement: "We are in consultation with trade unions over reductions in our defence workforce at Ansty.

"We hope to achieve this without compulsory redundancies."

The firm said its civil aerospace business in Ansty was not affected by the plan.

Ian Waddell, Unite's national officer for aerospace and shipbuilding, said: "The blame for the loss of these highly skilled jobs in the key defence sector lies with the Government and its short-sighted determination to ram through massive spending cuts in the defence budget.

"Once again, Unite calls for a coherent defence industrial strategy to be drawn up as matter of urgency to safeguard jobs and a defence industry at which Britain excels.

"This is vital - otherwise more high-skilled jobs will be lost, perhaps forever.

"There is a very long timescale for consultation and implementation, so we hope that compulsory redundancies will be avoided."

Mr Waddell added that "work from Germany will be transferred to Rolls-Royce's site at Bristol".

He said bosses at Rolls-Royce had acted "fairly" by giving as much notice as possible to the staff of the company's plans.

The 200-acre Rolls-Royce site at Ansty employs about 800 people and handles the refit and repair of both aeroplane and marine engines.

Components for the company's Trent series of civil aviation engines are also manufactured on the site.

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David Cameron To Pledge 'In-Out' EU Referendum

Cameron And The EU: A Q&A

Updated: 3:46pm UK, Tuesday 22 January 2013

By Nicola Boden, Sky News Online

David Cameron's speech on Britain's position in Europe is significant for his party and for the country. Here is an explainer.

Why is Cameron making a speech?

Mr Cameron's speech on Britain's position in Europe has been a long time coming.

He wants to set out his views on the future role the UK should play in the European Union to try and settle rumblings in his own party and beyond.

The issue has become increasingly significant as the eurozone crisis developed and single currency members started pushing for closer integration in a bid to prevent a repeat of the crippling financial crisis.

This will require a new treaty, which could allow Britain to renegotiate its membership on a looser basis.

Mr Cameron wants to use this as a way of addressing growing calls for a referendum due to fears about the steady loss of sovereignty to Brussels.

Why was it delayed?

The speech was first planned months ago but put off until after Christmas.

It was initially planned for January 22 but then Downing Street were told this clashed with the anniversary of the signing of the Elysee Treaty between France and Germany and the timing would therefore play badly with these two key European allies.

January 21 was not an option because of Barack Obama's inauguration.

It was moved to January 18 and Amsterdam was fixed as the location, only for it to be delayed again because of the hostage crisis in Algeria.

Mr Cameron will now speak in London because it fits best with his schedule.

Why is it significant?

This speech has been billed as the most important foreign policy speech made by Mr Cameron since he first became Tory leader.

Europe is certainly becoming an increasingly pressing issue within the Tory party and nationally.

Senior ministers including Michael Gove have now openly talked about leaving the EU if powers cannot be brought back to Britain.

The Prime Minister wants to settle the question by setting out a clear strategy for the years ahead, with the prospect of a referendum in the next parliament should the Conservatives win in 2015.

Europe has long been a fault line in the Tory party and Mr Cameron hopes he can keep his party united as he increasingly focuses on winning the next general election.

It also represents an opportunity to steal a march on Labour, whose leader Ed Miliband is very woolly about his own position, and the Lib Dems - led by renowned europhile Nick Clegg.

And significantly, it could help stem the flow of support to UKIP, who advocate total withdrawal from the EU and have been surging in recent opinion polls.

What are Tory eurosceptics pushing for?

There are varying degrees of feeling on the Conservative benches but it has been suggested that a document drawn up by the "Fresh Start" group could become party policy.

This called for:

:: the repatriation of all social and employment law, such as the Working Time Directive;

:: an opt-out from all existing policing and criminal justice measures;

:: an emergency brake on any new legislation affecting financial services;

:: stopping the European Parliament moving between Brussels and Strasbourg.

What is David Cameron's position?

The Prime Minister wants to establish a "fresh settlement" with Brussels and then hold a referendum on it in 2018.

His plan would be to negotiate a looser relationship for Britain while allowing the single currency countries to forge stronger links, thus retaining the common market.

The referendum pledge relies on the Tories winning power outright in 2015 and is unlikely to hold if they have to enter another coalition, which would anger Tory MPs.

Downing Street seems confident the public would vote to stay in the EU if significant powers were returned to the UK.

Mr Cameron insists he wants Britain to remain in the EU but accepts that the "status quo" cannot continue.

Is repatriation of powers realistic?

This is the million-pound question.

Other EU members are unlikely to take kindly to British attempts to pick and choose what it wants to sign up to.

There is a risk that they could call Mr Cameron's bluff and say that Britain should just leave if it no longer wants to play a proper part.

What about pro-Europeans?

Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable have both warned that tabling a referendum will encourage uncertainty and put off investors, costing much-needed jobs at a time of economic fragility.

Business chiefs including Sir Richard Branson also published a letter earlier this month, urging Mr Cameron not to jeopardise relations with Brussels by pushing for a "wholesale renegotiation" of British membership.

Meanwhile, the Obama administration has declared that it wants a "strong British voice in the EU" - a view repeated by Barack Obama on the phone to Mr Cameron last week.

Where do the other parties stand?

Both Labour and the Lib Dems are on tricky territory when it comes to Europe.

Labour leader Ed Miliband was tied in knots last week when asked to outline his position.

He has refused to back a referendum but also suggested he would not overturn the current "referendum lock" which means a vote would have to be held if any more powers are transferred.

He created further confusion by suggesting he too would try to repatriate some powers.

Nick Clegg has called Mr Cameron's plans to bring back powers from Brussels a "false promise wrapped in a Union Jack".

In their manifesto in 2010, the Lib Dems expressed their commitment to an in/out referendum the next time Britain has to sign up to a "fundamental change" in the UK-EU relationship.

But now the Lib Dem leader says holding referendum would be putting "the cart before the horse" because Europe is still reeling from the eurozone crisis.

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Google Sees Its Annual Revenue Top $50bn

Search giant Google has hit a new annual revenue high and an increase in profit, despite ploughing more money into developing smartphone and tablet technology.

"We ended 2012 with a strong quarter," Google co-founder and chief executive Larry Page said.

"We hit $50bn (£31bn) in revenues for the first time last year; not a bad achievement in just a decade and a half."

The fourth quarter profit was up 6.7% from a year earlier at $2.89bn (£1.8bn), and for the full year Google's earnings grew 10% to $10.74bn (£6.8bn).

Revenue in the quarter that ended December 31 was up 36% from the same period a year earlier at $14.4bn (£9bn). For the year, revenues grew to $50.2bn.

Google shares jumped more than five% to $738.20 (£466) in after-market trading that followed release of the earnings figures, which topped most Wall Street estimates.

Google dominates the US online advertising market, which grew 14.9% to $10.58bn in the final three months of last year, according to eMarketer.

The market tracker estimated that Google takes in more than 41% of digital ad revenue in the US and "holds more share than any other company" when it comes to online, display and mobile advertising.

Google has sought to spread the use of its Android technology

However cost-per-click prices were down 6% from the fourth quarter of 2011, and up 2% on the third quarter of 2012.

In a conference call with financial analysts, Google executives stressed how the company is connecting with people on smartphones and tablets, and cautioned that it would take time to get freshly acquired Motorola Mobility on course.

Mr Page said he was excited about progress Google has made in handling search queries spoken to mobile devices and described the online Play shop for music, books, applications and other digital content as "on fire."

Google's mapping service program tailored for Apple gadgets running on the iOS platform have been a hit, Page said, adding that its search and email programs are also popular on Apple devices.

"We now live in a multi-screen world - in fact, we feel naked without our smartphones," Mr Page said.

"Devices have been one of our biggest bets in the last few years, along with the software that goes with these devices."

In an indirect shot at the Apple iPad Mini launched late last year, Mr Page said Google's Nexus 7 "continues to define the seven-inch tablet category."

Google has been shedding unwanted Motorola Mobility assets since it completed its $12.5 billion takeover of the company last year.

The Internet giant's purchase of Motorola Mobility was seen as a grab for patents to protect Google's Android mobile operating system from legal attacks.

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Old Fashioned Con Artistry Makes A Comeback

Traditional con artistry is making a comeback with cheque and procurement fraud as well as Ponzi scams on the rise.

While the spotlight has been on rogue traders and 'super' fraud cases in recent years, KPMG has found a surge in the number of individuals swindling employers, banks and the government.

The latest bi-annual Fraud Barometer reports that insider fraud is hitting corporates hard while more individuals are over-claiming benefits and evading tax.

Cases include a finance department employee who stole hundreds of thousands of pounds – leading to the closure of the company she worked for.

In another case, a family used false identities to claim £2.2m in HIV medication - which was then shipped to Africa and sold at a profit.

Identity fraud more than doubled in value from the year before to £26.3m, while counterfeit goods fraud was three times the five-year average at £22.9m.

Ponzi Schemes worth £72m came to court - also three times the level seen in 2011 and procurement fraud increased to £21.4m in 2012.

Hitesh Patel, UK Forensic Partner at KPMG, said: "In the last few years we have become used to sophisticated frauds at eye-watering values. 

"While the total value of fraud has dropped substantially in the absence of so-called fraud 'super' cases, the old-fashioned con man hasn't given up his tricks. 

"Times may be tough but the data shows that some people are unwilling to give up the lifestyles they've become accustomed to."

Fraud by either management or employees accounted for 80% of financial loss through fraud experienced by UK businesses in 2012.

Employee fraud cases rose to 35 in 2012, up from 22 the year before, with their value doubling from £12m in 2011 to £25.1m over the past year.

Tax evasion or benefit fraud cases rose to 15 from three in 2011.

Mr Patel said: "Tax evasion is one of the hot topics of the moment but an increasing assault on the social welfare budgets, particularly benefit fraud, is a real and increasing threat for the government, as shown by the latest figures. 

"Fraudulent actions of individuals in both the public and private sectors exacerbate the need to make cuts in the first place and cause more than just monetary loss: jobs can be lost and already tight government budgets are stretched further, with implications for the delivery of services."

The report also found a fall in the number of cases perpetrated by professional criminals, from 98 at the end of 2011 (valued at £1.4bn) to 79 in the 12 months to December 2012 (valued at £414m).

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Rose Replaces Grade As Ocado Chairman

By Mark Kleinman, City Editor

Sir Stuart Rose is to stage a dramatic stock market comeback after he was appointed today as the new chairman of Ocado, the online grocer.

I exclusively revealed that Ocado would announce Sir Stuart's appointment as the successor to Lord Grade, who was stepping down after seven years at the helm.

A statement confirmed the move shortly after it was revealed on Sky News.

Sir Stuart's arrival at Ocado represents his most prominent appointment since he stepped down as chairman of Marks & Spencer at the end of 2010.

His recruitment is a coup for the online retailer, which has yet to record an annual profit since launching a decade ago. Ocado floated on the stock market three years ago, since when its share price has fallen sharply.

Ironically, M&S was the catalyst for an increase in Ocado's share price on Monday with traders betting on rumours that the online grocer could be a takeover target for its high street counterpart.

Ocado, which is lauded for its customer service, is having to fight increasingly intense competition from the online operations of the big supermarket chains, including Tesco and J Sainsbury.

Since leaving M&S, Sir Stuart has taken on a number of part-time roles, including acting as an adviser to Bridgepoint, the private equity firm, and as a non-executive director of Woolworths Holdings, the South African retailer.

The former M&S boss, who was parachuted into the high street chain in 2004 to fend off a takeover bid from Sir Philip Green, had a fractious relationship with the company's shareholders after becoming executive chairman in 2008.

Sir Stuart is expected to take over as Ocado chairman after the company's annual meeting in May.

Ocado declined to comment before the official announcemet while Sir Stuart couldn't be reached for comment.

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Defence Cuts: 5,000 Soldiers Set To Be Axed

By Alistair Bunkall, Defence Correspondent

Around 5,000 soldiers will be made redundant in the latest round of job cuts, the Government will announce today.

The Army will bear the heaviest burden in this third tranche of redundancies, the Navy and RAF having already completed most of their necessary cuts.

Sky News understands that soldiers fitting the redundancy criteria will be informed by their superiors later this morning.

Anyone currently serving in Afghanistan is likely to be exempt from this round of job cuts, so too are soldiers preparing to deploy within the next six months and anyone recovering from a recent operational tour of duty.

No-one will actually be made redundant immediately and today's announcement marks the start of the process for the latest round of cuts. Final decisions will be made by June.

In the last round of cuts, 72% of redundancies ended up being voluntary. Military leaders and politicians are hoping for a similar outcome this time round.

Anyone accepted for voluntary redundancy will be expected to work a six-month notice period and those selected for compulsory redundancy will have a full year to find alternative employment before leaving the service.

They will be given resettlement support.

Around 9,000 British personnel are deployed to Afghanistan

By the end of the process the Army will have shrunk to 80,000 soldiers, a reduction of around 20,000, mostly through a redundancy process but also achieved through slower recruitment.

A fourth round of cuts is expected but has not been confirmed. It is likely this would happen at around the same time next year.

The job losses are part of a strategic review driven by budget cuts which aims produce a new look military by 2020.

The biggest commitment by some way is in Afghanistan - 9,000 personnel are deployed in the country - but the withdrawal process is due to start this year and by the end of 2014 most soldiers will have returned home.

Final numbers haven not been announced.

In October last year the Defence Secretary announced plans to rename the Territorial Army the 'Reservists' and double its members to 30,000.

There is also a hope that some of those leaving the military because of the redundancy scheme might sign up to the TA so their experience is not lost.

By the end of the redundancy process the number of serving personnel in all three services will be reduced to 150,000 from 180,000.

It will result in the smallest army since the 18th century and plenty of concerns over effectiveness.

It is not just serving military personnel taking the hit - the Ministry of Defence is in the process of cutting around 25% of its staff. The aim is to save £3.8m a year and to make the department less top-heavy with management.

The UK still faces real or potential threats around the globe, demonstrated in the past few weeks by the hostage situation in Algeria and conflict in Mali.

Some, particularly retired service chiefs, question the UK's ability to face these threats with a reduced military and gaps in the equipment locker.

The Government will again need to convince detractors, home and abroad, that the UK military can still earn international respect despite its reduced size.

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Prince Charles In British Industry Warning

Prince Charles is to warn that Britain is in danger of losing its reputation as the "standard bearer of quality manufacturing and engineering" if more young people are not attracted into the industries.

The Prince of Wales will deliver his speech during a visit to the Jaguar Land Rover production plant at Halewood on Merseyside.

He will say: "As a country, we are rightly proud of our industrial heritage, but we should also celebrate our continued success as the standard bearer of quality manufacturing and engineering throughout the world.

"From car production to quality shoe-making, from precision engineering to traditional craft skills, Britain is truly a global leader."

But he will stress that this reputation is at stake if the country does not attract more young people into manufacturing and engineering in the future.

The Prince is carrying out a series of visits over two days to champion the 'Best of British' engineering and manufacturing in the UK.

He will also launch Industrial Cadets, a national initiative backed by the Department for Communities and Local Government to encourage young people to join manufacturing industries.

The idea stemmed from discussions between the Prince and Tata Steel in 2010 and is being run by the education charity EDT.

Industrial Cadets aims to raise aspirations for students aged 12 to 14 by building awareness of manufacturing industry in their local area.

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Dreamliner Probe Widened Beyond Batteries

Boeing 787 Dreamliner Timeline

Updated: 1:50am UK, Saturday 19 January 2013

The turbulent history of the Boeing 787 Dreamliner:

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines.

Jan 18, 2013: US Federal Aviation Administration (FAA) officials arrive in Japan to examine a 787 and its melted battery pack after an All Nippon Air (ANA) emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Tax Office Moves To Wind-Up Late Pay Firms

HM Revenue and Customs attempts to shut down companies late to pay tax have jumped by 57% in a year, according to a new survey.

Business advisory firm Wilkins Kennedy said HMRC presented 5,302 petitions to wind up companies in the year ending March 31 last year, compared to 3,367 in the previous period.

As a result the Tax Office is adopting a tougher stance to late-paying business, the survey suggests.

After firms enter "compulsory liquidation" following a winding up order, a liquidator can be appointed to sell of assets to generate cash to pay creditors.

HMRC can use the wind-up orders a to reclaim debts from businesses that cannot pay their tax due.

According to the research, HMRC has toughened its approach to struggling businesses compared to recent years.

Anthony Cork, partner at Wilkins Kennedy, said: "When businesses run into trouble, often one of the first things they do is try to delay tax payments to help manage their cash flow - this puts businesses on a collision course with HMRC.

"HMRC does not like being used as a 'lender of first resort', and is keen to dispel the image that it is a soft touch or that the unauthorised late payment of taxes is an acceptable way for a business to resolve cash flow problems."

Government pressure on the Tax Office has increased in recent years as receipts have fallen post-global financial crisis, with further reduction from the collapse in interest rates - with the base rate now sitting at an historic low.

Wilkins Kennedy said that the jump in winding up petitions coincides with HMRC's continued tightening of access to the 'Time to Pay' business scheme that was expanded during the recession.

Late last year electricals chain Comet went into administration owing an estimated £26m in unpaid VAT and payroll taxes to the Tax Office

HMRC winding-up petitions have also been placed on several sporting entities in recent years, including Chester City and Rangers.

Mr Cork added: "Businesses need to be very careful about getting on the wrong side of HMRC - these figures show HMRC has become increasingly unwilling to compromise in its pursuit of missing taxes."

But the Tax Office told Sky News action is only taken after significant consideration is taken into each firm's circumstances.

"HMRC's aim is not to wind up companies or make individuals bankrupt, but to collect, as efficiently as we can, the debts that are due," an HMRC spokesman said.

"HMRC only initiates winding up or bankruptcy action where it believes this is the best course of action to protect the interests of the Exchequer in respect of a particular debt. We do not take such action lightly.

"Anyone who is struggling to pay an HMRC debt should call us. HMRC has an outstanding track record in supporting those who are experiencing genuine difficulty paying their debts, and this approach will continue."

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Boeing Dreamliner Deliveries Halted

Boeing 787 Dreamliner Timeline

Updated: 1:50am UK, Saturday 19 January 2013

The turbulent history of the Boeing 787 Dreamliner:

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines.

Jan 18, 2013: US Federal Aviation Administration (FAA) officials arrive in Japan to examine a 787 and its melted battery pack after an All Nippon Air (ANA) emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Investment Bank Chief To Quit RBS In Shake-Up

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is to embark on a further restructuring of its investment banking arm in a move that will pave the way for the departure of the unit's chief executive.

I have learned that RBS executives are at an advanced stage of preparations for splitting its markets and international banking arm (M&IB), which employs more than 16,000 people around the world, into two separate divisions.

The split, which could be announced within days, would mean that the heads of the two divisions will now report directly to Stephen Hester, RBS's chief executive.

Alongside news of the restructuring, and assuming that the plans are approved by RBS's board, it will also announce that John Hourican, chief executive of the M&IB business, is to leave the bank.

Mr Hourican's departure will end more than four years in the role, in which he has overseen one of the most radical restructurings of an investment bank ever attempted.

Formerly the chief financial officer of ABN Amro, the Dutch bank which RBS bought as part of a consortium in a spectacularly ill-fated deal in 2007, Mr Hourican has engineered a vast reduction in the level of risk-weighted assets on RBS's balance sheet.

Earlier this month, it was reported that Mr Hourican would leave RBS to satisfy demands from regulators for senior scalps as part of the taxpayer-backed lender's settlement with UK and US authorities over the manipulation of Libor, the interbank borrowing rate.

A settlement could be announced next week, although it is more likely to be confirmed at the end of January, City sources said.

RBS insiders have acknowledged that Mr Hourican was unaware of any wrongdoing by the bank's employees in relation to its role in setting benchmark interest rates, but said the division of M&IB into two units meant that the bulk of his work had now been completed.

Shares awarded to Mr Hourican in previous years are likely to vest on his departure from the bank, although he would not receive a payoff other than his contractual entitlement.

Mr Hester is understood to have given Mr Hourican his backing in recent weeks and is said to be keen that the latter's departure is not connected to any Libor-related wrongdoing by RBS staff.

Speculation suggested that Peter Nielsen, head of RBS's markets business within M&IB, would also be asked to resign by the bank's board.

I understand, however, that Mr Nielsen's departure has not been agreed either internally or with regulators, and that he may not leave in the near future.

RBS's investment bank was given the M&IB name after a previous restructuring that involved the sale or closure of the parts of its operations which advised on areas such as mergers and acquisitions activity.

Previously called global banking and markets (GBM), it has been reduced in size to the extent that the investment bank now accounts for approximately 20% of RBS's risk-weighted assets, which provide one measure of the risk on a bank's balance sheet, compared to about 60% five years ago. The number of people working in the division has also come down from about 26,000 to roughly 16,000.

RBS will need to undertake a further year of wider balance sheet restructuring before it can begin to resemble what directors have called "a normal bank".

The future of RBS's investment banking business has become increasingly contentious in recent months as British banks come under pressure to raise the level of their protective capital buffers.

The Financial Services Authority wrote to Mr Hester last autumn to suggest that the M&IB business could be scaled back much further, and that view is understood to have the support of some board directors.

Although it is the most controversial area of RBS's business and the banking sector in general,  the investment bank has yielded more than £10bn of profit since RBS was rescued by British taxpayers in 2008.

After Mr Hourican's departure, the terms of which are not yet finalised, the two M&IB units are likely to be run by John Owen, who heads international banking, and either Mr Nielsen or Suneel Kamlani, Mr Hourican's deputy.

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Blockbuster Shuts 129 Shops And Slashes Staff

The collapsed DVD and games rental firm Blockbuster is to close 129 of its 528 shops and axe 760 workers in the coming weeks.

Some 31 branches have already been put on notice of closure, according to the company's administrators Deloitte.

The move means the chain is already planning to close a quarter of its branches and make 18% of its workforce redundant.

It was announced just days after the chain went into administration in a run of bad news for the British high street.

There will be fears that this is just the first step in taking apart a company that employs more than 4,000 people in the UK.

Lee Manning, of administrator Deloitte, said: "Having reviewed the portfolio with management, the store closure plan is an inevitable consequence of having to restructure the company to a profitable core which is capable of being sold.

"We would like to thank the company's employees for their support and professionalism during this difficult time. We are also grateful to the customers for their continued support."

An employee helpline and an "employee assistance programme" have been set up to help staff find other jobs.

The firm's trading woes were blamed on competition from internet firms and digital streaming of movies and games.

Blockbuster had struggled to adapt to the changing market and rivalry from internet retailers including Netflix, Amazon's LoveFilm and iTunes, which now offers a movie rental service.

Its collapse came after its own plans to break into film-streaming appeared to stall in recent months.

It follows the demise of camera chain Jessops and electricals group Comet, which also blamed competition from online players for their downfall.

Just a day before Blockbuster went into administration, the music and entertainment chain HMV went under following dismal Christmas sales.

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