Gold Tarnish Worsens Amid Commodity Sell-Off

Gold has traded near to its lowest level in almost three years and is on track for its worst quarterly performance since at least 1968.

London early trading saw gold sit at $1,206 but by 1.45pm it dropped to $1191.99.

The hit to the precious metal comes amid continued worries that the United States will wind down its stimulus, puncturing confidence in the metal as an inflation hedge.

The price had earlier dropped to $1,180.50 in Asian trading - which was the lowest level since August 3, 2010.

Other key commodities have been hammered over the past three months by concerns that the era of cheap US central bank money is coming to an end.

Oil has also been heading for its weakest quarter in a year but in early afternoon trading Brent Crude was 0.21% up.

Copper, which is essential for both electronic gadgets and construction wiring, looks at its deepest quarterly loss in nearly two years.

The fears have hit gold prices the hardest as funds ditched the metal and physical buyers sat out the rout as bets grew prices could decline further.

"From July onwards, commodity prices should remain softer for two key reasons," Vishnu Varathan, market economist at Mizuho Corporate Bank, said.

"One is while timing may be variable, the impetus is for the US to reduce stimulus not increase it."

"There are bright spots in the US economy which is a reason for reducing stimulus.

"I don't think global growth factors have broadened enough for us to see the kind of synchronised upturn in growth with China, eurozone and the rest following in a very convincing way."

The price of bullion has fallen by as much as 15% since last week after Federal Reserve chairman Ben Bernanke signalled the central bank may reduce its $85bn (£50bn) monthly bond purchases later this year.

He added that the programme may be ended altogether by mid-2014, if the economy improves as expected.

For the quarter, gold is down by nearly 25%, its sharpest quarterly drop on record, based on Reuters data that dates back to 1968.

That puts it on course for its first annual fall after a 12-year rally.

Meanwhile copper is heading for its steepest quarterly drop since July-September 2011, which has come under pressure by concerns over slower growth in top consumer China.

Three-month copper on the London Metal Exchange was steady at $6,730 a tonne, but was down almost 11% for the quarter, its third quarterly loss in a row.

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Chancellor Courts Bankers For RBS Break-Up

By Mark Kleinman, City Editor

The Treasury has begun the search for advisers to map out the future structure of Royal Bank of Scotland (RBS) as it wrestles with a break-up that could delay a mass share sale for years.

Sky News understands that Treasury officials issued a tender document in recent days to recruit an investment bank to assist with a quick-fire review that will play a crucial role in determining the timetable for reprivatising RBS.

The review follows George Osborne's announcement in his Mansion House speech last week that an investigation of whether a 'bad bank' should be established to house RBS's toxic assets would report back by the autumn.

The idea has faced hostility from City shareholders in the bank, which is 81%-owned by British taxpayers, who believe it would prove chaotic and delay the point at which the Treasury would be able to start selling its RBS shareholding.

"We will only sell our stake in RBS when we feel the bank is fully able to support our economy and when we get good value for the taxpayer," Mr Osborne said.

"There's no doubt that, despite all the progress of recent years, RBS remains weighed down by too many poor assets - loans issued in the boom that have gone bad and may take a long time to improve.

"The question is - do we remove those poor assets from RBS, and set up what's known as a Bad Bank?

"This would then enable RBS to focus on the good parts of its business – supporting the British economy and maximising the benefits for the taxpayer.

"Opinion is divided – some say the disruption isn't worth it; others that it's the only way we'll really restore our banking system to health."

The Chancellor said the review would examine a "broad range" of RBS's assets, but with a focus on Ulster Bank, its troubled Irish subsidiary, and its UK commercial real estate holdings.

"We will establish a Bad Bank if it meets our three objectives. If it supports the British economy; if it's in the interests of taxpayers - and if it accelerates the return to private ownership. But if the review reveals that it would not achieve these things, then we won't do it," Mr Osborne added.

UK Financial Investments, the agency which manages taxpayers' stakes in RBS and Lloyds Banking Group, has also kicked off a search for banking advisers as the Chancellor mulls his options for selling the state's 39% stake in Lloyds.

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Starbucks Losses Hit £30m In Last Tax Year

By Pete Norman, Sky News Online

Starbucks UK reported a net annual loss of more than £30m for the 12 months to September 30, according to newly released documents.

Accounts filed with Companies House show that Starbucks Coffee (UK) Ltd reported a total turnover of £413.39m in 2011-12, compared to £397.7m in 2010-11.

Gross profit was £70.5m, however after administrative losses of £98.2m - including royalty and licensing fees of £26.48m - the loss for the 2011-12 tax year amounted to £30.4m, the company said.

The net loss in the tax year 2010-11 was £32.8m. In 2009-10 the loss after tax of £34.2m, while in 2008-9 it was £52m and in 2007-8 the loss was £46m.

The directors of the company took home a combined £1.08m for the year ending September 30, up from £590,319 in the previous year.

The figure for directors includes shares that have vested in the period. No director shares were vested in financial year 2010-11 (FY11).

A Starbucks spokesman told Sky News: "All full and part-time employees of Starbucks receive shares as part of their pay.

"Over half of the remuneration provided to our directors last year comprised vested equity shares."

He added: "The reason for the increase is that the directors took the decision to sell some of their vested shares in FY12.

"These shares could have been granted at any point during the directors' tenure with the company, and can be sold once vested."

In real terms, it means salaries for the three directors have risen by around  10%.

The accounts show that the highest paid director of the company received a total package of £708,019, including £116,560 in relocation benefits.

The top director's pay was increased 90% from the previous year, when it amounted to £372,440

Starbucks was grilled by MPs last October over why the company had paid no UK corporation tax for three years, despite total sales of £1.2bn in the period.

It confirmed that the company had only made a UK profit once in the 14 years it had been trading in the country.

The subsequent public furore led to Mr Engskov telling Sky News, in December, that the company decided to "take action".

It announced that the UK firm would pay HM Revenue and Customs (HMRC) £20m over two years but critics slammed it as a gift and not a legal requirement.

Starbucks recently paid its first 'instalment' of £5m to HMRC for the financial year 2012-13, after it said it would make "certain deductions" relating to royalties paid to other arms of the multinational.

It intends to pay another £5m before September 30 and another £10m in the 2013-14 tax year.

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Double-Dip: Recession Never Actually Happened

The Office for National Statistics (ONS) says updates to its past calculations on the performance of the UK economy mean Britain was never in a double-dip recession after all.

Revised GDP data showed that output was actually flat in the first three months of 2012 - rather than shrinking as had first been measured - meaning there was no second recession.

The ONS credited a stronger contribution to growth from the construction sector.

But that was where the good news ended for the Chancellor George Osborne as there were downgrades to other key economic indicators.

The ONS said the original recession in the wake of the financial crisis was deeper than had been previously found, with growth contracting by 7.2% instead of 6.3%.

The body said that output was now 3.9% below its pre-recession peak - again worse than previously reported.

While growth in the first three months of 2013 was unrevised at 0.3%, the year-on-year growth estimate was unexpectedly halved to 0.3%.

A more detailed breakdown of the data also showed the pressures faced by consumers as real household spending plunged by 1.7% in the first three months of 2013 - the largest drop for 26 years.

Consumers were hit by falling wages and rising inflation, according to the ONS.

Business investment also fell, by 1.9% quarter-on-quarter to £27.3bn.

However, the recovery is expected to pick up in the second quarter, with GDP forecasted to grow by 0.5%, although economists say it remains possible that incoming governor of the Bank of England, Mark Carney, may choose to follow Sir Mervyn King in backing more quantitative easing to boost money in the economy.

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Power Warning: Higher Risk Of Shortages

The energy regulator has warned of a greater risk of power shortages in three years' time - although it says blackouts are unlikely.

Ofgem said electricity margins could tighten in 2015-16 to between around 2% to 5% and the generation industry must get a grip on the problem through greater investment and other initiatives.

But the study did admit it was difficult to anticipate rising demand because of various factors including uncertainty over the strength of the UK economy and the timing and scale of plant closures and mothballing.

Ofgem said the report illustrated the need for the timely implementation of the Department for Energy and Climate Change's capacity market reforms.

It said: "Electricity margins could tighten in 2015-2016 to between around 2% and 5% depending on demand.

"This means that the probability of a supply disruption increases from 1 in 47 years now to around 1 in 12 years for 2015/16 or lower.

"If the projected decline in demand does not materialise margins could fall to 2%."

Ofgem has been working with Government and National Grid to explore options that would provide consumers with additional safeguards against the increased risk to security of supply.

These include giving National Grid the option to buy extra reserve generation to balance the electricity network.

Andrew Wright, Ofgem's Chief Executive, said: "(Our) latest report on electricity security of supply highlights the need for reform to encourage investment in generation.

"This is why Ofgem welcomes DECC's (Department for Energy & Climate Change) commitment to introduce a capacity market that will provide a longer term solution to this problem at a time when Britain's energy industry is facing an unprecedented challenge to secure supplies."

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Ed Balls Admits To Running A Red Light

Shadow Chancellor Ed Balls has admitted to being caught running a red light as he drove home through London after work.

He was snapped by a traffic camera as he headed along the Embankment after a late night sitting in parliament.

His spokesman said the MP had "passed through the light just after it turned red" when traffic diversions were in place.

It is not the first time Mr Balls has been caught breaching the rules of the road.

Earlier this year the MP said he was "bang to rights" when he was caught driving six miles above the 50mph limit on a motorway near his constituency home in West Yorkshire.

Mr Balls joked at the time that he had been going "too far, too fast" - a favourite attack line against the coalition's austerity measures - and said he had been "caught out by the never-ending roadworks on the M62".

He chose to pay a fine and attended a speed awareness course rather than accept penalty points.

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Come And Get Our Cash, RBS Tells UK Companies

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is poised to reignite the bitter political debate about business lending by telling thousands of its corporate customers: "come and get our money".

Sky News has learnt that in recent weeks the state-backed lender has begun writing to approximately 100,000 small and medium-sized businesses (SMEs) to inform them that it would be willing to substantially increase the sums it lends to them.

The initiative follows a successful pilot programme by RBS and its NatWest subsidiary, and is likely to be extended to a much larger number of its 1.2m UK-based SME customers.

The bank is expected to announce details of the campaign, which is the most aggressive since RBS was rescued by taxpayers in 2008, later this week.

It involves offering new working capital facilities or term loans, as well as providing 12-month capital repayment holidays or reduced monthly repayments in some cases.

The lending appetite project is understood to be the brainchild of Chris Sullivan, RBS's corporate banking chief, who is seen in the City as one of a small number of credible internal candidates to succeed Stephen Hester as the group's chief executive.

It comes as industry-wide figures showed a further contraction in lending to non-financial businesses.

Data released by the British Bankers' Association on Tuesday revealed a £1.7bn fall in May, which the trade body said was attributable to businesses relying on cash and other forms of funding rather than bank loans.

RBS's move to reach out to business customers also comes amid growing uncertainty about its future structure, with George Osborne, the Chancellor, bowing to calls to explore a break-up of the group.

In his speech at Mansion House last week, Mr Osborne said a review of whether to split RBS into separate 'good' and 'bad' banks was partly driven by a desire to see it lend more to the real economy.

"We will establish a 'bad' bank if it meets our three objectives: if it supports the British economy; if it's in the interests of taxpayers; and if it accelerates the return to private ownership," he said.

Senior RBS sources said the bank had trialled the lending appetite outreach programme with 20,000 SME customers, resulting in an additional £1.7bn of credit being extended.

To avoid possible accusations that it is lending recklessly, RBS is only writing to customers with a satisfactory repayment history.

In an interview with The Sunday Times last month, Mr Hester said RBS was "desperate" to lend as much as £20bn of corporate deposits but said customers' borrowing appetite was being constrained by a lack of confidence in the British economy.

Mr Hester's departure from the bank was effectively orchestrated by the Chancellor, and his successor will face intense pressure to grow its SME lending as the Government tries to engineer a faster economic recovery.

RBS is Britain's biggest lender to businesses, extending £58bn of new loans to corporate customers in its home market last year, more than half of which were to SMEs.

The debate about the bank's future and its willingness to lend has drawn in other Cabinet ministers. Vince Cable, the Business Secretary, said last week that he wanted formal lending targets to be reintroduced at RBS and for the pay of its next chief executive to be more closely linked to business lending levels.

Rows over business lending have blighted the banking sector since the financial crisis, with a string of government measures failing to trigger a sustained upturn in the supply of credit to British companies.

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Spending Review: Osborne To Slash Budgets

By Jon Craig, Chief Political Correspondent

George Osborne will today take the axe to public spending and claim the Government's tough policy of cuts is leading to economic recovery.

The Chancellor will announce his spending review, setting out limits for 2015/16 and slicing £11.5bn off the budgets of Whitehall departments, an average of 8%.

But he is also expected to pledge billions more to major big infrastructure projects in an attempt to boost growth over the years up to 2020.

Echoing his Mansion House speech last week, the Chancellor is expected to tell MPs: "Britain is moving from rescue to recovery. But while the British economy is leaving intensive care; now we need to secure that recovery ...

"We're saving money on welfare and waste to invest in the roads and railways, schooling and science our economy needs to succeed in the future.

"I know that times are still not easy for families. But we have a clear economic plan. We've stuck to it. It is working. And I'm determined to go on delivering it.

"Now, together, we're moving Britain from rescue to recovery, let's build an economy that works for everyone."

Following the murder of Drummer Lee Rigby outside Woolwich barracks, the Chancellor will confirm a boost in spending on the fight against terrorism.

Earlier this month, after agreeing Theresa May's Home Office budget, Treasury Chief Secretary Danny Alexander said: "Counter-terrorism policing is a crucial part of our national security and I took no convincing of the need to protect this area.

"Given recent events in Woolwich, we cannot compromise on our national security."

Tory MPs will be anxiously awaiting news of where spending cuts in the Ministry of Defence (MoD) budget will fall, following the Chancellor's pledge at the weekend that they will not involve further cuts in manpower levels.

But they will welcome Mr Osborne revealing how he intends to implement a proposed cap on previously uncontrolled parts of the public finances, such as welfare, debt interest and payments to the EU.

The Chancellor tweeted this image as he was finishing off his speech

The cap on so-called "annually managed expenditure" was floated by Mr Osborne in his Budget in March, when he said he would impose a limit on a "significant proportion" of AME, which is made up of elements of public spending which can go up and down due to factors beyond the Government's control.

The Treasury has signalled that the state pension will not be affected by any cap, and Mr Osborne has said it will not impact on the "automatic stabilisers" which come into effect in a downturn, suggesting that unemployment benefits could also be excluded.

Mr Osborne reached agreement at the weekend with Vince Cable over the level of cuts at his Business Department - the last Whitehall ministry to finalise its settlement.

All areas of departmental current spending will be asked to tighten their belts except the NHS, schools and overseas aid, which are ring-fenced.

Attention will, however, be focused on whether departments like defence or the Foreign Office have succeeded in reassigning elements of their activities to the health or international development budgets.

Mr Osborne said at the weekend that there would be a cut in numbers of civilian workers at the MoD, as well as a renegotiation of major contracts with suppliers to save money.

Cuts will take place in the defence budget

But he insisted there would be no cuts in numbers of sailors, soldiers or airmen and no reduction in the UK's military capability.

Labour leader Ed Miliband said on Wednesday morning: "What we see again today is the British people paying the price for this Government's failure.

"The Government tells us the economy is healing but actually it is getting worse for ordinary families. What we actually need is a fairer plan to get growth moving, living standards rising and the deficit down."

But in Treasury Questions on Tuesday, Mr Osborne insisted his economic plan was moving Britain "from rescue to recovery" and vowed to protect health and schooling.

Mr Balls taunted the Chancellor: "The fact is that you promised to get the deficit down and it is rising. How can you still say we are all in it together, when for everyone else living standards are falling and the economy has flat-lined for three years?

"Isn't this economic failure the reason why you will not balance the books in 2015 and why tomorrow you are coming back to the House to ask for more cuts in public services, because you are unfair, out-of-touch and now revealed as totally incompetent?"

Mr Osborne replied: "Getting a lesson from you in how to balance the books is like getting a lesson from Dracula in how to look after a blood bank."

Institute for Fiscal Studies (IFS) head Paul Johnson said: "The scale of the cuts is really astonishing,

"If you really do carry on with the next two years up to 2017-18 as pencilled in, that will result in a whole slew of government spending one third or more less than it was in 2010.

"So, if I was a betting man I would think there would be some kind of tax rises after the election."

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Direct Line Cuts 2,000 Jobs In New Cost Drive

The insurance group Direct Line is wanting to cut approximately 2,000 jobs as part of new cost-cutting plans.

The majority of the anticipated job losses, Direct Line said, would come from head office and support functions though it did not rule out some redeployment.

The group, which is Britain's biggest motor insurer and behind the Churchill brand, said it had launched a consultation and would work to find opportunities for affected workers with other potential employers.

More than 1,200 positions were cut last year after the transformation plan was first launched.

The latest job cuts - which represent about 14% of its current 14,400-strong workforce - are part of Direct Line's drive to more than double its original cost savings target to over £200m in gross annual savings by 2014, or £130m a year on a net basis.

Paul Geddes, group chief executive, said the firm had "not made these proposed changes lightly."

He added: "As we have done in the past, we will deal fairly and carefully with those impacted, and do all we can to support them through these changes."

It has 16 sites across the UK, including offices in central London, Croydon, Bromley, Leeds, Glasgow and Manchester.

As had been previously announced, the group's Teesside call centre is to shut over the next week while it is understood another site is at risk of closure under the latest move to slash costs.

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Qatar: Influential Emir To Hand Over Power

The ruler of Qatar, the tiny Gulf state that has played a key role in the Arab spring, is to transfer power to his son in a surprise move.

The emir will hand over to his 33-year-old heir in a rare transition of authority in the Arab world where most leaders remain until death.

It is unclear whether health issues of the 61-year-old ruler - Sheikh Hamad bin Khalifa al Thani - played a role in the decision.

Qatar has served as a powerful player in the Middle East, providing key support for rebels in Libya last year and now in Syria and for the Muslim Brotherhood, which rose to political dominance in Egypt.

The Taliban recently opened an office in Qatar

The move will usher a new generation into leadership ranks dominated by old guard figures, such as the 90-year-old King Abdullah in Saudi Arabia.

No major policy shifts are expected when Hamad steps down. The British-schooled crown prince, Sheikh Tamim bin Hamad al Thani, has been closely involved in all key decisions in recent years and the emir is likely to play important roles from the wings.

Diplomats said that over the past three years the emir has increasingly transferred military and security responsibilities to Tamim, who like his father went to the British military academy Sandhurst.

The peninsula holds the world's third largest gas reserves and produces roughly 77 million tonnes of liquefied natural gas per year, making it the world's largest supplier.

It also controls a powerful media empire through Al-Jazeera, and earlier this year bought struggling US cable channel Current TV in preparation for the launch of Al-Jazeera America.

Qatar's reach is extended by its global investment strategies - ranging from sports clubs such as football's Paris Saint-Germain to aid for debt-burdened Greece and Italy.

The state hosted a Syrian opposition conference this week attended by US Secretary of State John Kerry and is the venue for possible US-led peace talks with Afghanistan's Taliban.

The power transfer is the first major shift of rule among the Western-allied Gulf Arab states since a contentious transition in Kuwait in early 2006.

The royal palace announced that a statement would be made at 8am local time on Tuesday, and an official confirmed that the transfer of power would be announced.

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Satellites To Boost Internet In 180 Countries

Billions of people who struggle with slow internet access are to get quicker connections when a dozen new satellites are shot into space.

The first four satellites will be carried into orbit by the Russian Soyuz rocket, as part of a project to offer affordable, high-speed access to people in around 180 "under-connected" countries.

The launch has been delayed by at least 24 hours due to adverse weather.

Users will lock on to the satellites in the same way they might with GPS handsets.

Internet pioneer Greg Wyler, who launched the scheme after finding it difficult to get online during a trip to Russia in 2007, said: "Access to the internet backbone is still severely limited in emerging markets, whether landlocked in Africa or isolated by water in the Pacific Islands.

"Only when emerging markets achieve affordable and ubiquitous access to the rest of the world will we observe locally-generated content, widespread e-learning, telemedicine and many more enablers to social and economic growth."

The project is dubbed O3b after the "other three billion" people in the world with restricted internet access.

A constellation of small satellites will hover above the equator, covering a vast area that includes the entire African continent, the Middle East, southeast Asia, Australia, the Pacific Islands and most of Latin America.

Existing geostationary satellites provide similar services but their cost is prohibitive for many people.

Orbiting at around 36,000km (22,000 miles) above Earth, they take around half a second to bounce signals back to the planet.

The cheaper, lighter O3b satellites will be closer to Earth and communicate four times faster.

Another four orbiters will be launched within weeks, with the final four set to arrive in space next year.

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Market Mayhem: China Woes Extend Losses

The flight from risk in world stock markets has continued in Asia during volatile trading amid concerns over credit tightening in China and the winding down of US stimulus.

Asian stock markets suffered steep falls during much of Tuesday's session - with the Shanghai Composite Index entering bear market territory, analysts said, following falls of more than 5% at one stage on top of steep declines on Monday.

But Tuesday's losses were largely erased in late-trading - with Shanghai just 0.2% down - while Europe opened positively on perceptions that many stocks were now under-valued following weeks of falls.

The most recent worry for investors, particularly in Asia, has been that measures by the People's Bank of China (PBC) to curb a cheap credit boom would hurt growth in the world's second-largest economy.

Higher commercial lending rates prompted a flight from the stocks of smaller banks, which rely on central bank funding the most.

Prices correct at 08:25 BST

The value of medium-sized lenders was also hurt.

While the PBC has said it is satisfied by the amount of money available, the crackdown has left markets in China particularly fearing a liquidity squeeze.

Shanghai's stock index had endured its biggest loss in four years on Monday while the pain was also felt worldwide, with the US and European markets falling back further, having already been spooked in recent weeks by the prospect of the US Federal Reserve easing its $85bn-a-month bond-buying programme.

A top US central banker warned on Monday against market attempts to lift the yields on US Treasuries and stop plans to slow the Fed's stimulus.

Price correct at 08:30 BST

Richard Fisher, who is president of the Dallas Federal Reserve, told the Financial Times that "feral hogs" would not break the Fed's resolve.

The FTSE 100 share index lifted 0.7% in early trading on Tuesday from five-month lows while there were stronger gains on the continent.

The London market has lost more than 10% of its value since concerns first arose last month about the prospect of Fed stimulus easing.

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Wind Farm Plan In Bristol Channel 'Catastrophic'

By Emma Birchley, Sky Correspondent

A battle is being fought to stop one of the world's biggest offshore windfarms being built in the Bristol Channel as the race continues to hit tough targets on renewable energy.

The Atlantic Array is a development of 240 wind turbines that will be visible both from South Wales and North Devon.

If planning permission is granted, it would provide enough power for 900,000 homes and reinforce the UK's status as the global leader in offshore wind power.

But Steve Crowther from the Slay The Array campaign says it will be "environmentally catastrophic".

"They call this an offshore wind farm - it's inshore. It is between this beautiful Devon coast visited by four million people every year and the Pembroke coast visited by three million people every year.

"And people don't come here to see the landscape and the horizon covered in wind turbines. They come here for peace, tranquility, rural settings and seascapes."

But with the Government committed to offshore wind power, the number of turbines is only going to increase.

One of the biggest players in the industry is DONG Energy.

Steve Crowther says the wind farm will destroy the beauty of the area

It operates the 48 turbines at Gunfleet Sands near Clacton, which have been up and running for three years and supply electricity to 120,000 homes in Essex.

UK wind power manager for the company, Benj Sykes, says despite concerns about the efficiency of wind farms, they are generating energy more than 80% of the time.

"They are becoming more efficient by the day and Dong Energy is committed to improving that further.

"By the end of the decade we will see the cost of energy coming down by something like 40%, making them competitive with other technologies."

And with nearly 8000 miles of coastline there is plenty of opportunity for further development.

Offshore wind turbines in the UK can currently generate more than 3GW watts of energy - enough to power two million homes.

In all, 12.5% of the UK's electricity is already created from renewable sources.

The target is to produce around 30% by 2020, which means building many more turbines - and that creates jobs.

In Brightlingsea, an entire business has been built because of the Essex wind farm.

Andy White, chairman of Ctruk and Cwind, said: "Three years ago we didn't exist. We started the two companies to go out and help build offshore wind farms for the utility companies so three years ago we had zero people working for us and now three years on we have 150 people working for us."

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Chancellor Signs Off £11.5bn Spending Cuts

Chancellor George Osborne has reached agreement with Cabinet colleagues over the extent of cuts to their budgets for the year after the next general election.

The Treasury said the new agreements among government departments would produce savings of £11.5bn.

A spokesman said: "We've completed the spending round savings early and without all the arguments you normally get. This shows our determination to take the tough decisions needed to deliver our economic plan and to turn Britain around."

Sky News political correspondent Sophy Ridge said the sign-off would come as a "huge relief" for the Chancellor.

"I'm not completely convinced by the Treasury's argument that there were no rows over this spending settlement," she said.

"For example, Defence Secretary Philip Hammond and Business Secretary Vince Cable were pretty late in signing off cuts to their budgets so I think there was clearly concern among some Cabinet ministers.

"But at the same time this is a clear win for the Chancellor and I think he will be pretty relieved to have had it signed off at all."

Mr Osborne indicated there would be further cuts in the number of civilians employed at the Ministry of Defence, but no further reduction in military manpower under the settlement agreed with Mr Hammond.

There will be no reduction in military manpower under the settlement

He also promised £10m a year to help uphold the military covenant and to spend more money on cyber warfare.

Before the 2010 election Prime Minister David Cameron pledged to protect universal pensioner benefits such as bus passes and winter fuel allowance for the duration of the Parliament.

But Mr Osborne would not commit to funding pensioner benefits beyond the 2015 poll, acknowledging "we have got to look at how we can afford them".

Mr Cable was understood to be holding out until he was sure that he had reached a settlement which would safeguard measures to boost growth.

Shadow chancellor Ed Balls said he would adopt Mr Osborne's day-to-day spending limits for 2015-16 if his party wins the election, but indicated that a Labour government could borrow more to pay for infrastructure investment.

"If George Osborne had done that last year or the year before, we wouldn't have had such a flatlining economy," he told the BBC.

"I think he is so complacent and out of touch, I'm not going to make the same mistake."

Mr Osborne will announce the details of the Whitehall cuts in the Government's spending review on Wednesday, in which he will also reveal plans for an infrastructure plan using savings to invest in roads, railways, education and science.

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Boeing 787 Dreamliner In Emergency Landing

A Boeing 787 Dreamliner jet operated by United Airlines has been forced to make an emergency landing due to a problem with its brake system.

United said in a statement that the unscheduled landing occurred on a domestic flight in the United States over the weekend.

"United flight 94 from Houston to Denver returned to Houston Sunday due to a brake indicator issue," the US carrier said.

"Following standard operating procedures, as a precautionary measure, the flight landed in emergency status.

"The aircraft landed safely at 11.58am and our maintenance team is conducting a review of the aircraft."

A Boeing spokeswoman said the problem with the braking system forced the plane "back to base," without giving details of the malfunction or how long it might take to repair it.

Batteries overheated on two Japanese Dreamliners in January

Boeing sent a field service representative to the scene in Houston to help the airline with the problem.

The dual concerns were getting the aeroplane back into service and dealing with the flight's stranded passengers.

Last week, United said a Dreamliner on its way to Tokyo from Denver was forced to land in Seattle as a precaution.

Regulators and investors are keenly following the progress of the Dreamliner, Boeing's first predominantly carbon-fibre aircraft.

It was more than three years late getting into service after a number of production setbacks.

Introduced by airlines in late 2011, the Dreamliner was grounded in January after batteries overheated on two Japanese jets in quick succession.

It resumed commercial service in May after Boeing installed a redesigned battery system, based on a beefed-up housing, on the 50 jets in service.

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Diesel Drivers 'Get Worse Deal' In Fuel War

The cost of filling up at the pumps has edged up over the last month, with diesel drivers getting a worse deal than those using petrol, according to new figures from the AA.

The average price of petrol in the UK has risen from 133.35p a litre in mid-May to 134.61p in mid-June, while diesel has gone up from 138.17p a litre to 139.16p.

Northern Ireland has the most expensive petrol, at an average of 135.8p a litre, with London having the cheapest, at 134.61p.

Northern Ireland also has the dearest diesel (139.8p a litre) with London and south west England having the least expensive (139.1p).

The AA said the slight rise in average petrol prices nationally represented "something of a lull" after the 8-10p swings in prices over the last 12 months.

But it warned that this year retailers have on average been "creaming up to £1 a tank extra off diesel car drivers and up to £1.40 a tank extra off diesel van owners".

The AA went on: "At present, the 1p-a-litre premium that fuel stations are generally adding to the cost of diesel adds 5,500 miles to the break-even point for a new car buyer who chooses diesel instead of petrol.

"Diesel cars typically cost £1,500 more but the saving from better fuel efficiency should eventually recoup that."

AA President Edmund King said: "To be fair, there is often much greater variation in the price of diesel among retailers in a town than with petrol.

"However, on average, the profit margin on diesel is consistently at least a penny higher than with petrol.

"The clear message to diesel drivers is to take advantage of the greater range of prices locally. Some forecourts are more diesel-friendly than others."

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Football Streaming Website Faces Legal Action

Internet service providers in the UK could be forced to block a Swedish-based website which streams live football matches.

The Premier League is in the process of requesting a court order that would make ISPs effectively ban their customers from accessing www.FirstRow1.eu.

The planned legal action by the football governing body follows moves made by the music and film industries.

They have successfully blocked websites which offer the opportunity to download copyrighted material, such as Pirate Bay, under Section 97 of the 1988 Copyright, Design and Patent Act.

The Premier League has agreed a new worldwide television deal worth around £5.5bn over three years, starting with the new season.

BT has paid £246m to the Premier League for three years and BSkyB, the parent company of Sky News, has invested £760m in its football coverage for the next three seasons.

The Premier League has written to the major UK ISPs, which also include Virgin Media and TalkTalk, to outline its plans to apply for a court order to block www.FirstRow1.eu.

The proposals are expected to be put forward by the end of the month.

Should the court order be granted, the ISPs would then have to contest the application, or comply and restrict access.

It is understood that indications are the ISPs have no plans to go against any such application.

The Premier League has for many years monitored various websites during live matches and enforced the removal of any streaming content which breaches copyright.

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Osborne: Economy 'Leaving Intensive Care'

Chancellor George Osborne will claim the British economy is "moving from rescue to recovery" as he unveils his fresh round of spending cuts for Whitehall.

Mr Osborne will deliver his spending review on Wednesday, setting out £11.5bn of cuts in Government departments in the year after the next general election.

Alongside the cuts the Chancellor will announce plans for an infrastructure plan to "power Britain back into the economic premier league", using savings to invest in roads, railways, education and science.

Final details of the spending review are still being worked out, with reports suggesting some ministries, including Vince Cable's Business Department, are yet to agree their settlements.

Mr Osborne is expected to tell MPs on Wednesday: "Britain is moving from rescue to recovery. But while the British economy is leaving intensive care; now we need to secure that recovery.

"Full recovery won't be easy but I won't let up in my determination to put right what went so badly wrong. We are already making progress: the economy is growing, more than a million new jobs have been created by British businesses and the amount the government has to borrow each year - the deficit - is down by one third.

"But there's more we have to do - it's time for the next stage of our economic plan."

Ed Balls calls on Mr Osborne to pump money into the economy

Mr Osborne has come under pressure to invest in capital projects in order to help the fragile recovery and he will give details of  "a long term infrastructure plan".

He will say: "We're saving money on welfare and waste to invest in the roads and railways, schooling and science our economy needs to succeed in the future.

"I know that times are still not easy for families. But we have a clear economic plan. We've stuck to it. It is working. And I'm determined to go on delivering it. Now, together, we're moving Britain from rescue to recovery let's build an economy that works for everyone."

Shadow chancellor Ed Balls urged Mr Osborne to pump money into the economy now in order to reduce the need for cuts in two years' time.

Writing in the Sunday Mirror, he said: "Instead of planning more cuts two years ahead, they should use this week's spending review to boost growth and living standards this year and next year.

"More growth now would bring in more tax revenues and mean our public services would not face such deep cuts in 2015."

He said the Government should boost lending to businesses with a new British Investment Bank and reintroduce the 10p income tax band.

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