Microsoft Gets Xbox One And Surface Boost

Global software giant Microsoft has reported better-than-expected results for the fourth quarter - on the back of booming Xbox One game consoles and tablet sales.

It made a profit of £3.94bn in the three months to the end of December, up nearly 3% on same period in 2012.

The Washington-based company sold 3.9 million Xbox One consoles to retailers and doubled revenue from its line of Surface tablets, compared to the third quarter.

Revenue rose in the fourth quarter by 14% to $24.52bn (£14.76bn).

The firm has also had a solid 12 months on the stock market, with its share price rising around 30% over the previous year.

Outgoing CEO Steve Ballmer said its devices and consumer segment had a "great holiday quarter."

Microsoft launched its Surface tablet last year

Surface tablet revenue rose to $893m (£537m) in the quarter, up 123% from Q3.

The company benefited from a US summer price cut to its first-generation models, unveiled the Surface 2 and expanded the number of places it is sold at retail.

"There's better hardware, the software continues to improve and there's better market perception," Microsoft's general manager of investor relations Chris Suh said.

However, analysts continue to question the company's new focus on manufacturing hardware on top of its mainstay software business.

The Surface division still need to reach manufacturing scale that would make it profitable and knock Apple off its iPad perch.

And the Xbox One, which launched late last year to rival Sony's PlayStation 4, is yet to maximise returns from game sales.

Market watchers are also concerned about the company's purchase in the current quarter of struggling Finnish firm Nokia's phone segment, in a deal valued around £4.7bn.

Xbox One has gone head-to-head against Sony amid Nintendo Wii's woes

On Thursday, Nokia revealed that its smartphone sales plummeted 29% in the December quarter, even though it released new Lumia models.

Microsoft has also continued to weather to storm of declining PC sales, once its main revenue source.

PC sales between October and December are estimated to have fallen globally by 6.5%, but Microsoft said revenue from its flagship operating system fell just 3%.

However it did not give figures for the split between Windows 7 or its troubled Windows 8.1 operating system.

Overall, revenue from its devices and consumer segment grew 13% to $11.91bn (£7.18bn), while business service revenue from server and cloud computing grew 10% to $12.67bn (£7.64bn).

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Nestlé Chair Warns Over UK Exit From Europe

By Mark Kleinman, City Editor, in Davos

The consumer goods giant Nestle would be forced to re-evaluate the extent of its presence in the UK if Britain decided to leave the European Union, its chairman has told Sky News.

In an interview during the World Economic Forum in Davos, Peter Brabeck-Letmathe said the company was committed to its business in the UK but that he could not envisage a separation from its biggest trading partner being in the country's interest.

Nestle, which makes Nespresso coffee capsules and Kit-Kat chocolate bars, employs approximately 8,000 people in the UK and accounts for exports worth roughly £400m. Its other brands include Nescafe, Smarties and Yorkie.

"From a purely economic point of view, I can't see that the withdrawal of the UK [from the EU] would be favourable for any UK industries," Mr Brabeck-Letmathe, an Austrian, said.

"It would isolate the UK economically. Every company would be forced to re-evaluate the implications of investing in the UK. It would no doubt have an impact on its ability to supply European markets."

The warning, ahead of a likely referendum on Britain's EU membership in 2017, echoes the views of many of the multinational business leaders gathered in Davos.

Prime Minister David Cameron told Sky News on Thursday that he did not believe the Government's stance on EU membership was jeopardising inward investment, saying that companies had been "voting with their feet".

He said: "The argument I make with these business leaders is that the best thing for Britain would be to secure our place within a reformed European Union.

"Simply saying 'let's hope this issue goes away, let's hope that Europe sorts itself out', without doing anything, won't work.

"We need to get in there, change Europe, make it work better, make it more competitive, make it more flexible - help make Britain more comfortable with its membership, have that referendum and then settle this issue."

Mr Brabeck-Letmathe, who also chairs the parent company of Formula One motor racing, said the EU and its single currency had been "an incredible success".

"The EU is full of failures and weaknesses like any large institution, but its achievements are greater. We have to work to strengthen the internal market."

He suggested that the trading bloc's governing mechanisms required reforms such as shrinking the number of EU Commissioners.

"The current system is not an efficient way to run it," he said.

In addition to his corporate roles, Mr Brabeck-Letmathe has also been a leading advocate of water stewardship in large companies, and unveiled new measures this week aimed at improving global water sustainability.

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Non-EU Banks Slip Through Bonus Cap Loophole

By Mark Kleinman, City Editor in Davos

Major global banks such as Morgan Stanley and Nomura are benefiting from a loophole in new European pay rules that could leave British rivals at a big disadvantage.

Sky News understands that banks based outside the European Union (EU) are able to approve bigger bonuses for employees of their subsidiaries in the trading bloc without recourse to external shareholders.

That means Wall Street and Asian banks can instantly consent to variable pay for senior staff worth double the level of their salaries, the maximum permissible under the new EU cap.

However, Barclays, HSBC and other British banks will have to put the same measure to their annual investor meetings. Without approval, they will not be able to award bonuses worth more than 100% of salaries in any one year.

UK banks such as Barclays may be left at a disadvantage over bonuses

Sources said that banks including Bank of America Merrill Lynch and Goldman Sachs had formally discussed the issue at their group remuneration committees "to ensure appropriate corporate governance". Both had already given approval for the 200% cap, they added.

In practice, the UK banks will not be disadvantaged if shareholders back motions at this year's AGMs allowing them to pay bonuses at the higher level.

However, the fact that international rivals have already been able to give staff certainty about their pay from this year onwards was proving to be a valuable recruitment tool, bankers say.

Sky News has revealed in recent weeks the details of plans by Barclays, Goldman, HSBC and Morgan Stanley to raise base salaries through monthly or quarterly allowances for senior staff.

George Osborne, the Chancellor, is aware of the loophole benefiting non-EU banks, aides said on Friday.

Mr Osborne is fighting the ratio cap in the courts, and one senior Treasury official said that while the Government is confident that it has "a decent legal case", recent defeats to Brussels had left it only mildly optimistic about emerging victorious.

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High Street Chain Bathstore Groomed For Sale

By Mark Kleinman, City Editor

Another prominent UK high street chain is poised to change hands with the sale of Bathstore, the specialist bathrooms retailer.

Sky News understands that Endless, the investment fund which acquired Bathstore in May 2012, has decided to explore a sale of the company, which operates more than 150 shops across the country.

Rothschild, the investment bank, has been appointed to sound out interest from potential buyers.

Plumbing firm Wolseley acquired Bathstore for £15m

Bathstore was acquired for just £15m from Wolseley, the FTSE-100 plumbing group, which had been struggling to satisfy the City with its financial performance and had decided that the retailer was a non-core asset.

Watford-based Bathstore made a profit of £6.5m on sales of £95m in 2011, a reasonable result at a time when the UK economy was relatively weak.

In a statement, a spokesman for Endless said: "We are pleased with the performance of Bathstore since we made our investment in May 2012.

"There has been encouraging inbound interest in the business and we continue to work with management to support its growth."

It is thought unlikely that Endless will pursue a stock market listing for Bathstore, and will instead opt for a private sale of the business.

However, that will make Bathstore a relative rarity as the owners of thousands of high street shops examine flotations in an effort to take advantage of strong equity markets and a rebounding economy.

Fat Face, House of Fraser, Pets At Home and Poundland are among the private equity-backed retailers looking to go public this year.

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Energy Boss Attacks Price Comparison Websites

The boss of Co-operative Energy has accused price comparison websites of misleading customers and pushing up energy bills.

Group General Manager Ramsay Dunning has called on the likes of uSwitch, MoneySupermarket.com and Energy Helpline to disclose how much they charged in commission each time a business or household moves supplier.

Sky News Business Presenter Joel Hills said it was his understanding the rate of commission could be as much as £60 per account switched.

In a speech at a conference held by Cornwall Energy, Mr Dunning said that far from improving competition, price comparison websites were a negative influence.

He added: "It's time all the advertising costs and fat profits were returned to hard pressed households.

"There is a lot of money spent through the comparison websites - because they charge companies likes us and the Big Six and independents a rate of commission.

"If that rate was a lot lower, or non-existent, the bills to customers would be lower, because our costs would be lower."

Co-operative Energy uses price comparison websites and says it has gained 60,000 customers in the nine months through to the end of last year.

Mr Dunning refused to say how much his company paid the websites in commission, claiming the contracts were commercially confidential, but called for full disclosure.

According to the Department of Energy and Climate Change, almost five million gas and electricity accounts switched in the year through to the end of September 2013.

Ofgem, the regulator, said price comparison websites play an "important role" in the energy market, but admitted it does not know how much they charge in commission.

A spokesperson said: "Ofgem runs a code of practice for these sites and we are reviewing it to ensure that its objectives are in line with our reforms for a simpler, clearer, fairer energy market. We will be consulting on this in spring.

"The code of practice protects consumers in a number of ways. For example switching sites have to state which suppliers they earn commission from.

"They also have to make sure that they do not rank tariffs in accordance with which suppliers from which they are earning commission."

Adam Scorer, director of Consumer Futures, said price comparison websites are popular but there were issues of trust and transparency with their services.

He said: "Consumers should not automatically assume that a price comparison website will save them money on their purchase. In our research this was only true in 21% of cases.

"Without price comparison websites millions of people would be on higher tariffs than they are now."

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Royal Mail Rides The Online Parcel Wave

The newly-privatised Royal Mail has revealed a rise in pacel delivery revenue of 8% in the nine months to December 29.

The spike in like-for-like earnings comes as the shift to online purchases continues.

The company said the figures were boosted by strong demand over Christmas.

Despite parcel volumes remaining flat, price delivery changes pushed revenue upwards.

Meanwhile, revenue for its letter delivery service was down 3% in the same period - blamed on the rise of email and social media.

Royal Mail said the trading performance was in line with expectations it has confidence it will deliver results consistent with key value targets for the full year.

The postal firm's part-flotation last October by the Government was fiercely opposed by unions and Labour.

The Government still has a 30% stake but was widely criticised for potentially short-changing the taxpayer on the flotation price.

Shares in the firm closed at 588p on Thursday, up 78% from the 330p per share price.

The company is now valued at £5.9bn.

More follows...

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Man Utd Out Of Football's Top Three Rich List

Manchester United has been relegated from the top three in a global rich list of football teams.

The English club has been squeezed out by success at Real Madrid, Barcelona and Bayern Munich.

The list, compiled by 'Big Four' accountancy firm Deloitte, is based revenues accrued during the 2012-13 season.

For the ninth year Real Madrid headed the list, with revenues of €518.9m (£424m). The Spanish team has now broken a record previously held by Man Utd.

Placed in fourth with revenues of €423.8m (£346m), Man Utd is ranked one spot above French champions Paris Saint Germain, who are now backed by the financial might of the Qatar Investment Authority.

Details of Man Utd's fall in the rankings came the club's calamitous season on the field took another turn for the worse as they dropped out of the Capital One Cup with defeat to Sunderland in the semi-finals on Wednesday night.

According to Deloitte, the world's 20 richest clubs saw a combined revenue rise of 8% last season to €5.4bn (£4.4bn).

Bayern Munich saw the largest revenue rise, of 17% to €431.2m (£352m), compared to the previous year.

Liverpool, despite increasing its revenue by 9% in 2012-13, still fell out of the top 10 to 12th spot.

Liverpool had been in the top 10 rankings throughout the 21st century.

The list has been compiled annually by the sport business group of the accountancy firm since 1999-97.

It said all clubs in the top 30 of the list now have annual revenues above €100m. In the first year of rankings only Man Utd had that honour.

Market watchers are now waiting to see what, if any, impact the list and Wednesday night's loss to Sunderland may have.

Earlier this month, it was reported that the value of the club had seen a drop of around £250m on the New York Stock Exchange since Moyes took over as manager.

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Morgan Stanley Joins Race To Beat EU Pay Cap

By Mark Kleinman, City Editor

Morgan Stanley is to join the ranks of global banks offering substantial pay rises to London-based staff ahead of the imposition of new European remuneration rules.

Sky News understands that the Wall Street bank is finalising proposals to offer senior employees at its Canary Wharf base cash payments that will enable it to continue paying large bonuses.

Insiders said that Morgan Stanley was likely to operate a similar scheme to that planned by rival Goldman Sachs, which will involve eligible staff being handed big increases to their annual salaries.

The awards may involve lump sums paid out at the end of the financial year, according to a person briefed on Morgan Stanley's deliberations.

The news about Morgan Stanley, which employs thousands of people in the UK, is significant because it underlines the extent to which major banks are seeking to negate the impact of the European Union measures.

Sky News understands that Citi and Deutsche Bank are also working on similar incremental payments for senior staff.

The move to retain key employees is likely to mean significantly increasing the 113 employees designated as "code staff" by Morgan Stanley in 2012. Code staff are those who are deemed by regulators to hold senior responsibilities.

Last week, Sky News revealed that Goldman is to hand substantial rises in fixed pay to hundreds of London-based staff.

The shift from variable to fixed pay, about which staff will be informed shortly, will in some cases be worth hundreds of thousands of pounds, although the sums are not expected to impact the total amounts that Goldman's top risk-takers in London will earn.

Under the new pay framework imposed by Brussels, the bank will only be able to pay double the level of salaries in variable pay to London-based staff in any given year.

The new European Union rules will restrict the amount that banks operating within the trading bloc can pay to their staff as a proportion of their basic pay.

From this year, banks will be allowed to pay up to 100% of salaries as bonuses, or double that sum with the approval of the company's shareholders.

Barclays and HSBC are among the other banks which have devised methods for enhancing the remuneration of key staff as they seek to avoid a defection to rivals who are less hindered by the EU ratio cap.

A Morgan Stanley spokesman declined to comment.

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Help To Buy Scheme: Under 40s Rush To Apply

Nearly half of would-be homeowners under the age of 40 are planning to apply for Help To Buy assistance this year, a new study suggests.

According to research by Experian, 39% of those aged between 20 and 40 hope to apply for the Government initiative in 2014.

The report said the average deposit saved by them is £9,590.

There has been a flurry of applications in recent months.

In November, figures showed in the first month of the scheme's launch more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage - and by early January that had topped 6,000.

Under the scheme, which came into effect at the beginning of October, people can buy homes of up to £600,000 with a deposit of just 5% as the Government guarantees up to 20% of the mortgage.

The report warned that 26% have saved less than £5,000 - the minimum deposit required to take part in the scheme.

The research also indicated that many have burdensome credit outstanding that may hamper applications.

The study said the average credit owed is around £4,600, which increases with age, so that the average 40-year-old owes £5,240.

Regionally, the East Midlands has the highest credit owed (£5,800), with the South East the lowest (£3,940). Some 5% owed more than £15,000 to creditors.

But with lenders increasingly reliant on database checks for loan risk assessment, many of those wishing to become homeowners are unaware of the process.

The report said 40% are not listed as living at their current address, which will adversely affect credit ratings.

It said: "Those living in the East Midlands, Yorkshire and London proved the least likely to have their names on the electoral roll."

"Ensure everything is accurate and up-to-date. Simple issues like incorrect address details, linked accounts they may have forgotten about and not being on the electoral roll can hamper attempts to access a mortgage.

"Buyers should also play close attention to things like outstanding accounts that should be marked as settled."

Prime Minister David Cameron said he hoped 2014 would see "thousands more realise their dream of home ownership".

However, the significant take-up of the loans will further fuel fears of a housing bubble.

The scheme's expansion this year means two-thirds of the entire UK mortgage market will offer products under Help to Buy, bringing home ownership to a growing number of people.

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Lloyds Co-Op Deal Denounced By Lord Levene

A peer has alleged "bad faith" after a bid he was leading to buy hundreds of Lloyds bank branches lost out to the rival Co-operative Group.

Giving evidence to MPs at Westminster, Lord Levene, who chaired NBNK Investments which had been seeking to create a new 'challenger' bank, said the bidding process had been unfair.

And he accused Lloyds of "unattractive commercial practice".

Lord Levene also claimed he was told in a confidential meeting with the then-Governor of the Bank of England, Mervyn King, that it would be a "political decision".

Lord Levene claimed the bidding process for the Lloyds branches was unfair

The hearing formed part of the Treasury Select Committee's inquiry into the collapse of the Co-op's acquisition of 632 Lloyds branches.

Lord Levene appeared alongside Gary Hoffman, the former chief executive of NBNK.

Speaking about the thwarted NBNK bid, Lord Levene told MPs: "It's a matter of great regret to me this didn't happen.

"I think it was a good idea but life goes on and you have to get on with it."

But when asked by committee chairman Andrew Tyrie if the bidding process was fair he said: "No."

Under further close questioning by Mr Tyrie, he was asked if he was alleging bad faith.

He replied: "Yes."

In evidence to MPs, Lord Levene said during the bidding process he was told to look at the reference to financial services in the Coalition agreement, which said one of the goals was "to promote the interests of mutuals".

Lord Levene said: "With the benefit of hindsight there seems to have been a view that if the creation of a new challenger bank was created by a mutual it would be another tick in the box for the goals set out.

"I have no problem with that provided it's done by fair means rather than than foul.

"In our view they chose to concentrate on all the positive aspects of the Co-Op, and none of the positive aspects of our bid."

He said later: "It was like a penny dropped, and we suddenly started to realise where this was coming from."

Lord Levene also accused Lloyds of "unattractive commercial practice", and said  the evidence it had given to the Treasury committee was "at best disingenuous".

Lord Levene repeated his claim that the bid by NBNK had been "financially superior".

The peer told MPs he had personally lost £60,000 as a result of the failed bid. Investors collectively lost £30m.

Mr Hoffman said: "The great tragedy out of all of this is that it's been to the detriment of the mutual sector, and that's a great tragedy.

"The other great tragedy is we don't have a challenger bank."

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Energy Bosses 'Utterly Complacent' Over Storms

Energy bosses have been accused of "utter complacency" over their response to the Christmas storms that left hundreds of thousands without power.

The heads of the six companies, responsible for the networks which provide power to the UK's homes, were appearing before MPs on the House of Commons Energy Select Committee.

They said they were pleased with the response to the crisis, which saw some homes without power for up to five days, effectively claiming that customers were lucky it had not taken longer to restore electricity to homes.

In addition they were unable to tell MPs how many people were affected, even three weeks after the event.

The committee accused them of having exploited their "privileged monopoly position" and of a lack of sympathy for families who were left without electricity on Christmas Day.

Yalding resident Erica Olivares confronted David Cameron over power cuts

Conservative MP Tim Yeo lambasted them saying: "I've heard nothing at all this morning which reassures me that you are taking this problem seriously enough to deal with the concerns of millions of your customers.

"There is no sense of urgency in what you said about any plans to step up your capacity to respond to severe weather even though we now have quite clear warnings that extreme events are likely to take place more frequently in future."

In addition they cast doubt on Energy Secretary Ed Davey's pledge to introduce a 999-style emergency blackout telephone number for households confused over whom to call in a crisis.

Mr Davey made the claim on January 8 following a meeting with the six energy network company bosses, however, when questioned David Smith, chief executive of the Energy Networks Association, said they were "working on it".

Mr Yeo accused the firms of managing to "make the Secretary of State look ridiculous in his claim that there is going to be a three digit number that customers can use".

Power cuts caused chaos as Gatwick Airport. Pic: Andrew Jennings

He asked Mr Smith if he had informed Mr Davey's office that the introduction of an emergency number were "complete nonsense" and was told: "We had the conversation with the Secretary of State and one of the things that we were very clear on was we need to do some more work, we need to get the final bits and pieces in place, and that was the key point."

Mark Mathieson, managing director of SSE's electricity networks, told the committee: "It was just the impact of the event. It was a massive event. Certainly we haven't seen damage like this in the South back from the early 90s and even back to the great storm of 1987.

"I think the one thing I would say, and I've been in this industry for 25 years, we as an industry clean these events up much quicker than we used to. But we also recognise the impact that has on customers.

"We are sorry and I did go out to communicate with customers that we were sorry that they were off."

Tim Yeo criticised firms for neglecting customers

Basil Scarsella, the chief executive of UK Power Networks, said that they had been prepared for the storms but that the weather forecast "escalated significantly".

He said that on Friday they had forecast 40-50mph winds for Monday but by Sunday that has increased to 70-80mph.

The bosses were also questioned over the levels of compensation offered to customers who had gone without power.

They said they had doubled the levels of compensation to households who had been without power.

However, they were given examples where payouts were being questioned where homes had not met the criteria of 24 hours without power because electricity had been restored for five minutes during the day.

There was widespread anger about the delays in restoring power during the prolonged period of flooding over Christmas.

The outages caused significant delays at Gatwick airport with hundreds of passengers affected and flights cancelled.

David Cameron was memorably confronted by angry resident Erica Olivares during a visit to the village of Yalding in Kent on December 27.

Mr Yeo concluded the committee hearing by telling the six men: "I have to conclude that you are exploiting your privileged monopoly position and you have displayed a neglect of your customers which I personally find absolutely astonishing."

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Osborne Hails New IMF Growth Forecast For UK

Full-Blown Recovery Uncertain Despite IMF Boost

Updated: 4:40pm UK, Tuesday 21 January 2014

By Ed Conway, Economics Editor

The chances are by now that you are already well aware of the gist of the International Monetary Fund's latest update to their economic forecasts.

As we revealed on Sky News on Monday, the Fund is raising its forecast for UK economic growth this year from 1.9% to 2.4% - the biggest upgrade of any major economy.

It is raising its forecast for world economic growth as well, though by far less: it is 0.1 percentage points higher than in October, at 3.7%.

The US is also slated to grow at a faster rate than previously expected - 2.8%, compared with the 2.6% forecast last time around.

The news is not uniformly positive, however. There are cuts in the forecast for Russian and Brazilian growth, and although China's growth forecast is notched up slightly, it is nonetheless poised to be at its lowest rate since the mid-1990s.

And while many will look at the IMF upgrade and exhale a large sigh of relief, the numbers are by no means compatible with a full-blown recovery.

In fact, the Fund itself points out that, for the most part, the recent improvement in GDP numbers - the key metric it bases its forecasts on - is down not to a genuine bounce-back in spending but to something else.

As it puts it, in advanced economies, "much of the upward surprise in growth is due to higher inventory demand".

Inventories are a rather bizarre element of national accounting - essentially they measure the work and products companies have made, but not sold. It is the stuff they have warehoused away until there is more demand.

The problem is that a big reliance on inventories often means that today's growth may not be sustained all the way into the future (after all, those big stockpiles mean companies may not have to produce as much in the coming quarters).

Now, on the one hand, set against the scale of the recession and crisis faced both in the developed and developing world, this question of whether we are now witnessing the "right kind of growth" might seem like a minor one.

But the worry is that the world economy (especially the UK and US) is still reliant on the massive monetary stimulus provided by quantitative easing.

As Olivier Blanchard, the chief economist of the Fund, put it on Tuesday: "As the recovery takes hold in advanced economies, a main challenge will be to normalise monetary policy."

This will imply big movements in markets in the coming years as investors become accustomed to the new world where markets are no longer being artificially propped up by central banks.

This, in turn, holds some risk for developing economies, which are reliant on those capital flows for much of their growth.

But the more profound concern is that despite the monetary mountain of cash which has been poured into major economies, many consumers are still reluctant to spend. Those high inventory numbers are a little worrying in that respect.

There seem to be two alternative extremes going on right now: in countries like Britain people are willing to go out and spend, but only using their saved cash or by borrowing (because of those low interest rates caused by Quantitative Easing).

Meanwhile, in other areas, Europe in particular, there still seems to be a profound reluctance to spend.

A real rebound may well be on the cards in the coming months, but the IMF is worried we are still yet to see the full-blooded recovery that often follows a recession.

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Warning Over New Platinum Mine Strikes

The South African government has warned that the country cannot afford industrial action, ahead of a planned strike this week at the world's top three platinum producers.

Finance Minister Pravin Gordhan issued the warning as the platinum industry's main trade union served notice on Anglo American Platinum, Lonmin and Impala Platinum.

South African industry has been hit by a series of sometimes violent strikes in the factory and mining sectors.

Growth has been constrained to a sluggish 2% in 2013, which has thwarted job creation by President Jacob Zuma's administration.

Gold and platinum mining have been crucial to the economy

The African National Congress has ruled since white minority rule ended in 1994, but the Mr Zuma's party has suffered increasing hostility after failing to improve living standards.

On Monday, Platinum producers Anglo American Platinum, Lonmin and Impala Platinum confirmed they had received notice from the Association of Mineworkers and Construction Union (AMCU) to strike in 48 hours.

Industry experts now predict the onset of unrest to hit the sector.

Thousands of workers went on strike at the Marikana mine in 2012

The trade body representing the bullion producers said it hoped to thwart AMCU industrial action at three gold mining locations through court orders.

The AMCU has rejected an 8% pay hike that rival union National Union of Mineworkers (NUM) - which still represents most gold miners - negotiated with mine firms last year.

The South African currency has taken a battering in recent months.

The rand has lost 4% in 2014 against the US dollar, and now hovers near five-year lows after the strike plans were announced.

More than 50 people died in violent mine protests in 2012, amid claims of police brutality and firing on striking workers.

The impact on Africa's biggest economy prompted rating agencies Moody's, Fitch, and Standard and Poor's to downgrade the country.

Police were accused of indiscriminate firing on protesters

This prompted the rand losing value by around a quarter.

"The platinum industry needs to seriously get around the table," Mr Gordhan said.

"We can least afford another round of strikes that will act as a destabilisation to the platinum sector, which has had increasing difficulties over the last 18 months."

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IMF Upgrades UK Growth Forecast Above Rivals

By Ed Conway, Economics Editor

The International Monetary Fund is on the brink of upgrading its growth forecast for the UK more than any other major economy, Sky News has learnt.

The Fund is poised to increase its projection for UK growth in 2014 from 1.9% to 2.4%. Although the Fund will also lift its forecasts for world economic growth, the UK upgrade is significantly stronger.

It is the latest boost to the fortunes of the Chancellor, coming barely 24 hours after the Ernst & Young ITEM Club also increased its projection for UK economic growth this year.

Although the Fund's forecast for growth this year will be shy of the 2.7% predicted by the ITEM Club, the scale of the upgrade underlines how quickly sentiment about Britain's economy has turned in recent months.

The updated forecasts may also be construed as a reputational blow for the Fund itself, whose chief economist warned less than a year ago that the economic policies being carried out by George Osborne amounted to "playing with fire".

Since then, the Fund has already increased its growth projections for Britain once, last October, before this week's anticipated upgrade.

The news comes amid growing optimism about the speed of the UK recovery. In spite of concerns about retailers' fortunes over Christmas, retail sales grew in December at the fastest annual rate in almost a decade.

The Office for National Statistics is expected to announce next week that growth in the final quarter of 2013 remained relatively strong at around 0.7%.

However, some have voiced concern that Britain has been reliant for much of the growth on household spending rather than the exports and manufacturing sector.

The IMF itself has voiced concern that, having failed to rebalance the economy, the government is now reliant, through policies such as Help to Buy, on boosting the housing market and encouraging consumers to take out more debt.

Nonetheless, the IMF upgrade represents the latest evidence that Britain's recovery is starting to take real hold, pushing the country towards robust growth this year.

 :: Watch the news conference live on Sky News, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Motorway Pub To Open Despite Opposition

A new £1m pub opens at a motorway service station today, in the face of fierce criticism from road safety and alcohol campaigners.

Pub chain JD Wetherspoon says The Hope & Champion will be open from 4am to 1am, seven days a week.

The venue is located in the Extra Motorway Service Area at junction 2 of the M40 in Beaconsfield, Buckinghamshire.

It is the first pub ever to be opened at a motorway service area, and will sell real ale from local and regional brewers.

But critics say the location of the pub is "at odds" with public opinion.

The RAC said a survey of 2,000 people showed only 12% of respondents supported putting pubs into motorway service stations.

Around two-thirds said they did not agree with the move, with older drivers more likely to oppose the sale of alcohol at motorway service areas.

Only 8% of over-55s were in favour, with 71% against, while almost one in five of those aged between 18 and 34 were in support.

The RAC's head of external affairs Pete Williams said: "The public appear to be very much against the introduction of motorway pubs.

"In our view this is a risky and frankly unnecessary move. The question we are struggling to answer is - of all the places to open a pub, why choose a motorway service station?

"The temptation to drink and drive can only be increased by easier access to alcohol."

But Steve Baldwin, manager of the new pub, said the venue would serve the local community.

"The Extra Motorway Service Area, now including The Hope & Champion, primarily serves the motorway users, but its facilities are also available to the surrounding community from the local road network," he said.

Sir Ian Gilmore, Royal College of Physicians special adviser on alcohol and chair of the Alcohol Health Alliance, said: "I am disappointed by the decision to open a JD Wetherspoon on the M40.

"We are trying to prevent harm from alcohol-related traffic accidents and this sends out completely the wrong message."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Bingo Hall Burden: MPs Call For Tax Cuts

By Adele Robinson, Sky News Correspondent

The UK's bingo hall business will "stagnate" if the Government does not cut tax on it, campaigners say.

More than 50 MPs are backing calls to reduce duty and bring levies on the game in line with other forms of gambling.

Bingo hall profits are currently taxed at 20% compared with a 15% rate for most other gambling activities.

Campaigners estimate that reducing bingo duty is expected to raise around £40m for the Exchequer over four years.

Miles Baron, from the Bingo Association, says investment is vital for growth.

"By building new clubs and investing in new clubs, attendances would improve that would generate more income, that would generate new taxes, that would employ more people ... this is at the heart of the community, this is a vital and important part of some people's social repertoire."

Campaigners claim gambling taxes are forcing more and more clubs to close

The Government says it would have to carefully consider before reducing the rate because its priority is to cut the budget deficit.

Jim Cunningham, Labour MP for Coventry South, says if more support is not given then the "social service" side of bingo will be lost.

"The implications can be that some of these places may have to close because they're not profitable and if that happens then there is a problem for some of these elderly people, during the day in particular, to find somewhere else to go."

Nearly 400 bingo clubs across England, Scotland and Wales are hosting free bingo games this weekend to support the campaign to cut tax.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Fastest Growth In Retail Sales Since 2004

Brisk business for smaller retailers ahead of Christmas helped sales volumes grow at their fastest annual pace since 2004 in December.

Figures from the Office for National Statistics (ONS) measured 2.6% growth during December to show an annual increase of 5.3% - easily topping the forecasts of economists.

The performance suggests a bigger contribution to GDP growth from consumer spending in the fourth quarter of 2013, after the sector was credited with driving recovery during the previous three months.

However, it will also raise more concerns about consumer debt levels and the extent to which people are digging into savings.

The surge in business for small stores may have been a result of the storms ahead of Christmas - prompting consumers to shop locally.

Debenhams had a poor Xmas despite department stores seeing strong trade

Small stores were found by the ONS to have outperformed their bigger rivals, with the amount spent in them increasing by 8.1% against growth of 2.6% for larger stores, compared with December 2012.

The figures follow news of upbeat trading from the likes of Argos, Halfords, Primark and Next over the festive season, though Marks & Spencer and Debenhams struggled.

The extent of their woes was laid bare by the ONS, which measured department store sales volume growth of 11.7% in December - the highest year-on-year growth since January 2000.

The slew of results from major chains suggested retailers who embraced online and high demand for gadgets and cheap fashion enjoyed robust trading.

The ONS said internet sales increased 11.8% by value compared with the same month last year, with average weekly spending online standing at £675.4m.

The statistical body also reported that the 2.6% growth in sales volumes month-on-month equalled the previous high set in February 2010.

The overall amount spent in shops was up 3.6% compared with the same month last year, with food stores improving by 2.2% and non-food stores by 4.4%.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Ex-Barclays Executive Plots New Business Bank

By Mark Kleinman, City Editor

A former Barclays executive is setting up a new bank to target small and medium-sized businesses (SMEs) in a test of the City regulator's pledge to accelerate approvals for new lenders.

Sky News understands that OakNorth, which has secured backing from a group of prominent investors, is one of 20 fledgling banks which are pursuing licences from the Financial Conduct Authority (FCA).

OakNorth has been established by Richard Davies, who rose to become the head of UK operations within Barclays' corporate bank before resigning last November.

He is being joined by a team including Chris Dailey, who was an executive at Aldermore, one of the new banks which have emerged in Britain in the aftermath of the financial crisis.

The emergence of lenders such as OakNorth comes at an important moment in the political debate about banking competition, with the Labour leader Ed Miliband vowing to make the creation of new banks a central plank of his economic policy.

Last summer, the FCA said it would relax capital and liquidity rules for new entrants to the banking market, two of the major obstacles for start-up banks to gain regulatory approval.

London-based OakNorth, which declined to comment further on its plans, intends to "focus on the entrepreneurial community in the UK - working with fast growing small and medium sized enterprises, property developers, high net worth individuals and venture capital firms," according to a website it has set up.

"OakNorth will offer a wide range of lending and saving products to assist SMEs and investors in financing their future growth. The business model will seek to augment traditional banking practices with digital / new form lending techniques."

Sky News has also learnt that Vince Cable, the Business Secretary, held talks earlier this month with a group of so-called challenger banks to discuss the hurdles confronting them.

Among those attending the meeting were executives from Aldermore, Metro Bank, Shawbrook and TSB, as well as Treasury ministers, regulators and the chief executive of Mr Cable's new British Business Bank, which will become operational this year.

Mr Cable told Sky News: "New banks entering the market should be encouraged as they provide choice to customers and are an important source of finance for small businesses.

"Regulators have taken moves to improve the way they authorise new entrants, working closely with the banks and providing time for those that need to get staff and investment in place.

"They have reported an increase in the number of potential new banks they are in talks with, which is promising.

"However, most applications under consideration are for niche banks and to have meaningful competition we need banks with the significant technological platform, the kind TSB and Williams and Glyn received from their parent banks [Lloyds Banking Group and Royal Bank of Scotland."

One of the executives who attended the meeting with Mr Cable said industry representatives had emphasised the need for new bank entrants to have access to robust technology platforms that were often prohibitively expensive to small start-up companies.

In a speech last week, Mr Miliband said that Britain's banking market was "broken" and said Labour would, if it won the next general election, create at least two new credible competitors to the country's five biggest lenders.

His pledge has sparked a row with the industry and political rivals, who have accused him of duplicating plans already being implemented through the creation of new high street players such as TSB.

Sky News revealed last month that Aldermore had raised £40m from two leading hedge funds ahead of a flotation this year, while Metro Bank had secured nearly ten times that sum in new funding.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Miliband Promises 'Reckoning' With Big Banks

Is The Banking System Broken?

Updated: 12:36pm UK, Friday 17 January 2014

By Joel Hills, Business Presenter

Folklore at Tesco has it that any internal business pitch to the former boss Sir Terry Leahy which didn't include the word "customer" in the first sentence was bound to end in failure and, on occasion, humiliation.

Sir Terry's time at Tesco is in the process of being reassessed, but there's surely no doubting that the supermarket's spectacular growth in the late 90s was down, in great part, to Tesco's obsession with delivering what customers wanted (no quips about horse burgers, please).

The reason banks are so unpopular, of course, is that they have demonstrably failed to put their customers at the heart of what they do.

In fact they have, on the whole, treated us appallingly.

As Bill Michael of KPMG put it to a group of bank bosses at their annual conference in 2012, far from treating their customers like kings, banks had behaved as if we were "captive geese that can be force-fed, or sold more product to - whether appropriate or not".

Here's the remarkable thing though: the litany of recent scandals and abuses (Payment Protection Insurance, interest rate swaps, Libor-fixing, money laundering, tax avoidance) doesn't seem to have cost the big banks any customers.

Take Barclays. Broadly speaking, the bank has the same number of personal accounts and business accounts today that it did before the financial crisis.

Now the likes of Barclays, Lloyds, RBS and HSBC will tell you that's because ultimately we are all satisfied with the service we are getting from them. Ed Miliband believes it indicates there is something seriously wrong.

The Labour leader's view - that the market isn't functioning properly - is one some of the bosses of smaller banks share.

Last October, a month after the new seven-day switch guarantee was introduced, I chaired a session at the British Bankers' Association's 2013 conference.

Jayne-Anne Gadhia, the chief executive of Virgin Money, complained that the playing field was still horribly skewed in favour of her rivals. 

Paul Lynam, the chief executive of Secure Trust bank, also thinks he's kicking a ball uphill and struggles to steal business from his much bigger rivals as a result.

Interestingly, while both of them share Ed Miliband's diagnosis of the problem, they both also think his prescription of forced branch sales and market share caps are wrong-headed.

Mr Lynam's grumble is that bigger banks can lend more freely than he can because they can borrow more cheaply (they're still too big to fail and therefore continue to enjoy an implicit taxpayer guarantee) and they are not obliged to retain as much capital to protect themselves against losses as he is (Basel rules – don't worry, I'm not going there).

He also believes that the Payments System is deeply flawed.

Now stay with me, please, because his last point is important. Think of the Payments System like the National Grid, but instead of moving gas and electricity around the country the Payments System moves money.

If Mr Lynam wants to send a payment on behalf of one of his customers to a customer at another bank he has to use the Payments System. Here's the rub: the Payments System is effectively owned by the big banks and they charge Mr Lynam up to 40 pence to "clear" each transaction. He says the real cost is closer to 1p.

The whole issue of competition in banking is nuanced and fiercely contested, but it is also desperately important that it's resolved.

It is imperative that we all have faith that the banking system is working well and in our interests.

Perhaps Mr Miliband's suggestion of a full, independent competition inquiry, however long, isn't such a bad idea.

After all, the Competition Commission investigation into the supermarket sector in 2008 went some way to sorting fact from myth and, I would argue, helped to restore some public trust in the likes of Tesco. And public trust in our banks has surely never been so low.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Fastest Growth In Retail Sales Since 2004

Brisk business for smaller retailers ahead of Christmas helped sales volumes grow at their fastest annual pace since 2004 in December.

Figures from the Office for National Statistics (ONS) measured 2.6% growth during December to show an annual increase of 5.3% - easily topping the forecasts of economists.

The performance suggests a bigger contribution to GDP growth from consumer spending in the fourth quarter of 2013, after the sector was credited with driving recovery during the previous three months.

However, it will also raise more concerns about consumer debt levels and the extent to which people are digging into savings.

The surge in business for small stores may have been a result of the storms ahead of Christmas - prompting consumers to shop locally.

Debenhams had a poor Xmas despite department stores seeing strong trade

Small stores were found by the ONS to have outperformed their bigger rivals, with the amount spent in them increasing by 8.1% against growth of 2.6% for larger stores, compared with December 2012.

The figures follow news of upbeat trading from the likes of Argos, Halfords, Primark and Next over the festive season, though Marks & Spencer and Debenhams struggled.

The extent of their woes was laid bare by the ONS, which measured department store sales volume growth of 11.7% in December - the highest year-on-year growth since January 2000.

The slew of results from major chains suggested retailers who embraced online and high demand for gadgets and cheap fashion enjoyed robust trading.

The ONS said internet sales increased 11.8% by value compared with the same month last year, with average weekly spending online standing at £675.4m.

The statistical body also reported that the 2.6% growth in sales volumes month-on-month equalled the previous high set in February 2010.

The overall amount spent in shops was up 3.6% compared with the same month last year, with food stores improving by 2.2% and non-food stores by 4.4%.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Bingo Hall Burden: MPs Call For Tax Cuts

By Adele Robinson, Sky News Correspondent

The UK's bingo hall business will "stagnate" if the Government does not cut tax on it, campaigners say.

More than 50 MPs are backing calls to reduce duty and bring levies on the game in line with other forms of gambling.

Bingo hall profits are currently taxed at 20% compared with a 15% rate for most other gambling activities.

Campaigners estimate that reducing bingo duty is expected to raise around £40m for the Exchequer over four years.

Miles Baron, from the Bingo Association, says investment is vital for growth.

"By building new clubs and investing in new clubs, attendances would improve that would generate more income, that would generate new taxes, that would employ more people ... this is at the heart of the community, this is a vital and important part of some people's social repertoire."

Campaigners claim gambling taxes are forcing more and more clubs to close

The Government says it would have to carefully consider before reducing the rate because its priority is to cut the budget deficit.

Jim Cunningham, Labour MP for Coventry South, says if more support is not given then the "social service" side of bingo will be lost.

"The implications can be that some of these places may have to close because they're not profitable and if that happens then there is a problem for some of these elderly people, during the day in particular, to find somewhere else to go."

Nearly 400 bingo clubs across England, Scotland and Wales are hosting free bingo games this weekend to support the campaign to cut tax.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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