Sony: 'We Had No Choice' But To Cancel Film

Sony has defended its decision to cancel a film mocking the North Korean regime after the studio suffered a damaging cyber-attack.

In a statement, the company said it had "no choice" but to pull The Interview, because cinema chains across the US had backed away from showing the film, which depicts a plot to assassinate North Korean leader Kim Jong-Un.

The decision was made after the group claiming responsibility for the cyber-attack made terrorist threats against US cinemas if they showed the movie, which stars Seth Rogen and James Franco.

President Barack Obama strongly criticised the move, saying he believed the studio had "made a mistake".

Celebrities and film-makers have also slammed the decision, which was made earlier this week.

Video: Obama: Sony Pulling Film 'Mistake'

Mr Obama said: "I wish they had spoken to me first.

"We cannot have a society in which some dictatorship someplace can start imposing censorship."

"Without theaters, we could not release it in the theaters on Christmas Day," Sony said in response.

Video: Sony CEO: 'We Have Not Backed Down'

"We had no choice."

It insists it has only cancelled the Christmas Day release and it has been "actively surveying alternatives" to release the film on another platform.

"It is still our hope that anyone who wants to see this movie will get the opportunity to do so," Sony said.

Video: US Will Respond To 'N Korea Hack'

Sony's chief executive, Michael Lynton, has also defended the company's actions, telling CNN: "We experienced the worst cyber-attack in American history.

"We have not caved, we have not given in, we have persevered and we have not backed down.

"We have always had every desire to have the American public see this movie."

Video: Who Could Be Behind Sony Hack?

Mr Lynton said the President, the media and the public "are mistaken as to what actually happened" and added he had personally talked to senior advisers at the White House, who were "certainly aware of the situation".

The FBI revealed on Friday it believed North Korea was behind the cyber-attack on Sony, something Pyongyang has denied.

However, a North Korean diplomat did say the film "defamed the image of our country".

Video: The Interview: Official Trailer

The FBI called the attack, which led to a series of embarrassing leaks, an unacceptable act of state-sponsored "intimidation".

The agency said technical analysis of malware used in the attack found links to malware that "North Korean actors" had developed and found a "significant overlap" with "other malicious cyber activity" previously tied to Pyongyang.

The group claiming responsibility for the attack, who call themselves Guardians of Peace, praised the decision to cancel the film's release in a statement provided to CNN on Friday.

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1. Gallery: 'The Interview' Film Pulled: Hollywood Takes to Twitter

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'Panic Saturday' To Start Xmas Spending Spree

Shoppers are set to spend a total of £1.2bn on last minute gifts and groceries on what has been dubbed "Panic Saturday".

Around 13 million consumers will spend £2.1m for every minute stores are open at an average of £92.31 per person, according to a report by the Centre for Retail Research (CRR) for Vouchercodes.co.uk.

Claire Davenport, Vouchercodes.co.uk managing director, said: "With Christmas Day falling later in the week this year, consumers feel that there is still plenty of time to complete their shopping.

"Panic Saturday kicks off a big week for retailers and we're expecting to see a huge increase in traffic to our site this weekend."

Some of the biggest high street names have slashed their prices for what is expected to be one of the busiest shopping days of the year.

Video: Black Friday Sales 'Unprecedented'

Debenhams has reduced some gifts by 50%, Boots is offering a 60% discount of selected fragrances, while Marks & Spencer is selling some beauty products for half-price.

Delayed online orders, poor weather and earlier sales are expected to drive around 70 million shoppers to the high street between now and Christmas Eve - an increase of 14% on last year.

The CRR report also predicts in-store sales will reach £4.74bn over the five days before Christmas, another noticeable increase on last year (21%).

The CRR says the additional shopping day will contribute an extra £870m.

Video: Retailers Hoping For Busy Weekend

Department stores can expect to double their takings this weekend, data from payment processing company Worldpay suggests, with shops in the north of England set to benefit the most.

It said the number of card payments taken by department stores in some parts of the UK just before Christmas increased by as much as 224% this time last year, and even better figures are expected for 2014.

Worldpay UK managing director Dave Hobday said: "Department stores are magnets for shoppers who find themselves in the last-chance saloon in the final few days before Christmas.

"Many of these eleventh-hour shoppers will be breaking into a cold sweat at the thought of heading to the high street on the busiest shopping day of the year and praying for someone to take the pain away."

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1. Gallery: Black Friday: Madness In The Shops

   Yes, really. Shoppers have wrestled over a television. It has come that, people. "Black Friday" is in full swing in Britain and the stiff upper lip Brits are famous for has well and truly left the building. This photo was taken at an Asda in Wembley, north London

Britain's high streets, shopping centres and websites have been awash with discounts as more retailers than ever embraced US-style promotions, seeking to kickstart trading in the key Christmas period

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Push To Get More Women Into The Cockpit

By Charlotte Lomas, Sky News Reporter

More than four decades after the first British female pilot took to the skies in a commercial airliner, there are still few women choosing flying as a career. But why are there so few female pilots?

Of the 3,500 pilots employed by British Airways, just 200 are women and this is more than any other UK airline.

Globally, 4,000 of the 130,000 airline pilots are female and fewer still are captains - worldwide there are around 450.

Helen Macnamara has been a British Airways pilot for 14 years after enrolling on a sponsorship scheme once she left university.

Helen Macnamara says there were a lack of opportunities in the past

"I like to see the world and different places and I enjoy the magic of flying itself," she said.

"Once you have the passion for it, then that's it really".

Helen, 38, believes the reason so few women go into flying may stem from a lack of opportunities in the past.

She said: "I think historically there were less women involved in aviation and that has been changing throughout my career.

"I think it's important females see this as an option and that there are role models in our industry."

One such role model is TV presenter and now fully trained pilot, Carol Vorderman.

Trained pilot Carol Vorderman is supporting the drive

She is planning to embark on a solo round-the-world flying trip and is supporting a recruitment drive by British Airways to get more women in the cockpit.

Carol said: "I always wanted to be a pilot since I was very young.

"It was the reason I read Engineering at Cambridge, and ideally would have joined the RAF or a commercial airline after graduating, but sadly this was not an option then.

"I think the reason so few women enter the profession can be traced back to schools, home and the media. Girls need to be encouraged more to pursue sciences, maths and technology at school and realise different paths are open to them."

Although many women work in the aviation industry as a whole - piloting is still very much a male-dominated profession.

Jim McAuslan, the general secretary of BALPA, the British Airline Pilots Association, is hoping this will change.

He said: "Women make great pilots, unfortunately only five percent of our members and British pilots are women, and that's disappointing.

"So we're reaching out to women to find why they're not coming forward. Perhaps it's because of their choice of careers at an earlier age. Engineering is a great way to get into flying, so perhaps people should look at their careers early on.

"But our big message would be: have the dream."

Some critics argue that women face prejudice when considering a career in flying.

In 2009 a Virgin Airlines advert featuring glamorous female flight attendants flanking a male pilot received complaints it was sexist.

So too did an Air New Zealand in-flight safety video where women were dressed bikinis.

But Helen says that she has never experienced any negativity. Most passengers are simply surprised to have a female pilot, she said.

"Actually when members of the public come to our flight simulator where we train, it is usually the women who fare better than the men.

"They are softer with the manoeuvres and males can be more heavy handed."

In an industry where fewer than 5% of pilots are women it's hoped more will be landing safely on the tarmac in future.

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Pump Prices: Cheap Petrol Comes With A Warning

Tumbling oil prices are resulting in lower petrol costs, but there are warnings the good news for drivers may not last.

With prices falling by more than 40% since June's high of $111 a barrel, there have been an increasing number of reports suggesting petrol prices across the UK could soon fall below £1 per litre - the lowest level since the end of May 2009.

Experts at the RAC believe petrol could fall to 99p a litre next year, while economists at Goldman Sachs also believe petrol could fall close to £1.

But AA president Edmund King said this possibility remained "remote".

He said: "A 6.6p-a-litre drop in the price of petrol releases a potential £3m-a-day switch of consumer spending from fuel forecourts to other businesses.

Video: What's Causing Falling Oil Prices?

"It will also lower the cost of transporting goods, hopefully also to be passed on to customers."

Mr King went on: "However, the parallels with the 2008 crash, albeit that was a market in freefall while this one has been engineered by OPEC and could be stopped any time, carry a warning from the ghost of Christmas past.

"In 2009, a new year brought a new assessment of the market and pump prices started to rise again on January 5."

Analysis by the Office for National Statistics (ONS) also suggests petrol prices are unlikely to fall below £1-a-litre in the coming months.

Video: How Do Oil Traders View The Future?

But while the ONS said the price consumers pay at the pumps for petrol and diesel were "strongly related to the price of crude oil", it highlighted that price changes were "less volatile and the effect of changes in crude oil prices are delayed".

Ian Taylor, chief executive and president of Vitol, the world's largest oil trading company, told Sky News' Ian King Live that although the future was difficult to predict he believes the market "will steady up".

He said: "As you know oil traders are pretty useless at predicting price, but we sort of feel that inevitably at these price levels that several areas of the world will begin to cut back on capex (capital expenditure) and we'll see some reductions in supply and a big transfer of income to the consumers - hopefully lower petrol prices in the UK etc - and that will increase demand.

"We feel at the current prices and with Brent at $60 a barrel we should begin to see some stability, but oil has been a lot lower than this and a lot higher so it's difficult to predict just at this moment - but I do begin to believe the market will begin steady up."

Video: Oil Prices - Winners And Losers

He added: "It's a pretty big tax cut for every single consumer in the world and it's a huge transfer of income from oil producers to world consumers. It's pretty positive for the UK, Europe and other big consuming countries around the globe."

Petrol pump prices have plunged in the last month with the mid-November to mid-December fall the third biggest in 25 years, according to the AA.

The motoring group said that between mid-November and mid-December UK average petrol prices fell 6.6p to 116.32p a litre.

Only the October-November 2008 fall of 11.5p a litre and the August-September 2006 dip of 7.9p have been greater than the most recent decline.

Video: Oil Chief's Petrol Price Prediction

The AA also said that average diesel prices have fallen 5.27p a litre to 122.16p over the mid-November to mid-December 2014 period.

And the fall does not include the very latest 2p-a-litre petrol reduction by the four biggest supermarkets which took effect on Wednesday.

Currently, south west England has the cheapest petrol, at an average of 116.1p a litre, while East Anglia has the dearest, at 117.1p.

The cheapest diesel is to be found in Northern Ireland, at 121.8p a litre, with the most-expensive in Scotland, at 122.7p a litre.

Video: 13 Nov: Why Is The Oil Price Down?

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Russia's Crumbling Economy Faces Fresh Sanctions

Russia's crumbling economy could be hit further after the EU agreed on more santions over its intervention in Ukraine.

Fresh punitive measures - banning investment in Crimea to target Russian Black Sea oil and gas exploration - were agreed at the end of the European Council summit in Brussels.

New EU president Donald Tusk said they needed to create a long-term strategy to stop Russia President Vladimir Putin's defiance of the West.

"We need to be realistic, we have to treat this as a long-term game. We must go beyond being reactive and defensive."

He called on Europeans to "regain our self-confidence and realise our own strength" when dealing with Russia.

Video: Putin Promises Economic Recovery

David Cameron warned Mr Putin that Russia's economy was in "serious" trouble after being hit by a slump in oil prices and sanctions from the EU and US.

"I think that something very important is being made clear here, which is that if you want to have full access to the international capital markets you cannot behave in a way that flies in the face of the international rules and how to behave towards other countries.

"If it takes Russian troops out of Ukraine, and it obeys all the strictures of the Minsk agreement, these sanctions can go.

Video: Russia Rocked By Rouble Rout

"But until that happens these sanctions should not go and there was a very clear and unanimous and unified view in the EU tonight."

Speaking at his annual end-of-year media conference, Mr Putin hit back saying the sanctions have not had a big effect and accused the West of behaving like "an empire".

He also accused the West of trying to "chain" the Russian bear.

Video: Can Russia Overcome Rouble Crisis?

"Probably our bear should just relax and sit quietly and just eat honey instead of hunting animals. Maybe then they will leave the bear in peace.

"But they will not.  What they are trying to do is chain the bear and when they manage to chain the bear they will just take out its fangs and claws."

Video: Russia's Rouble Tumbles

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Falling Oil Prices Could Spell Serious Trouble

By Dominic Waghorn, US Correspondent

Paul Kenworthy has been an oilman for more than two decades. He's the owner of 10 wells near Midland West Texas and has seen good times and bad come and go, several times over.

But the precipitous drop in oil prices on what they called Black Friday last month has been painful all the same. Like everyone else he's seen the value of the black gold his pumps pull out of the Texas dirt go down by 40%.

He blames OPEC and the Saudis who have refused to cut production despite falling demand in Asia and Europe. But he says he understands what they're doing.

Paul Kenworthy has seen the value of his oil slashed by 40%

"To use a line from The Godfather, 'It's business it's not personal'," he told Sky News. "They're trying to maintain market share and they're going to do what it takes to maintain that market share."

OPEC, he says, is responding to a massive increase in US oil production because of the revolution in fracking. 

Video: Oil Chief's Petrol Price Prediction

Hydraulic fracking has brought boom times to places like Midland not witnessed since the 80s. The average income in the town is the fastest growing in the country, and currently stands at $82,000 a year.

It's not just the oil industry that's been booming.

Mark Pearce is a homebuilder and says it's been impossible to keep up with demand from people flooding in to take advantage of the oil money.

Video: Russian Economy In A Crisis

'It's been really all you can get and nobody has been able to keep up. Early it was how much can you sell now it's just how much can you build to meet demand."

But fracking is expensive and not profitable if the price of oil goes below a certain level.

From cities like Dallas and Houston they are watching nervously asking the multibillion dollar question: how low will the price go and for how long?

Video: How Do Oil Traders View The Future?

The answer is important for people far beyond America. Its economy is the only one that's showing signs of a sustainable recovery currently. Much of that recovery has been driven by the oil boom.

Lower oil prices can help that further. They give people more money in their pocket - between $500 to $1,000 a year, according to current estimates. That should drive consumption and lower fuel prices make production cheaper too.

But if the price stays too low, the oil industry could be in serious trouble. That would threaten the wider economic recovery here and because what happens in America spreads to Europe, including the UK.

Video: Big Oil Set For Big Changes

Bruce Bullock, director of the Maguire Energy Institute in Dallas, says it's a Goldilocks question. The oil price can't be allowed to get too high or two low.

"If it were to rebound up to $65 or $70 a barrel, I think on balance it will help the economic recovery. If it were to drop further I think it will harm the recovery. There's a lot at stake here for America and for the rest of the world."

Something worth bearing in mind before getting too excited by plunging prices at the pump.

Video: Oil Prices - Winners And Losers

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Wellcome Trust Warns On 'Populist' Mansion Tax

By Mark Kleinman, City Editor

One of Britain's most successful investors has issued a thinly veiled swipe at Labour's proposed mansion tax and warned that "populist politics" risk derailing Britain's economic revival.

Speaking to Sky News, Danny Truell, chief investment officer of the Wellcome Trust, the medical research charity, said a lack of clarity about politicians' intentions toward key industries was potentially damaging.

Mr Truell did not explicitly identify Labour's proposals for a tax on expensive homes, but people close to the Wellcome Trust confirmed its anxiety that the party had not said whether charities would be exempted from a new levy.

"In the UK, populist policies risk derailing progress in restoring balance in the economy," Mr Truell said.

"We own £1.2bn of residential property in the UK; there is no clarity on how charities will be treated in respect of property taxes, which can only damage confidence in the short term."

His warning will reinforce impressions of a gulf between Mr Miliband's party and the interests of business leaders and the City.

Labour has pledged to address that perception despite pledges of a crackdown on the banking, energy and property industries.

Mr Truell oversees a vast investment portfolio at the Wellcome Trust, which includes shareholdings in companies such as Apple, Marks & Spencer, Twitter and Vodafone.

The research foundation's residential property assets include more than 1700 units in South Kensington in Central London, which it said today may generate "more muted" returns in the near term because of "political concerns and overly strong recent price appreciation".

Mr Truell was speaking to coincide with the disclosure of another stellar annual performance by the Wellcome Trust's investment division, which generated a total return of 15.4% in the year to September 30.

That equated to a £2.5bn return, which will contribute to a £4bn investment in charitable activities during the next five years.

Mr Truell added that the current slump in oil prices would be conducive to growth in Europe and Asia, and said he was surprised by the market's reaction.

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Mobile Networks Agree Deal To Boost UK Coverage

A £5bn project to guarantee mobile phone voice and text coverage to 90% of the UK geographical area by 2017 will go ahead.

The deal means the four mobile networks - EE, O2, Three and Vodafone - have all agreed to tackle poor coverage in so-called partial "not spots".

These are areas that may have coverage from some but not all of the four networks.

This will halve the number of areas where there is patchy mobile coverage.

In addition, the operators will increase full coverage from 69% to 85% - allowing phone users to download data.

Culture Secretary Sajid Javid said: "Too many parts of the UK regularly suffer from poor mobile coverage leaving them unable to make calls or send texts.

"Government and businesses have been clear about the importance of mobile connectivity, and improved coverage, so this legally binding agreement will give the UK the world-class mobile phone coverage it needs and deserves."

A Vodafone UK spokesman said: "We support the Government's objective of delivering better coverage to rural areas including partial not-spots.

"It is a great result for UK consumers and businesses and it will make the UK a leader across Europe in terms of the reach of mobile coverage."

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US Rate Signal Boosts World Stock Markets

World stock markets have rallied after the US Federal Reserve signalled interest rates would not be rising any time soon despite an improving economy.

US stocks enjoyed their strongest session of the year following three days of declines when the Fed said it would adopt a "patient" approach to rates - ending fears among investors of an increase in borrowing costs as soon as the spring.

Asian markets also rallied while European stocks were tipped to follow suit.

Fed chair Janet Yellen remained upbeat in her commentary surrounding the world economy despite the currency turmoil in Russia amid a downward spiral in world oil prices, low global inflation and general economic weakness - particularly in the eurozone.

But she stressed that the mention of patience was not a change in policy.

Ms Yellen said: "This new language does not represent a change in our policy intentions and is fully consistent with our previous guidance, which stated that it likely will be appropriate to maintain the current starting range for the federal funds rate for a considerable time after the end of our asset-purchase programme.

"But with that programme having ended in October and the economy continuing to make progress toward our objectives, the committee judged that some modifications for guidance is appropriate at this time.

"Employment is rising at a healthy rate and the US economy is strengthening," she added while noting: "There is room for further improvement."

US commentators had believed that better economic indicators, especially within the jobs market, could tip the Fed to begin rate rises as early as March.

But the jitters of recent days were cast aside following Ms Yellen's comments as the Dow Jones added 1.7% - the tech-heavy Nasdaq 2.1%.

In Asia, Japan's Nikkei jumped 2.3% while stocks in Australia climbed 1.8% for their best day since late 2013.

In commodity markets, oil prices steadied after some wild swings this week.

US crude rose 16 cents while Brent Crude was trading above $61-per-barrel.

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Festive Cheer On Forecourt As Petrol Prices Fall

Petrol prices could soon fall below £1 per litre - the lowest level since the end of May 2009.

The RAC said the recent fall in the price of  oil - now below the $60-a-barrel - would keep dropping.

"What's currently happening at the pumps with falling fuel prices is something many motorists will not remember seeing before," said RAC fuel spokesman Simon Williams said.

"Talk of prices going up like a rocket and falling like a feather could not be further from the truth as retailers have been quick to pass on savings at the forecourt since we forecast on December 6 that prices were due to come down by 7p a litre for petrol and 6p for diesel."

The RAC added that it was hopeful drivers would benefit from the fall in prices in the first few months of the new year.

Video: What's Causing Falling Oil Prices?

The group's monitoring of fuel prices shows the average price of a litre of petrol is 116.9p - nearly 14p a litre cheaper than at the start of the year.

Diesel is nearly 16p cheaper - 122.33p a litre now compared to 138.24p in January.

The average supermarket price of fuel is 114.26p a litre for petrol and 120.18p for diesel.

Video: Petrol Prices

Mr Williams added: "Current forecasts are for average petrol prices to fall to below 110p a litre in the next fortnight and diesel to drop to under 116p.

"At these average prices across the country the cheapest retailers will almost certainly be selling petrol for around 105p a litre, or even lower."

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Taxpayer 'Risk' From £10.5bn New Train Deal

A report by MPs has accused the Department for Transport (DfT) of leaving taxpayers with all the risk from two contracts for new trains worth a combined £10.5bn.

The Public Accounts Committee said that by buying the new trains for the Intercity Express Programme and for the Thameslink project directly, taxpayers "would have to cover the costs of any financial shortfall" should passenger demand fall short of expectations.

Its report said: "These two major projects also demonstrate yet again that the department has limited capacity and capability to manage large-scale procurements, and that it remains overly reliant on consultants."

The report also said that the DfT began the procurement of the Intercity Express trains "without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required."

The committee added that it was disappointed that Siemens would not be manufacturing the Thameslink carriages in the UK.

The DfT said in its defence that the trains would bring "enormous benefits" to commuters.

A Hitachi-led consortium is supplying 866 new carriages for the Intercity Express programme, which will replace old trains on the Great Western and East Coast lines.

German company Siemens is supplying 1,140 new Thameslink coaches to provide improved capacity on cross-London rail routes.

The committee's chairman, Margaret Hodge, said: "The department has no previous experience of running a procurement of this

kind, let alone two with a combined value of £10.5bn.

"Yet it has chosen to break with its previous approach of leaving it to rolling stock companies and train operators to buy trains, transferring risk away from the rail industry back to government."

She went on: "The only way the department can limit this risk is by requiring train operating companies to use these new trains to run their services regardless of whether they best fit the services they would like to offer."

Mick Cash, general secretary of the RMT transport union, described the programme as an "absolute disgrace."

He said: "The companies using these trains get to privatise the profits while the public get to shoulder over £10bn of risks."

A DfT spokesman reponded: "The Intercity Express Programme (IEP) and Thameslink are huge projects that will bring enormous benefits to passengers.

"Successive Governments have considered how best to deliver these orders and have come to the same conclusion, that Government should lead with expert support and advice from the train operating companies.

"IEP and Thameslink are making excellent progress and are on track to deliver very good value for taxpayers and improved services for passengers.

"They are also creating thousands of new jobs across the UK rail industry."

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Russians Rush To Shops Amid Currency Crisis

Russians are rushing to the shops to snap up goods as price rises begin to intensify following steep falls in the value of the rouble.

The volatility of recent days, which culminated in the currency's biggest one-day drop against the dollar since 1998 on Tuesday, fell 3% as trading began in Moscow on Wednesday.

The value of the rouble had plunged 21% over the past two days, despite central bank action to raise its core interest rate to 17%.

More follows...

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BT Set To Buy EE Mobile Phone Network

BT has announced that it wants to buy phone firm EE as it makes a play to re-enter the mobile market.

The company has been in negotiations with EE and rival O2, but BT announced a decision on Monday to go with EE.

The deal is worth £12.5bn. 

In a statement BT said it had "entered into an exclusivity agreement with Deutsche Telekom and Orange in relation to BT's possible acquisition of all of their UK mobile business, EE".

"The period of exclusivity will last several weeks allowing BT to complete its due diligence and for negotiations on a definitive agreement to be concluded."

EE is the UK's largest mobile group which has 27 million customers.

It was formed in 2010 in a joint venture between French operator Orange and Germany's Deutsche Telekom.

BT is Britain's biggest broadband and landline provider and has been looking to expand into so-called "quad play", offering landline, broadband, pay TV and mobile services.

"They might spend more money buying EE (than O2) but EE offers more opportunities," James Allison, a senior analyst in telecommunications at HIS, told Sky's Ian King.

"It is a a bigger operator, but more importantly it has better radio spectrum so they'll be able to offer more mobile service to more customers."

The planned purchase comes more than a decade after BT was forced to sell its mobile operations to reduce a multi-billion pound debt pile.

The deal is now likely to face scrutiny by the regulator Ofcom.

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'Armageddon' Test Hits Co-op, Lloyds And RBS

By Mark Kleinman, City Editor

Britain's eight biggest lenders would accumulate losses of £13bn during an 'Armageddon'-style recession in which the Co-operative Bank would see its capital reserves exhausted and the two state-backed banks severely tested.

The Bank of England (BoE) published on Tuesday the results of its inaugural annual stress tests, which concluded that Lloyds Banking Group and Royal Bank of Scotland (RBS) were among the worst performers six years after their huge taxpayer bailouts.

Lloyds and RBS, which is 80%-owned by taxpayers, were judged by the BoE to need to strengthen their capital based on their positions at the end of last year.

Under the test, which examined the banks' balance sheets during a hypothetical three-year period in which the UK slumped into its deepest recession for decades, RBS only just remained above a 4.5% capital 'hurdle rate' set by the BoE's Prudential Regulation Authority (PRA).

But both it and Lloyds were told by regulators that based on improvements made this year and future plans, neither would be required to submit revised blueprints for strengthening their balance sheets.

RBS announced on Tuesday the issuance of billions of pounds-worth of bonds which convert into shares in the event of its capital reserves falling below a specific level.

The BoE tested banks' resilience in the face of a situation under which interest rates rose to 4.2%, unemployment soared to 12%, house prices slumped by 35%, commercial real estate prices fell by 30%, and GDP crashed by 3.5%.

Those factors amounted to what would be a brutal UK recession, with approximately one-third of mortgage-owners projected to be in negative equity.

Data produced by the BoE showed that Lloyds would be projected to take £12bn of impairment charges on its UK mortgage lending during the hypothetical recession, well over half of the £21.9bn projected across the entire industry.

In total, the authorities forecast that between them, the banks would accumulate roughly £70bn of additional impairments under the stress scenario, approximately £46bn of which would relate to UK household and commercial real estate lending.

Regulators said the tests highlighted a positive overall picture of the British banking system, adding that it would "have the capacity to maintain its core functions" despite the huge losses forecast.

They said the Financial Policy Committee, which has powers to rein in mortgage lending and impose other restrictions on the industry, "judged that no system-wide, macroprudential actions were needed in response to the stress test".

The only lender to effectively fail the test and be ordered to submit a revised capital plan was the Co-operative Bank, which was saved from collapse last year after a rescue led by US hedge funds.

The Co-op Bank, which would see its capital exhausted by the BoE stress scenario, has proposed slashing the size of its business in the wake of huge losses on its commercial real estate lending.

The BoE disallowed any effort by banks to shrink their loan-books as part of the exercise, insisting that their role supporting the real economy by continuing to lend to homeowners and businesses remained unimpaired.

However, banks' ability to pay dividends could be jeopardised.

While neither Lloyds, which is 25%-owned by taxpayers, nor RBS has paid a dividend since their bail-outs in 2008, the BoE was explicit that they could be prohibited from doing so under conditions similar to those modelled in the test.

Of the eight lenders examined by the BoE, Barclays, HSBC, Nationwide, Santander UK and Standard Chartered produced widely varying results in the test, but the trough of each of their capital positions remained well above the BoE's 4.5% minimum requirement.

Standard Chartered was excluded from the calculation of UK loan losses because it undertakes minimal lending in the UK.

The UK test followed a similar exercise conducted by European regulators earlier this year.

Mark Carney, the Bank of England Governor, said the exercise had been "demanding" but insisted it painted a positive picture of the rebuilding of Britain's banking sector.

"The results show that the core of the banking system is significantly more resilient, that it has the strength to continue to serve the real economy even in a severe stress, and that the growing confidence in the system is merited."

The Bank reiterated on Tuesday that the stress scenario was hypothetical and did not reflect a forecast for economic conditions in the UK.

Ewen Stevenson, RBS chief financial officer, said: "We have made good progress during 2014 in both strengthening our capital ratios and reducing higher risk exposures.

"However, we recognise that there is still much work to be done to improve the resilience of our balance sheet."

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Russia Ramps Up Rate To 17% To Boost Rouble

Russia's central bank has made an aggressive move to combat the plunge in the country's currency by raising its core interest rate to 17%.

The surprise action, announced overnight, was a response to the rouble's value sinking by almost 50% over the course of the year - hit by Western sanctions imposed over the conflict in Ukraine and plunging worldwide oil prices.

The currency strengthened by more than 9% against the dollar in the wake of the surprise intervention.

It was also intended to settle nerves back home as fears grow that the extent of Russia's economic problems - largely unreported by state media - could at some stage potentially spark panic among consumers as price rises become unmanageable.

By raising interest rates, the bank hopes too that investors will find it more financially appealing to keep their money in Russia.

The rate was raised to 17% from 10.5% - highlighting the extent of the monetary policy action.

Russia's economy relies heavily on revenue from oil, which is priced in dollars.

Falls of more than 50% in world oil prices are tipped to plunge the country into recession next year.

The central bank has raised the rate from 5.5% earlier this year to 10.5% just last Thursday.

The Bank of Russia said then that it expected inflation to run at 10% this year but climb further in the first quarter of 2015.

But the ruble plunged further against the dollar on Monday, dropping from 55 rubles last week to about 65 rubles to the dollar.

A falling currency increases the cost of imports, thereby stoking inflationary pressures.

At the same time, plummeting oil prices give the government less money to combat a downturn and can force it to borrow more.

The sanctions imposed by the West have magnified Russia's economic turmoil.

In September, the US and the European Union announced a new round of sanctions over Moscow's involvement in Ukraine, which included blocking Western financial markets to key Russian companies and limiting imports of some technologies.

The potential for a prolonged downturn caused investors to pull their money from the country, causing the ruble to further lose value.

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Tax Helplines Cut Off Almost A Third Of Calls

Tax bosses have promised the service offered by public helplines will be improved, after it was revealed that almost a third of calls are getting cut off.

Research by consumer group Which? found that, in a sample of 100 calls, only 71 were not cut off with an automated message saying the service was "very busy".

Those calls that did survive this initial cut waited an average of 18 minutes to speak to someone, with the longest waiting 41 minutes.

The system's voice recognition also made mistakes when directing queries to other departments, with more complex phrases being misunderstood.

For example, when asked "do I need to pay tax on premium bond winnings?" the system asked if the caller was inquiring about changing a name or about a VAT surcharge notice.

The research comes in the run-up to the self-assessment tax return deadline of 31 January.

HM Revenue and Customs admitted the service "isn't good enough" and that new technology is being brought in to improve responses.

Which? executive director Richard Lloyd said: "With large numbers of people soon to be seeking help with their self-assessment tax return, we want to see HMRC doing more to monitor and improve their call-waiting times."

A spokesman for HMRC said: "HMRC receives over 40 million calls a year but we know that some of our customers can struggle to get through on our helplines at very busy times. This isn't good enough, and we are working hard to improve the range of services we provide.

"This year we are introducing new technology to help us answer more calls quicker at busy times, and we are improving the digital services we offer so that more customers can find all they need online.

"There is more to do, and we are committed to improving the service we offer all of our customers at all times, to help them find advice and support when they need it."

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David Cameron To Launch Home Discount Scheme

A scheme offering 100,000 first-time buyers new homes with a discount of 20% as part of a drive to help people onto the property ladder will be launched by David Cameron later.

Those under 40 who have never owned their own home can register their interest in buying via the Starter Home Initiative from the start of 2015 - six months earlier than planned.

Because of a change to the planning system set to come into force, under-used or unviable brownfield land will be freed from certain costs in return for a below market value sale price on properties constructed on the site.

Developers and councils are being urged to ensure the changes unlock a variety of sites across the country.

Mr Cameron said: "Hard-working young people want to plan for the future and enjoy the security of being able to own their own home. I want to help them do just that.

Video: Stamp Duty: Good News For Buyers

"Under this scheme, first-time buyers will be offered the chance of a 20% discount, unlocking home ownership for a generation.

"This is all part of our long-term economic plan to secure a better future for Britain, making sure we are backing those who work hard and get on in life."

Communities Secretary Eric Pickles said: "The 2008 housing crash blocked millions of hard-working, creditworthy people from becoming home-owners, at a time in their lives when they should have been able to expect to get on the property ladder.

"We're turning that around with Help to Buy, but today's new Starter Homes scheme will offer a further boost, giving young people (under 40) the opportunity to buy low-cost, high-quality new homes for significantly less than they would normally expect."

Stewart Baseley, executive chairman of the Home Builders Federation, said the initiative is "another positive step" in tackling the shortage of housing.

At the moment, developers can face an average bill of £15,000 per home in Section 106 affordable housing contributions and tariffs.

But under the scheme, developers offering Starter Homes would not have to pay certain charges.

To ensure the savings are passed onto buyers, the homes will not be able to be re-sold at market value for a fixed period.

Video: July: Young Unable To Buy Homes

More than 30 house builders have already backed the plans, and say they would consider bringing forward land to be developed from next year.

A design panel will be set up to ensure the homes are not only cheap, but also high-quality.

Renowned architect Sir Terry Farrell, who is on the panel, said it could make a real difference.

He added it would build on the recommendations of the Farrell Review, which raised the need for more proactive planning.

Sir Terry said: "Only by planning and designing our villages, towns and cities together with local communities can we create the kind of built environment we all aspire to and should be demanding."

Shadow housing minister Emma Reynolds said no-one would believe the PM's promises on the issue, and added: "The only way to restore the dream of home ownership is to build more homes and Labour has a plan to get at least 200,000 homes built a year by 2020.

"We are in favour of building starter homes but it is not clear how the Government is going to deliver these homes 20% cheaper than market price."

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Glitch Causes Items To Be Sold On Amazon For 1p

Businesses are furious after a piece of software used by retailers on Amazon went wrong, causing hundreds of items to be sold for 1p.

Some firms which use RepricerExpress say they risk going bankrupt because the problem has resulted in them losing so much money.

The software is designed to keep businesses competitive by automatically repricing items of stock so they are cheaper than others in the digital market.

The firm states on its website: "We are here to increase your sales on Amazon and Rakuten's Play.com and make your efforts as profitable as possible."

For an hour on Friday, between 7pm and 8pm, a problem with RepricerExpress led to hundreds of items being sold on Amazon at a fraction of their normal price. At the same time, some customers said, Amazon charged its usual fees for every item sold.

One of the sellers, Judith Blackford of Kiddymania, told Sky News she could be forced out of business as result of the error.

She said: "I started using Repricer Express - a repricing tool as did a lot of other businesses a few months ago.

"Last night through an error in their programme they listed my stock on Amazon at 1p per item including delivery.

"I have lost about £20,000 overnight. Having asked Amazon to cancel the orders they are still sending them out and charging me horrendous fees.

"Surely someone has to be accountable for this. I will be bankrupt at this rate by the end of January."

Another online trader Belle thinks her company, which sells toys and games, will lose around £30,000 and she will probably be put out of business.

Belle thinks her firm, which sells toys and games, will lose around £30,000

She told Sky News: "It's disgusting really because this third party software, that is their business, this should not have happened, this is 2014.

"We have to pay for this software every month, we've been using it for 18 months no problem.

"At the busiest time - this was predicted to be our busiest weekend of Christmas - turnover is zero."

As a result of the error, several buyers commented on Twitter at how pleased they were to have bought the items for so little.

One person wrote: "Amazon are having a glitch on their site and loads of stuff is selling for 1p. I just bought an incense holder, don't even need it."

An email to some customers from the CEO of RepricerExpress, Brendan Doherty, said the problems with the software caused incorrect pricing to be sent to Amazon.

A statement on the company's website from Mr Doherty said: "I am truly sorry for the distress this has caused our customers.

"We have received communication that Amazon will not penalise sellers for this error. We are continuing to work to identify how this problem occurred and to put measures in place to ensure that it does not happen again.

"Everyone here is devastated and disappointed that you have experienced this problem.

"We understand that you are angry and upset and we will endeavour to work to make good on this issue."

A spokesman for Amazon said: "We are aware that a number of Marketplace sellers listed incorrect prices for a short period of time as a result of the third party software they use to price their items on Amazon.co.uk.

"We responded quickly and were able to cancel the vast majority of orders placed on these affected items immediately and no costs or fees will be incurred by sellers for these cancelled orders.

"We are now reviewing the small number of orders that were processed and will be reaching out to any affected sellers directly."

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Treasury To Unveil 'Landmark' Bank Agreement

By Mark Kleinman, City Editor

Ministers will next week hail a "landmark" deal with Britain's nine biggest lenders to offer millions of consumers a new fee-free basic bank account.

Sky News has learnt that the Treasury will announce on Monday that the banks will establish accounts which end charges - whcih can be as high as £35 per item - for failed direct debit or standing order payments.

The new product will be provided by institutions which between them have more than 90% of the current account market, and will be available to people who are not eligible for a bank's standard current account and either have no bank account, or cannot use their existing accounts because of financial problems.

The participating lenders - which have agreed to launch the accounts by the end of next year - are Barclays, the Co-operative Bank, HSBC, Lloyds Banking Group, National Australia Bank (which owns the Clydesdale and Yorkshire), Nationwide, Royal Bank of Scotland, Santander UK and TSB.

Andrea Leadsom, the economic secretary to the Treasury, is expected to hail the development as a "landmark" agreement, saying that it should bring to an end the problem of consumers being locked out of their accounts when payments fail.

Sky News had previously revealed that some banks had expressed concerns during negotiations with the Government about the terms of the deal.

The provision of basic bank accounts, of which there are estimated to be more than 9m in the UK, is estimated to cost the industry more than £300m annually, with the new accounts likely to add substantially to that bill.

Earlier this year, a European Union Directive ordered member states to supervise the introduction of basic accounts which must charge fees described as "fair".

Ministers are understood to be pleased that they have secured an agreement to launch accounts with no fees, with customers offered services on the same terms as other personal current accounts provided by each participating lender.

This will involve customers having access to all standard over-the-counter services in bank and Post Office branches, as well as access to the entire national ATM network.

Some bank executives have warned that the structure agreed with the Treasury will mean that the new accounts are ultimately subsidised by consumers elsewhere in the banking system.

A further concern was raised that the new account could attract demand from large numbers of consumers who are not benefit claimants, but this is likely to have been alleviated by the eligibility restrictions agreed between the lenders and the Treasury.

The Government estimates that up to 7m people will participate in the Universal Credit welfare programme by 2019, with the new basic account expected to be restricted to that population.

The British Bankers' Association (BBA) has been leading the negotiations with the Treasury about the framework of the plans.

Neither the BBA nor the Treasury would comment on Friday.

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FTSE 100 Suffers Worst Week In Three Years

More than £110bn has been wiped off the value of Britain's leading companies as the FTSE 100 suffered its worst week in three years.

The index closed down 161.07 points on Friday, a loss of 2.49%, making an overall drop of 6.6% since Monday - the largest weekly fall since August 2011.

The slide reflected a new five-year low for the price of Brent crude and worries about the global outlook, particularly after more disappointing economic figures from China.

The FTSE 100 is dominated by business with an interest in the energy and commodity sectors, meaning it has taken a bigger hit from weak oil prices.

Oil stocks have taken a hit as weakening demand and the prospect of oversupply sparked a fall in the price of oil by 10% this week to around $62 (£39.50) a barrel.

Video: What's Causing Falling Oil Prices?

The International Energy Agency on Friday cut its forecast for global demand for the fourth time in five months.

BP shares have fallen by 9% since the start of the week and are a fifth cheaper in the year to date.

In New York, the Dow Jones Industrial Average ended the week down 677.96 points or 3.8%, while markets in France and Germany were down by nearly 3%.

Video: 13 Nov: Why Is The Oil Price Down?

Traders were reacting negatively to the plunge in the oil price despite the likelihood that it could represent a $4bn (£2.5bn) stimulus to the world economy.

Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers, said markets are mulling the question of whether a lower oil price is a "symptom or a cure" for weak global demand.

He said: "The answer is it is probably both, but the restorative qualities of a lower oil price are going to take some time to feed through, and in the meantime markets are focusing on the negatives."

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Growing Business: Demand Soars For UK Xmas Trees

By Nick Ravenscroft, Sky News Reporter

Families in Britain are increasingly buying Christmas trees that were grown in the UK rather than ones that have been imported, according to UK suppliers.

The British Christmas Tree Growers' Association (BCTGA) estimates that in the last six years the total number being grown here in the UK has risen by as much as 20%.

This is reflected in the proportion of British and imported trees being bought at shops and markets across the country.

Six years ago it was evenly split with approximately half being shipped in from Europe, according to the BCTGA.

The association's members now say British-grown plants account for some 70% of the total number of trees sold in the UK.

Harry Brightwell, secretary of the BCTGA, told Sky News: "People are much more conscious of environmental issues and the fact of buying a British grown tree usually means the transport is less."

At Yattendon Estates, a Christmas tree farm in West Berkshire, a cold and frosty morning was no deterrent to customers looking to buy a tree as the calendar counts down the days to Christmas.

Manager Alastair Jeffrey said: "Ten years ago our European competitors stole a march on us… now UK industry has really concentrated on making sure we're right up to spec… quality is the name of the game."

The majority of trees sold in Britain are Nordmann Firs which, for a six foot tree, will cost upwards of £45.

Among the Nordmann Firs grown in Britain are those supplied to Downing Street, which this year took trees from Herefordshire and the Gower, according to BCTGA.

With up to eight million trees already being sold by British producers, the move away from European imports spells continued growth for this part of the rural economy.

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