UK Economy: GDP Growth Accelerates To 0.8%

The Chancellor claims there is now "real momentum" in the UK's economic recovery after GDP growth of 0.8% was measured in the third quarter.

The Office for National Statistics (ONS) said it marked the strongest period of growth in more than three years - with services, construction and manufacturing all expanding.

It was also the third successive period of improving output, in line with the expectations of economists, though some had forecast growth to have reached 1%.

The ONS said construction - a sector bolstered by Government initiatives such as Help to Buy - surged by 2.5%.

George Osborne said: "This shows that Britain's hard work is paying off & the country is on the path to prosperity."

Prime Minister David Cameron tweeted: "Today's encouraging #GDP growth figures are another sign we are turning a corner."

Labour argued the growth was "long overdue".

Overall GDP was 1.5% ahead of the same period last year - a time when the economy was being boosted by the Olympics and Paralympics.

But the economy remains 2.5% off its pre-recession peak at the start of 2008.

During the third quarter, construction was boosted by new work on private housing and private commercial building as well as domestic home repair and maintenance but remained 12.5% off its 2008 high.

Housebuilders have been buoyed by the Government's Help to Buy scheme, which recently launched a new phase offering mortgage guarantees.

Production grew by 0.5%, though this remains 12.8% off its 2008 level, while within this manufacturing improved 0.9% in the third quarter.

The powerhouse services sector, which represents three-quarters of economic output, grew by 0.7% and is now 0.6% above its pre-crisis peak.

The largest contributions here came from business services and finance, followed by distribution, hotels and restaurants.

But the wider statistics highlighted one piece of bad news - in terms of UK growth.

The contribution from utilities - including gas and electricity - tumbled by 6.8% in the period, possibly a result of the warm summer compared to the same period last year which was largely a washout and cool.

The figure was seen as a potential factor behind the decision among energy suppliers to increase household bills - to make up for lower demand.

Chris Williamson, chief economist at Markit, said: "Britain is booming again with the economy showing the most sustainable and robust-looking upturn since the financial crisis."

But Alan Clarke of Scotiabank said the figure was a "tad disappointing" - given survey data indicating growth nearer 1% - and "wasn't a home run".

Shadow chancellor Ed Balls said: "After three damaging years of flatlining, it's both welcome and long overdue that our economy is growing again.

"But for millions of people across the country still seeing prices rising faster than their wages this is no recovery at all."

Dave Prentis, general secretary of the Unison union, said growth figures will "mean nothing to the vast majority of people in this country faced with mounting household bills and stagnant wages."

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Grangemouth's Future Saved In Last-Minute Deal

Grangemouth petrochemicals plant has been saved following a last-minute deal.

The 800 workers who were due to lose their jobs at the Falkirk plant - Scotland's largest industrial site and its only refinery - were told the news at 11am on Friday.

It came after the Unite union confirmed it would now "embrace" a survival plan in an effort to reverse a decision by Swiss-based owner Ineos to close the business.

Calum MacLean, chairman of Ineos' petrochemicals division, told a news conference a "great cheer" went up from workers as he told them their jobs were safe.

But he said "very limited redundancies" would have to be made.

Asked by one reporter if he had held a gun to Scotland's head, he replied: "I don't think that's the case."

He pointed out that Ineos had invested £1bn in the business and would invest another £300m to secure its future for at least the next 15 years.

Another £300m will be invested at the site, Ineos says

He said it was "only right" that by making such a "huge investment" the company had to make sure it had a "long-term sustainable base".

The agreement was to see fuel production resume at the company's oil refinery on Friday after a shutdown of more than a week.

The closure would have been a major setback for the Scottish National Party, which is leading the campaign for Scotland's independence from the UK.

Scotland's First Minister Alex Salmond said: "This news is a tremendous fillip for the workforce and the whole Grangemouth community, following what could have been a potential disaster."

Later, in an interview with Sky News, Mr Calum MacLean declined to say how many redundancies would be made. He said the £300m would be spent on building a new gas terminal at the site.

Asked what he thought of union tactics during the negotiations, he said it would have "saved a lot of traumatic effects" if union officials had begun the talks a week ago with the same attitude they had had over the past two days.

The closure would have been a huge blow for Alex Salmond

Jim Ratcliffe, chairman of Ineos Group, said: "This is a victory for common sense. Unite advised employees to reject change and vote for closure. Thank goodness people finally came to their senses. Grangemouth now has a great future."

Ineos said Unite had made a "dramatic U-turn" and had agreed to a three-year pay freeze, no strikes for three years, and moving to a "modern" pension scheme.

Earlier, Unite's general secretary Len McCluskey said shop stewards had decided to accept the company's survival plan "warts and all" in the wake of the closure decision.

Unite's Scottish secretary, Pat Rafferty, said: "Grangemouth is the powerhouse of the Scottish economy - it now has a fighting chance of upholding this crucial role into the future.

"Obviously today's news is tinged with sadness - decent men and women are being asked to make sacrifices to hold on to their jobs, but the clear wish of our members is that we work with the company to implement its proposals."

Ineos caused shockwaves on Wednesday when it announced it could not continue to operate its loss-making petrochemicals division, leaving hundreds of staff at risk and many more contractors facing the axe.

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Family Not Seeing 'Green Shoots' Of Recovery

By Emma Birchley, East Of England Correspondent

The green shoots of economic recovery might be growing stronger but the Horton family is not feeling the effects.

"It's been really, really tough. We are struggling to make ends meet," said Spencer, 39, from Felixstowe.

He has his own recording studio and band, Mohawk, but he makes much of his money from teaching guitar, bass and drums as well as vocal coaching.

The past year has been difficult as the luxury of music lessons has been dropped by those struggling to meet the cost. Pub closures mean fewer gigs.

But there are tentative signs that things may be on the up.

He said: "The lessons have started picking up in the last month or so. I've got five new students so that helps but I don't know how much of that is a sign that the economy is improving."

His wife, Morgan, is training to be a counsellor and volunteers her skills, but is also a self-employed massage therapist and has seen her business suffer.

She said: "I used to have a lot of clients who have a massage as a luxury or to treat chronic back pain but it got to the point that they had to make a choice because of money and the massage went.

"We have both chosen to be in professions that give back to the community and that keeps us going yet the Government does not value or recognise that."

The couple have two children, April, five, and Coby, two.

Keeping the house warm and the family well fed has meant putting up with increasing costs.

Mrs Horton said: "We don't buy luxuries very often and our food bill is still big. It's gone up by about a third in the last year or so.

"Energy is really expensive too. They say the national average is £1,400 a year and we pay close to double that in gas and electricity."

Keeping up with the bills meant they recently had to get a £10,000 loan.

She added: "It really frustrates me because I wanted to spend it on doing up the house but the overdraft kept creeping up so we had to pay that off."

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Mark Carney Announces Liquidity Boost

By Ed Conway, Economics Editor

The Bank of England Governor has unveiled a major overhaul of the way the Bank pumps cash into the markets.

In a speech on Thursday evening to celebrate the 125th anniversary of the Financial Times, Mark Carney revealed that the Bank will be making major changes to the terms under which the Bank provides cash to Britain's financial system.

Though the overhaul itself is unlikely to be noticed by bank customers, policymakers hope that it will help encourage lenders to provide more cash for those who want to borrow.

One of the key ways in which the Bank controls the UK economy, borrowing rates and financial stability is by lending private banks cash in exchange for assets.

However, over the course of the financial crisis it came under fire for offering this so-called liquidity at high prices and in exchange for only the best-quality assets.

The Bank of England will make facilities cheaper

Mr Carney said that the Bank intended to cut the charges for one such facility - the Index Long-Term Repo - and to allow banks to leave collateral of less-stringent quality in exchange for cash.

Whereas previously only high quality assets were acceptable, in future, lesser-quality investments such as mortgage-backed securities will be allowed.

The Bank will also make the terms of its discount window, an emergency short-term lending facility – more generous.

Mr Carney said: "Our facilities are not ornamental. They are there to be used by banks to access money and high-quality collateral. We are offering money and collateral for longer terms.

"The range of assets we will accept in exchange will be wider, extending to raw loans and, in fact, any asset of which we are capable of assessing the risks. And using our facilities will be cheaper. In some cases the fees are being more than halved."

The speech comes only hours ahead of the official announcement of Britain's latest gross domestic product figures.

The Governor indicated that while he was cheered by the recovering economy, the improvement in GDP, which is expected to be strong, was not as broad based as some had hoped. 

He said: "The economy has picked up over the last couple of quarters. We expect the second half to be stronger than the first half, as indicated in our minutes that came out earlier this week.

"We will find out, I'm not so foolish as to try to give a prediction of a number that's going to come out in less than 24 hours so why don't we wait for the GDP report."

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UK Economy 'May Have Grown By Up To 1%'

Carney Unveils Liquidity Boost

Updated: 8:39pm UK, Thursday 24 October 2013

By Ed Conway, Economics Editor

The Bank of England Governor has unveiled a major overhaul of the way the Bank pumps cash into the markets.

In a speech on Thursday evening to celebrate the 125th anniversary of the Financial Times, Mark Carney revealed that the Bank will be making major changes to the terms under which the Bank provides cash to Britain's financial system.

Though the overhaul itself is unlikely to be noticed by bank customers, policymakers hope that it will help encourage lenders to provide more cash for those who want to borrow.

One of the key ways in which the Bank controls the UK economy, borrowing rates and financial stability is by lending private banks cash in exchange for assets.

However, over the course of the financial crisis it came under fire for offering this so-called liquidity at high prices and in exchange for only the best-quality assets.

Mr Carney said that the Bank intended to cut the charges for one such facility - the Index Long-Term Repo - and to allow banks to leave collateral of less-stringent quality in exchange for cash.

Whereas previously only high quality assets were acceptable, in future, lesser-quality investments such as mortgage-backed securities will be allowed.

The Bank will also make the terms of its discount window, an emergency short-term lending facility – more generous.

Mr Carney said: "Our facilities are not ornamental. They are there to be used by banks to access money and high-quality collateral. We are offering money and collateral for longer terms.

"The range of assets we will accept in exchange will be wider, extending to raw loans and, in fact, any asset of which we are capable of assessing the risks. And using our facilities will be cheaper. In some cases the fees are being more than halved."

The speech comes only hours ahead of the official announcement of Britain's latest gross domestic product figures.

The Governor indicated that while he was cheered by the recovering economy, the improvement in GDP, which is expected to be strong, was not as broad based as some had hoped. 

He said: "The economy has picked up over the last couple of quarters. We expect the second half to be stronger than the first half, as indicated in our minutes that came out earlier this week.

"We will find out, I'm not so foolish as to try to give a prediction of a number that's going to come out in less than 24 hours so why don't we wait for the GDP report."

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Twitter Sets IPO Share Pricing Range

Twitter has set a price range of $17 to $20 (£10 to £12) per share for its initial public offering and says it could raise as much as $1.6bn (£987m) in the process.

Twitter Inc said in a regulatory filing on Thursday that it is putting forth 70 million shares in the much-anticipated offering.

If those are sold, the underwriters can buy another 10.5 million shares.

At the $20 share price, Twitter's market value is around $12.5bn (£7.7bn) - a relatively conservative number after some analysts expected the figure to be as high as $20bn (£12.3bn).

The caution appears to show that Twitter learned from Facebook's rocky initial public offering last year, which was marred by technical glitches on the Nasdaq stock exchange.

The tech-heavy exchange agreed this year to pay a $10m (£6.3m) penalty for trading glitches.

"It's conservative and likely going to be raised as they start the road show at least once if not twice," Sam Hamadeh of PrivCo, a private company research firm, said.

"The size of the offering is also a bit small.

"But they may only choose to raise the price once they gauge investor demand. Raising both the price and the size was Facebook's fatal mistake."

Twitter plans to list its stock under the ticker symbol "TWTR" on the New York Stock Exchange, with trading possibly beginning within the next few weeks.

The San Francisco-based micro-blogging service had more than 215 million active users as of the end of June, up 44% from the previous year.

Separately Twitter announced it had hired former NBC executive Vivian Schiller to head its news operations.

Ms Schiller has been the chief digital officer for NBC News since 2011, and has some 25 years experience in the media business. She is expected to be a key liaison between Twitter and the news industry.

The appointment highlights the growing role of Twitter and other social media in the news industry. 

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Grangemouth Job Fears As Chemical Plant Shut

The owner of the Grangemouth petrochemical plant is to close the operation permanently and keep shut, for now, its major oil refinery amid a continuing pay dispute.

The move threatens up to 800 jobs at the petrochemicals business, which makes products used in everyday items such as packaging and plastic bags, unless it can be sold.

The Grangemouth site's owner Ineos said while it would retain the refinery, which produces 80% of Scotland's petrol and diesel, production would remain shut down until the threat of industrial action was removed.

The Government said there was no current threat of fuel shortages in Scotland because of contingency planning.

Workers were given news of the closure at a meeting with Ineos petrochemicals chairman Calum MacLean following the passing of a deadline on a survival plan which asked all Grangemouth staff to accept changes to pensions and other terms and conditions.

The Prime Minister described the closure as "disappointing"

The Unite union said around 680 of the site's total 1,370-strong workforce rejected the proposals, which included a pay freeze for 2014-16, removal of a bonus up to 2016, a reduced shift allowance and ending of the final salary pension scheme.

Following the meeting with staff, one worker who did not want to be named, said: "I feel sick. It's gone."

The worker, who appeared close to tears at points, told Sky News he could only listen to about 10 minutes of the meeting, before he felt he had to leave.

"There's no livelihoods left and we don't even know if we're going to get redundancy out of it. I hope they're happy with themselves," he said.

More than 1,300 people are currently employed at Grangemouth by Ineos

Unite has accused the company's owner Jim Ratcliffe of playing "Russian roulette" with the future of Grangemouth, the biggest industrial site in Scotland, and said it would back any efforts by the Scottish Government to find a new buyer for the petrochemical complex.

In a statement, Ineos blamed the union's opposition to its survival plan for the decision to close the petrochemical plant - saying shareholders could no longer fund it.

Mr MacLean said: "This is a hugely sad day for everyone at Grangemouth. We have tried our hardest to convince employees of the need for change but unsuccessfully.

"There was only ever going to be one outcome to this story if nothing changed and we continued to lose money.

"We still struggle to comprehend what has happened here. The employees were offered a chance to secure substantial new investment in the company, preserve their jobs and keep their salaries. Sadly this will no longer be the case."

The company added: "As a result of this decision, the directors of the petrochemicals business have had no option but to engage the services of a liquidator. It is anticipated that a liquidation process will commence in a week."

Energy Secretary Ed Davey said: "I am saddened to hear of Ineos' plans to place the petrochemicals business into administration, particularly because of the impact it will have on the workforce and local community.

"While respecting Ineos' right to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant.

"Even at this late stage, I urge Ineos to continue dialogue with the workforce and Government will offer help and support with this.

"Ineos have informed us that the refinery will stay open and the management wish to restart full operations as soon as possible.

"We stand ready to help with discussions between the management and the union to ensure this can happen.

"Fuel supplies continue to be delivered as usual and there is no current risk of disruption to supplies."

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Marikana Massacre: 'Damning' Evidence Emerges

By Alex Crawford, Special Correspondent

The Marikana Miners Support group has called for South African police to be prosecuted after apparently unearthing new evidence which disputes the authorities' version of what happened on the day more than 30 striking miners were shot dead by police.

The evidence was uncovered by a film-maker - who is also a member of the campaign group - while he was doing research for a documentary on the incident at the Lonmin mine in August 2012.

It appears to throw more doubt on the police claim that they acted in self-defence when they opened fire on striking miners.

As well as the 34 miners killed, nearly 80 others were left wounded.

The footage has been submitted to the Commission of Inquiry which is continuing into just what went wrong at Marikana.

Film-maker Rehad Desai called it "damning" evidence which showed - in his opinion - that the police had not only engineered the situation which led to the miners being shot, but had then lied repeatedly to the South African public and the inquiry to cover up their actions.

New video shows a miners' leader (circled) who was shot dead minutes later

The footage is shot from what Mr Desai called a "fourth" angle that was mostly unseen and unexamined.

It depicts a large group of the miners being led away from the hillock, or koppie as it is known in South Africa, where they had been demonstrating.

They are filmed walking away slowly, apparently passively and quietly, as they are shepherded by their leaders towards the informal settlement where many of them lived.

The footage, which is shown in the order which it was filmed and apparently has an embedded time code showing what time it was recorded, then shows increased activity among the police.

They are seen moving armoured police vehicles to block the miners' path and forming a barrier between them and the informal settlement.

The footage shows police with guns drawn, apparently before trouble started

The miners are corralled down a relatively narrow path alongside police vehicles and in the direction of a waiting line of armed police.

As they pass a row of police trucks, one policeman can be seen to the left of the picture shooting birdshot into the crowd of passing miners.

Other police then follow suit. The miners, who are already cowering with some crouching over, then start to panic.

One can be seen turning towards the police who are side-on to the crowd and firing his handgun directly at the police.

There is some smoke seen which is thought to be tear gas. Miners start running away from the gas and the shooting coming at them from the side.

Film-maker Rehad Desai says the new evidence is 'damning

They run directly towards the line-up of police and within seconds, a cacophony of noise is heard as the police open fire with live ammunition.

The latest allegations follow a statement by the Commission a few weeks ago that it had managed to obtain documents which the police had previously said did not exist.

The Commission also managed to get access to police computer hard drives.

At the time, it issued a statement saying: "We have obtained documents which in our opinion demonstrate that the (police) version of the events at Marikana ... is in material respects not the truth."

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Grangemouth Plant Closure U-Turn Is Possible

The owner of the Grangemouth petrochemicals plant says it could reverse Wednesday's decision to close it if "substantive" talks today yield union concessions.

Sources at Ineos were speaking to Sky News ahead of a meeting with Unite which began at 8am but they insisted that any agreement on re-opening the chemical side of the operation at the peace talks would have to be rubber-stamped by a full meeting of Ineos shareholders.

The company had announced that it could not continue to operate the loss-making petrochemicals division - leaving 800 jobs at risk at the plant with many more contractors facing the axe too.

Ineos also confirmed that while it was not planning to close down the oil refinery, which produces 80% of Scotland's fuel supplies, it would remain shut for now pending reassurances from Unite that there would be no strike action.

The union yesterday accused Ineos owner Jim Ratcliffe of deliberately engineering the chemical plant's closure.

It said it had put what it called a "plan to save jobs" to the company yesterday and Unite's Scottish secretary Pat Rafferty added: "The ball is now in the court of Jim Ratcliffe and the respective governments in Edinburgh and Westminster and we await their responses."

Ineos argued it was left with no alternative but to close the petrochemical business, which makes products used in the manufacture of household goods such as plastic packaging.

The firm cited a failure to persuade its staff to accept a survival plan, which included a pay freeze, ending of a final salary pension scheme and other changes to terms and conditions.

Ineos said white-collar workers such as admin staff had backed the plan but workers represented by Unite had rejected it.

Politicians had urged the two sides to resume talks to prevent the closure, while efforts are expected to continue to find a potential buyer in case the peace efforts fail.

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Energy Bills: Major Calls For 'Windfall Tax'

By Jon Craig, Chief Political Correspondent

Former Prime Minister Sir John Major has dropped an energy price hike bombshell on David Cameron by calling for a windfall tax on power companies this winter.

In a move that stunned the Tory high command, he said the recent price rises were unacceptable and many people would have to choose between heating and eating.

And he said that if there was severe cold weather this winter and the Government had to help vulnerable people it should impose an "excess profits tax" on the energy companies.

But within an hour the former Prime Minister was slapped down by Downing Street, with the Prime Minister's spokesman declaring: "We have no plans for this."

Labour seized on the apparent disarray.

Ed Miliband, whose price freeze pledge has put the Government on the defensive for weeks, tweeted: "Sir John Major makes Labour's argument: David Cameron stands up for the energy companies not hard-pressed families."

Ed Miliband said Sir John was making "Labour's argument"

Sir John's shock intervention in the energy price row came in a comeback speech to political journalists at Westminster in which he made a passionate plea to the Tories to win back the support of blue collar voters.

Asked about energy price hikes of up to 10%, Sir John said: "I do not see how it can be in any way acceptable that with energy prices rising broadly 4% in terms of costs that the price to the consumer should rise by the 9-10% that we are hearing.

"I do not regard that as acceptable at all by the energy companies.

"And it is not acceptable to me, it ought not to be acceptable to anyone, that many people are going to have to choose between keeping warm and eating. That is not acceptable.

"So if we get this cold spell the government, I think, will have to intervene and if they do intervene, and it is costly, I for one would regard it as perfectly acceptable for them then, subsequently, to levy and excess profits tax on the energy companies and claw that money back to the Exchequer, where their primary job is to get the economy working and people back to work."

Asked if he was backing the Labour leader, the former Prime Minister said: "When Ed Miliband made his suggestions just a few weeks ago I think his heart was in the right place but his head had gone walkabout.

"But he did touch on an issue that's very important. The private sector is something the Conservative party support but when the private sector goes wrong or behaves badly I think it is entirely right to make changes and put it right."

David Cameron's spokesman said it was an "interesting contribution"

Sir John told reporters that with interest rates at a record low, energy companies should be looking to borrow money to pay for investment rather than funding it "out of the revenue of families whose wages have not been going up at a time when other costs have been rising".

"I believe there will be difficulties this winter without action and, if there are those difficulties, the Chancellor will have my total support if he acted in the way I suggest and imposed an emergency impost upon the energy companies to claw back the money that we will have to give to people to help them see the winter in any form of warmth," he said.

Shortly after Sir John's speech, Mr Cameron's spokesman told reporters: "The Prime Minister's view on this is that this is an interesting contribution. We have no plans for this.

"What the Government is doing is legislating around forcing energy companies to put customers on their lowest tariffs and more competition in energy markets."

Asked about Sir John's concerns about people having to choose between eating and heating this winter, the spokesman said: "There are a number of initiatives that the Government has to support vulnerable people, such as the cold weather payments.

"We have a range of ways in which support is given and those are the right ones."

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