Cameron's Speech Rebuked By Fiscal Watchdog

David Cameron has been rebuked by the Office for Budget Responsibility about the impact of his Government's austerity measures on economic growth.

In a high-profile speech on Thursday, the Prime Minister said the OBR was "absolutely clear that the deficit reduction plan is not responsible" for depressed growth, adding "in fact, quite the opposite".

But the head of the independent fiscal watchdog has written to Mr Cameron saying he misrepresented its position.

Chairman Robert Chote wrote to Number 10, disputing the claims.

He insisted that it believed there was a short-term effect and that "fiscal consolidation measures have reduced economic growth over the past couple of years".

The strong retort from the watchdog came in response to a passage from the Prime Minister's speech which he used to insist there was "no alternative" to the Government's strategy.

"There's not some choice between dealing with our debts and planning for growth," he said.

"As the independent Office for Budget Responsibility has made clear growth has been depressed by the financial crisis, the problems in the eurozone and a 60% rise in oil prices between August 2010 and April 2011.

"They are absolutely clear that the deficit reduction plan is not responsible. In fact, quite the opposite."

But the OBR published a letter sent to Number 10 on Friday by Mr Chote in which he took exception to the claims.

"For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely-held assumption that tax increases and spending cuts reduce economic growth in the short term."

He added that an impact of "external inflation shocks, deteriorating export markets and financial sector and eurozone difficulties were more likely explanations" than incorrect multipliers for the reason growth was even weaker that initially forecast.

A Downing Street spokesman said: "The OBR has today again highlighted external inflation shocks, the eurozone and financial sector difficulties as the reasons why their forecasts have come in lower than expected.

"That is precisely the point the Prime Minister was underlining."

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US Boom: Jobs Jump By 236,000 In February

The number of people hired in the United States by non-farm employers jumped by 236,000 in February, exceeding expectations.

The unemployment rate also dropped to 7.7% from 7.9% in January, the lowest level since December 2008.

The Obama administration said it is evidence that the economic recovery is "gaining traction".

New jobs have averaged more than 200,000 per month since November last year.

Wages have increased and the gains were broad-based, led by the best construction hiring in six years.

New construction jobs continue to build up the US economy

But there was one negative detail in the government's February employment report.

Employers added fewer jobs in January than first estimated.

Job gains were lowered to 119,000 from an initially reported 157,000.

However, December hiring was a little better than first thought, with 219,000 jobs added instead of 196,000.

The upbeat figures saw a strengthening of the dollar, with Sterling sliding beneath the $1.49 figure.

Many economists expected hiring to fall in early 2013 largely due to the ongoing uncertainty surrounding the US budget, higher tax rates and looming federal spending cuts that took effect in March.

Yet the latest jobs report indicates job creation is speeding up.

However, early 2011 and 2012 also saw hiring jumps only to see the figures die back as the year went on.

White House economist Alan Krueger noted in a statement that the new unemployment rate was measured before $85bn (£56bn) in automatic budget cuts started taking effect.

The administration has warned that the cuts could have a negative impact on employment and economic growth.

It is urging Congress to move toward a "sustainable federal budget" by closing tax loopholes, enacting entitlement reforms and cutting spending.

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More Than 400 In Barclays Millionaires' Club

By Mark Kleinman, City Editor

More than 400 staff at Barclays earned pay deals worth more than £1m last year, a reduction on 2011 but a substantial number for a year in which the bank's reputation was dragged through the mire.

According to Barclays' annual report, which was published on Friday morning, the number of employees paid more than £1m fell from 473 in 2011, with proportionately larger falls in the number paid more than £2.5m and in excess of £5m.

The disclosures are the most detailed given yet by Barclays and are designed to demonstrate a new commitment to transparency in the way it pays its top staff.

The 356-page annual report confirmed Sky News' revelation last month that Barclays had imposed around £450m of financial penalties on staff because of the Libor-rigging scandal through a combination of clawback and bonus reductions.

Barclays said it had decided to comply ahead of schedule with new Government requirements for companies to publish a single figure for the total remuneration of executive directors.

By one measure, this showed that Antony Jenkins, the new chief executive, earned a total of £1.129m in 2012, although this excludes a long-term share award valued at £1.467m.

The bank did not identify the pay package awarded to Rich Ricci, the chief executive of its investment bank, who was one of four executives to forego their annual bonus because of the Libor scandal, although he is thought to have received less than £3.5m in total.

Five employees were paid more than £5m in 2012, although the bank declined to identify them or specify what their total remuneration had been.

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Bank Holds Off On More Economic Stimulus

The Bank of England's Monetary Policy Committee (MPC) has voted not to pump billions of pounds more into the UK economy, despite fears of weak growth.

In what was likely to have been a close decision on extending quantitative easing (QE) after a 6-3 split among the nine-member MPC the previous month, the bank also held the base rate of interest rate at 0.5% - keeping it at a historic low for four years.

The QE programme, which currently stands at £375bn, was likely to have been kept on hold because of signs of growing activity in the main service sector of the UK economy.

Pressure for more action came amid signs that the Bank of England's flagship Funding for Lending scheme was so far struggling to encourage banks to lend more to households and businesses.

There were also disappointing snapshots of output in the manufacturing and construction sectors.

Nevertheless, there is a growing chorus among economists that the UK will avoid a triple-dip recession.

The British Chambers of Commerce (BCC) allied itself to that view in its latest economic forecast, despite cutting its estimate for GDP output to just 0.6% for 2013.

It now expects the economy to recover from its 0.3% contraction in the fourth quarter and grow in the current quarter - albeit by a paltry 0.1%.

BCC chief economist David Kern said: "We expect quarterly growth to increase very gradually over the next two years, but it will remain modest and below-trend for some time."

The flat-lining performance leaves Chancellor George Osborne under pressure ahead of his Budget statement to MPs on March 20. But his handling of the economy has been further backed by the Prime Minister, who has dismissed calls for a borrowing-fuelled spending drive, warning it would leave families facing devastating interest rate hikes.

While the Government is facing intense political pressure to change course and invest in the recovery, there remains scope for the Bank of England to act in support of growth.

Deputy Governor Paul Tucker recently told MPs that he had even put negative interest rates up for consideration as part of efforts to kick-start the recovery.

Others are worried about the prospect of more QE.

Howard Archer, chief UK and European economist at IHS Global, said it risked weakening the pound further.

"There is a danger that doing further QE at a time when sterling is already under serious downward pressure could cause the pound to fall too far too fast, which would be both destabilising and perhaps over-stoke inflation risks," he said.

:: The European Central Bank kept its core interest rate for the euro area at 0.75% for the eighth successive month.

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Barclays Chief Jenkins Hints At Jobs Axe

By Mark Kleinman, City Editor

The chief executive of Barclays has suggested that the growing automation of banking services could result in tens of thousands of jobs disappearing from its workforce during the next decade.

I have learned that during meetings with leading shareholders following Barclays' annual results last month, Antony Jenkins said that he envisaged a future in which the bank employed as few as 100,000 people. Barclays currently employs approximately 140,000 staff.

Mr Jenkins is understood to have discussed during the investor meetings the objective of Barclays becoming a self service-oriented company which allows its remaining staff to focus on delivering "added value" to customers and clients across its retail, investment and wealth management operations.

The suggestion by Mr Jenkins could stoke concerns that he is planning a vast redundancy programme, although a Barclays insider insisted that Mr Jenkins had not been setting a formal target for job cuts and that his comments should be regarded as "blue-sky thinking about the long-term future".

"He was talking about how the bank needs to be more efficient in general terms," a person close to Mr Jenkins said. "It's about how we do the same or more with a smaller headcount, but there is no specificity about how much smaller."

Antony Jenkins replaced Bob Diamond as chief executive last year

Even so, the reference to such a potentially dramatic reduction in the size of Barclays' workforce is inflammatory, given Mr Jenkins' effort to position it as the 'Go-To' bank for stakeholders. Mr Jenkins took over as chief executive in the wake of the Libor-rigging scandal that saw Barclays fined £291m by regulators in the UK and US.

His comments come as banks face growing pressure from investors to make themselves more efficient amid pressure from regulators to hold more capital. The major UK-based banks have consistently underperformed in terms of delivering returns to investors since the financial crisis because of their bloated cost bases, and have been under pressure to reduce bonus pools in order to deliver more capital to shareholders.

Barclays has more than 1,650 branches in Britain, employing tens of thousands of people. Achieving job reductions on the scale implied by Mr Jenkins during his recent meetings would, insiders said, principally involve Barclays' investment bank's back office as well as the closure of some branches both in the bank's home market and overseas, although a spokesman said that such actions were not on the bank's immediate agenda.

Any large-scale closure of UK branches would entail further bad news for high streets ravaged by the collapse of a string of prominent retailers.

Mr Jenkins has already set out a concrete cost reduction programme at Barclays, which will involve £1.7bn being eradicated from the bank's cost-base by 2015. 3700 jobs will be axed as part of the plan to address costs, which the Barclays chief executive referred to last month as a "strategic battleground".

Many of the proposed job cuts are taking place within Barclays' investment banking arm, with the bulk of the rest focused on its retail banking operations in troubled Eurozone countries such as Italy and Spain.

Accompanying last month's full-year results, in which Barclays reported a profit of £246m, Mr Jenkins gave a presentation about the future of the bank in which he referred to the "21st Century industrialisation" of the industry.

The "large-scale focused automation of core processes", "globalisation of processes [and] reduced real-estate footprint" and "customer and client-centric self-service via best-in-class digital and mobile" were all signalled by the Barclays chief in his presentation.

Barclays has been a pioneer in internet and mobile-based banking and payment services, including through its money-transfer app, Ping-It, which has been hugely popular as customers increasingly switch to digital channels.

One investor said Mr Jenkins' presentation underlined his determination to overhaul Barclays in a more radical way than even that attempted by Bob Diamond, his predecessor.

Barclays declined to comment on Mr Jenkins' remarks.

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PM: We'll Come Through If We Hold Firm

Cameron Firm On Tough Resolutions

Updated: 4:54pm UK, Thursday 07 March 2013

By Jon Craig, Chief Political Correspondent, in Keighley

David Cameron came to Bronte country to talk about human emotions … or rather the impact on them of these tough economic times.

"I know things are tough right now," he said at the beginning of his big speech on the economy in a smart, modern workshop at the Cinetic Landis factory, heading up hill out of Keighley towards the moors.

"Families are struggling with the bills at the end of the month. Some are just a pay cheque away from going into the red. Parents are worried about what the future holds for their children."

Spoken with Bronte-like passion.

It was as if he wanted to answer straightaway the criticism of his opponents - and some Conservative MPs - that he's a rich, posh boy who doesn't understand the hardship facing ordinary families.

But after the "I feel your pain" opening, he ended his speech with a defiant message on the economy, rejecting calls for a U-turn on spending cuts and repeating Margaret Thatcher's famous slogan: "There is no alternative."

"This month's Budget will be about sticking to the course," said the Prime Minister. "Because there is no alternative that will secure our country's future."

Aah, but there is, his critics are arguing. And those critics now include Vince Cable, according to Labour, after his New Statesman article calling for more borrowing to fund more capital spending.

But David Cameron wasn't having any of that.

After he said in his speech that he was prepared to "roll up his sleeves and fight" opponents of various Government initiatives like the HS2 rail project, I asked him in his Q&A if he would do the same with his Business Secretary.

No need, he said, somewhat unconvincingly. "He agrees with the Government's policy," he said. "The article he wrote in the New Statesman was cleared and approved by the Treasury."

Really? By Danny Alexander, perhaps, but not George Osborne, I fancy.

Vince Cable's intervention rather took the gloss off the PM's speech in the big, shiny workshop in this highly impressive machine tools factory, where they're working seven days a week to meet their export demands from China and other countries.

The Prime Minister was clearly intending, less than a fortnight before the Budget, to give a few pointers to the Chancellor's statement on March 20. There would be more help for people to get mortgages, he hinted, and possibly more help for motorists hit by rising fuel bills.

He described himself as a "low tax Conservative" and said the only way to cut taxes was to cut the deficit. Labour, he said, believed there was a "magic money tree". From branding Ed Miliband a "croupier in the casino" at PMQs to a "magic money tree". Colourful!

But the main thrust of his defiant message came at the end of his speech, when he concluded by insisting the Government would "stick to the course" because it was about "doing the right thing".

Why? Because, he said, if there were to be good jobs, good public services and money to look after people in their old age, the deficit had to be cut and there must be no more "squandering billions on welfare for people who could work".

This speech came just a few days after Mr Cameron pledged in a Sunday Telegraph article that there would be no "lurch to the Right".

And yet here he was repeating Mrs Thatcher's "There is no alternative" slogan.

But then Margaret Thatcher has always been David Cameron's heroine, in true Wuthering Heights style.

Was Maggie Catherine Earnshaw to Dave's Heathcliffe, I wonder? No, it was Gordon Brown who was likened to the brooding Heathcliffe.

Wait a minute, the PM also talked here about "tough choices", a Tony Blair phrase.

Perhaps Dave is Jane Eyre to Blair's Mr Rochester? No, Frank Field compared Gordon Brown to him too.

Many Tory MPs see the Prime Minister as a flawed hero these days, however.

No wonder he only stayed in Bronte country for about an hour and a half.

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EasyJet: Budget Airline Joins FTSE 100

Budget airline easyJet has been promoted to the FTSE 100 Index after a record run for its share price.

The Luton-based firm is the London market's 82nd largest company and with a value of £4bn is large enough to earn a place among the ranks of blue-chip companies in the latest quarterly review of FTSE indices.

Its shares closed at a record high of 1017p on Friday, having stood at just under 400p when Carolyn McCall took over as chief executive in July 2010.

The company, which joined the stock market in 2000, has benefited from an improved operational performance and the launch of allocated seating, which helped it attract 10 million business passengers last year.

EasyJet has consistently beaten City expectations for profits but a long-running war of words with founder and major shareholder Sir Stelios Haji Ioannou has overshadowed some of its recent success.

Sir Stelios, whose family holds around 36% of the company's shares, has been unhappy at plans to place a large order for a fleet of more fuel-efficient aircraft.

At its recent annual meeting, the entrepreneur was unsuccessful in a vote against the company's remuneration report and re-election of Sir Mike Rake as chairman.

Sir Mike has already said he will leave the company in the summer because easyJet's promotion to the FTSE 100 Index will conflict with his role as chairman of another blue-chip company, BT Group.

The FTSE 100 is the index of the biggest firms listed in London.

It will be the first time that Easyjet has made it into the blue-chip index.

The London Stock Exchange is also returning to the FTSE 100 after a nearly three-year absence.

The changes will take effect from the start of trading on Monday March 18.

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RBS Apology As Customers Hit By New IT Glitch

RBS, NatWest and Ulster Bank have apologised after many customers were unable to use their accounts online or withdraw cash for several hours.

The technical problems, which started on Wednesday evening, come less than a year after they were hit by a computer meltdown that left millions of people unable to access their money.

"We are disappointed that our customers have faced disruption to banking services for a period this evening, and apologise for that," the banks said in a message on Twitter.

The banks said their systems were back to normal around three hours after they admitted there was a problem - but not before hundreds of customers took to Twitter to voice their frustration.

Many said they had difficulties using cash machines or logging into online banking, while others complained their cards had been declined.

Steve Ireland, who lives in London, told Sky News he discovered the problem when he tried to pay with his card at a supermarket.

RBS boss Stephen Hester had to apologise for a glitch last June

"I was out shopping after a night out with my partner to celebrate a birthday," he said. "I went into a very big chain supermarket and got to the cash desk with all my shopping, only to be told the card was declined.

"It was a really bad experience and very embarrassing. You get evil looks from the cashier when you can't pay."

Stuart Keel, from Cornwall, said he tried to use a cash machine but it was not working.

"We went to the supermarket thinking we could use our cards in there, no problem," he said.

"While we were walking around I was using my NatWest (smartphone) app and it wasn't working at all."

He said his card was then declined at the checkout.

"I thought, 'There's something not right here'," he added.

In June last year, millions of people were affected when a software update failed at the banks.

Customers were unable to view up-to-date balances, while payments such as direct debits for bills were not made and some wages were not received.

Stephen Hester, the chief executive of the banks' parent company RBS Group, which is 80% state-owned, was forced to apologise for the problems at the time and £100m was put aside to compensate customers.

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Daw Mill Mine Closes Leaving 650 Jobs At Risk

The owner of Daw Mill Colliery confirms it is to close, ending 47 years of coal production at the Warwickshire mine.

UK Coal Mine Holdings said the majority of its 650-strong workforce are facing redundancy.

The move comes after what the company's chief executive described as a "ferocious fire" at the mine last month.

"This has been a terrible week, not just for the company and its employees but also for the energy security of the country," Kevin McCullough said in a statement.

"Having successfully completed the restructuring, and being only weeks away from returning to healthy production, this ferocious fire has dealt a blow to everything we tried to achieve over the last 12 months - in just ten days.

"We are now exploring the possible transfer of some colleagues to our other mines. 

"Regrettably however, this news is likely to see the majority of the Daw Mill workforce being made redundant and our thoughts and best wishes are with these colleagues and their families at this difficult time."

More follows...

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Miliband: Low-Skill Immigration Is Too High

Britons must get a "fair crack of the whip" when it comes to competing for jobs with immigrants, Ed Miliband will say later.

In a party political broadcast, the party leader will admit Labour got the immigration issue wrong while in power and should not have dismissed the concerns raised by ordinary people.

He will insist that diversity is "good for Britain", but will say that migration needs to work for all of the country's people, not just some.

Reducing the number of low-skilled migrants coming to the UK will be part of Labour's "new approach" to the issue.

Tougher enforcement of the minimum wage will be among the measures he suggests, along with tighter controls on employment agencies to stop migrant workers being brought in from overseas to undercut homegrown staff.

Miliband: 'Rules need to be fair'

The broadcast - to be shown on TV channels in England this evening - comes ahead of a major speech by shadow home secretary Yvette Cooper on Thursday, in which she is expected to set out a raft of new policies.

These include more prosecutions and higher fines for paying less than the minimum wage, as well measures to tackle "gangmasters" employing illegal migrants in the social care, hospitality and construction industries - including a ban on housing workers in over-crowded accommodation.

Ms Cooper is also expected to detail proposed reforms of the immigration system and action to improve the training of UK workers so they can fill jobs in shortage occupations.

Aides said Labour's "long thought-through" approach contrasted with the "kite-flying" of Government ministers, who have floated a range of possible initiatives to limit Romanian and Bulgarian immigration when the countries' nationals gain full freedom of access to the UK at the end of the year.

Labour argues that policies must address the key "pull-factor" for low-skilled migrants, which is the availability of work.

In his broadcast, Mr Miliband will say: "Britain's diversity is a source of our great strength. It makes us a more successful country.

"But people can lose out if migration isn't properly managed. The pace of change can be too fast or people can see their wages undercut.

"Low-skill migration has been too high and we need to bring it down.

"That means the maximum transitional controls for new countries coming in from eastern Europe; it means properly enforcing the minimum wage so people aren't brought here to undercut workers already here; and it means let's give proper training to workers already here so that they have a fighting chance of filling the vacancies that exist.

"There's nothing wrong in employing people from abroad, but the rules need to be fair so that local people get a fair crack of the whip."

Mr Miliband will promise a boost to English language teaching to new migrants, along with an English-speaking requirement for all state employees working face-to-face with the public.

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