Spain Slashes Economic Growth Forecasts

The Spanish government has forecast that the economy will contract by more than expected in 2013, but will return to growth next near.

The country's deputy prime minister said its gross domestic product (GDP) would shrink by 1.3% in 2013 - down from the 0.5% contraction previously forecast.

But Soraya Saenz de Santamaria said Spain's economy is expected to return to growth of 0.5% in 2014, and will expand by 0.9% in 2015.

At a press conference following the adoption of a new economic plan for the country, she said that no major new reforms, tax hikes and spending cuts were needed to meet the new targets.

The forecasts come a day after protestors took to the streets of Madrid

She added that the government - which had to backtrack from its promise to cut taxes next year - was still aiming to cut some taxes in 2015.

The economy minister, Luis de Guindos, said the deficit-reduction strategy had been agreed with the European Commission and other eurozone officials.

"2014 will be the year of recovery," he said.

The deficit is now forecast to reach 6.3% of GDP in 2013 - well above earlier targets - but would fall to 2.7% by 2016, Mr de Guindos added.

The unemployment rate - which hit a record high of 27.2% in the first quarter of this year - is expected to fall back to 26.7% in 2014, and 25% in 2015.

It comes as protests broke out in Madrid on Wednesday following the release of the latest jobs data.

Around 1,000 people took to the streets in the latest demonstration against the country's austerity measures and tax hikes that have left many without jobs.

The country's economy has been struggling to show signs of recovery since the collapse of its once-booming property market in 2008.

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US Economy Misses Forecasts In Last Quarter

The US economy has expanded at a rate below that forecast by economists, the latest official figures have shown.

Although economic growth regained speed in the first quarter, it was not as much as expected, heightening fears the already weakening economy could struggle to handle deep government spending cuts and higher taxes.

Gross domestic product (GDP) expanded at 2.5% annualised rate in the first three months of 2013, according to the Commerce Department.

The figure was up on the previous quarter, after growth nearly stalled at 0.4%.

The latest increase, however, missed economists' expectations for a 3% growth pace.

Part of the acceleration in activity reflected farmers' filling up silos after a drought last summer decimated crop output.

Removing inventories, the growth rate was reduced to a tepid 1.5%.

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Winston Churchill To Appear On New £5 Notes

Former British prime minister Sir Winston Churchill is to appear on the next banknotes, it has been announced.

Bank of England Governor Sir Mervyn King revealed the image of Churchill which will be used to members of his family at his former home, Chartwell, on Friday.

Sir Mervyn said: "Our banknotes acknowledge the life and work of great Britons. Sir Winston Churchill was a truly great British leader, orator and writer.

"Above that, he remains a hero of the entire free world. His energy, courage, eloquence, wit and public service are an inspiration to us all. I am proud to announce that he will appear on our next banknote."

The Churchill banknote is due to be issued as a £5 note for use during 2016.

The design on the reverse of the note will include a portrait of Churchill from a photograph taken in Ottawa by Yousuf Karsh on December 30, 1941 and a view of Westminster and the Elizabeth Tower from the South Bank looking across Westminster Bridge.

The image of the Elizabeth Tower will feature the hands of the Great Clock at 3pm - the approximate time on May 13, 1940 when Churchill declared in a speech to the House of Commons: "I have nothing to offer but blood, toil, tears and sweat." This declaration is quoted beneath the portrait.

In the background, there will be the Nobel Prize medal which Churchill was awarded in 1953 for literature, together with the wording of the prize citation.

Sir Mervyn King with Lady Soames, Churchill's only surviving child.

Sir Mervyn, due to retire later this year, suggested the new note could become known as a "Winston" - and that the spirit of Churchill's inspirational "blood, toil, tears and sweat" speech was just as important during today's times of economic difficulty as during the War.

He said: "We do not face the challenges faced by Churchill's generation. But we have our own.

"And the spirit of those words remains as relevant today as it was to my parents' generation who fought for the survival of our country and freedom under Churchill's leadership."

Churchill's image replaces that of Elizabeth Fry, the philanthropist and penal reformer, who appears on current notes first issued in 2002.

These will be phased out over two or three years, leaving no notes featuring the face of a famous woman - other than the Queen.

The choice of Churchill reflects the fact that, though a political figure, he is widely revered across the spectrum as the man who saved Britain in its darkest hour from the fearful advance of Nazism across Europe.

Another war hero, the Duke of Wellington, is the only other prime minister to have featured on a banknote image - the old £5 phased out in the 1990s.

Speaking in the grounds of Chartwell, Sir Winston's grandson, Mid Sussex Tory MP Nicholas Soames, said featuring on a bank note would have given the former wartime prime minister great pleasure.

He said: "He was an extraordinary man and his ability to capture the mood and the people's mood was one of his great gifts as a statesman.

"The design of the bank note, the quotation and the whole idea behind it is so appropriate and fitting, and my grandfather would have been truly very proud."

Churchill had a long parliamentary career during which he served as home secretary and chancellor before a spell in the political wilderness in the 1930s when he warned of the increasing threat of German rearmament.

In May 1940, he replaced Neville Chamberlain as prime minister in the newly-formed National Government. His leadership and brilliant oratory were credited with helping to steer Britain to victory.

Defeated by Labour in the 1945 general election, he served again as prime minister from 1951 to 1955, when he retired aged 80. Churchill died in 1965 and was given a full state funeral, the first commoner to receive such an honour since Gladstone in 1898.

He was also the first commoner to feature on a British coin - the 1965 crown or five-shilling piece.

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GDP Figures: Triple-Dip Recession Feared

The spectre of a triple-dip recession is hanging over the UK economy ahead of official figures that will show whether the country has avoided another quarter of shrinking output.

Economists fear it will be a close-run result this morning, amid mounting warnings over the strength of the recovery and following last week's latest downgrade to the UK's AAA credit rating.

Most experts are predicting the initial estimate of gross domestic product (GDP) from the Office for National Statistics will show growth of 0.1% in the first three months of the year, which would mean the economy narrowly avoided its third recession since 2008.

But a volatile start to 2013 following snowstorms in January and March and ongoing pressure in the construction sector have left it hanging in the balance.

Facing mounting pressure to do more to help the recovery, Chancellor George Osborne beefed up his flagship Funding for Lending Scheme (FLS) on Wednesday to help cash-starved businesses and spur on growth.

Banks are being offered an up to 10-fold increase in the cheap funding they can access in return for extending loans to smaller firms under the FLS revamp.

It is also to be opened up to non-bank lenders such as invoice finance houses and leasing firms that provide around £20bn of working capital to small businesses, and will be extended for a year to January 2015.

Fitch became the second ratings agency to strip Britain of its prized AAA rating on Friday, citing a weaker economic outlook and worse-than-expected progress on cutting debt levels.

The decision came after a brutal assessment of Britain's economic prospects by incoming Bank of England governor Mark Carney, who branded the UK a "crisis economy" alongside stricken eurozone countries and Japan.

Mr Osborne was offered some respite earlier this week when figures revealed that underlying public borrowing fell in the last financial year to £120.6bn - but it was just £300m lower than a year earlier in the latest sign that his austerity plans are stalling.

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Made In Britain: China Boosts Iconic Brands

By Mark Stone, Asia Correspondent in Shanghai

As Britain contemplates the prospect of a triple-dip recession, a growing number of iconic 'Made in Britain' brands are focussing their attention on China.

In an interview with Sky News, the chief executive of Rolls-Royce said the Chinese market was key.

"The Chinese are in love with Rolls-Royce," Torsten Muller-Otvos said as he showed off the company's latest model, the Wraith, to the Asian market at the Shanghai Motor Show this week.

"It is definitely good for Britain because 90% of our cars produced in Britain are exported and 10% roughly stay in the home market.

"That is basically very good for business and for the economy in Britain."

The new Jaguar F-Type, revealed at the Shanghai Auto Show this week

Rolls-Royce is now owned by Germany's BMW but the brand itself is still iconically British. The company produced 3,575 vehicles in 2012 from its factory in Chichester, West Sussex.

It wouldn't reveal how many of those came to China but, along with the Middle East, China is a vital market.

"When you look at the long-term forecast for so-called ultra-high-net-worth individuals, this is forecast to grow 3-5% year by year," Mr Muller-Otvos said.

These ultra-high-net-worth individuals are people like Chen Anzhi, a businessman from Shanghai. He owns three Rolls-Royces and agreed to take Sky News for a spin in one.

Sky News is given a ride in Mr Chen's Rolls Royce

"British to me means very high quality of workmanship; attention to detail. I appreciate that," Mr Chen said at the wheel of his bright green convertible Roller.

"Look at my suit!" he said, taking both hands off the steering wheel of his vastly expensive car.

"I think I am wearing Dunhill today. Dunhill's also British I think?

"I bought three of these Rolls-Royces. Presently I have two: a white one, this green one and I had a burgundy one but I gave it away."

Mr Chen represents one of a growing number of people in China with an eye-watering amount of money and a love affair for luxury and all things British.

"I love British cars, British furniture, I love to go to London," he said.

"I enjoy the very luxury lifestyle, yes. Chinese and British - good friends!"

The Aston Martin stand at the Shanghai Auto Show

We pass Shanghai's flagship stores, including British ones like Burberry. The reflection of our more than ostentatious car is visible in the windows of the shiny shop windows.

"Fourteen years ago you rarely see BMW and Mercedes," Mr Chen said.

"Now you see Rolls-Royce and you think 'wow'! What happened here to the economy? It's booming."

Jaguar Land Rover is another 'Made in Britain' brand - albeit now Indian owned - which is increasingly popular in China.

The Chinese market is now the company's largest globally, allowing it to invest in new jobs in the UK and set up a new joint-venture project in China.

At this week's Auto Show in Shanghai, the new Jaguar F-Type and the new Range Rover Sport were both unveiled to the Asian market.

Range Rovers, often in garish colours with added body-kits, are a regular sight on the streets of Beijing and Shanghai.

Back in Mr Chen's bright green Rolls Royce, I ask him the awkward question. How much did it cost him?

"I knew that question was coming," he laughs!

"It's close to $1.8m dollars. The price is crazy, I know, but after you drive this car, the enjoyment and pleasure, you just forget about the price."

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Spain's Jobless Rise 'Worse Than Feared'

Spain's unemployment rate soared to 27.2% in the first quarter of the year, worse than economists had predicted.

The official figures revealed that the number of those without jobs surpassed six million for the first time - with 237,400 people added to the grim unemployment statistics over the period taking the total to 6.2 million.

Economists had expected the unemployment rate to grow from 26% in the final quarter of 2012 to 26.5%.

The figures were released by the country's National Statistics Institute against a backdrop of recession, which is expected to continue throughout 2013.

The Bank of Spain has predicted a 0.5% fall in GDP during the first three months of the year while the International Monetary Fund's recent World Economic Outlook report expects a contraction of 1.6% over the 12 months.

Spain's problems stem from the collapse of its once-booming real estate sector in 2008, which resulted in a facility of up to 100 billion euros (£85bn) in rescue funds being made available by its eurozone partners.

The government has launched a series of financial and labour reforms and pursued a raft of spending cuts and tax increases that have managed to reduce a swollen deficit but been blamed for choking economic growth.

Despite the measures, Spain had the highest budget deficit among the 17 European Union countries that use the euro in 2012.

Its Budget, due to be announced on Friday, is expected to focus less on austerity and include more measures to stimulate activity in the economy.

More follows...

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Apple Profits Fall For First Time In 10 Years

Apple has reported its first fall in profits for nearly 10 years - a move that could further threaten its market value.

Analysts expected a tumble of up to 18% in earnings when the company delivered its second quarter trading statement on Tuesday.

In the end, the technology giant announced its profits for the second quarter of the financial year - the three months to the end of March 2013 - were down £1.38bn ($2.1bn) to £6.27bn ($9.56bn), which was what analysts predicted.

Soon after announcing the profit fall, the Apple board cleared the way to buy back $100bn worth of shares by 2015.

It is rumoured that higher component prices and the lower costs of some of its products were what ate into its profit margins.

Stronger competition in the smartphone and tablet markets was also expected to be reflected in the statement.

Weaker demand - largely because of the competition issue - has been blamed for the 40% drop in Apple's stock value since September last year.

But Apple reported strong growth in the sales of many of its products.

The company sold 37.4m iPhones in the quarter, compared to 35.1m in the same quarter a year before.

Apple also sold 19.5m iPads during the quarter, compared to 11.8m in the year before.

But the company admitted it sold just under 4m Macs, compared to 4m in the year-ago quarter.

Apple did its best to make light of the profits fall.

CEO Tim Cook, who took over after Steve Jobs died of cancer in 2011, said: "We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad.

"Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline."

Apple shares fell below the $400 (£262) mark last week for the first time since December 2011.

Despite the fall, the markets responded positively, buoyed by the fact that the results were not worse than expected and off the back of the sales results.

Apple leapt 5.5% in after-hours trading, also boosted by the buy-back plan.

The US firm's forecast had added to market speculation that sales of the iPhone - which make up more than half of Apple's revenue - are slowing more quickly than expected as Samsung and other rivals flood the market with cheaper devices.

A cloud was lifted from the iPhone on Monday night when the US International Trade Commission threw out a Motorola Mobility patent claim that threatened to block the import of some iPhone models into the US.

The commission dismissed a complaint by the Google-owned firm which accused Apple of infringing technology that makes touch screens ignore fingers when people are holding smartphones to their ears for calls.

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Funding For Lending Scheme Given Makeover

The Funding for Lending Scheme (FLS) to boost the economy has been extended and reworked in an attempt to help get more credit to small firms.

Under the reforms announced by the Treasury and Bank of England the country's banks are being offered an up to ten-fold increase in the low-interest funding they can access in return for extending loans to smaller businesses.

The FLS, they said, was also being opened up to non-bank lenders such as invoice finance houses and leasing firms that provide around £20bn of working capital to small firms, and will be extended for a year to January 2015.

The scheme was launched last summer to offer banks and building societies funding at low interest rates on condition they are passed on to households and businesses.

But while it has been helping the home loans sector, it has failed to make an impact on small businesses which have complained of remaining starved of credit.

Bank figures last week showed net lending to companies had slumped by £4.8bn in the three months to February.

Under the new deal, every pound of additional lending to small and medium-sized enterprises (SMEs) next year will allow the lender to access £5 of discounted funding from the Bank. The ratio in the rest of the scheme is 1:1.

In a bid to speed up the flow of much-needed credit into the system, each pound lent to SMEs for the rest of this year will allow a draw-down of 10 times that in 2014.

The Treasury said there was "no upper limit to the scheme" and the move was hailed by the Chancellor George Osborne, who said: "This is a big boost for the small and medium-sized businesses that are at the heart of the British economy.

"The Funding for Lending Scheme has already reduced the costs of household mortgages and loans for businesses. This innovative extension will now do even more for small and medium-sized businesses so that they can play their full part in creating new jobs."

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Co-Op Deal To Buy Lloyds Branches Collapses

Lloyds Banking Group's sale of more than 600 branches to the Co-operative Group has fallen through.

The Co-op - which pulled out of the £800m deal - said it was "not in the best interests of the Group's members" at the present time.

"This decision reflects the impact of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general," the company said in a statement.

It comes after Sky's City Editor Mark Kleinman highlighted doubts about the takeover plans in February.

If the deal had gone ahead, the Co-op bank would have doubled in size

The UK's financial regulator had concerns over the Co-op Bank's capital position, he said.

Lloyds is being forced to dispose of the branch network - known as Project Verde - by European regulators in return for the £20bn of state aid it received at the height of the 2008 banking crisis.

The part-nationalised bank now intended to sell the network through an initial public offering (IPO).

Lloyds' chief executive, Antonio Horta-Osorio, said the company was disappointed by the Co-Op's decision.

"However, we are well advanced in our plans to bring the Verde business to the UK high street during the summer through the TSB Bank, and will now proceed with the option to IPO the business, subject to the necessary approvals," he said.

"The TSB Bank will be an attractive retail and commercial bank that will have around 630 branches across the UK, a strong management team and will be a real challenger on the high street."

If the deal had been completed, the Co-op would have doubled in size with around 1,000 bank branches across the UK - making it a viable competitor to the "Big Four" lenders - Lloyds,HSBC, Barclays and Royal Bank of Scotland (RBS).

Its collapse comes after Santander UK withdrew from a deal to buy 316 RBS branches in October last year.

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Cyber Attacks On UK Businesses 'Soaring'

The number of cyber attacks hitting businesses has soared in the past year, Government-commissioned research has revealed.

The survey showed 87% of small firms - up 10% - experienced a security breach last year and 93% of large organisations had also been targeted.

The Information Security Breaches Survey, commissioned by the Department for Business, Innovation and Skills (BIS), found some of the attacks caused more than £1m of damage.

Affected companies experienced around 50% more attacks on average than a year ago.

The median number of breaches suffered by large organisations has risen from 71 to 113, while the figure for small firms is up from 11 to 17.

The Government has increased support for small firms to help them protect against electronic attacks.

The Technology Strategy Board has extended a scheme to allow small and medium enterprises to bid for up to £5,000 from a £500,000 pot to improve their cyber security by bringing in outside expertise.

BIS is also publishing guidance to help small firms make cyber security part of their normal risk management procedures.

Universities and Science Minister David Willetts said that keeping electronic information secure is crucial to a business's bottom line.

"Companies are more at risk than ever of having their cyber security compromised, in particular small businesses, and no sector is immune from attack," he said.

"But there are simple steps that can be taken to prevent the majority of incidents.

"The package of support we are announcing today will help small businesses protect valuable assets like financial information, websites, equipment, software and intellectual property, driving growth and keeping UK businesses ahead in the global race."

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