Powell comes clean over spy rock

A former UK government official has admitted Britain was behind a plot to spy on Russians with a device hidden in a fake rock, it has emerged.

Russia made the allegations in January 2006, but they were not publicly accepted by the UK before now.

Jonathan Powell, then prime minister Tony Blair's chief of staff, told a BBC documentary: "The spy rock was embarrassing.

Jonathan Powell has admitted Britain was
behind a fake rock plot to spy on Russians

"They had us bang to rights. Clearly they had known about it for some time and had been saving it up for a political purpose."

Six years ago, Russian state television broadcast a film claiming British agents had hidden a sophisticated transmitter inside a fake rock which was left on a Moscow street.

Embassy officials then allegedly downloaded classified data from the transmitter using palm-top computers.

The Russian security service, the FSB, linked the rock with claims that British security services were making covert payments to pro-democracy and human rights groups.

Then president Vladimir Putin later introduced a law restricting non-governmental organisations (NGOs) from getting funding from foreign governments, causing many to close down.

After the broadcast Mr Blair refused to comment on the crisis, and the Foreign Office denied any improper relations with Russian NGOs.

The documentary series, Putin, Russia and the West, will be screened on BBC Two.

PM 'interested' in Estuary airport

The Government is getting "increasingly interested" in the idea of a new airport in the Thames Estuary, London mayor Boris Johnson has said.

Mr Johnson already firmly backs a new "Boris Island" airport and architect Lord Foster has produced plans for a £50 billion airport on the Isle of Grain in Kent.

With a third runway ruled out at Heathrow, the Government is set to include the Thames Estuary option in a consultation on UK aviation this spring.

Prime Minister David Cameron is said to be growing keener on a Thames Estuary airport plan.

On BBC Radio 4's Today programme, Mr Johnson said: "I think that where we are is that the Government is increasingly interested in this idea. I genuinely believe that they see not just the overwhelming aviation argument and the argument from international competitiveness in making sure that Britain has a hub airport that is viable for the long-term future."

But Mick Rix, the GMB union's civil aviation industry national officer, said a Thames Estuary plan was "plain daft" and called on all political parties to reopen the issue of Heathrow's third runway.

An architect's impression of how the Thames Estuary Airport could look

A Department for Transport spokesman said: "No decisions have been taken. As the Chancellor made clear in his autumn statement, we will explore all the options for maintaining the UK's aviation hub status with the exception of a third runway at Heathrow.

"The Government will consult on a sustainable framework for UK aviation this spring, at which time we will set out our long-term plans for the sector."

Colin Matthews, chief executive of airport operator BAA, which runs Heathrow, told the Today programme: "An island airport is very long and very expensive. Even if it is agreed, it will be decades away. We need jobs and we need growth in this economy today."

Having scrapped Labour's plans for a third Heathrow runway, the coalition Government had, originally, ruled out expansion at any south east England airport. Chancellor George Osborne's Autumn Statement, however, indicated that only the Heathrow option was off the table.

©Press Association 2012

Miliband: End the 'rip-off' charges

Ed Miliband has called for an end to Britain's "rip-off consumer culture", insisting the Government should intervene on exorbitant charges for savings, holidays, banking and parking.

The Labour leader urged David Cameron to take a tougher approach to "predatory" companies that exploited customers, and proposed the creation of a new consumer watchdog to limit pension fees, car parking charges and airline levies.

His comments to the Daily Telegraph come amid growing concern that families are being exploited by irresponsible companies at a time when they are struggling to cope with rising prices and austerity measures.

Mr Miliband said: "In every area, you have to call time on the surcharge culture. Making a fair profit is important but it can't be done in an underhand and predatory way. This is about power in relation to private services and how government can be on the consumer's side. Lots of businesses recognise this. It's part of how you build a competitive economy in the world."

He added: "It's about the rules that government sets. This is a specific argument about a number of private services to the public. (For example) we're not proposing to go back on taking the railways into private ownership but maybe in transition not enough was done to protect the public."

Mr Miliband said the plans would ultimately help business to become more competitive and points to America, where consumer regulation is tougher.

"People's living standards are squeezed as never before, and we have to do everything we can to relieve that burden," he said.

Ed Miliband has called for the creation
of a consumer watchdog to limit pension
fees, car parking charges and airline levies

The Labour leader identified several areas for immediate action. On savings fees he said pension firms should set out how much they are charging savers to invest, after research showed that up to 16 fees and levies can be applied to private schemes. If charges do not fall, total charges should be capped.

He said car parking charges at railway stations should be capped, along with season tickets and other fares; for banks, which make £2 billion annually from unauthorised overdraft fees, a new watchdog should have the power to intervene and outlaw excessive fees; and the big energy firms should be broken up and transparent pricing introduced to enable proper competition.

Mr Miliband also hit out at consumer helplines, saying it is unacceptable that people are charged "50p a minute just to complain", and criticised airline levies which mean travellers face a range of charges for baggage, paying with a credit card and even checking in without printing out a boarding pass.

Copyright © 2012 The Press Association. All rights reserved.

Politicians and police to blame for hacking - Hislop

LONDON (Reuters) - A respected editor laid the blame for the country's phone-hacking scandal at the door of politicians and police on Tuesday, and said journalists did not need new rules but merely to observe existing ones.

Ian Hislop, editor of the satirical and investigative Private Eye magazine told a government-ordered inquiry into press standards that legislation was not needed because many of the tricks exposed by the hacking scandal were already illegal.

Hislop was appearing at the Leveson inquiry along with editors from the Times, Sunday Times and Guardian to urge the presiding judge to protect the country's cherished free press and show caution when considering new legislation.

"Most of the heinous crimes that came up and have made such a splash in front of this inquiry have already been illegal," he said. "Contempt of court is illegal, phone-tapping is illegal, policemen taking money is illegal. All of these things don't need a code, we already have laws for them.

"The fact that these laws were not rigorously enforced is again due to the failure of the police, the interaction of the police and News International -- and let's be honest about this, the fact that our politicians have been very, very involved in ways that I think are not sensible with senior News International people."

Ian Hislop blamed the police and politicians for the phone hacking scandal.

The Leveson Inquiry was ordered by Prime Minister David Cameron last year at the height of the phone-hacking scandal at the News of the World that prompted Rupert Murdoch's News Corp. to close the best-selling Sunday tabloid.

The scandal, which dominated the news agenda for weeks last year, drew attention to the level of influence held by editors and executives at News International, the British newspaper arm of News Corp, and other newspapers in the country.

It embarrassed politicians for their close ties with newspaper executives and also the police, who repeatedly failed to investigate allegations of illegal phone hacking at the News of the World.

Hislop said the conduct of the politicians, who socialised with newspaper executives and employed former editors, gave the impression to many that the industry was untouchable.

"If the prime minister appoints an ex-News of the World editor to be his communications director, you must think 'we're top of the pile, what could stop us?'" he suggested, adding that the current and former prime ministers should appear before the inquiry to explain their conduct.

Tom Mockridge, the head of News International who took over when a host of Murdoch executives departed last year, also urged the inquiry to protect the independent nature of Britain's press regulation, which he said was respected around the world.

"In this society, where there is not a constitutional guarantee of free speech, for the government to make laws which intervene in the press would contravene that basic principle and undermine the principle of a free press," he said.

He added that he had tightened the rules and governance at the company's newspapers since arriving last year.

Judge Leveson is using the lengthy investigation to consider new rules for the country's press which could range from statutory regulation to the more lenient and current system of self-regulation.

Most journalists and executives appearing before the inquiry have accepted that the current rules need to be changed to give more credibility and power to the body that oversees the industry.

All have been opposed to a system where the government regulates the press or has any control over its output.

"I think if the state regulates the press, the press no longer regulates the state," Hislop said.

(Reporting by Kate Holton; Editing by Steve Addison)
©Reuters

Homes scheme helps OAPs to downsize

Elderly homeowners are to be encouraged to move into smaller properties under Government-backed plans, enabling councils to rent out their homes to families.

The scheme - announced by Housing Minister Grant Shapps - is intended to ease pressure on young families at a time when many are struggling to find affordable accommodation.

The scheme will ease pressure on young families.

Under the plans, local authorities would offer to help pensioners living in family homes to find more suitable places to live.

The councils would then take over responsibility for maintaining the property and renting it out at affordable rates, returning any profit to the elderly person or their estate.

Officials stressed the scheme was purely voluntary and no one would be forced to move.

Mr Shapps said that he wanted councils to follow the example of a Government-backed pilot project run by Redbridge Council in east London.

"For too long the housing needs of the elderly have been neglected," he said.

"Older people who should be enjoying their homes have watched helplessly as their properties have become prisons, and many have been forced to sell their homes and move into residential care.

"With nearly a fifth of our population expected to be over 65 by 2020, radical and urgent change is needed to ensure the nation's housing needs are met."

Mr Shapps said for some older people, the move to more suitable accommodation could make a "life-changing difference. They can live independently for longer and enjoy more disposable income without selling their home, and other families can benefit from living in an affordable home".

©Press Association 2012

Hislop addresses Leveson Inquiry

Private Eye editor Ian Hislop will give evidence to the Leveson Inquiry into press standards.

Mr Hislop, who has been at the helm of the fortnightly satirical magazine for 25 years, has also been a long-running panellist on BBC current affairs quiz Have I Got News For You.

Other witnesses due to address the hearing include Guardian editor Alan Rusbridger, Times editor James Harding and Sunday Times editor John Witherow.

Tom Mockridge, who succeeded Rebekah Brooks as News International chief executive after the phone hacking scandal broke last year, will also give evidence.

Ian Hislop, Editor of Private eye will give evidence
to the Leveson Inquiry today

On Monday the editors of the Daily Mirror and the Sunday Mirror conceded that phone hacking might have occurred at their newspapers too.

Richard Wallace, who has edited the Daily Mirror since 2004, said the practice may have taken place in the newsroom without his knowledge. And Sunday Mirror editor Tina Weaver told the hearing she was not aware of phone hacking at her newspaper but there was no guarantee that it had not occurred.

But Sly Bailey, the chief executive of Trinity Mirror, which runs five national titles and more than 140 regional newspapers, said she was unaware of hacking at any of her papers and that she promoted ethics as a "general source of business".

Prime Minister David Cameron set up the Leveson Inquiry last July in response to revelations that the News of the World commissioned a private detective to hack murdered schoolgirl Milly Dowler's phone after she disappeared in 2002.

The first part of the inquiry, sitting at the Royal Courts of Justice in London, is looking at the culture, practices and ethics of the press in general and is due to produce a report by September.

The second part, examining the extent of unlawful activities by journalists, will not begin until detectives have completed their investigation into alleged phone hacking and corrupt payments to police, and any prosecutions have been concluded.

©Press Association 2012

Killers can die in jail, judges say

Britain's most dangerous and notorious criminals can be kept behind bars for the rest of their lives, European judges have ruled.

Jeremy Bamber has been told being kept behind bars for the rest
of his life is not a breach of his human rights

Killer Jeremy Bamber and two other convicted murderers lost their appeal to the European Court of Human Rights (ECHR) that whole-life tariffs condemning prisoners to die in jail amounted to "inhuman or degrading treatment".

The whole-life tariff is not "grossly disproportionate" and in each case London's High Court had "decided that an all-life tariff was required, relatively recently and following a fair and detailed consideration", the judges ruled.

©Press Association

ISPs launch copyright law appeal

BT and TalkTalk have gone to the Court of Appeal in the latest challenge over Government moves to tackle online copyright infringement - particularly in music, films and books.

The pair are two of the UK's largest internet service providers (ISPs) and are attempting to overturn a ruling in favour of controversial measures to curb illegal internet file sharing.

They say the measures will invade privacy, result in disproportionate costs for ISPs and consumers, and are not compatible with EU law.

BT and TalkTalk have challenged the
Governments attempt to tackle
online infringement

High Court judge Mr Justice Kenneth Parker rejected the challenge in April last year, declaring the proposals under the Digital Economy Act 2010 a proportionate parliamentary response to the serious economic problem of peer-to-peer file sharing, and the likely costs were justified.

He upheld submissions made by lawyers for the Department for Culture, Media and Sport (DCMS) that there were sufficient safeguards to protect the rights of consumers and ISPs .

The judge's decision was welcomed by supporters of the new laws, including employers and unions in the creative industries, who say copyright infringement is taking place on "a massive scale", costing millions and threatening livelihoods.

But BT and TalkTalk have now asked the appeal court to rule that the High Court had "erred in law", and the contested provisions were incompatible with a number of EU directives related to "electronic commerce".

BT and TalkTalk are submitting to the court that provision is also being made for the possible future introduction of certain "technical obligations" aimed at suspending, curtailing or limiting a subscriber's internet access.

A DCMS spokesperson said: "We are confident the High Court's original verdict will be upheld."

The hearing before Lady Justice Arden, sitting with Lord Justice Richards and Lord Justice Patten, is expected to last two days.

©Press Association

Concessions offered over disability benefit changes

Ministers are set to make further concessions over controversial proposed changes to disability benefits.

The government have agreed to halve the time seriously ill or disabled people will have to wait to be eligible for Personal Independence Payments (PIPs) from six to three months.

The move came after peers defeated the coalition over other welfare changes.

No 10 said the government had listened to disability groups' concerns but campaigners wanted further changes.

Peers are currently debating the government's welfare bill, one of its flagship pieces of legislation, which ministers want to become law by the end of parliamentary session in May.

Ministers say the changes will substantially reduce the multi-billion pound welfare bill - helping to cut the deficit - while also increasing incentives to work and targeting support for the vulnerable more effectively.

But the government was defeated three times in the House of Lords last week over proposed changes to eligibility for employment support allowance (ESA), formerly known as incapacity benefit.

And ministers are set to come under further pressure when peers discuss changes to disability benefits on Tuesday.

Lord Freud has added his name to the amendment
of the Welfare Reform Bill

Under current proposals, the qualifying time for PIPs - which are replacing the longstanding disability living allowance (DLA) - would be extended from three months to six.

But it emerged on Monday that Welfare Reform Minister Lord Freud has added his name to an amendment tabled by other peers that would revert the waiting period back to three months.

Lord Freud has tabled another amendment removing a clause that would have prevented disabled people living in care homes receiving a payment - worth £51 a week - to help with their travel and transport costs.

Ministers first signalled a U-turn on this policy in December. However, the mobility component of PIPs will still not be paid to people receiving treatment in hospital.

All 3.2 million people receiving DLA at the moment, both those in work and out of work, are due to be reassessed.

Ministers have insisted the benefit, introduced in 1992 to help disabled people cope with the extra costs they face in their daily lives, is complicated and inconsistent and needs to be simplified.

While the PIPS remain a non means-tested cash payment, ministers say they will be easier to apply for and administer.

The government says spending on DLA has risen by 30% in the past eight years and, even after the changes, projected spending in 2015-2016 would be equivalent to 2009-2010 levels.

Downing Street said the government had listened to concerns about aspects of its proposals but would continue with its central objective of reducing welfare spending.

"We are making some big changes to welfare policy and you would expect us to have discussions with the groups that are affected by these changes," a No 10 spokesman said

The Governments "change of heart" would
"protect the most vulnerable"

Macmillan Cancer Support said the government's "change of heart" would "protect the most vulnerable".

"Cancer patients experience the greatest costs in the first six months following their diagnosis," its director of policy Mike Hobday said.

"They will often have to give up work to undergo gruelling treatment and still find money to put food on the table. Extending the waiting time would have been devastating."

But disability charity, The Papworth Trust, said they were worried that people would now have to demonstrate they were likely to be afflicted for a further nine months - rather than six - to continue receiving the benefit.

"We believe it will be difficult for a disabled person or the new PIP assessment process to predict that they will be affected for nine months, especially for fluctuating conditions such as Crohn's Disease," said Matthew Lester, the charity's director of operations.

"This change to nine months means more disabled people will be unable to get financial support when they need it most, and risks pushing more people into poverty unfairly."


©BBC News

Chancellor 'confident' on economy

Chancellor George Osborne has insisted the Government was doing everything possible to "weather the storm" as economic forecasters warned the UK is likely to be already in recession.

The Ernst & Young ITEM Club and the Centre for Economics and Business Research both believe that gross domestic product (GDP) shrank in the final quarter of last year and will fall again in the first three months of 2012. A recession is defined as two consecutive quarters of contracting output.

Mr Osborne said the most recent predictions by the Office for Budget Responsibility, which issues official forecasts, showed that Britain would have a negative quarter of growth but not go into recession.

He told BBC Radio 4's Today programme: "That's their forecast, but they were the first to say that it is very uncertain and one of the biggest risks to the British economy is the further deterioration of the eurozone crisis.

The Government is doing everything it can to deal with the economic crisis, Chancellor George Osborne has said

"I said openly at the end of November to the House of Commons when I made my autumn statement that if the eurozone were to go into a deep recession, that would have a real impact on the British economy.

"I'm confident the British Government is doing everything it can with a very difficult inheritance, facing a very difficult international situation to get Britain through this, to weather the storm."

The warnings come shortly after France, the second biggest economy in the eurozone, saw its AAA credit rating downgraded by Standard & Poor's in a move which signals more troubles for the single currency bloc.

Professor Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said: "Figures for the last quarter of 2011 and the first quarter of this year are likely to show that we are back in recession and we are going to have to wait until this summer before there are any signs of improvement. But it's not going to be a repeat of 2009 - we are not going to see a serious double dip."

The ITEM Club report forecasts GDP growth of just 0.2% this year before increasing to 1.8% in 2013 and 2.8% in 2014. It said deteriorating levels of confidence will see business investment stagnate in 2012, while export prospects have already slowed.

But the group said UK companies have stronger balance sheets than in 2009 and have built up large cash stockpiles, which will provide a useful insurance policy if the situation deteriorates further.

©Press Association

'No plans' for Western military action on Syria, Iran

Western nations have no immediate plans for military action to stop the repression of protests in Syria or to halt Iran's nuclear programme, Foreign Secretary William Hague said on Sunday.

Asked if there was a possibility of a no-fly zone in Syria like the one imposed over Libya last year, Hague said there was "no serious prospect" of a UN resolution on the subject.

"We haven't been looking at a no-fly zone," Hague told Sky News, saying it would be only effective in tandem with other measures, and that the Syrian regime had not been relying on air power to repress protests.

"There is no serious prospect certainly at the moment of the United Nations Security Council agreeing any resulution at the moment, let alone agreeing a resolution comparable to anything that happened in Libya."

But he said that if the current Arab League monitoring mission in Syria does not work "I hope they (the Arab League) will come to the UN and suggest a way forward that we can all get behind."

Hague was also cool on suggestions by Qatar that Arab forces should be sent into Syria to stop the deadly 10-month crackdown on dissent by President Bashar al-Assad's regime.

On Iran, Hague warned that Tehran's "dangerous" nuclear drive threatened profileration across the Middle East.

"We must not be put off further sanctions by bluster or statements from Iran," Hague said, adding that he hoped European Union foreign ministers would agree new measures when they meet on January 23.

Syrian President Bashar al-Assad waves at supporters during a rare public appearance in Damascus on January 11

"If it continues it will produce nuclear profileration across the Middle East, which will then be extremely dangerous for the people of Iran, for the whole region and for the peace of the world."

Hague refused to rule out military action against Iran but said Britain was not calling for it.

"We've never ruled anything out, we've not ruled out any option, or we've not ruled out supporting any option, we believe all options should be on the table, that is part of the pressure on Iran, he said.

"But we're clearly not calling for or advocating military action, we're advocating negotiation, meaningful netogiations, if Iran will enter in to them."

The West accuses Iran of trying to produce a nuclear weapon, but Iran says its programme is for civilian use.

AFP 2012

Eurozone must focus on growth: Britain

Eurozone countries must concentrate on boosting growth and cutting regulation following the downgrading of several nations in the bloc, British Foreign Secretary William Hague said Sunday.

Hague said the decision on Friday by ratings agency Standard and Poor's to downgrade more than half of the members of the debt-ridden eurozone -- including stripping France of its triple-A rating -- was "serious".

"It underlines the fact that the eurozone is not through its problems... Across Europe, including in the UK, we need to redouble our efforts to get growth going," Hague said.

"That means in Europe more free trade agreements with the rest of the world, it means really pushing for the single market, it means stopping passing regulations who've made life more difficult for businesses."

Hague: European countries need growth

Britain, which is not a member of the eurozone, was the only EU member to reject a Franco-German proposal in December for a treaty across the bloc on implementing stricter fiscal discipline.

Prime Minister David Cameron said he did so to protect the City of London from moves to introduce a financial services tax.

Britain was also involved in a slanging match with France last month after the French central bank governor and senior ministers said rating agencies should be mulling a debt downgrade of Britain rather than France.

Britain's AAA rating remains intact.

Hague said it was in Britain's interest for the eurozone, its biggest export market, to recover.

"We want the eurozone countries to recover. They can best do so through that kind of financial actions and to really setting a course for growth. No more time wasting bureaucratic directives, real emphasis on free trade."

AFP 2012

School names police probe monks

Seven Roman Catholic monks with links to a top public school have faced police investigation over child sex and pornography offences, the school has admitted.

In a letter to the parents of the 1,500 pupils at the £26,000-per-year Downside School in Somerset, Dom Aidan Bellenger, the Benedictine Abbot of Downside, apologised to parents and named some of the monks who were picked out by a criminal investigation looking at 50 years of confidential school records.

Of the seven monks from Downside, he said four had faced police action and two, against whom allegations "were founded" , had restrictions imposed on their ministry. The seventh was cleared and allowed to return to his monastic life.

The school has already announced a "major review of the school's governance" that would result in "significant changes" after a monk and former teacher at the school, Richard White, was jailed for five years on January 3 for sexually abusing two 12-year-old boys in the late 1980s.

His abuse was known about by monastic and school staff at the time but he evaded criminal charges for more than 20 years.

Richard White, a paedophile monk who abused two boys at a Roman Catholic public school

"We are truly sorry that children and young people have been abused by those whom they should have been able to trust," Dom Bellenger wrote.

"We are committed to doing everything possible to ensure that such things do not happen again.

"We must never underestimate the great damage suffered by the victims of abuse. Their bravery in telling their stories has resulted in radical changes in the way safeguarding is approached. Victims of abuse are in our prayers and the sadness we feel for what they have suffered will be with us always.

"These unhappy events inevitably cast a long shadow, but your chief concern will of course be the welfare, security and happiness of children currently at Downside. Many steps have been taken to ensure that the Downside portrayed in some parts of the media is a thing of the past."

©Press Association

Balls in public sector pay warning

Shadow chancellor Ed Balls has warned public sector workers he would make no promise to reverse the freeze on their pay before the end of this parliament.

He blamed Chancellor George Osborne's "mistakes" with the economy for making such pay restraint necessary.

But he said Labour would not make commitments on public spending unless they were "responsible and credible".

Mr Balls angered unions by effectively accepting the public sector pay freeze up to 2015, the year of the planned next election.

Ed Balls-Labour's economic plan must be credible

But he said: "I can't just promise to people that I can just wave a magic wand and be able to spend more and tax less.

"I cannot make commitments now for three years' time. I won't do that, it wouldn't be credible."

Speaking to BBC Radio 4's Today programme, Mr Balls said voters faced a choice between higher public sector pay or tackling rising unemployment.

"George Osborne clearly hoped he would be able to have tax cuts later in the parliament and rising public pay. It's not going to happen because of his failures," he said.

"People might expect me to come along and say 'well of course we will back higher pay'.

"It's a question of priorities. I can't say to private and public workers or to the country that Labour would put higher pay above jobs when unemployment is so high. We've got to be honest with people about the choices they face."

©Press Association

S&P downgrades nine euro countries

The Standard & Poor's ratings agency has carried out a mass downgrade of more than half of the euro zone countries. S&P stripped France and Austria of their top AAA ratings on Friday in a move that may complicate efforts to solve a two-year old European debt crisis. Those were just two of the nine member-states of the euro area that had ratings cut. Besides France and Austria, Malta, Slovakie and Slovenia suffered a one-notch downgrade while Portugal, Italy, Spain and Cyprus were cut by two notches. "What Standard & Poor's is saying is that the kind of measures European countries are proposing up until now simply may not be enough," Jackie Rowland, Al Jazeera's correspondent in Pairs, said. The downgrades come as crucial talks on cutting Greece's massive debt pile appeared close to collapse on Friday. A pact being negotiated to tighten budgetary discipline is not a breakthrough for the eurozone's problems and may lead to self-defeating fiscal austerity, Standard & Poor's. The pact, which EU leaders agreed to negotiate at a December 9 summit, "has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems," S&P said as it announced the downgrades. S&P reaffirmed the ratings of Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands. The agency said that of the 16 countries reviewed, all save Germany and Slovakia have negative outlooks, meaning more downgrades are possible in the next couple of years. It also said that while Italy's downgrade reflects increasing vulnerabilities to external financing risks and their negative implications on economic growth, Germany's AAA rating reflects a track record of prudent fiscal policies and spending discipline, with the ability to absorb large economic and financial shocks. Global impact Markets in Europe and the US plummeted earlier on Friday after a European Union official disclosed Standard & Poor's decision. Previously, France was, along with Germany, Luxembourg and the Netherlands, among the six eurozone nations with a AAA rating. Friday's developments sent the euro currency spinning down to a 17-month low against the dollar. The widespread downgrade could have far-reaching implications, potentially complicating the ability of Europe's bailout fund, the European Financial Stability Facility (EFSF), to provide support to struggling countries. Responding to the downgrade, the head of the Eurogroup said in a statement that the eurozone is determined to protect the triple-A credit rating of its bailout fund. "The shareholders of the EFSF affirm their determination to explore the options for maintaining the EFSF's AAA rating," Jean-Claude Juncker, Luxembourg's prime minister, said. France is a major contributor to the EFSF. Europe's crisis sprang from worries that countries had taken on more debt during boom years than they could pay back once their economies slowed.

Source:

Al Jazeera and agencies

Balls to outline Labour alternative

Labour faces "a big task" to regain economic credibility and win back public trust, Ed Balls is set to admit in a speech.

In a high-profile speech setting out what he terms the "economic alternative" to the coalition Government, the shadow chancellor will acknowledge that Labour should have been "clearer" before the 2010 general election that it would impose spending cuts and tax rises if re-elected.

And he will repeat his message that the party cannot make any commitments now to reverse coalition cuts or tax hikes if it returns to power.

Ed Ball want to regain trust with the electorate

Chancellor George Osborne's economic policy threatens Britain with "a decade of stagnation", Mr Balls will warn in a speech to the Fabian Society in London. Labour must offer an economic alternative which meets the twin challenges of boosting growth now through temporary tax cuts and investment in jobs and delivering reform over the longer term to build "responsible capitalism".

But he will caution: "To make that alternative work and be credible, it must be underpinned by a clear commitment to balanced but tough spending and budget discipline now and into the medium term.

"However difficult it is for me, for some of my colleagues and for our wider supporters, we cannot make any commitments now that the next Labour government will reverse tax rises or spending cuts. And we will not."

Labour's five-point plan for a temporary VAT cut and investment in jobs is needed to "stop a decade of slow growth and higher debts becoming a self-fulfilling prophecy", Mr Balls will say.

"Action now for growth, jobs and reform does not conflict with the need for a credible medium-term plan on the deficit, it reinforces it," he will argue.

This must be coupled with "long-term reform to ... build a stronger and fairer economic model for the future - what Ed Miliband has called a more responsible capitalism - which can, even in tougher times, meet our aspirations for social justice and strong public services", he will say.

But he will acknowledge that setting out an alternative to the coalition's economic policy is not enough, and that Labour must also overcome the electorate's doubts over its economic credentials.

Sick-leave bank chief refuses bonus

The boss of taxpayer-backed Lloyds Banking Group has said that he would not take his annual bonus for 2011 to reflect the "impact" his leave of absence had had on the bank.

Antonio Horta-Osorio, who returned to work earlier this week after taking two months off due to severe sleeping problems, said he acknowledged that his absence had had an impact both "inside and outside the bank, including for shareholders".

Lloyds Banking Group boss Antonio Horta-Osorio has said he will not take his annual bonus

Lloyds, which is 40.2% state-owned, saw its shares slump when Mr Horta-Osorio stepped down, amid fears that his leave could become permanent and derail progress made on reviving the bank.

The 47-year-old Portuguese-born banker, whose pay and bonus entitlement will be revealed in the group's annual report next month, added that his bonus should reflect the performance of the bank but also the "tough financial circumstances that many people are facing".

The announcement follows a pledge from Prime Minister David Cameron to crack down on City pay, which would include introducing a binding vote for shareholders on executives' salaries.

©Press Association 2012