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THE DIVIDED state of the UK retail sec-tor was brought into sharp focus yes-terday as an upbeat Tesco and ShopDirect claimed victory in theChristmas retail wars, while Marksand Spencer suffered the fallout of aworse-than-expected festive period.

Following muted performances byrivals Sainsburys and Morrisons, aresurgent Tesco revealed its strongestsales growth in three years, unveilinga 1.8 per cent rise in like-for-like salesfor the six weeks to 5 January, part ofits fourth quarter.

Shareholders were alsocheered by chief executivePhilip Clarkes announce-ment that he would behanding over the reins ofrunning the UK businessto Chris Bush, a Tesco vet-eran and currently UKchief operating officer afurther sign thatthe gro-cers 1bnplan tot u r n

around its UK business is gatheringmomentum.

Shares climbed almost two per centafter the update, which saw total UKsales including VAT and petrol grow by4.2 per cent, while sales for the groupas a whole, including its internationalarm, rose 3.8 per cent.

Upmarket rival Waitrose, whichreported record Christmas sales lastweek, is expected to reveal a bumperstart to the New Year when it deliversits weekly sales figures this morning.This is in stark contrast to Marks &

Spencer, whose shares dived 4.5 percent as the markets opened yesterday,after a leak on Wednesday night

forced the retailer to rush out its fes-tive sales figures. It delivered aworse than expected drop in trad-ing, upping the pressure on chiefexecutive Marc Bolland. Shareslater recovered to close down 0.6per cent.Britains largest clothing retailer

revealed sales of general mer-

chandise, including clothing andhomeware, slumped by 3.8 per cent ona like-for-like basis compared to ana-lysts forecasts, which ranged from up0.5 per cent to down 3.5 per cent.

Marks & Spencer denied that thegrim figures in clothing this year hadthrown into question chief executiveMarc Bollands future with the compa-ny. Alan Stewart, finance director, saidBolland had the full support of theboard.

But one institutional shareholdertold City A.M.yesterday that they need-ed to see improvements in tradingwithin the next year.

We recognise that Bolland is undera bit of pressure but we are inclinedto give him a bit more time at leastsix to 12 months to give him achance to bed in his new team, partic-ularly in womenswear where therehave been personnel changes, theinvestor said.Tescos Philip Clarke faced similar

pressure a year ago, when the grocersshares tumbled after it revealed like-for-like sales fell 2.3 per cent overChristmas 2011, excluding fuel andVAT, prompting its first profit warning

in 20 years and the launch of a 1bnplan to overhaul the UK operations.

But yesterday Clarke said the compa-ny was back on form.

People have been bruised, felt a bitof failure, and they are not used to it,he said. There is now a new sense ofenergy and optimism.

Meanwhile ShopDirect the homeand online shopping group owned bythe Barclay brothers reaffirmed thesuccess of online retailers yesterday asit posted a five per cent rise on last yearfor total sales excluding VAT in the sixweeks to 29 December.

Online sales accounted for 80 percent of total sales in the run up toChristmas, up from 74 per cent in 2011.

More than a third of all customersqueries now come by a mobile device,the company said.

Earlier this week, the British RetailConsortium said online sales hadpropped up the sector over Christmas,showing annual growth of almost 18per cent to push the total value ofgoods sold up just 1.5 per cent fromDecember 2011.JD Sports, meanwhile, continued its

mixed performance throughout 2012,

warning that full-year profits would beat the lower end of market expecta-tions because of one-off losses atBlacks, the outdoors chain it rescuedout of administration last year.The sports and fashion retailer,

which forecast losses of 4-5m forBlacks in the second half of the year,now anticipates full-year profits in theregion of 60m.This warning came despite JD report-

ing that its core sports stores, whichinclude JD and Size?, enjoyed a recordChristmas, with like-for-like sales up3.2 per cent in the seven weeks to 5January.

HMV is launching a massive sale across its stores from tomorrow

Philip Clarkesays Tesco isback on form

BUSINESS WITH PERSONALITY

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ISSUE 1,795 FRIDAY 11 JANUARY 2013

WHY THE UKS CREDITRATING IS ON THE LINE

BOTTOM LINE: Page 5

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from 29/10/12 to 25/11/12 is 129,356

George Trefgarne in the Forum: Page 19

TROUBLED retailer HMV yesterdaydug in for a last ditch fight to

boost its stricken sales figures byslashing 25 per cent off prices,amid mounting pressure on theoutlet over looming debt covenant

breaches.The retailer, which lost 37.3m

in the first half of last year, willditch its normal Januarypromotional campaign in favour of

more aggressive price reductions.HMV is currently locked in talkswith a syndicate of eight lenders

over its debt pile. Last month it saidit faced a probable breach of debtcovenants, after sales fell 13 percent in the first half of last year.

Despite assurances that the salewas unlinked to talks with lenders,investors were spooked enough tosend shares down 5.42 per cent

yesterday.Meanwhile photography chain

Jessops, which collapsed intoadministration on Wednesday,

yesterday stopped purchases

through its website. PwC has beenappointed as administrator to thefirm, which was founded in 1935.

Marks and Spencer Group PLC

10 Jan4 Jan 7 Jan 8 Jan 9 Jan

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BY MICHAEL BOW

UNMISSABLEWE REVIEW LES MISERABLES AS IT RECEIVES EIGHT OSCAR NOMINATIONS See Page 20

...ANDTHE

UGLY

BY KASMIRA JEFFORD

AND ELIZABETH FOURNIER

THE GOOD,THE BAD

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[email protected]

Follow me on Twitter: @allisterheath

LISTED buyout company 3i yesterdaycashed out its final stake in Germanengineering firm Norma to kick off astring of potential sales by the firmpencilled in for this year.

3i, led by chief executive SimonBorrows, has seen a drastic surge inshare price since Borrowsappointment, up 40 per cent thisyear as it moves to reorientate itsbusiness.

Yesterday the firm made109m(89.5m) on Norma, which it boughtin 2006, after placing more thanfive million shares with investors at20.50 a pop, evaporating its final16.7 per cent stake. 3i is currentlysounding out potential trade andsecondary buyers for further sales, asource said last night.

Morgan Stanley has beenappointed to sell the firms stake inMold Masters, a Canadian plastictechnology company whileRothschild is lead the sale of itssmall holding in French firm Labco.Rothschild is also sounding outpotential buyers ofBritish softwarefirm Civica. 3i isalso hoping to sellEuropean ferryoperator Scandline.

3i sells Norma

stake and eyesfuture salesBY MICHAEL BOW

UK makes slow progressup economic liberty ranksDESPITE David Camerons promiseto cut through red tape for Britishbuisinesses, UK economic freedomhas risen by just 0.7 percentagepoints over the past year, accordingto research out yesterday.The UK edged up the Heritage

Foundations 2013 rankings of eco-nomic freedom to hit 14th, despiteplacing behind 159 countries on thegovernment spending rankings, andactually seeing business freedomdecline during 2012.

Overall, the UK scored 74.8 out of100, putting it behind Estonia,Bahrain and Ireland.And the score paled in comparison

to business-friendly Hong Kong,which topped the table for the 19thconsecutive year with a tally of 89.3.After Hong Kong was Singapore,

which scored 88, followed byAustralia, New Zealand andSwitzerland.

Rounding off the top 10 wereCanada, Chile, Mauritius, Denmarkand placed 10th, the United States.

But a positive note for the UK wasits comparison with Europeanpeers within the region the UK wasplaced fifth, well ahead of France,Germany, Spain and Italy, despiterecent reforms in many Eurozonecountries.

But according to Institute of

Herbalife hits back at mythsHerbalife, the nutritional supplementcompany accused of being a pyramidscheme by short seller Bill Ackman,yesterday lashed out at his PershingSquare hedge fund. Mr Ackman, whosehedge fund has sold short almost a fifth ofHerbalifes stock, in December claimedthat the company was operating with theprimary aim of recruiting distributors intoits network a key characteristic of apyramid scheme rather than sellingproducts to consumers.

Hostile takeovers slump to lowHostile takeovers have fallen to a decadelow, highlighting how lack of confidenceamong corporate leaders is reining indealmaking. Global hostile dealmakingvolume reached $100.6bn in 2012, thelowest volume since 2003.

Yum apologises for food scareYum Brands, owner of the KFC fast-foodchain, has issued a belated apology toconsumers in China for the way it handleda recent food scare, underlining thestruggles that the US company faces inthe increasingly competitive Chinesemarket.

Tchenguiz investigation costs 1.3mThe Serious Fraud Office has spent anestimated 1.3 million on its disastrousinvestigation of Kaupthing Bank, asidefrom the legal costs and damages it willhave to pay to the Tchenguiz brothers, ithas emerged.

PPI flood forces workforce to doubleThe Financial Ombudsman Service willalmost double its workforce over twoyears to cope with the flood of complaintsabout personal payment insurance.

Clegg: OAP benefits in playThe next general election will be ascarcity election that will spell the endof universal pensioner benefits like thewinter fuel payment, Nick Clegg haspredicted.

MPs call for 20,000 pay riseMPs have made fresh demands for a20,000 pay rise, with more than twothirds of members believing they are notpaid enough, a Westminster watchdogsaid.

FDA says insomnia drug doses cutThe Food and Drug Administration isrequiring the makers of certain sleep-inducing drugs, including Ambien, tolower doses of the medicines becausethey have been shown to impairactivitiessuch as drivingthe morningafter the drugs have been taken.

Rare sight in California: A surplusCalifornia is predicting a surplus for itsnext fiscal year, in a turnaround from thesteep deficits of recent times.

HEDGE fund giant Citadel, one ofthe biggest investors in the world,continued its winning streak last

year after revealing a 25 per centreturn for its main funds in 2012.

Citadel, led by founder and chiefexecutive Ken Griffin, toldinvestors it had been one of thefirms strongest years ofperformance, after it surpassed thesix per cent average returndelivered across the rest of theindustry.

Griffin, who set up Citadel in1990, has had an outstandingperformance following thefinancial crisis, delivering a 62 percent return in 2009. In 2010 henotched up an 11 per cent returnand last year clocked up a 20 percent return for investors.

Citadel, based in Chicago, hasabout $14bn (8.7bn) in assetsunder management and is one ofthe most prominent hedgestrategies in the world following itsstellar success.

The funds hitting 25 per cent,Kensington and Wellington, haveabout $7bn of investors money inthem, with one pitched at USinvestors and the other overseasinvestors. Citadel also runs $3bn ofUS equity money. In 2012 thisdelivered returns of 17.8 per centcompared to the S&P 500 which

was up 13 per cent.

Hedge giant

Citadel soars to25pc return

Prime Minister David Cameron has repeatedly stressed the need to tear away red tape

2 NEWS

BY MICHAEL BOW

BY BEN SOUTHWOOD

To contact the newsdesk email [email protected]

WE are now reaching a tippingpoint for British retailers. Acombination of historicallyweak growth in consumer

spending and a new phase in thedigital revolution is on the verge ofdestroying many business models. Asonline sales continue to boom, and

those from stores start to slide, ratherthan merely grow more slowly, it willsoon become apparent that vastamounts of retail space are no longerrequired, replaced instead by out oftown depots and warehouses.

So far, specialist or minor retailersin areas most affected by the internethave folded as a result of the techno-logical revolution; Begbies Traynorhas 140 retailers on its critical list. Yetthe pain will soon spread. Stores havea highly leveraged economic model: asmall rise in sales delivers lots of prof-its but small declines can be crippling.

EDITORSLETTER

ALLISTER HEATH

Our struggling retailers face years of creative destruction

FRIDAY 11 JANUARY 2013

There will still be a need for mostshops, of course, as well as pick-upfacilities as the click and collectapproach to retail continues to grow.But it is likely that hundreds of stores including some large supermarketsand even some second-order retailparks will eventually become sur-plus to requirement. If so, govern-ment planners need to act fast toallow their use to be changed. Somecould be turned into leisure facilitiessuch as gyms, others into schools as

the demand for places keeps on grow-ing as a result of the baby boom andothers into much-needed housing.Retailers woes are not merely cycli-cal: they are undergoing a fully-fledged process of creativedestruction. It is too soon to tellwhere this will end.

NOT FREE ENOUGHBritain is now a slightly freer econo-my than it was last year; for the firsttime in five years, its score on theHeritage Foundations index of eco-nomic freedom has gone up, ratherthan down. But despite all the huff-ing and puffing, austerity and politi-cal warfare, we have only increasedour score by 0.3 points (to 74.8) since2010, when the coalition was elected.We are still ranked a miserable 14thglobally, up from 15th.The report also reveals a negative

inflation, rather than change its com-position in a way that wouldinevitably have reduce the reportedrate of price increases.

Official attitudes towards inflationare softening. There is again a grow-ing belief in the existence of a tradeoff between growth and inflation, at

least in the short term. Inflationerodes the real value of debt, anappealing thought in ultra-leveragedeconomies. Central banks are becom-ing less independent. Governmentsare running massive deficits and arehappy for them to be monetised. SoIm delighted that it will now be a lit-tle harder for the authorities to allowprices to rip. But for a fascinatingcounter-view, read George Trefgarnesanalysis on page 19.

correlation between countries thatincreased public spending and eco-nomic growth rates. The relationshipis especially negative in the case ofadvanced economies (a one per centhike in spending is associated with areduction in growth of 0.46 per cent).Of course, correlations dont imply

causation weak economies mayhave responded by hiking spending,so the causation could go the otherway round. But there is lots of rigor-ous econometric evidence that biggovernments are bad for growth.Unless the coalition does more to freethe economy, low growth will be hereto stay.

HAWKS WINIt is unusually good news that the sta-tistical authorities have chosen tokeep intact the retail price index, thetraditional and broadest measure of

Economic Affairs director generalMark Littlewood the slight gain shouldnot be seen as a big victory for policy-makers.

Although the UKs economic free-dom score is up on last year, a lack ofsignificant structural reform is stilldamaging growth prospects,Littlewood said. This years score isjust 0.3 points higher than in 2010, soour mediocre record can no longer beattributed to the poor decisions by theprevious government.

The tax burden has grown and busi-nesses are still hampered by signifi-

cant levels of regulation, he said.The warning chimes with recent

research from the Bank of Englandfinding that supply-side issues are atleast as important as demand inexplaining the depth of the slump.When the Heritage Foundation first

published the economic freedomindex, in 1995, the UK placed thirdwith a score of 77.9. As recently as2006, Britain was placed in sixth, witha higher score of 80.4.

But policy related to the recessiondrove a fall to 16th by 2011, with thethink-tank scoring the UK at just 74.5.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

3is chief executiveSimon Borrows hasled a share revival

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OUTGOING Eurozone head Jean

Claude Juncker said yesterday that aFrench woman would head the boardof the European Central Banks newbanking supervision authority thatwas agreed last year and which is dueto be in place in early 2014.

Although Juncker offered nonames, the secretary general ofFrances ACP financial sectorregulator, Daniele Nouy, has beenregularly cited as well placed to chairthe board.

Asked about the lack of women insenior EU roles yesterday, Junckersaid: I am totally in favour ofwomens representation. He addedthat in the case of the singlesupervisory mechanism, she will beFrench.

Nouy is secretary-general of theBank of Frances

Prudential ControlAuthority.

The Frenchfinance ministry

and the Bank ofFrance declined to

comment on thematter.

Juncker backsFrench womanfor regulator

BY CITY A.M. REPORTER

Hector Sants warns rate-fixingscandal might happen againREGULATORS can never havesufficient resources to monitorevery bit of banks behaviour, and sothe Libor crisis could easily happenagain, former Financial ServicesAuthority chief Hector Sants warnedyesterday.

The former top regulator told theParliamentary Commission onBanking Standards only radicalchanges throughout banks couldprevent a repeat of the scandal.

Unless firms put in radically

BY TIM WALLACE

different culture,incentives andbehaviours, and bettercontrols there is a veryhigh risk this will comeback round again, Santstold the MPs andpeers.

He notedregulatoryactionagainstindividualsare moreoften

challenged than those against firms,taking far more time and resourcesfrom the regulator.

As a result one of the reformsthat needs to be made to the systemis to enable regulators to take more

efficient action againstindividuals, he said.

And he noted powers overforeign entities working in theUK would be helpful to clarifythe FSAs capabilities.

Hector Sants will soon start workin compliance for Barclays bank

UBSs Libor-rigging culture grewin part because the Swiss bank

became too big and complex formanagers to keep track of

behaviour properly, former bossestold MPs and peers yesterday.

Former group chief executiveMarcel Rohner said he nowrealises they hired new staff who

were motivated by money ratherthan by serving clients.

Some of the people we hired,looking back, clearly have toqualify as mercenaries, Rohnertold the Parliamentary

Ex-UBS leader blames rapidexpansion for Libor-rigging

BY TIM WALLACECommission into BankingStandards. That is not how weshould have built the firm.Financial services is peopleproviding advice ultimately thereputation of the firm depends onall of the individuals there muchmore than for a manufacturer.

The bosses, including formerinvestment bank heads Huw

Jenkins, Jerker Johansson and AlexWilmot-Sitwell, denied priorknowledge of Libor fiddling.

The level of ignorance seemsstaggering to the point ofincredulity, said commissionchairman Andrew Tyrie MP.

FRIDAY 11 JANUARY 20133NEWScityam.com

SENIOR RBS bankers are likely to losetheir jobs over the Libor-fixing scan-dal as the state-backed institutionlooks to satisfy investors, politiciansand the public that individuals havebeen punished, it emerged yesterday.

Investment bank boss JohnHourican and markets head PeterNielsen are believed to be potentialcasualties.

Neither was involved in Libor fix-ing, or even knew it was taking place.But it is thought that RBS and theFinancial Services Authority are dis-cussing the loss of senior bankers

who were in post at the time to showcritics the bank has made amends.

Barclays chief executive BobDiamond left in the storm followingthe Libor revelations last summer.

But RBS chief Stephen Hester is notlikely to follow suit, as he wasbrought in only after the financialcrisis to clean up the bank.

RBS wants to settle the Libor f ixing

RBS reshufflelooms ahead

of Libor finesBY TIM WALLACE claims with the FSA and the US regu-

lators before its full year results nextmonth to move on from the scandal.That will make it the third bank to

be punished, after Barclays and UBS.It is currently in negotiations with

the regulators and is expected to set-tle in the coming weeks. The size ofits fine is not known, but is expectedto be larger than Barclays 290m.

Discussions with various authori-ties in relation to Libor setting areongoing, said RBS in a statement.The FSA declined to comment.

John Hourican (above) and Peter Nielsen (below) could be senior casualties at RBS

Royal Bank of Scotland Group PLC


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Daniele Nouy is inline for theregulatory job

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STAR fund manager John Duffieldhas joined the growing ranks ofBumi shareholders backing NatRothschilds bid to take control ofthe company.

Duffield, who founded JupiterFund Management before setting updefunct investment house New StarAsset Management, is understood tohave thrown his weight behindRothschilds plan to overhaul themining companys board, Sky saidlast night. Rothschild wants to oust12 of the 14 directors of Bumi afterhe quit the firm last year followingtensions with the Bakrie family.

Support growsfor Rothschild

BY MICHAEL BOW

SEARCH engine giant Google faces

sanctions from Brussels unless itchanges the way it presents its searchresults in Europe.

The European Unionscompetition chief Joaquin Almunialast night said that he believedGoogle was diverting web traffic giving unfair promotion to its ownweb services. The strong positionthey have in the general searchmarket....I fear there is an abuse ofthis dominant position, Almuniatold the Financial Times.

EU trys to forceGoogle change

BY KATIE HOPE

FRIDAY 11 JANUARY 20134 NEWS cityam.com

INFLATION-LINKED gilt yieldsplunged to record lows after marketswere surprised by the UK statisticiansdecision not to change how the retailprice index (RPI) is calculated.

RPI-linked gilts maturing in 2040plummeted to yields of minus 0.05per cent, before rising to close to zero,having stood at just above 0.22 percent before the announcement.The decision cheered by pension

funds was taken after a consultationin which 82 per cent of 406 responsescame out against rejigging the formu-la. But the Consumer Prices AdvisoryCommittee, tasked with making the

choice, said most of these responsesmade no attempt to address the statis-tical and methodological issue andfocused only on personal financialconcerns.And the decision came despite

national statistician Jil Mathesonsconclusion that the RPI fails to meetinternational standards. The Carli for-mula on which the RPIs arithmetic isbased, is said to be outdated.

Growth in the consumer pricesindex is kept somewhere between

Gilt yields diveto record lows

on RPI decisionBY BEN SOUTHWOOD seven tenths of and one percentagepoint below RPI due to its use of theJevons formula, which, unlike theCarli method, assumes consumersswitch goods when prices rise.

Pensions groups cheered the unex-pected decision, as a move would havehit them with big losses through ris-ing yields on the RPI-linked gilts theyare heavily invested in due to theirmuch reduced capacity as an inflationhedge.

But economists derided the decisionto add RPIJ essentially RPI calculatedwith the Jevons formula as adding toan already busy field, crowded with atleast 23 headline indices already.

WINNERS LOSERSDefined contribution pension plansn Many defined contribution pensionschemes have significant investmentsin RPI-linked gilts, whose coupon andprincipal would both have been

adjusted more modestly if RPI hadbeen rejigged with a formula that saw itgo up slower.

UK utility companiesn UK water companies and theNational Grid benefit from the move areduced rate would have reduced thehikes in bills they would have been ableto make on their popular RPI + X deals.

The governmentn Debt service payments would havegone down with a formula change,since index-linked gilts are tied to theRPI inflation measure.

Final salary pension schemesn Schemes whose liabilities werediscounted by RPI 60 to 80 percent would have seen their deficitsshrink significantly.

Commuters and driversn Rail fares and fuel duty would havegone up slower under a rejigged RPI.

An altered RPI measurement could have been a boon for chancellor George Osborne

Gilt yields crash after decision not to change RPI formula

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CREDIT card company AmericanExpress yesterday announced plansto slash around 5,400 jobs, and takeabout $594m (367m) in after-taxcharges in the fourth quarter, whichwill halve its net income for theperiod.The New York based business said it

would employ four to six per centfewer people by the end of 2013, com-pared to its current headcount of63,500.The largest reduction would come

in its travel business and would bespread proportionately between theUS and overseas, it said.

For the next two years, ouraim is to hold annual operat-ing expense increases to lessthan three per cent, chiefexecutive Kenneth Chenaultsaid in a statement.The $594m charges

helped reduce netincome to $637mfrom $1.19bn ayear earlier afall of 47 percent.The charges

are com-prised of a

$287m after-

AmEx to slash

5,400 jobs asincome sinksBY CITY A.M. REPORTER

tax restructuring charge, in additionto other charges related to its rewardsprogramme and reimbursements tocardholders under agreementssigned with regulators.AmEx also took a $95m charge for

cardmember reimbursements fortransactions going back several years.The company said cardmember

spending grew eight per cent in thefourth quarter, the third straightquarter of single-digit growth afternine quarters of double-digit growth.

The job reductions will take placeacross seniority levels, businesses andstaff groups, the company said in thestatement.

The largest reductions will come inthe travel businesses, which operatein an industry that is being funda-mentally reinvented as a result ofthe digital revolution.

Revenues rose 5.2 per cent to$8.14bn in the fourth quarter,AmEx reported.

Shares of the company roseone per cent to $61.45 intrading after the bell.They closed at $60.79 on

the New York StockExchange last night.

BOTTOMLINE

MARC SIDWELL

AMAZON has upped its battle withApples iTunes by offering freemusic downloads to customersthat buy CDs on the website.

The service, called AutoRip, willcover tracks on CDs boughtdirectly from Amazon, includingpurchases dating back 15 years.

Amazon has aimed to step up itsdigital entertainment offering in

recent months as its Kindle Firetablets take on Apples iPad.

Amazon offersCD downloads

Apple says nocheap iPhone

BY JAMES TITCOMB

A SENIOR Apple executive hasshot down suggestions that thecompany is looking to build acheaper version of the iPhone,saying Apple would be unwillingto sacrifice its high profit marginsto gain greater market share.

Despite the popularity of cheapsmartphones [in China], this willnever be the future of Apples

products, marketing boss PhilSchiller told a Chinese newspaper.

BY JAMES TITCOMB


HOW to find a clear winner inthe Christmas battle of thesupermarkets? Not from theheadline figures, it seems, after

straightforward data releases fromSainsbury and Tesco descended into afurore over the small print.

Tesco reported like-for-like sales

growth of 1.8 per cent overChristmas. Sainsbury reported like-for-like growth of 0.9 per cent.Victory to Tesco? Not so fast. Tescosfigure is arguably inflated by 28 percent, as it includes sales using loyaltycard points, while Sainsburysfigures left them out. Thecomparable like-for-like figure forTesco is tucked in a table at thebottom of its statement: 1.4 per cent.

Sharp practice with the

presentation aside, surely this meansTesco still wins out? After all, 1.4 percent is far better than 0.9 growth.But Sainsbury and Tesco were alsoreporting over different periods,both ending 5 January: a month anda half for Tesco; three and a halfmonths for Sainsbury.

How then are we to judge? Perhapswe should simply wait for Waitroses

figures this morning, which maywell outclass both. But we can alsolook back at the previous yearsnumbers for each firm. Sainsburyslike-for-like figures excluding fuel forthe 14 weeks to 8 January 2011 showa sales rise of 3.6 per cent. It was 2.1per cent in 2012 over the same

period. The growth rate isdiminishing at an accelerating rate:a fall of 42 per cent from 2010 to2011 and another of 57.1 per centfrom 2011 to the end of 2012.

Now consider Tesco. Like-for-likesdeclined by 1.7 per cent last year inthe six weeks to 8 January 2012, andgrew by only 0.6 per cent in the sameperiod the year before. That makesthis years 1.4 per cent look heroic.

To misquote Tolstoy, every

unhappy company is unhappy in itsown ways. But in choosing betweenunhappy supermarket performancesin a tough marketplace, here is onemeasure, however you look at it, onwhich only Tesco looks to be movingin the right direction.

THE ART OF LUXURYIF Ford sold just 3,575 units in anentire year, itd be a disaster. Butwhen youre Rolls-Royce and anaverage model sets customers back250,000 its a different story.

Record sales released yesterday bythe BMW-owned luxury marqueshow the top end of the market isbooming. Most of Rolls high rollerseven shell out extra to have theirPhantoms and Ghosts customised.

And for the super rich, luxury isno longer enough. Research groupJato Dynamics estimates premiumand luxury car sales have risen by 13per cent since 2008, but the rise iseven bigger 36 per cent in fouryears when you narrow that downto the cars they call super luxury

think VWs Bentleys, Aston Martinsand Mercedes new Maybach range,the ones for which youd struggle toget change from 100,000.

We are not in the car business,chief executive Torsten Muller-Otvossaid yesterday. A Rolls Royce is apiece of art And art, as any collectorwill tell you, is a luxury worthsplashing out on.

Marc Sidwell is City A.M.s managingeditor @marcsidwell

Why Tescos cracking results took the Christmas crown

AmEx chief Kenneth Chenault

said net income had halved

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BALANCING governments booksand reforming the Eurozones weak-est economies are more vital thanever, European Central Bank bossMario Draghi said yesterday.And by insisting the economic

medicine is working, analystsbelieve Draghi has ruled out anyfurther monetary easing.

Hitting back at critics of austeritythe ECB president said that citizensin countries like Spain have alreadymade great sacrifices in the inter-ests of longer-term growth, but anyslowdown in the reforms wouldreverse those gains andrender the past yearsefforts wasted.

So much progress hasalready taken place,accompanied by such abig sacrifice that torevert to a situationwhich has already beenfound to be untenablewould not be right, hesaid after announc-ing the ECB isholding inter-est rates thismonth.

Draghi goes on

attack againstausterity criticsBY TIM WALLACE

We should not forget fiscal consol-idation is unavoidable. It has shortterm contractionary effects, but somuch has been done that it is notright to go back.

But the ECB president added muchmore still needs to be done if theperipheral economies are to regaintheir lost competitiveness.

In particular product markets andlabour markets need to be liber-alised, to increased competition andend the two speed jobs markets inwhich young workers remain unpro-tected and unemployed while olderworkers are effectively unsackable.

Draghi argued that no change tointerest rates was needed because of

improving stock markets, fallingfinancial volatility and fallingbond spreads.

By turning more upbeat onthe assessment of financing con-ditions, the ECB statement wasmore hawkish than we expect-

ed, said Citi economistJurgen Michels.

Unless there isa significantfall in the sen-timent data,we no longer

expect a cutin the refi

rate in thefirst quar-ter.

Draghi heldinterest rates


INSIDETRACK

DAVID HELLIER

THE investment banks are onboard and now the next stageahead of the ultimateprivatisation of the Royal Mail

is about to be sorted; theappointment of a financial publicrelations team that will sell a deal tothe City via the f inancial media.Various firms, including City heavy-

weight RLM Finsbury, are vying toadvise the parcel and letters deliverygroup on its path towards the privatemarkets either through a sale or ashare issue.Those who pitch for the business

will come up against Brunswick, theincumbent.

Brunswick has a strong card to play;not only is it one of the Citys domi-nant firms but it is also the one thatadvised Direct Line, the insurance

group, on its partial separation fromowner RBS, in what was unquestion-ably the flotation of the year forLondons main market in 2012.The appointment of a financial PR

firm often, but not always, indicatesthat a deal is within months of com-ing to market.

So although there is no timing asyet, the company and its chief execu-tive, the Canadian Moya Greene,

appear close to putting the finishingtouches to the pre-flotation line-up.

Crucially, the group, which hasbeen shorn of its post offices busi-ness, is now in a healthier financialposition than it has ever been. It hasa growing parcels delivery business,endorsed recently by Amazon, whichis growing quickly as its letters busi-

ness declines. Recent financialresults showed a 12 per cent jump inhalf-year pre-tax profit to 115m.Aside from the lifting of several

price controls, a major reason for thetransformation in Royal Mailsfinances has been the governmentsdecision to take over its giant pen-sion fund, which saw 28bn of assetsand 38bn in liabilities transferred tothe state, and meant there was noequivalent to 2010-11s 292m deficit

payment.In terms of financial advisers, per-

haps the biggest surprise so far hasbeen the appointment of STJAdvisors, a boutique, that was hiredby the group to provide advice for thebank selection process.

STJ, principally an adviser for pri-vate equity groups planning to sell an

asset, has risen to prominence despitefrustrating some of the investmentbanks it has worked with on deals.Banks complain that STJ tries to sec-ond guess them and interferes in thedeal process.

It was recently hired by Spanishbank Banco Popular to advise on itsrights issue deal and played a key rolein setting a narrower discount for thenew shares in the rights issue thanthe banks, headed by Deutsche,

would have preferred or suggested.As a result of STJs deliberations,

Royal Mails long-standing adviserBarclays remains on board and bothGoldman Sachs and Bank of AmericaMerrill Lynch have been instructed toassist with early investor findings.

Oh, to be a fly on the wall at some ofthose meetings between STJ and the

other bankers.Those who have studied the busi-ness say it could be worth anythingbetween 2bn and 4bn, even withthe extension of the obligation to pro-vide a universal service. While thiswouldnt fill a major hole in govern-ment finances, many in the City feel asuccessful flotation of the Royal Mailwould send a strong positive messageof dynamism ahead of an election.

[email protected]

Wanted: more advisers to deliver a Royal Mail sale

THE BANK of England decided tokeep interest rates steady

yesterday, and economists predictrising inflation will stop theMonetary Policy Committee (MPC)from printing more money anytime soon.

The economy is believed to bestuck in a zig zag of quarters of

growth followed by quarters of

contraction or stagnation.But high inflation the latest

Bank of England holds rates asinflation expected to rise again

BY TIM WALLACEfigures put the consumer priceindex at 2.7 per cent in the year toNovember mean the traditionalremedy of cutting rates or usingmore quantitative easing isunlikely to be an option.

We expect inflation to riseabove three per cent over the nextfew months, to an extent due tothe hikes in utility tariffs alreadyannounced, but also because we

judge that there is further upside

to food price inflation, said PhilipShaw from Investec.

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IN BRIEFClegg hints at state pension cutsn Nick Clegg yesterday told reportersthat all major political parties wouldfight the 2015 election on an austerityplatform and cuts to the state pensionwould be included in all manifestoes.

The Deputy Prime Minister said it isunjustifiable to continue universalpension payments to some of therichest people in society andprotecting them from welfare cuts iscompletely irrational. He insistedpublic opinion supported such reform.

BlackRock buys Credit Suisse unitn BlackRock is to buy Credit Suissesexchange-traded fund (ETF) business,which will give the US asset managergreater scale in Europe. The price tagon the deal, announced yesterday, wasnot disclosed, but two sources familiarwith the matter put it at between$200m (123.8m) and $300m. ForCredit Suisse, the disposal marksanother step to bolster capital in linewith tough new requirements onbanks after the financial crisis.

GERMAN MPs yesterday warnedBritain must not indulge inblackmail as it attempts tonegotiate a looser relationship withthe European Union.

Gunther Krichbaum, an ally ofGerman chancellor Angela Merkel,yesterday visited London and warnedit would be economic disaster forBritain to quit the 27-member bloc.

You cannot create a politicalfuture if you are blackmailing otherstates. That will not help Britain. Itneeds a Europe that is stable. It needsmarkets that are functioning,Krichbaum said.

He warned that holding areferendum on the UKs membershipof the EU would be disruptive, whilerenegotiation of treaties couldencourage other member states tofollow suit.

Germans warnBritain over EU

BY JAMES WATERSON

ROLLS-ROYCE has hired a formerHerbert Smith senior partner whomonitors compliance at BAE Systemsto conduct a review of its own compli-ance procedures after claims ofbribery and corruption overseas.

Lord Gold of Westcliff-on-Sea, whospent 38 years as a solicitor at the lawfirm including five years as seniorpartner, will look into Rolls dealingswith some of its intermediaries.

Rolls revealed in December that aninternal probe conducted at thebehest of the Serious Fraud Office(SFO) had thrown up matters of con-

cern at its Indonesian and Chinesebusinesses.

The SFO is examining whistleblow-ers claims of improper payments tofirms that later signed multi-billionpound contracts with Rolls-Royce. TheUS Department of Justice has alsobeen made aware of the allegations.

Gold, who was made a Conservativepeer in 2011, is an independent corpo-rate monitor at aerospace rival BAE

BAEs monitorhired for review

at Rolls-RoyceBY MARION DAKERS Systems, a role that is due to come to

an end by August.He is responsible for submitting

reports to the DoJ, following BAEs$400m fine for making false state-ments in 2010.

He set up his own litigation practiceafter leaving Herbert Smith, and hasbeen described by law directoryChambers as a legal Rottweiler.

He is one of the UKs most senior lit-igators and has extensive experienceworking at the highest levels with cor-porations, governments and regula-tors around the world, Rolls said.

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US CAR maker Ford yesterdaydoubled its quarterly dividend to10 cents per share, a seven-yearhigh, due to strong sales in North

America and its strong balancesheet.

The increase follows years ofstruggling during the economiccrisis, when Ford suspended itsdividends for five years up untilDecember 2011.

We had thought that a

dividend increase was likely butthis announcement is larger than

Ford doubles dividend to sevenyear high on good balance sheet

BY JAKOB VILLUMSEN we expected, RBC Capital Marketsanalyst Joseph Spak said.

Ford said it had increased itsliquidity during the first threequarters of last year by $2bn(1.2bn), having told the marketearlier this month that it soldmore than 2m cars in the US last

year and had its strongestDecember sales since 2006.

However, Ford hasacknowledged it has lost marketshare, and the company isexpected to lose $3bn from its

European business over the nexttwo years.

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A REVIEW commissioned in the wakeof the West Coast franchising fiascohas called for changes to the biddingprocess, including a hiring drive tobring more experienced staff into theDepartment for Transport.

Former Eurostar boss RichardBrown used his report, published yes-terday, to call for passenger satisfac-tion to be taken into account whenconsidering bids.

He also wants to see shorter fran-chise lengths with break clauses, plusclearer bid requirements listedupfront, to ensure companies deliver

what they promise.However, he stopped short of

demanding that the DfT bestripped of its franchisingpowers, saying that theprocess is not fundamentallyflawed and should restart assoon as possible.Transport secretary Patrick

McLoughlin said he will soon

BY MARION DAKERS decide whether to unfreeze three fran-chise contests that were halted inOctober, and will set out plans forfuture route competitions by spring.

Brown voiced concerns that under-staffing at the DfT contributed to theerrors that led to the collapse of theWest Coast contest in September.

He said the department shouldaddress a sharp asymmetry betweenthe capability and resources of biddersand that of the department by hiringindustry experts and by entrustingfranchises to a separate team thatwould oversee the process from begin-ning to end.

Train companies broadly wel-

comed the report. FirstGroup,which had its West Coast

contract scrapped, said itplanned to resubmit bidsonce the process restarts.

KPMG transport advisoryhead Ed Thomas said thereports recommendations

were a welcome dose ofpragmatism that would

help rebalance the risksborne by the state and the

operating companies.

Boris sets out airport criteriaBORIS Johnson yesterday said hewill present a shortlist of potentialsites for airport expansion to the

government as early as this year,the latest move in his campaign formore flight capacity for the southeast.

The Mayor of London alsopublished proposed standards that

BY JAMES WATERSONa hub airport site must meet before

being put to the government,including a shortconstruction timescale, swiftrail links, and the possibilityof 24-hour operation. Thefinal point is likely to excludeexpansion of Heathrow.

Johnson has set up his

own inquiry into airport capacity,run in parallel with the

government inquiry led by ex-FSA chair Howard Davies.

The Mayor has previouslydescribed the Davies

Commission, which willnot report until after

the next generalelection, as afudge-orama.

The Mayor has backed a newThames estuary airport

Richard Brown wantsbidding to restart soon


Shoreditch set for 75m facelift PLANS were submitted thisweek to regenerate a site inLondons East End that haslain derelict for more than 30years into a new 75mcommercial hub.

The proposed scheme,known as Shoreditch Village,will create 150,000 square feetof commercial-led space,including a 180-bed hotel,20,000 sq ft of offices, 42,000

sq ft of shops, restaurantsand a covered food market.The site, which is next to

Shoreditch High Street stationand under a part of therailway viaduct, has beenprivately owned by twofamilies since the 1970s.

Dominic White, a formerKnight Frank partner and aco-owner of the project saidthey were close to signing ahotel operator and talks withseveral restaurant groupswere taking place.

EllisMiller Architects aredesigning the scheme.

BY KASMIRA JEFFORD

Brown calls forspeedy restart

of rail contracts

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SOUTH Korean rapper Psys songGangnam Style may have broken aGuinness world record and receivedover 1bn hits on YouTube. Howeverthe latest parody of the videoshorseriding dance has come from anunexpected source.

Lawyers at Norton Roses HongKong office have produced their ownversion of the viral video, and evenposted it on the Norton Rose website.

Gangnam Style

makes its wayto Norton Rose

The Capitalist enquired as to whetherany game trainees, or indeed part-ners, from the London office wouldbe challenging their Asian counter-parts to a dance-off with their ownrelease. However the firm was reluc-tant to take on the challenge: Can itbe done any better than it alreadyhas?

Looks like we wont be treated to aSouthwark Style anytime soon.

10 cityam.com

cityam.com/the-capitalistTHECAPITALISTNurses at Guys Hospital areliving in the shadow of the

Shard, literally. Since the massivebuilding was erected, their panoramicviews across the City have been allbut obliterated. One of the few

pleasures of a long 10 hour nursingshift gazing at the spectacular viewsover London has disappearedaccording to one senior nurse at thehospital. Perhaps the medical staffhave timed their complaint well, asthe View From The Shard, the capitalshighest viewing gallery, opens at thestart of February. Clearly the protestshavent fallen on deaf ears, as TheCapitalistis told Irvine Sellars Shardteam have given 2,400 free viewingtickets to the Guys and ThomasHospital Trust. At a pricey 25 a pop,not a donation to be sniffed at.

FRIDAY 11 JANUARY 2013

EDITED BY CALLY SQUIRES

Got A Story? Email

[email protected]

Two membersof Norton Rosemid-Gangnam

THERE was a distinct chill allover London yesterday thatcaught many commuters withouttheir woolies on by surprise.

Luckily, as the London IceSculpting Festival is back inCanary Wharf for a fifth year,the frosty weather is set to geteven nippier in the next fewdays.

The annual event offers Citysluggers out in Docklands the

Canary Wharf embraces the bigchill with ice sculpting festival

chance to take an ice carvingmasterclass, frolic in a snow-filled pit, scribble on aninteractive ice graffiti wall, playon a giant chess board and thepiece de resistance a laser showof the Northern Lights.

The food market offers wintryfare such as alpine raclette,roasted chestnuts, hot chocolate,

gluhwein and a hog roast foranyone pining for the slopes.

Anna-Marie Taberdo sculpting Canary Wharf out of an ice block yesterday

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4 years interest free credit with

nothing to pay for the first year

no deposit, no interest ever

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Hays hit by Australiamining slowdownRECRUITER Hays posted a one percent fall in second quarter group net

fees after lower activity in its highmargin mining industry in WesternAustralia led to a hiring slowdown.

The weaker performance in Asia,which represents 29 per cent ofgroup fees, was partially offset by 12per cent net fee growth in Europeand the rest of the world, worth 40per cent of the group, with Germanyagain its top performer.

Chief executive Alistair Cox saidyesterday that he was pleased 12countries delivered growth of morethan 10 per cent but that the UK,southern Europe and banking-related specialisms remained tough.

Overall, we expect conditions toremain fragile, he said.

The slowdown in resources andmining hit permanent recruitmentparticularly hard in Australia andNew Zealand in the three months tothe end of December, with overall

fees there down 15 per cent and Asiaalso declining.

BY HARRY BANKS Hays cut its headcount in the AsiaPacific region by six per cent in thequarter. The overall group net feedecrease of one per cent was slightly

ahead of consensus estimates of atwo per cent drop. UK and Irelandnet fees fell four per cent year-on-year.

Analysts at Jefferies said they werehopeful of improved momentum inthe second half of the year butdowngraded 2013 earnings per shareby five per cent on the news to 4.47p.

A deterioration in high marginAsia Pacific and improvement in lowmargin UK is unhelpful forprofitability, analysts said

FRIDAY 11 JANUARY 201312 NEWS

UPMARKET investment managerRathbone Brothers sounded anoptimistic note for the comingyear yesterday after posting adouble digit percentage rise inthe assets it runs during 2012.

In a trading statement,Rathbones said while it wasmindful of the political risksemanating from governments inthe UK and United States grap-pling with tough conditions, itlooks forward to 2013 withmore optimism.

Rathbones total funds undermanagement grew 13.4 per centin 2012 to 17.98bn, boosted by acombination of strengthening

BY HARRY BANKS stock markets, acquisitions and net

inflows of new money.The firm reported underlyingorganic fund growth of three percent, down from 5.4 per cent the pre-vious year. Rathbones will publishfull results for 2012 on 20 February.

Rathbone Brothers PLC


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LONDON Capital Group (LCG),owner of popular spread bettingplatform Capital Spreads,yesterday revealed plans to cutalmost 5m in costs after

revealing disappointing figuresfor 2012.Less market volatility last year

meant a drop in the number ofpeople taking a punt on themarket, hitting LCGs corespread betting business.

The firm forecast more than a200,000 loss for the year on theback of 28.6m in revenues.Revenues in the previous yearwere 39m.

The Liverpool Street-basedbusiness said it had identifiedaround 15 per cent of costs itcould cut to improve the bottomline. It plans to achieve thesesavings, equivalent to 4.8m, bythe end of this year, it said.

LCG rocked bycalm markets

BY MICHAEL BOW

OIL services firm Cosalt, chairedby Carphone Warehouse founderDavid Ross, yesterday warnedshareholders they would beunlikely to receive anything if itsoperating businesses were sold off.

The firm confirmed it was intalks with third parties over thesale of both Cosalt Offshore and

Cosalt Workwear, but warned it isunlikely there would be any value

Cosalt warns shareholders mayget nothing in business sell-off

BY KATIE HOPE attributable to shareholders dueto the level of the groups netindebtedness and pension schemeliabilities.

Cosalt, which has a pensiondeficit of around 9m, said at theend of last year that its debts werearound 17m.

The directors remain focusedon reaching a solution which willensure the long term future of

both operating businesses, it saidin a statement.

Cosalt, chaired by David Ross, said it was in talks over a sale of its operating businesses

IN BRIEFSIG warns on construction marketn Building products giant SIGyesterday warned that constructionmarkets would remain challengingthis year, as it reported flat year onyear revenue at 2.6bn. The firm saidthat 2012 underlying pre-tax profitwould be no less than 82m thanksto resilience in mainland Europe upfrom 81.7m over the previous year.

Bunzl in 140m spending spreen Bunzl yesterday snapped up fourbusinesses spending an estimated140m. In South America, the FTSE 100company bought Chilean personalprotection business Vicsa Safety and itsSouth American subsidiaries, as well asBrazilian business Vicsa Brasil. In theUS, Bunzl has acquired Schwarz PaperCompany and Destiny Packaging.

Balfours first fund hits targetn Balfour Beattys foray into fundmanagement got a boost yesterday asits maiden infrastructure fund reachedits first close with 200m ofcommitments. Balfour, which has put70m into the fund, said it will makeinvestments in transport, energy andutilities in the UK, Europe and North

America.

Rathbones ina good mood

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BRITISH TV box manufacturer Paceshowed yesterday there is life afterits failed takeover of MotorolaHome, the set-top box unit owned

by Google, as it revealed record

revenues for the end of last year.The company said turnover for2012 is expected to be four percent up on the previous year, andit expects sales of $2.4bn (1.5bn).

This marks a turnaround forPace, which warned last year thatrevenues would decline in 2012,

before adjusting expectations tosay they would be flat.

Pace put the improvements inthe second half of the year downto increasing demand for itstechnology in the US, where Pacemakes the boxes sold by severalpay-TV providers.

Pace missed out on MotorolaHome last month, with Googleselling the unit to US firm Arris.

Pace shrugs offfailed Moto deal

BY JAMES TITCOMB

ONLINE gaming companyBwin.party hit out at Germangambling proposals yesterday,claiming that there is not a level-playing field for domestic and

foreign companies.Whilst we welcome the move toregulate the online gaming marketin Germany, this must be in aconsistent and coherent manner in-line with EU law, the companysaid, as it raised concerns that plansfor a newly-regulated onlinegaming market would be unfair onnon-domestic firms.

The outburst is the latest standoffbetween Bwin.party and regulatorsin mainland Europe. Chiefexecutive Norbert Teufelberger wasquestioned by Belgium gamblingauthorities in November on a visitto the country. A number of EUcountries gambling industrypolicies are being investigated byEU officials over claims theyconflict with European law.

The company also said tradinghad been in line with expectations

since September, although Octoberhad been a very strong month.

Bwin.party inGerman spat

Nokia on road to recovery asLumia sales finally pick up

BY JAMES TITCOMB

JEWELLERY firm Tiffany & Co failed to meet sales expectations for the holiday seasonwith net worldwide growth of four per cent compared to last year, while same-store

sales were flat, it said yesterday. The result was below the firms own forecasts, withsales at its flagship store on 5th Avenue even falling by two per cent. Jakob Villumsen

SHINE TAKEN OFF TIFFANYS HOLIDAY SALES

Rank hopes to cut itslosses on Blue SquareTHE LOSSMAKING online sportsbookie, Blue Square, has been put

on the market by its owner, casinooperator Rank.Rank, which bought Blue Square

in 2003, said yesterday it wouldundertake a review of thebusiness. Blue Square survived asimilar review in 2009 but Rank isunderstood to be pursuing a salethis time, and early discussionshave begun with some parties.

However, 888.com, which waspinpointed as the most likely buyerof Blue Square by some analystsyesterday, is not understood to beinterested.

The business operates solely inthe digital channel of the highlycompetitive sports betting marketwhere it continues to generate an

BY JAMES TITCOMB operating loss, the company said.Rank intends to focus its

resources on further developingGrosvenor Casino and Mecca

[bingo].Rank is also trying to have its205m deal for rival operator Gala,which would make it the UKsbiggest casino owner, cleared bycompetition authorities.

NOKIA showed early signs ofputting its recent troubles behind ityesterday, as it announced that salesof its Lumia smartphones had beenbetter than expected in the months

leading up to Christmas.The Finnish company has postedrepeated billion-dollar losses inrecent months as it has failed toattract customers buying iPhonesand Samsung handsets in theirdroves. But a recently revampedlineup of high-end phones, as wellas impressive sales of cheaphandsets in emergingmarkets, pushed Nokiato an underlying profitin the fourth quarter ofthe year.

Significantly forNokias long-termprospects, sales of itsLumia range the high-margin

BY JAMES TITCOMB smartphones running MicrosoftsWindows Phone software increased from 2.9m in the previousquarter to 4.4m.

This led the firm to estimate thatmargins in the period were betweenzero and two per cent, far better

than the minus six per centpreviously forecast. Sales of its Ashaphones, which are aimed atemerging markets, were 50 per centup on the previous quarter at 9.3m.

The news sent Nokia shares inNew York up more than 18 per centto highs not seen since last April.

We focused on our priorities andas a result we sold a total of 14mAsha smartphones and Lumiasmartphones while managing ourcosts efficiently, Nokias Canadianchief executive Stephen Elop, whowas made boss in 2011, said.

Stephen Elop has overseenrepeated losses at Nokia

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IN BRIEFGoals Soccer halts growth plansn Goals Soccer Centre is to freeze itsexpansion plans until 2014 in a bid tocut back on its 50m debt-pile, thecompany said yesterday as it revealeda six per cent rise in full-year sales.The group, which runs 43 five-a-sidefootball centres in the UK, said itsuccessfully appealed HMRCsdecision to charge VAT on leagueincome during the year, lifting like-for-like sales by two per cent in theyear to 31 December.

Hilton agrees Australian venturen Hilton Food, the meat packingcompany which supplies majorretailers including Tesco, yesterdayreported a solid performance in theUK and Ireland last year and said thatit had performed in line with boardexpectations. The group, which is dueto publish its full-year results in March,also announced it is stepping up itsexpansion abroad after signing a jointventure deal with Australian retailgiant Woolworths.

Swatch sales tick up 14 per centn Swiss based watch company Swatch

said demand for affordable watcheshelped sales beat growth forecastslast year as demand for luxury modelscooled in China. The worlds biggestwatchmakers total sales were up by14 per cent from 2011 to SwFr8.14bn(5.5bn), with Chinese customersbuying cheaper watches being a majordriver in the increase. Chief executiveNick Hayek said he expected to scoredouble-digit growth in 2013.

BMW and Audi both posted record-breaking annual sales yesterday asdemand for high-end marques inemerging markets continued to drivegrowth.

Germanys BMW reported sales of1.845m vehicles in the year, a rise of10.6 per cent.All three of its brands BMW, Mini

and Rolls-Royce delivered increasesduring the year.

Rolls-Royce enjoyed the best-sellingyear of its 108-year history, delivering3,575 cars as global clamour for theheritage brand continued.

However, the pace of growth slowed

to one per cent, as chief executiveTorsten Muller-Otvos pointed to a hes-itation from Chinese customers.

For the group, Asia overtook theAmericas to become its second-biggest

marketafter

Luxury cars stillselling fast in

new marketsBY MARION DAKERS the region bought 491,512 vehicles, arise of 31.6 per cent.We enter the new year with positive

momentum and despite the prevail-ing headwinds in some markets, weaim to achieve another record year insales in 2013, said sales and market-ing board member Ian Robertson.According to KPMGs annual indus-

try survey out this week, BMW andAudi parent Volkswagen are the twofirms most likely to gain global mar-ket share in the next five years theonly companies based in Westernnations to feature in its top ten.Audi yesterday said it sold 1.455m

cars last year, a rise of 11.7 per cent.It said Europe was doing well, with

UK sales up 7.2 per cent, but Asia hadbeen the main source of expansion.

Bentley, also owned by Volkswagen,posted 22 per cent growth as it deliv-ered 8,510 cars. Customers in theAmericas were the most prolific buy-ers of Bentleys, taking 2,457 cars in the

year, closely followed by Chinawith 2,253.

JUNIOR stockmarket-listed IthacaEnergy yesterday pledged $360m(224m) in development on a

North Sea oil field.This years investment

programme for North Sea-focusedIthaca will be concentrated on theGreater Stella Area (GSA)development, in which Ithacaholds a 55 per cent interest.

The drilling in the area, which isapproximately 238km south eastof Peterhead in Scotland, isexpected to begin in the firstquarter of this year, and will befunded from existing cash

Ithaca Energy to spend 224mon North Sea oil field project

BY CATHY ADAMS resources and from its currentdebt facility.

Meanwhile, the explorerreported a 31 per cent jump inoutput year on year in the fourth

quarter, up to 610,070 barrels ofoil equivalent, or 6,631 barrels ofoil a day.

This year, production isexpected to be in the range of6,000 to 6,700 barrels of oil a day,

with around 80 per cent of outputcoming from the Cook, Athena,Beatrice and Jacky fields in theUKs North Sea.

Ithaca Energy shares closeddown 6.51 per cent yesterday at125.75p.


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Ithaca Energy expects to start drilling the GSA field in the first quarter of this year

Rolls-Royce sold a record3,575 vehicles last year

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US NEW jobless claims edgedhigher in the first week ofJanuary, according to data outyesterday, but stayed below thefigure for a year earlier.

Seasonally adjusted newunemployment insurance claimsclimbed by 4,000 to hit 371,000 inthe week ending 5 January, theDepartment of Labor revealed.

However, overall the labourmarket looks to be in a bettercondition than at the same pointlast year. New claims for this weeklast year were 19,000 higher onthe adjusted measure and 94,176when left unadjusted. Andseasonally adjusted total insuredunemployment fell by 127,000 tohit 3,109,000, its lowest point sinceOctober 2008, and 495,000 belowwhere it was a year earlier, thoughthese figures are a week in arrearsof the new claims numbers.

This came in tandem withupbeat data from the wholesaletrade. Wholesalers sales volumesclimbed 2.3 per cent betweenOctober and November, accordingto the US Census Bureau, hitting$419.3bn (260bn). This meantwholesalers were enjoying sales5.6 per cent higher compared toNovember last year.

Jobless claimsin US edge up

at start of yearBY BEN SOUTHWOOD

INVESTORS showed increasing trustin the Spanish and Italian govern-ments yesterday, allowing the coun-tries borrowing costs to fall tounexpectedly low levels.

It came as credit ratings agencyStandard and Poors published areport arguing the Eurozone couldstart to emerge from sovereign debttroubles in 2013, if the continentmanages to address major imbalancesand its lack of competitiveness.

Madrid raised5.8bn (4.8bn) in twoyear bonds, paying just 2.47 per cent.

That compares with an interest rateof 3.28 per cent in the last similar auc-tion three months ago and helpedpull the benchmark 10-year bondyield down below five per cent for thefirst time in nine months.The Italian government raised

8.5bn in one-year debt, which camein at a yield of 0.864 per cent, downfrom 1.46 per cent in December andthe lowest level in three years.

Both governments have been strug-

Spain and Italy

see borrowingcosts collapse

BY TIM WALLACE gling to keep a lid on borrowing costs.Spains 10-year bond yields peaked at

more than 7.5 per cent in July 2012while the Italian governments roseabove 7.4 per cent in November 2011.

Borrowing costs of above seven percent are widely regarded as unsustain-able. Greece, Ireland and Portugal allrequired bailouts after their bondsbreached that level.

But tough austerity programmesand economic reforms, combinedwith supportive action from theEuropean Central Bank, have pulledthem back from the brink.

House prices rise by 3 per centin 2012 despite flat DecemberHOUSE PRICES were flat inDecember, but rose overall in 2012,

according to data published today.Despite the lack of changebetween November and December,the average house price was 3.2 percent higher last month than a yearbefore, according to the LSL houseprice index.The rise adds 7,000 to the average

propertys value.The finding cements a general

picture of housing marketimprovement in 2012, comingfrom a range of house priceindices, including Rightmove and

BY BEN SOUTHWOOD LSL which was the mostoptimistic.

Nationwide, Halifax andHometracks indices however

showed slight decline for the year.Separately, data from Zoopla,also released this morning, addedto the evidence that despiteeconomic hardship, many propertyowners saw their wealth balloon.

The total value of UK housingclimbed 57bn during 2012, theproperty website said, bringingBritish housing wealth to 5.96trillion an increase of roughlyone per cent.

Of this total 57bn, some42.4bn 74.4 per cent came

from property in the capital, wherevalues continued to boom past pre-recession highs, shaking off thedownturn challenging markets

across the rest of the countr y.

China trade boost adds to hopethat the slowdown has endedCHINESE export growth rocketed toa seven-month high in December,adding to evidence the worldssecond biggest economy had turneda corner.

Exports were 14.1 per cent higherin December than the same monthin 2011, easily surpassing analystexpectations that the measurewould show four per cent growth.

This growth drove the Asiangiants trade surplus even furtherinto positive territory, climbingfrom $19.6bn (12.1bn) in November

to hit $31.6bn.This positive news came in

BY BEN SOUTHWOOD tandem with a rise in HSBCsemerging markets index, indicatingfaster growth in developingeconomies during the fourth quarterof the year.

The headline index rose from52.2 in the third quarter toreach 52.9, HSBC said, furtherabove the 50 value thatindicates no change in output.This was the first time thepace of expansion hadincreased since mid-2011, and potentially

indicating that recent slowdown inemerging market growth is over.

But both of these nuggets ofupbeat data cannot rule out thepossibility that despite a raft ofpro-growth reforms from PremierWen Jiabaos economic team Chinas growth for the whole of2012 will come in lower than any

year since 1999. And the data willnot be easy reading for Japan

whose exports to its biggesttrading partner collapsed 20per cent over the year asthe two states came tologgerheads over the

Senkaku/Diaoyu islandchain.

Spanish 10-year yields hit an eight month low

2013DecNov

5.0

5.4

5.6

5.8

5.8

6

4.9

%

House price indices show flat end to 2012

Dec12Dec 10 Dec 11Dec09Dec08Dec07

-10

-5

-15

-20

0

5

10

15 Annual change in house prices, %

Range of house price indices

Premier Wen Jiabao setsChinese economic policy

THE OLYMPICS failed to increasetourism into Britain, officialfigures revealed yesterday, as thesurge in visitors coming to see theGames was outweighed by otherpotential travellers staying away.

But those who came to see thesporting spectacle spent more thantwice as much as the averagetourist, and the country saw arebound in visitor numbers inNovember, balancing out theoverall financial impact on Britain.

UK tourism bounces back after

hit to numbers from OlympicsBY TIM WALLACE An estimated 685,000 peoplecame to watch the Olympics, theOffice for National Statistics said,equivalent to eight per cent of thetypical total in the third quarter.

Overall tourist numbers in theperiod fell three per cent.

But Games visitors spent anaverage of 1,510 compared withan average of 720, increasing totaltourist spending by eight per centto 6.4bn.

In November tourist numbersbounced back, rising nine per centon the year.

EXCLUSIVEBY BEN SOUTHWOOD


THE OLYMPICS HIT TOURIST VISITS TO UK

19.3mTRIPS ABROAD

0.3%

8%

8.9mVISITS INTO

THE UK3%

Olympics visitors spent

Double the 720most visitors spend

Earnings from tourists

1,510 EACH

THE DIFFICULTY of obtainingcredit is driving firms to leaseequipment they need, according tofigures seen byCity A.M.

The use of asset finance toprocure IT hardware and softwaresoared 26 per cent during the yearto September 2012, data fromSyscap revealed, hitting 1.34bn,up from 1.07bn in the sameperiod a year earlier. This is overand above the three per cent risein overall asset financing, thefigures from the IT specialistlender show.

In the same period Bank of

England figures showed lending toprivate non-financial corporations

Tough lending conditions push

firms into leasing IT equipment2.8 per cent down highlightingthe difficult funding climate forUK businesses.

Businesses have under-investedin IT equipment because ofuncertainty in the economy and

because bank funding for ITinvestment has been so hard tosecure, said Syscap chief executivePhilip White. However he warnedthat even the meteoric rise inleasing could be erased by furtherfalls in traditional lendingsources given the existing sizedifferences.

This comes as the UK economyenters the sixth month of the Bankof England and HM TreasurysFunding for Lending Scheme,

designed to boost the amount ofcredit offered by banks.

OVER 65s were last year facedwith energy bi lls more thandouble those they paid in 2005,according to data out thismorning.

The average weekly fuel bill forfamilies of people aged 65 andolder was 26.08 in 2012, Sagasaid, up from 12.87 in 2005 anincrease of 102.6 per cent.

This brought the bills up to 6.6per cent of over 65s weeklydisposable income, the figuresrevealed, from just 4.2 per centseven years before. For under 50sthe average was 3.7 per cent ofdisposable income in 2012, also

well up on 2005s 2.4 per cent,but due to their higher average

Pensioners fuel bills more thandouble as energy price climbs

BY BEN SOUTHWOOD disposable incomes 615.83 in2012 energy costs are a moremanageable burden.

Energy prices are continuingto increase and we are still tofeel the full effects of the latestprice rises so energy costs are

likely to put even more of afinancial strain on households in2013, said Saga director-generalRos Altmann.

While incomes have gone upin the last seven years, they havenot kept pace with energy andfuel costs, she added.

These accelerating energycosts, combined with relativelyslow income growth, are forcing29 per cent of pensioners to raidsavings to make ends meet,

Altmann claimed.SOURCE:LSL/ACADAMETRICS

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16FRIDAY 11 JANUARY 2013 cityam.com

LONDON REPORT

RathbonesThe investment management

firm has appointed MikeTownsend as investment director.He joins from Coutts, where hewas a senior private banker.Townsend has 34 yearsexperience in wealthmanagement, and is a memberof the Chartered Institute forSecurities and Investment.

City FinancialThe fund management firm has appointed Mark Harris asmanager of its multi-asset funds. He was part of the EdenAsset Management team that joined City Financial inOctober 2012. Harris has also held senior roles at New Starand Henderson Global Investors, where he was head ofmulti-manager.

UK Green Investment BankThe government-funded investment bank has appointed

Robert Mansley as managing director, capital markets. Hewas previously a managing director at Morgan Stanley,where he was head of European renewables in its globalpower and utilities group. Mansley has also held roles atCredit Suisse and HSBC Investment Bank.

VTB CapitalMarco Huber has been appointed head of debt capitalmarkets for central and eastern Europe, Middle East andAfrica at the investment bank. He was previously directorfor eastern Europe, Middle East and Africa debt capitalmarkets at Credit Suisse. Huber has over 10 yearsexperience in the region.

KNG SecuritiesThe specialist investment product provider has appointedThomas Saler and Gabrielle Balducci to its fixed income

team. Saler joins from UBS, where he was a seniorsalesperson. He has also served as head of fixed incomewealth management products at UBS. Balducci previouslyheld positions on the fixed income teams at Merrill Lynchand JP Morgan, with a particular focus on southern Europe.

Jones Lang LaSalleLuke Hargreaves has been appointed regional director inthe real estate services firms central London retail team.He joins from Cushman & Wakefield, where he spent sevenyears advising private landlords and luxury retailers oncentral London real estate.

Knights SolicitorsThe law firm has made two appointments to its real estateteam. Amanda Hanmore joins as a commercial propertypartner from SGH Martineau, where she was a partner.Christopher Howdle joins as a property planner from LSGSolicitors, where he was also a partner.

WHOS SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.comSPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

Bullish Chinesedata sends USshares upward

US stocks rose yesterday andthe S&P 500 ended at a freshfive-year high as stronger-than- expected exports from

China spurred optimism aboutglobal growth prospects.

Buying accelerated late in the dayafter the S&P 500 broke throughtechnical resistance at 1,466.47,which was the markets closing level

last Friday and the highest levelsince December 2007.

Historically, January is a positivemonth for the market and youreseeing that play out, said MichaelSheldon, market strategist at RDMFinancial in Westport, Connecticut.

Financial and energy stocks werethe days top gainers. The financialsector index rose 1.4 per cent and theenergy sector was up one per cent.Analysts cited economic data out of

China as the days catalyst, whichshowed the countrys export growthrebounded sharply to a seven-monthhigh in December, a strong finish tothe year after seven straight quartersof slowdown.

It is being interpreted positivelythat theyve stopped the downturn(in growth), said Kurt Brunner, port-folio manager at Swarthmore Groupin Philadelphia.

If they continue to produce goodgrowth, thats going to be supportiveof our global manufacturers.Wall Streets fear gauge, the CBOE

Volatility Index, suggested marketswere relatively calm. The VIX wasdown 2.3 per cent at 13.49.At last nights close, the S&P sits

about six per cent below its all-timeclosing high of 1,565.15, hit inOctober 2007.The Dow Jones industrial average

gained 80.71 points, or 0.6 per cent,to 13,471.22. The Standard & Poors500 Index rose 11.10 points, or 0.76per cent, to 1,472.12. The NasdaqComposite Index added 15.95 points,or 0.51 per cent, to 3,121.76.Yesterdays session had earlier

included a dip that traders said wastriggered by a trade in the optionsmarket that prompted a large

amount of S&P futures to hit themarket at the same time. That sentthe S&P 500 index down rapidly butthose losses were reversed throughthe afternoon.

Financials benefited from eventsthis week that added clarity to mort-gage rules and banks potential expo-sure to the housing market.The US governments consumer

finance watchdog announced mort-gage rules yesterday that will forcebanks to use new criteria to deter-mine whether a borrower can repaya home loan.

Earlier this week, several big mort-gage lenders reached a deal withregulators to end a review of foreclo-sures mandated by thegovernment.

Bank of America gained 3.1 percent to $11.78, while Morgan Stanleywas up 3.7 per cent at $20.34, one

day after sources said the bank plansto cut jobs.

BRITAINS top share index closedabove the 6,100 resistance level forthe first time since 22 May 2008,yesterday, recovering from a late

wobble after a choppy trading session.The FTSE 100 index was up 2.86 points,

or 0.1 per cent, at 6,101,51, having seensome late profit-taking erased in the clos-ing auction, but the gains seemed fragileto traders.

The index is looking toppy at themoment, providing an opportunity fortraders to book profits, said IshaqSidiqqi, market strategist at ETX Capital.

It is likely we will see a retreat inFridays session, particularly with (UK)manufacturing and industrial productionnumbers out which may be a lot uglierthan expected after the recent slide inPMI services data.

Banking was the top performing bluechip sector as it drew continued strengthfrom the recent decision by regulators towater down liquidity requirements.

HSBC added 0.5 per cent, alone provid-ing nearly all of the blue chips pointsgain, after saying its $9.4bn deal to sell itsstake in Chinese insurer Ping An remains

on track, scotching recent media reportsthat the sale had run into trouble.Emerging markets-focused peer

Standard Chartered also saw good gains,ahead 0.8 per cent, with traders citing theimpact of an upgrade in rating by SocieteGenerale to buy.

Chip designer ARM Holdingswas thetop blue chip riser, up 4.4 per cent, liftedby rumours of a new, cheaper AppleiPhone, which uses the firms products.A reversal by miners was a big drag on

blue chip sentiment, with the sector run-ning into profit-taking late on after gainsearlier following trade data from Chinawhich showed exports from the worldstop metals consumer recovered inDecember.

Commentators pointed out that weakmoney supply data illustrated some slow-ing of the pace of growth in China, with aglut of further data due from the countryover the next week.

The trade data points to continued eco-nomic growth, underpinning our positive

view on the likes of the mining sector, butthe slowing in growth of money supplymay erode expectations for further accel-eration of the Chinese economy in thesecond half of 2013, Shore Capital mar-ket strategist Gerard Lane said.

Blue chip retailers were again the bigfocus in London following tradingupdates from both Tesco and Marks &Spencer with the picture on the UK highstreet mixed.

Tesco rose 1.8 per cent after the worldsthird largest retailer posted its highestsales growth in three years, offering signsthat a turnaround strategy is beginningto show results.

Peer Marks & Spencer, however, was ablue chip faller, down 0.6 per cent afterreporting a steep drop in its non-foodsales in the Christmas quarter, leadingEspirito Santo Investment Bank to cut itsrating to sell from neutral.

M&S has disappointed investors manytimes and though the reasons have varied rain, Olympic distraction, buying mis-

takes, competitor promotions et cetera the conclusion seems increasingly clearthat customers are just not happy with

M&Ss product and value, Espirito Santosaid in a note.Volume in M&S shares was by far the

biggest on the FTSE 100 index, at over fourtimes its 90-day daily average, with totalblue chip volume at around 108 per centof its daily average.

Global distribution and outsourcingfirm Bunzlwas also among the top risers,ending up 3.35 per cent. The firm hasreceived a number of positive broker com-ments including an upgrade by Numis,noted CMC Markets Michael Hewson.

Profit-taking cannot halt FTSE as ithits highest close since May 2008

BESTof the BROKERSG4S PLC

4 Jan 7 Jan 8 Jan 9 Jan 10 Jan

p267266

265

264

263

261

262

261.5010 Jan

G4SRBC has lifted the security company from Outperform to Top Pickwith a price target of 320p, believing it will catch up with its peers afterhaving underperformed the services sector by 27 per cent last year, aswell as the FTSE 100 by 11 per cent. In 2013, G4S is likely to see solidorganic growth, and according to RBC the resolution of the botchedOlympics contract should soon be signed off.

FTSE


6,120

6,100

6,080

6,060

6,020

6,040

6,101.5110 Jan

DASHBOARDCITYCITY MOVES

To appear in CITYMOVES please email your career updates and pictures to [email protected]

NEW YORKREPORT

YOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTS

in association with

AVEVA Group PLC


p2,160

2,150

2,140

2,130

2,120

2,135.0010 Jan

AVEVAMerchant Securities downgraded the engineering software company toHold from Buy yesterday and lowered its target price by 220p to

1,980p following disappointing interims, particularly in China andLatin America. The downgrade comes ahead of Avevas earnings reportfor the third quarter later this month, and according to the Merchant itcould well contain further disappointments.

Chemring Group PLC


p280

275

270

265

260

255

275.0010 Jan

CHEMRINGUBS has upgraded the aerospace and defence company to Buy fromNeutral and lifted its target price by 60p to 360p, expecting the newlyappointed chief executives restructuring plan to deliver strong growth.According to UBS, the potential for a successful restructure is not priced

in at the moment, with the consensus estimates for the next financialyear being too pessimistic.

7/30/2019 Cityam 2013-01-11

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TWO weeks into my New Yearsresolution and its alreadytime to admit that its notgoing well. At least I can takesome comfort in the

knowledge that the coalition hasntlived up to its promises either,missing 70 election pledgesaccording to its mid-term audit.When I fail to hit my weekly targetfor gym visits, only my waistlinesuffers. When David Cameron andNick Clegg fail to deliver, the countryfinds itself brought to the lip of atriple-dip recession, with familiarretail names apparently falling bythe day.

It is a curious thing that, whileneither individuals nor politicians

are good at keeping their promises,

HOW often do we hearpoliticians claiming that halfour exports go to the EU? Imnot sure this statistic was everproperly true. The data has

been distorted in two ways. First, thereis what economists call theRotterdam effect: many Britishexports destined for non-EU marketsare routed through Antwerp andRotterdam, thus showing up in theraw numbers as exports to the EU.Second, UK exports to the Republic of

Ireland include goods from overseasthat are shipped through Belfast.

Be that as it may, the EU nowaccounts for a minority of our tradeincluding invisibles. The Treasury PinkBook, the OECD, the EuropeanCommission: all now put the figure atbelow 50 per cent. The latest figuresfrom the Office of National Statisticsshow the Eurozone accounts for just47.1 per cent of our exports of goods.

Never mind a percentage point hereor there. The trend is unarguable. Everycontinent is growing except Europe.Our exports of goods to the Eurozonefell by 3.7 per cent in the last three

cityam.com/forum

The trend is not

arguable. Everycontinent is growingexcept Europe.

THEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected]? Disagree? Got a sharp comment?

The Forum wants you to join the debate. Top responses will be reprinted in The Forum.

18FRIDAY 11 JANUARY 2013

DAN HANNAN

Britain is bound to a Single Marketat the expense of freedom to trade

months for which we have data, com-pared to the same period in the previ-ous year, while our exports to the restof the world rose by 6.8 per cent.

Its not just that developing countriesgrow faster than industrialised ones.The EU has also been comprehensivelyoutperformed by the US and by whatwe used to call the Old Dominions.

In June 2012, the Commonwealthseconomy overtook the Eurozones.According to the InternationalMonetary Fund, the countries withinthe single currency will grow at anaverage of 2.7 per cent over the nextfive years which strikes me as opti-mistic while the Commonwealth willsurge ahead at 7.3 per cent.These figures destroy the premise on

which we joined the EU. Our trade has

been redirected, by government inter-vention, away from the markets towhich we are connected by languageand law, habit and sentiment; marketswhich, unlike those in the EU, aregrowing.

It never made sense to join a customsunion with similar industrialisedeconomies at the expense of the rawproducers of the Commonwealth. Thewhole point of a market, after all, is toswap on the back of differences. Butthe latest figures are spelling out quite

how wrongheaded our choice was.Im not denying that Europe matters:

it still makes up a hefty share of ourexports. But the EU is becoming oneamong many of our markets, alongsidethe countries that make up the NorthAmerican Free Trade Agreement,Mercosur and so on. No one arguesthat we need to merge our politicalinstitutions with theirs to be able tosell to them.

Consider Switzerland. The Swissdeclined to join the EU, instead negoti-ating a series of sectoral trade accordscovering everything from fish farmingto lorry noise. As a result, they are fully

covered by the four freedoms of the sin-gle market free movement of goods,services, people and capital but areoutside the Common AgriculturalPolicy and the Common FisheriesPolicy, and spared the budget contribu-tions which EU members are requiredto make to Brussels.

Has their trade to the EU suffered?

Hardly. In 2011, their exports to the EUwere, in per capita terms, 450 per centof Britains. Its true that Swissexporters must meet EU standardswhen exporting to the EU, just as theymust meet Japanese standards whenselling to Japan. But, critically, theydont allow the EU to dictate their trad-ing arrangements with third countries.Although Switzerland tends to repli-

cate most EU trade accords with thirdcountries, it can and does go furtherwhen it feels that the EU has beenunduly protectionist. It has signed afree trade agreement with Canada, forexample, and is in the middle of nego-tiating one with China. Britain, by con-trast, is dragged into trade disputes inorder to protect the interests of somecosseted continental producer.The Common External Tariff, which

cityam 2013-01-11

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