China Premier Wen Jiabao says world risks double dip recession

Wen Jiabao, the Chinese Premier, closed the National People’s Congress session
today with grim warnings that the global economy risked plunging into
double-dip recession and that China itself faced a “complicated” year.

Mr Wen’s note of alarm for the global economy was based on the still high
state of unemployment in many of the markets that buy Chinese exports.
Sovereign debt problems and exchange rate instability, he said, created the
risk that the world economy could tumble back into a second recessionary
downturn.

His speech included an aggressive defence of Beijing’s currency policy – the
emergency decision made at the height of the financial crisis to re-peg the
yuan and stop the steady appreciation against the dollar which began in
2005.

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Difficult year ahead for China admits Premier Wen Jiabao

China faces a difficult year as it works to maintain economic growth and spur
development, but it would not be bullied into boosting the value of its
currency, Premier Wen Jiabao said today.

In a wide-ranging press conference at the end of China’s annual session of
parliament, Mr Wen said Beijing was not ready to withdraw stimulus measures
put in place in late 2008 to pull the world’s third-largest economy out of
the crisis, and denied criticism that China is keeping its currency
undervalued in order to boost exports.

He also said that he would not allow the US to push China on the issues of
China and Tibet, and claimed he was snubbed at last year’s Copenhagen
climate change summit.

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Our exports may be cheap, but Europe is not buying

A few days ago, something odd happened. A bad set of trade figures came out
and they resulted in sterling coming under pressure. Why odd? Because it is
a long time since the markets took any notice of the monthly trade figures.

In the distant past, they were regarded as the single most important barometer
of the country’s health. We will never know for sure whether a bad set of
trade figures cost Harold Wilson the June 1970 election, but they certainly
did not help.

Later, capital flows took over from trade as the driver of currency movements.
Sterling was strong from 1996 to 2007 because of this, despite a
deteriorating trade picture that nobody took much notice of. Now, it seems,
trade is important again.

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Tough guy Walsh leaves BA flying high in the City

Work this out. The unions whacked British Airways with seven days of strikes
last week. The disruption to services, lost bookings and damage to the brand
could cost the airline hundreds of millions of pounds when it is already
heading for big losses.

So why did the shares end the week up — and not just up, but at 235½p, only 4p
off the highest they have been in 12 months?

The answer appears to be that BA’s big shareholders, the pension funds and
asset-management companies in the City, like the idea of Willie Walsh, BA’s
chief executive, taking on the cabin crew. They see beyond the present clash
and financial damage to an era when BA’s managers will have defeated the
unions and will enjoy lower costs and a much more flexible business.

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Peter Jones sets up Dragon’s Den for teenagers

Despite being dressed to the nines, in a suit, Adam, 19, is nervous and it shows. His hands flutter like frantic birds as he tries to explain his thoughts to a panel of businessmen.
It’s a scene that could be straight from the television programme Dragons’ Den, on which wannabe entrepreneurs present inventions to a panel of investors in the hope of attracting backing. Adam and his fellow students are pitching ideas for a mobile phone promotion to the multi-millionaire Peter Jones and executives from the telecom company Orange. Three other teams are competing against them.
Today, however, the students’ inexperience shows and some of the feedback is brutal. “You are hedging your bets,” Jones says bluntly to one team. “There are big lessons to be learnt.”
This is the first business pitch the students attending Jones’s fledgling academies for entrepreneurs have made. The tycoon, one of the dragons in the series, has set up two academies, one at Amersham & Wycombe college in Buckinghamshire, the other in Manchester.

In them 70 teenagers are being taught how to set up their own company — just as Jones did when, at 16, he launched a tennis academy before making his fortune, first in computers, later in mobile phones. He’s determined to give his protégés real-life experience, hence the day at Orange’s headquarters in west London.
Bosses are always moaning about school leavers. Last Wednesday Lucy Neville-Rolfe, a Tesco director, complained that they believed “the world owes them a living”. Britain’s biggest private employer was “seeing problems with literacy and numeracy”, she grumbled. “Many school-leavers have what you might call an attitude problem. They don’t seem to understand the importance of a tidy appearance and have problems time keeping. Often they haven’t learnt to work in a team.”
Jones has been almost as scathing in the past about the irrelevance to the world of work of the stuff children learn at school. But his approach is to roll up his sleeves and get stuck in.
“I’m not as dismissive,” he said. “I have had kids who turn up for a couple of days and then they play truant. But rather than have a dictatorial approach, I realise there is a huge skills gap. We have a lot of youngsters who have a false impression of what it takes to work in a business. This is about changing kids’ mindset.”
Stretching in his chair and giving a glimpse of his characteristic stripey socks, Jones goes on: “I’m taking 16-year-olds into my academies and, quite frankly, if you saw the performance of three or four of them on entry you’d think, hmm, distinctly average. When they leave, though, they would knock your socks off.” But, he admits, it’s “costing a fortune. I have put millions of my own money into this”.
Spending part of every day helping run the academies on top of running his business, Phones International, must be gruelling. However, this father of five, with three children under the age of eight, says that the revolution needs to start with children as young as possible. He’s writing business story books for “six-year-olds” — featuring characters such as “Justin, who runs the corner shop”, based on the Sainsbury boss Justin King.
“My daughter Natalia was six when she watched Dragons’ Den and told me that I was wrong to have pooh-poohed one idea,” he explains. “She said, ‘Dad, you should have invested in the Trunki. Everyone will want one.’ The Trunki was a smiley suitcase that kids could sit on in airports when they got tired. She was right that it was a popular item and I was right that it wouldn’t make money. But it showed that even at six, kids can learn about business.”
It has been a year since he launched his academies. Is he happy with progress? Not entirely it seems. Jones admits that he’s disappointed that only 130 teenagers applied for the 100 places on offer — and that 60 then dropped out. “That’s not good enough. I want 500 people queuing outside the door saying, ‘Let me in’.”
The “academies for tycoons” he enthused about in his book Tycoon have now been officially branded “national enterprise academies”; they are partly state-funded and the government has insisted that one in four of the students should be from poor families. It’s not exactly the vision he started out with.
On the whole, however, he is upbeat. Three more academies are due to open and the aim is to teach the one-year BTEC course in enterprise and entrepreneurship to 20,000 students in 10 academies. He’s got positive stories, too, about the disadvantaged children who have enrolled.
He said: “One boy whose dad is in prison has come up with an idea for an online company that will help prisoners with their CVs when they are released. We had issues with this boy at the beginning, about how focused he was.
“If you looked at him today you’d say that’s a young businessman. His main driver was, did he want to go in the same direction as his dad? My belief was if you knew how to steal a car radio or a stereo, those skills could be put to better use.”
What do the other guinea-pig students think? Ciaran Nilan, 18, now at the Amersham academy, says he was deterred at his state school from running a lunchtime business selling crisps to classmates. Nonetheless, he still wants to “run my own blue chip company when I’m older”.
“This course suits me,” he says. “It’s really hands-on. It’s made me more confident. If you’d met me a year ago I’d have shied away from pitching an idea to a room full of people, today I am just excited about it.”
The day after the students have competed at Orange’s headquarters, Jones phones me. One of the teams, he says, had “a lightbulb moment”, an idea that the company might implement. Of course, he adds quickly, he can’t tell me more, because it’s commercially sensitive, but “it has the potential to uplift sales by 20-30%”.
Maybe even Lucy Neville-Rolfe would be impressed.

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Royal Mail quality tests ‘rigged’

The postal watchdog is considering taking action against Royal Mail after finding quality tests had been rigged.Postcomm, acting on an insider tip-off, found that addresses involved in testing deliveries in some areas had been passed on to staff. Staff had also learned to recognise test mail and were able to prioritise it to ensure it arrived on time. Royal Mail said that there had been “no material impact whatsoever” on its quality of service figures. Tip-offPostcomm’s preliminary report said it was “minded” to find the company had breached its licence conditions for quality of service since 2006. Royal Mail was obliged to use market research firm Research International to monitor the standard of its service. Part of this clause also meant Royal Mail should make sure that the panellists used to send mail between each other to test delivery times remained anonymous. But a 10-month investigation, launched after the tip-off, found test delivery addresses were circulated to Royal Mail workers and senior managers. Postcomm was also told by its whistleblower that a microchip used to identify test mail could be felt through the covering of post, allowing staff to search for the relevant items. However, the rigging did not make a “material difference” to the firm’s published quality of service figures, the watchdog said. Postcomm is expected to make a final decision on whether to take action against Royal Mail in May. During Royal Mail’s own investigation into what had happened a number of staff were suspended, it said. It also said that the company had co-operated fully with the probe. In a statement, a Royal Mail spokesperson said: “Following investigations by Royal Mail and Postcomm into allegations concerning quality of service measurement, primarily in local mail operations in the Motherwell area - announced last year - both Royal Mail and Postcomm found that there has been no material impact whatsoever on Royal Mail’s Quality of Service figures.”

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BA union announces strike dates

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Willie Walsh, BA chief executive: “We’ll do whatever we can to keep BA flying”

The union representing British Airways cabin crew has said its members will go on strike for three days from 20 March and for four days from 27 March.The Unite union confirmed it would not strike over Easter, but warned there could be further action after 14 April if a resolution had not been agreed. BA cabin crew are striking over changes to pay and staffing levels imposed by the airline last November. Another row has broken out between BA and the union about a new offer. In addition to strike action, the union announced at a press conference that it would also ballot its members on a new offer from BA tabled earlier this week, but said it would not recommend it. But shortly afterwards, BA boss Willie Walsh told the BBC that the airline’s offer was no longer available. He said the offer was conditional on strike action being averted, and so had been withdrawn. Unite’s assistant general secretary Len McCluskey said this latest move by British Airways “beggared belief” and denied that the offer was ever conditional. Far apartAlthough both sides reasserted that they were available for further talks, the language on both sides has hardened since the strikes were announced.

Mr Walsh said the two parties were “not close at all” to coming to an agreement. The union’s proposals to save more than £60m at the loss-making airline included staff pay cuts that BA described as “morally wrong”. Mr Walsh said Unite had failed to provide any credible plan to date. The union contended that it had “made enormous strides and significant offers that meet the demands of BA”. Mr McCluskey said that the withdrawal of the offer showed that the airline’s management was “bent on confrontation and never had any intention of an agreement”. The Conservatives accused the government of “looking the other way” because the union was “channelling millions” into “Labour’s election coffers”. Prime Minister Gordon Brown urged the two sides to resume negotiations. “It’s in my view essential that the parties continue to talk now even at this 11th hour,” he said. “I hope they will do so but I remind them of the danger and risk to the British economy of disruptive strikes going ahead.” Flight cancellationsBA said all flights to and from London City Airport would be unaffected by strike action, as would all long-haul flights from Gatwick.

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Vauxhall gets UK loans guarantee

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Vauxhall gets UK loans guarantee

Business Secretary Lord Mandelson has announced a 300m-euro ($412m; £270m) loan guarantee to the European arm of General Motors (GM).The money will help secure operations at the carmaker’s two Vauxhall plants in the UK and those of Opel in Europe. Lord Mandelson told the BBC he thought the move would secure the future of Vauxhall plants in the UK. GM had planned to sell Opel after going into bankruptcy protection last year, but then changed its mind. After announcing last week an increase in its investment in Opel and Vauxhall to 1.9bn euros, GM said it needed 2bn euros of loans and guarantees from European governments. It has asked for about 60% of this total to come from Germany, where the majority of GM’s European workers are based. GM estimates that Opel - which includes the UK’s Vauxhall business - needs 3.3bn euros to be turned around. The US firm decided to keep Opel rather than sell it to Canadian car parts maker Magna, which Germany had supported. The UK government loan will come from the government’s Automotive Assistance Programme. Vauxhall said it represented “a strong vote of confidence in UK automotive industry”. Luton concernsGM is cutting 8,300 jobs across Europe and is closing plants as it seeks to revive the brand. No jobs will be lost at the Ellesmere Port factory in Cheshire, which employs 2,166 people and makes the Vauxhall Astra. But it confirmed earlier this year that more than 360 jobs were to go at Vauxhall’s Bedfordshire van plant, 150 from its administrative department and 369 posts would be lost at its Luton plant. There have been concerns about the future of the Luton plant - which makes the Vivaro commercial van - beyond the current contract, which ends in 2012-2013. “It’s too early to say what new product will replace the current production at Luton,” Lord Mandelson told the BBC. “But I have spoken to the head of GM Europe and he is working very hard… in finding a further product that can be produced at Luton.” RestructuringGM also plans to invest 11bn euros “in a new product offensive” over the next five years Opel plans to launch eight new models this year, and another four in 2011. A big slump in sales during the global downturn forced GM into bankruptcy protection last summer, and it emerged 62%-owned by the US government. It has since sold its Swedish brand Saab and closed a number of classic US car brands such as the Pontiac and Saturn. Last month, it decided to wind down operations of the off-road Hummer brand after failing to complete a planned takeover by a Chinese firm.

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Lloyds aids mortgage overpayments

Lloyds Banking Group is encouraging its borrowers to pay off their mortgages early.Customers on variable rate deals can, for one year, overpay their mortgages by up to 20% of their loans. Ultra-low interest rates mean UK households have saved about £20bn in interest repayments in the past year, the Bank of England has estimated. Figures suggest that about one in four borrowers have used the money to accelerate their repayments. Lloyds’ current annual limit, common among lenders, is a 10% overpayment per year. The Halifax, the main mortgage lending arm of the Lloyds group, was unable to say how many of its existing customers were using the current 10% facility, but a spokeswoman said it was responding to customer interest. “We have had people phoning us up asking how much they can pay off,” she said. Reduced interestThe advantage of overpaying is that it enables a borrower to pay off a loan more quickly, thus saving interest.

The one exception might be where the mortgage interest rate was so low that a borrower would be better off putting the extra payments into a savings account paying a higher rate of interest, after tax. An analysis by the Council of Mortgage Lenders (CML) last year suggested that a quarter of the £20bn annual interest saving, brought about by the Bank of England’s 0.5% bank rate, was showing up in higher mortgage capital repayments. This analysis was backed up by a survey for Lloyds, suggesting that a quarter of mortgage holders were taking advantage of their much lower interest rates to pay off capital at a faster rate. Stephen Noakes, commercial director of mortgages, Lloyds Banking Group said: “The average mortgage repayment has dropped by around £188 per month. “And those on tracker mortgages have done even better - on average they are just over £400 a month better off.” ‘Not widespread’It is normal for lenders to allow some overpayment on mortgage loans, each month or each year, before levying charges for the privilege. Some allow up to £500 in overpayments each month; others stipulate a ceiling of 5% of the outstanding loan; and some allow 25% extra to be paid over the course of the particular deal, for instance during the two or three years of a fixed-rate mortgage. Ray Boulger of mortgage brokers John Charcol, said: “Offset mortgages can allow you to overpay as much as you like, so long as you don’t pay off the whole mortgage.” Despite the obvious attraction of making overpayments, January’s edition of Trends in Lending, published by the Bank of England, found that they have not been common. “The major UK lenders reported that overpayment of mortgages has not been widespread, partly because reduced payments had been used to finance spending and in some cases used to repay more expensive unsecured debts or held as precautionary saving,” it said.

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‘Shame’ on supermarkets over abuse of supply staff

Evidence of widespread physical and verbal abuse of migrant workers in the meat and poultry industry that supplies Britain’s supermarkets has been uncovered by the Equality and Human Rights Commission.
A two-year investigation revealed frequent breaches of licensing and safety standards in meat processing factories, as well as at the employment agencies providing the labour.
Migrant workers make up most of the agency workforce, according to a report by the commission, because few British workers want to do the physically demanding, low-paid work. It also found that agency employees were routinely more poorly paid than directly employed staff.
Neil Kinghan, director-general of the commission, said: “The inquiry reveals widespread and significant ill-treatment in the industry. We have heard stories of workers subjected to bullying, violence and being humiliated and degraded by being denied toilet breaks. Some workers feel they have little choice but to put up with these conditions out of economic necessity. Others lack the language skills to understand and assert their rights.

“While most supermarkets are carrying out audits of their suppliers, our evidence shows that these audits are not safeguarding workers and they clearly need to take steps to improve them. The processing firms themselves and the agencies supplying their workers also need to pay more than lip- service to ensuring that workers are not subjected to unlawful and unethical treatment.”
Jack Dromey, deputy general secretary of Unite, the union that has been campaigning for change in an industry that employs 88,000 workers, said that supermarkets should hang their heads in shame. “[They] have driven down costs along their supply chain with tens of thousands of workers paying the price, suffering discrimination and unfair treatment,” he said. “A two-tier labour market has been created, exploiting migrant agency workers on poorer conditions of employment.
“The report exposes labour practices in the supply chain that are an affront to human decency — physical and verbal abuse, a lack of health and safety protection, shameful treatment of pregnant women and a culture of fear. The report says, and rightly so, that there are reputable employers but they are undercut by the rogues.”
Asda has signed new arrangements with its suppliers, but no other leading supermarket has followed suit.
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