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Rajoy presents Spain bailout as ‘victory’

By Victor Mallet in Madrid and Peter Spiegel in Brussels

Mariano Rajoy, Spain’s embattled prime minister, on Sunday attempted to portray his country’s decision to seek as much as €100bn in European Union rescue funds for troubled domestic banks as a victory, saying his government’s budget prudence prevented a full-scale bailout that would have forced him to surrender sovereignty to Brussels.

Spain has now became the fourth and largest eurozone economy to seek an international bailout. But Mr Rajoy, who had resisted any outside EU assistance since his centre-right government was voted into office in December, insisted the agreed loan from EU funds was solely to recapitalise banks.


Spanish PM claims bank bailout 'triumph' amid eurozone crisis

Mariano Rajoy puts gloss on €100bn loan but 'bailout lite' could prompt reaction from hard-hit Ireland, Portugal and Greece

By Giles Tremlett in Madrid and Jill Treanor

Spain's prime minister, Mariano Rajoy, on Sunday made a desperate attempt to portray a €100bn (£81bn) bailout of his country's banking system as a triumph at the start of a week which could determine the future of the single currency.

Speaking hours before flying to Poland to watch Spain's World Cup-winning soccer team play its first match of Euro 2012, Rajoy proclaimed that the "credibility of the euro won" following Saturday's bank bailout, funded by eurozone countries.

But with Greeks returning to the polls on Sunday, the crisis engulfing the eurozone is far from over amid speculation that the absence of tough conditions attached to the loans being readied for Spain could give ammunition to attempts by Greece, Ireland or Portugal to renegotiate the terms of their bailouts.


Markets expected to revive after Spain bailout but relief could be short lived, experts warn

By Rupert Steiner

The stock market is expected to bounce back in early trading after Spain managed to secure EU aid for its stricken banks. But experts fear the relief could be short lived once the true cost sinks in.

Vicky Pryce, an independent economic analyst and former government adviser, said: ‘There will be relief, at least the banking crisis has been averted – but concern over the implications for rest of Europe, and Spain’s ability to borrow.’

Eurozone finance ministers agreed to lend Spain as much as £80billion to recapitalise its banking sector – almost double what most were expecting.


Banks warn of costs from saver safeguards

Borrowing costs will rise if the Government pushes ahead with plans to give savers more protection against bank failures, the Chancellor has been told.

By Roland Gribben

Bankers have warned George Osborne they will be pressured by bondholders and other corporate borrowers to increase rates to compensate for losing ground in the compensation pecking order.

Mr Osborne believes the banking claims are exaggerated. He is expected to release details of the better deal for savers in a long awaited white paper on banking reforms ahead of his Mansion House speech on Thursday.

He has accepted the recommendation from the Independent Commission on Banking that individual savers should be placed ahead of bondholders and corporate creditors in the event of failure. At present they are lower down the list alongside bigger creditors and international traders.


Osborne told to stop using eurozone alibi

By George Parker, Political Editor

George Osborne has been warned by Tory MPs not to use the eurozone crisis as “an alibi” for Britain’s poor economic performance and to step up supply-side reforms to promote growth.

The chancellor claimed on Sunday that Britain’s recovery was being “killed off by the crisis on our doorstep”, a message he is expected to repeat on Thursday in his Mansion House speech.

But a number of Conservative MPs have questioned Mr Osborne’s critique, arguing that while huge uncertainty in the eurozone is weighing down on Britain, there is more that can be done at home.


Mortgage costs soar as British families pay for Euro turmoil

By Giles Sheldrick

The annual cost of mortgages has shot up by an average of almost £450 in just six months due to the devastating effects of the eurozone crisis, experts have revealed. Banks are heaping pressure on squeezed borrowers by hiking home loan deals, despite the Bank of England’s base rate remaining at a record low of 0.5 per cent for more than three years.

Lenders blame the deepening Europe-wide debt crisis which has seen Britain implicated in a series of costly bailouts for hard-up nations like Portugal, Greece and Ireland.

The steep rise in home loan costs has caused a storm of protest from families forced to choose from more expensive new fixed and standard variable deals in recent months.


Cable to water down curbs on executive pay

By Tom Bawden

Vince Cable, the Business Secretary, plans to water down his hardest hitting measure to curb excessive executive pay.

Chief executives are likely to be spared an annual binding vote on their pay and bonuses, which had been proposed by Mr Cable in a paper on tackling boardroom greed. Instead, he is now planning on a vote every three years, because of fears that an annual vote would add huge amounts of bureaucracy.

Chuka Umunna, the shadow Business Secretary, said: "It is greatly disappointing that the Government is backing down on its proposal for annual binding votes on executive pay."

Mr Cable's move comes after a "shareholder spring" in which investors revolted against the pay of a slew of chief executives, at companies such as Barclays, Aviva and William Hill.

WPP's chief executive, Martin Sorrell, could be the next in line when his £12.9m pay deal is put to the vote on Wednesday.


Grimmer up north: Ministers urged to tackle growing North-South divide on youth unemployment

Low business confidence in the North – hit harder by public sector job losses– has led to 'hiring freeze'

Ministers today face calls to tackle a growing North-South divide on youth unemployment.

One in five under-25s in the North are classed as “NEETs” – “not in education, employment or training”.

That compares with 14% in the South West and London and just 12% in the South East, according to a report from the Institute for Public Policy Research.

Low business confidence in the North – which has been hit harder by public sector job losses– has led to a hiring freeze, claims the IPPR think-tank.

That means the youth jobs gap will grow when students leave schools and universities this summer – unless the Government acts.


Frustrated callers hang up on tax ‘helplines’

By Anushka Asthana and Leah Milner

Four million callers to Revenue & Customs hung up in frustration last year after waiting times trebled to almost six minutes on average, The Times can reveal.

Labour has accused HMRC of “chaos and incompetence”, questioning how much money the Government was losing as some callers tried in vain to pay tax back.

The figures, obtained under the Freedom of Information Act, show that 28 per cent of callers gave up midway through their call to the pay-as-you-earn helpline. That has risen from 10 per cent in 2009, when the average waiting time was one minute 53 seconds. By last year it was five minutes 45 seconds.

The revelation will inflict further damage to HMRC, which admitted this year that it had sent out incorrect penalty threats to 12,000 people.

It also raises questions about how the taxman will cope with queries from the millions of people being told that they have been charged the wrong amount of tax as part of the annual PAYE “reconciliation” process.


Vodafone hits back at claims that it paid no corporation tax

By Peter Cripps

Mobile phone giant Vodafone faces a fresh tax row after a Sunday newspaper claimed yesterday the firm had paid no UK corporation tax last year.

The firm earns several hundred million pounds from its 19 million UK customers, but shared none of it with HM Revenue & Customs (HMRC), according to the report.

Vodafone said its corporation tax liabilities in the UK were offset by investment in improving its network.

The group has previously been criticised for its dealings with the taxman after its £1.2 billion settlement of a decade-long dispute with HMRC in 2010.

Underlying profits at Vodafone’s British operation rose from £1.2bn to £1.3bn in the year to 31 March, while adjusted profits rose 16 per cent to £402 million. Yet its corporation tax bill fell from £140m to zero.

Vodafone said its UK capital investment increased to £575m from £516m in the year. It said its UK business accounts for less than 4 per cent of group profits.


Apprenticeship review is launched by government

The government has launched a review of apprenticeships in England.

It says it is conducting the review to ensure the schemes deliver the training and skills employers need.

It will be led by entrepreneur Doug Richard and will also aim to spell out what makes a high-quality apprenticeship.

Business Secretary Vince Cable said "vocational youngsters had been let down by weak courses", and the schemes needed to adapt.

"To build a prosperous economy we need a skilled workforce," he said.