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News Analysis: Britain’s Economic Malaise Brought Ratings Downgrade

February 25, 2013 by Leave a Comment

Prime Minister David Cameron and his increasingly jittery coalition government have made deficit and debt reduction a defining priority. In December, his powerful chancellor of the Exchequer, George Osborne, warned that an austerity program that had already resulted in the elimination of tens of thousands public-sector jobs would have to be extended for a year longer than planned, to 2018. But that same austerity program has contributed to long-term economic malaise.

On Friday Moody’s became the first ratings agency to strip Britain of its prized triple-A investment grade, reducing the country to Aa1. In its report, Moody’s said one of the core factors behind its decision was the very slow pace of the British recovery.

Mr. Osborne said afterward that Moody’s decision was “disappointing news,” but he promised not to let the downgrade deflect the government from its deficit-cutting strategy.

The challenge Mr. Cameron and Mr. Osborne face in turning around the economy and changing Britain’s status as a fiscal and trade laggard was underscored by two statistics released Friday in a widely anticipated European Commission economic forecast for the European Union.

The first is that despite presiding over one of the longest and highest-profile European austerity campaigns, the British government will end this year with a primary deficit — the purest measure of how much more a government spends than it receives in taxes — of 4.3 percent of gross domestic product. That is by far the highest such figure in Europe and second only to debt-ridden Japan among the world’s developed economies.

The second is that even though the pound has lost up to a third of its value against major currencies since the onset of the financial crisis, Britain this year will be the only developed economy in the world that will register a current account deficit that will be higher, at 3.1 percent of G.D.P., than it was in 2009.

The current account balance is the broadest measure of a country’s ability to sell its goods abroad. The larger the deficit, the more a country must borrow. All things being equal, a less costly currency should make it more attractive for foreigners to purchase a country’s goods or invest in its assets. Export powers like Germany and China run large current account surpluses.

Mr. Cameron has touted the benefits of having a flexible currency, free of the constraints of the euro — and Britain may even hold a referendum on its continued membership in the European Union. But even euro zone countries like Spain, Greece and Portugal, which three years ago had gaping account deficits that drove them to the brink of collapse, have made dramatic improvements in this regard. The European Commission even sees Spain moving to a current account surplus this year.

Britain’s persistent and worsening trade gap illustrates a troubling inability to increase exports even though the government has made this a policy priority. In his first address to Parliament, the incoming governor of the Bank of England, Mark J. Carney, pointed out that since 2000, Britain’s share of global exports had decreased about 50 percent — the steepest decline among the world’s 20 biggest economies.

One explanation for the disappointing British record in narrowing its deficit and becoming more competitive is a surprising decline in productivity since the start of the crisis.

Since their economies tanked, countries like Spain, Portugal and Ireland have become more competitive by laying off workers. That should set the stage for a more robust return to growth once the recession ends.

In Britain, however, the opposite has been true: Despite stagnant economic growth, the British unemployment rate has remained relatively low, at just under 8 percent. In other words, Britain needs more workers to produce the same product — which, in addition to keeping the economy from growing strongly, pushes up labor costs, making exports more expensive to foreign buyers.

Article source: http://www.nytimes.com/2013/02/25/business/global/britains-economic-malaise-brought-ratings-downgrade.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

In Battling Tax Dodgers, Britain Gives Shame a Try

February 23, 2013 by Leave a Comment

On its Web site, Her Majesty’s Revenue Customs on Thursday published the names and addresses of accused tax cheats, along with the amount the department says they owe. The individuals and small businesses owe a combined £1.8 million, or $2.7 million, in fines and unpaid taxes. The department said the list would be updated every three months.

The campaign is intended to encourage Britons to pay their taxes in full and put pressure on tax dodgers to come forward, the government said, but some lawmakers and pressure groups argued that it failed to address the real problem in Britain: tax avoidance strategies used by large corporations.

“The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes — the vast majority — that there are consequences for those who refuse to tell Her Majesty’s Revenue Customs about their full liability,” David Gauke, exchequer secretary to the Treasury, said in a statement.

Executives of Starbucks, Amazon and Google were questioned by lawmakers in November over concerns that the companies were not paying enough tax in Britain, given the sales they generate here. The companies responded that they had been unfairly singled out, but a month later Starbucks bowed to public pressure and said it would pay more corporate tax in Britain.

Going after tax cheats and making it harder for individuals and companies to find loopholes in the tax system is one of Prime Minister David Cameron’s top goals. At a time of austerity — and when average households are increasingly squeezed by rising electricity and food prices — the government is under pressure to be seen as doing more to limit tax evasion and avoidance. In January, Mr. Cameron said those avoiding taxes “need to wake up and smell the coffee.”

Britain missed out on £5 billion in revenue in the tax year that ended in 2011 because of tax-avoidance methods and about £4 billion from tax evasion, according to the tax authorities. The Public Accounts Committee, a group of lawmakers representing the largest political parties, called on the authorities Tuesday to consider naming and shaming those who promote tax avoidance strategies to make them less attractive to individuals and companies.

The nine names published on the Web site also include a wine merchant, a grocery store and a bus operator. UK Uncut, a campaign that combats tax avoidance, said the step showed the authorities “spent time and money going after small companies that avoid tax, but so far we’ve seen no serious action from the government to claw back the billions avoided by global giants.”

Chris Morgan, head of tax policy at KPMG in London, said the naming and shaming campaign was a “perfectly reasonable step” and would help to deter people from not declaring their full income. The tax bills of large corporations are a different matter because companies generally declare their income properly, he said, but their tax obligations can be interpreted in different ways.

Judith Freedman, a professor of taxation law at Oxford University, agreed.

“The people who have been named on the Web site deliberately evaded taxes” and were penalized for it, she said, adding that there was “no penalty you could levy against the big companies.”

“So far, no one has proven that they have done something wrong,” she said. “You might not like what they do, but it is no secret.”

Article source: http://www.nytimes.com/2013/02/23/business/global/britain-names-and-shames-accused-tax-scofflaws.html?partner=rss&emc=rss

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Bloomberg Builds an Empire in London

February 8, 2013 by Leave a Comment

Bloomberg Place, roughly the size of a Manhattan city block, is the future European home of Michael R. Bloomberg’s company and charity. But it is only one piece of the New York City mayor’s growing British empire.

He is underwriting a major expansion of one of England’s most prestigious galleries, in Kensington Gardens, designed by the noted architect Zaha Hadid.

He has the ear of London’s raffish mayor, Boris Johnson, who dispatches aides to City Hall in New York for tutelage in municipal management.

Mayor Bloomberg and his aides court the city’s elite, holding expensive dinners for tastemakers and Downing Street officials. The buzz is so great that a chief aide to Prime Minister David Cameron impishly floated the idea of a Bloomberg candidacy, for mayor of London.

As he imagines a more global life for himself after City Hall, unshackled from the 24/7 needs of running New York, Mr. Bloomberg — an Anglophile with a taste for English Regency style — is exporting his vast quantities of financial, social and political capital to this ancient city, where he has long yearned for influence.

Manhattan is home, and Bermuda a weekend escape, but no place has captured the mayor’s imagination like London, a kind of Bloomberg utopia where guns are banned, drivers pay a fee at peak hours and bicycling is a popular mode of commuting.

The affection, it turns out, is mutual: Mr. Bloomberg wrote a blurb for a book Mr. Johnson wrote. “Mike’s had a lot of cut-through in Britain,” Mayor Johnson said in an interview on a London commuter train last month. “We endlessly try to find ways of entertaining him, but generally speaking, it’s the other way around.”

Advisers to Mr. Cameron tried their own version of 311; Mr. Johnson started a volunteer program modeled after Mr. Bloomberg’s. Both have dined with the mayor on the Upper East Side.

“When I’m in New York, I’m treated like a king by Bloomberg, and it’s fantastic,” Mr. Johnson said.

Still, any foreign affair has its hiccups. Mr. Bloomberg’s attempts to install noisy air conditioners at his $20 million London home have earned the ire of neighbors, prompting local officials to call the plans “totally unacceptable.” And some of his more high-minded policies, like soda limits, have left the natives bemused.

When the mayors met for the first time, Mr. Johnson recalled, Mr. Bloomberg kept talking about trans fats.

“I didn’t know what trans fats were,” Mr. Johnson said, a glint in his eye. “I thought it had something to do with transsexuals, obese transsexuals, or something. Anyway, he made a great deal about that.”

A Gallery in the Park

Julia Peyton-Jones, the elegantly dressed director of the Serpentine Gallery in Kensington Gardens, was leading a tour last month of the newest exhibition hall when she picked up a monogrammed orange hard hat and placed it, gently, on her head.

“This is a present from Mike and Patti,” she said, smiling.

That would be Mr. Bloomberg, a lead benefactor of the expansion, and the deputy mayor who heads his charitable foundation, Patricia E. Harris. The mayor has already been offered naming rights to a room in the new gallery.

“There is no question,” Ms. Peyton-Jones said, “he’s among the most important supporters of contemporary culture in this country.”

Just as he assiduously conquered New York’s social scene, Mr. Bloomberg has, from his earliest days here, relied on parties and philanthropy to propel himself into London’s upper echelon.

He threw himself into the city’s cultural scene, joining the boards of the Serpentine and the Old Vic theater. A public relations firm was hired to make introductions in London society.

In a country where the government often financed the arts, Mr. Bloomberg adopted a more American style of corporate giving, stamping his name in museums where he paid for audio guides and sponsoring the Royal Court theater’s “Bloomberg Mondays,” when tickets were sold at a discount.

He bought a box at Ascot, the high-society horse racing grounds, and flew in celebrities by helicopter from London. (Guests received a photograph of themselves drinking Champagne with the top-hatted host.)

Article source: http://www.nytimes.com/2013/02/08/nyregion/bloomberg-builds-an-empire-in-london.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Can Britain Forge Looser Ties to Europe Without Losing Influence?

January 22, 2013 by Leave a Comment

Prime Minister David Cameron of Britain in Davos last year.Jean-Christophe Bott/European Pressphoto AgencyPrime Minister David Cameron of Britain in Davos last year.

LONDON – Last year, Prime Minister David Cameron of Britain used his appearance at the World Economic Forum to vent frustration with the European Union, listing some of the policies he would ditch if he could throw off Europe’s regulatory shackles.

“In the name of social protection, the E.U. has promoted unnecessary measures that impose burdens on businesses and governments, and can destroy jobs,” he argued, adding a list of directives that he would dearly like to scrap.

One year later, Mr. Cameron is following through on that pledge. He is promising to renegotiate Britain’s ties to the 27-nation bloc, forge a new and looser relationship, and probably put the outcome of those talks to a referendum.

World Economic Forum in Davos
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A speech on Europe, planned for last week, was postponed because of the crisis in Algeria. It has been rescheduled for Wednesday, ahead of a possible visit by Mr. Cameron to Davos, Switzerland.

It was unclear whether Mr. Cameron would attend Davos this year and speak on the same theme. But his tough line on Europe echoes growing British disenchantment with a bloc whose single currency union, which the British never joined, has been in crisis for three years.

Yet, supposing Mr. Cameron were to succeed in scaling down Britain’s involvement, some central questions will arise. Can Britain play a more limited role in Brussels and still retain significant influence there? And what might that mean for Britain’s full participation in one of the world’s biggest single markets?

In their 40-year history of engagement with a unifying Europe, Britons have never embraced the ideal of unity; instead they have seen their ties to the Continent in pragmatic terms. Increasingly, London’s conclusion seems to be that the costs in terms of regulatory burdens and financial contributions are not outweighed by clear benefits.

Mr. Cameron argues that to stabilize support for the European Union in Britain, the relationship must be loosened and focused more on the bloc’s single market of almost 500 million people.

Britain, which already is in the second tier of European Union membership, not only stayed out of the euro — and unlike most of the others on the sidelines has no intention of joining — but also does not participate in Europe’s Schengen passport-free travel zone. The British government also announced last year that it would opt out of a range of justice and security policy areas.

A group of Conservative lawmakers argued last week for five treaty changes, including those that would allow any country to block new European Union legislation on financial services, and would repatriate social and employment laws to national capitals. Britain’s euro-skeptics are also blunt in their criticism of the bloc’s agricultural, fisheries and regional aid programs

Many would ideally like to keep just one element of European Union membership, access to the single market, though achieving such status looks highly improbable.

Even those who sympathize with Mr. Cameron’s stance argue that a more detached position comes at the price of reduced influence, though they contend the cost of not changing would be higher. What is more, they argue, leverage in some of the policy areas is of limited value anyway.

“There is a trade-off, there is no doubt,” said Mats Persson, director of Open Europe, a research organization that favors a change in Britain’s relationship with the union. “If you reduce the level of E.U. influence in the British economy and society, you will lose some influence over some policy areas.”

But Mr. Persson argues that “if there is no change in Britain’s E.U. relationship, its membership is in question, which would really reduce its influence.”

Others worry that Britain is weakening its own position. Charles Grant, director of the Center for European Reform, a research institute in London, says that already “British influence in Brussels is at its lowest level in the 25 years I have been following the E.U.”

And critics argue that standing back from more policy arenas would increase the country’s sense of alienation from the bloc and fuel popular sentiment that things are stacked against Britain. A more detached relationship could also prove a disadvantage in the deal-making culture that prevails in Brussels.

Officially, decisions on legislation in Brussels are made by national governments under a complex series of rules before going to the European Parliament, whose approval is also required. In some cases, like tax policy, all 27 national governments need to agree, though in many others a weighted majority is required.

But relatively few decisions are actually put to a vote by governments. In practice, countries strike informal agreements and compromises, often trading support on one issue for a reciprocal agreement, sometimes in an unrelated area of policy.

In this twilight zone, horse-trading abounds. For example, Britain once supported Germany, which wanted to water down planned rules on takeovers, in exchange for help from Berlin to soften new European Union legislation on workers’ rights.

The fewer areas in which a country participates, the less influence it has to barter.

Something similar affects another area of unofficial influence: control of crucial positions in Brussels. When the last round of top European Union jobs was decided, Tony Blair, a former British prime minister, was a contender to become the president of the European Council, the body in which national governments meet. But Britain’s absence from the euro currency and the Schengen zone made this a nonstarter.

The prime minister at the time, Gordon Brown, wanted a top economic post for Britain in the European Commission, the executive of the bloc. Instead, he got a foreign policy position for Catherine Ashton, reflecting the fact that Britain remained an engaged player in that area.

The euro has dominated the agenda in Brussels for the last three years, but Britons have reduced prospects of making big careers in this policy area because London has no power to lobby for them.

“If you are in the Treasury in London, why the hell would you go to Brussels?” said one European Union official not authorized to speak publicly.

That trend now looks likely to extend to justice and security policy. Britain recently held the most senior position in the justice and home affairs directorate of the European Commission, partly because the British used to be enthusiastic about cooperation in that forum. A Briton, Rob Wainwright, is currently the director of Europol, the bloc’s law enforcement agency.

But given the government’s decision to distance itself, it will be harder for Britons to get such top jobs in the future.

Declining career prospects for British officials are reflected in staff recruitment figures, released in April 2011. They showed that the European Commission now employed more Poles than Britons, though Britain has a larger population and joined the European Union’s forerunner more than 30 years before Polish accession in 2004.

Britain has fewer than half France’s number of European Commission officials, and the situation seems destined to deteriorate because relatively few Britons are applying for entry-level jobs.

All this risks creating a downward spiral in British influence, which the country would need to counter by being more effective in the areas in which it remains.

“I think Britain still could have clout in more limited areas if it keeps friends and allies,” Mr. Grant said. “But the fact that we are not, for example, so engaged in justice and home affairs weakens our bargaining power across policy areas and weakens the career prospects of British officials.

Mr. Grant added, “There has been a steady diminution in the last few years, which you could plot on a graph: the more you distance yourself the less influence you have.”

Article source: http://dealbook.nytimes.com/2013/01/22/can-britain-forge-looser-ties-to-europe-without-losing-influence/?partner=rss&emc=rss

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William Rees-Mogg, Former Editor of The Times of London, Dies at 84

January 4, 2013 by Leave a Comment

The cause was esophageal cancer, his family said. In a statement, Prime Minister David Cameron called him “a Fleet Street legend.”

Mr. Rees-Mogg was 38 when he was named editor of The Times in 1967, making him the youngest ever to hold the job. He was perhaps the last in that post to reasonably aspire to the formidable influence in Britain’s ruling circles that his predecessors at The Times had wielded for almost 200 years.

When Mr. Rees-Mogg took over the editorship, the paper’s circulation and profitability had slipped sharply in the face of stiff competition from The Daily Telegraph, a broadsheet, and The Daily Mail, a tabloid, both competing for the same, mostly conservative readers as the Times.

Under the Canadian press baron Roy Thomson, who bought the paper in 1967, Mr. Rees-Mogg worked to restore The Times’s fortunes and editorial authority, and to shed its fusty image. Innovations included a women’s page, a business section and bylines for the paper’s hitherto anonymous reporters and commentators, as well as expanded sports and arts coverage.

But when the innovations failed to reverse the declines, he presided over a return to some of the old ways at the paper. This was the state of affairs when  Lord Thomson’s son Kenneth R. Thomson decided to sell The Times and its sister paper, The Sunday Times, to Rupert Murdoch in 1981. At the time, Mr. Murdoch was moving News International, his British subsidiary, into a dominant position in Britain’s newspaper market.

In character and temperament, Mr. Murdoch and Mr. Rees-Mogg were poles apart. Mr. Murdoch, an Australian regarded by many in Britain’s upper classes as a colonial upstart, harbored a deep hostility toward the country’s ruling establishment, of which Mr. Rees-Mogg was a proud member. Mr. Rees-Mogg resigned shortly after the takeover and was soon replaced by Harold Evans, whose own tenure was ended after barely a year amid policy differences with Mr. Murdoch.

As a writer of editorials and columns, Mr. Rees-Mogg was as elegant in his prose as he was courteous in manner and conservative in attire, holding fast to pinstripe suits in the office as his colleagues shifted to shirt sleeves, even jeans. One younger staff member said Mr. Rees-Mogg was the only man he could imagine wearing double-breasted pajamas. Mr. Rees-Mogg shunned typewriters and computers, writing his articles and books in longhand.

He found little that was offensive in being called a fogy, or being satirized, as he was in journals like Private Eye and in the play “Pravda,” by Howard Brenton and David Hare, where his alter ego was the unforgettably named Elliot Fruit-Norton.

He expressed his passion in his columns. He defended President Nixon during the Watergate scandal (he later called it “a hysterical overreaction”) and argued for years for a return to the gold standard. In 1976 he entered a dispute between the Labour prime minister Harold Wilson against his more right-wing foreign secretary, George Brown, a man known for excessive drinking.

“Lord George Brown is a better man drunk than the prime minister is sober,” Mr. Rees-Mogg wrote.

He incensed some Times readers in 1967 with a lead editorial in which he attacked the severity of jail sentences imposed on the Rolling Stones’s Mick Jagger (three months) and Keith Richards (one year) for drug offenses.

“If we are going to make any case a symbol of the conflict between the sound traditional values of Britain and the new hedonism, then we must be sure that the sound traditional values include those of tolerance and equity,” Mr. Rees-Mogg wrote, under the headline “Who Breaks a Butterfly on a Wheel?”

The jail terms were soon quashed on appeal.

William Rees-Mogg was born in southwest England on July 14, 1928, the son of a wealthy farmer, Edmund Fletcher Rees-Mogg, and an American mother, the former Beatrice Warren. He was educated at Balliol College, Oxford, and began his journalism career in 1952 with The Financial Times before moving to The Sunday Times in 1960.

In retirement, Mr. Rees-Mogg served on the governing board of the BBC and was appointed by Prime Minister Margaret Thatcher to lead the British Broadcasting Council, monitoring standards on the country’s radio and television channels.

Above all he remained a prolific writer, turning out volumes on economics and rare books — a passion that led to his purchase of one of London’s best-known antiquarian bookshops, Pickering and Chatto — and contributing commentaries to The Times and other newspapers until shortly before his death.

His survivors include his wife, the former Gillian Shakespeare Morris, and the couple’s two sons, Thomas and Jacob, and three daughters, Emma, Charlotte and Annunziata. Jacob was elected to Parliament as a Conservative in 2010.

Mr. Rees-Mogg, who was defeated badly in two attempts to win a seat in Parliament for the Conservatives in the 1950s,  made no secret of his ambition to emulate his Times predecessors in occupying a seat in the councils of power.

Answering critics who called him haughty, snobbish and a pillar of the Establishment, he declined to apologize, especially for the last one.

“It seems to me, provided one doesn’t allow oneself to become pompous and opinionated, a useful and helpful thing to be,” he once said in an interview. “I think it’s a good thing, the Establishment.”

Article source: http://www.nytimes.com/2013/01/05/world/europe/william-rees-mogg-former-editor-of-the-times-of-london-dies-at-84.html?partner=rss&emc=rss

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Hacking Report Criticizes Murdoch Newspaper and British Press Standards

November 29, 2012 by Leave a Comment

The report singled out Rupert Murdoch’s defunct tabloid The News of the World for sharp criticism.

“Too many stories in too many newspapers were the subject of complaints from too many people with too little in the way of titles taking responsibility, or considering the consequences for the individuals involved,” the head of the inquiry, Lord Justice Sir Brian Leveson, said in a 46-page summary of the findings in his long-awaited, 1,987-page report published in four volumes.

“The ball moves back into the politicians’ court,” Sir Brian said, referring to what form new and tighter regulations should take. “They must now decide who guards the guardians.”

The report was published after some 337 witnesses testified in person in 9 months of hearings that sought to unravel the close ties between politicians, the press and the police, reaching into what were depicted as an opaque web of links and cross-links within the British elite as well as a catalog of murky and sometimes unlawful practices within the newspaper industry.

“This inquiry has been the most concentrated look at the press this country has ever seen,” Sir Brian said after the report was made public.

But in a first reaction, Prime Minister David Cameron resisted the report’s recommendation that a new form of press regulation should be underpinned by laws, telling lawmakers that they “should be wary” of “crossing the Rubicon” by enacting legislation with the potential to limit free speech and free expression.

Mr. Cameron’s remarks drew immediate criticism from the leader of the Labour opposition, Ed Miliband, who said Sir Brian’s proposals should be accepted in their entirety.

Mr. Cameron ordered the Leveson Inquiry in July, 2011, as the phone hacking scandal at The News of the World blossomed into broad public revulsion with reports that the newspaper had ordered the interception of voice mail messages left on the cellphone of Milly Dowler, a British teenager who was abducted in 2002 and later found murdered. Sir Brian said there had been a “failure of management and compliance” at the 168-year-old News of the World, which Mr. Murdoch closed in July, 2011, accusing it of a “general lack of respect for individual privacy and dignity.”

“It was said that The News of the World had lost its way in relation to phone hacking,” the summary said. “Its casual attitude to privacy and the lip service it paid to consent demonstrated a far more general loss of direction.”

Speaking after the report was published, Sir Brian said that while the British press held a “privileged and powerful place in our society,” its “responsibilities have simply been ignored.”

“A free press in a democracy holds power to account. But, with a few honorable exceptions, the U.K. press has not performed that vital role in the case of its own power.”

“The press needs to establish a new regulatory body which is truly independent of industry leaders and of government and politicians,” he said. “Guaranteed independence, long-term stability and genuine benefits for the industry cannot be realized without legislation,” he said, adding: “This is not and cannot reasonably or fairly be characterized as statutory regulation of the press.”

In the body of the exhaustive report, reprising at length the testimony of many of the witnesses who spoke at the hearings, the document discusses press culture and ethics; explores the press’s attitude toward the subjects of its stories; and discusses the cozy relationship between the press and the police, and the press and politicians.

John F. Burns, Sandy Lark Turner and Sandy Macaskill contributed reporting.

Article source: http://www.nytimes.com/2012/11/30/world/europe/leveson-report-phone-hacking-scandal-britain.html?partner=rss&emc=rss

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BBC Turmoil Spreads as More Executives Step Aside

November 13, 2012 by Leave a Comment

The BBC’s Web site said its director of news, Helen Boaden, and her deputy, Stephen Mitchell, had “stepped aside,” the latest moves since a flagship current affairs program, “Newsnight,” wrongly implicated a former Conservative Party politician in accusations of sexual abuse at a children’s home in North Wales in the 1970s and 1980s.

The BBC management said that while neither Ms. Boaden nor Mr. Mitchell “had anything at all to do with the failed ‘Newsnight’ investigation” of the politician, Alistair McAlpine, it “believes there is a lack of clarity in the lines of command and control in BBC News” because of an inquiry into a separate “Newsnight” debacle — the cancellation of a program a year ago into allegations of sexual abuse by Jimmy Savile, a longtime BBC television host who died last year at age 84. The BBC said the two executives would step aside until the end of that investigation, which is being conducted by Nick Pollard, a former head of the rival Sky News.

The BBC said its head of news gathering, Fran Unsworth, and Ceri Thomas, the editor of the current affairs radio program “Today,” would fill in for the executives who stepped aside.

But furor continued to build on several fronts. On Monday, British lawmakers, politicians and newspapers focused on a decision by the BBC Trust to authorize a settlement payment to the former director general, George Entwistle, equivalent to one year’s salary of around $750,000. The BBC justified the payment — double its contractual obligation of six months’ pay — by saying Mr. Entwistle would continue to help the various inquiries into the scandals.

Prime Minister David Cameron’s office challenged the payment as “hard to justify,” but sent a signal opposing calls for the chairman of the supervisory BBC Trust, Chris Patten, to step down. “The important thing is for Chris Patten to lead the BBC out of its present difficulties,” Mr. Cameron’s office said. “That has to be the priority at the moment.”

Tim Davie, 45, an executive with a background in marketing who is director of the BBC’s radio operations, is to serve as the acting director general. In an interview posted by the BBC, Mr. Davie also said he would take a short period to deliberate.

“I’ve just got into the job,” he said. “I’m going to take a bit of time to look through the recommendations, and then we’ll take the disciplinary process through and be fair to those individuals.” He added: “The BBC has lost a director-general in this process. That in itself is very significant and he has taken responsibility.”

Accounts published in Britain’s newspapers, citing current and former BBC staff members, said the “Newsnight” team had worked with an independent group, the Bureau of Investigative Journalism at the City University in London, in preparing the Nov. 2 report that wrongly implicated Lord McAlpine.

The privately financed bureau was founded in 2009 to investigate controversial issues and, in its own words, to provide a “gold standard” for reporting. It has used experienced journalists and students at the university’s journalism school, often in conjunction with mainstream media organizations like the BBC that have paid the bureau for its work.

In a statement, the bureau’s board of trustees said that it was “appalled by what appears to be a breach” of standards and that “remedial action will be taken against those responsible.”

The bureau’s work for the report was led by a former BBC reporter, Angus Stickler, who was seconded to “Newsnight” and worked jointly under a BBC producer and the bureau’s own managing editor, Iain Overton, a former BBC producer. Mr. Overton resigned on Monday.

Several of those involved in the preparation of the “Newsnight” report have been quoted in British papers as saying that errors included not calling Lord McAlpine for a response and not showing a former child-home resident interviewed, Steve Messham, a photo of Lord McAlpine. Mr. Messham has apologized to Lord McAlpine, tracing the confusion to the police identification of a photograph of a man he identified as his abuser in the early 1990s.

The latest debacle has compounded the problems facing the network since accusations exploded last month against Mr. Savile, who is suspected of having sexually accosted or abused as many as 300 young people. Critics have accused the BBC of covering up the abuse by canceling a “Newsnight” report on the accusations against him last December. Mr. Entwistle has said that he was not informed beforehand of the nature of the “Newsnight” investigation or the reasons for its cancellation.

At that time, Mr. Entwistle was in charge of all the BBC’s television productions and was seeking to succeed Mark Thompson as director general.

Mr. Thompson stepped down in September after accepting an offer to become president and chief executive of The New York Times Company, a post he took up on Monday. He has said that he knew nothing beforehand about the “Newsnight” investigation of Mr. Savile or the decision to scrap it, but that he is willing to answer any questions from investigators.

In a message to the staff of The Times on Monday, Arthur Sulzberger Jr., the publisher and board chairman, welcomed Mr. Thompson without alluding to the crisis at the BBC. “Mark will lead us as we continue our digital transformation, bolster our international growth, drive our productivity and introduce new technologies that will help us become better storytellers and enrich the experience for our readers and viewers,” he wrote. “That is what he did as Director-General of the BBC. His experience will be of great value to our company as we continue our pursuit of creating the highest quality journalism and the business results to support it.”

Article source: http://www.nytimes.com/2012/11/13/world/europe/bbc-turmoil-spreads-as-more-executives-step-aside.html?partner=rss&emc=rss

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U.K. and Future in Mind, E.U. Plans for Less Unanimity

January 1, 2012 by Leave a Comment

But, as the Union expands, that is changing.

Acknowledging the growing risk of national vetoes in a bloc of 27 nations, legislators are coming up with plans that are intended to work with smaller groups of countries if — or rather when — all 27 fail to agree.

The move, which reflects the growing fragmentation of the European Union, is a significant shift from the principle that has dominated the European Union for decades: that every member state should move together toward ever closer union.

Tensions over legislation drafted in this new way helped prompt the spectacular dispute at the European summit meeting in December when Prime Minister David Cameron failed to achieve new safeguards from E.U. laws for Britain’s financial-services sector, which he believes is increasingly under threat. In retaliation, he blocked a proposed treaty change aimed to help strengthen the euro.

Under E.U. rules intended to reinforce cooperation among smaller bands of nations within the Union, groups of at least nine nations may go ahead with legislation if agreement has stalled. This change was agreed to more than a decade ago, but the process can begin only after all 27 countries have been through the time-consuming process of trying and failing to agree. So far, that has happened in only two cases, but others in which this principle may apply are working their way slowly through the system.

Two pieces of draft tax legislation opposed by Britain have been drawn up in a way that ensures that they could work without the British if necessary. Moreover, they seem designed to operate in a way that could prevent Britain from gaining a big competitive advantage from staying outside the plan and undercutting other nations that adopt it.

The most sensitive proposal involves a financial transaction tax, which has been proposed by the European Commission and which could annually raise about €57 billion, or about $74 billion, starting in 2014. Under the plan, the tax would be levied at a rate of one-tenth of 1 percent on all transactions between institutions. Derivatives contracts would be taxed at the rate of one-hundredth of 1 percent.

French and German policy makers see this “Robin Hood tax” as a way of discouraging speculative transactions and of recovering cash from the bankers who provoked the financial crisis.

With its finance center in the City of London, Britain would generate a huge chunk of the revenue. But it fears that unless a global system were set up, banks would simply relocate from London to New York, Singapore or other lower-tax domains. The British government points out that even a study by the European Commission, the executive arm of the European Union, suggests that the tax could reduce European gross domestic product by 1.76 percent.

Thus, Britain’s veto, blocking the proposal from being carried out among all 27 nations of the European Union, would not prevent 9 or more nations that wanted to go ahead from doing so under the reinforced cooperation rules.

In principle, this would allow Britain to continue as a partial tax haven, but in fact it would not be entirely immune from the new measure. Crucially, a clause in the proposed law would affect banks in the smaller band of nations even if they operated in Britain, so a German bank, for example, would pay the tax on some transactions in Germany under the current draft, even if it operated in the City of London.

Similarly, moves to harmonize the base on which corporate taxes are assessed in Europe could also work among a smaller number of nations even if Britain (which has so far opposed the plan) did not take part. Large corporations operating across borders would be able to opt for a unified tax system in the countries that sign up for the plan. That would simplify tax issues for companies operating in the participating nations and might even tempt some to relocate to them at the expense of Britain, which is likely to stay out.

“Obviously, these proposals are both on the table for 27 member states and we would like to see them agreed by the 27,” said Emer Traynor, spokeswoman on taxation for the European Commission. “However, if that is not possible, these proposals are also workable if done by a smaller group. It is still completely feasible for a smaller group of member states to go ahead with them and deliver big benefits.”

Article source: http://www.nytimes.com/2012/01/02/world/europe/uk-and-future-in-mind-eu-plans-for-less-unanimity.html?partner=rss&emc=rss

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Europe’s Leaders Get Testy as Crucial Summit Nears

October 26, 2011 by Leave a Comment

On Sunday, when the 27 leaders had their first round of deliberations, emotions ran high and some tough exchanges soon leaked out to the news media, designed as ever to make individual leaders look smarter, more intelligent or more courageous than the others.

For all the talk of European solidarity, these summit meetings tend to be covered — and briefed by officials — as boxing matches, with every national delegation trying to show its boss as the champion of national interests against the collective horde.

Prime Minister David Cameron of Britain tried that on Sunday, insisting that there be a full summit meeting of all 27 members of the European Union on Wednesday, as well as a meeting of the 17 nations in the euro zone. Facing an internal party revolt, he means to protect Britain’s interests, he said, in case the euro zone countries get ahead of themselves and do damage to the single market that is one of the European Union’s greatest strengths.

But President Nicolas Sarkozy of France turned on him, fed up with criticism of the euro crisis from Mr. Cameron and especially from George Osborne, the young British chancellor of the exchequer, or treasury minister.

“You’ve lost a good opportunity to shut up,” Mr. Sarkozy told Mr. Cameron, the same phrase his predecessor, Jacques Chirac, once used about his Polish counterpart. “We’re sick of you criticizing us and telling us what to do. You say you hate the euro, and now you want to interfere in our meetings.”

This exchange was leaked by British diplomats and officials, but French officials did not deny the essence of it. Mr. Sarkozy, they confirmed, is not a great fan of kibitzing from outside the euro zone (Britain is not a member). Mr. Sarkozy barked at a French journalist, too, saying essentially that comment is cheap and governing is hard.

Mr. Sarkozy and the German chancellor, Angela Merkel, are compelled to work together, but find each other difficult and even odd. She has been known to make fun of the way he gestures and walks, comparing him to the old French comic Louis de Funès, with his wavy hair and prominent nose. He has been known to call her “La Boche,” an offensive French version of “Kraut,” and mocks what he sees as her matronly caution.

But their relationship is said to have improved of late, and Sunday evening there were “informal” photos of the two of them as he opened her present, a Steiff teddy bear, for his newborn daughter, Giulia.

The “Franco-German couple” ganged up on the Italian prime minister, Silvio Berlusconi. They criticized him for not following through on his promises of economic and governmental restructuring, saying Italy’s failure to move quickly was putting not just Italy but also the euro at risk.

The whole point of beefing up a new bailout fund, the European Financial Stability Facility, was to be able to protect Italy from bond speculators, but Italy had to act too, they told him, officials said. Mr. Berlusconi pretended to fall asleep at one point, officials said, and afterward said he had never been held back a year at school.

Even in public, at a news conference, Mrs. Merkel lectured Italy about making “credible” reductions in its huge debt — 120 percent of its gross domestic product. And Mr. Sarkozy, when asked if he had confidence in Mr. Berlusconi, said only that he had confidence in the whole of Italian society — “political, financial, economic.”

Part of Mr. Sarkozy’s annoyance is not just economic, but stems also from a sense of betrayal. The new head of the European Central Bank is to be Mario Draghi, an Italian who replaces a Frenchman, Jean-Claude Trichet, in part because the obvious German candidate quit the bank in disgust over its supposedly overly liberal credit policies.

In return for supporting Mr. Draghi, Mr. Sarkozy got Mr. Berlusconi to agree to move another Italian, Lorenzo Bini Smaghi, from the bank’s executive board to make room for a French banker. Mr. Bini Smaghi said he would quit only if he replaced Mr. Draghi as head of Italy’s Central Bank. But in the end, Mr. Berlusconi felt compelled by domestic politics to give that job to another person, so Mr. Bini Smaghi remains where he is and Paris has no one on the board, a political humiliation for Mr. Sarkozy.

Article source: http://www.nytimes.com/2011/10/26/world/europe/europes-leaders-testy-as-summit-nears.html?partner=rss&emc=rss

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Meetings Indicate British Officials’ Links to Murdochs

July 27, 2011 by Leave a Comment

Pressure on Mr. Osborne mounted Tuesday as details of his extensive meetings with the Murdochs and leaders of the News Corporation’s British subsidiary, News International, were released.

A diary posted on the official Web site of the Exchequer showed that his encounters continued even after a new police inquiry into hacking had begun, and as the government neared a crucial decision on the Murdochs’ $12 billion bid, subsequently abandoned, to take complete control of British Sky Broadcasting, the country’s dominant satellite broadcaster.

The political significance of what appeared to be Mr. Osborne’s husbanding of the government’s ties with the Murdoch empire lay in large part in his role as the chief architect of Prime Minister David Cameron’s contentious program of harsh austerity measures. Those measures have made Mr. Osborne, 40, one of the most divisive figures in British politics. Any hint that he is politically vulnerable in the hacking scandal could affect the government’s declared resolve to hold unwaveringly to its economic policies, which combine steep spending cuts with tax increases.

The release on Tuesday of new data showing that the economy grew only 0.2 percent in the second quarter, well short of the economic acceleration the government had hoped to show, added to the pressure on Mr. Osborne.

The figures prompted new criticism from the Labour Party and economists opposed to the austerity program, with Labour’s chief economic spokesman, Ed Balls, calling Mr. Osborne “breathtakingly complacent,” and demanding immediate measures to stimulate the economy.

But Mr. Osborne stuck to his guns. “We are traveling a difficult road, but it is the only road that leads to a lasting private sector recovery, and to the jobs we all want to see,” he said.

Mr. Osborne has also drawn criticism from within the Conservative Party for his role in hiring Mr. Coulson. According to two party insiders, Mr. Osborne had pushed for Mr. Coulson, partly out of a belief that it would help cement Rupert Murdoch’s support in the national elections.

The posting of Mr. Osborne’s meetings with News Corporation executives followed Mr. Cameron’s disclosure that he had 26 meetings and social engagements with Rupert Murdoch, his son James and their lieutenants since taking office in May 2010. The Labour leader, Ed Miliband, has released his own list, showing 15 meetings or social contacts with News International executives over the same period.

According to the Exchequer’s listing, which did not include interviews with journalists, Mr. Osborne met 10 times with the two Murdochs and their former lieutenant, Rebekah Brooks. These were among 16 meetings or social occasions Mr. Osborne attended at which News International executives were present — representing a third of all meetings he had with senior figures from all of Britain’s media organizations. Mr. Coulson and Ms. Brooks, who resigned this month as chief executive of News International, are among a group of people who worked for News International and The News of the World who have been arrested in connection with the phone hacking case.

Ms. Brooks is among those who have said publicly that it was Mr. Osborne’s idea to appoint Mr. Coulson as the Conservative Party’s chief media adviser in 2007, a post that carried him into Downing Street after the election. Mr. Coulson resigned from his government post in January, citing “distractions” from the phone hacking scandal.

Scrutiny of Mr. Osborne’s encounters with the Murdochs and their top British executives seemed likely to focus on a meeting in April with James Murdoch and Ms. Brooks for what was described in the document as a “general discussion.” That meeting occurred as a reinvigorated police inquiry began to gain pace with the arrest of senior News of the World journalists. Another occasion on the list, with Rupert Murdoch in December, occurred two weeks before the government was to rule on his proposed takeover of the remaining shares of British Sky Broadcasting.

A spokesman for Mr. Osborne, referring to the April meeting, said Mr. Osborne had explained to James Murdoch and Ms. Brooks that he could not discuss the takeover bid, which was being handled, on Mr. Cameron’s orders, by another official.

The spokesman added that “the topic was not raised at any other discussion” with the Murdoch executives. But Tom Watson, a Labour member of Parliament, called the frequency of Mr. Osborne’s meetings “absolutely remarkable,” and he called on the chancellor to disclose what was discussed at those meetings.

Don Van Natta Jr. and Jo Becker contributed reporting.

Article source: http://www.nytimes.com/2011/07/27/world/europe/27hacking.html?partner=rss&emc=rss

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