PRESS DIGEST - Financial Times - March 17

Financial Times

EUROPE'S 200 BILLION EURO PROBLEM LOANS ON PROPERTY

A report by property consultancy CB Richard Ellis shows UK and German markets account for more than half of the total 970 billion euro real estate debt outstanding, with 24 per cent and 34 per cent respectively. CBRE said the UK and Germany are more exposed to problem loans with about 30 per cent in both countries, whereas only 12 per cent of similar debt is held in the rest of Europe. In the UK, about half of the debt is held by state-backed banks Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L). Despite European banks having more than 200 million euros in commercial real estate debt, CBRE director Robin Hubbard said "lenders are generally taking a methodical approach to recouping value."

'NAVEL-GAZING' JOBS SURGE AS INDUSTRY DECLINES

The government's first National Strategic Skills Audit has found occupations involved in the environment, beauty and psychology have seen the biggest growth. In contrast, the audit, which compared the second quarter of 2009 with the same period in 2001, found jobs in telesales, electrical assembly and metal making are in decline. John Philpott, chief economic adviser at the Chartered Institute of Personnel Development said the trends show people are indulging in "higher level personal services." But the report revealed the UK's growth in highly skilled jobs has been one of the lowest in the Organisation for Economic Co-operation and Development since 2001, with "leadership and management skills" and "technical skills" being "in need of particular improvement."

FEWER HOME-LOANS PAYMENT FAILURES

City watchdog the Financial Services Authority said the proportion of homeowners failing to make their mortgage payments or losing their homes to repossession fell in the fourth quarter of 2009. The FSA said the number of new arrears cases during the last three months of 2009 dropped to 41,400 - a fall of nine per cent from the third quarter.

CONFLICT OVER TACKLING DEFICIT HOTS UP

Both Labour and the Conservatives sought to highlight the differences in their respective approaches to addressing the public sector deficit on Tuesday. Shadow business secretary Ken Clarke endorsed the European Commission's view that Labour's plans were too timid but failed to commit to the EC's recommendation that the deficit should be cut to three percent of GDP by the end of the next parliament. Neither party has given detail on how the cuts will be achieved and it is suggested that there is very little difference between the two. Labour plans to reduce the structural deficit from nine per cent of GDP to 3.1 per cent in 2014-15, while the conservatives plan to reduce "the bulk" of the deficit.

BERLIN REJECTS CALLS FROM EUROPEAN PARTNERS TO INCREASE DEMAND

Wolfgang Schauble, Germany's finance minister, has rejected calls from France and other European countries to do more to boost domestic demand. Addressing the Bundestag, Schauble said Germany intended to pursue an "exit strategy" from its current economic stimulus programme by slowly cutting surplus liquidity and gradually reducing the budget deficit. Schauble also dismissed claims that Germany's export model put too much pressure on weaker economies, saying that Germany intended to "strengthen the competitiveness of Europe as a whole" and that economically successful countries could not be blamed for "the problems of others".

TUBE LINES LOSES 34 MILLION POUND LU CLAIM

Tube Lines, the contractor which maintains track and trains on some of London's busiest underground lines, has lost its second compensation claim against London Underground in two months. It had asked for 34 million pounds over LU's alleged repeated failure to send trains to the correct Northern line depot for night-time maintenance before the introduction of a new timetable.

DEBENHAMS GETS SALES BOOST FROM PRINCIPLES

Retailer Debenhams (DEB.L) has reported forecast-beating underlying sales in the first half of its financial year thanks to the revival of the Principles brand, which Debenhams chief executive Rob Templeman labelled the best brand launch in the firm's history. Debenhams bought Principles last year when the fashion chain's owner, Mosaic, entered administration. Sales at Debenhams stores open for at least a year increased 0.3 per cent in the first half to February 27. Analysts had predicted flat like-for-like sales. Shares in Debenhams fell 0.8 pence on Tuesday, closing at 70.2 pence.

SHELL FREEZES DIVIDEND DESPITE FORECAST OF SURGE IN PRODUCTION

Oil giant Royal Dutch Shell (RDSa.L) announced on Tuesday that it would leave its dividend unchanged this year, and possibly longer, despite forecasts of an 11 per cent rise in production during 2009-2012 as new projects begin in Canada and Qatar. Chief financial officer Simon Henry attributed the dividend freeze to weak refining margins as well as the risk of a fall in the oil price. Henry said the resumption of dividend growth would depend on market conditions, adding that Shell's debts were set to rise this year to finance 18.4 billion pounds in planned capital spending.

BA AGREES PENSION DEAL WITH UNIONS

British Airways BAY.L has reached agreement over changes to its pension scheme with three unions representing its staff. Under the terms of the deal, which comes amid a stand-off between BA and the Unite union, BA workers will contribute up to 37 million pounds more to the fund each year in order to maintain the same level of benefits. The changes will allow the carrier to address the 3.7 billion pound deficit, which has proved to be the biggest obstacle to a merger with Spanish airline Iberia.

KRAFT GIVES MPS PLEDGE ON FACTORY CLOSURES

In a bid to placate angry MPs and union members, Kraft (KFT.N) has pledged not to close any more Cadbury factories in the UK for at least two years. The US food group also said that there would be no further compulsory redundancies in manufacturing operations over that period. Kraft has been on the receiving end of heavy criticism after, within days of agreeing the 11.7 billion pound takeover of Cadbury; it reneged on promises to save a Bristol factory from closure.