Newspaper round-up

LONDON (Reuters) - Here are the business headlines from Thursday's newspapers.

Financial Times

BROWN CONFIRMS 20 PERCENT RATE TALK

Tory leader David Cameron on Wednesday challenged Gordon Brown that the Treasury had considered raising value-added tax to 20 percent or even higher in 2011, thus concealing a "tax bombshell". Mr Brown responded by saying that "we considered all options but rejected options", and that "we chose options that were fairest to ordinary and hard-working families". Chancellor Alistair Darling and the prime minister argued that they rejected the rise in VAT because it was fairer to raise other taxes, including creating a 45 pence income tax rate for earnings above 150,000 pounds.

CONSUMER SPENDING FALLS IN THIRD QUARTER

Data from the Office for National Statistics has revealed a drop in consumer spending for the second quarter in a row. The 0.2 percent fall in spending between July and September follows the 0.1 percent decrease in the quarter to June, while gross domestic product fell by 0.5 percent in the third quarter. Most of the contraction came from a 2.4 percent drop in business investment, especially in housebuilding, and Hetal Mehta at the Ernst & Young Item Club said it was now clear that only government spending was contributing to growth.

N ROCK RAISES MORTGAGE RATES

Northern Rock NRK.L on Wednesday increased the rates of its most competitive home loans just 10 days after reducing them, while HSBC (HSBA.L) withdrew one of its popular mortgage rates, a lifetime 0.99 percent above the base rate tracker, due to business volumes three to four times above normal levels. The moves will be a blow for the government, which now owns Northern Rock, as it has been pushing high-street lenders to pass on recent base rate cuts to customers. Northern Rock said "we will adjust our competitive standing at different times to attract or moderate business flows".

BANKS PULL PLUG ON WOOLWORTHS

Thirty thousand jobs were placed at risk on Wednesday night after Woolworths succumbed to the drop in consumer spending and tightening of credit availability and fell into administration. Directors appointed Deloitte as administrator after they failed to get enough backing from banks to weather a cash crisis, and comes in spite of late moves by the government and BBC Worldwide to salvage the situation. The department of business brokered a deal with Woolworths and its bankers which will ensure that staff will be paid until the end of the year, even though an administration has occurred.

P&G TAKES STAKE IN LOSSMAKING OCADO IN BOOST TO ONLINE RETAILER

Procter & Gamble (PG.N) has paid five million pounds for a one percent stake in online retailer Ocado. The move is the first foray into a retail business for the maker of Fairy Liquid and Oil of Olay, and is intended to help it better understand how consumers use the internet. "We think it is a huge research opportunity. They have a unique business and we can learn from it", P&G said.

MFI GOES INTO ADMINISTRATION

MCR has been appointed administrator of MFI after the kitchen retailer went into administration on Wednesday night. MFI was bought from Merchant Equity Partners for a nominal sum in September by a management team led by chief executive Gary Favell, but saw a sharp deterioration in sales in October. Mr Favell said at the time of the buy-out that it would "safeguard employees within the store network", but if MCR fails to find a buyer then these jobs will be lost.

'ROBUST' UNITED UTILITIES ON COURSE FOR RAISED DIVIDENDS

Shares in United Utilities (UU.L) closed down 26 pence at 618 pence on Wednesday, after it recorded a 4.9 percent rise in revenues to 1.2 billion pounds in the six months to September 30. An increase in bills helped grow operating profit four percent to 362 million pounds, while pre-tax profit rose from 252 million pounds to 306 million pounds. The UK's largest listed water company said its "robust financial position" should allow it to hit a revised dividend target of real growth, of retail price index plus two percent, for the next two financial years.