Fiscal Cliff: Obama 'Optimistic' After Talks

Mr Burns Explains The Fiscal Cliff

Updated: 3:03pm UK, Friday 07 December 2012

The Simpsons character Mr Burns has managed to explain the "fiscal cliff" with a pithy cartoon.

It may be a complex and political concept, but with the use of a simple graph and a man in a car, the unpopular nuclear plant CEO succeeds in explaining the predicament facing the US economy.

Admittedly it may have a certain Republican spin to it, but given that the explanation is made in the Burns mansion where Mitt Romney presidential campaign posters are peeling from the wall, that is no surprise.

According to Mr Burns the "fiscal cliff" is defined simply as this: "Think of the economy as a car and the rich man as the driver. If you don't give the driver all the money he will drive you over a cliff.

"It's just common sense."

He goes on to tell his right-hand man Smithers: "Furthermore, rich people feel things more than the common man."

The fiscal cliff is the $607bn (£378bn) of cuts and taxes that will kick in on January 1 if the Republicans and the Democrats in Congress cannot agree on how to run the US economy.

While the Democrats favour raising taxes for the rich, the Republicans want to retain the tax cuts brought in by George W Bush and say it is government spending that must be curtailed.

Because they failed to agree they made a deal on a package of tax rises and spending cuts, including defence and welfare, that will come into action in the new year unless a solution is found.

Economists have warned that if this happens then it could throw the US back into recession and damage the global financial recovery.

Some financial experts have said that the fiscal cliff is the biggest threat to global recovery, as the rest of the world is looking to the US to lead them out of recession.

Congress is now working to try to find a solution before the December 31 deadline.

If it does not, then Smithers will be driving Mr Burns' car to the top of the graph and over the cliff.

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Pig Farming Crisis To Push Up Pork Prices

By Emma Birchley, Sky News Correspondent

Supplies of British pork on shop shelves are under threat as pig farmers struggle to stay in business.

Cripplingly high feed costs caused by global wheat and soya shortages have forced many farms to close already.

The problem, according to Essex farmer Fergus Howie, is that most producers are not being paid enough by supermarkets to make a profit.

"It's unsustainable to continue farming pigs when you are losing on every single pig that you produce so pig farmers throughout the country and in Europe and America are packing up and going out of business.

"We are certainly losing about £10 a pig."

Some producers are now being offered deals that enable them to make a small profit, but many of those who are not so lucky have resorted to slaughtering more breeding sows to cut their costs.

Since mid-June an extra 15,500 sows have been slaughtered. That works out at between 3% and 4% of the total UK breeding herd.

The National Pig Association expects the result to be increased prices of bacon and sausages by the autumn.

"Because of the length of the production cycle, we won't see the impact of these numbers going out of the herd for eight to 12 months," said Zoe Davies, the NPA's general manager.

"That's when we will start to see the shortages and the prices probably creep up."

More sows are also being slaughtered across Europe which will add to the shortage of pork. And there are other changes afoot across the Channel that are likely to affect supply.

In 1999, a ban was brought in on small metal crates known as sow stalls in the UK.

Only now are similar welfare rules being brought in across EU. In theory, it should make it easier for British farmers to compete.

But Fergus Howie remains to be convinced that the law will make the difference it should.

"If is is properly implemented it will be a fair playing field but we are really worried that it won't be properly implemented and product will be coming into this country that would be illegal."

At Wicks Manor in Tolleshunt Major, the Howie family make bacon, sausages and ham from their animals and that has helped keep the farm afloat.

But for the farmers relying on a fair price for their pigs, it looks set to be another year of battling to stay in business despite prices rising on the shelves.

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Online Shopping Surges Over Xmas

Internet retail sales are on course to have risen 30% over the Christmas period as shoppers moved to bag a bargain from home and beat sale queues.

Figures from market data firm Experian suggest Boxing Day set a new British record for online shopping.

According to the report, Britons spent 14 million hours trawling websites on Boxing Day, paying around 113 million visits to online retailers on what became the UK's biggest day for internet shopping.

Experian found that web sales were up by 17% on Boxing Day last year.

The figure had been expected to be higher but the company's digital insight manager, James Murray, said: "With a number of the major retailers bringing their sales forward to Christmas Eve, the impact of that was that Boxing Day was slightly muted and not as prolific as we forecast."

Figures show that Christmas Eve was 86% bigger than last year as a shopping day while Christmas Day was 71% bigger, as shoppers took to websites.

British Retail Consortium (BRC) spokesman Richard Dodd said the dash for discounts was boosted by consumers who were feeling the pinch.

He said: "Customers are under lots of financial pressure and are really keen on seeking out value and taking advantage of bargains."

Robert Goodman, general manager of Kent's Bluewater shopping centre, said: "Boxing Day's momentum has continued into today, with the opening of the John Lewis clearance sale being a major draw."

Waitrose said it had enjoyed a record Christmas season - with Sunday, December 23,proving to be its busiest ever.

Total branch sales excluding petrol for the festive period rose 7.7% between Sunday, November 4, and Christmas Eve.

On a like for like basis, sales were up 4.3% on the equivalent period last year.

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Fiscal Cliff: Obama Calls Leaders To White House

Opinion: President Obama Must Find Diplomacy Skills

Updated: 3:58pm UK, Thursday 27 December 2012

By David Buik, Cantor Index

President Obama and his charming wife Michelle recently posed for Christmas holiday photographs in Hawaii – all chilled out, very avant-garde in their dress and without appearing to have care in the world.

Clearly his advisers were not in concert with his thinking and summoned him back to Washington in response to an uncomfortable poll, where 47% were of the opinion that a solution will not be found before 1st January 2013 to avoid the 'fiscal cliff!'

I do not subscribe to that intense feeling of uncertainty.  However this impasse with the Republican majority in Congress cannot prevail without serious consequences!

Falling off the Fiscal Cliff would mean that $600bn of tax increases would be immediately implemented affecting many from the US middle-class to the tune of $2,000 per annum plus expenditure cuts totalling $100bn, including austerity measures on an already stressed defence budget.

Measures of such magnitude could send the US economy into recession. Many feel that this frustrating level of prevarication or if you prefer political brinkmanship could take 0.5% off GDP in 2013.

There has always been some degree of posturing by Congress when the opposition holds the majority of votes.  However this time around there appears to be an excess of 'bad blood' between the warring parties. Democrat House Minority Leader Nancy Pelosi and Harry Reid, senior majority leader in the Senate, would hardly qualify as candidates for a first class honours degree in diplomacy, always pouring oil on the flames of discontent on any negotiations which are not in line with their thinking.

John Boehner, the GOP's majority leader has not exactly excelled himself either in terms of presentation.  He preens himself like a peacock, without a hair out of place, when updating the media on the disappointing progress of the negotiations, thus irritating the Democrats for the perceived intransigence of the Republicans.

For the market place easily the most disappointing performance of all from these budget negotiations has come from the President himself.  Despite the fact that he has a larger majority than he gained at the Presidential election in 2008, he still has no majority in Congress.  That's a fact of life and unless the constitution is changed, and frankly 'hell has a better chance of freezing over,' an agreement has to be found within the framework of Congress – like it or not.

Let's not mince words.  There is an air of arrogant confidence about President Barack Obama's demeanour.  Unfortunately he has a lousy relationship with the Republicans in Congress, which is almost understandable; but what is unforgivable is the perception that his relationship with the Democrats in Congress is one of aloofness, irritation and indifference.

He may well protest at that allegation – no matter! As Commander-in-Chief it is the President's job to cajole and steer the acceptance of the US government's legislation and policies through Congress.

President Obama has a very strong case that those earning over $250,000 a year should shoulder more of the tax burden.  However what is terrifying to the market place is what seems to be the threat of abrogation of responsibility in dealing with the unacceptable and gargantuan levels of debt.

Objective people accept that in 2008 President Obama took an economic 'hospital-pass' from President George W Bush, which sent the economy in to recession.  Of that there is no doubt. TARP was a successful ruse!  Treasury Secretary Geithner and FED Chairman Bernanke's next little trick, which fell out of 'Pandora's Box' was quantitative easing!

It was a decent temporary solution and it bought time and restored confidence.  However there are only 4 aces in a pack of cards. Geithner and Bernanke may think there are six. Zero interest rates can only last so long.  Eventually someone has to pick up the tab!  Since 2008 the deficit has risen from $9tn to $16t. This is unacceptable.

In my humble opinion debt is the greatest threat to democracy! The US government cannot rely on China to keep buying Treasuries with an insatiable appetite, regardless of liquidity, if the US government does not attend to its responsibilities. 

Governments, banks and Consumers are all-over borrowed.  De-leveraging must be implemented.

If the market and China in particular decides that the debt burden is too great and consequently withdrew their automatic support with yields from 0.25% to 2% rising meteorically, that would send the cost of servicing debt in to orbit. The worst case scenario would be recession, massive unemployment and civil unrest!

President Obama, please avoid possible turmoil and 'go bang a few heads' together diplomatically!

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UK Economy: Workers Face A 'Hard Year Of Slog'

A number of reports are warning of a tough 2013 in the jobs market, with one study predicting it will be a "hard year of slog" for even those in work.

Dr John Philpott, director of The Jobs Economist, believes workers can expect longer hours, a continued squeeze on pay and fewer jobs being created.

His analysis suggests job insecurity will remain high, with workers having to maintain a "grin and bear it" attitude.

The study forecasts that the rend in falling unemployment will come to an end with the jobless total increasing by 120,000 to 2.63 million in 2013 because growth in the workforce will exceed the number of jobs being created.

However, Youth unemployment would fall below 900,000, while long-term unemployment will remain broadly the same.

The outlook also forecast that pay deals would continue to be affected by unemployment, with increases lagging behind inflation, leading to wage cuts for workers in real terms.

He said: "Our jobs outlook for 2013 is relatively optimistic in that we expect only a modest rise in unemployment. However, the fact that this can be considered good news merely underlines the harsh reality of current economic austerity.

"GDP may grow somewhat faster but 2013 will be another year of hard slog, with longer hours for those lucky enough to have jobs and a further squeeze on living standards for workers and the jobless alike."

But a separate study painted a slightly better picture for the longer term.

A report for the Chartered Institute of Personnel and Development (CIPD) said that continued growth in employment was likely in 2013, with the number of people in work potentially reaching a historic milestone of 30 million before the next general election in 2015.

Latest figures showed there were 29.6 million people in employment in the quarter to October, an increase of almost half a million on a year earlier.

However, the study also warned that excess capacity had built up in some firms as employers held on to skilled and talented staff, which could lead to weaker employment growth even if the economy picks up.

Mark Beatson, chief economist at the CIPD, said: "The jobs enigma, of strong growth in private sector employment in the absence of sustained economic growth, has been one of the most mystifying economic features of 2012, and if 2012 proved an enigma, the labour market appears equally difficult to pin down for 2013.

"Although the flexibility of the UK labour market is an important factor, the popular focus on under-employment as a major factor in explaining rising overall employment seems overplayed.

"While there are undoubtedly significant numbers of people working fewer hours than they would like, and this is an issue that merits further investigation and consideration by policy makers and employers alike, the numbers have not increased significantly this year, making it a poor explanation on its own for the 2012 jobs enigma."

He continued: "On balance, there are likely to be further increases in employment. Rising employment alongside muted growth indicates that employers have significant reserves of skilled labour capacity on which to call to support growth."

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Boxing Day Sales: Record-Breaking Surge

Boxing Day sales records have been smashed after shoppers sent tills into meltdown across Britain.

Bargain-hunters queued overnight in preparation for stores opening this morning, with thousands pouring through the doors from as early as 6am.

Forecasters said more than £50m would have been taken on London West End's famous shopping destinations of Bond Street, Regent Street and Oxford Street at closing time.

Footfall was up 31.3% on Boxing Day last year in the West End, with sales fuelled by tourists eager to spend. The UK average footfall was up by 21.6%, the retailers' body said.

Hundreds of shoppers poured through the doors when Selfridges opened

On Oxford Street, flagship store Selfridges reported its most successful first hour of trade ever, with £1.5 million rattling through the tills.

Sue West, Selfridges director of operations, said handbags and menswear were among the items flying off the shelves.

"Online sales have been great, but year-on-year people still want to experience the Boxing Day sales," she said.

Leading department store John Lewis announced a record start to its online sale which began on Christmas Eve with hourly orders up 70% on last year.

In its final pre-Christmas trading period John Lewis saw sales of £157.8m, up 26.5% on the same period last year and breaking the £150m barrier for the first time.

Queues formed outside some shops from as early as 1am.

Andy Street, managing director of John Lewis, said: "To be announcing another record-breaking pre-Christmas week along with such a fantastic start to our online clearance is marvellous news."

At Birmingham's Bullring Shopping Centre, thousands were ready and waiting from 12.20am for the off with 350,000 passing through within the next 24 hours.

Manchester's Trafford Centre enjoyed its biggest Boxing Day sale in its history with police drafted in to help manage the crowds - 20,000 were at the out-of-town location by 8am.

The centre's Gordon McKinnon said: "Many retailers have kept stock levels much tighter this year, so the sales will not be stretching on into January."

Kent's Bluewater shopping centre saw about 120,000 visitors pass through its doors, with queues forming at 1am.

Stores reported an influx of shoppers from abroad

The British Retail Consortium had described high-street spending as "acceptable but not exceptional" this festive period, but the Boxing Day sales would add gloss to the figures.

Retailers slashed prices and began early-morning trading in a bid to entice shoppers and compete with online rivals offering weighty discounts.

A strike by London tube drivers about bank holiday pay does not seem to have had too much impact on the sales.

Extra buses were laid on for those travelling to the West End, as well as the Westfield shopping centres in Stratford, east London, and White City, west London, Transport for London said.

Jason Tyrrell from the New West End Company told Sky News: "We were prepared for this strike and had coaches for staff. The shoppers are out in force, but I hope both sides get round the table and sort it out."

Online retailers tried to stay one step ahead of the competition by offering heavy discounts on Christmas Day with Amazon's UK website seeing a 263% rise in sales over the last five years.

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Graphene: Super Funds For Super-Material

Investment funds totalling £21.5m are going to some of Britain's top universities to develop commercial uses for the "super-material" graphene.

Manchester University academics Andre Geim and Konstantin Novoselov won the 2010 Nobel Prize in Physics for demonstrating the remarkable properties of the material.

Graphene is a kind of two-dimensional carbon which is one of the thinnest, lightest, strongest and most conductive materials known to man.

Graphene atoms are arranged in a regular hexagonal pattern similar to graphite, but in a sheet one-atom thick.

A sheet measuring one metre square weighs only .77 milligrams.

The aim is to see the material put to use in a wide array of industrial and everyday applications.

Graphene could deliver potentially lucrative technological breakthroughs in areas ranging from electronics to energy generation and telecommunications.

George Osborne saw Manchester University's graphene research labs last year

The Engineering & Physical Sciences Research Council has identified the most promising graphene-related research projects in British universities to benefit from state funding.

The University of Cambridge has been awarded more than £12m for research into graphene flexible electronics and opto-electronics, which could include things like touch-screens and other display devices.

London's Imperial College will receive over £4.5m to investigate aerospace applications of graphene, working with a number of industrial partners including Airbus.

The other successful projects are based at Durham University, the University of Manchester, the University of Exeter and Royal Holloway.

The universities will be working with industrial partners including Nokia, BAE Systems, Procter & Gamble, Qinetiq, Rolls-Royce, Dyson, Sharp and Philips Research. They will together bring a further £12m to the table.

News of the funding was announced by Chancellor George Osborne, who said: "The Government moved quickly and decisively to make sure this Nobel Prize-winning technology invented here in the UK was also developed here.

"It's exactly what our commitment to science and a proactive industrial strategy is all about - and we've beaten off strong global competition.

"Now I am glad to announce investment that will help take it from the British laboratory to the British factory floor."

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Whisky: China's Rich Pay £200k For One Bottle

By Mark Stone, China Correspondent

A Scottish whisky house has opened up a club in Beijing and is successfully selling whisky at prices ranging from almost £2,000 to a staggering £200,000 a bottle.

Johnnie Walker House is described by Diageo, the company behind the venture, as "the world's largest embassy for luxury Scotch whisky, providing consumers with bespoke experiences to immerse themselves into the world of whisky and Johnnie Walker".

The opening night of the four-storey emporium to Scotch was an incongruous affair.

Bagpipes, kilts and the occasional Scotsman mixing with Beijing's mega-rich and A-list celebrities - a stone's throw from the heart of this Communist country, Tiananmen Square.

It is an odd mix until you do the maths because this is a story of simple economics; a British company harnessing an opportunity.

The Chinese like whisky brands with a strong history

The Chinese love whisky and the wealthy Chinese will, it seems, pay anything for it.

"The starting price for a bottle of Johnnie Walker Scotch through the Johnnie Walker House is $3000," Diageo's Asia-Pacific President Gilberte Ghostine told Sky News.

"It starts at $3000 a bottle and goes up to $300,000 a bottle. And people are paying that."

We meet Mr Ghostine in the Blending Room, an intimate corner of the club where whisky bottles line the walls and the floors are clad with copper.

It is a place where clients can decide on their own bespoke blend of the brand.

"We have done lots of work to understand our customers here in China," Mr Ghostine said.

Scottish whisky makes up 40% of foreign spirit imports into China

When you listen to the statistics Mr Ghostine quotes, Diageo's investment in China makes perfect sense.

"Eighty percent of Chinese millionaires are below 45 years old. So it's a younger profile than in the US, for example, where only 35% of their millionaires are below 45," Mr Ghostine explains.

He added: "The Chinese have an interest in brands with real heritage, history, provenance, craftsmanship and real substance. And this exactly what we have."

Upstairs, in one of the three busy bars, we bump into Jim Beveridge, Johnnie Walker's masterblender, a Scottish chemist turned whisky connoisseur whose job it is to do the blending for the millionaires.

"The whiskies used for Johnnie Walker Black Label were distilled 12 years ago and I wouldn't have dreamed back then that they would now be consumed in this way in this kind of market," he said, sipping on his favourite blend.

The wealthy are spending their money on premium goods

Scotch whisky makes up 40% of international spirit imports into China.

Combine that with the fact that they have the money to buy the very best, and the result for the Scottish and UK economy is extremely positive.

Mr Ghostine said: "It is definitely great for Scotland. Today the Scotch whisky industry is very important for the UK.

"Every second £134 is being generated by Scotch whisky for the UK and the potential is huge.

"There is a big correlation between Gross Domestic Product growth in emerging markets and Scotch whisky.

"The Scotch whisky category is 50% of international spirits market in the whole Asia-Pacific region, and so the potential is very big."

It doesn't take long to find the sort of people who are buying the whisky. Zhao Yong Yao is an advertising executive in her mid-fifties.

We watch as she samples different blends, slowly and thoughtfully.

"I think Chinese would like it. Look at my friends, they all like it. And they also can drink a lot," she said.

"Since China had opened her doors over the past few years, Chinese people have earned a lot of money and at the same time they now know how to enjoy high quality goods.

"I like whisky because it represents British culture."

After our interview, Mrs Zhao reveals that she only started drinking alcohol six months ago. She is Diageo's perfect client: rich and with a new taste for the very best Scotland has to offer.

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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Pop-Up Shops Benefit From Empty High Street

By Lisa Dowd, Midlands Correspondent

With 20 shops closing every day on Britain's high streets, some premises are being temporarily rented out for as little as £1 a week to pop-up businesses.

One in six premises now stands empty compared with one in 20 at the start of the recession, according to retail research firm the Local Data Company.

So could pop-up shops help alleviate the situation?

"I've heard of examples of some shops going for as little as £1 a week because the landlord is saying to himself, I think these people have got a good product and if I give them a month or two at a cheap rate they may want to stay longer and then I can charge a commercial rate, " said Jerry Blackett from Birmingham Chamber of Commerce.

In Birmingham's Great Western Arcade, No 22, a jewellery shop showcasing the talent of young, local designers, moved into premises which had stood empty for months.

Silversmith and mentor Kerry O'Connor said: "We pay rates and all the bills and we get a reduced rent.

"It works both ways that we can stay here potentially as long as we want but likewise if somebody comes along who wants to take on a proper lease we could get kicked out within a month."

No 22 is paid for by European funding and a local council who are keen to help fledgling businesses and promote Birmingham as a centre of jewellery excellence.

"The pop-up encourages people to come to the arcade and see something new," said Carol Alderson from Birmingham City Council.

"We've put out flyers around the city, we've emailed, lots of people have gone on the website, it encourages new people into the arcade which should have a knock-on effect on the other businesses with people coming into the pop-up shop."

Designer Karen Collis said: "It's a brilliant opportunity to showcase my work for the first time really because I only graduated in June so I can test the market to see if people like the stuff that I'm making and also there's the opportunity to sell, I sold a piece yesterday, it was exciting."

Pop-ups come and go quickly, so it's not known how many are trading, or their impact.

But those involved with No 22 recognise that no-one benefits from premises standing empty.

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Boxing Day Sales: Millions Of Shoppers Expected

Shops up and down the country are expected to be swamped by millions of bargain-hunters after an early push by online retailers.

Up to 7.1 million shoppers are expected to hit the Boxing Day sales with one in 10 venturing out for a deal before 9am, according to research from Green Flag.

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn.

A poll for the website found almost four million Britons (8%) plan to head to the high street on Boxing Day in addition to more than five million (10%) who will be searching online.

However, figures from one survey, by comparison website Pricerunner, suggested that almost half (47%) of those questioned were not planning on buying anything in the post-Christmas sales.

Consumers in London could struggle to get to the shops as Tube drivers prepare to strike over a dispute about bank holiday pay.

Extra buses will be laid on for those travelling to the West End, as well as the Westfield shopping centres in Stratford, east London, and White City, west London, Transport for London said.

Online retailers tried to stay one step ahead of the competition by offering heavy discounts on Christmas Day with Amazon's UK website seeing a 263% rise in sales over the last five years.

Analysts Experian predict that Christmas 2012 will be the "biggest and busiest ever" for online retailers in the UK, with visits to retail websites expected to reach 126 million today, up 31% on 2011 and consumers predicted to spend £472.5m online.

But there was more gloom for the high street in the run-up to Christmas with shoppers preferring to buy presents online, according to Business recovery group Begbies Traynor.

The British Retail Consortium (BRC) said high street spending was "acceptable but not exceptional" this festive period – blaming it poor accessibility to high streets and weak consumer demand rather than online shopping.

Richard Dodd of BRC said: "There are a lot of myths around online retail. 10% of overall retailing over the year comes from online shopping and actually it presents lots of opportunities for the retail sector."

A Begbies Traynor report said almost high-street 140 firms were in a critical condition in the fourth quarter, meaning they are on the brink of collapse, while more than 13,700 were in "significant" distress - up 35% during the three months to December 17.

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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Belgian Chocolate: Is Its Reputation Melting?

By Robert Nisbet, Europe Correspondent

Belgium's reputation as the world's chocolate capital could be melting as emerging markets develop a sweet tooth and the recession continues to bite.

The region became the base for the industry shortly after the Spanish explorer Cortes returned from Mexico with cocoa pods from Mexico in the 17th century.

Three hundred chocolate companies are based in Belgium, which have a combined turnover of nearly £2bn every year.

While the commodities analyst Mintel suggests the global market for chocolate has held steady in 2012 at roughly £52bn, the market in Western Europe shrank by 5%.

More worryingly for many of the Belgian craftsman, who buy their chocolate already ground and cooked before adding their own ingredients, processing has shifted away from factories in neighbouring Germany and the Netherlands.

Statistics from the European Cocoa Association show that processing in Europe fell by 17% over the summer.

It is not just the recession, the economic model is changing: demand for luxury chocolate is growing in emerging economies, but slowly shrinking in richer countries.

World record-breaking chocolate train

So it makes more economic sense for the larger companies to shift production to new markets where labour costs are low and the beans do not have to be shipped to Europe to be processed.

Since the recession, Belgian artisans have been mostly shielded from a dip in local demand by growing demand in eastern Europe and the so-called BRIC countries.

But there could be problems ahead when they have to pay more to buy processed chocolate from further afield.

There certainly is not an air of impending crisis.

We saw a giant chocolate sculpture of a hippopotamus draw gasps in Grand Sablon, the "quality street" where most of the famous chocolate houses have a flagship shop.

There was also the unveiling of the world's longest ever structure built purely from chocolate in the Gare du Midi near the railway platform where Eurostar trains rumble in from London.

The 34 metre long sculpture of a vintage steam train was checked by inspectors from the Guinness Book of World Records to ensure it was solid chocolate and not bulked out using cheaper ingredients.

The tourism minister Christos Doulkeridis told Sky News that he believed Belgium will keep its chocolate crown.

"We don't want to be the first one just in chocolate. We want to be the first one in chocolate of quality," he said.

The test will be whether the country can continue to maintain its reputation as a marque of quality in the teeth of foreign competition.

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Christmas Day Online Sales Surge Predicted

Bargain season begins in force today as online retailers slash prices ahead of an expected onslaught of consumers hitting the high street for the traditional Boxing Day sales.

Amazon's UK website said it had seen sales on Christmas Day increase by 263% over the last five years.

It expects this to be its busiest Christmas Day to date, partly due to the growth in home broadband and the popularity of tablets and smartphones.

The retailer is launching its Boxing Day deals a day early, which include clearance offers and "lightning deals" for a limited time and quantity of stock.

Shopping frenzies are moving from the high street to the internet

Trends seen on past Christmas Days on Amazon include an 11am rush for last minute gift cards, the spending of gift cards at midday and sofa surfing at 8.15pm.

Amazon's vice president of EU retail, Xavier Garambois, said: "The digital revolution has certainly played a part in this growth and Christmas Day is our biggest day of the year for MP3 and Kindle book downloads, as many people are buying content from new devices that they have just received.

"It's not just digital items though, we are seeing purchases of everything from baby products to women's clothing rapidly growing on Christmas Day.

"Many customers are shopping on Christmas Day in a way that has previously only been seen in the retail industry on Boxing Day."

According to MoneySupermarket.com, shoppers in the UK are set to spend a total of £2.9bn in the Boxing Day sales.

Furniture Village said visits to its website on Christmas Day last year peaked at 25,000 at 4pm, with that figure increasing to 50,000 on Boxing Day, suggesting that the majority of customers researched products online before buying from high street stores.

Chris Webster, a spokesman for technology analyst Capgemini, said: "Online tills will be ringing all the way from Christmas Eve to Boxing Day, including a massive £300m spent on Christmas morning itself.

"Christmas Day will see a surge in online sales as new tablets and smartphones are put through their paces and vouchers are cashed in for virtual goods such as movies and music.

"This year we're as likely to be downloading Queen's Greatest Hits as watching the Queen's speech."

Meanwhile, high street spending was "acceptable but not exceptional" this festive period, according to the British Retail Consortium.

Head of media and campaigns Richard Dodd said poor accessibility on high streets, a lack of parking and weak consumer demand were to blame rather than an increase in online shopping.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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House Prices Predicted To Edge Down In 2013

House prices across the country fall by 1% during 2013 as the London market shows signs of cooling, property analysts have said.

Prices fell 0.1% month-on-month in December, marking the sixth month in a row that this has happened, and average prices ended the year 0.3% lower than a year ago, Hometrack said.

It predicts that a reluctance by struggling families to take on more debt will continue to act as a drag on the housing market next year and prices will be more volatile with continued low sales.

Hometrack's monthly figures for December show prices were flat in London and East Anglia, fell 0.1% in the Midlands, the South and Yorkshire and Humberside, dropped 0.2% in the North West and Wales and by 0.3% in the North East.

One in five postcodes in England and Wales recorded price increases over the past year but prices have fallen across two-thirds of the country.

London has had strong demand from wealthy overseas buyers and consistently outperforms other regions, seeing prices rise in seven out of 10 postcodes this year. Property prices are now 10% higher than at the peak of the market in 2007.

But price growth in London, vital to keeping average prices up in the rest of the country, is predicted to slow over next year, with a 2% annual increase pencilled in.

Central London price growth looks set to slow, following the introduction of a 7% stamp duty rate placed on homes worth over £2m in March.

The Office for National Statistics recently indicated that house price increases in London could be slowing. The rate of year-on-year price growth in the city dropped from 5.2% in September to 3.4% by October.

The study regularly asks estate agents across England and Wales about achievable selling prices.

But Hometrack's predictions jar with some other recent surveys, including one from Rightmove which said increased competition among mortgage lenders and a continued shortage of homes to choose from will help to push asking prices up by 2% across England and Wales next year.

The Council of Mortgage Lenders has said it expects the housing market to "feel more stable and positive" next year, with much of the boost coming from a multibillion-pound Government scheme which has already helped to increase mortgage availability.

But the council has also said demand for mortgages could be held back by the weakness of the economy and much will hinge on the continued resilience of UK employment.

Halifax has said house prices are likely to be flat next year, with any growth likely to be strongest in London and the South East.

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BT Slapped With £95m Refund Bill

BT has been told it must repay almost £95m to corporate customers following a row over high speed data provision.

The regulator Ofcom ruled the company had overcharged for Ethernet services and must hand back £94.8m to communication providers BSkyB - the owner of Sky News - Talk Talk, Virgin Media, Verizon UK and Cable & Wireless.

Ethernet services are mainly used by businesses and provide dedicated broadband capacity between different locations.

Ofcom said it received the first complaint in 2010 that the charges levied by BT were "not cost orientated".

It had continued to receive related claims ahead of today's decision, the regulator stated.

BT, which said in November that its second quarter revenues had been hit by a triple whammy of recession, regulation and rain, has two months to decide if it will appeal the decision.

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UK Economic Growth Less Than Expected

Britain's growth figure for the third quarter has been revised to 0.9% by the Office for National Statistics.

That is down from their previous estimate of 1%.

Britain's dominant services sector posted meagre growth in October, adding to the challenge for the economy as a whole to expand in the last three months of 2012.

Third quarter GDP growth was the strongest since the third quarter of 2007, but much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output. 

Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.

It also emerged that borrowing unexpectedly increased last month, putting more pressure on Chancellor George Osborne's plan to bring down the budget deficit.

Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, up £1.2bn on the same month last year.

Economists had predicted borrowing would fall slightly to around £16bn.

Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9% higher than the same period last year.

The latest figures will put more pressure on Chancellor George Osborne

James Knightley, analyst at ING Bank, said the borrowing figures highlighted the weak state of the UK economy and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.

He said: "All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise."

The ONS said the latest figures do not take into account the transfer of assets from the Bank of England's money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108bn in 2012/13, compared to £119.9bn in the March estimate.

The news will put further pressure on Britain's gold-plated AAA status.

All of the three main ratings agencies have now put the UK on negative watch.

Vicky Redwood, chief UK economist at Capital Economics, said: "Although a number of temporary factors flattered the OBR's new forecast for borrowing this year, the underlying picture is that the weak economy is preventing the deficit from falling."

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BAE Systems Strikes £2.5bn Deal With Oman

By Alistair Bunkall, Defence Correspondent

A deal worth £2.5bn has been completed between British defence manufacturer BAE Systems and Oman.

It will see BAE provide the Gulf state with 12 Eurofighter Typhoon aircraft and eight Hawk training jets.

As well as supplying aircraft, BAE Systems will provide in-service support to the Royal Air Force of Oman's (RAFO) operational tasks.

Work to start building the aircraft will begin in 2014, with the first jets due for delivery in 2017.

But the markets did not seem too enthusiastic about the announcement, as the BAE share price was down 2% during the early hours of trading.

More importantly for the company's future financial health is the Salam deal for 72 Typhoon jets with Saudi Arabia, worth £4.5bn.

Earlier this week, BAE warned that its 2012 earnings would suffer if no agreement was reached on this deal by February 21.

Last month, Prime Minister David Cameron visited Jordan, Saudi Arabia and the United Arab Emirates on a trade mission to promote BAE and persuade the states to buy British-made defence equipment.

PM David Cameron visited Jordan, Saudi Arabia and the UAE last month

It is unusual for a British prime minister to promote defence companies so openly but the Government is seeking to build closer ties with friendly Middle Eastern states in the face of what it sees as a growing threat in the region from countries like Iran.

The move also demonstrates an attempt to forge links outside of the traditional Nato countries.

The deal is not only important for BAE Systems but also for the companies that form the supply chain, many of which are based in the UK.

The deal will support BAE's assertion that it still has a strong business with a positive future after the proposed merger with EADS collapsed in October.

Cuts to defence budgets globally have resulted in a tougher and more competitive market, and BAE had hoped a merger with a company that specialises in civil aviation would lessen any effect of budget cuts.

Guy Griffiths, group managing director for BAE Systems' International business, said: "Receiving this contract is an honour and is excellent news for both BAE Systems and the Eurofighter Typhoon consortium.

"We look forward to working in partnership with Oman's Ministry of Defence, and the Royal Air Force of Oman, to ensure this is a highly successful programme that maximises the potential of both Hawk and Typhoon."

Oman becomes the seventh country in the world, and the second in the Middle East, to operate the Typhoon, joining the air forces of the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia.

Business Secretary Vince Cable said: "This is obviously a very good day for BAE Systems, its suppliers and the broader Eurofighter supply chain.

"We, and our partners in the Eurofighter consortium are pursuing a number of opportunities at present and I hope that the decision by Oman to join the Typhoon family is followed by more of its friends and neighbours."

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