Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

Gas stocks were reportedly just 10% full at Britain's largest storage facility on Thursday night, compared to 49% this time last year.

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Graphical comparison year-on-year of gas in the UK (graph: Utilyx)

Andrew Horstead of the energy consultancy Utilyx told the Times: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Matt Osborne, risk manager at energy consultancy and brokerage firm Inenco, told Sky News that wholesale prices had spiked about 20% overnight, prompting the industry to respond quickly.

County Durham after the latest batch of snow

On Friday morning gas prices for within-day delivery then jumped more than 50% above Thursday's close following the closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

Downing Street said Prime Minister David Cameron is "confident" that the UK's gas needs will continue to be met.

A spokesman said:  "The absolute key thing on this is that supplies are not running out.

It was so warm last March people flocked to beaches and parks

"The gas market is how we source our supplies and that market continues to function well.

"The Prime Minister's key concern is that gas supplies continue. It is absolutely clear that supplies are not running out."

Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: "Absolutely confident."

Scrub fires near Newport in Wales last March

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

But a Department of Environment and Climate Change (DECC) spokesperson insisted that "gas supplies are not running out".

The Chancellor's Budget revealed further gas fracking support

The spokesperson said: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."

However, the gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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City Titans Back Crunch Stock Market Probe

By Mark Kleinman, City Editor

The City's most powerful investor group is launching a probe into the effectiveness of Britain's stock markets amid deepening concern that 'short-termism' is damaging the country's wider economic interests.

I have learnt that the Association of British Insurers (ABI), whose members own about 20% of the blue-chip FTSE-100 index, has begun consulting with leading City firms over what is set to be one of the most important inquiries in its history.

People close to the ABI said the investigation would examine a string of issues which have provoked controversy in the City in recent years, including the functioning of the market for new share sales.

The number of initial public offerings (IPOs) has dwindled since the financial crisis of 2008, partly because of mistrust between the private equity groups attempting to sell their portfolio companies and stock market investors.

The ABI inquiry is being headed by Robert Talbut, chairman of its investment committee and a senior fund manager at Royal London Asset Management, and Robert Hingley, the group's director of investment affairs.

Sky News understands that the ABI has drafted in Angus Bogle, a former executive at Citi, the investment bank, and Fidelity, the fund management giant, to oversee the probe.

Meetings have been scheduled with leading fund managers and investment banks in the coming weeks, with the aim of producing a series of recommendations in a report later this year.

The ABI, whose largest members include Legal & General, Prudential and Standard Life, will also look at the tax treatment of debt and equity; assess ways to improve the market for equity investment in support of longer term growth; and examine shifts in the composition of investors' portfolios in recent years.

Perceptions of investor short-termism have become a hotly-debated political issue, particularly after a spate of foreign takeovers of major listed UK companies, culminating in the takeover of Cadbury by Kraft Foods of the US in 2010.

Last year, John Kay, an economist, published a report commissioned by Vince Cable, the Business Secretary, in which he recommended an end to quarterly company reporting and the establishment of an investor forum to encourage more effective engagement with public companies.

Mr Cable said at the time: "Many of us feel that in the past, our public companies and investors have focused on short-term profit at the expense of long-term value.

"The behaviour of many banks in the run up to the financial crisis is an extreme example of this quick buck mentality, but there is clearly a wider problem."

Some senior ABI figures are understood to have felt that Professor Kay's review did not go far enough, prompting the lobbying group to launch its own probe.

Earlier this month, Labour published a separate review which recommended reforms to executive pay packages and changing the rules governing overseas takeovers of British companies.

The ABI, which declined to comment on its investigation, is one of the most influential lobbying groups in British business. Late last year it published a report in which it warned that reforms to the regulation of the banking industry risked making the UK's biggest lenders uninvestable.

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Cyprus Bailout: MPs Stumble Towards Deal

Cyprus Bailout: Threat To Savings

Updated: 7:36am UK, Saturday 23 March 2013

By Ashish Joshi, Sky News Correspondent

Finally late into Friday night - an agreement on Plan B, meaning Cyprus has moved one giant step towards securing a Brussels bailout.

It includes a solidarity fund pooling together state assets and the granting of power to the Government to control bank capital.

The latter move is to prevent a run on the banks when their doors finally open on Tuesday.

There will also be a restructuring of the country's banks and a savings tax on Cypriot savers.

The details of the tax have still to be finalised, but the framework is in place.

It could mean savings over 100,000 euros held in Bank of Cyprus accounts being taxed up to 20%, according to one source close to the negotiations.

The same source said if that proposal is rejected there will be a plan to impose a tax of around 10% on all Cypriot bank accounts over 100,000 euros.

The threat of savers being hit hangs over the heads of people like Loizos Michael.

The 60-year-old tailor worked hard for 35 years, building up a good business.

He was looking forward to a wealthy retirement. Not anymore. Times are hard.

Speaking from his small tailor's shop in central Nicosia, Mr Michael said: "With the banks being closed, it is hard because I don't have a credit card and so cash flow is a problem.

"Even filling your car with petrol needs thinking about.

"Cypriots have always been workers by nature and nobody could have imagined that unemployment would be so high.

"This has hit us hard in the pockets."

Cyprus is weathering a storm - the likes of which this Mediterranean island has never faced in her young history.

Mr Michael said he knew things were getting bad, but expected solutions to be found to avoid ordinary people having to suffer.

"I expected something better. But now, it looks like the problem has been brewing for some time," he said.

"There used to be some people talking about the crisis, but now everyone's talking about it.

"I think things are harder now than just after the war. After the war of '74 people could still find work. Now, there is just no work so people have no money. What can we do?"

In the 1990s, Cyprus boasted a dynamic, booming economy, but it grew and unchecked.

An overbloated banking sector exposed to Greek debt has crippled the country's economy.

Now people like Loizos Michael must pay the price. He and the rest of Cyprus will soon find out exactly how much that is going to be.

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Retail Sales Rebound In February

Strong demand for tablets has helped retail sales increase by more than expected in February.

Excluding fuel, they rebounded by 1.9% when compared to January, and by 3.3% on the year, according to the Office for National Statistics (ONS).

The jump in both volume and amount spent follows subdued year-on-year retail sales growth rates since September 2012.

Strong sales at computer equipment retailers and department stores helped drive February's rise, and online also performed well, the ONS said.

Spending online accounted for 9.7% of all retail spending, excluding fuel, in February. The average weekly spend on the internet was £540m - an increase of over 10% when compared with February 2012.

It comes after a disappointing start to 2013, when sales plunged as a result of heavy snow across swathes of the UK.

Deloitte's UK head of retail, Ian Geddes, said February's figures were good news for the sector - but warned that caution should be exercised because New Year sales often continue into February.

He added: "The period measured does not include the last week of February when poor weather hit, so next month's figures may be affected."

The data comes a day after Chancellor George Osborne unveiled his Budget - but Mr Geddes said it provided "little respite" for the troubled high street.

"Any retailer expecting consumers to have more money in their pockets as a result of this Budget may be disappointed," he said.

But he added that the reduction of the corporation tax rate would "significantly benefit" UK-based retailers, which represent some of the largest UK corporation tax payers.

The data also came as clothing retailers Next and Ted Baker reported full-year financial results.

Both companies said sales had increased in 2012, and joined a number of other companies - including Zara, Sports Direct and Asos - in reporting strong figures despite the difficult economic conditions.

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Cyprus Bank Limits Cash Withdrawals Amid Crisis

Russian Money Talks In Cyprus Bailout

Updated: 12:52pm UK, Thursday 21 March 2013

By Tim Marshall, Foreign Affairs Editor

Even allowing for inflation, 10 billion euros can still buy you quite a lot these days.

For example, if you were Russia, and you used your 10 billion to bail out Cyprus, you could buy another few decades of European dependence on you for energy.

You might also get a dent in people's confidence in the EU thrown in. If you invested it all wisely, in the longer term you could even get a warm-water naval port out of it.

Not bad a return.

The Russian offer to better the terms of the EU bailout for Cyprus is not just commercial. It is an attempt to regain influence in a region of growing energy importance.

Russia had already lost power in the Mediterranean and Middle East when Egypt was flipped and turned towards the USA.

After the implosion of the Soviet empire in 1989, Moscow lost any chance of a quick return to the region and was left only with a small port on the coast of Syria to play with.

But Russia is now back on its feet, and the discovery of the potentially huge gas field in the eastern Mediterranean has given it an opportunity to again engage in the region.

It has already done a deal via Gazprom with the Israeli's over its gas fields, and is now trying to get in on Cyprus's potential gold pot.

Europe has for years been looking for a way to wean itself off energy dependency on Russia, and Cyprus was one route.

However, if Gazprom secures the rights to explore the Cypriot gas fields, this will give Moscow massive influence there.

Influence is power and that power could feasibly result, down the line, in Cyprus suggesting that the British bases on their island close.

From there, the possibility of a Russian base might emerge in what is a key part of Nato's Mediterranean strategy and an intelligence gathering post.

The UK, Greece, Turkey, and the US - all Nato members - might object. But money talks and we have seen in the last decade that Russia wins some and loses some. 

The ties between Cyprus and Russia are not just commercial and political.

We should not underestimate the cultural ties between the two, which are based on Russia's perception of itself as the guardian of Orthodox Christianity.

Whether Russia wins this geopolitical fight or not, it will continue to watch with interest the political and social fallout of the euro crisis and the democratic deficit which has been part of it.

The EU has crossed an intellectual line in Cyprus. Previous bailouts of other countries may have required austerity measures, but now unelected Eurocrats, in consultation with Cypriot leaders, have told the people that they are going to take up to 10% of their money without asking them. In Cyprus they have a word for this - theft.

This has been noticed across the European Union. If it might happen in Cyprus then it might happen in Greece, or Spain, or Italy. The raison d'etre of the Union is to ensure prosperity and the safety of its peoples, not to take money from their bank accounts.

The Cypriot politicians fear they could become the target of retribution from the people and so have hot-footed their way to Russia.

Not only might they get what in the short term looks a much better deal from Moscow, but, and this might be really what's going on, they might force Brussels to offer a much better deal to prevent Cyprus from "falling" to the Russians.

Either way - terms and conditions apply.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

The Times reported that last night that Britain's gas stocks were just 10% full, compared to 49% this time last year.

It was so warm last March people flocked to beaches and parks

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert warned.

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Andrew Horstead, of the energy consultancy Utilyx. told the newspaper: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

County Durham after the latest batch of snow

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

It comes as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale  of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

Scrub fires threatened areas near Newport in Wales last March

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1:12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

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Cyprus Outlines 'Plan B' To Avert Bankruptcy

Cyprus Asks Russia For Help

Updated: 8:32pm UK, Wednesday 20 March 2013

The vote rejecting the EU offer had hardly been cast before Cyprus's finance minster was in the air.

Michael Sarris dashed to Moscow in a desperate search for another bailout plan to save his country.

The flight route was no surprise - Moscow is heavily invested in Cyprus. Another name for Limassol could be Moscow-On-Sea.

The Mediterranean island offers the safety of Europe, favourable business conditions including low taxes and not too many probing questions about the source of the income.

That explains why an estimated 20bn euros of Russian money is parked here.

It also explains why Moscow and Cyprus have a shared interest in saving the island's economy. 

After attending the first round of talks with his Russian counterparts Mr Sarris said:  "There were no offers, nothing concrete.

"We are continuing discussions. We are happy with a good beginning and we are looking forward to continuing these discussions over the next few hours. Thank you very much."

Cyprus is desperate for the cash.

Banks have been shut since the weekend and may stay closed until next week.

Russia will try and extract as much as it can from the desperate Cypriots, which could include a share in Cyprus's energy rich future.

Some experts believe Cyprus could be sitting on natural gas reserves worth up to 300bn euros.

It would also give Russia great political satisfaction to have one of its companies operating inside Europe, according to Russian economist Alexander Orlov.

"Currently Europe cant't fulfil its need for natural gas. Libya and Algeria are too politically unstable," he said.

"Cyprus would be ideal as it's close to mainland Europe and it can be delivered by pipeline."

Cyprus already owes Russia money, but is looking for another 5bn euros - that is the amount it needs in addition to the 10bn bailout offer from Europe. 

But taking on more debt will not please Europe. That is why it come up with the controversial plan to tax Cypriot savings. 

It still wants Cyprus to fund a so called bail-in, but it is suggesting a more targeted approach.

German Chancellor Angela Merkel has proposed a potentially more palatable proposal: "The members of the Eurogroup would appreciate that investors below 100,000 euro are not included.

"However, investors over 100,000 euro should support the banking industry so that the banking industry will be sustainable."

But this again would mean Russian investments being taxed by Brussels, which will certainly factor in to any further negotiations.

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YouTube Reaches Billion Viewers A Month Target

YouTube has announced more than one billion people are now visiting its online video site each month.

The milestone marks another step in YouTube's evolution from a quirky start-up launched in 2005 to one of the most influential forces in today's media landscape.

YouTube crossed the one billion threshold five months after Facebook said its online social network had reached that figure.

The vast audience has given YouTube's owner, Google Inc, another lucrative channel for selling online adverts beyond its dominant internet search engine.

Google bought YouTube for $1.76bn in 2006 when the video site had an estimated 50 million users worldwide.

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Budget: George Osborne Defends Economic Plans

George Osborne has defended his Budget as he pointed to Cyprus and warned Britain's problems "could be a lot worse".

In an interview on Sky News, the Chancellor insisted the public understood he had to take tough decisions to secure the country's future.

"People know that it is a difficult situation out there but it is a situation that could be very much worse for Britain if we didn't take these decisions," he said.

Labour has attacked his "aspiration nation" Budget, warning that it does not do enough to boost growth and calling for a U-turn.

Shadow chancellor Ed Balls, writing in the Daily Mirror, said: "What we needed yesterday was a change of direction, action to kickstart our flatlining economy and real help for people on middle and low incomes.

"But what we got was more of the same failing policies and a huge tax cut for millionaires. Britain deserves better than this."

But the Chancellor accused the Opposition of having no "serious economic alternative" and resorting to "personal abuse" instead of setting out its own plans.

George Osborne on Sky News on Thursday

He told Sky News: "It is a tough economic situation and of course if it is a difficult job dealing with that situation but it is a job the whole British people is facing at the moment.

"I think the British public understand there is not a simple or easy answer to our country's problems but just the painstaking work of putting right what went wrong."

MPs will debate the detail of the announcements in the House of Commons later.

Centre to Mr Osborne's plans are moves to stimulate the housing market in the hope this will stimulate economic recovery.

The Government will plough billions into boosting home ownership by underwriting the mortgages of hundreds of thousands of people.

Interest-free loans lasting five years and worth up to 20% of the value of new build homes under £600,000 will be available.

And from next January, taxpayers' money will be used as a guarantee for home buyers who can only pull together small deposits.

Mr Osborne claimed on Thursday that the measures would help boost the flat housing market and provide jobs in construction as new homes were built.

He insisted: "It doesn't mean a return to five or six years ago when you had those big 125% Northern Rock mortgages.

"It is just saying to people if you can get together a decent deposit, we are going to help you buy a home. People are being robbed of that at the moment because of the problems in our financial markets."

In his Budget, there were further tax breaks for drinkers, drivers and working parents.

There was a 1p cut in the price of beer as the beer duty escalator was also scrapped, and a planned fuel duty hike was cancelled.

Small businesses will be boosted by a new employment allowance which will save employers £2,000 on their National Insurance bills.

Ed Miliband and Ed Balls condemned the Budget as "more of the same"

And plans to raise the income tax threshold have been brought forward to 2014, meaning earnings up to £10,000 will be tax free.

But those announcements could not disguise the dismal economic figures and forecasts that showed the austerity era will last a decade.

Official growth forecasts for this year have been cut in half to 0.6% because the recovery is so weak, and next year's figure has also been downgraded.

The independent watchdog the Office for Budget Responsibility (OBR) also warned that the decline in borrowing seen in the first years of the coalition "no appears to have stalled".

Public borrowing predictions for every year to 2017/18 have been revised upwards, putting the total £55.7bn higher than it was just three months ago.

The OBR expects Britain to narrowly escape an unprecedented triple-dip recession, predicting a small increase in GDP in the first quarter of this year.

But debt is not set to fall as share of national income until two years after Mr Osborne's original 2014 target.

It is due to peak at 85.6% of GDP - equal to a massive £1.58tn - in 2016/17 - an increase of 6.4% on previous forecasts.

Labour condemned Mr Osborne as a "downgraded Chancellor" who was simply offering "more of the same" and some experts criticised him for not going far enough to boost growth.

Research for consumer group Which? carried out immediately after the Budget found 89% of voters backed the rise in the personal tax allowance and 87% supported the fuel duty move.

But it also suggested that a third of the public now feel less confident about the prospects of the economy this year, and 28% feel less confident about their own finances.

Some 59% said the Government should rethink its economic plan and 44% expect their personal finances to worsen over the coming year.

In another blow to Mr Osborne, hours after his Budget was delivered peers inflicted a major defeat on the Government over its "shares for rights" plan.

Former Civil Service chief Lord O'Donnell linked the plans to slavery and ex-Tory minister Lord Forsyth of Drumlean said they were "ill-thought through, confused and muddled".

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Facebook Scheme: Man 'Stole' $8M From Clients

A Florida investment adviser has been charged in New York in an $8m securities fraud scheme that exploited demand for shares of the social networking site Facebook.

Craig L Berkman, 71, was arrested on Tuesday at his home in Florida and detained pending a hearing set for Thursday.

He was charged with falsely claiming in December 2010 to own shares of Facebook Inc, well before the company went public last year.

In reality Berkman did not directly own shares, and prosecutors say he stole much of $8m (£5.3m) that more than 50 investors entrusted to him.

The US Securities and Exchange Commission has also announced separate civil charges.

The government said Berkman operated a private company called Ventures Trust II LLC.

Facebook went public in May with its much-hyped $104bn (£65bn) IPO.

But the company's value dropped soon after, with shares quickly falling from their debut price of $38 (£25.16).

On Tuesday the stock's value closed at $26.55 (£17.58).

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Cyprus Looks To Russia Amid Bailout Chaos

Sacrificing Trust In The Banks

Updated: 8:16am UK, Wednesday 20 March 2013

By Ed Conway, Economics Editor

I'm rather glad that the Pope managed to mention Abraham in his inaugural mass.

After all, of all the Old Testament, the tale of Abraham and Isaac is probably about the most comparable to the current imbroglio in Cyprus.

The father and guardian takes his son to the top of the mount, binds him and is on the point of sacrificing him when, at the last minute, God sends down an angel to stop him.

In an analogous way, the Cypriot government, on orders from on high (the eurogroup in this case, not God) has come to the brink of gouging an unprecedented tax out of its peoples' savings, and, at the last minute, seems to have been offered a reprieve.*

Now, if this were the Bible, the story would end there. Abraham's faith was tested, and he passed the test. Conveniently, the ancients glossed over the question of what this incident did to the father-son relationship.

However, this is not the Bible, and so we're left unpicking a relationship that has gone very wrong indeed. There is clearly a widespread sense of betrayal in Nicosia, and one can understand why.

Even if, as is the current plan, small savers with less than 20,000 euros in their accounts are let off the deposit tax, this episode will leave a lasting scar in place.

After all, the Government had spent the past few years insisting to savers that any deposits below 100,000 euros would be safe, protected by its deposit insurance scheme.

That it could subsequently play fast and loose with the bank accounts is unlikely to be forgotten.

Even if the Government were to stop short of a deposit tax, it's hard to see why savers wouldn't simply withdraw all their cash in droves when the banks reopen (whenever that is) – even if it's simply to put it underneath a mattress at home.

This episode has fatally undermined the element of trust in the banking system – something which is fundamental to the way capitalist economy functions in its current form.

Whether this triggers chaos elsewhere is difficult to predict. Markets have become more unsteady as the situation in Cyprus has deteriorated, but we haven't yet seen any kind of depositor panic elsewhere, for instance in Portugal and Spain.

However, the story in Cyprus is far from over. Anger is mounting, the parliamentary system is creaking under the weight of the demands coming over from Brussels, and the threats from Frankfurt to cut off emergency funding to the banks if the country doesn't co-operate haven't made them any more willing.

Short of a papal intervention, it's hard to imagine how to get a happy ending out of this story.

*Yes I know there are some inconsistencies. For instance, it's debatable whether the eurocrats have ditched the plan or whether it's simply being rejected by the government, the latter of which would be akin to Isaac breaking free of his bindings and escaping.

Plus, Isaac had not borrowed himself so far into penury that he was facing bankruptcy. Nor had he become a go-between for Russian tax avoiders but let's leave that aside for the time being.

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Budget: Osborne Vows To Help People 'Get On'

By Jon Craig, Chief Political Correspondent

George Osborne has vowed to help people "work hard and get on" as he prepares to deliver the most important Budget of his career.

The Chancellor joined Twitter hours before the financial statement, which comes as he is under intense pressure over the lack of growth.

A Twitpic shows George Osborne at work

Posting a picture of himself at work with his red box, he wrote: "Today I'll present a Budget that tackles the economy's problems head on helping those who want to work hard & get on."

Mr Osborne will this lunchtime unveil a Budget that has the twin aims of trying to rescue the British economy and the political fortunes of the Conservative Party.

He will announce a raft of measures he hopes will not only kick-start economic growth but also reverse a Tory slump that began with his Budget a year ago.

Many Tories blame 2012's "omnishambles" statement containing a series of blunders that required embarrassing U-turns for the collapse in the party's support.

Further questions have been raised about the Chancellor since Britain lost its AAA credit rating and slipped into a double dip recession, with the risk of a triple drip still alive.

Labour leader Ed Miliband warned on Wednesday that Britain did not want "more of the same". "What we don't need is him saying I'm going to stick to my failed plan," he said.

But despite lower growth forecasts and a rise in borrowing set to be confirmed in the statement, Mr Osborne is expected to insist there can be no shift from austerity.

He has already promised help for pensioners, working couples and homebuyers but will also need to tackle fuel duty and encourage businesses to invest to avoid another onslaught from critics.

On tax, the Chancellor is tipped to help the low paid by accelerating raising the income tax threshold to £10,000, a move championed by the Tories' Lib Dem Coalition partners.

And after the furore in the Conservative Party over gay marriage, the Chancellor may boost the married couples' allowance to cheer up disgruntled Tory backbenchers.

A cut in corporation tax from 21p to 20p would also delight business leaders.

Mr Osborne is also expected to agree to unlock £4.8bn in child trust funds and allow parents to transfer their investments into more generous Junior ISAs. This move could leave some children up to £34,000 richer.

And he will announce that thousands of elderly people who lost up to half of their life savings when Equitable Life came close to collapse a decade ago will receive compensation.

But in a bleak message to MPs and voters on the state of the economy, there will be no U-turn on spending cuts or unfunded tax cuts and some grim economic forecasts.

Mr Osborne has defied calls from Lib Dem Cabinet colleague Vince Cable and former Tory defence secretary Liam Fox to change course and abandon his so-called "Plan A".

Warning that economic recovery would be a slow process, he said: "There is no easy answer to Britain's problems. There is no miracle cure, because of course if there was a miracle cure it would have been deployed."

Most government departments have in fact been ordered to cut another 2% from their budgets over the next two years so that the money can be spent on capital projects.

Health, schools, overseas aid and HM Revenue and Customs will be shielded from the latest round of savings, which will give a £2.5bn capital boost.

The Budget comes as a new poll confirmed Mr Osborne's unpopularity.

The survey suggested that more than four out of 10 voters (44%) think he should be sacked as Chancellor.

Fewer than one in five (18%) of those questioned said Mr Osborne should keep his job, while 38% did not know.

Favourite to replace him is Mr Cable, favoured by 12%, followed by Foreign Secretary William Hague (5%) and Home Secretary Theresa May (3%).

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Cyprus Urged To Protect Savings Under 100k

Eurozone finance ministers have urged Cyprus to protect savers with less than 100,000 euros (£86,000) in their accounts from a proposed tax on bank deposits.

Under a bailout deal agreed with the EU, Cyprus planned to impose a levy of 6.7% on all savings below that level.

The scheme was then changed to a 6.7% tax on all savings between 20,000 and 100,000 euros and 9.9% on all savings over 100,000 euros.

But the finance ministers, known as the Eurogroup, said they favoured a higher, 15.6% tax on richer savers in order to protect those with smaller deposits.

A statement from the group's president Jeroen Dijsselbloem said: "The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below 100,000 euros."

Sparing more modest savers in favour of the higher rate on bigger deposits, would not impact on the overall amount of the bailout - 10bn euros (£8.6bn) - the group said.

Protesters gathered outside the parliament in Nicosia

On Saturday the Eurogroup told debt-ridden Cyprus it would not give it a bailout unless it recouped some of the money it needed from savers.

The scheme had the potential to affect thousands of Britons who had either moved to Cyprus to live or had money saved in Cypriot accounts.

Russia, whose citizens are thought to have up to $30bn of their cash tied up in Cypriot accounts, was left furious by the proposal.

Cyprus may still ignore the advice from the Eurogroup and its parliament is expected to vote on a plan to save its economy on Tuesday.

Foreign Secretary William Hague said Britain had been "separated" from contributing towards the bailout, adding that 3,000 Britons in the country would not suffer in the proposed raid on bank savings.

Large numbers of Russian millionaires have stashed savings in Cypriot banks

It is believed, however, that many British Cypriots may have millions in accounts that are not protected by UK rules.

It was also unclear whether British troops serving in Cyprus who had set up large savings accounts would be able to escape the tax.

Cyprus had been due to vote on the levy on Sunday but it was first pushed back until Monday and then Tuesday.

Banks were closed in the country on Monday because of a bank holiday, which prevented people withdrawing their money but cash machines across the island were emptied.

Branches will stay shut for another two days - Tuesday and Wednesday - to prevent people removing all their cash while the authorities decide what to do.

A large amount of cash was withdrawn from Cypriot banks on Monday

The decision to target bank accounts stunned Cypriots, and police sealed off parliament as about 400 people staged a noisy protest outside, aggrieved that their small island of one million people should be singled out for such treatment.

It is the first time within the EU that it has been proposed to tax savers in a country to pay for the failings of their government.

The euro and stock markets fell on concern that developments in tiny Cyprus could reignite the financial crisis in the 17-nation eurozone.

If Cyprus does tax large savers heavily there are fears that money could flood out of the country as two thirds of deposits are from abroad.

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Nuisance Phone Calls: Which? Demands Action

Campaigners have demanded "tougher regulation" to clamp down on companies who plague people with unwanted phone calls and nuisance text messages.

Consumer group Which? found seven out of 10 consumers had been cold-called in the last three months, while two-fifths had received unsolicited texts.

The majority of calls and messages came from claims management companies (CMCs) offering to take up payment protection insurance (PPI) and personal injury cases.

Which? urged regulators including Ofcom and the Office of Fair Trading (OFT) to set up a joint taskforce to pull the plug on "intrusive and distressing" calls and texts.

It said offenders should receive fines and be put out of business.

"Unwanted calls or texts are not just a nuisance, they can be intrusive and distressing," executive director Richard Lloyd said.

"Many of us have been bombarded with spurious claims of PPI or injury compensation. People are telling us they are totally fed up with this nuisance and want to see action.

"Our research once again shows the behaviour of unscrupulous claims management companies must be tackled to stop them exploiting consumers who could claim compensation for free themselves.

"We want to see tougher regulation from the Government to clean up the CMC industry."

Which? said that a quarter of its members who made a claim on their car insurance were contacted by a CMC within three months.

Many of them were then bombarded by repeated messages. More than a fifth said they were sent at least 10 texts and one in eight received 10 or more phone calls.

The Transport Committee is currently investigating the extent to which bogus and exaggerated whiplash claims push up the cost of car insurance. False claims are estimated to add around £90 to the cost of every premium.

From next month, insurers will be banned from receiving money in exchange for the details of customers who make personal injury claims.

However, Which? said the rules will not cover non-injury claims such as car repairs.

It urged people to register their details with the Telephone Preference Service and to avoid opting into third party marketing when taking out an insurance policy.

It also said consumers should not respond to spam texts, even to text "stop", as this alerts the sender to the phone number being active and in use.

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Budget: Childcare Boost For Working Families

Working families will receive up to £1,200 per child a year under major plans to slash the cost of childcare.

More than two million families stand to benefit from the tax-free childcare plans, which have been announced ahead of Wednesday's Budget.

Eligible families will be given up to £1,200-a-year for each child, up to a maximum of 20% of their total childcare costs.

To qualify, both parents - or one parent if they are raising children alone - will have to be in work and each must earn less than £150,000.

But the scheme, which will replace the existing employer supported childcare programme (ESC) will not come into effect until late 2015, after the next general election.

Initially the measures will cover children up to five years old, but the level of support will build up "over time" to include children under 12.

Ministers say to start with, 1.3 million families will benefit, compared to 450,000 under ESC, eventually rising to around 2.5 million.

The leaders promised to boost childcare support in their mid-term review

The Government is set to invest £1.4bn in the plans - half-funded by abolishing the current childcare vouchers scheme and with the rest of the cash diverted from other departments.

Under the current scheme, parents get vouchers worth up to £55-a-week, deducted from their salary before tax is paid.

Prime Minister David Cameron and Deputy Prime Minister Nick Clegg pledged in their January mid-term review that they would act to help working families with childcare costs.

The move appears designed to appease many parents furious at losing their child benefit after cuts to what was once a universal handout.

Mr Cameron said: "Too many families find paying for childcare tough and are often stopped from working the hours they'd like.

"This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs."

Deputy Prime Minister, Nick Clegg added: "The rising cost of childcare is one of the biggest challenges parents face and it means many mums and dads simply can't afford to work.

"This not only hurts them financially, but is bad for the economy too."

Ministers have already announced plans to let childminders look after more children, which they hope will reduce costs and make more nursery places available.

Britain has some of the most expensive childcare costs in the world - with fees rising at more than twice the rate of inflation, according to the Daycare Trust.

A report by the trust recently found that a place at the UK's most expensive nursery cost £42,000 - some 25% more than a place at a top public school such as Charterhouse, which charges £30,574 a year.

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Cyprus Bailout: Savings Tax Could Be Cut

Officials in Cyprus are reportedly trying to renegotiate a eurozone bailout deal in order to soften the impact of a levy on smaller savers.

Authorities had planned a 6.7% tax on deposits under 100,000 euros (£85,454), triggering queues at cash machines as people in Cyprus rushed to withdraw their money.

But the country's government is thought to be discussing cutting the tax rate to 3% while raising the rate for deposits over 100,000 euros from 9.9% to 12.5%.

In exchange for the levy, Cyprus will receive 10bn euros (£8.54bn) in aid to help recapitalise banks.

Cypriot President Nicos Anastasiades held talks with his cabinet

World markets have reacted negatively this morning, with many losing more than 2% and the FTSE dropping 1.6%.

Cypriot President Nicos Anastasiades, who was elected just three weeks ago, said the island had to accept a painful compromise or face bankruptcy.

In a televised address, he said the bailout "will eventually stabilise the economy and lead it to recovery".

Monday is a national holiday in Cyprus and measures need to be approved before banks open again on Tuesday.

Depositors in the eurozone's weaker economies have been unnerved by the levy, with investors fearing it will set a precedent that could reignite market turmoil.

Their uncertainty could be reflected when European markets open later, with the euro having already seen sharp falls in Asia.

British government and military personnel in Cyprus will be protected from any levy on their bank deposits.

Foreign Secretary William Hague told Sky News that Britain had been "separated" from contributing towards the bailout, adding that 3,000 Britons in the country would not suffer in the proposed raid on bank savings.

The tax on deposits in Cyprus, which accounts for only 0.2% of the eurozone's economy, is expected to raise up to 6bn euros (£5bn).

Savers have queued to withdraw their money from cash machines across Cyprus

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves.

The size of foreign deposits in Cyprus - estimated at 37% of the total - was one reason the eurozone agreed to the tax on savings.

It will apply to all deposits held in banks within Cyprus, including an estimated 2bn euros (£1.75bn) of British money, according to the European Central Bank.

It will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

However, Laiki Bank UK said on its website: "Your eligible deposits with Laiki Bank UK are protected up to a total of 100,000 euro (£87,000) by the Cyprus Deposit Protection Scheme and are not protected by the UK Financial Services Compensation Scheme.

"Any deposits you hold above the 100,000 euro limit are not covered."

Cypriot banks lost 4.5bn euros (£3.8bn) - equal to a quarter of the island's gross domestic product - when eurozone leaders decided to write off Greek debt last year.

As part of its bailout deal, corporate tax will rise from 10% to 12.5%, while state assets will be sold off to help balance the public finances.

Cuts to government worker salaries and pensions have already been approved.

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HMRC Tax Helpline Is 'Disgraceful', MPs Say

A "disgraceful" tax helpline run by HM Revenue and Customs (HMRC) costs callers £136m a year through delays in answering calls, a spending watchdog has said.

The Commons Public Accounts Committee found a quarter of the 79 million annual calls to the HMRC phone line go unanswered, despite a £900m investment in customer service.

It said a new target to answer 80% of calls within five minutes was "woefully inadequate and unambitious" and questioned whether waiting times would increase if staff numbers are cut.

HMRC plans to close 281 tax inquiry centres in favour of a targeted "mobile" system in homes, businesses or community locations, claiming the move will save customers £12m a year in lost time and travel costs.

But Margaret Hodge, the Labour MP who chairs the committee, said changes to the way companies report payments to employees, as well as a shake-up of tax and benefit systems, would "drive up the number of phone calls to the department".

"Just how the department is going to improve standards of customer service, given the prospect of it having fewer staff and receiving a higher volume of calls, is open to question," she said, adding that HMRC should be aiming to answer the majority of calls within 20 seconds.

A spokesman for HMRC said it had "already recovered" from its "previous poor standard of service".

"In the past three months, we have been answering more than 90% of calls to our contact centres," he said.

"During the current year we have replied to 84.5% of the 16 million pieces of post we have received within 15 working days.

"We are investing an extra £34m in our contact centres to maintain this industry-standard level of performance.

"To make it cheaper for customers to call us, we have already transferred our Tax Credits phone lines from 0845 to 0345 numbers, and will begin to move our remaining lines to 03 numbers from April.

"We will continue to build on these improvements until we deliver the consistent quality of service that our customers are entitled to expect."

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Cyprus Bailout: Stock Markets Take Tumble

Borrowing costs have risen sharply for countries which received bailouts at the height of the eurozone crisis following the rescue deal for Cyprus.

The FTSE 100 followed other European stock markets lower when trading began in London, falling 1.6% in the first few minutes as investors digested the implications of the controversial agreement.

Asia was first to give its reaction with the Nikkei in Japan closing 2.7% lower while the Hang Seng lost 2%.

Those falls were more closely matched on the bourses of the countries at the centre of the euro crisis with the Spainish IBEX losing 2.3% on opening. The MIB in Italy was 2.2% down.

Banking stocks took the brunt of the losses amid an EU and IMF demand that in return for 10 billion euros (£8.56bn), Cyprus impose a tax on savings deposits.

While the terms are yet to be fully agreed by the local government, the move heightened fears of contagion in the euro area as they were seen by investors as a radical departure from previous aid packages which raised the prospect of either direct exposure or a knock-on effect.

For the UK, the turmoil over Cyprus helped the pound recover some lost ground on the euro as sterling gained 1.2p on the single currency.

There was also a positive implication for the cost of servicing the country's sovereign debt as bond yields tumbled, though the benchmark 10 year debt costs rose sharply for nations such as Spain and Portugal which saw increases of more than 4%.

More follows...

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Clegg Launches £1bn Aerospace Pledge

By Mark Kleinman, City Editor

The Government will next week commit hundreds of millions of pounds of public money to Britain's aerospace industry as it attempts to accelerate the rebalancing of the flagging economy.

I understand that Nick Clegg, the Deputy Prime Minister, will make the pledge on Monday when he unveils the latest phase of the Aerospace Growth Partnership (AGP).

Similar to initiatives already launched in the automotive and defence industries, the AGP will involve money committed by the major companies in the sector - including Airbus, Bombardier and Rolls-Royce - being match-funded by the Government.

Insiders said on Saturday that the total funding under the AGP could reach £1bn within a few years.

Unusually for an industrial initiative of this kind, Mr Clegg will commit to resourcing the AGP well beyond the lifetime of the Coalition Government by saying that the commitment will run for 10 years.

The longer duration of the pledges to support the aerospace industry are designed to counter accusations that the Government is too short-term in its industrial outlook and should enable big companies to make longer-term investment decisions, officials said.

The focus of the new funding will go towards supporting the infrastructure on which the aerospace industry depends, such as research and development activity, and protecting and enhancing the sector's supply chain.

Aerospace is one of the UK's most important industries, directly employing more than 100,000 people and recording more than £24bn in annual earnings, according to a document published by the Government last week.

"The UK's current strength is the result of significant public and private investment in research and technology in the late last century.

"The UK aerospace industry is faced with increasing competition globally, not only from traditional aerospace manufacturing nations but also from developing aerospace nations," it said.

"We can't stand still. To stay at the forefront of the increasingly global aerospace industry, the UK needs to secure strategic work packages on the new programmes, as those we are currently working on come to the end of production and support over the next few years.

"Action is needed now to ensure that public and private investment is increased to globally competitive levels."

Mr Clegg's announcement will come two days ahead of a Budget in which George Osborne, the Chancellor, is under pressure to provide much greater stimulus for industrial growth.

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Chancellor Warns Of 'More Tough Choices'

George Osborne has warned the country of "more tough choices" and says there are no "miracle cures" for the UK economy, as he prepares to deliver Wednesday's Budget.

The Chancellor is under mounting pressure to change course and kick start growth as the UK faces an increased risk of falling into a triple-dip recession.

An opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Mr Osborne dismissed calls for extra borrowing to cut taxes or finance a "spending spree" and insisted that abandoning his austerity programme would be a "disaster".

Writing in The Sun on Sunday, Mr Osborne hinted he would do more to help homebuyers, business start-ups, apprentices and people saving for retirement.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

His comments came as a report revealed families have cut back on spending by more than £3,000 a year since the start of the credit crunch.

The Chancellor will deliver his Budget on Wednesday

Consumer watchdog Which? found the cut in discretionary spending's opening up a £136bn black hole in the economy over the last five years.

Hopes the economy could grow in this quarter and thus avoid returning to recession were dealt a blow this week by a 1.5% fall in manufacturing output in January.

Former cabinet minister Liam Fox is leading Tory calls for a change of course - suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending, notably welfare.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Mr Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being mooted within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Mr Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense. If there were easy options and miracle cures then of course I would take them, but sadly there aren't."

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Cyprus Postpones Vote On Savings Raid Bailout

Cyprus's parliament is to decide later today whether savers must pay a levy on bank deposits under terms for an international bailout to avert bankruptcy.

The eurozone demand that savers pay up to 10% of deposits as a condition for the 10bn euro (£8.6bn) bailout has drawn criticism and anger in the eastern Mediterranean island.

Queues of people gathered at its cash machines on Saturday as they tried to withdraw their money ahead of the move.

And the country's cooperative banks had to shut their doors after seeing a rush of savers keen to protect their money.

Savers could apparently withdraw money but were not able to carry out electronic transfers.

Newly-elected Cypriot President Nicos Anastasiades said refusing the bailout would have led to the collapse of the island's two largest banks, badly burnt by their exposure to bailed out neighbour Greece.

The tax on deposits in Cyprus, which accounts for only 0.2% of the eurozone's economy, is expected to raise up to 6bn euros (£5bn) as a condition for the bailout, mainly needed to recapitalise banks.

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island as well as Cypriots themselves.

The size of foreign deposits in Cyprus - estimated at 37% of the total - was one reason the eurozone agreed to the tax on savings, to take effect when banks reopen on Tuesday.

Nicos Anastasiades with Angela Merkel in Brussels

The tax will apply to all deposits held in banks within Cyprus, including an estimated 2bn euros (£1.75bn) of British money, according to the European Central Bank.

However, it will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

The country has a large British expatriot community, among them David Symonds who lives in Limassol.

He told Sky News: "Everybody was surprised. We were assured only a few days ago that the haircut on the deposits was a red line for the government.

"When we learned that it might become a possibility we were told it would only be on deposits above 100,000 euros. Now of course we know it affects everybody."

Cyprus was badly hit by the Greek financial crisis because of its close links to the country.

Its two largest banks saw combined losses of 4.5bn euros (£3.8bn) - equal to a quarter of the island's gross domestic product.

The rescue package was agreed after 10 hours of talks in Brussels and was significantly less than the 17bn euros (£14.7bn) asked for.

As part of the deal, the government will also have to hike corporate tax to 12.5% from 10% and sell off state assets to help balance the public finances.

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