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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Retailers Geared Up For 'Busiest Day'

By Tadhg Enright, Business Correspondent

As the last full shopping day before Christmas Eve, today is expected to be the busiest day of the year on high streets and in shopping centres.

The British Retail Consortium expects between £4bn and £5bn to be spent throughout this weekend.

Researchers at the credit card company, Visa, have forecast sales to peak this afternoon between 2pm and 3pm.

At Brent Cross Shopping Centre in north London, management think today could be their busiest on record and extra security and traffic staff have been deployed to help customers.

Centre manager Tom Nathan told Sky News: "Everything shows us that when Christmas is on a Tuesday and the schools only broke up yesterday that today is going to be enormous because people haven't had the chance to go and do their full Christmas shop.

"So combine that with buying the turkey - and today is the start of the big turkey run - and today is going to be a huge one I think."

But the Local Government Association said confidence on the high street remained low.

Its annual Christmas survey found that 84% of town centre managers said confidence among shoppers had either not improved or worsened compared with this time last year.

It also suggested that the particularly cold and wet start to the winter could also be taking its toll on the number of shoppers visiting town centres.

Sales at Brent Cross Shopping Centre could be the busiest yet

Normally the busiest day of the year is December 23 - the last day before Christmas Eve - but this year that falls on a Sunday when trading hours for bigger shops are restricted by law to just six hours.

Big name retailers including John Lewis, Morrisons and Marks & Spencer failed in a bid to convince the Government to relax the restrictions on Sunday trading tomorrow.

M&S has responded by opening more than 100 of its stores at 12.01am on Christmas Eve morning to help shoppers get their Christmas essentials in time.

An M&S spokesman said: "We know that the days leading up to Christmas are some of the most hectic for our customers.

"Due to Sunday trading rules, we can only open for six hours on one of the busiest days of the year.

"We hope that these early bird hours on Monday will ease the pressure and give busy shoppers a bit more time to pick up Christmas food orders or last minute presents."

Waitrose, part of John Lewis, will also extend Christmas Eve trading hours in two thirds of its supermarkets by opening an hour earlier at 7am and closing an hour later at 6pm.

Sky News visited one of its four regional distribution centres at its head office in Bracknell, Berkshire, and saw staff working to deliver twice the normal volume of food to its stores.

They will be working 24 hours a day between now and 6am on Christmas Eve to ensure Waitrose shelves remain stocked.

But management are disappointed for them and their customers that trading will be curtailed on December 23 which is usually their most important shopping day.

Waitrose supply chain director David Jones told Sky News: "If you can imagine what you'd normally take in trading over 14 hours and shrinking that into six hours, it's quite challenging as you walk around the supermarket.

"You're trying to get people through checkouts and we would have loved to have had the opportunity to trade for a longer time."

Mr Jones will be taking time out from his executive duties to man the tills in his local branch over Christmas.

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Banks Face Break-Up Over Risky Trading

By Poppy Trowbridge, Business and Economics Correspondent

UK banks face break-up if they fail to follow new rules protecting high street operations from riskier trading.

The Parliamentary Commission on Banking Standards has published a report assessing Government-backed legislation that will require lenders to protect customers' banking deposits from potential losses.

While the report suggests ring-fencing will help address the damage done to culture and standards in banking, it may not be enough to stop banks taking advantage of the rules.

Commission chairman Andrew Tyrie MP said: "The legislation needs to set out a reserve power for separation; the regulator needs to know he can use it."

"Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence."

MPs are looking at ways to exert pressure on lenders that fail to comply.

Shadow chancellor Ed Balls told Sky News: "I think people are really frustrated, families, businesses, that banking reform is taking so long.

"In the meantime, our economy has not been growing, small business lending is falling. We've got to get on with it and we've got to get it right.

"The commission says the proposals on the table so far from George Osborne don't go far enough, they've been watered down, and they also are going to look at the wider issues of standards and culture in the way our banks operate."

Next year, the commission will take further evidence on whether full separation of proprietary trading operations at banks is necessary.

The Government launched an inquiry into banking standards in the wake of revelations that the London Interbank Offered Rate (Libor) had been manipulated by traders.

Barclays and Swiss bank UBS have been fined by authorities for manipulating Libor.

The rate is a reference point for vast ranges of financial contracts around the world worth around £184 trillion.

Mr Tyrie said: "The latest revelations of collusion, corruption and market-rigging beggar belief.

"It is the clearest illustration yet that a great deal more needs to be done to restore standards in banking."

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Nokia And Blackberry-Maker Agree Patent Truce

Nokia has settled all its patent disputes with Blackberry-maker Research In Motion amid the costly legal rows still gripping the fiercely competitive smartphone industry.

While terms of the agreement were confidential, Nokia said, the deal on wi-fi technology licensing includes a one-time payment and continuing fees.

The Finnish firm said the agreement settled all existing patent litigation between the two companies but it added that disputes with HTC Corp and ViewSonic over the same wi-fi technology still stood.

More follows...

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BAE 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 8 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.

The deal safeguards around 6,000 jobs in the UK at BAE's two sites in Lancashire.

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

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

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.

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

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.

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Tax Row: McDonald's Calls For Review Of Law

The chief executive of McDonald's in the UK has said Britain's corporation tax rules need to be addressed.

Speaking on Jeff Randall's Christmas Dinner, Jill McDonald warned that the continuing row over the amount of corporation tax companies pay could create a negative image of British business.

"Customers, consumers, want businesses to be doing the right thing," she said.

"I think it is politicians who are creating the laws who need to address and look at those."

She added: "I do think that it's in danger of spinning a little bit out of control because you don't want the conversation to be so negative about business …because, as we know, business is ultimately what's important to help Britain grow again."

McDonald's paid £42m in UK corporation tax last year

She made her comments after a number of companies – including Starbucks, Google and Amazon - were heavily criticised by politicians and campaigners over their tax affairs.

McDonald's, which employs over 90,000 people in the UK, paid £42m in UK corporation tax last year, which Ms McDonald defended as "fair".

"One man's efficient tax planning though is another's tax avoidance so the law does need to be looked at," she said.

"But in McDonald's for example we pay what we would consider to be our fair share of corporation tax."

Paul Walsh, the chief executive of Diageo which has Guinness, Smirnoff and Johnnie Walker among its brands, told Jeff Randall that tax is a complex issue for a global company.

Only 7% of Diageo's total sales were in the UK last year but the company - which is the world's biggest spirits company - paid more than a billion pounds in UK corporation tax.

"I think we run the risk of getting into the debate of 'If you pay tax, everything's fine'," he said.

"What about the company that's investing billions and will get appropriate tax losses and capital allowances?

"They're creating a lot of jobs so be very careful that we don't suddenly get so simplified in our approach that it conspires against what this nation is trying to do - create jobs. "

:: Jeff Randall's Christmas Dinner is broadcast tonight at 7pm on Sky News, and is repeated over the festive period. It is also available on Sky On Demand and the Sky News for iPad App.

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London Midland Free Tickets After Delays

Free travel passes and cheap train tickets are being given to London Midland passengers hit by cancellations and delays after the Government stepped in.

The package, worth £7m, was imposed after months of problems on routes which cover London, Birmingham, Northampton, Crewe and Liverpool.

Season ticket holders with the company will receive free travel passes for five days. Another 500,000 extra cheap advance tickets will also be handed out.

The free tickets will be available to all monthly and annual season ticket holders, and weekly ticket holders affected by disruption.

The cheap tickets will be made available over the next two years for passengers travelling on key London Midland routes.

The company has been battling a major driver shortage in recent weeks, forcing it to cancel almost 1,000 trains since October.

Transport Minister Norman Baker said: "London Midland has cancelled or delayed hundreds of services in recent months.

"On repeated occasions, they were not able to provide enough drivers and some services had to be cancelled, with severe delays to services, and they have fallen short both of everyone's expectations and their franchise obligations.

"Securing these benefits for passengers represents a firm yellow card for London Midland and some financial benefit for those who have been hardest hit by their poor performance.

"I am confident London Midland has now rectified their driver shortage but the company need to be clear that we will continue to monitor their performance closely and take firmer action if necessary."

The deal also confirms the franchise will end in September 2015, to ensure the firm has enough time to resolve the driver problems permanently.

London Midland will also have to spend millions improving the resilience of their trains and at least £2.25m on measures to help passengers - mostly in the West Midlands which was affected worst.

Its parent firm, the Go-Ahead Group, released this statement: "Following a period of consultation over the last couple of months, London Midland has agreed a package of benefits with the Department for Transport to compensate passengers for cancelled trains and delays to services.

"We acknowledge the impact that this has had on our passengers and we have now put measures in place to ensure we have sufficient drivers to operate our services.

"We also welcome the confirmation that the London Midland franchise has been extended until September 2015 which gives us the opportunity to provide longer-term investment in our services for the passengers' benefit."

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Ryanair: Airline Bottom Of Which? Survey

Ryanair is the least popular short-haul airline, according to a new survey that gave the carrier its lowest approval rating ever.

The Irish firm received an overall satisfaction score of just 34% in a table put together by consumer magazine Which? from its members' votes.

It was 16th and last in the table, which was compiled from views of passengers on a home-bound flight in the 12 months to October.

On Ryanair, Which? said: "We were inundated with comments about Ryanair - many about its extra charges.

"This partly accounts for the paltry one-star ratings for baggage allowance, boarding arrangements, seat allocation, and food and drinks."

Ryanair boss Michael O'Leary is known for his controversial comments

Which? said it was the first time Ryanair had been at the bottom of its survey, adding that its customer score was the airline's worst to date.

The most popular short-haul airline was Swiss, with an overall score of 82% and a maximum five-star score on a number of the rating categories.

These included check-in process, baggage allowance, seating allocation and airline staff.

Second in the table was Turkish Airlines with a score of 78%, with German carrier Lufthansa third, Aer Lingus fourth and KLM fifth.

Only airlines which received at least 30 responses were considered.

Swiss's results were based on 59 responses, Turkish Airlines on 38, Lufthansa 74 and Aer Lingus 65.

Ryanair's results were based on 563 responses. In 15th place was Thomas Cook Airlines with a score of 36%, with Thomson Airways 14th on 45% and Monarch 13th with 47%.

Swiss's customers spoke of the staff's "politeness and great service", while Turkish Airlines was the only carrier to get more than three stars in the food and drink category.

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Investigation Launched Into Comet Collapse

The Department for Business, Innovation and Skills has launched an investigation into the purchase and administration of troubled electrical chain Comet.

The Insolvency Service has been tasked with scrutinising the process following a number of complaints from MPs.

The business was bought for £2 by Hailey Acquisitions, an investment vehicle put together by Henry Jackson of OpCapita, in November 2011.

They were given a £50m dowry from previous owner Kesa Electricals, now known as Darty, to run the retailer, which collapsed just a year later.

Seven weeks after they were appointed administrators, Deloitte failed to find a buyer for the 235-store chain, and closed its remaining 49 outlets.

The collapse of the company, which was founded in Hull in 1933 and employed around 6,895 people, is one of the biggest high street failures since the demise of Woolworths in 2008.

Deloitte said on Monday that it remained in talks with a small number of parties over the sale of internet operations and the brand.

But the firm also confirmed the taxpayer will have to pick up a £49.4m bill for unpaid redundancy and tax payments.

Comet launched a sale following its collapse at the beginning of November

With insufficient funds raised from the winding down of the chain, the Government's Redundancy Payments Service will be required to meet the £23.2m of outstanding redundancy and accrued holiday pay and pay in lieu of notice.

The scale of the problems at Comet was also highlighted in the report, with the chain racking up losses of £95m in the year to April after also seeing revenues slump by £200m compared to a year earlier.

This was followed by a further £31m loss in the subsequent five months as credit insurers lost confidence and withdrew support for the business.

Hailey Acquisitions is expected to get payments of just under £50m as a secured creditor - a shortfall of £95m on the amount owed.

But it has been reported that unsecured creditors, including HM Revenue and Customs which is owed £26.2m, will receive nothing.

Comet was hit by weak high street trading conditions, competition from online rivals and being unable to secure the trade credit insurance needed to safeguard suppliers.

In particular, it was knocked by the lack of first-time home buyers who were key customers for Comet.

Holders of £4.7m of unclaimed Comet gift cards and vouchers are also on the list of unsecured creditors.

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