Weather: Economy Hit By Spring Snowstorm

By Nick Martin, Sky News Correspondent

Britain's fragile economy has been hit hard as a result of the spring snowstorm with some businesses reporting a slump in trade.

Some high street retailers say the cold snap kept customers away during what should have been the run-up to a busy Easter weekend.

Kingfisher, the owner of B&Q, reported a 13% drop in trade, while Next said it had seen a fall in sales during the bad weather.

Experts say the costs to the economy of the unseasonable weather could run into billions of pounds and threaten to impact on economic growth figures.

Some towns were cut off by the snow for up to a week making trading difficult on the high street.

In the Derbyshire town of Bakewell, which was badly affected by the snow, businesses were hoping the cleared roads would encourage locals and tourists back into the town.

Zoe McBurnie, owner of the Bakewell Tart and Coffee Shop, told Sky News that takings had dropped by £10,000 in just one week.

"The recession hasn't been too bad to us but the snow has been completely devastating.

"One minute you're busy and the next there's no-one coming in because the town is cut off by snow."

Some of the biggest losses were on farms where hundreds of livestock, including sheep, lambs and cattle, were claimed by the snow drifts.

On Nigel Birch's farm near Monyash in the Peak District, three calves lay dead on the yard, victims of the worse snowstorms there for 50 years.

Hundreds of sheep had to be taken inside and fed on expensive corn feed whilst stocks of silage were running low.

As lambing season enters full swing, newborns were left shivering in freezing conditions and had to be kept under heat lamps.

"This has been a very difficult week - one I want to forget," Mr Birch said.

"We've lost cattle, we're paying for new hay, feed and silage and in the end I think this spell will cost us between £5,000 and £10,000."

Tourism was also badly affected as roads became impassable and families chose to cancel holidays.

Nikki Dick, a B&B owner, said her diary was empty as guests were reluctant to book or could not get to her because of blocked roads.

"If I look at last year's diary for the same time it is full. This year we have a few bookings, but after that there's nothing.

"People have panicked and thought they're best to stay away.

"But the snow has been cleared, and we're all here open for business," she said.

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Cyprus Banks: President Makes Rallying Call

Cyprus' president has called on the country to "share the burden" of its financial crisis - as bank withdrawal limits remained at 300 euros.

President Nicos Anastasiades made a rallying call for understanding as queues formed outside banks on the Mediterranean island.

The banks reopened on Thursday for the first time since closing on March 16 to prevent people from draining their accounts at the height of the crisis.

The country has imposed daily withdrawal limits of 300 euros (£250) for individuals and 5,000 euros (£4,200) for businesses.

The limits are the first so-called capital controls that any country has applied in the eurozone's 14-year history. 

Depositors wait for the opening of a branch of Laiki Bank in Nicosia

Speaking at a civil servants union convention on Friday, Mr Anastasiades said: "The deal we agreed on, after the dramatic hours we all lived through last week, is without doubt painful.

"Everyone will have to make sacrifices as our financial situation, in the violent way in which it has developed, will oblige all of us to share the burden."

Despite the turmoil of the past weeks and harsh conditions of the rescue, Mr Anastasiades stressed that his country's future lay firmly within the euro.

"We are not going to leave, I stress, from the euro ... We will not, I stress, endanger the future of our country with dangerous experimentation."

Meanwhile, queues formed outside some banks just after opening time, but most were gone by mid-morning.

Financial strains are building on families and businesses, and the recession in Cyprus is likely to deepen.

Cyprus' banks became much bigger than the country's government could afford to rescue - more than seven times the size of the country's economy.

On Monday, Cyprus agreed to make the banks' bondholders and big depositors contribute to the rescue in order to secure 10 billion euros (£8.4bn) in loans from the eurozone and the International Monetary Fund.

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Cyber Currency Surge Amid Eurozone Crisis

By Siobhan Robbins, Sky News Reporter

As the eurozone is rocked by the crisis in Cyprus, a cyber currency called Bitcoin has seen a surge in popularity from people looking for an alternative place to invest their money.

Bitcoins are basically virtual money which can be earned or bought. They were created four years ago by a hacker who remains anonymous.

There are no banks to control them, people just exchange them directly with each other over the internet. That makes them difficult to tax, trace or freeze.

In the last month, the Bitcoin has more than doubled in value.

It is claimed the surge is partly down to people in cash-strapped countries including Spain and Greece turning to Bitcoins in the hope of protecting their money.

Amir Taaki has helped develop the Bitcoin since it was created by a hacker

Amir Taaki, who has helped to develop it in the UK, told Sky News he believes it is a purer alternative to traditional banks.

"There are so many things that are wrong and broken with banks. Primarily, the biggest problem is I have to trust them and I have no other option.

"Bitcoin is a basic system where I can choose how much trust I put in other people.

"There is no central bank or central authority controlling it. Everyone that participates in the network is upholding the network and it's not a theoretical concept but a billion dollar market with charts and graphs and people are using it.

"Because it's decentralised and runs off a mathematical algorithm it means it can't be corrupted."

The premises where the digital currency is being developed

The huge spike in value makes it an attractive investment for some, but currency experts like Simon Smith from FxPro warns against that.

"It's totally unsafe. They might as well burn their money in a pile as far as I'm concerned. Yes, Bitcoin has doubled in value over the last month but it has every sign of being a bubble."

Bitcoin has reached an all-time high, trading at almost £60. Its market value is now more than £500m.

Some restaurants and shops already accept Bitcoin as payment and its supporters claim that in the future it will be dispensed from ATMs like pounds and euros.

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Cyprus Banks Finally Reopen But Anger Lingers

By Tom Parmenter, Sky News Correspondent in Cyprus

Cyprus' banks have opened their doors after the longest enforced bank holiday in Europe's history.

Queues grew outside branches across the country, with no signs of panic as employees limited the number of customers allowed in at any one time.

But many residents expressed anger at the country's controversial bailout - which requires Cyprus to raise 5.8bn euros (£4.9bn).

After a rush when the doors first opened, customers queued calmly

"They have stolen our money," Milton Loucas told Sky News.

"I have been working for 60 years. I am 80 years old. I cannot work again for my living - they have cut the lot.

"Our money, our social insurance - they have cut them. How are we going to live?"

Another Cypriot, Stelios, came out of the bank empty handed.

"I tried to get my February wages and they gave me a piece of paper only," he said.

"I have two children in the army and they asked for money - I don't have money to give them.

"The Government didn't pay anybody. My old parents didn't get their pension."

Banks are giving customers information about the capital restrictions

The country's President - who has cut his own salary by 25% - tweeted his thanks to Cypriots for showing "maturity" as the banks reopened.

"I would like to thank the Cypriot people for their maturity and collectedness shown in their interactions with the Cypriot Banks," Nicos Anastasiades said on his official Twitter account.

Cash withdrawals and other transactions are subject to tough restrictions, introduced by the country's Finance Ministry in an effort to avoid a run on the banks.

The country's crippled banking system was effectively closed down on March 16 while the terms of the 10bn euro (£8.5bn) bailout were agreed and implemented.

Large depositors face losses of as much as 40% of their savings as part of the deal, leading to fears that customers would attempt to withdraw large amounts of money when the banks reopened.

Demonstrations against austerity measures continued in Cyprus on Wednesday

As a result, strict capital controls include a withdrawal limit of 300 euros (£253) a day and a ban on cashing cheques.

Travellers leaving the country can only take up to 1,000 euros (£845), or the equivalent in foreign currency, with them in cash - significantly less than expected.

Police and security staff were deployed to maintain order at branches, and G4S guards called in to work alongside police officers and other security firms across the country.

The giant global firm was the contractor that failed to meet their promises over security at the London Olympics prompting the British military to step in.

G4S's managing director in Cyprus, John Arghyrou, told Sky News: "I feel we have the resources, I feel extremely confident as a security company that we can undertake and meet the requirements of our customers."

With just 860,000 people, Cyprus has around 68bn euros (£57bn) in its banks.

This outsized financial system attracted deposits from foreigners but has struggled since investments in neighbouring Greece went sour.

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Deloitte Boss Blames Law For Tax Avoidance

The chief executive of one of the big four accountancy firms, Deloitte, has blamed UK law for the money lost as a result of tax avoidance.

Speaking on Jeff Randall Live, David Sproul admitted that the problem with the tax system is "mainly the law".

He said: "There's clearly tax practices that take advantage of the rules that the Government has brought in.

"The real question is the extent to which that is accepted. And I think there's no question that business recognises that what is acceptable has changed."

As an example of a practice no longer deemed acceptable, he cited the way banks used trust arrangements to pay bonuses to employees that meant they avoided national insurance and allowed them to defer the tax on those bonuses.

"That was widely accepted and was at the time widely used, we would have advised clients on it at the time. But we would not do that now."

In the middle of the Government's stringent austerity programme, large companies that have avoided paying tax legally have prompted much public anger and protests in recent times. Ministers are also anxious to do what they can to bolster the UK's public finances in the gloomy economic climate.

In his recent Budget, Chancellor George Osborne announced a series of measures to clamp down on aggressive tax avoidance and evasion in a bid to deliver an extra £4.6bn to the Exchequer.

The new initiatives included the immediate closure of 10 loopholes; the naming and shaming of those who promote tax avoidance schemes; and a new focus on offshore tax evasion through agreements with havens such as the Isle of Man, Guernsey and Jersey.

Mr Osborne also announced a tightening of the rules for companies that choose to arrange loans, which do not attract tax, for their directors or shareholders in place of taxable salaries or dividends.

Mr Sproul said "a lot" of the current tax gap was "at the small business and sole trader end".

"Some of it clearly is at the large business end and goes to some of the points (the Chancellor) is talking about," he added.

He denied claims that accountancy firms like his own used alleged staff shortages at HM Revenue and Customs to their advantage.

"The complexity (of the tax system) is what creates the problem, not the fact that HMRC may or may not have too few staff."

Mr Sproul welcomed the Chancellor's focus in this month's Budget on making the UK's tax regime more competitive, including the move to cut corporation tax to 20% from 2015. That was "very attractive, very important and does create jobs", he said.

He added that the reason "there is not a flood of companies coming to the UK now is not about the tax system, it's about the broader uncertainty in the economy".

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Weather: Economy Hit By Spring Snowstorm

By Nick Martin, Sky News Correspondent

Britain's fragile economy has been hit hard as a result of the spring snowstorm with some businesses reporting a slump in trade.

Some high street retailers say the cold snap kept customers away during what should have been the run-up to a busy Easter weekend.

Kingfisher, the owner of B&Q, reported a 13% drop in trade, while Next said it had seen a fall in sales during the bad weather.

Experts say the costs to the economy of the unseasonable weather could run into billions of pounds and threaten to impact on economic growth figures.

Some towns were cut off by the snow for up to a week making trading difficult on the high street.

In the Derbyshire town of Bakewell, which was badly affected by the snow, businesses were hoping the cleared roads would encourage locals and tourists back into the town.

Zoe McBurnie, owner of the Bakewell Tart and Coffee Shop, told Sky News that takings had dropped by £10,000 in just one week.

"The recession hasn't been too bad to us but the snow has been completely devastating.

"One minute you're busy and the next there's no-one coming in because the town is cut off by snow."

Some of the biggest losses were on farms where hundreds of livestock, including sheep, lambs and cattle, were claimed by the snow drifts.

On Nigel Birch's farm near Monyash in the Peak District, three calves lay dead on the yard, victims of the worse snowstorms there for 50 years.

Hundreds of sheep had to be taken inside and fed on expensive corn feed whilst stocks of silage were running low.

As lambing season enters full swing, newborns were left shivering in freezing conditions and had to be kept under heat lamps.

"This has been a very difficult week - one I want to forget," Mr Birch said.

"We've lost cattle, we're paying for new hay, feed and silage and in the end I think this spell will cost us between £5,000 and £10,000."

Tourism was also badly affected as roads became impassable and families chose to cancel holidays.

Nikki Dick, a B&B owner, said her diary was empty as guests were reluctant to book or could not get to her because of blocked roads.

"If I look at last year's diary for the same time it is full. This year we have a few bookings, but after that there's nothing.

"People have panicked and thought they're best to stay away.

"But the snow has been cleared, and we're all here open for business," she said.

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Cyprus Banks In 'Race' Ahead Of Reopening

By Tom Parmenter, Sky News Correspondent in Cyprus

Banks in Cyprus are in a "race against time" to be ready to reopen their doors today.

For nearly a fortnight banks have been closed after Cyprus was plunged into its biggest crisis since the Turkish invasion of the island in 1974.

The terms of the EU bailout agreed in Brussels mean there has been a state of financial limbo and widespread confusion.

Cheques have not been banked, people have not received their wages and regular payments have not been processed.

Thousands of people are expected to descend on the banks when they finally reopen their doors. One employee at his desk at the doomed Laiki bank told Sky News colleagues were in a "race against time" to be ready.

Police and security staff will be deployed to maintain order at branches and are hopeful of preventing a mass run on the banks.

An out-of-order cashpoint in Nicosia. Most machines are said to be working.

Staff from G4S have been working 24/7 since this crisis began ensuring cash machines have been filled up night after night.

The giant global firm was the contractor that failed to meet their promises over security at the London Olympics prompting the British military to step in.

G4S's managing director in Cyprus, John Arghyrou, told Sky News: "I feel we have the resources, I feel extremely confident as a security company that we can undertake and meet the requirements of our customers."

Some 180 guards will be deployed to banks across Cyprus to work alongside police officers and other security firms.

Mr Arghyrou added: "It is not really guarding it is assistance services ... but close co-operation with the police is essential."

A spokesman for the Cypriot police told Sky News he was "unable to disclose" full details of their plans but said they do not expect to need officers at every branch.

Cypriots protesting against austerity measures

People will be limited in the amount of money they can withdraw.

The Finance Ministry has imposed a 300 euro (£253) cap on cash withdrawals and a limit of 1,000 euros (£845) on the amount of cash individuals can take abroad.

The cashing of cheques was also banned in what are the tightest capital restrictions imposed in any eurozone country that has received a bailout.

Hari Tsoukas a business analyst in Nicosia told Sky News: "In the short term it maintains our position as a very peculiar member of the eurozone - nowhere else has these kind of capital controls but on the other hand it is necessary.

"People are angry. Communications with customers has been non-existent.

"The crisis management has been appalling, the best thing would be to set up some kind of hotline so at least people can call to get information."

Most banks in Cyprus are due to reopen at midday, which is 10am UK time. They are expected to stay open until 6pm local time, 4pm in Britain.

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Cyprus Imposes Limits Ahead Of Bank Reopening

Cyprus Bank Controls 'To Remain'

Updated: 7:07pm UK, Wednesday 27 March 2013

By Ed Conway, Economics Editor

Well that's a relief! The initial leaked documentation detailing how capital controls will work in Cyprus says they will only be temporary.

Of course, were one to look through history at episodes of international monetary breakdown, you'll find that most of the seminal, permanent measures which brought economic systems to an end were also described as temporary.

Iceland's capital controls, for instance, were "temporary" when first introduced in 2008. They are still in place, "temporarily", five years later.

When Britain left the Exchange Rate Mechanism in 1992 it was described by the Chancellor as a "temporary" measure.

Indeed, as far as many were concerned, when in 1971 Richard Nixon closed the gold window - a momentous moment that brought the Bretton Woods system to an end and landed us in a world of floating exchange rates - it was branded a "temporary suspension" as well.

And this is before one gets to the hackneyed example of income taxes which, when William Pitt the Younger introduced them in the UK in 1799, were supposed to be temporary too.

In other words, in economics it pays to be sceptical when someone insists something is only temporary. And, as I laid out in some detail in a previous post, if Cyprus has permanent capital controls, it will permanently cease to be a euro member.

So we will watch with interest and some scepticism Cyprus's efforts to try to dismantle the controls in a week's time.

Particularly since we now know they will be even less subtle, even less avoidable, than was anticipated: a ban on taking 3,000 euros of cash out of the country; a block on cheques being cashed unless they're intra-branch; limits on credit card spending overseas. It's clear that the country is constructing an iron ring around its borders.

And, clearly, a euro in Cyprus won't be worth the same as in other euro members.

Of all the feats Cyprus will have to surmount in the coming months and years to escape from its current predicament, taking down these "temporary" capital controls will be among the most difficult.

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TV Dragon Breathes New Life Into Jessops

TV Dragon Peter Jones has told Sky News he is taking a risk by relaunching collapsed high street camera chain Jessops but will give it his "best shot".

The entrepreneur snapped up the brand when the company went into administration in January with debts of more than £80m, leaving almost 1,500 staff out of work when its 187 stores were shut.

Jessops was then a casualty of not only its business model but of the consumer spending squeeze combined with stiff online competition and the boom in camera phones which hit demand for digital cameras.

It was the first of several chains to fail after Christmas, which resulted in more than 6,000 retail jobs being lost.

HMV, Blockbuster and Republic were among the brands that fell into administration.

Jessops had collapsed in January after a dismal Christmas

Mr Jones has invested £5m in the relaunch of Jessops, which will have a heavy focus on boosting its online presence to catch up with the soaring growth in internet retailing.

Products sold over the web will be price-matched to the stores - something that did not happen under Jessops' previous ownership.

The entrepreneur has taken on hundreds of staff, many of them former Jessops employees, and will open the first of at least 30 stores today in London and Birmingham.

The stores had been reconfigured, he said, to create a more interactive, customer-friendly experience while each site will include a Jessops Academy, offering photography courses and training.

"We've got a real chance of making it a success... The big thing about Jessops is the fact there is not another retailer in the country that has such experienced passionate staff when it comes to camera equipment sales... That makes a big difference."

He concluded: "We have to keep it lean and mean."

Mr Jones made his fortune after setting up the Phones International Group, which he sold a part of in 2011.

He has appeared on the BBC show Dragons' Den since it started in 2005.

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Banks Facing £60bn Capital Shortfall

Britain's banks are expected to be told they face a capital shortfall of up to £60bn as the Bank of England delivers its verdict on the strength of the sector.

The Bank's Financial Policy Committee (FPC) will reveal the scale of the balance sheet pressure in the banking industry and its decision on how to tackle the collective capital hole.

Banks are already braced for grim news after the FPC warned in November that the shortfall in capital needed as a cushion against future crises could be as high as £60bn in its worst-case scenario.

Lenders - such as The Co-operative Bank - have already been taking action to boost their balance sheets after discussions with the Financial Services Authority (FSA).

But it is thought the FPC believes banks will have to go further and raise more than agreed with the FSA, which is set to be axed on Monday as part of a major regulation overhaul in the UK.

In its quarterly report on liabilities and financing in the sector, the Bank on Tuesday said that capital levels remained broadly unchanged so far this year, although they were expected to rise in the next three months.

It had expected capital levels to have already started increasing.

A number of players are understood to have been given orders by the FSA to beef up their capital cushions, with the Co-operative Bank reportedly warned over a potential £1bn shortfall.

There are fears that state-backed lenders Royal Bank of Scotland and Lloyds Banking Group are also significantly under-capitalised and may be told to bolster their balance sheets with large capital raisings.

The Treasury is expected to make it clear that the taxpayer will not foot the bill and that there will be no more direct state support for RBS and Lloyds.

Instead, the FPC is likely to allow the lenders an extended period to come up with measures to build up their capital buffers.

They have already started making efforts to appease concerned regulators, with RBS recently agreeing to float a stake in its US business Citizens, while Lloyds has raised £500m by selling part of its stake in fund manager St James's Place.

Today's statement is seen as a pivotal one for the FPC, whose job it is to spot and prevent another financial crisis.

It is also the pillar of the new regulatory regime introduced by the coalition, which comes into force on April 1.

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