US New Jobs At Lowest Level For Nine Months

US Jobs Figures Are Deeply Worrying

Updated: 4:04pm UK, Friday 05 April 2013

By Ed Conway, Economics Editor

Americans are dropping out of the jobs market, and fast. That's the depressing takeaway from today's non-farm payroll report.

The overall participation rate – a measure, essentially, of the proportion of people of working age either in a job or looking for one – has fallen to the lowest level since 1978.

It is, as far as employment experts are concerned, a deeply worrying signal: increasingly, potential workers are giving up on getting work, dropping out of the jobs market instead of attempting to find a new position.

In fact, as you can see from the chart, participation has been falling since the turn of the millennium, though it's only in the wake of the financial crisis that the drop has become more vertiginous.

Why be concerned about this? Well, a high participation rate has typically been seen as evidence of the American economy's strength – a complement to its high productivity rate and consistently-strong GDP growth rate.

A low participation rate, on the other hand, is often evident in economies which are more sclerotic and less efficient – particularly ones with over-generous welfare states which some think discourage people from working.

So, for instance, Japan and Spain both have participation rates below 60%: Germany's has only just tipped fractionally above it.

The reality is that now, for the first time since 1977, America's participation rate, at 63.3%, is lower than Britain's, which is 63.6%, or was in the three months to the end of January.

It would be nice to claim that this was because Britain was in some way becoming leaner and meaner, but the statistics suggest otherwise: Britain's participation rate has remained steady since 2005 while America's has fallen sharply as people leave the workforce.

It might be odd, having said all of the above to say that today's nasty US jobs report (the headline, by the way, was that a mere 88,000 net jobs were added in March – well below the rise in the population) also technically make it more likely that the Federal Reserve will scale back its stimulus.

But in one sense they do. The Fed has committed to more quantitative easing, buying up $85bn (£55.8bn) of debt each month until the unemployment rate drops below 6.5%.

But because unemployment measures the number of working people as a percentage of the total workforce, it can fall as a direct result of the workforce falling – and that's what happened this time, with the rate dropping from 7.7% to 7.6%.

Now, pragmatically speaking the Fed will try to "look through" this optical illusion. But it's an important reminder that when you tie your monetary policy to a very specific number, it doesn't always make it easy to predict future moves from the central bank.

Mark Carney, who is coming in as Bank of England Governor this summer and has nodded approvingly over at what the Fed has been doing, should take note.

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HMV Rescue Saves 141 Stores And 2,500 Jobs

By Mark Kleinman, City Editor

HMV's future as a high street retailer has been salvaged in a £50m deal that secures 2,500 jobs on Britain's beleaguered high streets.

Hilco, a restructuring firm, confirmed on Friday morning that it had struck an agreement with Deloitte, the administrator to HMV, to rescue the retailer.

The deal, which was revealed exclusively by Sky News on Thursday night, will keep 141 shops open, including 25 which had already been earmarked for closure by Deloitte. All nine of the Fopp-branded shops are included in the transaction.

While that represents little more than half of HMV's UK stores that were open before it called in administrators in January, it represents a more optimistic outcome for the chain than many analysts had predicted.

Hilco acquired HMV's Canadian operations two years ago, since when the performance of the business has surpassed expectations.

Paul McGowan, Hilco chief executive, said the deal had the backing of key HMV suppliers and landlords.

He said: "We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly.

"The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business but we believe it has a successful future ahead of it."

Mr McGowan will become chairman of HMV, with two other Hilco executives taking key roles with the retailer.

HMV had been weighed down by a mountain of debt, allied to a combination of waning consumer confidence and intense pressure from supermarkets encroaching on its entertainment retailing turf, as well as the rapid rise of low-cost digital rivals.

Hilco said it would abandon a recently-introduced practice of selling tablets and other digital devices, using the space instead for an expanded music and visual entertainment range.

Ian Topping, one of the Hilco executives who will be involved in running HMV, said: "The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that."

Hilco also confirmed that it would seek to re-establish a presence for HMV in Ireland.

Nick Edwards, joint administrator at Deloitte, said the deal "provides a solid financial footing on which the business can be taken forward".

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Food Prices Set To Soar After Big Freeze

By Emma Birchley, East of England Correspondent

Months of heavy rain followed by extreme cold are set to hit harvests and push the price of the weekly shop up ever higher.

More than a quarter of winter wheat could not be planted last autumn because of waterlogged fields and attempts to catch up this spring have been hampered by frost.

But poor grain yields do not just affect the price of bread and biscuits.

Animal feed is 50% more expensive than 15 months ago, in turn increasing the cost of producing meat, milk and eggs.

Snow covers a field in North Yorkshire, with many crops affected

Mother-of-three Sarah Tait is concerned. She has already seen her weekly bill rise from £80 to around £100 in the past 18 months or so.

She said: "It is a worry. It just means there will be other things we don't buy because we have to buy food and retailers have got you really because you have got to pay what the prices say."

Other crops including potatoes, tomatoes and sugar beet have also been delayed.

In the 12 months to February fruit has risen in price by almost 12%, vegetables are up 7%, meat costs 4% more and bread and cereals are 3% more expensive - all above general inflation, which stands at 2.8%.

On the Euston Estate in Suffolk crops like winter barley have struggled from the start after being sown in November rather than the end of September due to the weather.

Estate manager Andrew Blenkiron expects the late planting to have a 20% impact on yield.

He said: "There are areas of the field that we couldn't plant because it was so wet and usually we would try to work through the winter and try to patch it up, but there's still water lying in it in early April."

UK growers should also have planted 50% of their spring cereals by now but have in fact only managed to sow 15% due to the weather.

Shoppers are being advised by Richard Dodd from the British Retail Consortium not to be too worried.

He said: "Customers shouldn't panic about the impact on food prices of this weather, of course it's adding an extra pressure, but at the same time the cost of lots of key world commodities, things like wheat are actually coming  down, and that's certainly balancing out any upward influences from weather.

"And of course retailing remains incredibly competitive so as the retailers battle it out for every bit of spending that is to be had from customers, they are doing all they can to protect customers from any effects."

But at the beginning of the year, Waitrose's managing director Mark Price warned the price increases in some commodities will be "massive".

And it will be some months before the full impact of the bad weather on crops becomes clear.

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HBOS Bank Bosses Life-Ban Call In Report

Exclusive: Ex-HBOS Banker Gets Ban

Updated: 8:00pm UK, Wednesday 12 September 2012

By Mark Kleinman, City Editor

One of the former executives who led HBOS to the brink of collapse in 2008 is to be hit with a massive fine and a lifetime ban from the industry, I can exclusively reveal.

Peter Cummings, the head of corporate lending at HBOS until its rescue by Lloyds TSB, is to be fined £500,000 by the Financial Services Authority (FSA) following a long-running investigation into his stewardship of the bank's vast balance sheet.

I am told that the City regulator plans to disclose the details of its probe tomorrow morning, although it is conceivable that a statement will be made this evening.

Mr Cummings was well-known in the City for leading the aggressive growth of HBOS' corporate lending activities, counting Sir Philip Green, the Top Shop billionaire, and Mike Ashley, the Sports Direct tycoon, among his most important clients.

He also presided over HBOS' acquisition of shareholdings in prominent businesses such as McCarthy & Stone, the retirement home-builder, and David Lloyd Leisure, the health and fitness club operator.

Since HBOS' rescue by Lloyds, the enlarged group's share price has tumbled, leaving taxpayers nursing a multi-billion pound paper loss.

In a statement in March, the FSA confirmed that it had been conducting an enforcement investigation into HBOS, saying that the bank "was guilty of very serious misconduct, which contributed to the circumstances that led to the UK government having to inject taxpayer funding into HBOS."

The lender, now part of Lloyds Banking Group - which is 41% owned by British taxpayers - escaped a fine from the regulator because (in the FSA's words) "public funds have already been called on to address the consequences of Bank of Scotland's misconduct, levying a penalty on the enlarged Group means the taxpayer would effectively pay twice for the same actions committed by the firm."

In the same statement, the FSA detailed a litany of failings at HBOS between 2006 and the early part of 2008.

"Between January 2006 and March 2008, Bank of Scotland's Corporate Division pursued an aggressive growth strategy that focused on high-risk, sub-investment grade lending."

Over the period, the division's transactions increased in size, complexity and risk.

Its portfolio was high risk with highly concentrated exposures to property and to significant large borrowers.

This strategy was highly vulnerable to a downturn in the economic cycle, yet the Corporate Division continued with the strategy even as markets began to worsen in 2007.

Rather than re-evaluating its business as conditions worsened, the division set out to increase its market share as other lenders started to pull out of the market.

In addition, its internal culture was focused on revenue rather than assessing the level of risk in transactions.

Bank of Scotland did not have systems and controls that were appropriate to the high level of risks that its Corporate Division was taking on.

And there were serious deficiencies in Bank of Scotland's control framework which provided insufficient challenge to the Corporate Division's strategy; the framework for managing credit risk across the portfolio; the distribution framework which did not operate effectively in reducing the risks in the portfolio; and the process for identifying and managing transactions that showed signs of stress.

From April 2008, as it became apparent that high value transactions were demonstrating signs of stress, it should have been apparent to Bank of Scotland that a more prudent approach was needed to mitigate risk, yet it was slow to move such transactions to its High Risk area within its Corporate Division.

There was a significant risk that this would have an impact on the firm's capital requirements.

It also meant the full extent of the stress within the corporate portfolio was not visible to the Group's Board or auditors.

In addition, while the firm's auditors agreed that the overall level of the firm's provisioning was acceptable, in relation to the Corporate Division provisions were consistently made at the optimistic rather than prudent end of the acceptable range, despite warnings from the divisional risk function and Bank of Scotland's auditors."

The fine for Mr Cummings is the latest in a string of punishments meted out by the City regulator in recent times.

The FSA was itself criticised strongly, not only for its lax supervision of Britain's biggest banks, but also for failing to anticipate the public and political appetite for a full report on the reasons for their collapse.

Last December, the FSA produced such a report on the failure of RBS, but said it would not begin a corresponding piece of work on HBOS' collapse until enforcement proceedings had been completed.

Assuming no other former HBOS executives will be subject to such actions, the fine for Mr Cummings is likely to mean that work will begin shortly.

The regulator is expected to face further questions about whether Mr Cummings has been made a scapegoat for HBOS' failure.

Andy Hornby, the ex-HBOS chief executive, and Lord Stevenson, its former chairman, were at the helm at the time the bank had to be bailed out.

There is no suggestion that any of Mr Cummings' actions or lending decision were unauthorised.

The FSA supervised the rapid expansion of HBOS' balance sheet during the economic boom years but, by its own admission, did nothing to curtail it.

There is also likely to be scepticism about the FSA's decision to hand Mr Cummings a lifetime ban from the banking sector because he has already retired.

The regulator was similarly criticised at RBS for pronouncing no sanction against Fred Goodwin, the bank's former chief executive, but instead pursuing Johnny Cameron, who ran its investment banking arm but was widely felt to have been unjustly singled-out.

The FSA declined to comment on Wednesday, while Mr Cummings could not be reached for comment.

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HMV Rescue: Hilco Deal To Save Jobs And Shops

By Mark Kleinman, City Editor

HMV, Britain's last remaining independent music retail chain, is on the verge of being rescued in a £50m deal that will preserve 2,500 jobs.

Hilco, the specialist restructuring firm, is poised to sign a binding agreement to secure HMV's future following weeks of speculation that the chain and its historic logo could disappear from high streets.

The deal, which could be announced as early as this morning, will involve HMV emerging from administration, backed by a new company incorporated in the UK.

Hilco will acquire roughly 130 HMV-branded stores, and all nine of the outlets which operate under the cut-price music brand Fopp.

People close to the talks said an agreement was likely to be struck later although it could yet be delayed.

Hilco has been the frontrunner to become the new owner of HMV since soon after Deloitte was appointed as administrator at the end of January. Initially brought in to manage the retailer's business alongside Deloitte, the restructuring firm acquired HMV's debts just days later.

The chain is expected to be run by a combination of incumbent HMV and newly-appointed Hilco executives.

Major music companies and film studios, anxious to retain a major distribution channel on Britain's high streets, are understood to have agreed to new supply terms with HMV and have given their blessing to the deal. HMV's landlords, confronted with the prospect of scores more vacant shops, are also understood to be supportive.

Some of the shops being taken on by Hilco had been earmarked for closure by Deloitte, so the final redundancy toll from HMV's restructuring was unclear. Prior to falling into administration, HMV had 230 shops in the UK.

Hilco, which has successfully turned around the performance of HMV's Canadian business since buying it two years ago, also has plans to re-establish the brand in Ireland by reopening a store on Dublin's Henry Street.

HMV's 16 Irish outlets, including the famous Grafton Street shop that has hosted gigs by the likes of U2, were closed in January.

Since the turn of the year, thousands of jobs have disappeared from Britain's high streets as prominent chains including Blockbuster UK, Republic and Jessops have been forced to call in administrators.

Some have been reborn in truncated form, with Jessops acquired by the Dragons' Den entrepreneur Peter Jones and Republic taken over by Mike Ashley, the Sports Direct tycoon.

Trevor Moore, who had a brief stint running HMV before its collapse into administration, had hoped to put together a bid for the company but was made redundant in February.

Among the other suitors which looked at bidding for HMV were Asda, the supermarket chain, and Jon Moulton, the private equity veteran.

HMV had been struggling for several years, pinned down under a debt mountain that vastly outweighed its stock market value. Caught between the dual pressures of fast-growing competition from digital rivals and waning consumer confidence, the company had shed some of its most prized assets, including Waterstones, the books retailer.

Hilco has had a mixed track record investing in other British retailers, having bought assets from chains including Allied Carpets, Ethel Austin and Woolworths.

Neither Deloitte nor Hilco could be reached for comment.

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HP Chairman Raymond Lane Resigns Amid Woes

The chairman of Hewlett-Packard is to resign amid a shakeup of the board of directors at the struggling US computer giant.

Non-executive chairman Raymond Lane was re-elected to the board last month with less than 60% of shareholder votes.

He will be replaced on an interim basis by Ralph Whitworth during the search for a permanent replacement. Mr Whitworth received 96% of the vote during the annual general meeting.

HP, which is still the world's biggest PC maker, has seen its market value half in less than three years, wiping out $45bn (£29.5bn) in shareholder wealth.

The damage would be even worse, if HP's stock had not rebounded during the past two months on hopes that the company is now headed in the right direction.

In addition to Mr Lane's departure two other top executives, John Hammergren and G. Kennedy Thompson, would be stepping down.

Meg Whitman has attempted to turn the firm's performance around

The departures are said to be linked to the £7.2bn purchase of UK software company Autonomy, which was allegedly sold at an over-inflated price.

The news comes with HP in the middle of a massive shift in strategy as consumers gravitate from traditional PCs to mobile devices, including tablets.

HP chief executive and president Meg Whitman said: "Ray, John and Ken have invested a part of themselves in HP."

"Their leadership is reflected in the early success we've had turning the company around. I'm grateful that Ray will continue to serve, and I wish John and Ken the very best.

"I also appreciate Ralph's willingness to increase his responsibilities during this transition."

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Boeing's Dreamliner: IAG Orders More Planes

Boeing 787 Dreamliner Timeline

Updated: 8:24am UK, Thursday 04 April 2013

The turbulent history of the Boeing 787 Dreamliner:

Apr 3, 2013: Company says it has completed more than half of its battery tests

Mar 25, 2013: Boeing says its first test flight with the new lithium-ion battery went according to plan.

Mar 15, 2013: Boeing unveils modifications to its 787 batteries, saying the Dreamliner is "absolutely safe".

Mar 12, 2013:  FAA approves Boeing's certification plan for a new battery system for the aircraft.

Mar 7, 2013: US National Transportation Safety Board says it has failed to identify the cause of the Jan 7 fire.

Feb 28, 2013: Boeing says it has found a "permanent" solution to fix problems with Dreamliner batteries.

Feb 25, 2013: All Nippon Air (ANA) confirms all of its fleet will remain grounded until the end of May.

Feb 8, 2013: Boeing confirms it has sent letters to airlines expecting imminent deliveries of possible delays.

Feb 7, 2013: US Federal Aviation Administration (FAA) allows limited test flight of the grounded Dreamliner.

Feb 5, 2013: Japanese official reveal CT scans of failed batteries does not reveal fire cause.

Feb 4, 2013: Boeing requests FAA approval for test flights of grounded model.

Jan 30, 2013: Amid revenue loss forecasts of $500m to $5bn, Boeing CEO addresses investors and downplays impact.

Jan 28, 2013: Investigators widen battery examination to sub-contractors of lithium ion battery maker GS Yuasa

Jan 21, 2013: Safety officials start probe of lithium ion battery maker GS Yuasa

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines

Jan 18, 2013: FAA officials arrive in Japan to examine a 787 and its melted battery pack after an ANA emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority (FAA) announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Triple-Dip Fears Ease With Upbeat PMI Survey

Britain's services sector recorded its strongest expansion in seven months in March, helping to ease fears of a pending triple-dip recession.

The main Markit/CIPS Purchasing Managers' Index (PMI) for the dominant service sector climbed to 52.4 in March from 51.8 in February.

The rise further above the 50 point line that divides growth from contraction confounded economists' forecasts for a drop to 51.5 and was the highest reading since August, when the London Olympics boosted business.

"The Government and Bank of England will breathe sighs of relief in seeing signs of a gathering upturn in the service sector during March," Chris Williamson, chief economist at survey compilers Markit, said.

"(It) looks set to have helped the UK avoid a triple-dip recession by the narrowest of margins."

The British economy shrank at the end of last year and another consecutive quarter of contraction would tip it into a third recession in less than five years.

Official data on how the economy fared in the first quarter is not due until April 25.

But it looks to have made a positive start after an Office for National Statistics (ONS) release showed the strongest growth in services in five months in January.

Services as measured by the ONS make up more than three quarters of British economic activity.

However, Markit's survey does not include the public sector or retailers, focusing instead on areas such as transport and communication, business services and entertainment.

Nonetheless, March's improvement in the services PMI offset contractions in manufacturing and construction and points to 0.1% economic growth in the first three months of 2013, Mr Williamson said.

The Bank of England is now less likely to extend asset purchases to support output, expected in an announcement later today, although economists expect more action before the end of the year.

Moreover, Mr Williamson said the economy was probably stronger than recent data suggested because unusually cold and snowy weather early this year hurt many businesses, whether by keeping consumers at home or disrupting deliveries to factories.

"We would therefore expect to see faster economic growth in the second quarter and, barring any surprises such as a further worsening of the euro zone crisis or severe weather, monetary policy is set to be on hold for the foreseeable future," he added.

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Rogue Trader Admits $8.3bn Goldman Sachs Fraud

A rogue trader has pleaded guilty to defrauding Wall Street giant Goldman Sachs with unauthorised trades totalling $8.3bn (£5.5bn).

Ex-Goldman trader Matthew Taylor admitted that he exceeded internal risk limits and lied to supervisors to cover up his activities involving futures trade in 2007.

Taylor, 34, pleaded guilty to one count of wire fraud in a United States federal court in lower Manhattan on Wednesday morning, after voluntarily turning himself in to authorities earlier in the day.

The Massachusetts Institute of Technology graduate pleaded guilty some four months after the Commodities Futures Trading Commission (CFTC) filed a civil complaint against him.

The CFTC accused Taylor of fabricating trades to conceal a huge, unauthorised position in e-mini Standard & Poor's futures contracts, which bet on the direction of the S&P 500 index.

The court heard that Taylor's trading position at the firm exceeded risk guidelines set by his supervisors "on the order of 10 times."

He also admitted to making false statements to Goldman Sachs personnel who questioned him about the position.

In total, Taylor's actions led to a $118m (£78m) monetary loss for Goldman Sachs.

"I am truly sorry," Taylor told the court.

Taylor outside court in Manhattan on April 3

Taylor, who joined Goldman in 2005, worked in a 10-person group called the Capital Structure Franchise Trading (CSFT), and was responsible for equity derivatives trades.

After his trading profits plunged in late 2007, his supervisors told Taylor his bonus was going to be cut and instructed him to reduce risk-taking.

Instead, he "amassed a position that far exceeded all trading and risk limits set by Goldman Sachs, not only for individual traders ... but for the entire CSFT desk," court documents said.

He subsequently attempted to hide his actions by putting false information into a manual entry system.

When supervisors and other employees confronted him about discrepancies compared with his actual positions, Taylor repeatedly lied, the court heard.

Taylor said he covertly built the position in an effort to restore his reputation and increase his bonus.

At the time he earned a $150,000 (£100,000) salary and expected a bonus of $1.6m (£1m).

Prosecutors are seeking a prison sentence of 33 to 41 months and a fine of up to $75,000 (£50,000), based on remuneration and not the actual loss suffered by the bank.

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Vodafone Shares Open Down As Deal Denied

Verizon Communications has denied speculation that it was preparing to bid for Vodafone - either alone or with others.

It comes after speculation that the US telecommunications company would pair-up with its biggest rival AT&T to buy out the British mobile phone giant.

Vodafone's shares opened lower following the denial - after rising to a 10-year high and closing up almost 3% on Tuesday following rumours of the deal.

But Verizon did reiterate that it was still interested in purchasing Vodafone's share of their wireless US venture.

"As Verizon has said many times, it would be a willing purchaser of the 45% stake that Vodafone holds in Verizon Wireless," the company said in a statement.

"It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others."

Vodafone shares have risen by almost 20% since January

Verizon owns the 55% of Verizon Wireless that Vodafone doesn't and has been openly interested for years in buying out its partner.

Speculation about a deal between Vodafone and Verizon has been circling since January when the British company began exploring what to do with its US asset, which makes up about 75% of its value.

But media reports claimed a huge tax bill faced by Vodafone had held the deal back.

City AM said the British company would be left with a levy equal to the rate of corporation tax on the capital gains it has made since starting the venture if it sold its stake.

The newspaper said analysts have valued the stake at up to £100bn, which could result in a tax bill of around £20bn.

A deal that included AT&T could prove more tax efficient; with Verizon taking Vodafone's US assets, and AT&T buying the rest.

But other analysts said that although it made sense for Verizon to purchase the rest of its wireless venture, it would be risky for AT&T to take on Vodafone's foreign assets.

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