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Thursday newspaper round-up: British Airways, easyJet, Woolworths

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Date: Thursday 19 Jun 2008

LONDON (ShareCast) - Alistair Darling and Mervyn King on Wednesday delivered the bleakest official assessments of economic prospects for 15 years in what the Bank of England governor said was “the most challenging period” since 1997, says the FT.

Again warning households to prepare for “average real take-home pay [to] stagnate this year”, Mr King used his annual Mansion House speech to City grandees to predict that “the squeeze on real income growth is likely to mean that both house prices and consumer spending weaken together”.

Sir John Gieve, the Deputy Governor of the Bank of England who was accused of lack of vigilance in the Northern Rock affair, is to stand down, it emerged last night. Sir John was responsible for maintaining the stability of financial markets, writes the Times.

The airline industry will be hit by a downturn far worse than even the most tumultuous periods in recent memory – the post- 9/11 years and the early Nineties recession – new research predicts, reports the Independent. Morgan Stanley slashed its earnings forecasts yesterday for several major European carriers, including British Airways and easyJet, in the latest of a flurry of gloomy assessments of the industry.

Woolworths' chairman, Richard North, maintained that its retail division can robustly grow its profits yesterday as the group parted company with its chief executive, according to the Independent.

Britain's bosses have been warned that they will become targets of future probes by the Financial Services Authority as the watchdog seeks to crack down on market abuse. The FSA's director of enforcement, Margaret Cole, said the regulator would switch its focus from companies to individuals as it believed it would be a more effective deterrent against wrongdoing, says the Telegraph.

Morgan Stanley on Wednesday became the latest financial group to be hit by the actions of a suspected rogue trader after revealing that a London-based credit derivatives trader had incorrectly valued his positions, forcing the company to take a $120m revenue hit, writes the FT.

Pleas by ministers for pay restraint have been met with contempt by the unions, emboldened by the Shell tanker drivers' 14 per cent rise over two years, way above the latest rate of inflation of 3.3 per cent and a remarkable result for the Unite union, reports the Independent.

London's status as a major world business centre is under threat, according to a survey of leading British companies. Senior executives from some of the country's biggest businesses fear the capital is becoming less competitive as companies struggle to raise money and feel the pinch of the credit crunch, according to the Telegraph.

The City regulator has rushed to change its emergency rules on disclosure of short-selling during rights issues after discovering a loophole that would have let hedge funds avoid stating their holdings. The Financial Services Authority reversed its position on how to take options into account when calculating the size of positions, according to Darren Fox, partner at Simmons & Simmons, legal adviser to many of London’s biggest funds, says the FT.

The double threat of soaring petrol prices and strict emissions targets has forced Jaguar Land Rover to hire 600 engineers and technical staff in a desperate effort to increase the efficiency of its gas-guzzling vehicles, reports the Independent.

News International, the UK's largest publisher of national newspapers, is planning to merge the back offices that support the Sun and the Times. The group is likely to dismantle the two separate management teams behind its main UK titles in a move designed to reduce costs and improve efficiencies, writes the Telegraph.

Ron Sandler, the executive chairman of Northern Rock, is examining the conduct of the troubled bank's former board to see if they could be sued for compensation. Adam Applegarth, the bank's former chief executive, was widely blamed for the flawed business model that brought the Rock down, according to the Times.

Olivant, the investment boutique headed by Luqman Arnold, has raised the stakes in its campaign for change at UBS by increasing its holding so that it is now one of the Swiss bank's largest shareholders, says the Telegraph.

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