Britain will not be stumping up an additional £1.7 billion (€2.1 billion) in contributions to the EU, according to British Prime Minister David Cameron yesterday.
Mr Cameron said he would go through the extra bill "in exhaustive detail" to find ways to reject the size of the EU payment and the five-week deadline for paying it. The EU says the extra contribution for the years 2002 to 2013 was triggered by a recent upward revision to the UK's gross national income during that period.
Justin Urquhart Stewart, of Seven Investment Management in London, describes the whole situation as a "soap opera" which is being driven by the fact that there is a general election next year. The analyst says it appears that the campaign has already started. He says the figure should not have come as a surprise as some of his officials in the Foreign Office and the Chancellor's Office would have known about it. But whether it was a surprise or not, he really made a song and dance of it, and has boxed himself into a problem. The analyst points out that if Cameron doesn't pay, or pays late, he could find himself facing significant fines. "This is a box he probably does not want to open, but now finds himself in a situation which the lid is already off," he states.
Ultimately, Mr Urquhart Stewart says that Britain will pay, adding that Britain is saying it will not pay "yet" or "now". He says that after the figures are thoroughly examined and adjustments made to them, at the end of the day the EU will be paid by Britain. He says the whole situation is politically embarrassing for the British Prime Minister.
The UK reported third quarter growth of 0.7% recently, and the analyst says the UK economy is facing stumbling blocks as it was propped up by €22.2 billion of fines from PPI claims. UK consumers have been happily spending this money, but it was a once-off and they can't rely on extra funds from fines anymore. He also says that tax revenues are not increasing and the deficit is widening, which offsets some other positive aspects of the UK economy.
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MORNING BRIEFS - Lloyds Banking Group - which operates Lloyds, Halifax and Bank of Scotland, reported pre-tax profits of £1.61 billion for the nine months to 30 September. It plans to cut 9,000 jobs by the end of 2017 to reduce costs. The UK government still holds a 25% stake in the bank, but has reduced its holding from about 39% through two separate share sales since September last year.
*** Just days before its first anniversary as a public company shares in Twitter fell as much as 10% in after-hours trading, after its third-quarter earnings renewed fears about slow user growth. Twitter reported the number of people logging on each month grew by just 5% quarter-on-quarter to 284 million. The social-media company said revenue again more than doubled in the third quarter to $361m, beating expectations and causing it to raise guidance for the full year. The more users that sign up and spend time on Twitter, the more potential there is for targeted advertising, Twitter's main revenue source. Last night it said it added 13 million monthly active users in the three months to September, reaching 284 million users world-wide. That was a slower pace than the 6.3% it added in the previous quarter.
*** Banca Monte dei Paschi di Siena, the world's oldest bank and the Italian lender with the biggest problems after the European Central Bank's stress tests, may need to find a buyer to help plug a capital shortfall. The bank, which has been bailed out twice in the past five years, must replenish €2.1 billion within nine months to meet European Central Bank requirements for capital buffers. Based in Siena and founded in 1472, it raised €5 billion from shareholders this year to prepare for the test and repay some state aid.
*** European gas demand is down 13% since the beginning of the year because of warmer weather conditions, according to energy supplier Vayu in its latest wholesale energy market report. This, along with increased supply, means much higher gas inventories. Total UK storage is now at 93% capacity, or 22 days supply. The UK is the major source of gas supply into Ireland. And storage levels across other major European hubs are above 90%. But average wholesale gas prices for October are up 4% compared to last month, because of a seasonal increase in demand, but are overall 23% lower than this time last year.
