Thursday, 2 February 2012

UK economy to enter recession soon, says report

The UK economy could rebound in 2013 if the eurozone crisis is resolved, Niesr said

The UK economy will enter recession in the first half of the year as households continue to cut back, an influential think tank has warned.
The National Institute of Economic and Social Research (Niesr) said the government should temporarily ease its spending cuts to promote growth.
It expects the economy to shrink 0.1% in 2012, but to grow 2.3% in 2013 if the eurozone debt crisis is resolved.
Niesr said, however, that deficit cuts had bolstered market confidence.
The UK is already close to another recession - defined as two consecutive quarters of economic contraction - after official figures in January showed that the economy shrank by 0.2% in the final three months of 2011.
In its UK and World Economy Forecast Niesr said: "We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand."
Niesr said economic conditions will not improve in the short term, as both the private the public sectors are still focused on paying off debts. "Over the near term we do not expect economic conditions to improve," the report said.
The think tank predicted that inflation would fall sharply, with the consumer price index down to 2.2% this year and 1.4% in 2013.
But there were grim forecasts on unemployment, which Niesr expects will rise to about 9% this year, from 8.4% in the three months to November, and will remain above 7% in 2014.
"Unemployment at this elevated level for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs," the report said.
Niesr suggests relaxing the government's austerity programme. "The UK economy currently suffers from deficient demand; the current stance of fiscal policy is contributing to this deficiency. A temporary easing of fiscal policy in the near term would boost the economy," the group said.
Little scope
More investment would not derail the chancellor's long term fiscal goals, Niesr said.
On Monday, the Institute of Fiscal Studies said the government could safely cut taxes temporarily, without worrying that the Bank of England would raise rates in response.
But the IFS that there was little scope for big or long-term tax cuts, which risked undermining investor confidence.
"The chancellor faces his third budget with the economy and public finances in considerably weaker shape than he had hoped a year ago," said Paul Johnson, director of the IFS.
Last month, Chancellor of the Exchequer George Osborne said he would continue with the coalition government's efforts to reduce the deficit, despite criticism that it is choking off recovery.
A Treasury spokesman said: "As Niesr have said, the government's commitment to deficit reduction has helped maintain market confidence.
"They expect the government to meet its fiscal mandate and for the UK economy to grow more strongly than the euro area this year and next."
Meanwhile, Niesr forecast global growth of 3.5% for 2012, led by China and India, and 4% in 2013. It forecast US economic growth of 2% this year.An independent Scotland could be more constrained on economic policy than at present, a study has suggested.
Scottish independence
The report also considered the monetary and fiscal policy choices facing Scotland if it leaves the union.
Niesr concluded that retaining sterling would be "sensible" for Scotland, but warned that currency union could restrict fiscal policy.
The Scottish government said the report "validates" its aim to retain sterling and insisted Scotland would be in a "healthier" financial position.
The report said that it is "doubtful" whether the Bank of England would extend lender-of-last-resort facilities to Scottish institutions, something First Minister Alex Salmond has argued for.
Niesr adds: "With a pro rata transfer of existing UK public debt, Scotland would enter independence heavily indebted with no insurance from fiscal risk sharing or fiscal transfer mechanism with the rest of the UK.
"Even with a favourable settlement on future oil revenues, its fiscal balances are likely to be volatile with large deficits in some years as a result of its dependence on oil revenues," the report said.

Tuesday, 31 January 2012

What do people on £1m salaries do with their money?

RBS boss Stephen Hester has just turned down a £1m bonus after a public outcry. But just what do people who earn a million pounds a year spend it on?
A million pounds symbolises a life of luxury in the popular imagination - the mansion in Knightsbridge, sports cars, homes dotted around the world, children at an expensive school.
Royal Bank of Scotland chief Stephen Hester waived a bonus of £963,000 paid in shares that were not redeemable for two years. But his basic salary is £1.2m a year, more than most people would even dream of earning.
So what do the million-pound earners actually spend their money on?


Property will be the biggest cost. On a £1m salary, you could get a mortgage up to four to five times that if outgoings were low, says Mark Harris, chief executive of SPF Private Clients.

How would Twitter spend £1m?

  • @thatblokeray First thing I'd do is buy my mum a house
  • @Ellen27 Making a huge bucket list and working my way through it - perhaps eating traditional food in every country
  • @nickie72 I would bank it and live off the interest - #boringanswer
  • @benchalmers that's 21k a year for life for me - which is a fantastic holiday and a decent charity donation every year until I die
  • @thomasm1 I would pay off my debts, the debts of my family, and then those of my friends. The rest I would waste on wine, women and song
  • Continue the conversation on Twitter by replying to @BBC_magazine
But it's assessed on an individual basis - if someone is heavily committed - say three kids in private school, loan on a property abroad, maybe maintenance on a previous spouse, it could be about £3m. If there is less of that commitment - such as a single footballer on a £1m a year - you could be looking at four to five times their salary."
Take home pay after tax is likely to be £550,000, or £46,000 a month. For someone borrowing £3m with 3% interest on an interest-only mortgage - widely favoured by those who earn large bonuses - the monthly mortgage payment works out at about £7,500 a month, which is easily affordable to million-pound earners, says Harris. For your £4m house you would have needed a 25-35% deposit.
But what can £3m buy in today's property market? The golden triangle for the million-pound earner is Kensington, Chelsea and Knightsbridge in London, says Harris. South-west London would also be an option - Putney, Clapham, Wandsworth. South down the A3 corridor - ie Guildford, Weybridge, Esher - are other popular areas.
But even on a million-pound salary London's Mayfair, which includes Belgravia, is off-limits for a family house, says Peter Murray, residential director of Jones Director, Residential Jones Lang LaSalle.

Education and staff costs

Fees at a top public school are more than £30,000 a yearfor boarders, with Winchester College on £31,350 and Eton clocking in at £30,981 plus a registration and entrance fee.
A top UK university charges tuition fees of £9,000 a year,but that's taken out of the student's income after graduation. However, there's still living costs to think of.
And for million-pound salary earners with children who aspire to be in business there's the cost of a postgraduate MBA course. London Business School charges £53,900for its MBA, while Warwick Business School charges£30,000 a year. Again, living costs are on top.
A private tutor can start at about £40 an hour, which might work out at several thousand pounds a year.
A nanny can cost anywhere from £500 to £1,200 a week, according to the Chelsea Staff Bureau. The nanny may live in the house or it may be that they need to be found a flat. If the nanny is taking the children to school they may need to be bought a car.
A gardener may cost anywhere between £15 and £30 an hour.


Arabian horseKeeping horses is an expensive hobby
Holidays are a major cost. Summers are likely to be taken in a French gite or Tuscan farmhouse, says Lucia Van Der Post, founding editor of the Financial Times' How To Spend It, with winters in a fully catered skiing chalet with private ski instructor.
"Intergenerational" holidays involving children and grandchildren for special occasions are a coming trend. For a family of five, a top of the range safari might cost £60,000 to £70,000 a year, Van Der Post estimates.
Hester has been regularly pictured in the newspapers on horseback in hunting regalia. Horses don't come cheap. To keep a horse at a livery stable for a year could cost £8,400,according to the British Horse Society.
Many young bankers on a million a year have a "flash" lifestyle, says Geraint Anderson, author of City Boy, who worked as a stockbroker for 12 years, with his salary and bonus package peaking at £620,000 a year. There are men in their 20s who like to spend it on cocaine, champagne and strippers, he notes.
A night out could cost £2,000 and a cocaine habit £30,000 a year, although some of this behaviour may have calmed down since the financial crisis, Anderson says. The women would spend their cash on shoes and handbags but were generally more cautious, he says.


Any sensible person who earns a large salary is likely to invest a large part of it, not least because of the knowledge that the million-pound salary job might not last forever.
Pensions, property and shares might all be large outgoings.
Anderson says he knew people who had invested extremely wisely.
"One guy who earned not more than a million [a year] over the years created a property portfolio in Sevenoaks of 200 properties."


Cars are a favourite for many wealthy people. As your salary rises, so do your expectations in terms of cars. A Porsche 911 Carrera is listed at £71,449. A more family-orientated car like a Mercedes E-class estate would set you back £31,475. At the other end of the spectrum a Ferrari 458 Spider would cost £198,906, Knightsbridge dealer HR Owen says.
But there are some things a million pounds won't bring you. "A million is a huge whack but it's not enough to have your own yacht, that you're not going to do the sailing. That'll cost hundreds of thousands," says Van Der Post.

Many types

It's difficult to generalise about million pound earners. "There are as many ways of spending a million quid as different personalities," Anderson says. But in the City - where a large proportion of these earners will work - money takes on another dimension, he argues.
It is used to judge a person's worth. "Money is a gauge by which you measure how wonderful someone is."
And before the financial crisis a million pounds was seen as small beer. "I remember seeing a 25-year-old telecoms analyst storming out of a meeting where he'd just been handed a million pound bonus. It wasn't enough."

Sunday, 29 January 2012

Iran says it may halt oil sales to 'some countries'

Oil exports are one of the biggest sources of revenue for Iran
he dispute between Iran and the Western economies has escalated after Tehran warned it will stop oil sales to "some countries".

Rostam Qasemi, Iran's oil minister, said the curbs will be implemented soon but did not mention specific countries.
The warning comes just days after the European Union (EU) agreed to stop importing Iranian oil from 1 July.
The US and EU have been trying to target Iran's oil exports as part of sanctions against it.
"Soon we will cut exporting oil to some countries," Mr Qasemi was quoted as saying by the state news agency IRNA.
'Arm twisting'
The EU agreed to stop importing all oil from Iran on 23 January. However, the embargo is scheduled to come into place only on 1 July, so that member states have enough time to find alternate sources of supply.
Analysts said that if Iran stopped selling oil to some EU nations on a short notice, it may create problems for the affected countries.
They said that Tehran was using this tactic in a bid to ease pressure on itself.
"I think this is a case of arm twisting. They are trying to turn around the conditions for negotiations," said Ker Chung Yang of Phillip Futures.
Mr Ker noted that despite all the rhetoric, the threat was unlikely to have any significant impact.
"I don't think this is going to work as they have a history of not following up on any extreme measures that they warn against."

Miracle material graphene can distil booze, says study

Graphene and its derivatives display many unusual and useful properties

Membranes based on the "miracle material" graphene can be used to distil alcohol, according to a new study in Science journal.
An international team created the membrane from graphene oxide - a chemical derivative of graphene.
They have shown that the membrane blocks the passage of several gases and liquids, but lets water through.
This joins a long list of fascinating and unusual properties associated with graphene and its derivatives.
Graphene is a form of carbon. It is a flat layer of carbon atoms tightly packed into a two-dimensional honeycomb arrangement.
Because it is so thin, it is also practically transparent. As a conductor of electricity, it performs as well as copper; and as a conductor of heat, it outperforms all other known materials.
The unusual electronic, mechanical and chemical properties of graphene at the molecular scale promise numerous applications.


  • Graphene is a form of carbon that exists as a sheet, one atom thick
  • Atoms are arranged into a two-dimensional honeycomb structure
  • Identification of graphene announced in October 2004
  • About 100 times stronger than steel and conducts electricity better than copper
  • About 1% of graphene mixed into plastics could turn them into electrical conductors
  • Analogous to millions of unrolled nanotubes stuck together
Andrei Geim and Konstantin Novoselov from the University of Manchester were awarded 2010's Nobel Prize in physics for their discovery, outlined in a scientific paper in 2004.
Geim and others have now developed a laminate made from thin sheets of graphene oxide.
These films were hundreds of times thinner than a human hair but remained strong, flexible and easy to handle.
When a metal container was sealed with such a film, even the most sensitive equipment was unable to detect air or any other gas, including helium, leaking through.
But when the researchers tried the same with water, they found that it evaporated without noticing the graphene seal. Water molecules diffused through the graphene-oxide membranes with such a great speed that the evaporation rate was the same whether the container was sealed or open.
'Just for a laugh'
Dr Rahul Nair from Manchester University, who led the team, commented: "Graphene oxide sheets arrange in such a way that between them there is room for exactly one layer of water molecules.
He added: "If another atom or molecule tries the same trick, it finds that graphene capillaries either shrink in low humidity or get clogged with water molecules."
Professor Geim added: "Helium gas is hard to stop. It slowly leaks even through a millimetre-thick window glass but our ultra-thin films completely block it. At the same time, water evaporates through them unimpeded. Materials cannot behave any stranger."
Dr Nair said: "Just for a laugh, we sealed a bottle of vodka with our membranes and found that the distilled solution became stronger and stronger with time. Neither of us drinks vodka but it was great fun to do the experiment."
Despite this, the researchers do not offer any immediate ideas for applications. But Professor Geim commented: "The properties are so unusual that it is hard to imagine that they cannot find some use in the design of filtration, separation or barrier membranes, and for selective removal of water."
In another study in Science journal, a different team reports the development of a membrane based on diamond-like carbon. This membrane has unique pore sizes that allow for the ultra-fast passage of oil through it.
One expert said it could potentially be used for filtering toxic contaminants out of water or for purifying industrial chemicals.

Friday, 27 January 2012

Facebook sues alleged clickjacking spammer sparking row

Some analysts have linked Facebook's spam crackdown to an imminent stock flotation

Facebook is suing a marketing firm, accusing it of "spreading spam through misleading and deceptive tactics".Adscend Media is alleged to have carried out "clickjacking".
The practice involves placing posts on the social network which include code that causes the links to appear on the users' homepages as a "liked" item without their permission. The links are designed to take users to other sites.
Adscend Media said it "vehemently denied" the "false claims".
Facebook likened its security efforts to an "arms race" and said that it was committed to pursuing "bad actors".
"Facebook's security professionals have made tremendous strides against this particular form of attack and we are intent on eradicating it completely," said Craig Clark, the firm's lead litigation counsel.
"We will continue to use all tools at our disposal to ensure that scammers do not profit from misusing Facebook's services."
Washington State also filed a related lawsuit. Its lawyers said that they believed that this was the first time any state had gone to court to combat spam on the social network.
"We don't 'like' schemes that illegally trick Facebook users into giving up personal information or paying for unwanted subscription services through spam," said the state's attorney general, Rob McKenna.
Mr McKenna's office said that Adscend Media had earned as much $1.2m (£766,000) a month from the practice.
Strong denial
However, the accused firm released a statement on Friday evening which said: "At no time did we engage in the activity alleged in the complaints.
"Adscend Media strictly complies with its legal obligations under federal and state law. We are undertaking an investigation to determine whether any of Adscend Media's affiliates engaged in the activity alleged by the Attorney General's office and Facebook.
"If they did, we are fully certain that the activity was conducted without the company's knowledge."
The firm's lawyer went on to accuse the Washington State authorities of being "irresponsible".
"We find it deeply troubling that the Attorney General's office made a public spectacle of these serious allegations without first questioning the company as part of its investigatory process and, even more inexplicably, without notifying the company that the complaint was being filed," said Mark Rosenberg.
He added that Adscend Media was now prepared to pursue a defamation action against those "responsible for tarnishing the reputation of the company".
Invisible buttons
Facebook has posted an article about the case in which it explained that it believed the "scam" had worked by exploiting a vulnerability in people's internet browsers that allowed its 'Like' button to be hidden.
"Once the 'Like' button is made invisible, scammers can overlay pictures and other content, to trick the user to click on the invisible 'Like' button," it said.
"First, Facebook users are encouraged to click the 'Like' button on the scammers' Facebook Pages, which then alerts their friends to the existence of the page. Then they are told that they cannot access the content unless they complete an online survey or advertising offer."
It said one case had involved a link promising to show a man who had taken a picture of his face every day over eight years.
Facebook said that the content often had not existed, and users had been directed to third-party sites. It alleged that "the scammers receive money for each misdirected user".
Stock sale
Facebook said that less than 4% of the content shared on its site was currently spam.
The internet security firm, Sophos, acknowledged that the network was trying to combat the problem, but suggested further steps should be taken.
"Facebook tried to introduce anti-clickjacking technology to fight the problem, but it was never entirely satisfactory," said the Sophos's senior technology consultant Graham Cluley.
"What would have been good would have been if Facebook had introduced a 'confirmation' dialog every time a user 'likes' a page on a third-party website. That way, the clickjackers would have been able to trick you into clicking like but you would still have had to confirm that you really wanted to share the message with your online friends.
"In the run-up to IPO [initial public offering], we're sure to see Facebook doing more to present itself as company that is fighting security threats like this."
This is the second time this month that Facebook has accused a group of illegal activity on its site. Last week it named several Russia-based suspects who it said were responsible for a malware attack known as the "Koobface worm".
Multiple reports suggest that the network may float its stock within the next four months. Bloomberg says the firm may sell a minority stake for $10bn, valuing the firm at 10 times the price.

Thursday, 26 January 2012

Twitter to selectively 'censor' tweets by country

Twitter said it would be transparent about which tweets had been removed.

Twitter has announced that it now has the technology to selectively block tweets on a country by country basis.
In its blog, Twitter said it could "reactively withhold content from users in a specific country".
But it said the removed content would be available to the rest of the world. Previously when Twitter deleted a tweet, it would disappear worldwide.
The move comes at a time when the company is in the process of expanding its global business.
In its blog post, Twitter explained that its international growth meant entering countries "that have different ideas about the contours of freedom of expression", citing France or Germany which ban pro-Nazi content as examples.
"Starting today, we give ourselves the ability to reactively withhold content from users in a specific country - while keeping it available in the rest of the world," the company said in a blog post titled Tweets Must Flow.
"We haven't yet used this ability, but if and when we are required to withhold a tweet in a specific country, we will attempt to let the user know, and we will clearly mark when the content has been withheld," it added.
A number of Twitter users have expressed dismay over the move, with some pointing out the adverse impact it would have on free speech, especially outside the US.
Twitter, along with other social networking sites like Facebook, has played a vital - if disputed - role in organising everything from the Arab Spring to the London riots in 2011, according to the BBC's technology correspondent Rory Cellan-Jones.
However, the micro-blogging service - which said it had more than 100 million active users as of September 2011 - has also had to balance local laws with free speech in the process.
The blog statement acknowledged that Twitter would not be able to operate in all countries, saying: "Some differ so much from our ideas that we will not be able to exist there."
Twitter is blocked in China, where microblogging alternatives known as Weibo have surged in popularity in the past year.

Tuesday, 24 January 2012

Google in privacy policy changes across its services

Google has faced privacy concerns from regulators over its social networking sites

Google has changed its privacy policy, streamlining it across its multiple services including search, email, video and social networking sites.
More than 60 different policies will be combined into one that will go into effect 1 March, the company said.
Google said the new policy will give people more relevant search results and help advertisers find customers.
Google has previously faced criticism over the sharing of users data.
"We're rolling out a new main privacy policy that covers the majority of our products and explains what information we collect, and how we use it in a more readable way," said Alma Whitten, Google's director of privacy, product and engineering.
The single privacy policy will apple to Google search, Gmail, YouTube and Google+, its social networking site.
The main change applies to users who have Google accounts.
"If you're signed into Google, we can do things like suggest search queries, or tailor your search results, based on the interests you've expressed in Google+, Gmail and YouTube," the company said, explaining the changes.
The revision comes after Google's previous attempt at social networking, Buzz, was shut down.
The company was criticised for inadvertently revealing users' most e-mailed contacts to other participants through the Buzz platform.
Last year, Google and the Federal Trade Commission reached a settlement to prevent Google from misrepresenting how it uses personal information and from sharing a user's data without approval.
Google said it had been in touch with regulators over these latest changes to its privacy policy, which will apply globally, according to the Associated Press news agency.