State Of The Union: Obama Vows To Create Jobs

By Amanda Walker, US Correspondent

Barack Obama says America's sluggish economy can only get back on track through a "rising, thriving middle class".

In his annual State of the Union address the American President outlined his plans for the coming year with the economy riding high on the agenda.

He said: "A growing economy that creates good, middle class jobs - that must be the North Star that guides our efforts. 

"Every day, we should ask ourselves three questions as a nation: How do we attract more jobs to our shores?  How do we equip our people with the skills needed to do those jobs? And how do we make sure that hard work leads to a decent living?"

Michelle Obama is welcomed ahead of her husband's address

He went on to lay out specific proposals, including initiatives and investments in infrastructure, manufacturing and clean energy - all capable, he insists, of reaping dividends without swelling the deficit.

"Let me repeat - nothing I'm proposing tonight should increase our deficit by a single dime.  It's not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth," the President said.

Senator Marco Rubio delivered the traditional rebuttal in his official opposition response to the President's speech. Mr Rubio is widely regarded as a new star of the waning Republican Party and in his address he criticised what he called Mr Obama's "obsession" with raising taxes.

"The tax increases and the deficit spending you propose will hurt middle class families. It will cost them their raises. It will cost them their benefits. It may even cost some of them their jobs," he said.

Barack Obama greets lawmakers as he arrives

Senator Rubio also delivered his speech in Spanish, marking the first ever bilingual response to the President's address and reiterating his image as a modern Republican and possible saviour of the party.

A pre-speech Twitter photo posted by the White House showed President Obama making last-minute changes to his speech, most notably a response to North Korea's latest nuclear test, one of the few deviations from a distinctly domestic agenda.

"The regime in North Korea must know that they will only achieve security and prosperity by meeting their international obligations.

"Provocations of the sort we saw last night will only isolate them further, as we stand by our allies, strengthen our own missile defence, and lead the world in taking firm action in response to these threats," Mr Obama said.

The President delivers his address

The President also offered some news that few will not welcome.

"Tonight, I can announce that over the next year, another 34,000 American troops will come home from Afghanistan. This drawdown will continue. And by the end of next year, our war in Afghanistan will be over."

He went from one of the least divisive issues to the one that splits America - gun control. With many of those who have been directly affected by gun violence in the audience, it made for a moment of heightened emotion.

"Gabby Giffords deserves a vote. The families of Newtown deserve a vote. The families of Aurora deserve a vote. The families of Oak Creek, and Tucson, and Blacksburg, and the countless other communities ripped open by gun violence, they deserve a simple vote."

Starting in North Carolina the President is now taking his message across America. It's a hard sell that has to bring results.

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Apple Boss Says Tech Giant Still Has Its Mojo

Apple's chief executive has told investors that his company can still "innovate like magic", as he tried to convince them that the firm's best days are not over yet.

Speaking at Goldman Sachs' technology and internet conference, he said Apple had "never been so bullish" on the level of innovation - even though he would not comment on future features or products from Apple.

He said: "We wouldn't do anything that we consider not a great product. That is not why we are on this Earth. There are other companies that do that and it is just not who we are."

But he added: "If you look at skills, Apple is in a unique and, in my view, unrivalled position. We have leadership in hardware, software and services.

"The real magic is at the intersection of these. Apple has the ability in all three of these spheres and create magic."

But Apple's share price has tumbled 35% in recent months, from a high of just over $700 (£447) last September.

Mr Cook said that when he feels down he visits an Apple store

Mr Cook disputed a popular view that the smartphone market in developed markets may be saturated, or it is losing the phone battle with bitter rival Samsung.

Samsung's smartphone market share is roughly 50% greater than Apple and its growth rate is about twice that of the iPhone.

He said: "On a longer-term basis, all phones will be smartphones and there's a lot more people in the world than 1.4 billion, and people love to upgrade their phones very regularly."

Mr Cook also hinted at the fact that Apple's board is seriously considering returning more of its £87.6bn cash pile to investors and shareholders.

Last March, Apple announced a quarterly cash dividend and a share buyback that would pay out $45bn (£28bn) over three years.

At the time, it was sitting on $98bn (£62bn) in cash. It has so far returned $10bn (£6bn) of that, but investors want more - led by a legal action bid by billionaire investor David Einhorn from hedge fund Greenlight Capital.

Apple's own view is that its cash pile is a strategic cushion, offering it more flexibility if such a need ever arises and Mr Cook described the legal bid as a "silly sideshow".

Samsung has fought back against Apple with tablets and smartphones

Meanwhile, Apple is still fighting an ongoing patent battle against rival Samsung. It claims it was the company that really invented the smartphone, and that Samsung has copied its intellectual property.

Although Apple was awarded $1bn (£668m) in damages last year in a US court, it was criticised in London's High Court by senior judges who described its bosses as showing a "lack of integrity"  for publishing "false and misleading" information after losing a separate legal challenge.

When founder Steve Jobs was the head of Apple he launched a legal war against Samsung, which he named "thermo-nuclear", in an attempt to keep 'iPhone clones' off the market.

Mr Cook also revealed that he was opposed to the late Mr Jobs' wish to sue Samsung over the patent-infringement issues from the outset.

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New Look Hires Banks To Tackle £1bn Debt Pile

By Mark Kleinman, City Editor

New Look, the high street fashion retailer, is appointing two Wall Street banking giants to help tackle its £1bn mountain of debt.

I have learnt that Goldman Sachs and JP Morgan are about to be enlisted to assist with a refinancing of New Look's debts. The talks will come ahead of a 2015 deadline imposed under its existing agreements with the company's lenders, which include HSBC and Royal Bank of Scotland.

The focus of the refinancing talks will be a £750m payment-in-kind (PIK) note which was issued several years ago and which has accumulated hundreds of millions of pounds in additional interest since.

Among the options likely to be considered by New Look and its advisers will be the issuance of high-yield debt to replace the PIK, although insiders said today that the process was at a very early stage.

The appointment of Goldman Sachs and JP Morgan comes as another prominent high street fashion edges closer to collapse. Republic, which is owned by the US private equity firm TPG, has gone into administration today after failing to secure better rent terms from landlords.

New Look is also owned by the buyout industry, having been taken over in 2004 by Apax Partners and Permira.

New Look is one of Britain's biggest retailers of women's fashion, with about 600 stores in the UK, a number that may shrink in the coming years as sales increasingly shift online.

The refinancing of the PIK note is partly complicated by the fact that some of the debt is held by a group of senior Apax executives, according to people close to the company.

New Look, which declined to comment, performed well over Christmas, reporting a 3.7% increase in like-for-like sales during the 14 weeks to December 29.

Its performance contrasted with that of some rivals, including Marks & Spencer, which suffered a 3.8% fall in like-for-like clothing sales.

Announcing the festive trading figures, Mr McGeorge said: "The group has delivered an excellent result in a challenging trading environment, and this performance is a testament to the success of our recovery programme and the strength of our brand.

"Once again customers have been tactical in their shopping through December, delaying spending until later in the month and searching out best value, which New Look was well equipped to deliver.

"Additionally, our online sales have been very strong, up over 50% on last year.

"Looking ahead we expect the economic outlook to remain challenging, however, we are confident in our ability to maintain the positive momentum being generated from the improved value of our ranges, our store refurbishment programme and continued growth of our online offer."

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Inflation To Hit 3% Or More - Bank of England

The Bank of England said it expects the UK economy will see a "slow, but sustained recovery" but has warned that inflation will rise to 3% or more.

Bank governor Sir Mervyn King said inflation was expected to remain above the 2% target for another two years.

The forecast was made after the bank published its quarterly inflation report.

Sir Mervyn said: "There is cause for optimism ... Today, too, the recovery is in sight.

"Although output has been broadly flat for the past two years, that masks a more encouraging underlying picture."

But the BoE forecast means that the UK economy will not regain its pre-crisis level until 2015.

Sir Mervyn added: "The UK economy is therefore set for recovery. That isn't to say that the road ahead will be smooth."

He said there were limits to what further stimulus of the economy could achieve.

The governor said the bank remained ready to do more to help the economy if needed.

"We must recognise, however, that there are limits to what can be achieved via general monetary stimulus - in any form - on its own," he said, adding that incentives to spend now reduced spending plans of households and businesses in the future.

The BoE has spent £375bn on buying government bonds as part of quantitative easing but has held off from increasing the programme.

Government debt prices fell after the governor's comments.

Sterling fell against the dollar and the euro after the lowered growth forecasts and said it was ready to provide more monetary stimulus if warranted.

Sir Mervyn also said that the BoE should not risk tightening monetary policy, even as it pushed back its expectations for when inflation would return to its target to early 2016, because the economy remained weak.

"Attempting to bring inflation back to target sooner would risk derailing the recovery and undershooting the target in the medium term," he said.

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Blockbuster To Close 164 High Street Stores

Blockbuster will shut 164 additional shops over the coming weeks as part of a "phased closure", it has been confirmed.

Administrators Deloitte said the closures were part of an ongoing portfolio review and discussion with landlords and "interested parties" over its 528 shops.

Joint administrator Lee Manning said: "We have continued to review the performance of individual shops since our appointment a month ago and have concluded that further closures are necessary in order to restructure the company for sale.

"We would like to thank the company's employees for their support and professionalism during this difficult time and we are also grateful for the continued support of customers."

The remaining stores will continue to trade as usual whilst administrators progress negotiations with bidders.

It said stock would be offered at promotional rates to "supplement" what was "already on offer across the estate".

Staff in the stores affected by the closures will now face redundancy.

The administrators have set up a dedicated employee helpline and are running an assistance programme to help the affected staff find other jobs.

Since being appointed, the administrators have examined the viability of the group's stores and targeted those they say hamper a restructure of the company.

Stores due to close down are expected to remain open for business and customers will be notified in advance of final closures so they can return rental items.

The additional closures were announced just minutes after it was confirmed that high street retailer Republic had called in administrators.

Republic's demise is the latest in a string of British high street casualties in the last few months.

Music and entertainment retailer HMV, camera specialist Jessops and electricals chain Comet have all gone into administration since October.

Deloitte was appointed joint administrator to Blockbuster's UK arm on January 16.

:: Affected employees should contact the helpline on 0845 302 2547.

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Global IT Firms Face Tax Grilling By MPs

MPs are preparing to question the tax affairs of major American computer companies, as the crackdown on tax avoidance intensifies.

The Public Accounts Committee (PAC) is considering calling in some of the biggest IT companies over their tax schemes, according to a report in the Financial Times.

Approached by Sky News, the PAC declined to confirm the report.

But according to the paper, the investigation is expected to highlight how the firms use a range of methods of tax avoidance to keep taxes low, including recording UK sales in low-tax jurisdictions.

It said that Microsoft and Dell are directing hundreds of millions of pounds worth of UK sales through Ireland to minimise the tax burden.

And added that security firm Symantec allegedly counts online sales through Ireland, since its website is run out of Ireland.

A study of the UK accounts of the nine suppliers for the five years to 2011 showed that the IT companies had made UK sales totalling £62bn but paid only £527m in corporation tax.

The PAC inquiry is expected to be part of a wider investigation into how much is being paid by Whitehall's larger contractors.

Treasury chief secretary Danny Alexander hits out against tax avoidance

Treasury chief secretary, Danny Alexander, has allegedly looked into whether the Government can stop firms from winning lucrative state contracts if it is found that they do not pay enough tax in the UK.

He is expected to announce plans which would see companies which are bidding for UK contracts having to disclose information about their tax compliance history and use of avoidance mechanisms.

The companies concerned have all stressed that these methods are entirely legitimate in accordance with UK tax laws.

The news about the grilling comes after the tax row which put international firms such as Starbucks, Google and Amazon under the spotlight.

Starbucks faced criticism after it emerged that since its arrival in Britain in 1998, it has paid £8.5m in corporation tax, despite total sales of £3bn.

In December, Chancellor George Osborne announced extra investment to help clamp down on multinational companies who avoid paying tax in Britain.

However, he warned that Britain must also be cautious and make sure big companies did not avoid Britain, because of high taxes.

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Rebel Investor Wages War Over Offices Group

By Mark Kleinman, City Editor

A tussle for control of one of Britain's biggest serviced office groups has intensified with the emergence of a High Court legal battle that threatens to cloud efforts to secure its future.

Sky News understands that advisers to MWB Business Exchange, which owns 39 sites in London and is controlled by MWB Property Limited (MWBPL), have been sounding out City investors in recent days about buying the parent's stake in the subsidiary.

The attempt to find alternative investors could be complicated, however, by an increasingly complex legal case in which both companies are involved.

Pyrrho Investments, a Hong Kong-based entity which holds approximately 25% of MWB Business Exchange, has been fighting a bitter battle with Richard Balfour-Lynn, the founder of parent group MWB Group, for more than a year.

MWB Group is best-known as the owner of the Hotel du Vin and Malmaison hotel chains.

A petition was filed by Pyrrho at the Companies Court division of the High Court earlier this week - a copy of which has been reviewed by Sky News - alleging that the affairs of MWB Business Exchange had been conducted in a manner which was prejudicial to the interests of shareholders other than MWBPL.

It also accused current and former board directors of MWB Business Exchange, including Mr Balfour-Lynn, of breaching their duties to the company.

Pyrrho had previously threatened to take legal action in a situation which is fast-becoming one of London's most fractious battles involving a listed company.

People familiar with the situation said that Deloitte, which was appointed as the administrator to MWB Group in November, has in recent days been trying to secure a higher offer for the 75% stake in the serviced offices subsidiary than a deal agreed with Regus late last year.

In its statement announcing the proposed deal, Regus, Britain's biggest serviced offices provider, said it had received an irrevocable undertaking from MWBPL to accept its offer for its 75% stake in MWB Business Exchange.

"Pursuant to the irrevocable undertaking ... Deloitte LLP are able to market MWBPL's shareholding in Business Exchange to other potential purchasers for a period of 8 weeks [expiring tomorrow]. Potential purchasers have the opportunity to make a higher offer for MWBPL's shareholding in Business Exchange during such Marketing Period. 

"If there is any such higher offer, Regus has the right, but no obligation, to announce a revised offer for MWBPL's BX Shares. If such revised offer satisfies certain criteria, MWBPL will be obliged to accept it, even if subsequently a competing offer or announces an increase in the value of its offer."

None of the parties were available for comment.

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Horsemeat: British Plants Raided Amid Warning

Those guilty of passing off horsemeat as beef are being threatened with the "full force of the law" after two British processing plants were shut down following raids.

Environment Secretary Owen Paterson made the warning before heading to Brussels today for a summit on the scandal.

It came after the Food Standards Agency (FSA), accompanied by police, swooped on a slaughterhouse and a meat manufacturer after apparently uncovering "a blatant misleading of consumers".

Peter Boddy slaughterhouse in Todmorden, West Yorkshire, and meat processing plant Farmbox Meats in Llandre near Aberystwyth, West Wales, had records seized and have been temporarily closed. The firms' owners deny any wrongdoing.

At the Farmbox Meats facility, Sky News saw large crates of meat - some covered by tarpaulin and others open - left in outdoor areas during the night, before they were removed this morning.

Its owner, Dafydd Ffredric Raw-Rees, told Sky News no meat had been seized during the raid and said the plant was operating as normal today. The FSA subsequently confirmed it should not be.

Farmfox Meats owner Dafydd Ffredric Raw-Rees

The FSA, which is investigating claims the firms supplied and used horse carcasses in burgers and kebabs, says it has "detained" all meat found at both raided premises and seized paperwork and customer lists.

Speaking after the latest developments, Mr Paterson said: "This is absolutely shocking. It's totally unacceptable if any business in the UK is defrauding the public by passing off horsemeat as beef.

"I expect the full force of the law to be brought down on anyone involved in this kind of activity."

And David Cameron, speaking at PMQs, described the situation as "appalling" and "completely unacceptable".

"If there has been criminal activity, there should be the full intervention of the law," the Prime Minister said.

Until now, meat linked to the scandal is thought to have come from suppliers in continental Europe, but for the first time it appears the contamination may also stem from British premises.

Andrew Rhodes, FSA director of operations, said: "I ordered an audit of all horse producing abattoirs in the UK after this issue first arose last month and I was shocked to uncover what appears to be a blatant misleading of consumers.

"I have suspended both plants immediately while our investigations continue."

Police and FSA officials raided the Farmbox Meats site in northwest Wales

Slaughterhouse owner Peter Boddy said he would co-operate with FSA officers and claimed they had not "raided" his Todmorden premises.

"It was not a raid - they are welcome to visit whenever they want, they just wanted to see my records which I will be showing them," he told ITV.

Mr Paterson has met representatives of the Institute of Grocery Distribution, which represents food retailers and suppliers, to discuss plans for a new regime of quarterly testing of products.

Results of tests into the extent of contamination of beef products are expected on Friday.

Meanwhile, Waitrose announced it has withdrawn its beef Essential British Frozen Meatballs after pork was found in two batches. The supermarket said they were made at the ABP Foods-owned Freshlink factory in Glasgow last summer.

And on Tuesday Supermarket giant Tesco became the latest retailer to drop a major supplier after discovering a range of spaghetti bolognese ready meals contained more than 60% horsemeat.

Shadow environment secretary Mary Creagh called for Europe-wide testing of meat products, raising concerns that horsemeat sometimes contained the painkiller bute.

She said: "I raised the problem of bute-contaminated horsemeat being released into the food chain with Defra ministers last month, yet up until two days ago horses were still not being tested for bute and were being released for human consumption.

"Parliamentary answers released this week show 9,405 horses were slaughtered in the UK for human consumption abroad last year. We must make sure horsemeat is not contaminated with bute."

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Barclays Chief: Tax Planning Still Important

By Mark Kleinman, City Editor

Tax planning will remain an important element of the services Barclays offers to corporate clients despite its decision to close a controversial unit which generated vast profits for the bank, according to one of its most senior executives.

An internal memo written yesterday by Eric Bommensath, the head of markets within Barclays' investment bank, said the group would be involved in "a narrower range" of tax-related activity than in the past but that "efficient tax planning remains an important part of financial transactions in complex global markets".

The memo has been obtained by Sky News.

Mr Bommensath's note followed the announcement by Antony Jenkins, Barclays' chief executive, that he would close the Structured Capital Markets (SCM) business, which had delivered bumper profits - and bonuses - but caused reputational damage to the bank by undertaking complex transactions purely to help clients avoid tax. Sky News revealed at the weekend that SCM would be closed.

Speaking yesterday, Mr Jenkins said it was not yet clear whether the employees in the SCM business would be redeployed elsewhere within Barclays. Some of them are likely to be among 1800 investment bank staff being axed as part of the new chief executive's effort to make the business more efficient.

Mr Bommensath's note made it clear that tax planning would remain an integral part of Barclays' offering to clients, and may raise questions about exactly which activities will be circumscribed under the bank's new rules.

"Our tax-related activity will now be delivered by teams integrated into the FICC [fixed income, currencies and commodities] and Equities businesses within Markets, and clearly linked to commercial activity. This will mean that we are involved in a narrower range of tax planning than we have been in the past. We will also maintain a Markets Portfolio Management Group, responsible for managing down our legacy positions over time," he wrote.

"Graham Wade will join the Markets Management Committee and be responsible for the integration of tax-related activity into the Markets business, reporting to me. He will focus particularly on implementing a Tax Risk and Approvals Framework, which will ensure that all new activity is consistent with our tax principles.

"Efficient tax planning remains an important part of financial transactions in complex global markets. By integrating support for our clients' tax planning into the Markets business we can better deliver commercially-driven tax solutions that are compatible with our purpose as an organisation."

Barclays also published a series of tax principles yesterday which it said would govern its involvement in transactions.

The Guardian reported today that the SCM unit will take up to a decade to close as Barclays winds down long-term schemes for clients.

Mr Jenkins declined to specify yesterday how much profit SCM had generated for Barclays. The division was recently accused of aiding "industrial scale tax avoidance" by Lord Lawson, the former Chancellor and a member of the Parliamentary Commission on Banking Standards.

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Republic In Administration As Website Shuts

Fashion retailer Republic has gone into administration and closed its website, putting 2,500 jobs at risk.

The normal website was replaced with a headline saying "Site Unavailable", along with a message from the joint administrators. 

Customers vented their frustration on social media outlets.

So-called onesies were popular at Christmas

The firm, which operates 121 stores across the UK with a stronger presence in the north of the country, has appointed administrators Ernst & Young to sell the business while it attempts to trade.

It has already made 150 employees at the head office in Leeds.

Speaking to Sky News about the Republic redundancies, Chancellor George Osborne said: "It is always very, very sad news when a retailer goes bust and people lose jobs.

"We are going to work hard to make sure they have jobs to go to."

Republic is owned by private equity firm TPG.

The investment firm's website still promotes Republic as "one of the United Kingdom's top young adult fashion retailers".

Staff tweeted a message after the move to administration.

It said: "Sadly #Republic is now in the hands of Administrators. We did all we could but it's simply too tough out there. Thanks for your support."

Republic was still promoted on owner TPG's website entering administration

On Tuesday, Sky News City Editor Mark Kleinman revealed the retailer was poised to enter administration.

But hours later it still promoted itself as a viable concern with a tweet about its all-in-one outfits.

The tweet said: "We are indeed your one stop Onesie shop. And if you play our #RepublicRomance game you can get 10% off."

Hunter Kelly, head of corporate restructuring team at Ernst & Young, said: "Republic suffered poor trading results in the autumn, and whilst sales picked up in December there has been a sudden and rapid decline in sales in late January.

"The impact on cash flows has resulted in the business being unable to continue to operate outside of an insolvency process."

Republic began as a men's denim retailer in 1986 under the Best Jeans brand, and sells brands including Diesel, Firetrap and G-Star Raw.

Republic's demise is the latest in a string of British high street casualties in the last six months.

Music and entertainment retailer HMV, DVD rental firm Blockbuster and camera specialist Jessops have all gone into administration this year.

In October, electricals chain Comet also called in administrators.

Mr Osborne is aware of the trend in retail of increasing web-based purchases and its affect on the retail sector.

He told Sky: "I think you are seeing changes on our high street, a lot of clothing is sold online now so we are seeing changes in the way people shop in this country."

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