Boris Johnson: UK Should Not Fear EU Exit

By Joey Jones, Deputy Political Editor

Boris Johnson has said the UK should not be afraid of life outside the EU if a better deal cannot be negotiated with other European countries.

In a major speech responding to a report the London mayor commissioned from his economic adviser Gerard Lyons, Mr Johnson supported David Cameron's desire to negotiate reforms to the EU in Britain's interest.

But he argued if the attempts at reform fail, there is an "attractive" option without EU membership.

"We could negotiate a generous exit, securing European Free Trade Association-style access to the Common Market," he said.

"There is nothing to be afraid of in going for an alternative future," he insisted, pointing to the possibility of "a Britain open not just to the rest of Europe but to the world... if we get it right it's a win-win".

The question Tories will ask themselves is whether Boris Johnson is positioning himself as a standard bearer for the Eurosceptic wing of the party.

The mayor will lend his support to Mr Cameron's push for EU reform

On that front, with such a heavily caveated position, the answer needs to be seen as yes and no.

There is every chance that with pent up expectation within the party, the mayor may be accused of being something of a tease on the Europe front - not an unaccustomed position.

During the speech Boris Johnson also said he will stand as an MP in the 2015 election.

The mayor's desire is to show that he is grappling in a serious way with a very tricky issue, and if in the process he shows a bit of ankle to Eurosceptics in the Conservative Party, so much the better.

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Bosses Who Fix Energy Prices Face Prison

Executives who rig wholesale gas and electricity prices face up to two years in jail under Government plans aimed at driving down the cost of household bills.

Those who fix prices at an artificial level would be committing a criminal offence if the Department of Energy (DECC) gets its way.

Such behaviour is currently investigated by regulators, whose powers extend only to fines.

Energy Secretary Ed Davey said: "Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent - more in line with the approach taken in the financial markets.

"The Government is doing everything it can to help consumers by increasing market competition to drive prices down."

The Big Six energy companies

The move is a response to rising consumer bills and widespread mistrust of the so-called Big Six electricity and gas suppliers

Richard Lloyd, executive director of Which?, said: "Anyone found to be manipulating wholesale energy markets deserves to have the book thrown at them.

"Rumours of market abuse do nothing for consumer confidence in the energy market so we support the Government tightening the rules and bringing in stiffer penalties to deter wrongdoing."

Under the plans it would become a crime to make misleading claims or conceal facts about wholesale energy prices in order to manipulate the market - especially if such an act could affect competition.

Anyone who uses insider information to buy or sell on the wholesale market would also be committing a criminal offence.

The proposals are at consultation stage and could come into force across the UK in spring next year.

Their unveiling follows a study this week which showed rising energy bills was the top concern for households.

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Russian Hackers 'Pull Off Biggest Data Theft'

Russian hackers have stolen 1.2 billion user name and password combinations in what could be the biggest ever data theft, according to a US security firm.

The information is said to relate to half a billion email addresses.

Hold Security, based in Milwaukee, says a 'Cybervor' gang stole the information from 420,000 web and FTP sites.

It claims the gang used a botnet, a network of infected computers controlled by a hacker, to identify weaknesses in websites that people visited.

Users typically do not know their machine is being manipulated by a botnet.

"The botnet conducted possibly the largest security audit ever," says Hold Security on its website, which says it spent seven months researching the alleged breach.

A botnet hunted vulnerabilities in sites used by unwitting computer users

"Over 400,000 sites were identified to be potentially vulnerable to SQL injection flaws alone.

"The CyberVors used these vulnerabilities to steal data from these sites' databases.

"To the best of our knowledge, they mostly focused on stealing credentials, eventually ending up with the largest cache of stolen personal information, totaling over 1.2 billion unique sets of emails and passwords."

Hold Security says the Russian gang targeted every site visited by an infected botnet machine and did not differentiate between well-known sites and smaller ones.

The company has not named the sites that were affected but says the list "includes many leaders in virtually all industries across the world, as well as a multitude of small or even personal websites".

The New York Times reports that so far it appears little of the information has been sold to other online criminals.

Instead, it says it is being used to send marketing pitches and junk messages on social networks such as Twitter.

Hold Security has a history of uncovering major hacking attacks and previously uncovered a large data theft from software company Adobe.

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UK House Price Average Rose 1.4% In July

UK house prices rose by a more-than-expected 1.4% in July, according to Halifax figures.

The rise takes the average price of a home in Britain to £186,322.

The British mortgage lender said house prices for the period were 10.2% higher than a year ago.

Compared to the previous quarter, the three months to July saw an increase of 3.6%.

UK house prices are on the up again following a monthly drop in June

The monthly rise follows a 0.4% drop in June as Halifax said month-by-month movements remain volatile.

Since December there have been four monthly price increases and four price falls.

Stephen Noakes, mortgage director at Halifax, said: "While supply remains low, housing demand continues to be supported by a continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates."

Last month a Halifax survey found that 70% of British adults predicted the average UK house price will rise over the next year.

The number of people who said rising property prices will be a barrier to buying rose by six points to 35%.

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L&G Sees Profit Rise On Pension Reforms

Legal & General (L&G) saw its pre-tax profit rise by 7% for the first half of the year.

The life insurance and pensions provider reported a profit of £636m, up from £594m for the same period last year.

The company credited an increase in demand for retirement products and said that Budget reforms to pensions would help boost earnings further.

In March Chancellor George Osborne made changes to allow people to access their pension pots when they turn 55, without having to buy an annuity.

L&G said the reforms would give greater flexibility to retirees as the company develops new products around the changes.

Group chief executive Nigel Wilson said: "These are strong financial results with dividends once again growing over 20% and a return on equity of 17.6%.

"Strong business performance across a well-diversified range of insurance, savings and investment markets underpins consistent earnings quality and dividend growth and enables us to respond positively to the ever changing political and regulatory landscape."

It comes after Sky News last week revealed that L&G is in talks about creating a £500m investment vehicle that will be used to finance major UK urban regeneration projects.

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Chicken Bug Retailers Could Be Named

A consumer group is urging food standards bosses to name retailers found selling fresh chickens containing a bug blamed for tens of thousands of cases of food poisoning every year.

The bug campylobacter was found in 59% of samples in a survey by the Food Standards Agency (FSA) which also found it on the outside of packaging in 4% of samples.

The agency has declined to name supermarkets and other retailers involved until it has more data from its 12-month survey which runs until February 2015.

Richard Lloyd, executive director of Which?, said: "The FSA's survey reveals unacceptably high levels of campylobacter and they must now publish the names of the retailers so consumers are aware of the best and worst performing shops.

"Campylobacter is responsible for thousands of cases of food poisoning and the deaths of 100 people every year so much more must be done to minimise the risk of contamination at every stage of production."

The FSA says chicken is quite safe as long as it is thoroughly cooked

FSA chief executive Catherine Brown said: "There is still a lot more to be done by all elements of the supply chain to ensure that consumers can be confident in the food they buy.

"As soon as we have enough data to robustly compare campylobacter levels in different retailers we will share that data with consumers."

Over the 12 months 4,000 samples of whole chickens bought from UK retail outlets and smaller independent stores and butchers will be tested. The new results are for the first quarter and represent 853 samples.

Ms Brown said the survey "will give us a clearer picture of the prevalence of campylobacter on raw poultry sold at retail and help us measure the impact of interventions introduced by producers, processors, and retailers to reduce contamination".

The survey is aimed at helping stem the prevalence of the campylobacter bug

She added: "The chicken supply chain is looking at how interventions such as improved biosecurity on farms, rapid surface chilling, and anti-microbial washes can help reduce campylobacter.

"So when they take action and invest in interventions designed to make a difference, these survey figures will enable us to see if they really do make an impact."

She said low levels of contamination on packaging may show that leak-proof wrappers used by most retailers is working.

Campylobacter is killed by thorough cooking, but is the most common form of food poisoning in the UK. It affects an estimated 280,000 people a year, and the majority of these cases come from contaminated poultry.

The FSA said that previous studies carried out into the prevalence of the bug had also shown around two thirds of raw poultry carry it.

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Standard Chartered's Profit Slumps By 20%

Standard Chartered endured a tough first half as it saw its profit plummet by 20%.

The bank reported a pre-tax profit of $3.3bn (£1.9bn) for the six months to June 30.

It comes as Standard Chartered said it faces fresh fines in the US over money laundering.

Peter Sands faces mounting pressure over the bank's performance

Regulators in New York have discovered more problems with the bank's surveillance system, which is used to monitor and prevent money laundering.

It is thought the latest issues could cost Standard Chartered between $100m (£59m) and $340m (£202m).

In 2012 the bank was fined $667m (£396m) by US regulators for breaking sanctions on Iran by hiding transactions and not using robust anti-money laundering systems.

Standard Chartered's weak performance for the first half of the year follows a profits warning in June.

The bank blamed tighter banking regulation and lower market volatility.

Last year, the bank announced its first drop in full-year profit for a decade.

Commenting on the latest results, group chief executive Peter Sands, said: "Our performance this first half is clearly disappointing.

"We're taking action on multiple fronts, both in response to near term pressures and to execute our refreshed strategy, with the objective of getting back to a trajectory of sustainable, profitable growth."

Despite speculation that pressure was mounting on Mr Sands to step down, the bank said earlier this year that its board backed him in restoring profitable growth.

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Lloyds Boss Joins Ranks Warning On New Rules

By Mark Kleinman, City Editor

The boss of Lloyds Banking Group has become the latest heavyweight figure to raise concerns about the impact of impending industry regulation, warning that a proposal to force bankers to prove they were not liable for major failures risks "incentivising people to do nothing".

Speaking to Sky News, Antonio Horta-Osorio said he supported the bulk of the proposals outlined last week by City watchdogs to strengthen accountability in banking, including seven-year clawback periods for bonuses and a new annual MOT to verify the propriety of bank employees.

He warned, however, that reversing the burden of proof for bankers risked being economically counter-productive at a time when financial institutions are under intense pressure to support the growth of the wider economy.

"I welcome the clawback proposals in principle. I have always believed that bonuses for senior managers should be linked to results, deferred for significant periods so that they can be potentially clawed back at a later date and that they should be made in shares to align the interests of management with those of shareholders," the Lloyds boss said.

He also agreed with the Parliamentary Commission on Banking Standards that the approach to enforcement within the UK should be reviewed.

"Enforcement and fines have an important role as a credible deterrent against future misconduct.

"But the new rules will potentially reverse the burden of proof where individuals are guilty until they prove themselves innocent in the eyes of the regulator.

"I worry that this could incentivise people to do nothing, as they could waste their time trying to create a paper trail rather than doing what they should be doing, focusing on customers.

"Secondly everyone makes mistakes. If you do a major thing wrong like causing the failure of a bank you should be held accountable for the decisions that you made. But we need to separate the major mistakes from the small ones which will always happen.

"Under the proposed rules we will run the risk that people spend their time avoiding accountability as they fear being prejudged as guilty when they get something wrong. We want to make sure that bankers, like any other profession, operate to the highest standards but we have to be fair in how we judge them."

Mr Horta-Osorio's remarks, which came days after Lloyds was fined more than £220m for manipulating the benchmark interest rate Libor, echo those made by Douglas Flint, chairman of HSBC.

Mr Flint said staff were becoming risk-averse because of potential regulatory consequences.

"We are in a business that manages risks and we have got to avoid getting to a state where people believe that there is a zero risk tolerance," he said on Monday.

"There certainly isn't within the firm. We expect to take risks which means we expect some outcomes to be adverse to your expectations but I think within the firm there are those who believe that our regulators in some cases have less tolerance for poor outcomes."

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Walgreens Confirms Full Takeover of Boots

US pharmacy chain Walgreens has confirmed it is to take full control of Boots.

In a deal worth £5.6bn worth of cash and shares, the drugs giant will acquire the remaining 55% of Alliance Boots that it does not already own.

But as US markets opened following the news, shares in Walgreens were 16% lower, wiping $10.6bn (£6.3bn) off the company's market value.

The transaction is expected to be completed early in 2015, following full shareholder approvals.

The new enterprise will be named Walgreens Boots Alliance and will keep its headquarters in the US.

Meanwhile, UK-based Boots will remain headquartered in Nottingham.

Walgreens Boots Alliance will be led by chief executive Greg Wasson, with senior executives from both companies on the management team.

Mr Wasson said: "We are excited to move forward with the next important step in becoming a new kind of global healthcare leader. 

"Expanding globally with Alliance Boots will make quality healthcare more affordable and accessible to communities here in America and around the world."

It comes after Sky News exclusively revealed news of the deal yesterday.

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Kellogg Crunches Numbers On £2bn Penguin Deal

By Mark Kleinman, City Editor

The American food giant Kellogg is examining a £2bn offer for the owner of McVitie's, Penguin and other famous British biscuit brands.

Sky News has learnt that Kellogg has appointed investment bankers at Barclays to assess an offer for United Biscuits (UB) that could presage another trans-Atlantic takeover of a prominent UK-based company.

Kellogg is already a major player in the US through its ownership of The Keebler Company, which it bought in 2001 but which for more than 20 years had been owned by UB.

Blackstone and PAI Partners, the private equity groups, have hired Goldman Sachs and JP Morgan to prepare a sale or stock market flotation of UB, whose other leading brands include Jaffa Cakes, Mini Cheddars and Twiglets.

A public listing is viewed as the likeliest option, although a final decision will depend upon the state of stock markets later in the year and the value of any formal offers received from bidders.

Bright Food, the Chinese majority-owner of Weetabix, and Turkey's Ulker are also expected to form part of a sale process.

Sky News understands that UB's board has engaged Centerview Partners, a leading independent advisory firm, to steer it through the process.

Martin Glenn, the former Pepsico and Iglo Birds Eye executive who was appointed to run UB last year, has begun meeting analysts and prospective institutional investors, from whom feedback is said to have been positive.

Mr Glenn has a strong reputation in the consumer goods industry and has focused in recent months on revitalising the core McVitie's brand with new advertising and products.

"He would make an ideal public company chief executive," a competitor said.

In 2012, Kellogg was linked to a possible bid for UB's snacks arm, which included Skips and Hula Hoops, but a formal offer failed to materialise before it was sold to Germany's Intersnack.

If UB does get sold, it would be the second industry deal in less than a year involving North American and British companies.

Last year, the Ontario Teachers Pension Plan bought Burton's Biscuits, the owner of Jammie Dodgers and Wagon Wheels, in a deal worth £350m.

Since then, Burton's has been in talks about a merger with Fox's, another major UK-based producer.

Kellogg said on Wednesday that it did not comment on rumour or speculation.

Last week, Michigan-based Kellogg announced second-quarter profit of $295m, broadly in line with Wall Street expectations.

A UB spokesman and Barclays also declined to comment.

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