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OPINION

SEVEN DAYS: 30 November 2012

SEVEN DAYS: 30 November 2012
November 30, 2012
SEVEN DAYS: 30 November 2012

Greek 'rebirth'

Debt deal done

After months of wrangling, Greece this week marked what its prime minister Antonis Samaras described as the "rebirth" of the country as its main international creditors, the EU and International Monetary Fund, came to an agreement on revising its debt mountain, allowing it to receive a further tranche of funding to recapitalise its banks. The deal also sees £32bn slashed from Greece's total debt as well as reductions in interest payments on some loans. Meanwhile, the European Commission has approved the refinancing of several of Spain's banks at a cost of €37bn (£29.8bn), with €45bn of bad loans shunted into a 'bad bank' structure.

Grim 2013 forecast

OECD figures

The Organisation of Economic Cooperation and Development (OECD) has warned that the problems facing the eurozone will continue to weigh on the UK economy through 2013, leading to a period of anaemic growth. It is forecasting a contraction of 0.1 per cent in the UK economy for 2012, followed by growth of 0.9 per cent next year and just 1.4 per cent in 2014. The OECD cited the eurozone crisis as the biggest threat to the world economy and a particular drag on the UK economy. It also said that it would support any decision by the chancellor George Osborne to pare back his austerity measures if it eased the burden on the economy.

Lynch mob appeal

Autonomy fightback

Mike Lynch, the founder of software business Autonomy, has hit back at Hewlett Packard in an open letter demanding to know how the company came to calculate the huge write-downs it announced last week, and primarily pinned on the acquisition of Autonomy. Mr Lynch has demanded Hewlett Packard make public details of the alleged misrepresentations and fraud it claims it found within Autonomy following Mr Lynch's departure earlier this year. However, the company, which has handed information to the SEC and Serious Fraud Office, says it is following best legal practice.

Out of Ammo

Buffett warning

Veteran US investor Warren Buffett has warned that the Federal Reserve has exhausted its monetary policy weaponry in attempting to kick-start the US economy and that the onus now falls on politicians in Congress to avert the impending fiscal cliff. He says the Fed has "used up pretty much all its bullets" in slashing interest rates to record lows and launching huge asset purchase schemes but the US still faces its 'D-day' in the coming weeks. Mr Buffett expressed his fear that the deadlock over budget talks could continue right up to the brink and could even spill over into January.

£105bn risk

Lloyd's warning

Lloyd's of London, the world's biggest insurance market, has warned of a growing deficit in insurance held against natural disasters. It cited emerging countries such as China, Poland, Thailand and Mexico as being underinsured against natural disasters after a series of increasingly extreme weather occurrences in recent years including last year's floods in Thailand. One of the most extreme examples is the Sichuan earthquake in 2008 which caused an estimated $125bn in damage but was only 0.3 per cent insured. Meanwhile, the recent extremely wet weather in the UK could cause a problem for those preparing their festive meals, with the price of sprouts and potatoes predicted to rise sharply.

BP Ban

US hits out

BP was hit this week with a temporary ban from any new US government contracts in reaction to the 2010 Gulf of Mexico oil spill. The Environmental Protection Agency cited BP’s “lack of business integrity as demonstrated by the company’s conduct” in relation to the Deepwater Horizon spill. Existing agreements are not affected but until the company can demonstrate “that it meets federal standards” any new contracts or agreements are off the table. There is no time scale attached to the ban. BP recently paid out $4.5bn against criminal charges relating to the disastrous oil spill.

'Underemployment' rises

Recession cost

The recent improvement in unemployment figures is being driven by an increasing number of people being 'underemployed' rather than any noticeable growth in jobs or output in the economy. The Office for National Statistics reports that since the beginning of the financial crisis in 2008 an extra 1m people can now be classed as 'underemployed' - that is, not working as many hours as they want. The total now tops 3m workers or 10 per cent of the total UK workforce.