Thursday, June 14, 2012

UK's 'worst crisis' since second world war; Nokia future in doubt; An online dating revolution in India; Spanish crisis deepens

1 UK's 'worst crisis since second world war (The Guardian) Mervyn King has announced emergency measures to help banks and boost business lending after a warning from George Osborne that the "debt storm" raging on the continent had left the UK and the rest of Europe facing their most serious economic crisis outside wartime. In a joint proposal between the Bank of England and the Treasury, banks will receive cut-price funds provided they pass on the benefits to their business customers.
 3 German no to eurobond idea (BBC) Germany's deputy finance minister has ruled out "eurobond-lite" plans to pool part of eurozone countries' debt. Secretary of State Steffen Kampeter said "debt is a national responsibility". "I don't see any strategies where we socialise and redistribute the bad political decisions made by some who are over-indebted." The German government has already ruled out full "eurobonds" for now.

This new "funding for lending" scheme could provide an £80bn boost to loans to the private sector within weeks and alleviate growing fears of a second slump since the start of the financial crisis in 2007. In a second scheme the Bank will begin pumping a minimum of £5bn a month within the next few days into City institutions to improve their liquidity.

With one Spanish minister warning that the future of Europe could be decided within hours, both the governor and the chancellor used the backdrop of another day of financial and economic turbulence in the eurozone to express deep concern about the threat to Britain posed by Europe.

2 Nokia future in doubt after job cuts (The Guardian) Nokia's future as an independent company is hanging in the balance and Microsoft could be forced to rescue the business if chief executive Stephen Elop cannot resuscitate the group's smartphone business by the end of the year, analysts have warned. The Finnish mobile phone manufacturer announced 10,000 job cuts on Thursday and issued its second profits warning in nine weeks.

Nokia's shares dropped 18%, falling below the €2 mark for the first time since 1996, as it acted to stem massive losses by cutting a fifth of its handset workforce. A total of 40,000 jobs have gone at the company and its Nokia Siemens Networks joint venture since Elop joined in September 2010. With Nokia still unable to dent Apple and Samsung's dominance in the smartphone market, Elop all but admitted the date of Nokia's recovery was impossible to forecast, saying in the second profits warning since April that the intention was to return to profit "as soon as possible".

Nokia is pinning its hopes of survival on the Lumia range of phones, its first to use Windows software. But between the lavishly marketed global unveiling last November and March this year, the company had sold just 3m Lumias – a drop in the ocean compared to the 72m Apple iPhones sold since October. Having lost its position as the world's biggest phone maker to Samsung earlier this year, Nokia is burning through cash. It has spent €2.1bn over the past five quarters, meaning that, without cost cuts, its €4.9bn reserves could be gone within a couple of years.

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