Morning papers: Merkel makes case for painful reform

Angela Merkel on Tuesday night swore eurozone partners to a long and painful process of structural reform to restore the economic growth the eurozone needed to overcome its debt crisis, reports the Financial Times.

Germany’s chancellor also stressed that reforming Greece outside the eurozone was not an option.

“I will not participate in pushing Greece out of the eurozone,” she said. A eurozone exit was “not an issue”.

Industry chiefs demand ‘vision’ for UK economy in 2030

Britain faces further decline compared with its international peers if the Government does not act to set out its priorities for industry, leaders from the sector have warned, reports The Telegraph.

As politicians debated bonuses in the Commons and the Prime Minister attempted to reassure business leaders that the Coalition was not “anti-business”, Sir John Parker led calls from engineers to refocus Whitehall on the UK’s industrial future.

Greek crisis deepens as austerity talks falter

Greek prime minister Lucas Papademos was struggling to maintain international credibility on Tuesday night, after missing a third deadline in a week to deliver an austerity agreement needed to release a €130bn (£108bn) bail-out package for his country and avert a debt default, reports The Telegraph.

However, international patience with Greece is fast running out.

This situation was exacerbated by the decision to postpone by one day a meeting due to start on Tuesday night, for the country’s political leaders to approve a “final draft document” on austerity measures.

Surprise drop in German industrial output

A shock fall in German industrial production in December confirmed the eurozone crisis caused Europe’s largest economy to shrink at the end of 2011, economists said, reports The Telegraph.

Industrial output fell 2.9 per cent on a monthly basis, which was sharply below the ‘no change’ in production levels economists had forecast.

Spanish banks race to meet latest government rules

Spanish banks are racing to find billions of euros in provisions for bad property loans to fulfil new government regulations, but will be able to use existing capital to lighten some of the burden, bankers and analysts said on Tuesday, reports the Financial Times.

Santander, the country’s biggest bank by capital and assets, said the rules – announced last week by Luis de Guindos, economy minister, as part of a €50bn plan to clean up bank balance sheets – required it to find an extra €6.1bn.

Glencore merger: Xstrata shareholders vow to oppose deal

Plans for a $90bn (£57bn) merger between Xstrata and the commodities trader Glencore have been dealt a major blow after two of the mining group’s largest independent shareholders insisted the terms “clearly undervalued” Xstrata, reports The Guardian.