Morning papers: Faith fades in eurozone firewall
The morning headlines brought to you by Investment Adviser: Tuesday, May 15 2012.
Fears that the eurozone’s firewall will prove insufficient to shield Spain and other embattled countries against the effects of a possible disorderly Greek exit from the currency union hit European financial markets on Monday, reports the Financial Times.
Spanish and Italian 10-year borrowing costs shot up to their highest levels this year and European stock markets suffered their biggest one-day drop in three weeks. German 10-year bond yields fell to a record low, widening the premium Madrid pays to borrow compared to Berlin to a new euro-era high.
Exports boost German GDP
Germany’s economy, the largest in Europe, grew far more than expected in the first quarter, driven by a surge in net exports, data released Tuesday by the Federal Statistics Office showed, reports The Wall Street Journal.
Germany’s gross domestic product rose by 0.5 per cent in the first quarter from the fourth quarter of last year, according to price, seasonally and calendar-adjusted figures, and was up 1.2 per cent from the corresponding period last year in price- and calendar-adjusted terms, Destatis said.
Companies face £100bn pension top-up
British businesses face a £100bn drain on their finances over the next three years as they top up ailing final salary pension schemes, according to new research, reports The Daily Telegraph.
The cost of plugging soaring pension deficits threatens to eat up as much as 13 per cent of companies’ total £750bn of cash balances, diverting money away from vital investment in jobs and growth, Pension Corporation warned. The extra funding is needed despite £80bn of deficit reduction payments made by business in the past three years.
Plus Markets to close leaving 150 companies looking for new homes
Thousands of shareholders in companies listed on one of London’s junior stock markets saw the value of their investments thrown into doubt after it was revealed the bourse was to close, reports The Daily Telegraph.
Plus Markets Group shocked its 150 client companies, worth a combined £2.3bn, with its decision to close the business after it failed to find a buyer. Companies on the market saw their share prices rocked as investors fled the struggling market. Although well known names such as brewer Shepherd Neame and Arsenal Football Club were able to weather the uncertainty other companies such as investment house Rivington Street Holdings, down 44 per cent at one point yesterday, saw their share prices suffer.
Firms are sitting on ‘large pile of cash’ and need to do more for growth, Defence Secretary says
Defence Secretary Philip Hammond risked further raising tensions between the Government and business leaders yesterday after accusing them of ‘whingeing’, reports the Daily Mail.
Mr Hammond said that firms were sitting on a ‘large pile of cash’ and needed to do more to kickstart growth in the economy.