Inflation and Public Borrowing Add to Budget 2011 Headaches
THE GUARDIAN: • Consumer price index hits 4.4% for February • Public sector net borrowing for February at £10.3bn • Hopes dashed of big cut in deficit • News increases chance of cautious budget package

George Osborne was handed a double dose of unwelcome pre-budget news on Tuesday when official figures showed inflation leaping to 4.4% and public borrowing hit its highest February level since modern records began in 1993.

With the chancellor putting the finishing touches to his second package of fiscal measures, the rise in inflation put additional pressure on the Bank of England to raise interest rates while the deterioration in the public finances put paid to City hopes that borrowing in 2010-11 would significantly undershoot the government's £148bn target.

The disappointing economic news increases the chances of a cautious package from Osborne on Wednesday. The setback to the public finances gives the chancellor even less scope for budget giveaways and he will see a tough fiscal stance as necessary to prevent the Bank from raising interest rates.

Higher heating costs, the soaring price of oil and mark-ups from clothing and footwear retailers were mainly responsible for the increase in the consumer prices index measure of inflation from 4% to a 28-month high of 4.4%, according to the Office for National Statistics. » | Larry Elliott, economics editor | Tuesday, March 22, 2011

THE GUARDIAN: Inflation hits 4.4% in February: Retail prices index, which includes housing costs, hit 5.5% - its highest level since July 1991 » | Graeme Wearden | Tuesday, March 22, 2011

Senior Lib Dem Sacked for Criticising Controversial Deal for Bankers
THE DAILY TELEGRAPH: Coalition tensions over bankers’ bonuses have been laid bare with the sacking of a senior Liberal Democrat who criticised a controversial deal announced by George Osborne.

Lord Oakeshott, a close ally of Vince Cable, the Business Secretary, was last night removed from his post as the Lib Dem spokesman on Treasury issues.

His departure from the post came after he condemned the Coalition’s agreement with the banking industry as inadequate and accused Mr Osborne’s team of “arrogance and incompetence”.

Under the deal with the industry, the heads of the taxpayer-backed high-street banks will receive multi-million pound pay and bonus packages for last year.

The Chancellor said it was time to move from “retribution to recovery” and agreed to water down laws which would have identified multi-million pound bank traders.

However, under the terms of the “Project Merlin” deal, the country’s main high-street banks have agreed to increase lending and provide funding for community projects – in return for the Government not vetoing their bonus payments. >>> James Kirkup, and Robert Winnett | Wednesday, February 09, 2011

THE DAILY TELEGRAPH: RBS's Stephen Hester and Lloyds' Eric Daniels accept multi-million pound bonuses: The chief executives of state-owned Royal Bank of Scotland and Lloyds Banking Group have accepted multi-million pound bonuses on the same day George Osborne unveiled details of a deal with UK banks that should cut pay-outs. >>> Harry Wilson and Andrew Trotman | Wednesday, February 09, 2011

Millionaire Bankers' Message to Britain: We're All Right, Jack
THE INDEPENDENT ON SUNDAY: Britain’s bankers are celebrating bumper bonuses. Whatever happened to the Government’s pledge to tackle them?

After umpteen calls for restraint by ministers, weighing the public relations impact, and consulting colleagues and advisers, Barclays chief executive Bob Diamond has made his most difficult decision. The multi-millionaire is set to accept a £9m bonus, one of the largest in the world, and will be followed by the bosses of the other major banks. This shows that they are all in something together, even if it's not what the rest of us are in.

Mr Diamond canvassed close City friends before deciding to take the bumper bonus which he fears will reignite the row over bankers pay. Sources close to him said: "Bob's been in a real dilemma as he can't stand this country's culture of banker-bashing and finds our attitude to bonuses extraordinary. But he is also aware of public opinion, so sounded out people about whether he should turn down his bonus again for the third year, take less or give some to charity."

Despite rising public anger about the scale of City payouts, David Cameron insisted last night that he was not interested in "headlines satisfying people today and tomorrow that I've given the banks a good kick in the pants. Can we do more on bonuses, particularly on those banks we own? Yes we can, and yes we will," he told The Sunday Telegraph. "But look, we've just been talking about growth. I don't believe actually in the long run, you can deliver the enterprise-growth agenda while having a running war with the British banking industry at the same time."

Some of those whom Mr Diamond – or his advisers – have consulted counselled him to show restraint. But the American decided that when he is offered the pay package – somewhere between £7m and £10m – he is minded to take it. >>> Margareta Pagano, Business Editor | Sunday, February 06, 2011

Why don’t they jail these SOBs? Then they would show some restraint! – © Mark

Davos 2011 - David Cameron

THE DAILY TELEGRAPH: Davos WEF 2011: Osborne calls time on banker bashing – George Osborne has given a clear signal the Government wants to halt the long period of “banker bashing” by admitting “we need to move on”. >>> Kamal Ahmed, in Davos | Friday, January 28, 2011

What the hell is this chancellor is talking about? Who the hell is he to tell us what we are supposed to think? If this chancellor wants people to stop banker-bashing, then he needs to take action to halt the despicable bonuses which these people are stealing from the system. This is the disgusting face of ‘unbridled’ capitalism. – © Mark

George Osborne: Budget Cuts Keep Down Interest Rates
George Osborne has said the Government's austerity package will keep down interest rates for borrowers after economists questioned his strategy following a sharp contraction in the economy

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Terry Murden: Bank Bonuses Are Back as Politicians Roll Over
THE SCOTSMAN: NO-ONE should be surprised that the banks are expected to defy public opinion and once again pay multi-million pound bonuses.

Difficulties in controlling the bonus culture have been made plain by the frustrations felt by politicians across the spectrum and were highlighted here as far back as August 2009 after the then shadow chancellor George Osborne demanded that bonuses should be banned altogether in banks that had been bailed out by the taxpayer.

Well, he's moved a long way from that particular argument and now doesn't even see eye-to-eye with the bite-your-legs business secretary Vince Cable, who has found himself muzzled over the issue.

The bankers believe the Lib Dems who have been making most of the noise on this issue are now a bit of a spent force in the debate and that the slightly more banker-friendly tone emanating from Osborne and Prime Minister David Cameron will leave them free to award themselves the sums they see as their right.

The banks argue that they contributed towards the £53.4 billion paid in taxes last year by the financial services industry, equal to 11.2 per cent of Britain's total tax receipts. No wonder the Treasury should consider it inappropriate to bite the hand that feeds it.

Before Christmas there were more threats of a new bonus tax, an idea revisited by Deputy Prime Minister Nick Clegg, and warnings from Cable that the banks would be punished if they didn't change their ways. But opinion in the City is that there is not much substance behind them.

The bankers are now said to feel so confident of getting away with paying large bonuses that they see no further need for Project Merlin, the initiative led by Barclays former chief executive John Varley to repair relations with the government. Expect the next round of bonuses to be trimmed, but only marginally, and as an acknowledgement of, rather than a concession to, public outrage. >>> Terry Murden | Sunday, January 09, 2011

THE SUNDAY TIMES: Lib Dems tear into Tories on bonuses: Ministers are furious at George Osborne’s apparent cave-in over unacceptable bank bonuses in a time of austerity >>> Marie Woolf, Whitehall Editor | Sunday, January 09, 2011 (£)

THE OBSERVER: Britain's best-paid bank boss set for showdown with MPs over huge bonus: Barclays chief Bob Diamond is under intense pressure to lead by example and give up payout >>> The Observer | Sunday, January 09, 2011