ceedee’s posterous

City bankers are to reap nearly £7bn in bonuses this spring even though the government has been forced to pump tens of billions into the banks to prevent them collapsing.

Analysis of preliminary pay data from the Office for National Statistics shows that in the first three months of the bonus season to February the financial sector has shared out £5bn in bonuses, half the level of the same period last year.

Extrapolating that to the full five months of the bonus season to April means payouts will be between £6.5bn and £7bn, compared with £13.7bn last year.

"These figures are alarming and show a complete lack of awareness in the City of the extent of the financial crisis, their role in creating it and the extent to which they are ultimately answerable to the taxpayer," said the Liberal Democrats' Treasury spokesman, Vince Cable. "It would be outrageous if taxpayer-supported institutions are handing out large bonuses, particularly at a time when hundreds of thousands of people are losing their jobs."

In last week's budget, Alistair Darling, revealed that borrowing would surge to £175bn this year as a result of the credit crunch and the country faced nearly a decade of rising taxes and big cuts in public spending to pay for the recession and bank bailouts.

The TUC general secretary, Brendan Barber, said: "Given the havoc that the City has wreaked on our economy, pegging back bonuses to a mere £7bn a year falls short of the value for money taxpayers should expect after bailing out the banks."

In a barbed examination of Tory spending plans, Blood & Treasure looks back to the post-war period:

In the original Age of Austerity, we managed to create the National Health Service, keep a million men under arms through conscription, and, in the Tories case, embark on a mass house building programme: all of that with public debt at 250% of GDP, twice that currently projected. Just because you don’t have much money doesn’t mean that you can’t spend what you have more or less how you please.

But to do that you need ideas: Right now, all the Tories are willing to show us in this direction is Michael Gove’s proposal to extend Academy status to primary schools: another Blairite retread and one specifically mounted right now in the hope that people will stop paying attention to the inconveniently popular tax hike on the wealthy.

In it's leader, "Optimism and the world economy -- A glimmer of hope?," The Economist is unconvinced the end is in sight:

The worst is over only in the narrowest sense that the pace of global decline has peaked. Thanks to massive—and unsustainable—fiscal and monetary transfusions, output will eventually stabilise. But in many ways, darker days lie ahead. Despite the scale of the slump, no conventional recovery is in sight. Growth, when it comes, will be too feeble to stop unemployment rising and idle capacity swelling. And for years most of the world’s economies will depend on their governments.

Consider what that means. Much of the rich world will see jobless rates that reach double-digits, and then stay there. Deflation—a devastating disease in debt-laden economies—could set in as record economic slack pushes down prices and wages, particularly since headline inflation has already plunged thanks to sinking fuel costs. Public debt will soar because of weak growth, prolonged stimulus spending and the growing costs of cleaning up the financial mess. The OECD’s member countries began the crisis with debt stocks, on average, at 75% of GDP; by 2010 they will reach 100%. One analysis suggests persistent weakness could push the biggest economies’ debt ratios to 140% by 2014. Continuing joblessness, years of weak investment and higher public-debt burdens, in turn, will dent economies’ underlying potential. Although there is no sign that the world economy will return to its trend rate of growth any time soon, it is already clear that this speed limit will be lower than before the crisis hit.

The British economy shrank at the fastest rate in 30 years in the first three months of this year, raising fresh doubts over Alistair Darling's budget forecasts just 48 hours after they were announced.

Official figures released this morning showed gross domestic product (GDP) fell by 1.9% between January and March. This is the sharpest quarterly decline since the third quarter of 1979, the year when Margaret Thatcher came to power.

This was far worse than the 1.5% decline forecast by City economists. It contradicts the chancellor's claim on Wednesday that the economy shrank "by a similar amount" to the fourth quarter, when it contracted by 1.6%.

ING economist James Knightley said: "Today's GDP report again highlights how optimistic Darling was in his budget assumptions and that the risk to the fiscal deficit remains heavily to the upside."

The downturn is forcing the chancellor to borrow £175bn this year.

The data from the Office for National Statistics (ONS) revealed that output in the first quarter was 4.1% less than a year ago, the worst annual decline since the end of 1980.

Some regional airports could struggle to survive the recession because of falling passenger numbers, the Airport Operators Association (AOA) has warned.

Its figures suggest overall traffic in March 2009 was down 15%, with passenger numbers reduced by 70% at Blackpool Airport and 50% at Durham Tees Valley.

The AOA blamed budget carriers for squeezing costs, but airlines say extra charges have forced travellers away.

The government said it was committed to helping business during the downturn.

'Decreased the burden'

Airports have insisted that a shortfall in income has forced them to introduce extra charges for services such as fast-track security or car drop-offs for passengers.

Luton, Leeds Bradford and Liverpool all charge a £3 fee to fast-track passengers through security, while Bristol airport charges £5. Blackpool and Norwich charge a mandatory airport development fee per passenger.

Business leaders have delivered a surprise attack on the government's environmental policy, arguing that ministers are not doing enough to cut global warming emissions or make sure the UK does not run out of power.

The CBI says billions of pounds of necessary investment will move to the US and China unless the government takes "urgent action".

It comes amid widespread disappointment that the G20 heads of state failed to come up with any real push on green issues as part of a $1.1tn (£743bn) financial aid package for the global economy.

The warning from the CBI follows a series of announcements by major energy companies, including Shell, BP and Centrica, that they would axe or reconsider investment in "low carbon" energy such as wind and solar power and carbon capture for coal-fired power stations.

Richard Lambert, the CBI's director general, said "politics and policy", not the recession, were delaying investment in the UK. He said the government's policies were on the "right path", but companies were "jittery" about investing in the UK because of delays with planning permission, poor National Grid connections, slow funding for new technology, and uncertainty over long-term carbon prices.

The government needs "to get on with it," said Lambert, ahead of today's launch of a new strategy for the energy industry. "If they don't, the risk is that the private capital needed will not come here in the volumes required."

Further evidence of the growing crisis of confidence in the green energy sector is exposed today by a survey which revealed that more than three quarters of Britain's green energy companies were now facing enormous financial difficulties gaining vital access to loans and investment money - a finding that has seriously shaken the industry's parent body.

Out of 39 member companies that responded to a poll by the Renewable Energy Association (REA), 32 said they were suffering from a shortage of cashflow and other problems, while only six said they were not affected at all.

A crisis is unfolding in the UK as people in poverty struggle with rising food prices and the recession, the Save the Children charity has warned.

It comes as new figures from The Grocer magazine show food prices rose by more than 18% over the last year.

On Monday, the charity will launch a crisis grant scheme to help families.

The government says it believes food prices have peaked and it is tackling child poverty through increased child benefits and child tax credits.

'More unequal'

Colette Marshall, of Save the Children, said: "We are facing a crisis. Benefits simply haven't been enough and with rising food costs it means that families cannot afford to give children proper decent food.

"We think we are heading towards malnutrition here in the UK."

Pensioner on her struggle with food costs

She is calling on the government to meet its target of halving child poverty by 2010 by putting £3bn in the Budget.

World leaders gathering for Thursday's G20 summit in London were warned today by the Organisation of Cooperation and Development that the world economy was shrinking much faster than previously thought and that global trade was in freefall.

The Paris-based thinktank also told the British prime minister, Gordon Brown, there was no room for the type of fiscal stimulus that the prime minister had been touting around the world.

"The world economy is in the midst of its deepest and most synchronised recession in our lifetime caused by a global financial crisis and deepened by a collapse in world trade," the OECD said in its latest twice-yearly economic forecasts.

It predicted that in spite of big cuts in interest rates around the world, fiscal stimuli and banking system bailouts, recovery would not come until 2010 at the earliest.

The organisation had warned on Monday that unemployment among its 30 rich nation members was likely to rise by 25m in the current crisis.

Japan and Germany announced big rises in joblessness today: in Germany it rose to 3.5m, its highest since February 2008 and giving a jobless rate of 8.1%, while Japan's rate reached a three-year high of 4.4%. Japan announced a new fiscal stimulus package as it seeks to pull its economy - a big exporter punished by the slump in world trade - out of a deep recession.

Brown said G20 leaders should aim to save or create 20m jobs and must act together to increase the potential impact of their actions.

"Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," he said .

The OECD expects global trade volumes to slump by 13% this year. "International trade is in freefall," it said.

It expects its member economies to shrink by an average 4.3% this year, with the United States contracting by 4%, the eurozone by 4.1% and Japan by 6.6%. It forecasts Britain's economy will shrink by 3.7% - the worst performance since the second world war.

Separately, the World Bank forecast that growth in the developing world would slow to just 2.1% this year from 5.8% in 2008.

"Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks but also reducing opportunities available to them, and frustrating their hopes," said Justin Yifu Lin, the World Bank's chief economist.