IFS: Recession Has Hit Young Adults Hardest

Young people have "borne the brunt of the recession" with their pay and job prospects hit much harder than older generations, a leading economic think tank has said.

The Institute for Fiscal Studies (IFS) found that among those aged 22-30 household incomes fell 13% between 2007-2013, wages plunged 15% and employment levels dropped by four points.

For those aged 31-59, income fell by 7%, wages by 6% and employment stayed stable, while the over-60s saw almost no impact on those measures.

The gap would have been even more pronounced but for the 25% of young adults still living with their parents, the IFS said.

The think tank - working with the Joseph Rowntree Foundation (JRF) social research charity - based its conclusions on the Government's Household's Below Average Income data.

It also found there was "no clear north-south divide" in recession-hit areas - with a wide spread in falls in median income from 8% in Northern Ireland to 2% in the East Midlands.

The IFS pointed out that a sustained period of low interest rates and real-terms falls in private rents had benefited young people's finances but that home ownership continued to plummet - spelling further costs for a generation of renters.

Only 21% of people born in the mid-1980s had bought their own place by the age of 25 - compared with 34% of those a decade earlier and 45% born in the mid-1960s, it said.

IFS research economist Jonathan Cribb said: "Pay, employment and incomes have all been hit hardest for those in their 20s. A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects."

JRF head of poverty research Chris Goulden said the research showed how a shortage of affordable homes and rising rent costs were forcing some 600,000 people to live below the poverty line after paying housing costs.

He said: "We need a comprehensive strategy and sufficient political will to get to grips with poverty. That means addressing low pay, the high cost of essentials, such as housing and childcare, and reform to the tax and benefits system to ensure work is a route out of poverty."

Labour Treasury spokeswoman Catherine McKinnell said: "While David Cameron denies there is a cost-of-living crisis, these figures show people have seen a substantial fall in their income since 2010.

"The IFS's research shows that young people have been hit particularly hard over the last few years.

"Labour will act by boosting apprenticeships and making sure young people who don't have the skills they need to get a job are in training, not on benefits."

A Treasury aide said: "This shows just how hard Labour's great recession hit young people and why it's vital we keep working through our long-term economic plan which is cutting the deficit, creating jobs and equipping people with the skills they need for the future."

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Citigroup To Pay $7bn Sub-Prime Mortgage Fine

Citigroup has confirmed it will pay $7bn (£4.1bn) to settle a US Justice Department investigation into sub-prime mortgages.

The agreement was announced following weeks of talks between officials and the New York-based investment bank over the size of the penalty for selling mortgage-backed securities made up from sub-prime mortgages - loans blamed for triggering the financial crisis.

Attorney General Eric Holder told a Monday news conference the settlement did not clear the bank or its employees of potential criminal prosecution.

He described the bank's misconduct as "egregious".

As part of the deal, Citigroup will make a $4bn civil monetary payment to the Justice Department and another $500m in compensatory payments to state attorney's general and the Federal Deposit Insurance Corporation (FPDIC).

The bank will also provide $2.5bn for consumer relief, which will include financing for construction and preservation of affordable housing, as well as principal reduction and forbearance for residential loans.

Bank chief executive Michael Corbat said: "The comprehensive settlement announced today with the US Department of Justice, state attorneys general, and the FDIC resolves all pending civil investigations related to our legacy RMBS (residential mortgage-backed securities) and CDO (collateralized debt obligations) underwriting, structuring and issuance activities.

"We also have now resolved substantially all of our legacy RMBS and CDO litigation," he said.

The settlement is the latest in a series of deals between banks and regulators to avert costly trials in the United States.

Citi and other banks were found to have downplayed the risks of sub-prime mortgages when selling them to mutual funds, investment trusts, pensions and others.

The securities, which contained so-called residential mortgage-backed securities and collateralised debt obligations, plunged in value when the housing market collapsed in 2006 and 2007.

The Citigroup settlement comes months after a similar - but much larger - $13bn deal between the Justice Department and JPMorgan Chase & Co.

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Dot Scot: New Web Domain Is Launched

Scotland now has its own national domain name - and both the yes and no referendum campaigns have been among the first to sign up.

Yes Scotland, Better Together, NHS Scotland and the Scottish government are among 50 businesses and organisations to use the .scot domain name.

Deputy First Minister Nicola Sturgeon said the domain would help promote Scotland all over the world.

"It is entirely right that Scotland should have its own distinctive and recognisable internet domain, in particular one that will resonate internationally, helping to promote Scottish business and culture throughout the world," she said.

The domain will be open for all to purchase from September 23, and expressions of interest can be registered at http://nic.scot.

Gavin McCutcheon, director of the not-for-profit Dot Scot Registry, said: "It's a community domain intended for everybody who lives and works in Scotland, and for the 50 million people around the globe who are part of Scotland's diaspora."

The domain went live at noon on Tuesday.

The .scot domain name follows the launch of .london, after the internet domain registration group Icann increased the number of top level domains available.

Wales is due to get .wales and .cymru domain names in early 2015. The Welsh government has already said it will be making the switch from .gov

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Inflation Jump 'May Be Down To Good Weather'

Inflation rose by more than forecast last month - possibly driven by retailers delaying summer sales because of good weather.

Figures released by the Office for National Statistics showed the annual pace of inflation rose in June to 1.9% from 1.5% in May.

It also measured - in a separate release - a sharp rise in house price inflation in London with annual growth calculated in May at a record 20.1%.

The average house price was 10.5% higher on a national, year-on-year basis the ONS said.

The official house price statistics were the first to cover the first month of tighter mortgage lending rules - aimed at ensuring greater affordability for both borrowers and lenders alike.

In its wider inflation statistics, the ONS said clothing and footwear prices rose month on month at a time when they are usually falling - as stores held off on summer discounts due to warmer weather bringing shoppers out.

Furniture, air fares and sea transport also had an upward effect but petrol prices went up by less than the same month a year before.

It meant inflation remained well above the rate of wage increases, which were last recorded at 0.7%, meaning real-terms pay is still stalling.

Inflation had been dragged down in May by the supermarket price war which saw food and non-alcoholic drinks costs fall but these were flat in June.

The headline measure still remains below the Bank of England's 2% target, with CPI having now been at or below target for seven months in a row - the first time this has happened since 2005.

Sterling jumped back above the $1.71 mark on expectations the latest figure raises the chances of an interest rate hike later this year.

Chris Williamson, chief economist at Markit, said: "With inflation almost hitting the Bank of England's 2% target, the housing market booming, the economy growing strongly with no signs of momentum being lost and unemployment plummeting, the case for higher interest rates is building."

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Firms Fined In Sausage Price Fixing Scandal

The latest price-fixing scandal to hit Germany has seen 21 companies fined a total of €338m (£270m) for collusion on pricing its national dish - the humble sausage.

The country's Federal Cartel Office (FCO), fresh from slapping a similar penalty on 10 breweries and three sugar producers earlier this year, said it had found evidence of anti-competitive practice in the sausage sector going back years,leading to higher shop prices.

The national competition watchdog said: "Numerous statements and documentation prove that there was a 'fundamental understanding' to agree regularly on requests for price increases".

In addition to the companies involved, including Herta, the watchdog also levelled penalties against 33 individuals.

It charted pricing activity among firms and company officials on the sidelines of an annual sausage industry summit.

The FCO explained that sausage makers had met legitimately for decades but found some members were also conducting discussions and agreements over pricing - often in private phone calls.

In its latest annual report, published last week, the cartel office said it expected to issue a record number of fines for anti-competitive behaviour this year.

Already in February, the watchdog fined three large sugar producers - Pfeifer & Langen, Suedzucker and Nordzucker - €280m (£220m) for price fixing.

The breweries were fined more than €300m (£238m) at the beginning of the year for fixing beer prices between 2006 and 2008.

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eBay To Stream Art Auctions In Sotheby's Deal

High-rolling art collectors will soon be able to bid for iconic works on eBay.

The site, renowned for selling everything from second-hand clothes to cheap electronics, has teamed up with auction house Sotheby's.

An online streaming platform is being built to allow users to view and acquire art, antiques and collectibles.

It comes as more collectors turn to the web and mobile devices to compete for highly prized items and possibly even works by artists such as Monet or Picasso.

You could buy a masterpiece without having to leave your living room

In 2013, online bidders competed for 17% of the total lots offered by the auction house.

The total number of lots purchased online jumped 36% compared to the previous year.

The global art market is worth an estimated £38bn.

Sotheby's believes online art sales could reach £7.6bn by 2020.

Chief operating officer Bruno Vinciguerra said: "The growth of the art market, new generation technology and our shared strengths make this the right time for this exciting new online opportunity.

"We are joining with eBay to make our sales more accessible to the broadest possible audience around the world."

From autumn, most of Sotheby's New York auctions will be broadcast live on a new section of eBay's website.

Eventually, online-only sales will be added, alone with streamed auctions from branches around the world.

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Manchester United Sign £750m Adidas Deal

Manchester United have agreed a record-breaking £750m kit sponsorship deal wth Adidas after Nike walked away from contract extension talks.

The 10-year agreement, starting at the beginning of the 2015/16 season, dwarfs the £150m deal over five years recently reached between Arsenal and Puma, which was in itself a UK record.

It was made as United prepared to begin the new Premier League campaign without the prospect of lucrative Champions League football following a disastrous 2013/14 season under David Moyes - now replaced as manager by Louis van Gaal, who led the Netherlands to third-place at the World Cup. 

The eagerness of Adidas to make United's kit was seen as evidence of the durability of United's brand value despite its worst-ever Premier League campaign which resulted in a seventh-place finish in May.

The sums agreed by Adidas - described as a "minimum guarantee" by United - more than double the value of Nike's current contract, which has one more season to run.

Nike supplies United's kit for the looming season

The deal, worth £75m a year from 2015, was announced in a short statement after Nike ruled itself out on cost grounds, saying a trebling in the cost of its existing 13-year equipment supply contract was not good value.

Simon Leaf, a sports lawyer for Berwin Leighton Paisner, told Sky News: "This is yet another example of the power and global appeal of the English Premier League.

"At a time of apparent weakness, where Manchester United last season finished over 20 points behind the winners Manchester City, failing to qualify for Europe, Adidas has been prepared to break all previous records to secure the deal.

"Nevertheless, from a legal perspective, we would expect that the amounts quoted would only ever become payable if Manchester United return to winning ways and are able to add to the trophies won under Sir Alex Ferguson.

"This deal will be celebrated in many boardrooms of the top teams around Europe as a new benchmark".

Nike recently unveiled shirts for 2014/15 featuring a gold Chevrolet logo, marking the start of the American car-maker's £326m seven-year sponsorship deal with the team.

In a statement issued last week , Nike said: "Any partnership with a club or federation has to be mutually beneficial and the terms that were on offer for a renewed contract did not represent good value for Nike's shareholders".

Adidas last held the United contract between 1980 and 1992.

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MPs Demand £22bn In Unpaid Debts Be Collected

A report by MPs has slammed the Government for failing to chase down at least £22bn of debts owed to the Treasury.

The Public Accounts Committee was reacting to an earlier study by the National Audit Office which calculated, that of March last year, £15bn was outstanding from HM Revenue and Customs.

The Department for Work and Pensions and the Ministry of Justice accounted for most of the remainder.

Margaret Hodge believes taxpayers are being failed

The MPs accused ministers of failing to take a strategic approach to the issue and warned that failure to minimise the volume of debt outstanding - ranging from unpaid fines and taxes to overpaid tax credits - was having a direct impact on Government borrowing volumes.

They recommended each department was given targets to recover what debt they could though vulnerable debtors should not be pursued inappropriately.

Committee chair Margaret Hodge said: "The Government is owed this massive amount of money but it has failed to take a strategic, cross-government approach to managing that debt and getting more money paid to the Exchequer".

The report added: "Government inaction has led to large volumes of old debts building up in departments which are unlikely to be collected.

"While the Treasury and the Cabinet Office say they are belatedly developing a cross-government strategy for debt, we are concerned that the centre has taken so long to drive improvements in debt collection, given that this should be a basic business activity, and given the huge volume of bad debts that are written off each year".

Another conclusion suggested departments review their use of debt collection agencies.

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White House Ex-Press Chief Tipped For Apple Job

Apple is lining up former White House press secretary Jay Carney to take over as its head of PR, according to reports.

Mr Carney would replace Katie Cotton, who stepped down from the position earlier this year.

He worked as White House press secretary from early 2011 until June this year. Before that he was the Miami bureau chief for Time Magazine and communications director for US Vice President Joe Biden.

A number of internal candidates at Apple have also been considered for the role, which reports directly to chief executive Tim Cook.

Apple CEO Tim Cook reportedly wants a "friendlier" PR face

Apple is notorious for ignoring media requests, so Mr Carney's trademark "I don't know" response to tough questions will be a small upgrade.

According to a report last month, Mr Cook wants a "friendlier, more approachable" face to lead his communications team.

Mr Carney has been linked with PR jobs at other well-known companies, including on-demand car service Uber.

The company is seeking a communications expert with a political background as it continues to battle the taxi industry.

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Payday Loan Caps To Cut The Cost Of Borrowing

The City regulator is to impose caps on payday loans from January to tackle abuses in the quick-credit market, in a move set to cost the industry £420m of its annual revenue.

The headline measure was a limit in the overall cost of a loan, which the Financial Conduct Authority (FCA) said should never exceed 100% of the total amount borrowed.

For example, if a borrower was to take out a loan of £300, the person's liability would not be more than £600.

Fixed default fees were also to be capped at £15, the regulator said, with interest on unpaid balances and default fees not exceeding 0.8% per day of the outstanding amount.

News of the restrictions - reported by Sky News on Monday night ahead of the announcement - prompted the industry body the Consumer Finance Association (CFA) to warn that the limits could force many of its members out of business, driving customers towards loan sharks instead as lending criteria was tightened.

The FCA admitted the measures were likely to cost the payday sector £420m annually but its chief executive Martin Wheatley dismissed the industry's claim as a "scare story" - telling Sky News the caps would only kill off those firms preying on their customers.

He said: "For the many people that struggle to repay their payday loans every year this is a giant leap forward.

"From January next year, if you borrow £100 for 30 days and pay back on time, you will not pay more than £24 in fees and charges and someone taking the same loan for 14 days will pay no more than £11.20. That's a significant saving.

"For those who struggle with their repayments, we are ensuring that someone borrowing £100 will never pay back more than £200 in any circumstance.

"There have been many strong and competing views to take into account, but I am confident we have found the right balance.

"Alongside our other new rules for payday firms - affordability tests and limits on rollovers and continuous payment authorities - the cap will help drive up standards in a sector that badly needs to improve how it treats its customers."

The measures were announced 24 hours after Wonga - the country's biggest payday lender - confirmed its new chairman was to lead a drive to improve standards in the wake of damaging revelations the firm created fake legal letters to threaten borrowers in arrears.

Citizens Advice chief executive Gillian Guy said of the caps: "Up until now, payday lenders have had the green light to send people into a spiral of unmanageable debt.

"The cap will help limit the scale of debts but its success will depend on enforcement and is part of a raft of measures, including limiting rollovers, that the FCA must make sure lenders are sticking to."

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