Turnaround specialist Justin King rejoins M&S as non-executive director

December 11, 2018

By James Davey

LONDON (Reuters) – British clothing and food retailer Marks & Spencer <MKS.L> has hired Justin King, the former boss of supermarket chain Sainsbury’s <SBRY.L>, as a non-executive director, adding another big-name industry veteran to its board.

M&S said on Tuesday that King, one of Britain’s best known businessmen, would take up his new role on Jan. 1. Shares in the firm were up 1 percent at 1355 GMT.

After a decade of failed reinventions, the 134-year-old M&S is now targeting sustainable, profitable growth in three to five years by shutting less-successful stores. It warned last month that sales were unlikely to improve any time soon.

King is best known for leading the revival of Sainsbury’s as chief executive over ten years. He delivered over 10 billion pounds ($12.7 billion) in incremental sales, a near-tripling in earnings and total shareholder return of 85 percent, before stepping down in 2014.

Prior to that, he was director of food at M&S and before that was part of the leadership team at supermarket group Asda, where he worked with Archie Norman, another turnaround specialist who is now M&S’s chairman.

“Justin is recognized as one of the UK’s most successful retail leaders,” said M&S.

King has been vice-chairman of private equity firm Terra Firma since 2015, although it was reported by Sky News earlier this month that he was stepping back from day-to-day management of the buyout group.

When he quit Sainsbury’s he said he wanted another big job. That is yet to materialize.

Analysts said that given King’s history his appointment will increase the pressure on chief executive Steve Rowe, an M&S lifer, and on new food managing director Stuart Machin.

Analysts speculated that should Norman lose patience with either he would have a ready-made replacement in King, although Britain’s corporate governance guidelines advise against moving a non-executive director to an executive role.

“Having worked there 15 years ago, M&S has a very special place in my affections,” said King. “I look forward to joining the board and supporting Steve in the turnaround that he is leading.”

(Reporting by James Davey; Editing by Sarah Young and Mark Potter)

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French government hikes 2019 deficit target: minister

December 11, 2018

PARIS (Reuters) – The French government now expects a 2019 budget deficit of 2.5 percent of economic output excluding the one-off impact of transforming a payroll tax rebate into a permanent cut, the budget minister said on Tuesday.

Before President Emmanuel Macron announced concessions to anti-government protestors, the government had previously expected a deficit excluding one-offs of 1.9 percent of gross domestic product.

As the overall deficit was previously expected at 2.8 percent, the new underlying deficit risks pushing the overall number towards 3.4 percent – past the European Union’s 3-percent limit.

Speaking before parliament, Darmanin also said that the concessions announced on Tuesday by Macron would amount to 10 billion euros ($11.4 billion), including the cancelling of energy tax hikes already announced last week.

(Reporting by Myriam Rivet; writing by Leigh Thomas; Editing by Michel Rose)

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Explainer: Chaos, or keep calm and carry on: What happens now in the UK?

December 11, 2018

By William James

LONDON (Reuters) – British Prime Minister Theresa May has delayed a vote in parliament to approve her Brexit deal in search of extra assurances from the European Union that will win over deeply skeptical lawmakers. Britain cannot ratify any withdrawal agreement without parliament’s consent.

So what happens now?

BACK TO PARLIAMENT

The government has said it intends to hold a vote before January 21. But, critics are already lining up to say that May will not be able to get enough from EU leaders to make members of parliament change their mind about a deal they say is flawed.

By law, if the vote is held and the deal is rejected, ministers have 21 days to state how they intend to proceed.

The government has rejected suggestions it could seek to bypass parliament and proceed towards a no-deal exit. It has promised that lawmakers will get the chance to debate the next steps by Jan. 21 whether there is a deal or not.

RESIGN

May could resign as leader of the Conservative Party, triggering an internal contest to replace her without a general election.

OUSTED

A long-running effort by some members of May’s own party to get rid of her could gain renewed impetus. If 48 out of 315 Conservative lawmakers want her to go, the party holds a leadership ballot. If she loses, there is an internal contest to replace her without a general election.

VOTE OF NO CONFIDENCE

The opposition Labour Party could call a vote of no confidence in the government, seeking to take control of the country without holding an election.

If a majority of lawmakers vote against May’s government, Labour would have 14 days to prove, by a vote, that it could command a majority and form its own government.

BACK TO THE BALLOT

If May’s government loses a confidence vote and Labour is unable to form a new government, an election is called. May could also call a general election herself if two-thirds of lawmakers in parliament agree to it. May has said that a general election is not in the national interest.

LONGER-TERM OPTIONS:

SECOND REFERENDUM

The route to a second referendum on Brexit – or a People’s Vote – is unclear but would almost certainly require the backing of the government of the day. A new referendum can be called only if it is approved by parliament.

With May dead set against a second referendum, and the opposition Labour Party not committed to one (but not ruling one out), a second referendum would need either a change in prime minister, a change in government, or an abrupt change in policy.

An increasingly vocal contingent of lawmakers from across the political spectrum supports a fresh vote to break the deadlock in parliament. But, so far they have not been able to prove there is a majority in parliament for this view.

Even if parliament did agree in principle to a second referendum, Britain would then have to ask for an extension to its timetable for leaving the EU.

DELAY OR CANCEL BREXIT

The government could seek to extend the negotiating period with the EU to give it time to try to reach a better deal, hold a general election, or conduct a second referendum.

The government could also withdraw its notice of intention to leave the EU, which the European Court of Justice has ruled this week it can do without consent of other EU countries.

May has said she does not want to delay Britain’s exit from the EU, and will not revoke the notice of intention to leave.

(Reporting by William James; Editing by Guy Faulconbridge and Peter Graff)

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Italy coalition parties resisting major changes to deficit target: government source

December 11, 2018

By Giuseppe Fonte

ROME (Reuters) – Italy’s coalition parties are resisting any major reduction to next year’s deficit target, complicating efforts to avoid EU disciplinary action over the 2019 budget, a government source said on Tuesday.

The European Commission has rejected Rome’s budget, which predicts the deficit will rise to 2.4 percent of gross domestic product in 2019 from 1.8 percent this year, saying it will not cut Italy’s large public debt as the rules require.

The source told Reuters there were “excellent chances” that the Commission would back down from a threat to discipline Rome if the target was cut to 2.0 percent.

However, the source said neither of the two coalition parties — the rightist League and the anti-establishment 5-Star Movement — wanted to see the target drop below 2.2 percent.

Underscoring tensions within the government, Economy Minister Giovanni Tria said it would be better to reach a deal with Brussels and cut the deficit in order to regain market trust.

The clash with the EU, whose fiscal rules are designed to protect the euro zone from a sovereign debt crisis, is worrying investors and has sent Italy’s borrowing costs surging and shares its banks tumbling.

Tria, an economics professor with no party affiliation, pressed earlier this year for a deficit target of under 2.0 percent. He has been pushed aside in the negotiations with Brussels, which are being led directly by Prime Minister Giuseppe Conte.

Conte is due to see Commission President Jean-Claude Juncker on Wednesday in an attempt to find a compromise. A separate government source said it was unlikely that he would put forward any deficit target at that meeting.

FRENCH IMPACT

Earlier, Conte told parliament he was confident he could reach an accord with Brussels, but said Europe had to overcome its “short-sighted” vision of fiscal rigor.

“I will not go to Brussels with a book of dreams. I will go with a complete spectrum of the reform program,” he said.

He added that increasing the budget deficit was needed to implement policies that Italians wanted and his coalition was not doing it “lightheartedly”.

Among the most costly measures in the budget are income support for Italy’s many poor and unemployed, and a reduction in retirement age for people who have paid at least 38 years of pension contributions.

Tria said he expected new financial forecasts costing these two measures to be finalised later on Tuesday, giving coalition parties the data they need to decide on the deficit.

While keen to avoid EU censure, the ruling parties feel emboldened by the weeks of unrest in France.

President Emmanuel Macron on Monday announced wage rises for the poorest workers and tax cuts for pensioners — concessions that risk shunting the French 2019 deficit through the EU’s 3 percent ceiling.

“Seeing what is going on in Paris, I refuse to believe that Brussels, for the sake of a few decimal places, will impose sanctions, inspectors and commissars,” Italian Deputy Prime Minister Matteo Salvini said on Sunday.

(Writing by Crispian Balmer; Editing by Robin Pomeroy)

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Automakers rise on report of China moving to cut U.S. car tariffs

December 11, 2018

(Reuters) – Automakers’ shares rose on Tuesday following a report that China could move to cut tariffs on American-made cars, a step which was forecast by U.S. President Donald Trump after a meeting with China’s president in Argentina.

China is moving to cut import tariffs on American-made cars to 15 percent from the current 40 percent, Bloomberg reported on Tuesday citing people familiar with the matter.

The step hasn’t been finalized and could still change, according to the report.

Shares of U.S. automakers including General Motors Co <GM.N> and Ford Motor Co <F.N> rose about 2 percent in premarket trading on hopes that the move could revitalize sales that took a hit when China ramped up levies on U.S.-made cars.

European auto stocks <.SXAP> also rallied 2.8 pct on the news, as several of the carmakers build SUVs in the United States and sell in China.

BMW <BMWG.DE>, Volkswagen AG <VOWG_p.DE> and Daimler AG <BMWG.DE> rose between 2.3 percent and 4 percent.

A proposal to reduce tariffs on cars made in the U.S. to 15 percent has been submitted to China’s Cabinet to be reviewed in the coming days, according to the report.

Beijing had raised tariffs on U.S. auto imports to 40 percent in July, forcing many carmakers to hike prices.

The news would also be beneficial for Tesla Inc <TSLA.O> that has been hit hard by increased tariffs on the electric cars it exports to China.

The U.S. firm, led by billionaire Elon Musk, has said it will cut prices to make its cars “more affordable” and absorb more of the hit from the tariffs. Tesla is also building a local plant in Shanghai to help it avoid steep tariffs.

“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%,” Trump had tweeted last week.

(Reporting by Rachit Vats in Bengaluru; Editing by Shounak Dasgupta)

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Climate policies put world on track for 3.3C warming: study

December 11, 2018

By Nina Chestney

KATOWICE, Poland (Reuters) – Average world temperatures are on course to far exceed the main goal set in the 2015 Paris Agreement on limiting global warming, a study showed on Tuesday.

But the overshoot by the end of this century could be less severe than expected thanks to significant efforts by some countries to combat climate change, said the report by Climate Action Tracker (CAT), a consortium of three independent European research groups.

The Paris Agreement aims to restrict warming to “well below” two degrees Celsius (3.6 Fahrenheit) above pre-industrial times.

Countries are meeting in Poland from Dec. 2-14 to agree guidelines for implementing the pact which comes into force in 2020 but there are concerns these will be too weak to limit temperature rise to within safe levels.

The CAT report said there had been progress since 2015, but current policies meant the world was heading for warming of 3.3C.

That compared with the 3.4C it predicted a year ago, and it said that if governments were to implement policies they had in the pipeline, warming by 2100 could be limited to 3C.

Even a rise of 3C could cause loss of tropical coral reefs, Alpine glaciers, Arctic summer sea ice and perhaps an irreversible melt of Greenland’s ice which would drive up world sea levels, a United Nations science panel has said.

The U.N. Intergovernmental Panel on Climate Change (IPCC) said in October that keeping the rise to 1.5C was possible but would require rapid and unprecedented changes in human behavior.

“We have yet to see this translate into action in terms of what governments are prepared to put on the table,” said Bill Hare, chief executive of Climate Analytics, one of the three CAT research groups.

Since the Paris accord was agreed, countries including Argentina, Canada, Chile and India plus the European Union are moving in the right direction toward cutting emissions.

Countries such as Norway and Costa Rica are making progress with low-carbon transport and renewable energy deployment but China’s carbon emissions rose again this year, the report said.

“With prices for renewables dropping roughly a third since Paris, both South Africa and Chile are mapping out strategies to address coal, and renewables are taking off in India,” said Niklas Höhne of research group NewClimate Institute.

But countries including the United States, Australia, Brazil, Indonesia, Russia and the United Arab Emirates have made either no progress or taken backward steps.

(Reporting by Nina Chestney; editing by John Stonestreet and Ed Osmond)

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Yemen’s warring parties exchange prisoner lists, talks focus on Hodeidah

December 11, 2018

By Aziz El Yaakoubi

RIMBO, Sweden (Reuters) – Yemen’s Houthi movement and the Saudi-backed government on Tuesday exchanged lists of some 15,000 prisoners for a swap agreed as a confidence-building measure at the start of U.N.-sponsored peace talks.

Both parties at the consultations in Sweden, set to last until Dec. 13, have yet to settle major sticking points, including a ceasefire in the port of Hodeidah, reopening of Sanaa airport and shoring up of the central bank.

The talks are being held as Western allies press Saudi Arabia and the United Arab Emirates, leaders of a military coalition backing the government of Abd-Rabbu Mansour Hadi, to end a war that has pushed Yemen to the verge of famine.

Delegates said the prisoner swap would be conducted via Houthi-held Sanaa airport in north Yemen and government-held Sayun airport in the south – a process overseen by the United Nations and the International Committee of the Red Cross.

“We have exchanged more than 7,000 names from each side, including some 200 high-ranking officers,” said Ghaleb Mutlaq, a delegate for the Iran-aligned Houthis.

Hadi’s foreign minister tweeted that the government had submitted a list of 8,576 prisoners, including activists and journalists.

The Houthi delegate said a joint committee would investigate those still missing.

Tuesday’s talks were expected to focus on Hodeidah, a major Red Sea port and humanitarian lifeline for millions that is now a focus of the war, according to a source familiar with the consultations.

Both parties have also agreed on a U.N. role in the port but differ on who should control the city itself. The Houthis say it should be declared a neutral zone, while the Hadi government wants Hodeidah under its control.

U.N. mediator Martin Griffiths wants to avert a full-scale coalition assault on Hodeidah, the Houthis’ main supply line and entry point for most of Yemen’s commercial goods and vital aid.

The Sunni Muslim, Saudi-led coalition launched an offensive on Hodeidah this year in an attempt to weaken the Houthis who control most of Yemen’s population centers, including the capital Sanaa, from which it ousted Hadi’s government in 2014.

Saudi Arabia and the UAE want to exit a costly conflict that has killed tens of thousands of people, as they face years of military stalemate. Western nations, some of which supply the alliance with arms and intelligence, want the war to end.

The coalition intervened in the Arabian Peninsula war in 2015 to restore Hadi’s government, a move largely seen in the region as part of a proxy conflict between Saudi Arabia and Shi’ite Muslim Iran.

(Reporting by Aziz El Yaakoubi; Editing by Mark Heinrich)

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Cryptoassets should be ‘outlawed’: Allianz GI CEO

December 11, 2018

LONDON (Reuters) – The head of one of Europe’s largest asset managers called for global regulators to ban cryptoassets on Tuesday, scorning them for wiping out people’s savings.

“You should outlaw it”, Allianz Global Investors Chief Executive Andreas Utermann said during a panel discussion in London.

“I am personally surprised that regulators haven’t stepped in harder.”

Utermann made the comments sitting next to Andrew Bailey, the head of Britain’s Financial Conduct Authority. Bailey responded saying “that’s quite strong actually!” before adding there was “no intrinsic value” in cryptoassets.

“We are watching that very closely.” Authorities also had crypto coin offerings (ICOs), which firms have used as an alternative way to raise funding, under surveillence too, Bailey said.

(Reporting by Marc Jones; editing by Huw Jones)

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Brazil will quit U.N. migration pact, incoming minister says

December 11, 2018

RIO DE JANEIRO (Reuters) – Brazil will pull out of a United Nations pact on dealing with rising migration, the incoming foreign relations minister said, joining the United States and a growing number of countries in rejecting the agreement.

Ernesto Araújo – who will take office in January under right-wing president-elect Jair Bolsonaro – said the international accord was “an inappropriate instrument” to deal with the issue and nations should set their own policies.

With a record 21.3 million refugees globally, the United Nations began work on the non-binding agreement after more than 1 million people arrived in Europe in 2015, many fleeing civil war in Syria and poverty in Africa.

The accord, which addresses issues such as how to protect migrants, integrate them and send them home, has been criticized by mostly right-wing European politicians who say it could increase immigration.

All 193 U.N. members except the United States agreed its wording in July, but only 164 – including representatives of Brazil’s current administration – formally ratified it at a ceremony in Marrakesh on Monday.

“The Bolsonaro government will dissociate from the Global Compact for Migration … an inappropriate instrument to deal with the problem,” Araújo wrote on Twitter late that same say.

“Immigration shouldn’t be treated as a global issue, but rather in accordance with the reality of each country.”

Araújo said Brazil would continue to take in refugees from neighboring Venezuela, but that “the fundamental point is restoring democracy” in that nation.

Bolsonaro, who takes office on Jan. 1, has adopted what opponents have called a harsh stance on immigration. In 2015 he was quoted describing refugees coming to Brazil as “the scum of the earth”.

Ten countries, mostly in formerly Communist Eastern Europe, have announced they are pulling of the U.N. immigration pact, and a Chilean official said over the weekend Santiago would do the same.

(Reporting by Gram Slattery; Editing by Andrew Heavens)

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Armed British police use stun gun on man inside grounds of parliament

December 11, 2018

By Peter Nicholls and William James

LONDON (Reuters) – Armed British police used a stun gun to restrain a man inside the grounds of parliament in Westminster on Tuesday, a Reuters photographer who witnessed the incident said.

“Stop. Get down,” police shouted, the Reuters photographer said.

Reuters pictures showed armed police using a stun gun on the man on the cobbled forecourt inside the British parliament’s main Carriage Gates.

The man was later handcuffed as police pointed a gun at the man’s head. Police did not immediately comment.

In March 2017, Khalid Masood killed four people on nearby Westminster Bridge and stabbed an unarmed police officer to death near Carriage Gates before being shot dead.

In August, a man was arrested after driving a car into pedestrians and cyclists before ramming into barriers outside the parliament building in what police said appeared to be a terrorism attack.

(Reporting by Peter Nicholls and William James; editing by Kate Holton and Guy Faulconbridge)

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