Guardian - Business

Sir Stelios Haji-Ioannou's representatives plans to embarrass airline's management over transparency and accountability

Months of public antagonism between the easyJet board and its biggest shareholder and founder, Sir Stelios Haji-Ioannou, will come to a head on Thursday at an annual meeting at which he will attempt to further embarrass the management on issues of transparency and accountability.

He is not expected to attend, but representatives will ask that the second biggest institutional shareholder, Standard Life, is barred from voting on grounds of conflict of interest. It manages the pension funds of EADS, the company that makes Airbus airliners. Stelios opposes easyJet's purchase of Airbus airliners. Standard Life has declined to comment.

Stelios's representatives will demand to know if Standard Life was sent a Section 793 request to identify shareholderswhich – the letter and subsequent correspondence that this week infuriated the airline's founder. EasyJet said the letter was a routine procedure. The representatives will also ask for further details of how an easyJet advertising account reportedly worth up to £50m was awarded last year.

In questions loaded with references to pay, they will urge the remuneration committee to "publishing their proposals on the final formula for the calculation of executive bonuses sooner rather than later".

Fearful of the possibility of a public row, easyJet has said it will take the unusual step of asking shareholders at the meeting if there are any objections to media being present.

Should Haji-Ioannou surprise everyone by turning up in person, the airline's directors will invite shareholders to consider holding the meeting in private. Such a move would be a major blow to the company's efforts to present itself as an accountable and transparent business besieged by a haranguing dominant shareholder.

The airline last month reported a 16.7% year-on-year rise in revenue for the last three months of 2011 and an 8% rise in passengers, albeit against a snow-hit 2010.

• easyJet
• Airline industry
• Sir Stelios Haji-Ioannou

Ofcom to consider licensing deal that would allow Everything Everywhere customers to enjoy super-fast mobile browsing

Customers of phone company Everything Everywhere, the largest UK network with 27 million subscribers, will have access to super-fast 4G mobile broadband before the end of the year if regulators grant permission. EE says it wants to put 4G into the hands of its Orange and T-Mobile customers, as well as those of Three, Virgin Media and other brands that use its network, a year ahead of schedule.

The UK has slipped behind other nations, including the US, Germany and Sweden, in the mobile broadband speed stakes, and those wanting to access the internet on the go using smartphones and laptops can find the experience frustratingly slow.

"The UK has been ahead in this industry for many years and we need to get that back," said EE chief executive Olaf Swantee. "As we are the largest in this market we believe it is our duty to lay the groundwork for a future digital Britain."

While Americans already have 4G services, other nations including France and Italy are well ahead of the UK in auctioning the airspace mobile operators need to deliver them. The British auction, the largest ever sale of national airwaves, has been delayed by legal wrangling between the operators and will not conclude until early next year. A full national rollout is now not scheduled until the end of 2013.

EE has asked telecoms watchdog Ofcom for permission to convert some of its existing 1800MHz (megahertz) spectrum, already used to carry voice calls, texts, and slower 3G internet connections, to 4G.

Created through the merger of two mobile networks and with a mast sharing agreement with Three, EE has enough spare capacity to offer a limited commercial service without having to buy new spectrum. With few 4G phones available, EE's service will at first work only on dongles – gadgets which plug into laptops to provide an internet connection via the mobile phone networks.

With 4G, internet connections will rev up to between 8 and 20 megabits per second, faster than the average home broadband service of 7.6Mbps. The 3G connections available in the UK today are much slower, with a web page taking around 8.5 seconds to load, according to Ofcom research, and speeds averaging 1.4Mbps.

EE's service, which will be on trial in Bristol from April, could launch by the end of 2012 if Ofcom grants approval by April or May.

A spokesman for the regulator said: "Ofcom has received an application from EE to vary its licence for 4G use. Ofcom is considering that application and once it arrives at a view it will consult with stakeholders."

The process could take between eight and 12 weeks, and will involve soundings with rival mobile phone networks and any other interested parties.

• Smartphones
• Broadband
• Internet
• Mobile phones
• Samsung

Sir Mike Darrington has become the first senior executive to break ranks with his peers and attack levels of boardroom pay

The former boss of Greggs, who built the bakery business into one of the UK's most successful high street chains, has become the first senior executive to break ranks with his peers and attack the level of boardroom pay in corporate Britain.

Sir Mike Darrington, who led Greggs for 25 years before his retirement in 2008, said: "The quantum of executive pay is excessive and must be reduced … if the current packages were halved, senior executives and bankers would still be overpaid."

Darrington, who was knighted in 2004 for services to business, has pledged to use his retirement to campaign against excessive boardroom pay deals. He hopes to encourage other like-minded business leaders to offer a critical perspective from inside the executive world.

In particular Darrington, 69, is keen to scotch the myth that attacks on executive rewards are attacks on business. "It is a smokescreen and a lot of bollocks – it is the greed of the people [at the top] that is anti-business." He has labelled his campaign "pro-business and anti-greed". He admits he had been sceptical about trends in corporate governance but claims remuneration has become such a toxic issue it must now be dealt with radically.

His condemnation of existing arrangements is the most searing criticism from the business establishment since Richard Lambert, then director-general of the Confederation of British Industry, two years ago warned bosses risked being viewed as "aliens [living in] a different galaxy from the rest of the community" because of the ever widening gulf between shopfloor and boardroom wages.

Darrington, who was born in Sussex but has lived much of his life in Jesmond, Newcastle, is seeking to build a broad base of support for a campaign to reign in executive pay. He is already supported by the High Pay Centre and corporate governance advisory group Pirc, but is keen to get public backing from fund managers and, ultimately, executives themselves.

In 2007, as Greggs chief executive, Darrington received pay, benefits and bonus of £901,000 and, a year later, retired having built up a pension pot of more than £2m. His pay was modest compared with peers. Since the group joined the stock market in 1984 it has grown steadily, becoming a FTSE 250 stock, and proving one of the few high street success stories during the recession. It continues to open stores, creating jobs, while many of its peers rapidly contract or go to the wall.

Unlike many politicians who have joined the debate on executive pay recently, Darrington is also happy to cite specific examples of what he sees as unacceptable excess. He attacked the decision this month by Barclays chief executive Bob Diamond to trim back investment banker pay by a third. "If profits are down [nearly] 40%, bonuses should be nil," he said yesterday at a governance conference organised by Pirc.

Also criticised were past pay arrangements for former Marks & Spencer boss Sir Stuart Rose and former Tesco chief executive Sir Terry Leahy. Darrington suggested that during Leahy's final years Tesco's share performance had been "good but not brilliant — and look what happened since". Some £5bn was wiped off the value of the group last month after Leahy's successor Philip Clarke delivered a heavy profits warning and attacked the company's "long-standing business issues".

Darrington also dismissed fears that companies taking a hard line on executive pay risked losing vital business leaders to rivals. It would be healthy to cut back pay to such a level that executives left, he said, as most companies had a rich pool of talent which could step up to fill any roles left vacant. "If you don't start to lose people, we have not gone far enough," he claimed, though he accepted a mass exodus might indicate inappropriately low levels of pay.

The increasing complexity of pay arrangements is another bugbear for Darrington. He said multiple bonus arrangements, purporting to be linked to performance, were "guilty of obfuscation".

Reflecting on the many cases of executives received big payouts despite manifestly poor performance, he said the complexity of remuneration arrangements meant shareholders "do not know what is going on until it is too late".

• Greggs
• Executive pay and bonuses
• Retail industry
• Food & drink industry

Prince of Wales to attend speech where prime minister will focus on economic expansion and reducing unemployment

David Cameron will signal his determination to produce a pro-growth budget by saying he is sick of the dangerous anti-business snobbery creeping into national debate, promising his focus is economic expansion and reducing joblessness among young people.

In a speech to the Business in the Community charity, attended by the Prince of Wales, Cameron will mount a fierce defence of business. He will say: "In recent months we've heard some dangerous rhetoric creep into our national debate that wealth creation is somehow anti-social, that people in business are out for themselves.

"We have got to fight this mood with all we've got. Not just because it's wrong for our economy because we need growth and jobs, but because it's wrong for our society. Business is not just about making money, as vital as that is. It's also the most powerful force for social progress the world has ever known.

"The snobbery that says business has no inherent moral worth like the state does, that it isn't really to be trusted, that it should stay out of social concerns and stick to making the money that pays the taxes. Frankly I am sick of this anti-business snobbery."

The speech comes as chancellor George Osborne faces intense political lobbying for tax cuts to boost growth in next month's budget. The Liberal Democrats are openly campaigning for faster progress towards a £10,000 free personal allowance, funded by new taxes on the rich. Clegg even delivered a party political broadcast to say his plans for personal allowances would put £60 a week in the family household.

The Tory right, led by the former defence secretary Liam Fox, are calling for job-creating tax cuts for business, funded through a fresh round of spending cuts.

The Treasury is opposed to further spending cuts, but may be willing to move on personal allowances, so long as the Liberal Democrats embrace a deregulatory package designed to help young unemployed people.

Equally the Treasury is dampening talk of unfunded tax cuts saying the relative improvement in public finances is very marginal.

The Liberal Democrats, desperate to see an end to the squeeze on middle-class living standards, are proposing changes to higher-rate pension tax relief to fund the lifting of personal allowances likely to cost £5bn. An alternative source of funding for the personal allowance has been a version of the mansion tax by by introducing two new council tax bands for high-value properties. No 10 is sceptical of the proposals, but says it is looking at any ideas that will lift living standards andspeed growth.

Cameron will also turn on those criticising the government's work experience schemes in which young unemployed are offered up to 8 week's work experience in return for their job seekers allowance.

A number of firms have been targeted by campaigners to pull out of the scheme that they describe as workfare.

Cameron will say: "We see this in the debate on education, put a young person into college for a month's learning, unpaid – and it's hailed as a good thing.

"Put a young person into a supermarket for a month's learning, unpaid – and it's slammed as slave labour.

"Put a child into a great school run by a local authority – cause for celebration.

"Put them into a great school backed by a bank – and that is a cause for suspicion.

Cameron's unbridled defence of capitalism came as prominent rightwinger David Davis, writing in Prospect, attacked "crony capitalism", adding too many governments had been willing to place their faith in big business rather than small business. He said the coming budget was seen by his fellow Tory backbenchers as the last chance to secure growth in the UK ahead of the next election.

Davis urged the Treasury to "discover the kind of competitive attitude American anti-trust campaigners demonstrated in the middle of the 20th century" when they "spoke of the curse of bigness".

He claimed some of Britain's flagship companies contributed little to our economy and society. In 2009, Barclays made £11.6bn pre-tax profits from its global operations, but paid just £113m in corporation tax.

Davis spreads the blame for what he calls "the network state" across government departments: "Wherever you look in Whitehall the government is too close to big business. We need to drop the idea hat biggest is best, and that Britain's economic health is well served by focusing on a few multinational companies".

• David Cameron
• Economic policy
• Economics
• Unemployment

Just when the economic news was looking promising for President Obama, a barrel of crude oil is back over $100 and, in places, petrol is more than $4 a gallon. Will the price of gas hurt Obama at the polls?

Congratulations to John Harris on his excellent article about A4e and the perils of outsourcing (Nice work if you can get it, G2, 22 February). As he points out, A4e and others act like an arm of the state but with little transparency or democratic scrutiny. It is good to see a politician of the status of Margaret Hodge admitting policy mistakes and recognising that "private providers often don't provide well". Should a contract end and the work need to be taken back in-house, there are further complications. The expertise has often been lost by the local authority or government department. They then have to reinvent the wheel at great cost to discharge their responsibilities.
Tony Clewes
Walsall, West Midlands

• I work for a locally recognised, small, specialist welfare-to-work provider – typical of the sort that Iain Duncan Smith insists the prime providers of the now infamous Work Programme should be engaging with. We know from previous articles that, contrary to their assurances during the tendering process, prime providers are not engaging with organisations such as us. A great many of us had and still have concerns about how prime providers have been operating, especially with the "harder to reach" claimants who would need longer-term and more expert support usually provided by specialists.

While it is unfortunate that four members of staff from one of these providers have been arrested on suspicion of skewing the figures to generate more income, I wonder whether this is the tip of the iceberg. Perhaps deeper investigations should be undertaken.
Jane Cattermole
Senior employment manager, Employment Support and Retraining Agency Ltd

• As somebody who was unemployed for 18 months, I'm glad that MPs and the public are beginning to see A4e's shortcomings. I had a short experience with them and it was awful, with no help in finding work and the only work offered unpaid in a charity shop already over-staffed with other jobseekers from A4e.

I had to borrow money to fund a training course. When I got a new job, A4e got paid by the government for helping me into work even though A4e were no help and continued to get payments for me in work. In your article it says the total payments A4e gets from each person such as me is up to £13,000. Why doesn't the government give jobseekers control of this money, and let them decide how to best use it so they can learn a new skill or fund a university course?

I only needed £1,500, so the government would have saved £11,500. The government must let jobcentres do more and stop people like Emma Harrison making millions from unemployed people.
Mark Judge
Sheffield

• On Tuesday I listened to an original recording of Asquith talking about his people's budget. He made it clear that it was only fair that those who had most should pay more tax to help those who had nothing. Buried deep down in David Laws's article (Our ambition for fairer tax, 22 February), one politician has the guts to make the same plea.

As a retired person on a reasonable occupation pension, I have, so far, been virtually unaffected by the austerity measures. I would gladly pay some extra tax if it meant that more young people could get into work, but no political party is prepared to offer me that option. Increasing VAT was a regressive measure affecting all, but income tax does, or should, reflect ability to pay and, in David Cameron's "big society", fairness has to be one of his aims or it stands even less chance of capturing the public imagination.
Maureen Panton
Malvern, Worcestershire

• David Laws, while supporting a policy which will condemn thousands more, particularly young people, to unemployment, claims the only tax change possible is to reduce tax avoidance and scale back certain reliefs. But there is a much simpler "tax change" which could yield up to £10bn: add three extra divisions to council tax rates. Income and affluence levels are closely related to the value of houses owned and any tax is unavoidable. The small number with high-value properties and limited income would simply have to move – the fate which will apply to the large working-class families in London because of the new rules.
John Pert
Tonbridge, Kent

• Margaret Levy is no doubt convinced by her own claims about the Youth Training Scheme (YTS), and the purported features that, "by design", it was "intended" to have (Letters, 20 February). She omits to state that in 1982, prior to the development of YTS, the Conservative government had abolished the majority of the very agencies that would have been able to develop relevant youth training programmes in negotiation with and agreement by employers, trade unions and educationalists.

Those agencies, the statutory industrial training boards (ITBs), had close links with employers and the occupational fields they covered, undertaking detailed research into changes in skill requirements and developing qualifications directly linked to job requirements. They were run by boards that had employer, trade union and educationalist members. Some 55% of the UK workforce was efficiently covered by the ITBs prior to 1982, with a total staff of only about 20% of that of the bloated Manpower Services Commission, which was effectively an arm of government.

The reason for abolition of most ITBs, and disabling of the remainder, was clear: they would not have supported YTS as it was introduced, because it did not meet the skills needs of industry. If the ITBs had not been abolished, we might by now have the highly skilled, globally competitive workforce we so desperately need. Clearly, the abolition of the ITBs, espousedly to improve training and skills levels, has been an utter failure. Their reintroduction is urgently needed but, sadly, unlikely under the ideologically driven policies of the current government.
Dr Leonard Holmes
Reader in management, University of Roehampton

• Employment minister Chris Grayling is stalling for time by suggesting that the unpaid work schemes he has promoted to businesses are to be reviewed (Unpaid work scheme may be reviewed, says minister, 21 February). He is attempting to justify the unjustifiable: tens of thousands of people being forced into working for companies, including Tesco, the biggest private-sector employer in the country, which made profits of £3.8bn.

He talks of protecting small employers, but the reality is that "workfare" schemes are a multimillion pound industry. On an eight-week placement, Tesco saves £1,500 by not paying the minimum wage of just £6.08 an hour to people on placements. Many have reported that they do the same work as any other Tesco employee without pay. 

Multiply this by the 1,400 workers Tesco says it took on placements in the last four months (Tesco under pressure to withdraw from unpaid work experience schemes, 17 February) and you arrive at £2m pounds in four months – £6m over a year. These savings on Tesco's wage bill are being subsidised by public money used to pay the subsistence benefits that keep those in forced labour fed.

The employment minister also states: "The idea of people being press-ganged to work for nothing to provide cheap labour for big firms is totally untrue." But as documents released by the Guardian show, the minister is disgracefully pushing not just the young, who face mandatory work activity for four weeks,into unpaid work, but also the disabled. In the case of those on disability benefits, there is no time limit on the period of servitude.

Referring to the plans, The Royal College of Psychiatrists has stated it would prefer the placements to be optional, suggesting that as it stands the vulnerable people they are aimed at have no choice in whether to participate.

Grayling should stop playing for time and move immediately to end the disgraceful schemes that are exploiting the most vulnerable to boost the profits of big business.
Mark Dunk, Rhia Lawrence, Alexandra Sayer, Richard Donnell
Right to Work

• Unemployment
• Welfare
• Privatisation
• David Laws
• Benefits
• Work & careers
• Job losses
• Tax and spending
• Economic policy

Even if you disagree on who is to blame for this crisis, the responsibility for getting out of it must still be shared

Let's be honest: if this eurozone did not exist, no one would now invent it. The key word in that sentence is "this". A smaller eurozone of more compatible, mainly north European economies – a nordozone or neurozone – could probably have weathered the post-2008 crisis of western capitalism, even with Maastricht's design flaws. Alternatively, a eurozone of the current size might eventually have followed from the creation of a political union, in institutions but also in hearts and minds, if and when that proved possible.

That would require a degree of fellow-feeling and inter-operability – so to speak – between Germans and Greeks comparable with that between New Englanders and Alabamans in the US, and (unless Alex Salmond, the Scottish nationalist leader, is to be believed) between Old Englanders and Scots in the UK. Still very different folks, but accepting large-scale redistribution of taxpayers' money from one place to the other; individually ready and able to move easily between and work in both places; having a common politics, budget, media and public sphere.

If only. If ever. But, as psychological counsellors tell depressed patients, you have to start from where you are. No obsessive rumination on what might have been. No regrets. Start from here. Make the best of it. Find a path towards something better.

That is what eurozone leaders insist they did this week. Their exhausting, day-and-night efforts must be acknowledged. They have worked hard to square many circles. It is easy to criticise from the sidelines. Nonetheless, this has to be said once again: they have not succeeded yet. It is not just, as the cliche has it, that they are still kicking the can down the road. Now they are kicking a Molotov cocktail down the road.

At the moment, there is still a solid majority in Greece for staying in the euro. Yet I find it hard to believe that the people of Greece can for months and years take the extreme pain demanded of them, with the only argument being "to leave the euro would be worse". The personal stories are already heartrending. The journalist, teacher, civil servant reduced to queueing at the soup kitchen. Students in a "lost generation" who have left the country or are about to. Unemployment at 21% and rising. An estimated 150,000 businesses that have closed. The minimum wage to be cut by more than one fifth. Thousands sleeping on the streets. The homeless by night; demonstrators by day. The octogenarian musician Mikis Theodorakis – a favourite with generations of German tourists – has called for an "uprising". And the government has to implement a bunch of further austerity and liberalisation measures over the next week, before it can get the €130bn bailout.

Sitting at his regular table in the pub, his Stammtisch, the reader of Germany's tabloid Bild may still mutter, "Well, they have only themselves to blame." But he would be wrong. It is true that a very large share of the blame lies with irresponsible, deceitful and corrupt Greek policies and business practices. But the scale of this mess, and the difficulty of getting out of it, also results from the fact that Greece was accepted into a badly designed, over-extended eurozone; that the way bond markets and banks (including German and French ones) treated that eurozone positively encouraged such irresponsibility; and that this bailout is as much to help those banks as it is to help Greece. So the blame must be shared.

Even if you disagree with that, the responsibility for getting out of it is still shared. This is obviously true so long as Greece remains in the eurozone; but even if Greece leaves, it will remain a member of the EU, and there will be a moral and historical responsibility that derives from having got into this mess together.

Then there's that troublesome thing we call, from the ancient Greek, democracy. Many European leaders privately agree with the German finance minister, Wolfgang Schäuble, that it would be better if Greece did not have an election scheduled for this April. Democracy? Ask the people? What an appalling idea. But the Greek people will be asked. Unless they are shown some realistic prospect of growth, parties opposed to the draconian terms of the bailout may yet gain a majority. No one will then be able (though some may privately wish) to follow Bertolt Brecht's famous ironic suggestion: dissolve the people and elect another.

At that moment, Angela Merkel will have more than a year to go to her own general election, which she is self-evidently determined to win. The eurozone will then be torn between the maximum pain that Greek voters will accept and the maximum price that Merkel believes German voters are prepared to pay. That dilemma – call it Merkel's fork – is just the most critical example of the deeper problem of this eurozone: the contradiction between already European policies and still national politics. You could have close, similar economies and still diverse politics (the nordozone that might have been). Or you could have fairly diverse economies if you had converged politics, with one eurozone election for one eurozone government. That common politics would then allow for the financial transfers to compensate for differences, as in the United States, and work towards economic convergence in the longer term. What is unsustainable is to have, within a single currency zone, both divergent national economies and divergent national politics.

So far as I can see, there are only two ways out of this. One is that Germany, all other European governments (including Britain's), the European Central Bank, the EU institutions, the IMF and every other relevant player work over the next few weeks, like Mozart in his most inspired frenzy, do what every sensible political economist (including many in Germany) says is necessary: produce a strategy for short- to medium-term growth as well as fiscal consolidation and structural reform. For as Mohamed el-Erian, the chief executive of the giant bond investment firm Pimco, observes, this week's agreement "leaves Greece's basic problem unresolved. The country still faces the prospect of too much debt and way too little growth."

That strategy for growth must not only be found, it must be seen to be found – seen by Greek voters, that is, before the next election. The other alternative is that, sooner or later, Greece leaves the eurozone. The former is more desirable, the latter more probable.

Twitter: @fromtga

• Eurozone crisis
• European Union
• European monetary union
• Economics
• Banking
• European banks
• Financial crisis
• Financial sector
• Euro
• Europe

Greeks resent terms of bailout agreement enforced by IMF, EU and European Central Bank

After councils and care units, now schools are being encouraged to imitate the department store's stakeholder structure

Once upon a time, we knew three things about John Lewis. One: it's a very nice, very middle-class department store. Two: it owns Waitrose, that very nice, very middle-class supermarket. Three: it is, or claims to be, never knowingly undersold.

These days, we can add a fourth: never knowingly under-referenced within plans to reform the welfare state. In 2010, London's Lambeth council announced an intention to remould itself according to the "John Lewis model". Last June, David Cameron unveiled plans to turn parts of the public sector into "John Lewis-style" mutuals. This week, a rightwing thinktank suggested turning state schools into John Lewis-like companies. A planned free school in Suffolk will be a John Lewis-style partnership, while an NHS hospital in Cambridgeshire and a care unit in Swindon already claim to operate along those lines. Even Nick Clegg has talked about making other firms in the private sector operate a bit more like John Lewis.

The John Lewis business model gives each employee part-ownership of the company, a share of its annual profits, and a say in how it is run. In theory, it makes employees more invested – literally – in their work, and so heightens both productivity and profits. At least, that's how it works at John Lewis itself. Critics argue that the right's proposals either only pay lip service to the scheme on which they are based – or are simply a way of making privatisation seem fluffier. This week's plans could encourage stakeholders (teachers, pupils) to work harder. On the flipside, they could also lead to the outsourcing of a school's management structures, and thereby make teachers less accountable. Suffolk's Breckland Free School has already outsourced its management to a private firm, and won't be overseen directly by the parents who set it up.

Lambeth's John Lewis council promised much – community involvement in exchange for council tax rebates – but has been criticised for playing an active role in privatisation. Only last week the council sold off a community-run arts centre to developers. And what of the Swindon care unit? In the words of cabinet office minister Francis Maude: "It's a mutual where there's no financial incentive. They will own it, but with no profit share or anything, no financial upside. They will have to take out 30% of their cost over the next four years and they are really excited about it." In other words, it's a John Lewis partnership, but without most of the rewards. Unless you count swingeing cuts as a good thing.

Nick Clegg's ideas seem the most appropriate interpretation of the John Lewis model: they're about making capitalist structures fairer. But proposals to turn public services into John Lewis-style firms seems slightly disingenuous. After all, the NHS – which gives citizens both a say in its organisation (at the ballot box) and a piece of its resources (in the surgery) – might already be the biggest John Lewis model going.

• Free schools
• John Lewis

Royal Bank of Scotland is expected to reveal a loss of £2bn after the eurozone crisis hit the performance of its investment bank

Royal Bank of Scotland risks igniting a row over City pay when it is expected to announce it is setting aside almost £400m for bonuses despite reporting its fourth consecutive year of losses.

The Edinburgh-based bank, which is more than 80% owned by the taxpayer after a series of bailouts that began in October 2008, is expected to try to defuse any controversy by revealing that 10,000 of its top staff will have pay freezes after a year in which the bank is is expected to reveal a loss of £2bn. The eurozone crisis dented the performance of its investment bank while the retail arm will be hit by a £1bn provision for payment protection insurance (PPI) mis-selling.

After the furore surrounding the award of a near-£1m bonus for chief executive Stephen Hester – - which he waived – he is still on course to be handed £600,000 in bonuses next month while close colleagues in the next few weeks could be handed up to £11m depending on the share price and their performance.

David Hillman, a spokesman for the Robin Hood Tax campaign, on Wednesday:"It is incredible that while the rest of us suffer, a loss-making bank bailed out by the taxpayer is allowed to pay out hundreds of millions in bonuses. The British public is getting a raw deal from RBS and the wider financial sector: it is time they were made to pay their fair share rather than line their own pockets." TUC general secretary Brendan Barber added pay and bonuses were "out of control" in the City.

Making reference to Hester's salary, Liberal Democrat peer Lord Oakeshott said that "every small business in Britain would love to have their bosses' pay frozen at £1.2m".

The bonus pot, expected to be just under £400m, is more than half the £950m paid out in 2010 .The chief executive will on Thursday present a three-year report card to set out the progress the bank is making - despite the £21bn loss the taxpayer is currently incurring in its 82% stake - along the path to recovery following the near £24bn record-breaking loss he inherited in 2008.

Hester will add further detail to the £38bn of costs that have already been incurred to clean-up the bank. Some £28bn relate to losses on loans which have turned sour and almost £3bn from restructuring charges as 33,000 roles have been shed since the financial crisis.

• Royal Bank of Scotland
• Executive pay and bonuses
• Banking
• Stephen Hester

In the colder post-2007 climate for financing, Peacocks chief executive Richard Kirk failed to get rid of the pay-in-kind notes (PIKs). Thus the inevitable process of financial strangulation began

Go back to the £404m management buy-out of Peacocks in 2005 and look at the reason given for taking the company private: "The shares have, for a number of years, traded at a valuation that was a relative discount to what the independent directors perceived to be the comparable companies listed on the London Stock Exchange." That was it: the shares were seen as too cheap compared with the opposition.

Thus chief executive Richard Kirk's offer to pay a 35% takeover premium was approved and nobody stopped to ask whether the boss's financing arrangements were too aggressive for anybody's long-term health. After all, the bid announcement did not contain a portrait of a company enjoying explosive success: profit on ordinary activities had risen from £22.6m to £25m in the year to March 2005 but trading conditions since October 2005 were described as "more challenging."

Aggressive financing was part of the culture of the times, of course. Leverage was the rage and private equity-style deals were appearing everywhere, especially in the retail sector. All the same, Kirk's proposal can be seen as an extreme version, even by 2005 standards: the capital structure, arranged by investment bank Goldman Sachs, relied on the issue of £110m-worth of so-called pay-in-kind notes (PIKs) to a couple of US hedge funds, Och-Ziff and Perry Capital. These notes attracted an annual interest rate of 17.2%.

Those are pauper's terms. Unless you refinance quickly, or produce truly explosive increases in profits every year, you will be slowly strangled by the law of compounding because the PIK feature means that interest payments are rolled up every year and added to the total pile of debt to be repaid at a fixed point in the future.

In the colder post-2007 climate for financing, Kirk failed to get rid of the PIKs. Thus the inevitable process of financial strangulation began. By 2010, the PIK liabilities had reached £301m. Peacocks' total debts at the point of administration last month are thought to have been about £750m, of which the PIKs may be roughly £400m.

The 2005 buy-out was an absurd bull market deal. Kirk's bet rested entirely on the expectation, or hope, that cheaper financing would be available within a year or two. Administrator KPMG's reference on Wednesday to an "unsustainable" capital structure is an understatement.

• Peacocks
• Retail industry

The anger and despair in Greece has not receded after Tuesday's bailout deal, claim Athens trade union leaders

In the end it was a bit of a damp squib: protesters, put off by the rain and perhaps fatigue, did not come in their thousands to oppose the emergency legislation that is likely to change the face of Greece. But trade union leaders said it mattered not.

The €130bn (£110bn) bailout deal secured in the early hours of Tuesday had not erased the anger or despair of Greeks. "Two years ago we were demonstrating about [wage and pension] cuts but now they want to take away everything," said Ilias Iliopoulos at the civil servants' union Adedy. "People are literally hungry and the number of homeless is growing every day … soon they won't take anymore. There'll be a popular revolt."

Barely a day after Athens agreed to the excoriating EU/European Central Bank/IMF terms to be saved from bankruptcy for a second time, popular fury at the terms of the rescue shows no signs of ebbing.

Demonstrators at an Athens rally on Wednesday night claimed the argument, articulated by the Greek finance minister Evangelos Venizelos, that the debt-choked country has escaped a "nightmare" meant little when so many had already been impoverished. "It would be bad but it's already bad, and it's going to get a lot worse," said Evangelia Fasilakaki, an umbrella in her hands as she evoked the deepening mood of resignation and defeat. "They are even closing down cancer wards here."

But opposition has not dampened the resolve of the technocrat prime minister Lucas Papademos to do what he was appointed to do: pass the reforms that will release the funds to keep bankruptcy at bay.

Despite widely expressed doubts over the efficacy of the latest aid package and attendant bond swap that will write off €100bn from the country's debt pile, Papademos insisted the deal would "create the conditions for growth and the recovery of the [recession-hit] Greek economy."

Although the bailout has generated widespread relief, politicians and analysts voiced consternation over a "confidential" IMF assessment of the Greek economy showing its debt-to-GDP ratio at 160% in 2020, the same level as today, and far above the rescue programme's target of 120.5%. Former finance minister Stefanos Manos said Greek debt would only become sustainable when cut to 90% of national outlay.

Reforms that are expected to overhaul the workings of Greece economically, politically and judicially will be fast-tracked through parliament in a record nine days as the government tries to convince creditors the country is willing to change. The emergency measures include a further €3.2bn in spending and income cuts.

It is hoped that with default no longer on the cards, Greeks will end a capital flight that has seen an estimated €65bn in deposits removed from banks since the crisis erupted in December 2009.

Venizelos said €16bn had been whisked abroad – mostly to banks in Britain – but the rest had remained in Greece, kept under the proverbial mattress of a nation that no longer believed in its own financial system.

• Greece
• Europe
• Eurozone crisis
• European Union
• European monetary union
• Economics
• Financial crisis
• Euro

Royal Dutch Shell's offer values Cove Energy at £992m

The bosses of London-listed oil and gas explorer Cove Energy are in line for a £38m payday after Royal Dutch Shell put in a near-£1bn takeover bid.

John Craven, Cove's chief executive and veteran geologist, is line for a £18m payout less than three years after he created the African-focus explorer. Michael Blaha, Cove's chairman and Shell's former head of Alergia, holds shares and options worth £13.5m under the 195p-a-share cash offer Shell. The company's finance director, Michael Nolan, is in line for £7.1m.

The offer, which values Cove at £992m, comes a month after Cove reported one of the world's largest gas discoveries off the coast of Mozambique. Cove owns a 8.5% stake in Mozambique's Rovum Offshore Area 1, which operator Anadarko reckons could hold more than 30tn cubic feet of recoverable natural gas.

That discovery and similar finds by Italy's Eni suggest the area could contain up to 60m cubic feet of natural gas, which would be enough to support a liquefied natural gas (LNG) project to supply fast-growing Asian markets.

"East Africa is a major prospective hydrocarbon province, which has seen a significant increase in exploration activity in recent years," Shell said in its offer document.

"Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa."

Shell's offer represents a 70% premium to Cove's share price before it put itself up for sale in January, and a 29% premium to Cove's average share price over the last five days. Cove's shares jumped by 25% to 193½p on Wednesday.

Stuart Joyner, an analyst at Investec, said the offer was a "much better price than the market anticipated" and said it was unlikely any higher bids would trump it.

Irene Himona, analyst at SocGen, said she expected Shell to buy up other players in the Rovuma field. "As the number one LNG player, Shell absolutely must be in East Africa," she said. "We should assume that 8.5% is too small for them."

The deal requires the approval of Mozambique's government. Standard Chartered Bank is advising Cove on the sale, while Morgan Stanley is acting for Shell.

Separately, Shell said Malcom Brinded, the head of its oil and gas exploration and production operations outside the America's, is to step down. Brinded, who was a contender for the chief executive post before Peter Voser was appointed in 2009, will be replaced by Andrew Brown, currently head of Shell's operations in Qatar.

• Oil and gas companies
• Royal Dutch Shell
• Mergers and acquisitions
• Oil
• Mozambique
• Africa
• Gas

HSBC is issuing £1.7bn of new shares to meet bonus payouts and awards to its 300,000 staff ahead of the publication of its full year results on Monday

HSBC is issuing £1.7bn of new shares to meet bonus payouts and awards to its 300,000 staff ahead of the publication of its full year results on Monday.

By issuing the 300m shares - 1.6% of its existing shares - the bank is also adding to its capital cushions, a move that is encouraged by the Financial Services Authority.

Not all of the shares will be used to pay its UK staff or to fulfil a new bonus scheme where the bank is issuing shares that it sells immediately to hand cash to its UK staff. Companies are permitted to extend their share capital by 10% over 10 years to pay their staff.

• HSBC
• Executive pay and bonuses
• Banking

Global slowdown in financial sector not enough to prevent recruitment company's overall profits rising 24% to £60m

The recruitment squeeze in banking, along with cuts in the public sector, have pushed recruitment company Hays's UK division to a £3m loss.

Some bankers are still leaving the UK and heading overseas, but the job situation in the financial sector has also worsened sharply around the world, from Singapore and Hong Kong to Sao Paulo, according to Hays's chief executive, Alistair Cox.

"A year ago we said that a lot of bankers were looking for jobs out in Asia. We still see that, but the banking sector has slowed down globally," he said. "Banking started to get worse four to five months ago. I don't think it will get any better soon."

The recruitment situation in Britain's public sector, meanwhile, has stabilised, he reported. "Monthly fees have been flat since April 2011, which gives us confidence that the worst is behind us," Cox said. With 5.5 million staff, the public sector remains the UK's biggest employer.

Since 2008, Hays has laid off about 1,000 of its staff in Britain, where it now employs 2,100 consultants out of a total UK headcount of 3,500. Each of its 113 offices is now profitable, but there is still scope to cut back office and other costs by up to £12m, Cox said.

Collins Stewart analyst James Gilbert said: "It is clear that in the absence of a pick-up in demand, there is no magic bullet for the UK."

The German and Australian recruitment markets, by contrast, are booming. Hays, which employs 8,000 people across 31 countries and will open up in Chile and Malaysia in the next few weeks, now generates nearly 70% of its fees outside the UK. It is sending engineers to Australia, Canada, the US, the Middle East and east Asia, while IT and pharmaceuticals professionals are also in demand.

Hays posted a 24% rise in pre-tax profit to £60m for the six months to the end of December, but, like many of its rivals, has seen growth slow rapidly as confidence among clients to hire, and candidates to consider moving jobs, is dampened by economic uncertainty.

Hays's half-year dividend to shareholders will be cut by 55% to 83p.

• Hays
• Banking

• Several rallies planned - full timings
• Germany and the Netherlands divided over bailout fund
• Fitch downgrades Greece to C
• Pensioners march in Athens
• Disappointing data hints at euro recession
• Bank of England divided over QE
• Today's agenda

5.46pm: In the absence of any other major developments, time to call it a day. Pensioners are marching in Athens, fears of a eurozone recession have intensified after some disappointing economic numbers and Greece has been downgraded by Fitch from CCC to C - the level that indicates default is inevitable. Good night - we'll be back tomorrow.

5.11pm: In France, the Socialists' abstention in a parliamentary vote on Europe's future bailout fund has fuelled concerns about how a possible left-wing presidential election victory would affect the eurozone crisis.

The Socialist Party, whose candidate François Hollande leads opinion polls for the April-May election, sat out Tuesday's lower house vote to create a permanent fund called the European Stability Mechanism (ESM) in protest at austerity measures across Europe. This did not stop the the bill passing in the conservative-led National Assembly, though.

President Nicolas Sarkozy's conservative government called the move a "historic error" and berated the Socialists. Even the left-leaning newspaper Liberation was critical in an editorial, comparing them to ostriches.

Some of them quibbled, most found the most pressing thing to do was not decide and others stepped up their vindictive jibes. If the left wins power, it needs to do better. And know what it wants.

Government spokeswoman Valerie Pecresse told Reuters:

A vote today against the ESM is a vote against Europe, a vote against the euro and a vote against European solidarity, and it's not behaviour fitting to the gravity of the situation.

Prime Minister François Fillon accused the Socialists of bringing election campaign tactics into parliament. Hollande has pledged to seek to amend an EU fiscal compact agreed last month to add clauses on growth and investment. While he is staunchly pro-European and advocates fiscal discipline, his stance raised questions about the compatibility of his views with Germany's in resolving the euro zone's sovereign debt crisis.

George Magnus, senior economic advisor at UBS, told Reuters:

I don't think this is a game changer. But it can be interpreted as revealing a part of the Socialist platform - that to be European we have to be very pro-growth - which is at odds with the Germanic view on what solidarity means.

If we see more instances like this in the run-up to the election, they could be perceived as marking out a political and negotiating position vis-a-vis Germany which would be seen as quite different and potentially capable of causing uncertainty about how the process would evolve.

5.03pm: The Greek parliament finance committee has approved the debt swap bill, news aggregation service RANsquawk reported.

European stock markets have closed. The FTSE 100 in London edged down 0.2%, or 11.65 points, to 5916.55. Germany's Dax lost 0.9% and France's CAC shed 0.5%.

4.42pm: If you're interested in footage from the streets of Athens, there's a live feed on Stop Cartel.

And I'm now handing this blog over to Julia Kollewe for the final push. Thanks all.

4.35pm: In the currency markets the pound hit a 10-week low against the euro, of €1.1825, which means one euro buys 84.56p.

William Poole of FC Exchange blamed this morning's Bank of England minutes, which showed that two policymakers wanted an even larger injection of quantitative easing:

Everyone is well aware that the UK economy is in dire straits, and today's central bank report only serves to reinforce this view. A disparity in opinion, in those charged with dictating policy to help the UK economy grow, merely highlights the struggles faced by the UK.

4.23pm: In the bond markets, Greece's five-year bond yield has passed 56% today - a sign that the bailout has lost yet more credibility, says economist Shaun Richards.

He blogged yesterday about how the economic accumptions behind the bailout are flawed (and worthy of Alice in Wonderland) here:

3.52pm: One of Finland's lawmakers has told Dow Jones this afternoon that he expects the Finnish parliament to approve the new Greek package.

That comes a few hours after a German MP, Wolfgang Bosbach said he would oppose it when the Bundestag votes next week.

Many Greeks, of course, would welcome the idea of the package being voted down by the German parliament. There's some dark humour out there.

Here's how regular reader James Wilkins of Kalamaria responded to the new plan, and the news the new bailout fund would be placed in an escrow account and dolled out to Greece by troika officials:

A deal of such mind-boggling complexity can never work. The people who made it should be kept in a special escrow account in Brussels and released in stages, but only when ordinary, hard-working Greeks are sure their lives are improving.

3.33pm: Makis Sinodinos, a journalist in Athens, reports that 10 people have been temporarily detained by police in Athens so far today.

People on the streets are also talking of a stronger than usual presence of undercover police on the streets,

#Greece #rbnews Witness on phone from #Syntagma: "Very weird vibe here today, undercover cops on every corner, no one looks normal" #22fgr

— Theodora Oikonomides (@IrateGreek) February 22, 2012

PS - we thought we has a picture of an undercover policeman in Athens, but at second glance it probably wasn't, so we've deleted it.

3.25pm: Now hearing from Athens that the marches are well underway, but the turnout is (as feared at 3.15pm) poor.

3.11pm: Developments from Athens where our correspondent Helena Smith says unionists have just told her that – contrary to earlier expectations – they are not expecting a great turnout today.

Helena reports:

Organisers of the demonstrations planned outside the Greek parliament now say they are not anticipating a mass turn out, partly because of the weather (the rain has stopped but its still damp and very wet) and partly, I sense, because of protest fatigue. Earlier today there were several spontaneous protests outside the ministries of labour and health.

Helena continues:

"We expect it to be very small mostly because it's raining and people spent most of the morning protesting," said Ilias Iliopoulos, general secretary of the civil servants' union Adedy. But while today's demonstrations were likely to end up being symbolic, Iliopoulos said this would not be the case in future.

"At first we were demonstrating about cuts but now they want to take away everything. People are literally hungry and the number of homeless is growing every day " he said. Greek authorities, he claimed, now had one tactic when dealing with crowds: stun grenades and tear gas.

"As we have seen the tactic whenever crowds gather is 'disperse them with chemicals, tear gas. The demonstration Sunday before last was outrageous. It had hardly began when police started toxic chemicals into the crowd. Well, you can do that once or twice but with people so angry that tactic is soon not going to work. Honestly I don't rule out a popular revolt."

Iliopoulos also explained that trade unions were in the process of joining up with other "forces and movements" to make "more of an impact."....

2.57pm: There's a rumour this afternoon that Greece's general elections might be postponed, rather than being held in April.

Environment minister George Papaconstantinou set the hare running by telling Die Zeit that a delay would give PM Papademos "a bit more time" to implement economic reform plans.

Papaconstantinou said:

It would be good if the government of Lucas Papademos got a bit more time. People must feel that things have changed. But that depends on our partners.

The comments have been seized on by Greek media today. A few thoughts:

1) Any delay would infuriate those already angry that an unelected prime minister is running Greece. When Papademos was installed, the agreement was that the former ECB vice-president would only run the show until April.

2) "A bit more time" probably won't make any difference, when people are facing austerity for at least the next five years

3) George Papaconstantinou is a member of Pasok, who are on track to be routed at the polls. A delay would give them a chance to rebuild their popularity. [But 2) also applies]

UPDATE: Our correspondent Helena Smith points out that Papaconstantinou is echoing the views of his boss and close friend George Papandreou:

Papandreou, whose leadership of the socialist Pasok party is not expected to last long (elections for the post are expected to take place in March) has made it very plain he would like to see Papademos, for whom Papandreou stepped aside last November, stay in the position until October 2013 when his own tenure would have run out. That would indeed give the Pasok party time to improve its dismal ratings in the polls -- at last take hovering aroud 12%. Not since the creation of the party by Papandreou's own father, Andreas, has its popularity been so low.

Speaking of George Papandreou...he has given an interview to the BBC in which he demands "more respect" from Greece's critics.

Papandreou sad:

Speculation over whether Greece will stay in the euro has created 'great pain' and even contribued to the recession by deterring people from investing.

2.39pm: Prime minister Lucas Papademos met with the Greek president today to discuss the country's second rescue package. He issued a statement after the talks (see it here in Greek)

The statement doesn't include much new (so don't start swotting up on your Greek specially). Papademos basically said Greece now needs to pass legislation approving the programme, and complete the PSI agreement.

He added that the decisions taken will create conditions that are

conducive to growth and the recovery of the Greek economy.

Regular readers might remember that Greek president Karolos Papoulias surrended his €286k salary a week ago, in solidarity with the workers. They might also recall that we reported his salary as €400k (bigger than Barack Obama's). That was a mistake, I'm afraid, which was later corrected. Sorry about that.

2.20pm: Bank shares in Athens have fallen sharply today, after rallying strongly in recent days.

National Bank of Greece is down 10%, while Piraeus Bank's lost 11%.

The selloff is driven by the expectation that the recapitalisation of Greece's banking sector will cost even more than previously feared, which would leave existing shareholders owning even less.

2.10pm: Another photo from the first protests of the day:

....Here, protesters shout slogans during an anti-austerity rally by employees of the Workers Housing Organisation in front of the Athens parliament.

1.47pm: Apologies if you're having trouble accessing the blog. We are experiencing technical issues on our website at the moment.

I"m assured that we're looking into it urgently.

Update: The best bit of the blog has vanished. Hopefully your comments will be back very soon.

1.24pm: We have news on Greece's debt swap, which is meant to cut its total borrowings by €107bn.

Finance minister Evangelos Venizelos has told the Athens parliament that the formal offer to bondholders will begin on February 24 at the latest (so perhaps not today after all), with the exchange occuring on March 12.

However, Greek bonds that were issued under British law (which make up a small proportion of the total debt pile) will not be swapped until early April.

The main difference between those British-law securities, and those issued locally, are that they contain "Collective Action Clauses" allowing the government to automatically declare a default if creditors don't take part in a voluntary restructuring.

12.56pm: A reminder that we have a flickr account that covers protests in Greece (click here).

Also, if you are there, we'd be grateful for any contributions from the streets today - it really complement's Helena's reporting from the ground. My email address is graeme.wearden@guardian.co.uk, and/or you could post in the comments below.

12.47pm: Athens is gearing up for this afternoon's protest marches (details here)

Several subway stations were due to close at 3pm local time (or 1pm GMT)

#Greece Subway stations #Syntagma & Monastiraki to close at 3pm ahead of #22fgr protests, on orders of police, via @athenstransport #rbnews

— Theodora Oikonomides (@IrateGreek) February 22, 2012

And on the streets, employees from the state-run Workers' Housing Organization have marched, peacefully, in Athens.

As you can deduce, it's still raining in Athens.

12.09pm: The European Commission is withholding €495m of EU development funds from Hungary after the country failed to reduce its deficit.

These funds are means to support the EU's poorer regions. It is the first time the European Commission has proposed to suspend development funds from one of its members over an excessive deficit.

David Gow reports from Brussels:

The EC flexed its new fiscal surveillance muscles by threatening to suspend almost €0.5bn in structural aid to Hungary for persistently breaching budget deficit rules.

Olli Rehn, EU economic and monetary affairs commissioner, said: "Today's decision has to be regarded as a incentive to correct a deviation (from fiscal prudence) and not as a punishment."

He told reporters that Hungary had been in "excessive deficit" – breaching the 3% of GDP ceiling – since it joined the EU in 2004 despite repeated warnings to get its fiscal house in order.

Rehn was also dismissive of Budapest's argument that it brought its deficit below the 3% ceiling in 2011, arguing it was due to one-off factors.

11.38am: Just in. Fitch has cut its credit rating on Greece from CCC to C, the level that indicates default *is inevitable*.

It explained that the debt-swap deal will constitute a "distressed debt exchange". Once the swap is completed, it will lower Greece's rating to RD (for restrictive default), and then re-rate the country "at a level consistent with the agency's assessment of its post-default structure and credit profile".

You can read the full statement here.

What's not clear, though, is whether this move means that insurance policies on Greek bonds will pay out, as Chris Adams of the FT was quick to point out:

In summary, Fitch move on Greece is technical, as with S&P, part of the bond swap process. More interesting is whether CDS will be triggered

— Christopher Adams (@ChrisAdamsMKTS) February 22, 2012

11.22am: The German government has insisted that it will not support an expansion of Europe's bailout fund, despite growing pressure from other countries.

Speaking in Berlin, Angela Merkel's press spokesman Steffen Seibert said that Germany saw no need to increase the upper limit of the European Stability Fund beyond €500bn.

The move puts Germany on a collision course with other countries, including the Netherlands, whose finance minister today said he favoured an expansion to €750bn.

Seibert said:

The German government's position has not changed -- that means no, it is not necessary....What was agreed with partners was that in March there would be an examination of the size.

As we reported this morning, European diplomats believe that next week's EU summit would be asked to endorse proposals to merge the lending capacity of the existing eurozone bailout fund, the EFSF, with that of the new European Stabilisation Mechanism – giving a firewall of between €650bn and €750bn.

Dutch finance minister Jan Kees de Jager told Le Monde today that his government is ready to combine the two funds, to create a pool worth €750bn.

Seibert also insisted that Portugal and Ireland will not be offered more generous terms on the back of Greece's new deal (under which the interest payment on its first package are cut).

11.09am: One demonstration has already taken place in Greece today.

Pensioners marched outside the Athens parliament this morning, as the photo above shows. Pensions have already been hit by previous austerity measures, and many face further cuts as the price of the deal agreed on Monday.

But (obviously) it's not just pensioners who are suffering. CNN has published a piece on the human cost of the crisis, with teachers, students and IT workers explaining how their lives have changed

10.45am: There are also reports this morning that the IMF is planning to contribute as little as a tenth of the new Greek package.

Süddeutsche Zeitung reports from New York that Christine Lagarde is playing hardball, proposing that the IMF should contribution at most €13bn or a tenth compared with 27% of the first €109bn package. The IMF's managing director, moreover, won't press the release button for this - as the Guardian reported today - until the EU/Eurogroup agree to combine the two bailout funds, the current EFSF and pending ESM, to produce a firewall against contagion of up to €750bn.

As David Gow reports, this idea is not popular in Berlin:

The Munich-based left-liberal daily suggests that Lagarde favours eurobonds - more anathema for the Fatherland - and is unimpressed by austerity at all costs. It detects the influence of David Lipton, her deputy and ex-director for international economic questions in the White House which is sharply critical of the EU's dilatoriness and, well, stinginess in solving the euro crisis.

Lipton wants a growth strategy rather than "a downward spiral of loss of confidence, stagnation and fewer jobs" in one of the richest regions of the world.

10.33am: It's not only in Greece that the protests against the second Greek bailout are mounting: Spiegel-Online reports that the chairman of the Bundestag's home affairs committee, Wolfgang Bosbach, will vote against when the package comes up for approval - probably on February 27.

Bosbach says it's a huge step towards a mutual liability union "burdening future generations with risks" that are "intolerable."

The German taxpayers' federation is calling on deputies to reject the package, claiming German taxpayers are liable for up to €320bn - "and an exit of Greece from the euro should not be taboo". Werner Hoyer, former Liberal (FDP minister, now president of the European Investment Bank, says Greece needs a new Marshall Plan as well as a savings programme.

None of this is helped, say Spiegel, by news from the Greek parliament that the budget deficit this year will be 6.7% rather than the original forecast/planned 5.4%. Further proof, if any were needed, that austerity equals recession equals more debt equals a third rescue package - or bust.... (my colleague David Gow writes)

10.17am: Union leaders are expecting a large turnout at this afternoon's demonstrations (details here), even though it's raining in Athens.

Adedy spokeswoman Tania Karayiannis told Helena that:

If the weather doesn't prevent people from coming we expect the demonstration to be big.

Karayiannis added that this afternoon's protests, which will converge on the Athens parliament, will be followed by many more.

This is just the beginning. There will be lots of strikes and protests and we are in the process of deciding exactly when they will take place.

10.12am: After this morning's disappointing PM data, some better news on the eurozone industrial sector.

New industrial orders across the region jumped by 1.8% in December, reversing November's 1.1% fall. Capital goods orders (which includes heavy duty machinery) jumped by 4.2%, while the only big fall was for 'durable consumer goods', which dropped by 2.7%.

I don't believe there's a country-by-country breakdown, though.

9.55am: News in from Athens where Helena Smith, our correspondent, says unions have gone on the war path barely a day after Greece's new rescue programme was announced.

Mass protests are planned for 4pm (2pm GMT) local time outside the Greek parliament – around the time it will vote on controversial legislation that will further erode wages and pensions (we blogged the timings here).

Helena explains:

The Greek Federation of workers (GSEE), which represents the country's largest work force and Adedy, the civil serrvants' union, have announced demonstrations in what is set to be a new wave of protests against a new wave of austerity measures that are the trade off for yet aid more for debt-straddled Greece. Pame, the communist-aligned unionist, will stage a separate protest rally at 5pm. The legislation has been submitted as an emergency bill - part of a barrage of reforms that technocrat prime minister Lucas Papademos has pledged to fast track before the next EU summit on March 1.

In a statement, the unions attacked:

The demolishment of labour law, the new cuts in principle and supplementary pensions, the demolishment of the welfare state, the eradication of public services … and new lay offs in the public sector constitute the new barbaric measures which the coalition government is hastily voting through to win favour with the troika [EC, ECB and IMF] and lenders.

Helena continues:

Commentators this morning say the "big bet is on" with the passage of a barrage of reforms the prelude to overhauling the way Europe's weakest link works.

"We will live in a very different Greece from now. The country is changing. It's a new reality, new era, we all have to change," said news anchor Nikos Evangelatos.

The big question was not so much whether the country would meet its debt repayments, now that it had secured emergency funds, but whether with the internal devaluation it was going through Greeks would be "saved" by prices also going down.

9.34am: Breaking – two members of the Bank of England's MPC wanted a bigger quantitative easing injection this month.

Minutes from the meeting, just released, showed that the committee was split 7-2. Adam Posen and David Miles wanted the electonic money-creating programme increased by £75bn, but the rest of the committee voted for a £50bn increase.

The news has sent the pound falling 0.7 of a cent, to $1.5705.

My colleague Simon Goodley explains:

The news is likely to re-open the debate about whether the central bank will add further QE in May, especially as the minutes showed that other MPC members saw a case for doing no further stimulus at all this month.

Miles and Posen argued there was a risk of a prolonged period of depressed demand causing inflation to fall materially below target in the medium term. Moreover, extra QE now would reduce the risk of a spiral of increasing unemployment and scrapping of capacity by firms.

However, most MPC members argued a bigger increase than £50bn "risked sending a signal that the committee thought the economic situation was weaker than it was".

The MPC members who voted for 50 billion more QE were not wholly united. "For some members ... a case could be made for maintaining the stance of policy at this meeting," the minutes said.

9.16am: The latest economic data from the eurozone is a disappointment.

The Composite PMI (a survey of purchasing manager conducted by Markit) came in at 49.7, down from the 50.4 recorded in January. That covers the region's manufacturing and services sectors.

A figure below 50 shows a contraction, and will fuel fears that the eurozone will officially fall into recession this quarter.

Chris Williamson, chief economist at Markit, commented:

A retreat back below the 50.0 no-change level for the euro-zone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession.

9.05am: Three seperate rallies are scheduled to take place in Athens today. Here's the details, via Living In Greece.

• The ADEDY and GSEE unions (the two biggest in Greece) have called a rally set for 16:00 EET (2pm GMT) outside Parliament in Athens.
• Insurance Fund employees to rally at 12:00 EET (10am GMT) outside OEK Patission and Solomou in Athens.
• PAME Communist workers group will begin a rally at 17:00 EET (3pm GMT), starting from Omonia and converging with union protest outside Parliament in Athens
• A second rally is being organised in Thessaloniki begins at 18:30 EET (4.30pm GMT) at the Venizelos statue.

8.52am: Grzegorz Kolodko, the former deputy prime minister and minister of finance of Poland, has come out firmly against the €130bn package today.

Kolodko, who now teaches at Kozminski University in Warsaw, is the latest senior politician to argue that Greeces's economy cannot return to strong growth in the face the measures that are being piled on. Society is being pushed to its limits:

In three years of austerity Greece's debt has risen from 113 per cent of gross domestic product to 163 per cent. Homelessness has jumped by 25 per cent. Unemployment has risen to 21 per cent, among the highest in the industrialised world, with 48 per cent of young people out of work. It is naïve to think they will watch TV, not demonstrate or fight in the streets. This policy is senseless.

Kolodko advocates wiping out 80% of Greece's external debt, plus an EU loan at zero interest rate.:

The easiest solution would be for the European Central Bank to buy new issues of Greek government bonds, but its hyper-liberal statutes and German ethos will not allow it to do so. The ECB has off-balance sheet resources of €3.3tn, equivalent to the current value of its seigniorage. If it is only used properly, the issue of eurozone sovereign debt can be resolved.

The full comment piece is here.

8.41am: Europe's stock markets opened flatly this morning, with the FTSE 100 down 9 points at 5919 in London. Other markets are more or less flat.

Traders say that the uncertainty over whether the Greek pacakge will a) be agreed, and b) work, means shares aren't heading higher (despite the Dow Jones index hitting its highest level since 2008 last night)

Chris Weston of IG Index explained:

The sights of the market are firmly fixed on the level of private sector involvement and how the market will take the prospect of hedge funds or investment banks claiming insurance from their credit-default swaps held over Greek debt if they aren't one of the potential 66% that are going to participate on a 'voluntary' basis.

We actually feel that the use of the CAC (collective action clauses) and subsequent triggering of CDS (credit default swaps) would not be that negative, and would show the system actually works.

8.27am: "Whatever eurozone finance ministers were smoking in their all-night marathon talks it must have been something strong".

That's the verdict of m'learned colleague Larry Elliott this morning. Our economics editor says that it's theoretically possible that the rescue package could succeed. After all:

It is all so simple: for a new wonder economy to arise in the Aegean what has to happen is for Greece's recession to end immediately, for the economy to have six consecutive years of strong growth from 2014 onwards; for the Greeks to submit to their eurozone partners' humiliating terms; for the bailout to be given the thumbs-up by the sceptical parliaments in Germany, Finland and the Netherlands, and for the assorted hedge funds, banks and insurers that make up Greece's private-sector creditors to accept a 53% "haircut" on their investments.

And if that happens.... Greece will still have a debt-to-GDP ratio of 120%, the equivalent of Italy today.

Larry concludes that Greece will ultimately leave the euro. But, as IfigEusLannuon points out below, he doesn't give a date. Any predictions?

Elsewhere, the Daily Telegraph's Jeremy Warner is scathing about the Charles Dellara (or Doolally, as he dubs him), for suggesting that Greece will return to growth despite official forecasts showing that the country faces five years of austerity.

Unfortunately, growth is one of the many things the Greeks don't have, and, according to the eurozone's own analysis, are most unlikely to get – in large part as a direct result of the eurozone's own policy prescription of never-ending austerity.

Mr Dallara must surely know that the plan is based on completely unrealistic economic assumptions, and therefore cannot succeed on the terms proposed.

8.15am: Greece's two largest unions have organised demonstrations in Athens this afternoon, beginning at 4pm local time. I'll blog more details in a moment.

On the economics front, we're getting new data showing how the eurozone's services and manufacturing sectors performed in January. France's data is already out, showing a surprise upturn. Industrial orders data is also due.

In the UK, the Bank of England minutes will also show whether its Monetary Policy Committee was unanimous in expanding its quantitative easing programme by another £50bn this month.

Here's today's agenda:

• Bank of England minutes - 9.30am
• Eurozone manufacturing+services PMI data - 9am GMT / 10am CET
• Eurozone industrial New Orders - 10am GMT / 11am CET
• Demonstrations in Athens - from 2pm GMT / 4pm EET

8.00am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.

Greece is still top of the agenda today. Its €130bn financial assistance package may have been agreed yesterday morning, but a growing band of critics are questioning whether the plan will work.

Protests are expected on the streets of Athens today, at a demonstration organised by trade unions. That should show the depth of public anger over the plan, which will mean years of IMF-directed austerity for Greece.

With just nine days to secure the new package, Greece may also open its bond swap with private creditors today.

• Eurozone crisis
• Greece
• Euro
• Financial crisis
• IMF
• European Union

Sunderland is best-known in business circles for its Japanese links via Nissan, but it's also renewing its own version of the special relationship

Northern England's links with the United States, which include the gift to the world of Wrigley's chewing gum, have been mightily emphasised today in Sunderland.

The city on the Wear has its own special Friendship Agreement with Washington DC, the only non-capital city in the world to do so. An uneven match? Not at all. Without Sunderland and area, there might never have been George Washington.

Hence the ceremonies at his family's old home, Washington Old Hall, which is very much worth a visit. While the British Embassy in Washington hosted a reception to mark the renewal of of the agreement, local people got together at the Wearside end to do their bit as well.

Encouragingly, for those who expect such things to be the preserve of people my age, the programme was much enlivened by young people. David Crone, chair of Sunderland youth parliament, read the American declaration of independence (the model for northern England's forthcoming breakaway), Lauren Waine of Monkwearmouth school sang the American national anthem and Martyn Foster from Broadway junior school read Martin Luther's eloquent speech, I have a dream.

Pupils from George Washington primary school joined in as well, before the Mayor of Sunderland – let's hope it becomes a Lord Mayoralty soon, now that the place is a city – Coun Norma Wright concluded proceedings.

There is a practical point to all the fun and games (and useful history). Contemporary Sunderland is famous for its links with Japan, through the Nissan plant, but are many American business connections as well.

United States firms account for one of the biggest shares of local inward investment, such as the Lear Corporation which is launching a new production plant at Rainton Bridge, creating 300 jobs. The TRW Automotive company already employs the same number at its steering systems plant, which was opened in 1989.

Looking the other way, the Sunderland firm SaleCycle, which recovers abandoned shopping trolleys online, has a sales office on the edge of Washington DC. At the small business level, Phil Vickery, one of Wearside's glass artists who cluster round the National Glass Centre, has found the Friendship Agreement more than just a twinning symbol.

He told the Old Hall get-together:

We need to keep doing this to form long-term relationships with US buyers. I have made strong contacts and captured opportunities that have led to friendships and being able to sell directly to the US market. Without this help it would be just about impossible for people like me to break into the US market.

Dominic Edmunds, founder and managing director of SaleCycle said:

We have recruited US staff, opened our office and generated sales directly into the US market. The good relationship which Sunderland has established with Washington DC was instrumental in all of this. Without the city council's connections it would have been much more difficult and taken far longer to achieve.

And Paul Willson, plant controller at TRW was happy too, that:

The Friendship Agreement builds the relationship, confidence and the possibility of investments between our two cities.

There's a way to go in the north east so far as jobs are concerned, as no one needs telling. But today has helped.

• Sunderland
• Washington DC
• The National Trust
• University of Sunderland

Analysts said a growing boycott of supplies from Iran, which is Opec's second largest producer, had encouraged traders to hoard oil contracts at higher prices

Oil prices reached a record high in sterling on Wednesday as jitters over a possible attack on Iran outweighed concerns that slowing export orders in China and the eurozone crisis could jeopardise global growth. The cost of Brent crude hit $121.92 a barrel, or £77.77, beating a sterling record set last year at the height of the Libyan war.

US crude hit a nine-month high of $106 (£67.62) a barrel this week, though it slipped slightly in trading on Wednesday night. The highest price recorded in dollars was $147 in July 2008, when the pound was stronger against the greenback.

Analysts said a growing boycott of supplies from Iran, which is Opec's second largest producer, had encouraged traders to hoard oil contracts at higher prices.

Prices have risen steadily over the last fortnight after a growing dispute between Iran and the UN over allegations that the Middle Eastern state is close to developing nuclear weapons. The UN's nuclear watchdog was forced to quit Iran earlier this month after talks on Tehran's atomic research broke down.

Russia warned Israel not to attack Iran over its nuclear programme, saying on Wednesday that military action would have catastrophic consequences.

Unable to act through the UN in the face of Russian resistance, the US has encouraged a worldwide boycott of Iranian oil and sanctions against its banks, but has stopped short of backing military action.

"Iran is still the main issue; it's keeping prices very well supported," said Andy Sommer, an analyst at EGL in Dietikon, Switzerland.

The jump in the oil market comes after the UK price of diesel reached a record 143p a litre last week and amid accusations in Europe and the US that high fuel prices are the result of a dysfunctional market.

UK refiners have come under fire for pushing up the price of fuel to maintain margins squeezed by falling demand. Most UK refiners are debt-laden independent operators struggling to repay debts in a period of declining sales.

Coryton, the Thames estuary refinery owned by Swiss oil group Petroplus, recently went bankrupt after it was unable to run at full capacity. Coryton is expected to return to capacity after a rescue bid, but could still struggle.

Demand has fallen across Europe and Asia following a slowdown in economic growth. Figures showing China's manufacturing sector contracted in February for a fourth straight month added to the gloom in the euro area, and stirred fears about fuel demand in the world's second-largest oil user.

Evidence that the poor economic situation is having a direct impact on the fuel market came from Singapore Airlines, which cut its cargo capacity by 20% as persistent weakness in demand and high jet fuel prices piled pressure on its profitability.

A high oil price was behind the sharp jump in UK inflation last year to above 5%. A rise this year could undermine George Osborne's hopes of a recovery. Officials in Spain, Italy and Greece are also watching the oil price closely because they are major importers, especially of Iranian crude, and are vulnerable to increased costs.

Several analysts have argued the deal struck between Brussels and Athens could be endangered by a further slump in Greek economic output following a sharp rise in oil prices.

The eurozone's service sector shrank unexpectedly this month, reviving fears that the economy could sink into recession, Markit's Eurozone Services Purchasing Managers' Index showed on Wednesday.

• Oil
• Commodities
• Iran
• Middle East and North Africa

Rich Burlew becomes crowdfunding site Kickstarter's most successful creative project

The author of a self-published webcomic about a band of heroes in a fantasy role-playing world has raised more than $1m (£600,000) from fans on "crowdfunding" website Kickstarter to bring his stories back into print, making The Order of the Stick the richest creative work in the crowdfunding site's history.

Author and illustrator Rich Burlew launched The Order of the Stick online in 2003. Following the comic fantasy adventures of a collection of stick figures in a role-playing game world as they struggle with enemies and the rules of the game, much of the story is available online for free, but Burlew also began self-publishing parts of it in paper format in 2005. When the costs of keeping it in print proved too high, Burlew turned to Kickstarter following repeated demands from readers, launching a project in January to raise the $57,750 he needed to rerelease the books in print.

Yesterday, he closed his fundraising project with 14,952 backers and $1,254,120 raised, making The Order of the Stick Kickstarter's most funded project by a single person ever and the most funded creative work the site has ever seen.

"I'm still shocked," Burlew said. "I was tragically underprepared. I never thought we'd get anywhere near the response we've gotten, and it's been a daily struggle to keep up with the progress of the whole thing. What I was thinking when I hit the Launch Project button was something roughly analogous to, 'I hope I'm not making a terrible mistake.' As it turned out, I wasn't."

Burlew offered fans a variety of options for donations: for $10, they could receive an Order of the Stick fridge magnet and a digital PDF of the original comic story (2,256 people took him up on this). For $100, there were four magnets on offer, for $200 there were books, prints and autographs available, for $600 there was an original crayon drawing by Burlew and for $5,000, the donator's original Dungeons & Dragons character could receive a walk-on cameo in The Order of the Stick webcomic. All options were sold out.

The author, who describes Order of the Stick as "a fantasy epic that doesn't take itself too seriously while still delivering a good story", believes that the comic's success lies in offering material for free.

"Unless you have the marketing department of a large corporation behind you, you're not likely to get enough people to take a chance on your unknown property, even through Kickstarter," Burlew said. "On the other hand, if you give it away first, people will form their opinion of you and your work before you ask them for money. And readers are a lot more likely to spend money on things they know they like than things they hope they will like. People want to own what they love, so rather than selling access to the content, sell the permanent incarnation of it – be that a book or an ebook or a DVD or whatever. The best thing about giving away your content first is that when it comes time to sell the final product, you're going to have almost 100% customer satisfaction. No one is going to complain that they didn't like the story they bought, because every one of your customers knew they liked it before paying."

• Self-publishing
• Publishing
• Internet

Embattered health secretary sidesteps questions over NHS reforms 'transition register' if tribunal orders publication

The health secretary, Andrew Lansley, has refused to be drawn on whether he would publish the controversial risk assessment of his NHS reforms if a tribunal in March rules that he must do so.

The tribunal is due to meet following a dispute between the Department of Health and the information commissioner, who said last year the government should publish the "transition register", which has assessed risks to the NHS and patients during the reorganisation set out in the health and social care bill.

As the Guardian reported last week, regional NHS risk assessments suggest wide-ranging concerns, including that patient care and safety could be damaged and that costs could rise, all such risks were assessed even after attempts to reduce the threat.

Speaking in a special opposition day debate organised by Labour, reiterating the call to publish the risk register, Lansley twice refused the opportunity to tell MPs that he would accept the tribunal's judgment after it meets on 5-6 March.

In answer to a question from the deputy Liberal Democrat leader, Simon Hughes, asking if he would "respond positively to the tribunal's decision", the health secretary instead quoted from an article in the Observer by the information commissioner, Christopher Graham, in which he said he was "not infallible".

"The government has the right to appeal to the tribunal … and the tribunal is the proper place for that public interest test to be tested," he added.

Lansley cleared up some confusion about the risk register, saying the document in question was the "transition risk register", relating specifically to the reorganisation set out in the health bill, an assessment which was first drawn up in 2010 but which has been, and is being continually, "reviewed and updated". This was different to the department's "strategic" risk register of all its operations.

The debate was fronted by Labour's shadow health secretary, Andy Burnham, who insisted that MPs and peers had a right to know the implications of the health reforms before they voted on the bill, which is currently in the report stage in the Lords.

Burnham had to fend off repeated charges by Conservative MPs that he had refused similar requests to publish risk registers when he was health secretary in the previous Labour government. Burnham said he had refused to publish a different document – the strategic register – and he had not been overruled by the information commissioner. Labour did release a similar policy-specific risk assessment, into Heathrow's third runway, when it was in government, said Burnham.

Quoting from local and regional risk assessments, which have been published individually by the relevant NHS organisations, Burnham cited quotes ranging from general warnings about meeting targets on waiting lists for treatment, poor patient care, and safety, to more specific concerns such as the threat of harm to women in London.

Burham also repeated his offer that if the government would "drop the bill", he would work with ministers to introduce GP-led commissioning for patients, one of the bill's key planks. Labour's chief opposition to the bill has been to claims that it will introduce more free market competition and privatisation into the NHS, along with poor accountability and more bureaucracy.

"He [Lansley] is running unacceptable risks," added Burnham. "What he's doing is wrong and needs to be stopped."

Lansley defended his decision not to publish the national risk register, saying that the prospect of publishing such assessments reduced the quality of advice given to ministers, meaning the documents would become "bland and anodyne" and "cease to be of practical value".

"To be effective, a risk register requires all those involved to be frank and open about potential risk," Lansley told MPs.

"It is their job to think the unthinkable and look at worst-case scenarios. It is vital nothing is done to inhibit that process.

"If people are in doubt about the confidentiality of their views they will inevitably think twice before committing themselves to such direct and candid language in the future."

Tory MP Mike Freer said: "The release of the risk register is seen as an opportunity by the opposition to cherry-pick doomsday scenarios the register may contain. It is simply a charter for shroud-waving."

• Andrew Lansley
• NHS
• Health
• Health policy
• Information commissioner
• Public services policy
• Healthcare industry
• Labour
• Andy Burnham
• Liberal-Conservative coalition