Interest rates paid by companies in the Eurozone's weaker economies have surged, highlighting the bloc's fragmentation as the European Central Bank loses control of borrowing costs. ECB data on Monday showed Spanish small businesses face the highest bank borrowing costs in almost four years - while interest rates paid by German rivals are at record lows. The sharply diverging interest rates have put southern European companies increasingly at a competitive disadvantage to their northern European rivals. They provide a gloomy backdrop to this week's ECB governing council meeting, which will discuss plans for intervening in Eurozone government debt markets, as investors price in the chance of a break-up of the 14-year old monetary union, The Financial Times says. Moody's has lowered the European Union's long-term issuer rating outlook from stable to negative, saying the move reflected credit risks of the bloc's key budget contributors. "It is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states," it said, citing negative outlooks for Britain, France, Germany and the Netherlands. Despite Moody's pronouncement, the euro rose to a two-month high of $1.2618 in Asian trading on Tuesday, compared with $1.2598 late Monday in London trade, AFP reported. Nevertheless, Moody's maintained the EU's triple-A rating, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states," The Telegraph explains.A senior Conservative has called on George Osborne to administer emergency "shock therapy" to the economy or risk delivering decades of decline. David Davis called for a swath of tax cuts and the scrapping of business red tape as he warned the Chancellor that he would not be excused if he failed to take drastic measures to kick-start growth. In a withering critique of the Government's economic performance, Mr Davis accused ministers of seeking excuses, such as the Eurozone crisis and the debt inheritance from Labour, rather than solutions. "An alibi is not a policy," he said. "There is a risk that by focusing on parcelling out blame we accept our circumstances with too much fatalism," The Times reports. BP is being sued for tens of millions of dollars in the US by institutional investors who allege the oil major misled them over its safety policies and the scale of the spill in the Gulf of Mexico. The company's shares more than halved - wiping billions of pounds off the value of the group - in the wake of the April 2010 disaster, which killed 11 men and caused the worst offshore spill in US history. Six investors who bought shares in BP in London prior to the accident or in its immediate aftermath claim that they would not have done so at the price they did "had they known the truth". They include the South Yorkshire Pensions Authority, Skandia Global Funds and GAM Fund Management. The funds allege that they lost "substantial sums as a result of BP's misleading statements", and are suing under Texas law for common law fraud and negligent misrepresentation, and for statutory fraud. That after the US Supreme Court blocked foreign investors seeking damages in federal courts, The Telegraph says. David Cameron will reboot the Conservative machine today as he uses a wide-ranging reshuffle to force the pace of government reforms. The Prime Minister has appointed a disciplinarian to tame rebellious Tory MPs and will announce a new public face of the party to take it on the uphill path to the 2015 election. Andrew Mitchell, Mr Cameron's new chief whip, spent yesterday helping the Prime Minister to plot his first reshuffle, which may see more than 20 ministers leave government. Mr Cameron is expected to name either Jeremy Hunt or Grant Shapps as the new Tory chairman, charged with energising a dwindling activist base and representing the party on the airwaves, writes The Times. Leni Gas & Oil is threatening court action against Mediterranean Oil & Gas (MOG), raising questions over whether it may have been misled before selling its interests in Malta at a low price. Leni said that on August 1 it sold its 10% stake in the Malta licence to MOG, which already owned 90%, for the nominal figure of $1 (63p) plus $19,050 in past costs. Leni said it would write off £1.9m in costs related to the licence. On August 23 MOG said it had sold 75% of its Maltese blocks for $10m to Genel Energy, whose chief executive is former BP chief executive Tony Hayward, prompting a statement from Leni expressing "surprise". Analysts said the deal, under which Genel will also pay for drilling two wells, could imply Leni's stake had been worth $9m, according to The Telegraph.A group of eight MPs have written to Barclays's new chief executive in protest at the bank's "deeply disappointing" action over the mis-selling of interest rate swaps. In a letter to Anthony Jenkins, seen by The Daily Telegraph, the MPs accuse the bank of failing to tackle the "difficult and distressing problem" which they claim is "threatening the long-term viability" of hundreds of small and medium-sized companies. The MPs call for Mr Jenkins, who was appointed only five days ago, to clarify how the bank intends to release companies from swap arrangements and to guard them from "punitive measures" if they claim compensation.AB
Last checked at 
