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George Osborne, the Chancellor of the Exchequer failed to dissuade EU finance minsters in Brussels from endorsing a plan to cap bankers’ pay bonuses. City banks contemplated taking the EU to court over it. HSBC’s annual profits fell by 6 per cent to £14 billion, including a loss of £700 million made in Britain. The Royal Bank of Scotland, 81 per cent of which is owned by the government, made its fifth annual loss in a row, of £5.17 billion. Sir Mervyn King, the governor of the Bank of England, suggested it should be split up and sold. Lloyds Banking Group, 40 per cent of which is owned by the government, reduced its losses to £570 million, from £3.5 billion the year before. Banks reduced their lending by £2.4 billion in the last quarter of 2012, despite the Funding for Lending Scheme operated by the Bank of England. Rolls-Royce made a profit of £1.4 billion, but paid no corporation tax. The FTSE reached 6,432, its highest close since January 2008. A walrus basked for the cameras on the shore of North Ronaldsay in a rare visit to Orkney.
MPs voted in favour of the Justice and Security Bill, which allows court evidence in civil cases to be heard in secret where there are grounds of national security. Chris Grayling, the Justice Secretary, announced savings of £2 billion from legal aid in England and Wales. Further cuts to the defence budget would remove the capability of Britain’s armed forces, Philip Hammond, the Defence Secretary, said. He announced the closure of Claro Barracks in North Yorkshire, Howe in Kent, Craigiehall in Edinburgh and Cawdor in Pembrokeshire. Britain decided to invest £88 million in the European Extremely Large Telescope, with its 128ft mirror, being built in Chile at a cost of £1 billion.
The Queen spent two days in hospital with symptoms of gastroenteritis after shaking hands with Olympic athletes. The East Coast mainline railway looked likely to remain under the control of its state-owned operator after its franchise expires in December, while the government tries to sort out the national allocation of franchises. Leicestershire Police encouraged people to deck trees with knitted items in Bede Park, Leicester, to reduce the fear of crime.
Abroad
President Hugo Chávez of Venezuela died, aged 58, a month after returning from cancer surgery in Cuba. In a referendum, the Swiss voted to allow shareholders to veto executives’ pay. Many people in Cyprus took money out of the bank while the EU worked towards a bailout. The Mexican teachers’ union chose a new leader after the arrest on fraud charges of Elba Esther Gordillo, its leader since 1989. In Italy the trial of Silvio Berlusconi, the former prime minister, continued, on charges of paying for sexual intercourse with women under 18. Jean-Claude ‘Baby Doc’ Duvalier, who returned to Haiti in 2011 after a 25-year exile, appeared before a court considering whether he should be charged with having committed crimes against humanity during his presidency, 1971-86. Iran saw a campaign on Facebook to boycott overpriced pistachios over the Persian New Year.
Syrian rebels took control of the city of Raqqa and captured the governor of the province of Raqqa. Government planes then bombed the city. The number of Syrian refugees in other countries exceeded a million, according to the UN. Chad said its troops in Mali had killed Mokhtar Belmokhtar, the one-eyed Islamist militant behind January’s siege at an Algerian gas plant, but al-Qa’eda in the Islamic Maghreb said he was still alive. Malaysian forces killed 27 of a Filipino clan calling themselves the Royal Army of Sulu, who had occupied land on Borneo. In Afghanistan, the International Security Assistance Force apologised for the death, in the province of Uruzgan, of two little boys tending cattle, killed when a helicopter fired on them, mistaking them for insurgents. The founder and former chief executive of Kabul Bank were sentenced to five years in jail for a fraud that nearly led to its collapse in 2010.
Cardinals gathered in Rome to vote for a new pope. In China, the National People’s Congress met to rubber-stamp the change in leadership and to hear economic targets of 7.5 per cent growth, 3.5 per cent inflation and the creation of nine million urban jobs. Brazil’s growth rate fell to 0.9 per cent in 2012. New York’s Dow Jones share index rose above the record intra-day high set in October 2007. In Kenya, Uhuru Kenyatta took the lead in elections for president. Scientists from Canada suggested that the camel evolved in the Arctic. CSH
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