LONODN Friday newspaper round-up: BP, Prudential, ITV

Date: Friday 04 Jun 2010

The Prime Minister’s closest advisers will be briefed this morning by senior executives at BP over the oil spill crisis in the Gulf of Mexico.

It is understood that John Gerson, BP’s director of security and public affairs and a former deputy head of MI6, will appraise officials from the No 10 Policy Unit. That briefing is aimed at advising the Prime Minister on the market sensitive information that BP’s chief executive Tony Hayward will present to City analysts this afternoon, the Times reports.

BP's financial prospects have been downgraded by two ratings agencies, despite "an important milestone" in its attempt to stem the Gulf of Mexico leak. The move by both Fitch and Moody's is a sign that City analysts and rating agents are belatedly reacting to the pressures facing the oil giant, which on Thursday confirmed that it would give a presentation reassuring investors about its financial situation, the Telegraph adds.

Prudential’s top team has the full support of the board and the majority of big shareholders and there will be no resignations over the collapse of its $35.5bn (£24.3bn) bid for AIA, Harvey McGrath, the UK insurer’s chairman, has told the Financial Times. In a defiant first interview since the board of AIG rejected a renegotiation of the deal early on Tuesday, Mr McGrath described those shareholders calling for change at the top as “outliers” and said that neither he nor Tidjane Thiam, chief executive, had been at all worried about their positions.

Network Rail has singled out electrification of railway lines as a major area of investment that could be cut back as public sector spending is squeezed. The £1 billion electrification of the main rail route between London and Wales and a line between Liverpool and Manchester was announced by Labour last summer. Electric trains are quieter, cleaner, more reliable and faster, the Times reports.

No one should fool themselves into believing that Britain can inflate its way out of its public debt mountain, the Bank of England's deputy governor has warned. Charles Bean raised the spectre of hyperinflation, saying it is "severely misguided" to hope that a rise in prices would help Britain out of its current predicament. His comments come amid growing suspicion that politicians around the world may eventually resort to inflation as a means of reducing what they owe in capital markets, and follow the Swedish Riksbank's decision to change its inflation target, the Telegraph reports.

One of Britain’s biggest retailers has called for the Government to consider levying VAT on more products instead of raising the rate to 20%. Ian Cheshire, chief executive of Kingfisher, the owner of B&Q, said yesterday that although tax rises were inevitable, the Government should “consider how they should be structured”. Most retailers are expecting a rise in VAT to 20%, from 17.5%, which would raise about £11bn for the Treasury and bring Britain into line with the European average, the Times reports.

Nearly 400,000 people abandoned British Airways last month as strikes by cabin crew forced the airline to cancel hundreds of flights. BA said passenger numbers fell by 14.2% to 2.3m during May after industrial action disrupted services in the last two weeks of the month. The strikes have cost BA £119m so far and the airline is facing further losses of £7m a day as cabin crew prepare for another five-day strike starting tomorrow, the Times reports.

The new chief executive of ITV, Adam Crozier, has made his second key appointment, hiring the former chief executive of the radio group GCap. Fru Hazlitt, who has also held leadership roles at Virgin Radio and Yahoo UK, will take up the newly-created role of managing director of commercial and online on 2 August, the Independent reports.

British officials are downplaying the chances of major breakthroughs on banking reform at the G20 summit beginning today in the South Korean city of Busan, which will be Chancellor George Osborne's first major outing on the international stage, the Independent reports.

The first big video game franchise to appear on a social network is launched on Friday when FIFA Superstars, a football World Cup game, goes live on Facebook. After the success of virtual pets, farms and mob warfare, the phenomenon of social gaming is moving to the next level as brands and publishers seek a slice of the biggest growth market in video games, the FT reports.

Naoto Kan, Japan’s finance minister, on Friday was poised to replace Yukio Hatoyama as prime minister after the ruling Democratic party chose him as its leader. Mr Kan, a former social campaigner who has led the 12-year-old DPJ twice before, defeated Shinji Tarutoko, a little-known party lawmaker, by a vote of 291 to 129 among the party’s parliamentarians, the FT reports.