Orangina Owners Reunite For £1bn Ribena Tilt

By Mark Kleinman, City Editor

The former owners of Orangina have reunited for a £1bn-plus tilt at Lucozade and Ribena, two of the biggest brands in Britain's beverages market.

Sky News understands that Blackstone and Lion Capital, two private equity firms, have joined forces to submit a formal offer for the two soft drinks, which have been put up for sale by GlaxoSmithKline, the FTSE-100 pharmaceuticals manufacturer.

Blackstone and Lion, which have hired bankers at Rothschild to advise on their bid, have enjoyed previous success in the sector.

In 2005, they acquired the European beverages division of Cadbury-Schweppes, selling it four years later to Suntory, the Japanese food and drink producer, for roughly £1.5bn.

Suntory, which is one of the world's largest soft drinks producers, is one of the rival bidders to Blackstone and Lion in the current auction.

Other buyout firms, such as Bain Capital, CVC Capital Partners, KKR and Onex, a Canadian fund, are among those also considering offers.

The auction of Lucozade and Ribena comes at a time of potential change in the UK soft drinks market.

Britvic and AG Barr, which makes Irn-Bru, recently saw their merger approved by competition authorities.

However, there is scepticism about whether the deal will ultimately happen because of the shifts in the relative shifts in the value of the two companies since it was conceived.

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Cameron In Kazakhstan For Trade Mission

David Cameron will hold talks with Kazakhstan's President Nursultan Nazarbayev today as part of a controversial trade mission to the country.

The official visit, the first by a serving British premier, is aimed at building strong business links and deals worth £700m to UK firms are set to be signed.

But Mr Cameron has been forced to reject assertions he was putting economic ties with the mineral-rich nation ahead of concerns over human rights abuses.

The Prime Minister insisted that "Britain always stands up for human rights wherever we are in the world" and said the allegations would be raised in the talks.

He said: "We will raise all the issues including human rights. That's part of our dialogue and I'll be signing a strategic partnership with Kazakhstan.

David Cameron recently met with Pakistan's PM Nawaz Sharif

"We need for Britain to get out there and win. We need our businesses to win.

"We need that growth and investment. Countries like Kazakhstan are rapidly growing and one day will be among the top 10 producers."

Campaign group Human Rights Watch have claimed there is a "serious and deteriorating" situation in Kazakhstan.

This includes "credible allegations of torture, the imprisonment of government critics, tight controls over the media and freedom of expression and association, limits on religious freedom, and continuing violations of workers' rights".

Amnesty International UK's head of policy and government affairs Allan Hogarth said: "Kazakhstan might be knee-deep in oil and gas wealth, but David Cameron shouldn't let lucrative energy deals prevent him from raising human rights during his trip."

The Prime Minister is leading a 30 strong business delegation to the country as he seeks to open a new chapter in the relationship with Kazakhstan.

Downing Street has acknowledged Mr Cameron is playing "catch-up" because other Western leaders have already visited the country.

Kazakhstan is experiencing rapid growth due to its vast oil and mineral reserves.

The Government believes British firms could secure contracts in Kazakhstan worth up to £85bn over the coming years.

Mr Cameron and Mr Nazarbayev began talks last night during a two hour flight on the presidential jet.

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Facebook To Remove Adverts From Adult Pages

Facebook will stop advertisements appearing on pages containing sexual or violent content after a number of companies suspended their campaigns.

Marks and Spencer and BSkyB, the parent company of Sky News, were among those to pull their adverts from the social networking site because of concerns about placement.

It led Facebook to announce a tightening of its review process, preventing promotions from appearing on pages and groups which contain offensive content.

"Our goal is to both preserve the freedoms of sharing on Facebook but also protect people and brands from certain types of content," a spokesman said in a blog post.

"We know that marketers work hard to promote their brands and we take their objectives seriously.

"While we already have rigorous review and removal policies for content against our terms, we recognise we need to do more to prevent situations where ads are displayed alongside controversial pages and groups."

In the first three months of the year, 85% of Facebook's revenue came from advertising - up 43% on the same quarter in 2012.

Advertisers paid a total of $1.25bn (£820m) to promote their products and services to the website's reported 665 million daily active users.

The company is paid around 3% more per advert than it was 12 months ago.

Facebook said its advertising review process will be manual at first but an automated system is expected to launch within weeks.

The spokesman added: "Like any digital platform, we're not going to be perfect but we will be much better.

"We'll continue to work aggressively on this issue with advertisers.

"We're confident the immediate steps we're taking will result in a significantly improved approach to preventing these instances from occurring, and we're committed to making this process work for everyone who uses Facebook."

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Crown Post Office Staff Stage Strike Action

By Emma Birchley, East of England Correspondent

Post Office workers have gone on strike over plans to close 70 state-owned branches and a dispute over pay.

The closing Crown branches - which are currently directly managed by Post Office Ltd - would be franchised and put within retailers such as WH Smith, which has already happened in some towns.

Debbie Spiteri, who works at the Dagenham branch in Essex, has been employed by the Post Office for 32 years and said she thought she had a job for life.

"I thought I would be here until I retired in my 60s, but now it looks like I may be made redundant, looking for another job and at my age I didn't want to be doing that," she said.

"I feel sorry for the local people. A lot are elderly and if they have to go somewhere else, they won't. They won't go into a shop to do their business because to them they want the personal touch."

The Post Office insists staff will be transferred to a new employer or offered voluntary redundancy, but the Communication Workers Union predicts 800 jobs will be lost.

Roger Gale, general manager of the Post Office's Crown and WH Smith network, said the changes are needed.

"It's absolutely not a programme of closing post offices," he said.

"We want to retain post office services on the high street but we have to do it in a way that doesn't lose tax-payers' money.

"What we're trying to do is get the Crown Network to a point where it breaks even. It currently loses £37m a year of tax-payers' money and what we're trying to do is to remove that loss."

The 373 Crown offices, which are usually the larger ones, represent just 3% of the total post office network.

But the CWU says its staff deal with a fifth of all customers and handle 40% of financial transactions involving things like banking and credit cards.

Clive Tickner, the CWU's representative for the Dagenham area, questions the timing as the Post Office launches its new current account.

"Ironically, if they close down Crown offices there will be less outlets to transact the current account so I'm very, very concerned that they are eroding away at the Post Office so that there will be nothing left in a few years' time," he said.

There is also concern about the impact on the high street.

Deborah Satchell works at Heathway Dry Cleaners in Dagenham.

She said: "It will affect the local shops because people will go elsewhere to do what they have got to do and it will take the business away from the local community."

The strikes are the seventh round of action in the current dispute and will only affect the Crown branches.

Staff are also calling for a pay rise of 3.5% for 2012/13 and a further rise this financial year, but the Post Office says that is not possible when it is making losses.

Instead, it is offering a series of cash payments totalling up to £3,400 before April 2015.

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Double-Dip: Recession Never Actually Happened

The Office for National Statistics (ONS) says updates to its past calculations on the performance of the UK economy mean Britain was never in a double-dip recession after all.

Revised GDP data showed that output was actually flat in the first three months of 2012 - rather than shrinking as had first been measured - meaning there was no second recession.

The ONS credited a stronger contribution to growth from the construction sector.

But that was where the good news ended for the Chancellor George Osborne as there were downgrades to other key economic indicators.

The ONS said the original recession in the wake of the financial crisis was deeper than had been previously found, with growth contracting by 7.2% instead of 6.3%.

The body said that output was now 3.9% below its pre-recession peak - again worse than previously reported.

While growth in the first three months of 2013 was unrevised at 0.3%, the year-on-year growth estimate was unexpectedly halved to 0.3%.

A more detailed breakdown of the data also showed the pressures faced by consumers as real household spending plunged by 1.7% in the first three months of 2013 - the largest drop for 26 years.

Consumers were hit by falling wages and rising inflation, according to the ONS.

Business investment also fell, by 1.9% quarter-on-quarter to £27.3bn.

However, the recovery is expected to pick up in the second quarter, with GDP forecasted to grow by 0.5%, although economists say it remains possible that incoming governor of the Bank of England, Mark Carney, may choose to follow Sir Mervyn King in backing more quantitative easing to boost money in the economy.

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Power Warning: Higher Risk Of Shortages

The energy regulator has warned of a greater risk of power shortages in three years' time - although it says blackouts are unlikely.

Ofgem said electricity margins could tighten in 2015-16 to between around 2% to 5% and the generation industry must get a grip on the problem through greater investment and other initiatives.

But the study did admit it was difficult to anticipate rising demand because of various factors including uncertainty over the strength of the UK economy and the timing and scale of plant closures and mothballing.

Ofgem said the report illustrated the need for the timely implementation of the Department for Energy and Climate Change's capacity market reforms.

It said: "Electricity margins could tighten in 2015-2016 to between around 2% and 5% depending on demand.

"This means that the probability of a supply disruption increases from 1 in 47 years now to around 1 in 12 years for 2015/16 or lower.

"If the projected decline in demand does not materialise margins could fall to 2%."

Ofgem has been working with Government and National Grid to explore options that would provide consumers with additional safeguards against the increased risk to security of supply.

These include giving National Grid the option to buy extra reserve generation to balance the electricity network.

Andrew Wright, Ofgem's Chief Executive, said: "(Our) latest report on electricity security of supply highlights the need for reform to encourage investment in generation.

"This is why Ofgem welcomes DECC's (Department for Energy & Climate Change) commitment to introduce a capacity market that will provide a longer term solution to this problem at a time when Britain's energy industry is facing an unprecedented challenge to secure supplies."

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Spending Review: The Key Points

The main announcements from Chancellor George Osborne in his spending review for 2015/16 as outlined to MPs in the Commons:

WELFARE:

:: Reforms to include the 'welfare cap' set in Budget statement annually from April 2015 for four years, though state pension not included.

:: Jobseekers face new requirements to get benefits. Non-English speaking claimants must learn the language or risk cuts to payments.

:: New upfront work search system will require claimants to provide a CV, register for online job search and start looking for work before getting benefits. 

:: Lone parents of three and four-year-olds to be required to attend job centres regularly and prepare for work.

:: Payment of winter fuel payments for people living abroad to be linked to a 'temperature test' from Autumn 2015 to ensure pensioners in hot countries do not get it.

JOBS & PAY:

:: Government workers to fall by extra 144,000 by 2015/16.

:: Ending automatic progression pay in public sector - though Armed Forces excluded. Pay rises limited to average of up to 1%.

INVESTMENT:

:: £50bn of capital investment in 2015/16, amounting to more than £300bn for infrastructure including broadband, science and schools by 2020. Promises the largest programme of investment in roads for 50 years and in railways since the Victorian age.

TAX:

:: HMRC resource budget cut by 5% but extra resources provided to tackle tax evasion raising a predicted £1bn-plus.

NHS:

:: NHS budget rises to £110bn for 2015/16. some £4.7bn capital spending in NHS.

EDUCATION:

:: Education budget increased to £53bn for spend on schools only. Pupil Premium extended to more children and 180 more Free Schools funded.

DEFENCE:

:: No reduction in numbers of soldiers, sailors or airmen, but cuts in civilian workforce.

:: Defence resource budget maintained at £24bn. Its equipment budget will be £14bn and will grow by 1% in real terms in following years.

TRANSPORT:

:: Government to "look at the case for" Crossrail 2 link from Wimbledon to Alexandra Palace in London and give mayor Boris Johnson almost £9bn of capital spending and additional financing power by 2020.

:: Transport to make 9% savings in day-to-day spending but receive largest boost of any department to its capital budget, which rises to £9.5bn - to be repeated every year to 2020.

LAW & ORDER:

:: Savings of 10% in justice department.

:: Police counter-terrorism budget will not be cut while there will be an increase of 3.4% in intelligence services budget.

KEY FIGURES:

:: A further £5bn of efficiency savings found in the latest spending round.

:: Total Government spending for 2015/16 will be £745bn.

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Spending Review: Osborne Wields The Axe Again

Public sector workers, benefit claimants and ex-pat pensioners have all been hit under the Chancellor's drastic plans for extra spending cuts.

George Osborne declared Britain was "moving out of intensive care and from rescue to recovery" but warned the country had to keep on making savings.

As part of moves to save a further £11.5bn across Whitehall, public sector pay will be limited to an average of 1% for 2015/16 and automatic rises scrapped.

Welfare spending including housing benefit, tax credits, disability benefits and pensioner handouts except the state pension will be capped from April 2015.

A council tax freeze due to end next April is being extended for two years, saving around £100 per family, but local authorities face 10% cuts in resources.

And £30m-a-year will be saved by stripping the winter fuel allowance from Britons who move to live in countries warmer than the UK.

George Osborne and Danny Alexander leaving the Treasury on Wednesday

In a 50-minute statement, Mr Osborne said balancing the UK's books involved "difficult decisions", adding: "There never was an easy way to bring spending under control."

But shadow chancellor Ed Balls claimed the new cuts represented a "comprehensive failure" of the top Tory's economic strategy and were simply "more of the same".

"This out of touch Chancellor has failed on living standards, growth and the deficit and families and businesses are paying the price for his failure," he said.

Ministers for the Treasury, Cabinet Office, Justice, Environment and Communities and Local Government will have to slash another 10% from their budgets and Work and Pensions 9.5%.

Business and the Home Office face cuts of 6%, the Foreign Office 8% and Culture, Media and Sport 7% while Scotland, Wales and Northern Ireland offices will also be squeezed by 2%.

The security services were one of the biggest winners with MI5, MI6 and GCHQ seeing a 3.4% increase in their annual budget to help the fight against terrorism.

The Department of Transport has to find 9% in day-to-day savings but also emerged with the largest cash boost because its capital budget is due to rise to £9.5bn.

Mr Osborne promised there would be the largest programme of investment in roads for 50 years and in railways since the Victorian age.

The Ministry of Defence will see its budget maintained in cash terms at £24bn, which will mean a real-terms cut of 1.9%, but money for equipment will rise by 1% a year.

Its capital budget will also be held at £8.7bn, representing a real-terms reduction of 2.3%.

There will be no further reductions in troop levels, although the Chancellor confirmed the civilian workforce will be slashed.

And fines levied against banks for the Libor rate-rigging scandal will be used to fund the Armed Forces Covenant, setting out the nation's obligation to troops in perpetuity.

The Chancellor insisted his measures, which only spared schools, the NHS, overseas aid and the intelligence services, were necessary and fair.

Nurses, police officers and teachers will all be hit by the loss of progressive pay, which sees them earn more each year regardless of performance, with only the armed forces exempt.

Mr Osborne said: "Progression pay can at best be described as antiquated; at worst, it's deeply unfair to other parts of the public sector who don't get it and to the private sector who have to pay for it."

The Chancellor also revealed the Office for Budget Responsibility predicts another 144,000 working for the Government will lose their jobs by 2015/16.

There was immediate anger at the pay changes, with union chiefs claiming civil servants have been made "scapegoats" for the coalition's austerity regime.

Fresh cuts for local authorities also raised concerns, despite Mr Osborne telling MPs spending would only fall by 2% once local government changes had taken effect.

Sir Merrick Cockell, chairman of the Local Government Association, said the reductions would "stretch essential services to breaking point in many areas".

Mr Osborne defended moves to restrict winter fuel payments for ex-pats, declaring he was putting a "limit on the nation's credit card".

"Paying out even more money to people from all nationalities who may have worked in this country years ago but no longer live here is not a fair use of the nation's cash," he said.

An unimpressed Ed Balls during Mr Osborne's statement

But he vowed not to include the basic state pension in his welfare cap, despite Labour signalling it would and experts warning its exclusion would make the limit "meaningless".

In further moves on benefits, jobseekers will have to wait seven days before they can claim handouts and sign in once a week, and foreign applicants will be forced to learn English.

In his last spending review in 2010, Mr Osborne set out plans to eliminate the deficit by 2015 - allowing the cuts to end in time for the election.

But sluggish economic growth and a rising deficit have forced him to impose further drastic savings for 2015/16.

There was some positive news as billions more was pledged for key infrastructure projects over the next five years, further details of which will come on Thursday.

More than £3bn in capital investment will go on affordable housing, Mr Osborne said, and science capital funding will rise from £0.6bn this year to £1.1bn in 2015/16.

The education budget will also rise by £53bn to cover extra spending on schools, with the pupil premium extended and funding for another 180 free schools.

The Commons statement was highly political, coming less than two years before the next election and outlining plans for a time Mr Osborne hopes the Tories will be in power alone.

He said: "I know that times are still not easy for families. But we have a clear economic plan. We've stuck to it. It is working. And I'm determined to go on delivering it."

Labour claims the Government will go into 2015 with state debt at £96bn and has pushed borrowing up by £245bn more than planned at the last spending review.

However leader Ed Miliband has admitted he cannot promise to reverse any of Mr Osborne's cuts in day-to-day spending if he wins the next election.

John Cridland, Director General of the CBI , said: "The Chancellor has carefully walked a tightrope of protecting growth, while making sizeable savings to pay down the debt."

But he warned the Government had to deliver on its promises about infrastructure, saying it was "critical we see a real pipeline of projects" announced by Danny Alexander tomorrow.

TUC general secretary Frances O'Grady said: "This is a toxic mix of bad economics, nasty politics and dishonest presentation.

"The last thing our struggling economy needs is further cuts to spending to try to close a deficit made worse by the Chancellor's earlier cuts.

"When the medicine is not working and side effects are choking the patient, you need a change in treatment, not more of the same.

Ahead of the statement, Sky's City Editor Mark Kleinman revealed the Government's main body for encouraging inward investment and promoting British companies abroad, UKTI, faced an 8% cut to its budget.

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Markets Tumble Across Europe After Asia Drops

Major Asian stock markets tumbled on Monday, extending last week's falls that hit exchanges around the world.

Shanghai slumped 5.30% to 1,963.24 - below the psychological 2,000-point level analysts had pegged as requiring support.

Hong Kong lost 2.22%, Seoul was down 1.31% and Sydney dropped 1.47%, while Tokyo's drop of 1.26% reversed a 1.42% gain at the start of Monday's trading on the Nikkei.

The negative sentiment followed to Europe, where the Ibex closed down 1.91%, the Cac 1.71%, the FTSE 1.42%, the MIB 0.93% and the Dax 1.24%.

The negative trend continued to Wall Street, with the Dow Jones down 1.5% by the afternoon.

The widespread drops come after the US Federal Reserve's indication it could reel in its stimulus later in the year.

Markets in Hong Kong and Shanghai were also stung on Monday by a liquidity crisis in China, while Sydney was hit as a number of listed firms rely heavily on Chinese trade.

Chinese investors have been sent running by a liquidity crisis in the banking system, which has caused lenders to put the brakes on loans.

China's central bank urged lenders in the country to strengthen liquidity management, in a sign Beijing does not intend to loosen policy despite a recent credit crunch.

It was the first public comment by the People's Bank of China since interbank borrowing costs spiked to record highs in recent weeks, raising concerns over a potential cash crisis amid an already slowing Chinese economy.

Hopes that Beijing would step in to provide money were dashed at the weekend when a commentary by the official Xinhua news agency said there was no shortage of funds in the financial system.

It blamed speculation and non-bank forms of lending, often called "shadow finance", for the problem.

"It's not that there's no money, it's that the money is not in the right places," the commentary said.

Global markets have been sent into a downward spiral since the Fed announcement last week that the economy looked in good enough shape for it to start rowing back on its $85bn (£55bn) monthly bond-buying scheme.

While the move shows the US economy is gaining strength, dealers fear it will mean there is less cash in the financial system to invest.

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Vodafone Lines Up £9bn Kabel Deutschland Deal

Mobile phone giant Vodafone is poised to buy Germany's biggest cable operator in a deal worth £9.1bn, it has been confirmed.

The addition of Kabel Deutschland's 8.5 million connected households would leave Vodafone with 32.4 million mobile, 5 million broadband and 7.6 million direct TV customers in 13 of Germany's 16 states.

Kabel Deutschland was "an attractive platform for TV and fixed broadband in Germany and creates a leading integrated operator with pro forma revenues of approximately 11.5 billion euros," Vodafone said in a statement.

The latest offer, which has been backed by Kabel Deutschland's management and supervisory boards, has a total value of £9.1bn when including £2.5bn of debt.

The acquisition, however, could still be derailed by rival interest from US media group Liberty Global. However, James Maughan, head of research at Olivetree Financial told Jeff Randall Live that Libert does not represent a huge threat:

"Vodafone know that Liberty is tied up with the Virgin Media deal and are not really in a position to do another one, to offer the all-cash deal that Vodafone can make available."

Vodafone's proposal is worth 87 euros (£74) a share and is thought to better an earlier rival bid from Liberty, owner of Virgin Media, at 85 euros (£72) a share.

The British company has been expanding its presence in Germany recently, announcing a tie-up with Deutsche Telekom to offer pay-TV over high-speed broadband to its customers.

Germany has been one of Vodafone's better-performing markets in Europe, while its Mediterranean region has been hit hard during the downturn.

Chief executive Vittorio Colao said: "German consumer and business demand for fast broadband and data services continues to grow substantially.

"As customers increasingly access TV, fixed and mobile broadband services from multiple devices in the home and workplace, and on the move."

Early trading in London saw shares in Vodafone rise 1.18% before easing to 0.8%, meanwhile Kabel Deutschland shares in Frankfurt added 1.7%.

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