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Inflation in the UK has fallen to 4.2%. Get the full data over time - and see how it compares to pay
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UK inflation dropped to a six-month low of 4.2% in December, the Office for National Statistics (ONS) revealed today - down from 4.8% for November 2011.

More precisely Consumer Price Index (CPI) measure of inflation stands at 4.2% for December. When looking at this drop it is important to remember that in September this year, when the CPI stood at 5.2%, it had never been higher in recorded history.

The Retail Price Index (RPI) measure of inflation stands at 4.8% down from 5.2% in November.

There are some important differences between these two main ways the ONS use to measure inflation. The government prefers the Consumer Price Index, which also includes services, housing, electricity, food, and transportation, but the Retail Price Index covers more items. The RPI includes housing costs and is used for many pay negotiations and used to be used for pension payments. We've included both here - just click on the links on the spreadsheet. You can get the full list of items in the inflation basket here.

We have also added in pay data - and you can see how inflation is racing ahead of average earnings.

We have gathered all the data for inflation since June 1948. Let us know what you can do with this data.

DATA: UK inflation since the 1940s - CPI and RPI
INTERACTIVE: how we visualised the data

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• Inflation
• Economics
• Quantitative easing
• Financial crisis
• Deflation
• Economic policy
• Bank of England
• Government data
• Office for National Statistics
• George Osborne
• Mervyn King

Electrical retailer reduces staff numbers following sale of business to private investment firm OpCapita

About 450 jobs will go at electricals retailer Comet under a plan to reduce its repairs service. The overhaul follows Kesa Electricals' sale of the business to private investment firm OpCapita. "The proposal to reduce our staff numbers has been a very tough decision to make but significant savings are required to secure the long-term viability of our business," said Comet's chief executive, Bob Darke. Comet currently provides a repair service on behalf of a range of manufacturers. Engineers across the UK would lose their jobs, as well as those with support roles at its Clevedon site near Bristol.

• Retail industry

The Move your Money campaign is encouraging consumers to take a stand against bank greed. We suggest some alternative homes for your cash if you decide to make a stand

At Barclays headquarters in the City, the bank on Friday revealed billions in profits and hundreds of millions in bonuses to be shared among an elite pool of traders and directors. But down at ground level – and a world away from the marble and glass of the executive suites – there was a very different picture, as more than 50 customers queued outside a nearby branch, ready to close their accounts and cut up their cards.

Campaigners are hoping this trickle of rejection will turn into a flood as the public vents its frustration against Britain's banks in the best way it can – by moving its money.

The Move Your Money campaign is a child of the Occupy Wall Street movement, which captured the imagination of the broader American public with a simple but compelling slogan: "Invest in Main Street, not Wall Street".

It claims to have led to more than 10 million people moving their money to local financial institutions, with a "Bank Transfer Day" in November seeing more than 40,000 people switch.

Move Your Money launches in the UK in March with the catchphrase "Bank on something better" in the belief we can all take concrete action to create a more stable and ethical banking system. "We're all angry about the cuts, about what's happening to schools and libraries and so on, given the wheelbarrows of cash that have supported the banks," says Ed Mayo, head of Co-ops UK.

"At an individual level, you can't do everything to put an unfair economy right – but you can do something. Move Your Money is the new Fairtrade. It is the campaign for our time."

The National Union of Students has joined, and is encouraging local student unions to junk accounts with the big five banks in favour of more ethical alternatives, such as the Co-op or Nationwide building society. It's an echo of the hugely successful 1980s boycott against Barclays and its operations in apartheid-era South Africa.

So far, just over 2,000 people have signed a pledge on moveyourmoney.org.uk, to "register your vote against business as usual", but organiser Louis Brooke says it's still early days, with the site open just four days.

In March, a series of events will try to keep the campaign in the public eye, including a nationwide petition. And it's not just crusty protesters threatening to move their overdrafts – the campaign says it's close to persuading even some Tory MPs to take the pledge.

If you want to join, what can you do? Here's Money's guide to where you can move your money the ethical way.

Why should I switch? Because you're appalled at bankers' bonuses, salaries and stock options. Because their trading and lending practices have left the western world's economy in ruins. Because you're fed up with your money financing arms dealers and dictators. Oh, and they also stung you for £25 last month when you went a few quid over your overdraft limit.

Move Your Money says: "The banks failed badly, but despite receiving the biggest taxpayer-funded bailout in history, nothing much has changed. Banks continue to pour money into socially useless lending and risky speculation, leaving us exposed to more crises, commodity bubbles and instability."

It uses ratings compiled not by Moody's or Standard & Poor's, but Ethical Consumer magazine to rate the banks. Barclays earns an "ethiscore" of just 0.5 out of 20 (Standard & Poor's gives it A+). But it gives 13 out of 20 to Co-operative Bank, 15.5 to Triodos Bank and 16 out of 20 to Charity Bank. It also likes Unity Bank, a specialist in accounts for organisations, not individuals.

What do they offer? The only ethical bank offering a current account is Co-operative, although several building societies also have deals. Co-op's standard account offers the usual facilities at no fee if you stay in the black. Its ethical commitment is now 20 years old, covering human rights, the environment, international development and animal welfare.

Triodos Bank commits to lending your money only to businesses that make the world a better place – from wind farms to housing projects. It promises total transparency, allowing depositors to view where it has lent money.

Charity Bank finances social enterprises, charities and community organisations, and promises a "financial return and social impact".

Which one should I go for? Ethical Consumer says "none come close to the Co-operative" for "clarity and ambition" in ethical banking, and names it a best-buy for an ethical current account. Co-op scores highly on customer satisfaction. It came second to First Direct in the annual JD Power survey in 2011. It was also named best current account provider 2011 by MoneySupermarket. But its cash Isa pays a lowly 0.5% interest, although it has a fixed-rate Isa paying 3% at affiliate Britannia. The good news is that Which? rates Charity Bank's ethical cash Isa, paying 2.5%, a best-buy, while Triodos pays 2% on its cash Isa. Top-rate Isas pay only 3%, so switching means savers lose little to salve their conscience.

Why should I switch? Credit unions are huge in countries such as Ireland, the US and Australia, but they have not taken off in a big way in the UK. However, in theory, they should tick all the boxes for a lot of people, in that they are not-for-profit financial co-operatives owned and controlled by their members with no outside shareholders. Any profits they make stay in the community and are used to develop the credit union and provide a return to savers.

Their progress has been hindered by restrictions that have limited take-up, but new rules introduced last month should allow them to provide a more effective alternative to banks on the one hand, and expensive payday lenders and loan sharks on the other. For the first time, credit unions will be able to pay people interest on their savings. And they will no longer have to prove that all the people able to join have something in common.

There are just over 400 credit unions in the UK. They are regulated by the Financial Services Authority and covered by the Financial Services Compensation Scheme (FSCS), so the first £85,000 of a member's savings are completely safe. Some do go bust – about seven went under last year, and at least two have collapsed so far this year. They tended to be small players, and most people get their money back via the FSCS within seven days.

What do they offer? Core products are savings accounts and loans. However, around 25 (including Bristol Credit Union and London Community Credit Union, which serves the residents of London's Hackney and Tower Hamlets) offer current accounts, and a handful (including Glasgow Credit Union and Scotwest, which serves those living or working in the west of Scotland) offer mortgages. Quite a few offer insurance products, cash Isas and prepaid cards.

Credit unions pay a "dividend" rather than interest. However, being able to pay interest should give a huge boost to the movement.

On the loans front, they can sometimes offer best-buy rates for people looking to borrow smaller sums. Some credit union loans charge borrowers no more than 1% interest a month on the actual amount owing – an APR of 12.7%. By law, you can't be charged more than 2% a month on the reducing balance (an APR of 26.8%).

Which one should I go for? Unfortunately, the rule changes don't mean you are allowed to join any credit union you like. A credit union open to people living or working in one London borough, won't be able to open its doors to the whole of London. But the system will be much more flexible than it is now.

To see if there is one you can join, use this search facility. Input your home and work postcodes, the name of your employer, and whether you belong to any groups, such as a trade union. I had a go, and it suggested eight credit unions (I live in north-east London and work at the Guardian's offices in King's Cross). However, I was ineligible for six; that left Waltham Forest Community Credit Union or Haringey, Islington and City Credit Union.

Why should I switch? All building societies are mutual, which means they are owned by their members. Many have a strong regional identity and are tied to their local communities. The sector is now dominated by one giant– Nationwide – which is bigger than the other 46 societies combined. Some regard Nationwide as little different to the other high street banks, and Ethical Consumer magazine criticises its "excessive directors' remuneration". But overall, its strong company ethos is rewarded with a score of 13, compared to Barclays' 0.5 score.

What do they offer? Nationwide has the biggest range of products. However, Coventry, Cumberland, and Norwich & Peterborough (now merged with the Yorkshire) all operate current accounts with online, branch and postal services, and all score highly on the ethical scale. Most also promise a UK call centre. Crucially, they give free access to the Link ATM network.

Coventry's current account pays in-credit interest of 1.1%, as well as giving customers a £250 interest-free overdraft. N&P's deal includes free card usage abroad, together with a promise that if you switch and everything is not completed within 10 days, you will receive a cheque for £50. But the societies are best-known for mortgages and savings products and, as they don't need to pay shareholders, tend to offer the best rates. A check on Moneyfacts reveals building societies currently top the table for fixed rate and variable cash Isas.

The Move Your Money UK campaign is keen to promote community development finance institutions (CDFIs), which many people won't have heard of. These are non-profit organisations that lend money to individuals, businesses, social enterprises and charities, who use the cash to help their local community in some way. Some CDFIs, such as Triodos Bank, are reasonably well-known, while others are small and local.

However, there are plenty of other options for those looking to support worthwhile community ventures, and in many cases you can earn a decent return, too. Up and down the country, local residents are setting up initiatives aimed, for example, at generating renewable energy or bringing vital amenities such as shops and pubs back to life. Often there is an opportunity for those sympathetic to the cause to invest in these schemes by buying shares.

Guardian Money has featured a number of these schemes in recent months, such as the Butchers Arms pub in Crosby Ravensworth, Cumbria, which reopened in August 2011 following a "save our local" campaign; Clevedon Community Bookshop, in the seaside town of Clevedon, North Somerset, which opened for business in December 2011; and The Drive housing co-operative in Walthamstow, north-east London, which Money featured in July 2011.

There are plenty of others, too. Those looking for a sustainable, environmentally friendly investment may want to consider buying shares in a community electricity generating scheme which hopes to pay out a 4% return. A group of villagers in Saddleworth, Greater Manchester, are looking to raise £120,000 through a share offer to allow them to build the UK's latest community hydro scheme. Water company United Utilities has given them permission to use Dove Stone Reservoir to generate green energy to power homes. The scheme will see a 51kW turbine installed on the north side of the reservoir. Once up and running, it aims to generate 170,000kWh of electricity each year – enough to power 45 homes and raise thousands of pounds for local projects.

The share offer will remain open until 16 April. Crucially for investors, the directors hope to offer a 4% return from year two.

Saddleworth Community Hydro has been set up to run the plant. The scheme is eligible for enterprise investment scheme (EIS) tax relief at 30%, provided individuals invest a minimum of £500 and keep the shares for at least three years. The minimum investment is £250, and the maximum, £20,000.

This is the latest in a line of such ventures set up in recent years. Water Power Enterprises (h2ope) – behind the UK's first community-owned hydro electric schemes – is also supporting the Saddleworth scheme. A prospectus can be downloaded at h2ope.co.uk.

Meanwhile, a new co-operative has been formed to help finance a multimillion-pound scheme to restore and regenerate one of Wakefield's iconic buildings, Unity Hall, and re-establish it as a major entertainment venue. Membership of the co-op starts from £200. The share issue runs until 18 May.

"A dividend of around 6% per annum is planned after three years of trading, and members will also be celebrated in a piece of public art within the building," says a Co-operative Group spokesman. Visit unityhallwakefield.co.uk

A number of charities, organisations and websites enable you to lend money to, or borrow from, other individuals.

Some are "peer-to-peer lending" sites, which cut out banks by putting people with money to lend in touch with those wanting to borrow. Others allow you to lend money to, or invest in, projects in the UK and overseas. Guardian Money has featured some of these in the past, such as lendwithcare.org, which allows people to lend small sums to entrepreneurs in the developing world.

Among those highlighted by Move Your Money UK are:

• Zopa The best-known UK peer-to-peer lending site says January 2012 was its biggest month ever, with its savers lending £8.2m.

"Lenders are enjoying a smart way of getting a return," it says. The average return on all money lent over the last 12 months was 6.2% (after fees but before bad debt). Meanwhile, it claims its loans are some of the cheapest in the country.

However, while Zopa appears to be doing well, one of its competitors, Quakle, collapsed at the end of last year. Bear in mind that peer-to-peer lending is not covered by the Financial Services Compensation Scheme.

• Buzzbnk An online marketplace/ "crowdfunding" website launched in January 2011, and 63% owned by charities, it enables social entrepreneurs to raise funds and build a crowd of supporters. Based in London, to date it has helped individuals and organisations raise more than £240,000.

• Kiva This non-profit organisation, based in San Francisco, has "a mission to connect people through lending to alleviate poverty".

• Ethical money
• Banks and building societies
• Credit unions
• Bank charges
• Consumer affairs
• Investments
• Consumer rights
• Banking
• Ethical business
• Barclays
• Communities

Tesco promises that customers will always pay the lower price in any 'daft' deal, but what about deals for internet shoppers?

Is Tesco especially daft? Every week we run a "daft deal" on this page, and in today's issue it's Tesco pizzas: £2.85 each, or two for £6. I try to vary the supermarkets, but it's not easy; the trolley-loads of these deals spotted in Tesco by our readers far outnumber those from the other big chains.

This may be down to Tesco's size; it has a market share of around 30%, or more than Sainsbury's and Morrisons combined. But even factoring that in, it still seems to lead by a long way.

Initially, we regarded these silly offers as just that – the result of a fat finger on a keyboard, a local manager who couldn't add up, or the like. But the pizza deal was more puzzling. It was sent in on the same day by readers in Edinburgh and south-west England.

Evidently, it wasn't a local error, but something that had been concocted centrally. Did it mean the stone-baked pizza lovers of Britain had been systemically over-charged if they popped two margheritas in their basket?

Tesco assures us this is not the case. A weary sounding press officer, evidently accustomed to dealing with questions about weird pricing, says the key word in what might otherwise appear to be a daft deal is "any". He tells us that, in this case, there should have been other pizzas on the shelf which would have been priced at more than £3, so the two-for-£6 deal could have made sense.

But what if a shopper did buy two of the £2.85 margheritas? Would they be charged £6? Again, an emphatic "no". The tills will automatically charge the lower price, we were told. (Please, readers, confirm this is the case.)

We decided to check some other of the daft deals received in recent weeks. A one-litre Alpro Soya Cholesterol Lowering milk pack at Tesco said "72p. Any 3 for £3". But looking into this brought us to a new level of daftness – and prompted us to ask if shoppers who buy groceries online from the supermarkets are getting a poor deal.

Sure enough, Alpro Soya comes in numerous (differently priced) versions: organic, chocolate, unsweetened, calcium etc. On Tesco's website, all were retailing for more than £1, so "any 3 for £3" was indeed a good deal.

But the promotional deal didn't exist online. Indeed, even the cholesterol lowering variant, which our reader had found in Cardiff Tesco at 72p, was priced at £1.45 online. Could it be true that buyers online were being charged nearly double compared to in store? It would go against everything Tesco says about its prices being the same from Inverness to Penzance, in store and online.

This one stumped Tesco for a while. Eventually, it returned with an explanation. The picture came in on 4 February, and the tag showed the deal running to 7 February. Our online check (which showed there was no three for £3 deal) was done on 7 February, but it appears Tesco removes the online deals one day before they are taken out of the stores. That's because if you buy online, you can only do so for delivery tomorrow, when the price will be higher. Head-scratching stuff, but it just about makes sense.

Still, I have a nagging doubt about online grocery shopping. Do you get the deals? Are you palmed off with veg that's super-close to sell-by dates? Let us know at money@guardian.co.uk.

• Consumer affairs
• Tesco
• Supermarkets
• Retail industry

In the town's Golf Green area, more than a third of 16- to 24-year-olds claim jobseeker's allowance

Angela Pace has been sending out dozens of job applications a week, with little luck. So far, she says, she has not even been invited to an interview. The 17-year-old finished secondary school two years ago with a clutch of GCSEs and had wanted to become a plumber. Unable to get on a vocational course or apprenticeship, she drifted aimlessly – until her mother threw her out.

"Mum told me to leave. I have three younger brother and sisters and she had to look after us all. She didn't work. It was too much of a struggle. She said: 'Get yourself a job and get on with your life.' But you cannot get a job without experience and you cannot get experience without a job."

Living on £50 a week in income support, Angela has spent more than a year sofa-surfing with "mates, my nan and uncles" who live just off the sandy beaches of the Tendring peninsula in north-east Essex.

While rising and persistent joblessness among young people in Britain is now setting off alarms across the political and economic spectrum, nowhere is the impact of youth unemployment felt more acutely than here in Jaywick, at the shabbier end of Clacton-on-Sea.

According to data collected for the Commission on Youth Unemployment, chaired by the Labour MP David Miliband, in the Golf Green area a third of 16- to 24-year-olds claim jobseeker's allowance, earning this desolate collection of homes laid out in tight rows the dubious honour of the nation's youth unemployment hotspot. Nationally, the figure is just 6%.

The report, produced by Acevo, which represents the biggest charities in Britain, says that "youth unemployment has reached emergency point" with one in five young people not in employment, education or training (neet). A quarter of a million have been unemployed for more than a year.

The national economy has to pick up the tab of higher benefit payments, lost income-tax revenues and wasted capacity. Acevo calculates that in 2012 youth unemployment will cost the exchequer £4.8bn – more than the budget for further education for 16- to 19-year-olds in England – and cost the economy £10.7bn in lost output.

Paul Gregg, a Bristol University economist who was a member of the commission, says youth unemployment leaves a "wage scar" that can persist into middle age: the longer the period of unemployment, the bigger the effect. He says that every year spent unemployed as a youth leads to a 10% drop in wages in your 30s. "You are not getting stable jobs with a long-term career. That leads to stress and health problems. The problems linger."

Although youth unemployment has been exacerbated by the crash of 2008, it first emerged as a problem in 2004 as the sectors that tend to employ young people – shops, motor trade, hotels and restaurants – began to shed staff. From 2004 to 2007, these industries lost 200,000 jobs at a time when the number of young people looking for a job rose by more than 100,000 a year.

Miliband admitted to the Guardian that Labour had taken its eye off young people. "We focused on lone parents and disability. So, yes, we missed that. This government has made all sorts of announcements but there's little detail on what they plan to do to get more employment."

Gregg says that all is not lost. "The British economy can create jobs for young people. When we had a brief period of growth in 2010, youth unemployment fell. The British economy creates jobs when there's demand. It's just we don't have any demand right now and things look pretty bad."

Many youth unemployment hotspots identified by the commission are in former coal mining areas in south Wales or where heavy industry collapsed in the north-east of England. What Jaywick shares with these areas is simple: there aren't any jobs.

There hasn't been a big local employer on this part of the Essex coast since Butlin's holiday camp closed down in 1983. Most of the work around today is seasonal – in the funparks or caravan sites that dot the coast. Geography doesn't help. The nearest big town, Colchester, is nearly 30 miles away.

To make matters worse, the government's cuts have begun to bite. The Connexions centre, the Labour scheme that gave teenagers help to find jobs and training, was closed down last year and replaced by three staff offering careers advice to 140,000 people. Dan Casey, the Labour councillor for Golf Green, says that the area is already officially one of the most deprived in Britain. "We know it's bad here. Trust me, we can do without the publicity. People here need jobs, not lectures about getting on your bike."

Ask Diane Boyd, the manager of a local charity, Signpost, helping young people find employment in Golf Green, what type of jobs young people do get and she's quick to reply: lifeguards. "I have got three interviews for the first five young people who did a week-long intensive lifeguard course. One of them is for Ipswich swimming pool. That's 40 miles away. Word spreads quickly, though – now I have 26 people applying to do the course."

Signpost operates out of a small community centre in Brooklands on the fringes of Golf Green. Under a bright yellow sign carrying the incongruously optimistic slogan "A smiling face makes this a happy place", sit Benjamin Kelly, 19, and Harry Murray, 16. Harry's one of the lucky trio to get an interview as a life-guard. "I will be very happy if I get the job. I'd rather be a mechanic but you've got no choice these days."

Kelly has tried his hand at a variety of roles: mechanic, bricklayer, painter and chef – picking up a variety of qualifications along the way. Worldly wise, he has steered away from the temptations of drink and drugs that dull the expectations of many Jaywick youth. "I know there are plenty of people who will rob to get that next fix or smoke the day away. But that's a total waste."

In the past, Kelly could work on building sites "for cash" but that's no longer possible as no one now is hired without a health and safety card. He would rather not be "exploited" by unscrupulous cafe owners who offer him £30 for a 10-hour shift on the seafront. Because he's been unemployed for almost nine months, Kelly has to do a placement with the government's Work Programme.

"If I don't go on the [Work Programme] I lose my benefits. I don't mind if it gets me a job. I want to work. When I was a chef, I was on £200 or £300 a week. On jobseeker's allowance I get £50 a week. That's not enough money to live on."

• Young people
• Unemployment
• Benefits
• Job losses
• Economic policy

Eurozone members defer bailout asking Greek ministers to commit to even deeper cuts to public spending

Growing up is about learning how to do risky things safely. The same should be true of the law

There is a well-understood balance between protecting people from risk, and making available the information that allows them to make their own decisions. There is also a growing recognition that too many rules may lead to unintended consequences, that rather than liberating people from danger they can constrain us inappropriately or distort the risks we take. It is better, for example, to be advised of a wet floor than to be bossed about not running. A cheer, then, for Sainsbury's decision to remove the injunction to "freeze on day of purchase" on its fresh produce, a move it believes could save an astonishing 800,000 tonnes of food a year. More contentiously, the practice of separating pedestrians from other road users, it is said, can make cars more rather than less dangerous to people on foot or bike. Experiments are under way that put everyone in the same space and ask them to make their own judgment about safe behaviour. Drivers are said to be infinitely more considerate in such circumstances, although it may not always feel like that to pedestrians. Removing the minatory warnings of officialdom while ensuring essential information is available should not be impossible. For example, fresh food could carry a picked on/cooked on date, a sentence of storage advice and a best-before date. If you think you can dive safely in 2m of water, you should make the judgment yourself. Growing up is about learning how to do risky things safely. The same should be true of the law.

• Food & drink
• Food & drink industry
• Food security
• Supermarkets

UK biotech firm's licensing deal on slow-release drugs with Tris Pharma sees £69m pledged in oversubscribed fundraising

uShares in Vernalis have surged after the biotechnology firm sealed a key deal with US company Tris Pharma to develop slow-release cough and cold medicines. The arrangement cheered investors, who pledged three times the company's £20m market value in a fundraising.

The chief executive, Ian Garland, hailed the licensing deal as a transformational move that would turn the drug developer into a pharmaceutical group with up to six new cough and cold treatments and its own salesforce to tap into the $2bn (£1.27bn) US market. At present, Vernalis's best known drug is Frovatriptan for migraines.

The Reading-based firm was formed from parts of troubled industry pioneer British Biotech, which was once one of the most promising UK biotech companies before suffering a series of setbacks, most notably the Food and Drug Administration's rejection of Frova as a treatment for menstrual migraine in the US in 2007.

"We have waited a long time for a deal of this nature, and are delighted that the company has finally executed," said Shawn Manning and Elizabeth Klein, analysts at Singer.

The shares leapt 28% to 25.2p on the news.

Privately owned Tris will develop new formulations of existing slow-release, longer-lasting cough and cold medicines, in return for staged payments and sales-based royalties from Vernalis. Once the drugs have been approved by the US regulator – which could happen in 12 to 24 months' time because the efficacy of Tris' extended-release liquid technology has already been proven – Vernalis will hire 120 to 200 sales reps to market the medicines to American doctors.

"They [Tris] have a broad range of products already validated with the FDA to show their technology works; their products have been used by millions of patients," said Garland, who joined Vernalis in 2009 after turning around Acambis and selling it to Sanofi-Aventis. "This is a dramatic change to the pipeline for Vernalis."

There are 35m prescriptions for cough and cold remedies in the US every year and there is only one slow-release product on the market, UCB's Tussionex.

Vernalis' fundraising at 20p a share, which also came on Friday, was heavily oversubscribed, a spokesman said. Vernalis raised £65.9m after costs to fund the partnership with Tris and give it a warchest for similar future deals.

Vernalis is also developing a cancer treatment with Novartis, which the Swiss pharmaceutical firm flagged as a potential blockbuster drug last summer, with sales of more than $1bn a year. Vernalis would earn royalties of 4% if the drug proves successful, although it will not be filed for regulatory approval before 2015.

• Pharmaceuticals industry
• Drugs
• United States
• Shares

Populist Laos party warns $130bn deal would 'cause more poverty' and attacks Germany's influence over Europe

The Greek government appeared increasingly shaky on Friday night as its junior partner, the populist Laos party, said it would not support a controversial €130bn (£108bn) loan agreement for the crisis-hit country and several senior ministers resigned.

Reflecting mistrust between debt-stricken Athens and its foreign lenders, the party said the mission chief from the International Monetary Fund, Poul Thomsen, one of the accord's chief architects, should instead be declared "persona non grata".

"We are not going to vote [the package] through," said the Laos leader, Georgios Karatzaferis, ahead of Sunday's make-or-break parliamentary vote on the deeply unpopular wage, pension and job cuts in the deal sponsored by the EU and IMF.

Far from rescuing Greece from bankruptcy, the draconian conditions attached to the financial lifeline would doom it to further poverty, he insisted.

"What has particularly bothered me is the humiliation of the country," he said referring to the refusal of foreign creditors, in particular Germany, to part with any funds before Greece found ways of saving a further €325m, despite the agreement being sealed.

Athens has six weeks to find €14.5bn to cover loans it must repay in March.

"Clearly Greece can't and shouldn't do without the European Union but it could do without the German boot," said Karatzaferis, an unabashed nationalist. "If we want things to go forward, Poul Thomsen must be declared persona non grata for Greece."

Tonight the Greek cabinet endorsed the controversial loan agreement but it is Sunday's vote that will cement Athens' future in the eurozone. Despite waning patience with Greece in Europe, Karatzaferis said the entire EU was suffering under Germany's hegemony.

"Germany decides for Europe because it has a fat wallet and with that fat wallet it rules over the lives of all the southern countries," he said. "Decisions aren't taken in Brussels but from a tower in Berlin from where Merkel co-operates with her satellite countries, the Netherlands, Austria, Finland and unfortunately also Luxembourg."

The extraordinary outburst intensified the political uncertainty engulfing Athens. The technocrat prime minister, Lucas Papademos, was appointed to the helm of a "national unity" government in November to arrange the bailout. Laos's decision to break ranks and withdraw support exacerbated the economic deadlock and sense of mounting confusion in the capital after days of wrangling over the deal.

Papademos began the arduous task of reassembling his cabinet after several ministers stepped down in anger over the austerity measures. Four Laos deputies in his government also tendered their resignation.

Popular fury over the belt tightening spilled onto the streets again as a mass demonstration erupted into running battles between riot police and protesters, and a 48-hour strike shut down the country for a second time this week.

Recalcitrant MPs, in interviews on radio and TV, voiced ambivalence over the conditions attached to the rescue package saying they were as bad as bankruptcy.

Several leading parliamentarians questioned whether, in good conscience, they could endorse the rescue package. "If we accept them we'll be setting in motion the bankruptcy of our country," said Odysseus Boudouris, an MP with the socialist Pasok. "Bankruptcy will be bad for Greece but it will also be bad for Europe, too."

Austerity measures over the past two years, including a barrage of tax rises and wage and pension cuts, have plunged Greece into its worst recession since the second world war. Unemployment exceeded one million this week, hitting a record 20.9%. Manufacturing has all but collapsed with many companies moving across the border into Albania and Bulgaria.

Announcing her resignation as deputy foreign minister for European affairs, Mariliza Xenoyiannakopoulou, a Pasok stalwart, captured the rising panic among Greece's political class.

"Unfortunately the troika and the institutions which it represents have not taken into account the lessons [gleaned] from the first memorandum," she said, referring to the bailout Greece received from the EU, ECB and IMF in May 2010.

"Because, beyond the weaknesses and delays there have been in implementing corrective changes, they [the troika] are attempting to impose measures which ultimately will dramatically increase the recession and push society into ever greater despair."

The coalition government and the political parties backing it had come under intense pressure to put their commitment in writing to the cost-cutting demanded in return for rescue funds. The latest bailout agreement also contains a private sector bond swap that will slice €100bn from the country's €350bn debt pile in the hope of bringing it down to 120% of GDP by 2020.

Ahead of general elections possibly as early as April, Karatzaferis, whose popularity has plummeted since Laos joined the government, and Antonis Samaras, who leads the conservative New Democracy party, have balked at doing so. Late on Friday it remained unclear whether Samaras, whose popularity has shot up on the back of fervent opposition to the fiscal remedies, would sign the loan deal.

With anti-German sentiment rising in Greece, it was yet another case of political posturing in the debt drama.

• Eurozone crisis
• Greece
• European monetary union
• Europe
• Euro
• European Union
• Economics
• Banking
• European banks
• Financial crisis
• Financial sector
• Lucas Papademos
• Germany
• IMF
• European Central Bank

The cuts strategy is not working in Greece: not economically, not socially and certainly not politically

What's Greek for constructive dismissal? Because that's an apt term to describe how Greece is being treated by the other members of the eurozone. Consider: party leaders in Athens have spent days agonising over how to make €3bn (£2.5bn) of extra spending cuts (or over 1% of Greek GDP), apparently essential to qualify for the next round of loans from the EU and the IMF (these are relatively high interest loans, not a free bailout). After drawing up a list of painful reductions, including a 20% cut to the minimum wage and public sector job losses, the Greeks were told this week to go away and find another €300m. Or consider the insistence by Luxembourg prime minister Jean-Claude Juncker that Greece's politicians must turn these cuts into law, without allowing the public a vote. This is reminiscent of the disclosure last month that Germany wanted to install a European commissar in Athens to oversee Greece's budget-setting process. And here's the clincher: consider the number of briefings in Berlin suggesting that were Greece to leave the euro it would not be such a calamity.

Official or unofficial, on the record or off, the message from all these communications is much the same: Greece does not deserve the full suite of democratic policymaking; nor does it merit the kind of consideration that would be given to any heavyweight economy. At one level, of course, this is simply what happens to bankrupt countries. Countless Asian and Latin American nations have undergone the same torture at the hands of the IMF. The big difference here is that this is happening in Europe, within a single-currency club that was meant to protect its members from such indignity. There are two main problems with this constructive dismissal strategy. First, it is indefensible to the Greeks – and indeed to anyone else who follows the economics. Second, if these tactics don't come off the very existence of the euro will be imperilled – all over again.

It must be obvious by now that the cuts strategy is not working in Greece: not economically, not socially and certainly not politically. To take three numbers from this week, industrial production in Greece dropped over 11% in December from a year ago, while 20.9% of all adults are now out of work – and just about half of all young Greeks are also on the dole. In a corner of the eurozone, one member is going through an under-reported depression – and it is one that has largely been imposed on it by its neighbours. The severe austerity ordered on Greece by the troika of IMF, the EU and the European Central Bank was never going to improve the country's growth prospects; it has also failed in its own terms of reducing the national debt pile. No wonder then that the country is racked by regular protests, or that ministers are quitting the coalition rather than get pushed out of power by their constituents. Four senior Greek MPs resigned from government yesterday and it is a fair bet that more will go before the end of next week. The northern-European strategy of forcing Greece's caretaker government to go faster and harder on spending cuts is meanwhile feeding support for extremist parties.

The gamble for the rest of Europe is this: what if Greece does go? The calculation between the constructive dismissal strategy is that the euro will get back to business as usual. There is every reason to believe it won't. If Greece goes, investors will speculate that Portugal will be next. There will be much testing of the eurozone's famous firewall that's meant to protect Italy and Spain from the contagion. And in any case, companies and banks have abandoned the idea that a euro is a euro, wherever it is kept in the eurozone. Vodafone reportedly takes all spare cash out of Greece every night; and other multinationals are meanwhile preparing contracts accounting for a break-up of the single currency. It would be a brave gambler who wagered that this crisis could be contained.

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

City bonus pool forecast to total £4.2bn for last year, down from £6.7bn in 2010 – and £11.6bn before the crash

"We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector." The Conservative party has not traditionally been seen as a scourge of business, but when David Cameron and Nick Clegg unveiled their coalition programme, this pledge was virtually the first in the document.

Almost two years later, is it possible that a change has been wrought? First António Horta-Osório, the chief executive of Lloyds Banking Group, decided to waive his 2011 bonus, followed by Stephen Hester at the Royal Bank of Scotland and Sir David Higgins at Network Rail. All three organisations are wholly or partly dependent on the taxpayer – and Hester and Higgins were under intense political pressure to forgo their money – but on Thursday, when Tom Albanese, the boss of London-listed mining group Rio Tinto, waived his bonus too, questions were being asked about whether such sacrifices had spread well beyond the public sector.

Except that Albanese waived his bonus for a very specific reason: a takeover had not gone as planned – the bid for aluminium producer Alcan – and forced the company to take a $9.3bn (£6bn) charge. Rio, which incurred pay protests from shareholders in 2010 and 2011, was no doubt mindful of the risk of another protest at an annual meeting – as evidenced by remarks from Ivor Pether, senior fund manager at Royal London Asset Management on Friday, who hit out against the remuneration committee, which sets bonuses. "The onus should really be on this committee to exercise its discretion and withhold bonus awards when there is deemed to be strong justification for doing so, rather than relying on the integrity of the executives to step up to the plate," said Pether.

And attempts by Barclays to demonstrate pay restraint on Friday – arguing that bonuses were down 48% for executives and its eight highest-paid employees – also backfired.

But according to the Treasury, shrinking bonuses are a trend. The City bonus pool is forecast to be £4.2bn for 2011-12, compared with £6.7bn in 2010-11 and £11.6bn in 2007-08. And as part of Project Merlin – the "armistice" between the government and the banks that traded promises on tax stability for assurances on pay and lending – banks agreed to show "responsibility" and to make bonus arrangements more transparent.

"We are not going back to the days when bankers received bonuses worth hundreds of thousands of pounds in cash when no one knew what risks they were taking," says a Treasury source.

The Treasury is not the only institution claiming some of the credit for bonus restraint. "We believe that the work that Compass, and the work that the high pay commission did, have transformed the national debate," says Gavin Hayes, general secretary of Compass, a leftwing pressure group that used to be better known for its idealism than its influence in the corridors of Whitehall. But Compass set up the independent high pay commission, which published a report last year. Clegg praised it lavishly and many of its recommendations were accepted when Vince Cable, the business secretary, announced plans to control executive pay last month. "The High Pay Commission has set a direction of travel that all the parties have, in one form or another, adopted," says Hayes.

Up to a point. Ed Miliband, who claims ownership of the "responsible capitalism" agenda, has accepted all 12 of the commission's conclusions and has criticised Cable for not backing its call for workers to be included on remuneration committees.

In a speech this weekGeorge Osborne, the chancellor, took a veiled swipe at Labour by attacking those "trying to create an anti-business culture in Britain". Miliband retaliated on Thursday, after Downing Street said it would not be commenting on the forthcoming Barclays bonus payments, by saying: "Some argue that it is not business of the public what bonuses banks pay. I fundamentally disagree."

But Labour and the government have both put transparency at the heart of their strategy for curbing bonuses and some believe the gap between the two sides on this is rather narrow. "It's more a difference of rhetoric," said one expert in this area at a big City organisation who asked not to be named. "Clearly there nuances where the policy is different, such as whether you have employees on remuneration committees, but in my view that's the type of measure that would not make much difference."

Project Merlin may have done something to curb bonus payments, but even at the Treasury, sources admit that City firms are also responding to public pressure. "In the past 18 months attitudes to executive pay have hardened, because people now recognise what a difficult economic environment we are in," says Deborah Hargreaves, the former Guardian journalist who chaired the high pay commission. She cites recent research showing that only 7% of people think that a FTSE 100 chief executive should be paid more than £1m a year; in fact, the average is £4m.

In the City this has not gone unnoticed. "I think everyone is aware of the sensitivities around pay at the moment," says Robert Talbut, chief investment officer at Royal London Asset Management and chairman of the investment committee at the Association of British Insurers, whose member companies are major stock market investors. He thinks attitudes to bonuses are changing for good.

"While some may take the view that is temporary, others believe this as a permanent change in the environment. Some people are hoping that improving economic growth and markets will cause everyone to forget about it. I think this is an incorrect view and that remuneration is going to remain a sensitive topic which has the potential to continue to damage the standing of companies," says Talbut.

Others are more sceptical. "What has undoubtedly changed is public perception," says Roger Barker, head of corporate governance at the Institute of Directors, which last year said that the reputation of British business was "significantly damaged" by pay packages not linked to performance. "It was public opinion that put pressure on [people like Hester]. But whether the underlying attitudes of executives who are working in these large companies have changed is as yet unascertained," he says.

John Philpott, chief economic adviser of the Chartered Institute of Personnel and Development, is also cautious. "There is nothing in the system about preventing a return to [business as usual]. There doesn't seem to be any political momentum for that to change. I don't see anything in the proposals that the government is bringing forward, as they are still talking misguidedly about pay being related to performance."

Philpott says that after the banking crisis of 2008 the markets were hit by "doom and gloom about the end of capitalism". But soon there was a return to business as usual, with the phrase "BAB" – bonuses are back – soon echoing through the City.

Cable suggested he was accepting 10 out of 12 of the commission's recommendations, but many he accepted only "in spirit". Hargreaves says that the three core proposals – dramatic simplification of pay, workers on remuneration committees and a permanent high pay commission – were ignored. "We still think there's some way to go," she says.

The coalition promised to tackle "unacceptable" bonuses. But what's "unacceptable" still remains undefined.

• Executive pay and bonuses
• Lloyds Banking Group
• Banking
• Barclays
• Royal Bank of Scotland
• Stephen Hester
• António Horta-Osório
• Bob Diamond
• Tom Albanese
• Rio Tinto
• Nick Clegg
• Vince Cable
• David Cameron

FTSE 100 finishes the day 43.08 points lower at 5852.39, a 50-point drop on the week

Struggling Cable & Wireless Communications slumped nearly 17% after it warned its full year results would not meet expectations.

The company said its business in Panama was facing increased competition and lower demand from corporate clients, and its earnings there would be around $254m (£160m) rather than the $270m-$295m it had been anticipating. It also had problems in Jamaica, and planned to write down the value of that business in its full year figures.

The news sent its shares tumbling 7.24p to 36.33p. In a sell note Rory Stokes at Liberum Capital said: "[A recent] refinancing has bought breathing space, but the very low cash generation of this business and the structural pressures it faces makes the net debt position look daunting and the dividend precarious."

After remaining steady for much of the week, despite the Greek crisis, the market came close to giving up the struggle yesterday afternoon. The FTSE 100 finished 43.08 points lower at 5852.39, a 50-point drop on the week.

Mining shares were among the leading fallers, both on the eurozone's economic problems and on renewed worries about a slowdown in China, a key market for commodity companies. According to the country's latest trade data, imports fell 15.3% year on year in January, raising new concerns about the state of its economy. In particular, copper imports dropped 18.7%.

Despite the takeover developments in the sector – Glencore and Xstrata – investors are taking the cautious view. Anglo American dropped 113.5p to 2746.5p, Kazakhmys fell 53p to £11.24 and BHP Billiton lost 57.5p to 2057.5p.

Icap lost 14.8p to 366.6p after Goldman Sachs downgraded the interdealer broker from buy to neutral. Icap's smaller rival Tullett Prebon also came under pressure, down 17.8p to 310.7p.

Aviva fell 8.7p to 361.3p on reports the insurer has postponed a potential sale of its stake in its loss-making Taiwan joint venture, because of regulatory disapproval.

Elsewhere Next added 14p to £27.33 after Deutsche Bank analysts raised their recommendation from hold to buy and their target price from £28.25 to £31: "We expect another steady year of earnings per share growth and attractive total shareholder return."

Online grocer Ocado fell 4.2p to 106.4p. A year ago exactly the John Lewis pension fund sold its remaining 10.4% stake for 265p a share, raising £152m.

Inmarsat lost 11.5p to 458.6p after climbing sharply earlier in the week on bid speculation. Traders suggested the satellite operator could be a target for GE, EADS or private equity.

Life insurer Phoenix fell 80.5p to 561p after calling off takeover talks with private equity group CVC.

888, earlier in the week reporting its highest quarterly revenues, was steady at 55.75p despite being one of 10 online gaming businesses put on a draft list of companies that could be excluded from operating in Belgium. Analysts at Daniel Stewart said: "The revenue 888 derives from this market is insignificant."

• Cable & Wireless Communications
• Stock markets

Banks promised to lend at least £76bn to small businesses under Project Merlin deal but only £74.9bn was handed over

High street banks have missed government-imposed targets for lending to small businesses, sparking a row over last year's Project Merlin deal and raising concerns about the health of the economy.

The British Bankers' Association, representing the five banks which signed up to the Project Merlin deal to lend £190bn to businesses last year, admitted that while the banks had promised to lend at least £76bn to small businesses only £74.9bn had been handed over.

The BBA said the banks had "met their overall business lending commitments" by lending £214.9bn in total during a year in which demand for loans was weak.

But Lord Oakeshott, the Liberal Democrat peer who resigned a year ago as his party's Treasury spokesman in the Lords over the Merlin agreement, described the banks' record as "pathetic" and regarded the use of the word "overall" as hiding the true picture.

"Who do they think they are fooling with this specious spin? The Bank of England on Monday will give the real grim picture of some banks' damaging failure to meet their small business lending promises under Project Merlin and their cynical attempts like this at a cover up," Oakeshott said.

Industry sources say the bailed out Royal Bank of Scotland is behind on its targets although Peter Ibbetson, chairman of the bank's small business operations, said this was not the case.

Stephen Hester, the RBS chief executive, said last week that his bank's lending would be greater than all its rivals combined. "Forget Project Merlin and how it's defined - that's damned impressive," he said.

There was no official bank-by-bank breakdown of lending during 2011 – and neither was there precise information about what had happened to net lending – which would show whether the amount being lent out was greater than the volume of loans being repaid. Mark Hoban, financial secretary to the Treasury, said the figures were good news as lending had increased by 20% over the past year as a result of the Merlin agreement, with lending to small business also up by 13%.

John Walker, national chairman of the Federation of Small Businesses, described the total figures as disappointing. He added: "It is even more disappointing, given that the Project Merlin targets were set artificially low in the first place.

Perhaps if the banks were to lower the cost of borrowing and play fair by the small business community then more money would be lent.

"As it is, more than a third of FSB members feel that they have missed their growth opportunities and fear being uncompetitive as a result of not being able to access finance," Walker added.

He called on the government to implement the credit easing scheme – intended to hand out £20bn of government guaranteed loans – that was promised in the chancellor's autumn statement.

The shadow business secretary, Chuka Umunna, warned that too many businesses were going under while the government continued to thrash out how credit easing would work.

"Last week we learned from the Bank of England that net lending to businesses has fallen by over £10bn in the last year and was negative in nine out of the last 12 months. As well as raising taxes and cutting spending too far and too fast, ministers are failing to get the banks to lend which is hitting business confidence, choking off growth and stalling job creation," Umunna said.

Individual banks scrambled to insist they had met their targets, which were based on gross lending rather than the net number that would show clearly whether there had been overall contraction of credit.

Bob Diamond, the Barclays chief executive, was publicly asked twice on Friday to provide details of the bank's performance on net lending and was unable to provide the information. He would only reveal that lending to all non-financial business was up 3%, compared with an industry-wide reduction of 5%.

"We really got on our horses to get businesses going," Diamond said.

Barclays later said net lending had been "flat" – that is the amount of new loans was the same as loans being repaid

Diamond expressed concern about the lack of confidence among businesses, which he said were holding high cash balances that they were refusing to spend.

He stressed that RBS, which has a market share of SME lending of around 28%, had been responsible for nearly half of all the loans to small businesses in 2011 – and that the bank had lent more than two and half times lent by its nearest rival, the bailed out Lloyds Banking Group.

John Maltby, commercial director at Lloyds, said the bank had lent £12.5bn to small businesses, against a target of £11.7bn. "We've grown our net lending during a time when, across the industry, net lending has slipped into reverse," Maltby said. Santander lent £4.3bn – exceeding the £4bn target, while HSBC said it had exceeded targets for £38.8bn of lending facilities to UK business customers and lent £11.7bn to small businesses.

• Banking
• Banking reform
• Financial sector
• Small business

Labour says proposals being considered as it announces policy review headed by former chief of National Consumer Council

Labour is examining proposals that would enable consumers to band together and seek redress from a firm they believed had cheated them through a class action, Chuka Umunna, the shadow business secretary, said on Friday.

Umunna said he was seriously considering the proposal as he announced a consumer policy review which will be headed by Ed Mayo, the former chief executive of the National Consumer Council.

Labour believes creating a class action framework would make it easier for those affected by issues such as the PIP breast implant scandal to fight for compensation. Class action lawsuits are common in the US and Australia, but in the UK the legal framework is different and opportunities for collective redress are more limited.

Ed Miliband recently said he wanted Labour to be "champions of the consumer", and the consumer policy review will look at ways of "putting consumers in the driving seat and ensuring markets work fairly for businesses and consumers alike".

Mayo, who will hold hearings around the country, will consider in particular high-profile cases involving complaints of consumers being ripped off, including payment protection insurance (PPI) mis-selling, hidden fees for pensions and credit cards, and energy price hikes.

"We need to change the rules of the game to stop business and consumers getting a raw deal," Umunna said. "Labour's consumer investigation will look into ways that we can empower consumers, back responsible business, underpin fair markets and end the rip-off culture which too often has faced consumers."

Mayo said: "The best businesses take the high road and live up to their promises for consumers, but in tough times, many more are doing the opposite – with poor service, new charges and lock-in contracts designed to cut people's choice.

"The investigation will hold evidence hearings involving key stakeholders across the business and consumer landscape with the aim of looking at the best ways of getting rid of this consumer con culture and to reward the companies who put their customers first."

Last month Miliband used a newspaper article to set out his determination to attack what he described as Britain's "rip-off consumer culture". He says defending consumer interests is part of his strategy of championing "the squeezed middle".

In particular he identified six areas where consumers were being unfairly treated: fees for savers that are not transparent; parking charges at stations, which in some areas have risen sharply; airline charges not disclosed up front; excessive bank charges; charges for consumer helplines; and energy charges.

• Labour
• Consumer rights
• Ed Miliband
• Consumer affairs

• Finance minister says Greece must decide by Sunday
• Street violence returns as ministers call bailout terms 'extortion'
• Merkel warns of default's 'uncontrollable consequences'

Greece is facing an acute political and social crisis this weekend as the bankrupt state prepares to decide whether it can stay in the single currency.

As riot police clashed with protesters on the streets of Athens, and five ministers resigned in protest at the scale of the spending cuts demanded in return for a new €130bn (£108bn) bailout, Evangelos Venizelos, the Greek finance minister and socialist leader, said the country had until Sunday to choose whether to swallow the eurozone medicine of more cuts – or default on its debt next month and be forced out of the euro.

In an emotional speech he said: "The choice we face is one of sacrifice or even greater sacrifice – on a scale that cannot be compared. Our country, our homeland, our society has to think and make a definitive, strategic decision. If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the programme approved."

Police ringed the Greek parliament building following the failure of eurozone finance ministers to approve the new bailout for Greece. Prime minister Lucas Papademos had offered new austerity measures worth €3.3bn to secure the euro lifeline, but he was told the cash would not be forthcoming until savings of an additional €325m were identified. He was told to get the €3.3bn programme endorsed and come up with a plan for the new cuts – to plug a gap in this year's budget – by Sunday.

George Karatzaferis, a Greek coalition leader, spoke of national humiliation and said he would not accept the new cuts, adding that Greece was labouring "under the German boot".

The scenes of violence in Athens shattered the mood of calm that has characterised the financial markets this year. The French and German stock markets closed down around 1.5%.

The anger from the extreme right in Greece was echoed on the left where a resigning socialist minister accused the eurozone of "extortion" in its policies towards Athens.

In Germany, Angela Merkel was reported to have warned her centre-right MPs of "uncontrollable consequences" for the eurozone should Greece become the first euro nation to declare sovereign default on its soaring debt. Her finance minister, Wolfgang Schäuble, told the same MPs, according to reports in Berlin, that Athens' latest pledges over spending cuts fell well short of what was needed.

EU ministers demanded that the three party leaders of the caretaker coalition under Papademos deliver signed pledges on the programme, making them binding and irreversible regardless of who wins an early general election expected in April.

"This certainly violates the sovereignty of the country and doesn't allow democratic choices to work," a government minister from a southern eurozone country told the Guardian. "But it's tough when you need the money."

Papademos told the cabinet, which endorsed the loan agreement tonight, the country had no choice – "our priority is to do whatever it takes to approve the new economic programme". Anyone who disagreed would have to leave the government.

The aim of the second Greek bailout in two years is to cut the country's debt from 160% of gross domestic product now to 120% by 2020. Ostensibly this is to be achieved by €130bn from the eurozone and the IMF, combined with swingeing spending cuts and tax rises and a write-down of debt by the country's private creditors through a debt swap pact halving the burden from €200bn to €100bn. But the €130bn is no longer viewed as sufficient and Schäuble was said to have told MPs that under Greek pledges the debt level would still be between 128% and 136% of GDP by 2020.

Separately, in an embarrassing admission captured on camera during a meeting in Brussels, Schäuble assured the Portuguese finance minister he would be prepared to adjust the terms of Portugal's €78bn bailout programme once the Greek situation was resolved – remarks viewed as incendiary given the tough line taken with Athens. "If there appears a necessity for an adjustment in the Portuguese programme we would be ready to do that," Schäuble said. Portugal's Vitor Gaspal replied: "That's much appreciated."

The eurozone's finance ministers are to meet again in Brussels on Wednesday to sign off on the bailout terms and the debt swap pact on condition that Athens has met the stringent conditions.

Karatzaferis, leader of the extreme right Laos party in the three-party coalition, said he would vote against the austerity package and was willing to quit the coalition in protest. "Greece can't and shouldn't do without the European Union, but it could do without the German boot," he said. "What has particularly bothered me is the humiliation of the country."

The other two coalition partners, the Pasok socialists and the conservative New Democracy, have a sweeping parliamentary majority and do not need Karatzaferis's 16 votes. The Pasok deputy labour minister, Yannis Koutsoukos, who resigned in protest on Thursday, accused the "troika" – officials from the European commission, ECB and IMF – of behaving "in an extortionate manner that is completely improper and shameless".

Without the new bailout, Greece will be unable to redeem more than €14bn of debt on 20 March, leaving the country in sovereign default and ushering in an even bigger crisis in the eurozone's distressed periphery.

• Greece
• Europe
• Eurozone crisis
• European Union
• European monetary union
• Economics
• Banking
• European banks
• Financial crisis
• Financial sector
• Euro
• Angela Merkel
• Protest

The bill is taking all the headlines, but many also question the president's oil deals that appear central to his rule

Uganda's president Yoweri Museveni has officially distanced himself from the noxious anti-homosexuality bill that has resurfaced in the country's parliament, saying that he cannot interfere in the country's democratic process.

This is ironic coming from a man who, after a distinctly sleazy election victory last year, ordered violent crackdowns on peaceful protests at rising food prices and proposed a new crime of "economic sabotage".

It is true that this is a private members' bill, introduced by the now world-famous David Bahati. It is also true that its proposed life-sentence penalty for "aggravated homosexuality" is popular in unashamedly homophobic Uganda. And for that very reason it is a convenient diversion from something that is much closer to the president's heart: oil.

Since 2006, international oil exploration companies have found 2.5bn barrels of recoverable oil reserves in Uganda and significant basins remain to be explored, so the eventual total may be higher. Production has not yet begun and, despite growing clamour from NGOs, civic activists and some MPs, the terms of the agreements between the oil companies and the government have not been made public.

In 2010, UK NGO Platform published a report, based on leaked drafts of the production sharing agreements, claiming that the contracts allowed excessive profits for the oil companies, and left Uganda bearing most of the risks. For the next 18 months, the government and Tullow Oil PLC, the Anglo-Irish company that found the oil, were at loggerheads over disputed tax payments. The government refused to renew licences or allow production to start. Tullow, which has also been experiencing technical difficulties in its Jubilee field in Ghana, saw a billion euro decline in its share prices.

The deadlock was broken a week ago, when the government and Tullow signed new deals on three oil blocks, opening the way for the company to finalise a production partnership with France's Total and China's CNOOC.

Full details of the new deals have not been disclosed but Tullow, under the pressure of its declining stock prices, has evidently made important concessions, including agreeing to an oil refinery in Uganda rather than exporting crude. It is likely that the terms of these deals are more favourable to Uganda than those offered by previous agreements.

But while this seems like a cause for celebration, Ugandan civic activists were outraged by the new deals, claiming that they were not merely lacking in transparency, but actually illegal. In a stormy debate last October, Uganda's parliament passed a resolution ordering a moratorium on all oil contracts until long-awaited petroleum and revenue management bills had been discussed and enacted. MPs also accused Tullow of bribery and demanded prosecution of three government ministers on related corruption charges.

Museveni's National Resistance Movement (NRM) has an overwhelming majority in parliament, which had long been seen as merely rubber-stamping presidential decisions. The parliamentary rebellion in NRM ranks showed, first, that ambitious younger politicians see Museveni as nearing the end of his shelf life and are jockeying for future positions. Second, it showed how deep and ubiquitous the mistrust and suspicion is of the man who has ruled Uganda for 26 years.

Many Ugandan intellectuals believe that Museveni needs oil revenues to sustain the personal patronage system that has increasingly characterised his rule, and that gets increasingly costly over time. The last thing he wants, they say, is transparency over oil agreements or a public debate about oil.

However, oil bills that have already been approved by the president's cabinet will be tabled in the current session of parliament. Their contents have not yet been made public, and civil society activists fear that they will be rushed through without proper debate or public scrutiny by MPs who, last week, were each given $44,000 for a new car. The basic pay for MPs in Uganda, where the median income is around $400 per year, is substantially higher than MPs in Britain.

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• Uganda
• Africa
• Oil
• Commodities