Guardian Business News

Inflation in the UK has fallen to 4.2%. Get the full data over time - and see how it compares to pay
• Get the data

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

Data journalism and data visualisations from the Guardian

• Search the world's government data with our gateway

• Search the world's global development data with our gateway

• Flickr Please post your visualisations and mash-ups on our Flickr group
• Contact us at data@guardian.co.uk

• Get the A-Z of data
• More at the Datastore directory
• Follow us on Twitter
• Like us on Facebook

• 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.

• Follow Comment is free on Twitter @commentisfree

• Uganda
• Africa
• Oil
• Commodities

Joblessness has surpassed 20% and the Greek Orthodox Church says it is feeding 250,000 people a day

The Eurozone finance ministers' message to Greece on Thursday night was stark: there will be no new bailout – and the Greek nation will go bankrupt – unless Athens finds a further €325m of budget cuts, on top of the €3.3bn of austerity measures already promised.

There will have to be yet more cuts in a country already reeling from an unprecedented squeeze on spending that has been accompanied by higher taxes.

And that, undoubtedly, will mean more customers at Klimaka, a red building in the heart of the capital that is a shelter for the homeless.

Few institutions have better first-hand experience of the impact of Greece's austerity measures – and few have better first-hand knowledge of Klimaka – than Lambros, an out-of-work plasterer who joined the ranks of Greece's unemployed when poverty caught up with him last year.

"From one day to the next, the economic crisis hit me," says the 55-year-old father of two. "Suddenly I was fired without any compensation from the company I was working at. Two months later I couldn't even afford my rent," he sighed. "All my savings had gone on paying medical bills for my late wife."

Evicted from his flat, the softly spoken plasterer then joined the thousands of Greeks, hit by job losses, wage cuts, tax rises and runaway prices, who have been forced to move outdoors.

"I didn't want to burden my children with my problems because they have problems, too. I didn't want to sleep on the streets either. So for four months I slept in my car," he says pointing to a battered, bag-filled Toyota outside the shelter. Until, that is, he could no longer afford petrol for the vehicle that had become his home. "Then I heard about Klimaka. But it was a big step asking them for a bed. I felt very ashamed."

A new underclass has emerged in Greece as the debt-stricken country, wrestling with the spectre of bankruptcy and the demands of international creditors, grapples with its worst crisis in modern times. A recession that began with the global financial downturn in 2008 but which has worsened dramatically as a result of EU and IMF-dictated austerity in the past two years, has left 20,000 Greeks without a roof over their heads, according to social workers and NGOs.

In a nation where joblessness is now more than 20%, with no family untouched by it, the sight of people sleeping on pavements and park benches, in metro stations and shopping arcades, doorways and cars, is the most visible sign yet of an economy in freefall. More than 10,000 people have been decanted on to the streets of Athens, home to the vast majority of Greece's 11 million population. The government has just announced emergency aid for the destitute and the Greek Orthodox Church has revealed it is feeding 250,000 people a day.

"Before the crisis, homelessness wasn't visible in Greek society and was very low compared to other EU countries," explained Ada Alamanou, Klimaka's spokeswoman. "But in the last few years it has increased by 25%. We call them the 'new homeless' because it is a rise that can be attributed solely to economic reasons," she said. "They are not people who have psychological problems or are suffering from drug and alcohol abuse. They are people who haven't been able to pay off their credit cards and mortgages. The crisis is hitting the middle class."

Even before Greece's debt drama, a fifth of its population lived under the poverty line with Greeks among the lowest income-earners in the EU. Now over a third can be considered officially impoverished, according to the statistics agency Eurostat.

As temperatures plunged to some of the lowest levels in living memory this week, municipal officials rushed to accommodate the homeless in hostels, hotels and other emergency centres. At night, groups of doctors and social workers took to the streets offering blankets and first aid. Educated professionals, too shamefaced to want to speak, now stand in line with immigrants from developing countries waiting for food handouts from the town hall.

"We are very close to this becoming a full-blown humanitarian crisis," said Giorgos Apostolopoulos, who heads Athens' municipal homeless shelter. "If these economic policies continue the situation will get a lot worse. It's shocking. Well-dressed people who own laptops and mobiles are finding themselves with nothing, out on the street."

Austerity has not only exhausted the Greeks. Anger is also mounting, evidenced by yesterday's protests. The prospect of more cost-cutting reforms – required, say creditors, to avoid a default in March when the country has to repay €14.5bn in maturing bonds – recently prompted Greece's spiritual leader, Archbishop Ieronymos, to warn of a "social explosion".

Making a rare public intervention in a letter to the prime minister, Lucas Papademos, he said: "Homelessness and even hunger – phenomena seen during the second world war – have reached nightmare proportions. The medicine we are taking has proved fatal for the nation. More painful and more unjust measures are now set to follow along the same, hopeless course."

Unions, too, have predicted that the reaction to yet more austerity will be "uncontrollable".

But in adversity, there has also been an extraordinary outpouring of solidarity. Klimaka's courtyard, like that of the municipal shelter, is brimming with boxes of blankets, clothes and food dispatched by other Greeks wanting to help their countrymen in need.

"The troika [debt inspectors from the EU/IMF and ECB] come and go," said Spyros Grigoratos, one do-gooder emerging from his BMW with sleeping bags and jackets for the refuge. "They fiddle with numbers and don't know or care about the real situation on the ground. The real answer is not more austerity. That way lies chaos."

For Greeks such as Lambros the latest measures are a wakeup call, but not for those who will suffer from them most. "If they want to take the last ten cents away from us, which they have clearly shown they want to do, they will have to pay the consequences. One fine day nothing will be the same again because people like me and them," he says pointing to others in the shelter, "will act."

• Greece
• Europe
• Eurozone crisis
• European banks

Every two minutes, someone in the UK faces losing their home. Proper advice and support must be there for those who need it

Father-of-three Peter Levenson is struggling desperately to hold on to his home. The former owner of a successful plumbing business, he began to fall behind with his mortgage when some of his customers defaulted on their payments. The resulting cash flow problems caused his business to fold in 2009 and since then his arrears have spiralled. Just last month, Peter was in court where he managed to fight off repossession by agreeing a payment plan that, for now, will keep him and his family in their home.

Behind Thursday's figures showing a fall in the number of repossessions – down by 9% to 8,500 last quarter – are thousands more people like Peter who are living on a knife-edge, facing a constant battle to keep a roof over their head. The same figures published by the Council of Mortgage Lenders show there are 54,000 households who have been in mortgage arrears for more than a year. Meanwhile, Shelter has seen a 38% increase over the past year in the number of calls to our helpline for advice on mortgage arrears.

We know from the people we see every day that living with the constant threat of losing your home puts enormous pressure on family life. Research has shown that the threat of homelessness is seen as more severe than being assaulted, burgled or going through a divorce involving a custody dispute. As Peter himself puts it: "The stress is dreadful. I wake up every day not able to turn off the worry. I don't want my children to end up homeless." Other figures show people are taking desperate measures like taking out payday loans or cutting back on heating and food for the family.

Some lifelines are available. Despite devastating cuts to the government's support for mortgage interest (SMI) scheme, it is still helping hundreds of thousands of struggling homeowners to stay afloat. That's why it's a real concern that the government is considering increasing the waiting period for SMI, making it harder for households to access support and stave off the bailiffs. Now is simply the wrong time to make people fighting for their homes wait nine and a half months before they can get help. For many, it will be too late to prevent them from getting into arrears, which could end in repossession. Cutting back the mortgage rescue scheme, which allows families who would otherwise be homeless to sell their home to the council and rent it back at affordable rates, was also a huge blow.

But with so many people languishing in arrears for longer, it's time more lenders considered other options to help those for whom, sadly, homeownership is simply no longer sustainable. When all other options have been exhausted, lenders could do more to support and help homeowners to sell up rather than dragging them through the costly and stressful eviction process. Research by the University of York found that assisted voluntary sales (AVS), where some lenders help struggling homeowners to sell their properties rather than repossess, has had positive results both for lenders and homeowners. Unfortunately not all lenders offer such a scheme and borrowers are naturally concerned about finding alternative accommodation, which is why we need lenders, councils and advice providers to work together to help those households out of an unsustainable situation where it's clear that all other options have been exhausted.

With wages flatlining and people from all walks of life feeling the squeeze, more and more people are going to struggle to make ends meet in the months ahead. Already, research by Shelter shows that every two minutes someone somewhere in the country faces the nightmare of losing their home, and as the director general of CML said only yesterday: "We are concerned that there will be a higher number of people facing more serious problems in 2012."

We need to make sure proper advice and support is there for those at risk of losing their homes.

• Follow Comment is free on Twitter @commentisfree

• Repossessions
• Recession
• Mortgage arrears
• Mortgages
• Homelessness
• Homes

• Tear gas fired during Athens protests
• Party leader refuses to support austerity measures
• Venizelos: Greece must decide whether to remain in the euro
• No disembursement without implementation
• Papademos tells colleagues to back bailout deal or go

6.21pm: After the comments from the Greek cabinet meeting, it's time to wrap the blog up for another week.

Amid protests on the street and disunity in the government, the country is still trying to get agreement on its austerity measures to enable payment of the next €130bn tranche of bailout funds.

The weekend could see a crucial vote on the cuts, with a possible cabinet reshuffle to follow. In any case Greece has to reach agreement by the time of a Eurozone meeting on Wednesday.

We'll be back on Monday morning to follow all the developments, so time to say thanks for all the comments and have a nice weekend.

5.55pm: Greek prime minister Lucas Papademos has told his cabinet meeting the country must do whatever it take to approve the €130bn bailout deal.

Defending his position amid a number of resignations - five so far it looks like now - he said any cabinet member who disagreed would have to go. According to Reuters Papademos said:

We cannot allow Greece to go bankrupt. Our priority is to do whatever it takes to approve the new economic programme and proceed with the new loan agreement.

It goes without saying that whoever disagrees and does not vote for the new programme cannot remain in the government.

He said there would be a sale of state assets worth at least €19bn up to 2015. And (heroically?) he spoke not just of austerity but of growth. The programme apparently sees a return to economic growth in 2013 and GDP growth of 2.5% in 2014 and 2015.

He reckons this is ambition but achievable......And he said those who thought default was preferable were wrong.

5.45pm: Now Fitch has waded in again to the Greek debate.

The ratings agency, which said last month the country would struggle to make its March bond repayments, has said it must secure an agreement about its bailout or face a disorderly default.

Now this may all be stating the obvious but it's chilling nonetheless. According to Bloomberg, Fitch said such a default could cause panic in the Greek banking system and cause contagion elsewhere, with Portugal and Ireland mentioned. Capital.gr reports:

"They must get this deal agreed really within the next few days to enable them sufficient time to do the paperwork and have the new bailout money disbursed before that bond is due," Tony Stringer, a managing director at Fitch, said in a conference in Singapore today. "If they don't manage to achieve that, then it could be in the realms of a disorderly default."

5.26pm: In a move which will surprise absolutely no one who's been following the long drawn out Greek drama, the proposed cabinet reshuffle has reportedly been delayed until Monday.

That means it will happen after Sunday's vote on the austerity measures (sorry for stating the obvious, there.)*

Meanwhile European markets have closed and it's not a pretty sight. Germany's Dax is down 1.41%, France's Cac is 1.51% lower and Italy is off 1.76%. The FTSE 100 finished 43.08 points lower at 5852.39, a 0.73% decline.

Athens fell more than 5% before recovering some of its losses to end 3% lower.

Meanwhile on Wall Street the Dow Jones Industrial Average is down 120 points at the moment, or nearly 1%.

* An update: talk now is the bailout vote itself might now not take place until Monday. Why am I not surprised?

4.44pm: We seem to be up to four resignations at the moment.

These are deputy foreign minister Mariliza Xenogiannakopoulou and three members of LAOS. According to Greek newspaper Etathimerini:

Transport Minister Makis Voridis, Deputy Merchant Marine Minister Adonis Georgiadis and Deputy Agriculture Minister Asterios Rondoulis tendered their resignation after LAOS leader Giorgos Karatzaferis said that he would not support the loan agreement following lengthy negotiations this week.

Apparently a cabinet meeting is due shortly which will be covered here (in Greek).

4.00pm: And the resignations apparently keep on coming. Greek TV is reporting deputy foreign minister Mariliza Xenogiannakopoulou is stepping down, while AP says two ministers have resigned. No more details on either, and at the moment it's not clear which two ministers AP is referring to.

There is growing talk that prime minster Lucas Papademos will announce a cabinet reshuffle...

3.49pm: Back with the US, it appears American consumers turned less optimistic about the economy in the early part of this month.

A Thomson Reuters/University of Michigan index of consumer sentiment fell from 75 in January to 72.5, less than the 74.5 level economists had been expecting. Annalisa Piazza of Newedge Strategy said:

This is quite disappointing, given the reassuring picture described by the last bureau of labour statistics employment report and the upswing in other survey indicators. We expect an upward correction in the coming months, with further signs of improvement in the US economy.

It has disappointed the market for sure, and the Dow Jones Industrial Average has slipped further, down 126 points or almost 1%.

3.19pm: Here's some video of the demonstrations in Athens against the austerity measures, showing police using teargas against protestors.

It also includes George Karatzaferis of the Laos party saying he cannot vote in favour of the proposed cutbacks.

2.57pm: Reports are coming in that another Greek minister has resigned over the austerity measures.

Deputy farm minister Asterios Rodoulis is said to have quit, following in the footsteps of Pavlos Stasinos, a Pasok (socialist) MP. Yesterday, a Pasok deputy labour minister and a New Democracy deputy both quit, saying they could not accept the demands being made on the Greek people.

Meanwhile my colleague Larry Elliott has written a piece arguing that the Germans want the Greeks out of the euro. He says:

With one important caveat, this would be a good outcome for Angela Merkel. If Greece decided to quit the euro of its own volition, she could say she had done all she could to keep the single currency intact but, in the end, the Greeks themselves had decided it was time to go.

The caveat is, of course, that a Greek departure would be orderly rather than disruptive.

2.41pm: The uncertainty in Greece - to put it mildly - is causing ructions well away from Hellenic shores.

Wall Street has just opened and in keeping with other global markets, it is falling sharply. The impetus for all this was news that George Karatzaferis of the Laos party, part of the Greek coalition, had refused to support the austerity programme the country has to agree in return for a second aid package worth €130bn.

It is still possible that Sunday's vote will endorse the cuts, but the move by Karatzaferis has caused more confusion in an already confusing situation. And markets are not liking it one bit. Germany's Dax is now down 1.65%, France's Cac is off 1.16% and the FTSE 100 has fallen 0.7%.

As for the US, the Dow Jones Industrial Average is down around 101 points or 0.7% in the first few minutes of trading. The fall comes despite news of a US trade deficit that widened from $47.1bn in November to $48.8bn in December, much in line with expectations.

With investors seeking havens for their money and finding few around, one area of appeal was UK government gilts, which have jumped more than a point. Ten year yields have dipped by 8 basis points to 2.143%.

2.08pm: It appears inevitable that Greek prime minister Lucas Papademos will be forced to shake up his cabinet very soon.

The Greek government spokesman has just told Helena Smith in Athens that since the national LAOS party [the government's junior coalition partner] won't be giving its vote to the loan agreement in parliament (see 12.19pm), it is "only logical" that there will be a cabinet reshuffle.

Spokesman Pandelis Kapsis said:

It is only logical that since he [Laos leader Georgios Karatzaferis'] won't be [endorsing the latest round of austerity measures in exchange for aid], his ministers won't be staying in the government.

Another well-placed official said Karatzaferis' decision not to back the measures when they are put to vote on Sunday would create "a serious problem" although he did not think it would stop the package being passed.

And with that, I'm handing this blog over to my colleague Nick Fletcher. Thanks all.

1.54pm: Greece's largest police union has threatened to issue arrest warrants for officials from the country's European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures.

That's according to Reuters, which says it has obtained a letter from the Federation of Greek Police. In it, the police accuse Troika officials of:

...blackmail, covertly abolishing or eroding democracy and national sovereignty.

Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers.

One target of the warrants would be the IMF's top official for Greece, Poul Thomsen.

Reuters explains:

The threat is largely symbolic since legal experts say a judge must first authorize such warrants, but it shows the depth of anger against foreign lenders who have demanded drastic wage and pension cuts in exchange for funds to keep Greece afloat.

1.30pm: Here's a lunchtime round-up of the main events so far:

• One of Greece's coalition leaders has refused to support the austerity programme that Greece must accept in return for a second aid package. George Karatzaferis of the Laos party said that the plan was the wrong way to take Greece. The move throws the situation in Athens into fresh confusion – just a day after the country's prime minister claimed that he had an agreement.

• Greek workers are taking part in a 48-hour strike in protest at the bailout plans. Transport systems, schools and offices have all been affected. In Athens, demonstrators convened on Syntagma Square and chanted for MPs to resign. Clashes broke out, teargas was deployed, and petrol bombs were thrown at police.

• Overnight, finance minister Evangelos Venizelos warned that Greece must either comply with the demands of its lenders, or quit the eurozone. He spoke out after the eurogroup of finance ministers ruled that Greece has not yet met its obligations, and must find €325m of additional budget cuts.

• Several MPs have spoken out against the austerity measures. One independent member pledged to vote against the plan, a second quit the government, and a third claimed that the latest budget cuts would ensure Greece's bankruptcy.

And on another note this lunchtime, several hundred Belgian firefighters have broken through police lines in Brussels and hosed down the prime minister's office in protest at the government's tougher retirement plans – part of its own austerity plans.

Remarkable scenes -- for once, it wasn't the protesters who got a drenching.

1.19pm: An update on that Greek cabinet meeting -- it's now been postponed until tomorrow. The situation is looking increasingly confused.....

12.51pm: The Greek cabinet is now planning to meet at 5pm Athens time (3pm GMT) to discuss the next step. That''s two hours later than planned -- following George Karatzaferis's decision to refuse to support the budget plans.

12.46pm: This second picture from Athens shows a petrol bomb exploding near riot police.

We don't yet know whether there were any injuries.

12.42pm: We have more pictures from today's protests in Athens.

This image shows demonstrators who have been detained by riot police.

12.38pm: An independent MP named Milena Apostalaki (formerly of Pasok) has announced that she will not vote for the austerity measures when they come before the Greek parliament (probably on Sunday).

Apostalaki's move comes amid mounting speculation that MPs will be ordered to vote in favour of the package.

That, Helena Smith says, will be very unpopular -- many MPs want to vote against the deepy unpopular package.

12.26pm: The euro has fallen sharply since Karatzaferis began his press conference -- losing almost a cent against the US dollar to $1.3204.

Shares are also in retreat, with the FTSE 100 down 44 points at 5851. The German Dax has suffered a heavier fall, down almost 1.7%.

12.19pm: Bombshell -- George Karatzaferis has declared that he cannot vote in favour of the austerity measures that international lenders insist Greece must accept.

Karatzaferis explained that he believes the road being proposed by the troika is 'not right'.

He also explained that he still supports Lucas's Papademos interim government, but wants the Greek prime minister to consider a reshuffle.

Karatzaferis's Laos party controls 16 seats in 300 seat parliament, so Papademos would still have a majority if Laos walked out of the coalition (which does not appear to have happened).

However, his power extends beyond simple parliamentary maths, as the EU has demanded that all parties need to sign the bill before financial aid is released.

12.10pm: Karatzaferis – whose far-right party is the smallest part of the coalition – goes on to claim that the Paol Thomsen, the International Monetary Fund's mission chief to Greece, should be declared "persona non grata".

That'll go down well with the international lenders, points out the Financial Times's Christopher Adams:

Karatzaferis really going out of his way to build bridges with creditors

— Christopher Adams (@ChrisAdamsMKTS) February 10, 2012

Karatzaferis. also called for "the restoration of democratic processes in Europe", and appeared to claim that Greece could cope without the "German boot".
.

12.06pm: While protests continue on the streets of Greece, the leader of the Laos party has begun his eagerly awaited press conference.

Looking very glum, George Karatzaferis tells the assembled media in Athens that Greece's dignity has been stolen, adding that he "will not put up with the country being ridiculed".

We have Germany deciding on behalf of Europe

More to come (via Helena, who's watching the press conference now).

11.47am: Riot police in Syntagma Square have clashed with demonstrators in the last few minutes.

Helena Smith reports that tear gas has been deployed, as "running battles" break out between protesters and the police on the steets of Athens.

Reuters reports that youths have been "throwing stones and petrol bombs".

Here's a picture from the streets, via Twitter.

Χημικά κ χτυπήματα τώρα οπισθοχωρουν #10fgr#Syntagma twitter.com/giannisg_/stat…

— giannis g. (@giannisg_) February 10, 2012

The kind of scenes we have seen at previous demonstrations, unfortunately:

Hooded persons breaking/hurling marble at riot police, tear gas, an MP resigns. Just another day in Athens. P.S. Most of us are at work

— Living in Greece (@livingingreece) February 10, 2012

11.25am: LAOS leader George Karatzaferis is due to give a press conference in a few minutes in Athens – and it could be significant.

UPDATE: It's been delayed until noon GMT / 2pm local time

Laos political aides say that Karatzaferis wants to "speak to the people" through the press*. They say he is furious that he was not consulted about the final deal which Evangelos Venizelos presented in Brussels last night.

Could he, as the rumour mill suggests (10.41am), quit the coalition?

* - it's a two-way process, so keep those comments coming....

11.20am: Word is also spreading on the streets that a government ministry has been occupied by protesters (as we flagged up at 10.41am). Helena Smith reports that demonstrators are being encouraged to head over there.

As kizbot points out in the comments below:

'Κατάληψη' or 'occupation' of a building is a common form of protest here.. especially in schools and universities. I wouldn't take it as a major sign of revolution.

11.11am: At Syntagma Square, our correspondent Helena Smith finds more people than ever before are saying that Greece should leave the eurozone.

That view conflicts with polls that have shown the vast majority of Greeks wanting to hang onto their euros, and not revert to the drachma.

But Despoina Koutoulouglou argued that it would be better to leave the single currency:

Under these terms why would we want to stay?

They are turning us into a sort of India with slave wages.

Koutoulouglou described herself as a member of the "500 euro generation" - a term used to describe young people who only receive low wages and are unable to leave their parents' home.

11.07am: Police bearing riot shields and protective helmets are now lined up outside the Greek parliament.

The protests still appear peaceful at this stage.

10.41am: Rumours are sweeping Greece that Laos, the far-right junior party in Lucas Papademos's coalition government, might quit the administration.

George Karatzaferis, the Laos leader, is reportedly meeting with Papademos now. A press conference is scheduled for 1.30pm local time (11.30am GMT), local media report (just checking this out now).

There are also reports that workers have occupied an office of the ministry of finance:

Ορθή επανάληψη: Κατάληψη στο υπουργείο Οικονομικών στη Φιλελλήνων από υπαλλήλους twitter.com/naftemporiki/s…

— naftemporiki (@naftemporiki) February 10, 2012

10.36am: The front page of the mass-selling Ta Nea sums up the mood, Helena Smith reports from Athens.

It declares:

"Citizens speak: We have turned fifty years back."

"A cold war [has erupted] with our lenders."

Helena confirms that another MP, Pavlos Stasinos, has indeed resigned from the socialist Pasok party in "disgust" over the agreement. Throughout the morning MPs have been ringing into radio shows to have their voices heard -- the vast majority being far too afraid to be seen in public .

Many said they would vote with their "conscience" come Sunday when the controversial loan agreement is put before the Greek parliament for endorsement. The effects of the accord, they argued, would be as bad as bankruptcy itself.

"If we vote these measures through we are setting in motion the bankruptcy of our country," said Odyyseus Boudouris, a parliamentarian with the socialist Pasok party. "The dilemma we are faced with is awful and wrong. But bankruptcy won't just be bad for Greece, it will be bad for our partners in the EU."

10.14am: Maria Verivaki has got in touch to report that there is disruption in the city of Hania, on Crete:

main roads closed in hania centre of town due to marches, approx 800m stretch; my cabbie husband simply avoids this road

Another reader in Greece, James Wilkins, says he would be happier if "this charade" was over, and Greece had defaulted:

It will mean many horrible years for the Greeks, but at least the world will have to find another country to scapegoat.

The Greeks will survive, they always do, but other eurozone countries, including Germany, and Britain and America too, will struggle. I look forward to the time when Greece has forgotten this experiment with borrowed capital ( from which other countries benefited) and goes back to being what it once was - a poor little country on the south of Europe where people, despite the poverty, enjoy life.

9.58am: Greek media are reporting another resignation over the austerity plan -- Pavlos Stasinos, a Pasok (socialist) MP. That would be the third since Greece's leaders agreed to the draft agreement. Yesterday, a Pasok deputy labour minister and a New Democracy deputy both quit, saying they could not accept the demands being made on the Greek people.

9.46am: Helena Smith, our correspondent in Athens, says the mood among protestors is far from mild.

"They are crooks and thieves," the crowds have been screaming outside the 300-seat House. "Our politicians should live on a minimum wage to see what it's like" railed Iphighenia Kontou, a laid-off shop assistant. "What have these measures achieved? None of them have worked and they want more? "

"We want justice," screamed a group of hospital workers. "They are tearing down our state," said Giorgos Klonizakis, a doctor. "People can't get basic healthcare any more. They want us to pay off our country's debts at the expense of everything else. Why hasn't one person gone to prison yet for all the corruption, all the wrongdoing that got us here in the first place?"

"For a long time we accepted these measures because we understand that Greece needs change," said a mechanic requesting anonymity. "But they've got us nowhere and it's now the third year! The middle class is being torn apart. To ask for more when there is no more to cut is foolish and dangerous."

Helena adds that the unions appear to have achieved a good turn out -- what's not clear yet is whether today's march (like so many before) will descend into violence. She adds:

Riot police armed with stun guns and teargas cannisters are out in force -- lined up in armour like medieval soldiers in the narrow streets beneath Syntagma square around the finance ministry. Most are young - much younger than many of the protestors out there.

9.25am: Update on the strikes -- people are gathering in Syntagma square, the area in the centre of Athens outside its parliament.

Some are carrying loudspeakers, and Reuters reports that slogans are being chanted across the square -- including:

No to layoffs! No to salary cuts! No to pension cuts! Do not bow your heads! Resist!

Teachers, hospital staff and bank employees are all joining in the strike, although we don't get have details of how many people are taking part in the industrial action.

There were marches on the streets of Athens on Tuesday during another general strike -- turnout wasn't as high as at some previous demos, partly due to heavy rain in the city. Today's marches will be closely watched to show the level of public anger.

9.04am: We recently created a Flickr page called "Greece - life in an economic crisis", where readers can upload their own pictures from the country (hat-tip Laura Oliver). It's still open – Greek readers might wish to upload their images.

8.59am: If you're in Greece today -- we'd be very grateful to hear how the strike is affecting you. Are you taking part? Do you support the action?

Let us know in the comment below, or via email (graeme.wearden@guardian.co.uk) or Twitter (@graemewearden).

Many thanks again if you helped out with this on Tuesday.

8.51am: The Greek transport system has been disrupted this morning as the 48-hour strike called by the country's two biggest unions gets under way.

Some railway, ferry and public transport schedules are suspended, as this picture shows.

Unions are planning to hold protests several cities, including Athens, around midday local time (10am GMT).

8.41am: Germany will vote in 17 days on whether Greece should receive its second bailout.

Klaus Ernst, the co-leader of the opposition Left party, has just told reporters that Angela Merkel briefed the leaders of the five parties in the lower parliamentary chamber about the Greek situation. According to Ernst:

We will probably have a special meeting of the Bundestag on February 27 to make decisions.

Another hurdle for the Greek bailout package to clear.

As I understand it (but I am very happy to be corrected) every eurozone parliament must give its approval to the €130bn package -- in the same way that they approved the changes to the eurozone bailout fund last autumn (although Slovakia initially opposed it). The French government gave its approval last September (when the bailout was a mere €109bn).

The immediate deadline, though, is next Wednesday – when the eurogroup of finance ministers meets again.

That gives the Greek government just five days to meet the new demands, which Elizabeth Afseth of Investec says will be challenging:

Specifying another €325m in savings will not be easy and getting the party leaders to sign up for it may be even trickier with an election looming.

Although as regular commentator RobertSchuman points out below, the €325m does not represent an increase on the original target of €3.3bn of budget savings. The eurogroup is demanding deeper cuts than contained in the plan that Greece politicians agreed to on Thursday.

8.14am: Most of Europe's stock markets have opened lower this morning. The FTSE 100 index dropped 30 points to 5864, a drop of around 0.5%.

That's partly due to disappointment over Greece, but shares have also been dented by disappointing trade data from China suggesting the global economy is slowing.

Greek bonds have dropped in value this morning, as economist Shaun Richards points out on Twitter:

The response to the new austerity is for the one-year bond yield in Greece to rise back above 500%. Some rescue! #gfc2 #euro #eurochat

— Shaun Richards (@notayesmansecon) February 10, 2012

8.09am: Evangelos Venizelos has said that Greece must decide whether it wants to remain in the eurozone.

The Greek finance minister told journalists that the Eurogroup have left Greece with a clear choice -- accept more austerity measures that its international lenders demand, or leave the euro.

Speaking after the talks broke up, Venizelos said:

From today until the next meeting of the eurogroup, 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 program approved.

Venizelos also criticised politicians who have criticise the austerity measures forced on Greece :

Nobody can keep pretending to be the good guy....The era of easy choices and demagoguery is over.

Greek ekathimerini.com , Friday February 10, 2012 (02:09)

7.49am: Jean-Claude Juncker, the prime minister of Luxembourg who chairs the Eurogroup*, was adamant last night that Greece had not done enough – yet – to receive a second rescue package.

Juncker said that the €325m shortfall must be addressed within days. The Greek parliament must also approve the wide-ranging reform plan, and the various leaders of its political parties must also pledge to enforce the plan.

Juncker told a press conference in Brussels his position was clear:

In short, no disbursement without implementation.

Neat, but not quite as catchy as 'No taxation without representation'. In this case, of course, there is no shortage of taxation:

The €325m black hole in the Greek budget plan was caused by the heads of its coalition parties rejecting pension reductions. If the missing funds can't be obtained there, prime minister Lucas Papademos will have to reach agreement on alternative spending cuts or tax rises.

* - the group of 17 finance ministers from eurozone countries

7.42am: My colleague Ian Traynor reported earlier this morning that the Troika of Greece's lenders voiced exasperation with Greek "delaying tactics".

Ian writes:

Despite announcements earlier that the coalition government in Athens had yielded to savage new terms from the eurozone to qualify for the bailout, the eurozone finance ministers were unimpressed. The emphasis was on first getting Greece to deliver its side of the bargain.

"On the condition that the Greek parliament takes decisions on the prior actions over the coming days, then next week we can finalise decision on the overall package," said Olli Rehn, the European commissioner for monetary affairs.

"It's up to the Greek government by concrete actions through legislation and other actions to convince its European partners that the second [bailout] programme can be made to work."

7.35am: Good morning. Greece's hopes of receiving its second rescue package received a setback overnight, as its eurozone partners warned that Athens has not met the terms of the €130bn bailout.

Meeting in Brussels last night, European finance ministers studied the plan presented by the Athens government yesterday and concluded that it was incomplete.

The European central bank, the European commission, and the International Monetary Fund are now demanding €325m in further cuts to this year's budget before it will approve the rescue package.

The news comes as Greek workers begin a nationwide two-day strike in protest at the austerity measures that coalition leaders reluctantly signed up for this week. Unions have warned that the country now faces a "social uprising".

• Eurozone crisis
• Euro
• Greece
• Lucas Papademos

Fraud worth £50m a year in unpaid duty and VAT afforded gang members a luxury lifestyle, investigators say

Four members of a criminal gang have been jailed for their roles in one of the biggest alcohol-smuggling frauds ever uncovered in Britain.

The scam, worth an estimated £50m a year in unpaid duty and VAT, allowed the men to buy fast cars and luxury homes, investigators said.

The four used their positions and contacts in the drinks trade to conceal dozens of truckloads of alcohol being moved into Britain without paying tax or duties in a scam known as diversion fraud.

The gang's ringleader, 49-year-old Kevin Burrage, and Gary Clarke, 55, were convicted of conspiracy to cheat the public revenue following a three-month trial at Canterbury crown court last month.

Their accomplices, Michael Turner, 52, and 32-year-old Davinder Dhaliwal, pleaded guilty at an earlier hearing to the same charges and fraudulent evasion of excise duty.

Sentencing them, Judge Michael O'Sullivan said: "All four of you were involved in a criminal enterprise to cheat the revenue. Alcohol was diverted into the UK without paying duty or tax due to the revenue."

Burrage, of Shoeburyness, Essex, was jailed for 10 years, and Clarke, of Thorpe Bay, also in Essex, was sentenced to six years and nine months. Turner, of Folkestone, Kent, was jailed for three years and two months and Dhaliwal, of Dartford, for 16 months.

Prosecutor Andrew Marshall said the scam focused on Promptstock Ltd, a bonded warehouse in Essex owned by Burrage. Alcohol can be stored and moved between bonded warehouses within the EU without paying excise duties.

But once the business needs to release the alcohol to retailers, the excise duty becomes payable at the rates applicable in the host country.

Burrage's brother-in-law, Clarke, managed the warehouse used by the pair to import and export alcohol without paying a penny in tax.

The gang bought beer, wine and spirits from bonded warehouses in France and imported them duty-free into Britain, destined for Promptstock Ltd. Once through Customs, the alcohol was illegally diverted to locations around the country and then sold without duty being added.

Marshall said: "What was planned and what took place was to cause enormous and continuous losses to the Revenue of millions of pounds, and those losses were only stopped by the arrests."

Over a 22-month period from January 2007, he said the total VAT and excise duty loss caused by the gang amounted to £7.49m.

Marshall said: "Mr Burrage was the organiser and ringleader of all of this trade. It was fraudulent from the very start. It has an international element, controlling goods abroad and from abroad."

A "web of corrupt players" was involved in the fraud, he said, including transport companies that diverted the loads from their intended destinations.

Investigators said the gang also reversed the fraud by appearing to send lorries loaded with non-duty paid alcohol to the continent. HMRC said the cargo of alcohol in fact remained in the UK and was sold on, again with no tax added.

."

• Crime
• Alcohol
• Tax avoidance