Speculators are largely responsible for driving crude prices to their peaks in recent weeks and the record oil price now looks like a bubble, George Soros has warned.

The billionaire investor’s comments came only days after the oil price soared to a record high of $135 a barrel amid speculation that crude could soon be catapulted towards the $200 mark.

In an interview with The Daily Telegraph, Mr Soros said that although the weak dollar, ebbing Middle Eastern supply and record Chinese demand could explain some of the increase in energy prices, the crude oil market had been significantly affected by speculation.

Speculation… is increasingly affecting the price,” he said. “The price has this parabolic shape which is characteristic of bubbles,” he said. ‘We face the most serious recession of our lifetime’

The comments are significant, not only because Mr Soros is the world’s most prominent hedge fund investor but also because many experts have claimed speculation is only a minor factor affecting crude prices.

Oil prices stalled on Friday after their biggest one-day jump since the first Gulf War earlier in the week. Continued….

Source: Edmund Conway, Economics Editor, Telegraph

For 700 years Ireland was Britain’s outer defence – nolens volens – against the great powers of continental Europe.

By a twist of fate, the Irish must now cast the ballot on the EU constitution for both islands, since Labour has defaulted on its pledge for a British referendum.

Our shared Anglo-Celtic culture has long been a well-spring of free enterprise (with Dutch, Swedish, and Hanseatic help in fighting European absolutism along the way), and that is what is so threatened by the Lisbon Treaty, the treaty to end all EU treaties.

The text strikes the words “free and undistorted competition” from the core objectives of the Union. Corporatist aims will enjoy a higher legal status at the European Court (ECJ) and must prevail if the two clash. The Rhineland Model has locked in a permanent advantage.

Euro-creep is already eviscerating the Common Law that underpins the British and Irish way of doing business. Lisbon quickens the pace. It upgrades the ECJ to a de facto supreme court, with broader jurisdiction. It will have the last say on a raft of new economic and social rights. Who can stop them imposing a Colbertist agenda by court rulings, if they so choose? The ECJ is beyond appeal. Continued…

Source: Ambrose Evans-Pritchard, International Business Editor, Telegraph

Ambrose Evans-Pritchard, now the Telegraph’s International Business Editor, was the Telegraph’s EU Correspondent in Brussels from 2000 to 2005. He covered the original drafting of the EU Constitution.

Many investors are drawn to buy funds that sit at or near the top of the performance league tables. But as the small print of adverts warns, performance can be a poor guide to prospects.

Investors who flocked to buy technology funds in 1999 and 2000 suffered badly as the bubble burst.

More recently, savers pumped billions of pounds into commercial property funds in 2006 and early 2007 on the back of strong growth, only to join the party too late and see the value of their investments slump.

Juliet Schooling, head of research at national investment adviser Chelsea Financial Services, says: ‘It is worrying that so many investors look only at what has performed well in the past year and decide that is where to head for their latest investment.’

Adrian Shandley, who runs independent adviser Premier Wealth Management in Southport, Merseyside, agrees. ‘You wouldn’t try to drive a car using just the rear view mirror, but many investors focus too much on past performance and not enough on looking ahead,’ he says.

Source: This is Money

Business leaders have called on the Treasury to scrap plans to introduce a 2p increase in fuel tax in the Autumn as the price at the pump surges.

The British Chamber of Commerce said businesses were being pushed “to the absolute edge” by the costs.

The comments came as the price of a barrel of oil reached hit a record $135 – twice what it cost a year ago.

The average UK price for a litre of unleaded petrol is now about 114p, while diesel costs, on average, 126.4p.

The path of UK petrol and diesel prices

This makes petrol 18% more expensive than a year ago while the cost of diesel on the garage forecourt is 30% higher.

The fuel tax rise, announced in last year’s Budget, had been due to come into effect on 1 April but will be postponed due to soaring crude oil prices. Continued…

Source: BBC News

The Telegraph’s Doctor Biz -  Guy Rigby provides advice on how best to approach banks for credit facillities.

Q: I run a small, but fast growing distribution business and I rely on my bank for support. Given the widely reported credit crisis, should I be worried about the renewal of my facilities?

A: There is certainly cause for concern but if your request for finance is timely and well prepared you stand a better chance of gaining your bank’s support.

The lending process is undoubtedly becoming more rigorous and the cost of borrowing is set to rise. Banks need to re-build their balance sheets and are therefore seeking to increase lending margins, fees and toughen covenants. Businesses seeking new or extended banking facilities could have more difficulty than those looking to renew facilities, but in general, the same rules apply.

You should therefore consider your ongoing cashflow requirements and arrange financing much earlier than has previously been necessary to avoid experiencing your own “credit crunch”.

Providing a well thought through credit submission, addressing the issues which are critical to lenders as early as possible should help you to negotiate better terms and within a shorter time frame.

Make sure that your presentation is as detailed and realistic as possible; showing that you understand the risks and know how these can be mitigated. Having said this, you need to focus on the positives of your business as banks are obviously more wary of risk at the moment.

Remember that impressions are generally regarded as reality, so don’t create a bad one. Be consistent in the information you provide and give reliable supporting numbers. Poor quality financial information may lead banks to assume the worst so avoid this at all costs. You should also be consistent in the information you provide and give reliable supporting numbers.

Dealing with your business’ finances may not be your main focus but in this climate it is essential to adopt a professional approach to renewing debt facilities, otherwise you could be faced with unnecessary delays which may have a detrimental impact on the long term growth prospects of your business.

Guy Rigby, head of entrepreneurs at accountants and investment management group, Smith & Williamson

Source: Telegraph

Many investors are drawn to buy funds that sit at or near the top of the performance league tables. But as the small print of adverts warns, performance can be a poor guide to prospects.

Investors who flocked to buy technology funds in 1999 and 2000 suffered badly as the bubble burst.

More recently, savers pumped billions of pounds into commercial property funds in 2006 and early 2007 on the back of strong growth, only to join the party too late and see the value of their investments slump.

Juliet Schooling, head of research at national investment adviser Chelsea Financial Services, says: ‘It is worrying that so many investors look only at what has performed well in the past year and decide that is where to head for their latest investment.’

Adrian Shandley, who runs independent adviser Premier Wealth Management in Southport, Merseyside, agrees. ‘You wouldn’t try to drive a car using just the rear view mirror, but many investors focus too much on past performance and not enough on looking ahead,’ he says. More

Source: This is Money

Alistair Darling will this week offer an olive branch to multinationals in an attempt to head off a threatened corporate exodus from Britain.

He will try to defuse a row over the taxation of foreign profits by insisting Treasury reforms are not intended as a revenue-raising measure.

Darling will also indicate that the government is willing to grant a concession on the key issue in the row – the treatment of intellectual property held offshore, such as brands and patents.

The Sunday Times revealed a fortnight ago that a powerful delegation from the secretive Multinational Chairmen’s Group had visited Downing Street to lobby Gordon Brown and Darling on the issue.

They warned that if the proposals on intellectual property went ahead, big companies might have to pay hundreds of millions of pounds more in tax. The Treasury plan would speed the move of corporate headquarters out of Britain to lower-tax regimes, the delegation said.

Darling will try to mend fences with the business community in his speech to the CBI’s annual dinner on Tuesday.

The chancellor will insist that there was no intention of widening the tax net and using the new proposals as a measure to increase revenue.

He will say that the Treasury’s final proposals, due to be published in July, will take into account the impact of the change on individual sectors, to ensure that none will face higher tax bills as a result.

“The Treasury has been looking hard into this,” a senior official said. “We’ve been at pains to make clear that any changes should be revenue neutral, but clearly we will also be looking at how individual sectors are affected and at the issues around intellectual property. We are absolutely committed to ensuring the UK tax regime remains competitive.”

Darling is also expected to unveil the membership of the new multinational forum on tax he announced at the end of last month “to discuss ways in which the tax system can provide the long-term certainty multinational companies need”, and he will set out the broader strategic areas on which the group will concentrate.

Significantly, its members will include Julian Heslop, chief financial officer of Glaxo Smith Kline (GSK), one of the intellectual property-rich companies that has raised concerns about the taxation of foreign profits.

Another member will be Douglas Flint, chief financial officer of HSBC. Representatives of both companies attended the recent meeting at Downing Street. The panel will be chaired by Treasury financial secretary Jane Kennedy.

Several high-profile companies, including Shire Pharmaceuticals and United Business Media, have already announced they will move out of the UK to Ireland to pay less tax. Several others, including WPP, GSK and Astra Zeneca, have said they are considering their options.

The current row grew out of proposals published last year to reform the way earnings from foreign subsidiaries are taxed.

A discussion document proposed making foreign dividends tax-exempt – a move welcomed by finance directors. The fine print of the document, however, contained exceptions, including a proposal to tax intellectual property held offshore.

Multinationals say this could bring earnings from overseas brands, patents and designs within the reach of the UK taxman.

Legal experts say one way forward for the Treasury would be to introduce a “motive” test, a feature of the current system governing foreign earnings. Companies would only pay up if it could be shown they deliberately moved activities offshore to avoid tax.

Source: Times

Governor of the Bank of England Mervyn King caused much excitement on Tuesday when he attacked the “excesses” of the City of London and its culture of bonuses tied to short-term targets.

But in the coverage that followed his statements to the Treasury Select Committee, little has been made of his disclosure that he has been more impressed by the trading ability and attitude of Britain’s myriad of privately-owned companies than the large financial institutions based in the City.

He implied that his decisions on what level to set interest rates are influenced more by the needs of these companies – how it will affect their ability to employ people and trade – than to help the financial services sector, upon which Britain has become increasingly reliant.

To quote Mr King: “If you were to ask me what companies have impressed me most during my five years as Governor it would not be the large institutions in the City it would be the many smaller, medium-sized, often privately owned companies in the rest of the United Kingdom economy, who are paid far less than people in the City, who may be operating with two or three housand employees exporting to a dozen countries and they have a tiny, tiny number of highly qualified people working with hem. The rest are ordinary people drawn from the community who work, who are highly motivated.

“These companies have excellent products, they do the most surprising things like exporting to China ordinary manufactured roducts. My first natural question to them is how can you compete with the Chinese? The response is we export to China. There re many companies like this. The big thing is not to generalise.

“I think it is absolutely crucial that we don’t lose sight of the fact that monetary policy is there to ensure steady, sustainable growth for businesses up and down the country who provide employment to people who live there.”

It is not often that you get this kind of insight into the thinking of the Governor of the Bank of England more

Source: Telegraph