two years of crisis and bank debt in Europe, the roaring euro party is over.

 

 Greeks are emptying their bank accounts, Italians are proposing that the Roman Catholic Church begin to pay nearly $1 billion in property taxes on lucrative hotels and businesses, and in the UK, protesters sans jobs have settled near 10 Downing in the wake of the nation’s biggest general strike in years. Spain has seen well-dressed panhandlers in Madrid. The Netherlands report higher bankruptcies and lower exports. French banks are cutting thousands of jobs. And in bailed-out Portugal, two religious and two civil holidays – weekdays off – will now fall on weekends, even as healthcare costs there have suddenly doubled in many hospitals. All across Europe, the severity of belt-tightening and public anger has brought a new stream of “austerity stories” to the fore: job cuts and their effect, new instances of ethnic hate, worry about social stability. Rising right-wing violence The majority of these stories flow out of Europe’s southern tier, the “less competitive” economies. Two Senegalese street traders in a Florence market were shot and killed Dec. 13 by a right-wing fanatic and three wounded. Higher piles of uncollected garbage sit on Greek streets and there’s an increase of drugs and crime there. Immigrants who used to be welcome labor five years ago in Greece, Italy, and especially in Spain, are now subject to heavy ID checks and public frowns, and there are more spasms of violence by vigilante groups. At times, the surly climate means that “Anyone who might pass for migrant runs the risk of being beaten up,” says Judith Sunderland of Human Rights Watch Europe. “There’s a gloomy mood… in ordinary neighborhoods that I visit… worry about jobs, benefits, social security and the cost of living,” says Pap Ndiaye, social historian at the Paris School for Advanced Studies in Social Sciences. “On top of that, minorities are concerned about backlash or adding problems to the general population. A few years ago, minorities with degrees were leaving France for Great Britain but now the UK is no longer so hospitable. Now we are seeing a phenomenon of looking to the Americas. More professionals are moving to Montreal, for example… with no plans to come back to France.” Belt-tightening across the spectrum To ease austerity, Greece is selling ferryboats to Turkey and what appear to be third-world items like string, used auto parts, and TV antennas to improbable places like the Bahamas and the Marshall Islands. Italy this week said it will release some 3,300 prisoners with less than 18 months on their sentence – remanded to their homes – to save an estimated $500,000 a day. As Greece ekes out its EU bailout loans quarterly – the next tranche is still under negotiation – ordinary folks are depleting their bank accounts. The governor of the Greek central bank, Georgios Provopoulos, recently told parliament, "In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November, the decline continued on a large scale.” The effect is to reduce the ability of banks to lend, he said. Some of the austerity effect may be indirectly positive. In Spain, archeologists outside Seville are glad that the building craze of the past 10 years has been halted, since planned shopping centers were to be erected on unexplored Copper Age settlements. Spanish police have also cracked down on a sophisticated forgery ring that was printing 50 euro notes out of a canning factory. In Italy, the 950 members of parliament that make nearly $200,000 a year are expected to cut their pay as the new government of Mario Monti seeks to deal with a cumulative 1.9 trillion euros in debt. Italy’s politicians earn twice that of French and German counterparts, and four times that of Spanish. Strains in northern Europe Yet various stresses and strains owing to new fracturing in Europe are not restricted just to the southern tier. Britain reports a 17-year high in unemployment even as EU figures show it has the 2nd highest living standard in Europe. London riots last August took place mainly among have-nots. Prime Minister David Cameron decided last week to opt-out of a German-French-engineered intergovernmental EU treaty designed to force discipline on EU states and stop future crises, seen as possibly isolating Britain. The decision highlighted an earlier decision by the town council of Bishop’s Stortford to alter an official 46-year old “sister city” or “twinning” relationship with the German town of Friedberg, near Frankfurt. The council is made up of mostly Tory or “euroskeptic” politicians and critics chided the town for downgrading the sister city status at a time of drift of European unity. More pertinently, perhaps, official November figures in the Netherlands, a more competitive state, show that some 610 businesses declared bankruptcy, an increase of 85 from October, and up from an average of roughly 500. Meanwhile, Dutch exports declined for the first time in two years in October. Dutch finance minister Jan Kees de Jager told reporters this week the country faces recessionary times and said there “are no taboos” in what may be cut in the budget. “We felt this coming. It is certainly not positive,” he said. “There are no easy times ahead of us.” The Netherlands will cut an estimated $24 billion under austerity measures, though the Freedom Party of anti-Islam politician Geert Wilders says it will not vote for cuts without a promise to end some $6 billion in foreign development aid.

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Brits who invested their savings in their adopted countries may not be able to withdraw cash and could even lose their homes if banks call in loans

Marbella, Andalusia, Spain (pic: Getty)

EMERGENCY evacuation plans for Brits living in Spain and Portugal are being drawn up amid fears of the euro collapsing.

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The drastic proposals emerged as a former Security Minister warned expats could be left stranded and destitute by the break-up of the single currency.

Brits who invested their savings in their adopted countries may not be able to withdraw cash and could even lose their homes if banks call in loans, worried ministers are warning.

The Foreign Office is preparing to bring them back from Spain and Portugal if the two countries are forced out of the euro, triggering a banking collapse.

A million Brits live in Spain and 50,000 in neighbouring Portugal – plus a million in the other eurozone countries.

And Baroness Neville-Jones, who only stepped down as a minister in May, called the situation “very, very worrying”.

The Tory peer – who once chaired the Joint Intelligence Committee for MI5, MI6 and other security agencies – said: “Spain is clearly a vulnerable area. If that happens, one of the things that will happen in a crash of that kind, is that the banks would close their doors. You would find that there are people there, including our own citizens, a lot of them, who couldn’t get money out to live on. So you would have a destitution problem.”

British planes, ships and coaches could be sent to pluck our citizens from debt-ridden Spain and Portugal

Commenting on the evacuation plans, she added: “I think they are right to be doing that. I think this is a real contingency that they need to plan against – very, very worrying.”

Officials are braced for a nightmare scenario where thousands end up penniless and sleeping at airports with no means of getting home. Planes, ships and coaches could be sent, with some expats being brought out through Gibraltar.

The Foreign Office could offer small loans while piling pressure on the banks to give Brits access to their funds.

Spanish and Portuguese banks guarantee the first 100,000 euros deposited by savers but many put limits on withdrawals in a crisis.

A powerful credit rating agency downgraded 10 Spanish banks last week, while another warned over the weekend the debt crisis was threatening to spiral out of control.

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Spanish, Italian police smash drug smuggling ring

 

Spanish and Italian police made five arrests while busting a drug-trafficking ring that for years smuggled cocaine from South America to Europe, investigators said on Friday. The group arranged for narcotics to be put on merchant ships headed to Europe. Just before the vessels arrived at their destination, the smugglers would dump cocaine packages overboard, Spanish police said in a statement. Members of the gang waiting in inflatable boats would then pick up the cocaine and take it to shore, from where it was distributed to customers in Spain and Italy, officials said.Two members of the group were detained in the Italian port city of Genoa in March in a joint operation by Spanish and Italian police. Police detained another three members of the group, including its leader, three months later in the northwestern Spanish coastal region of Galicia. "During the search of the home of the ringleader, police found a vault camouflaged behind the wall of the cellar, which housed security cameras that monitored the rest of the house as well as two large safes, cash, valuable watches, computer equipment and documents," police said in the statement. Police also seized 55 kilos (120 pounds) of cocaine, three cash-counting machines and five cars. Spain is the main gateway to Europe for cocaine from Latin America and for cannabis from north Africa

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The top ranks of the Government are now coming to the conclusion that the break-up of the euro is inevitable.

 

 I understand that Hague, like the Chancellor, now believes this will happen soon. Osborne told Cabinet colleagues on Monday that the Merkel-Sarkozy plan for greater fiscal discipline within the eurozone was no solution to the current  crisis. Rather, he said, ‘it was like standing over a man having a heart attack and telling him that to avoid one in future he should do more exercise and cut down on cholesterol’. This view that the euro is unlikely to survive is why there are, so far, few worries about Britain being isolated by the eurozone bloc and its allies. The Government is also confident that the differences between the countries in the single currency will remain – that the Netherlands and Finland will continue to take a more liberal attitude to financial services and the single market than the French and the Italians. But there’s little doubt that Cameron’s decision to wield the veto changes Britain’s relationship with the other members of the European Union. The days of Britain carrying on down the same route as the rest of Europe, just at a slower pace, are now over. As one of Cameron’s closest allies says: ‘We are now, inevitably, en route to a very different destiny.’ ... but one rift is healing, at least Labour’s failure to capitalise on the weakening economy has led to renewed tensions within the party’s ranks. Ed Balls, the Shadow Chancellor, is the target of much of this backbiting. Shadow Cabinet sources complain he is more interested in justifying his record in office than winning the argument about what to do now. Balls’ detractors argue that his bellicose statements are drowning out Ed Miliband’s message.

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The alleged members of the Dominican-based Trinitarios gang all face charges of racketeering, narcotics conspiracy and gun trafficking

Suspects accused of selling guns and drugs.

Authorities collared 38 Bronx and upper Manhattan gangbangers Wednesday after a two-year probe into a notorious crew, officials said.

The alleged members of the Dominican-based Trinitarios gang all face charges of racketeering, narcotics conspiracy and gun trafficking, authorities said.

The undercover investigation — which involved officers from the NYPD, the federal Drug Enforcement Administration, the Bureau of Alcohol, Tobacco and Firearms and Homeland Security — netted about $25,000 worth of drugs and 12 firearms in Wednesday’s raid, police said.

One weapon recovered, a Mac-11 machine gun, was painted the same shade of green the gang uses in its colors.

Federal prosecutors said the crew committed and planned violent acts, including murder, to protect its turf from rival gangs that include the Bloods, Crips, the Latin Kings and Dominicans Don’t Play.

“We believe we put a big dent in the Trinitarios gang,” said Capt. Lorenzo Johnson, the commanding officer of the NYPD’s Bronx gang squad.

Six people who were connected to the gang members were also arrested, police said. Authorities were still looking for about 12 other members of the gang.

Prosecutors said the Trinitarios sold firearms, including semiautomatic rifles, a shotgun and handguns, and transported them across state lines.

Numerous members of the Trinitarios who were arrested are also members of a smaller splinter gang, the Bad Boys, prosecutors said.

Johnson said most of suspects were already “known to the department in some manner,” and had long terrorized several blocks in Washington Heights and parts of the Bronx, including Marble Hill.

“Anytime we can help the community feel safer is a good day,” he said.

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Glenn Mulcaire, the private eye at the centre of the News of the World phone hacking scandal, has been arrested

 

Glenn Mulcaire, the private eye at the centre of the News of the World phone hacking scandal, has been arrested by Scotland Yard detectives pursuing a fresh investigation into phone intercepts, according to a person familiar with the inquiry. Officers working on Operation Weeting – the Metropolitan Police’s second probe into phone hacking at News International, which owned the now-defunct Sunday tabloid – announced on Wednesday that they had arrested a 41-year-old man who was being held on suspicion of conspiracy to hack voicemail messages and perverting the course of justice.  Mr Mulcaire is the 16th person to be arrested under the new operation, and has already served a six-month prison sentence in 2007 after pleading guilty to intercepting phone messages. He was arrested at his home in Surrey in a dawn swoop and held in a south London police station. Detectives on Operation Weeting have used the private investigator’s notebooks – which contain the names of nearly 5,800 potential victims and run to around 11,000 pages – as the basis for their investigation, trawling through the documents to identify those who may have been hacked. The hacking scandal was reignited this summer when it was revealed that the News of the World had hacked into the voicemail messages of the murdered schoolgirl Milly Dowler after she went missing in 2002, leading her parents to believe that she was still alive. Last month, Mr Mulcaire released a statement through his lawyer, denying that he had deleted voicemail messages on Ms Dowler’s phone. “[He] did not delete messages and had no reason to do so,” the statement read. The Financial Times could not reach Mr Mulcaire’s lawyer for comment on Wednesday. Chris Bryant, a Labour MP and suspected hacking victim, told the FT he was “quite encouraged” that Mr Mulcaire had been taken in for questioning. “I always thought this was a logical next step, but not one [the police] would take unless they had sufficient fresh evidence to put to [Mr Mulcaire], and it seems now they do,” he said. News of the arrest came as lawyers for Andy Coulson, the News of the World’s former editor, argued in the High Court on Wednesday that the tabloid’s parent company should continue to pay Mr Coulson’s legal bills arising from the criminal investigation into phone hacking. It emerged during the course of Mr Coulson’s evidence that News Group Newspapers – a subsidiary of News International – had continued to reimburse Mr Coulson for legal fees relating to his involvement in the judge-led phone hacking inquiry and parliamentary select committee hearings. The court heard that Mr Coulson had received a letter from Tom Mockridge, the chief executive of News International, in August informing him of an “immediate cessation” of payments in relation to criminal legal fees.

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Don't just book it, Thomas Cook it. So runs the slogan. Would you

 

Don't just book it, Thomas Cook it. So runs the slogan. Would you? Here's interim (that's reassuring) chief executive Sam Weihagen doing his safe-as-houses routine: "It's business as usual. We are trading within all our covenants. We have all the protection in place like any other travel company, and customers should not worry at all." Well, not quite like any other travel company. Thomas Cook of course holds an Air Travel Organisers' Licence from the Civil Aviation Authority which means customers should get their money back in the event of calamity. But the simple fear of being stranded a week after passengers of Austria's Comtel Air had to bribe pilots with £20,000 just to return to Birmingham is bound to unsettle would-be customers. There's a circle at work here and it is vicious. Given the choice between a similarly priced holiday with Thomas Cook or, say, Thomson, why would you risk the former? To counteract this, Thomas Cook might have to slash prices. That will eat into margins, cut profits and put banking covenants at risk. It might very quickly find it needs to borrow even more money. The company insists: "This is a robust business that has a strong future". We'll see.

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Europe's second biggest tour operator Thomas Cook has announced it is in negotiations with its banks

Europe's second biggest tour operator Thomas Cook has announced it is in negotiations with its banks about its growing £900 million debt.

As a result it plans to delay the announcement of its annual results due on Thursday.

It comes just a month after the company asked the bank for £100 million credit to see it through the quiet winter trading period.

The Thomas Cook share price opened 60% down following the news, adding to the downward spiral of the shares which have slumped 80% over the past year.

 

 

Thomas Cook Share Price 1-Month Chart

The holiday group had already issued three profits warnings this year, resulting in its chief executive Manny Fontenla-Novoa quitting in August.

It had also merged its high street travel business with the Co-operative Travel - and there were reports at the weekend that the company plans to shut 200 shops, putting 1,000 jobs at risk.

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landslide victory by Mariano Rajoy's People's party (PP) in Sunday's general election did nothing to stop Spain's debt problems worsening on Monday as the prime minister elect remained powerless to calm the markets.

Mariano Rajoy: little room for manoeuvre. Photograph: Juan Medina/Reuters

 

Spaniards were proud of having avoided an Italian-style government of unelected technocrats after they gave conservative Rajoy the go-ahead to introduce reform and impose further austerity.

But commentators warned that, similar to the technocrats running Italy and Greece, he had only limited options. "None of his predecessors have accumulated as much power as he will have," said Jesús Ceberio, a former El País editor. "But, paradoxically, none had such little room for manoeuvre."

Rajoy is hampered by the country's system for handing over power, which takes a month, and the impatience of markets that sent the cost of Spanish debt higher on Monday morning. He must also obey the dictates of an EU, dominated by German chancellor Angela Merkel, which has imposed severe austerity programmes on member countries with debt problems. "A large part of his most immediate programme is already set out in the fiscal consolidation plan demanded by Europe," Ceberio said.

Rajoy will, for example, be unable to choose Spain's deficit levels over the next three years, as strict targets have already been set by the EU.

The PP leader has warned that he does not carry a magic wand and will not be able to perform instant miracles, even though yields on Spanishbonds are floating dangerously towards the 7% level that economists consider unsustainable.

Rajoy's main message to investors is that Spain will be "compliant", meaning it will meet the deficit target of 4.4% set by the EU for next year. In a country where growth is zero and austerity already threatens a double-dip recession, that is likely to require further massive spending cuts or tax hikes, or a mixture of both.

On Sunday night he pledged to make Spain respected in, among other places, Frankfurt. That was recognition that the country now depends heavily on the Frankfurt-based European Central Bank, which has been buying Spanish bonds to keep yields down.

Rajoy is, however, in tune with Merkel, with whom he spoke by phone on Monday. Merkel's spokesman, Steffen Seibert, said they discussed "Spain's great problems".

Reforms that bring no cost to Spain's cash-strapped treasury, such as to the labour market, may come first.

Jaime García, an economist at a PP thinktank, said he expected Rajoy to announce "shock measures" soon.

PP leaders have urged the outgoing socialist government of prime minister José Luis Rodríguez Zapatero to speed up the transfer of powers, even though the law requires parliament to meet on 13 December before Rajoy can take over.

"There are extraordinary problems which demand that a holiday period between governments should not exist," said PP spokeswoman Soraya Sáenz de Santamaría. Economist Nicholas Spiro, of Spiro Sovereign Strategy, said: "The fact that investors have to wait another month for Mr Rajoy's cabinet to take the reins only adds to the uncertainty."

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euro crisis

Ian Langsdon/European Pressphoto Agency

President Nicolas Sarkozy at an Armistice Day ceremony in Paris this month. Mr. Sarkozy, facing re-election in April, fears becoming the next casualty in the euro crisis.

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Euro crisis hits UK property sector

 

This month’s statistics from Rightmove highlight how the relentless stream of economic uncertainty around the euro zone crisis has eroded consumer confidence to the extent that it now dominates decisions when it comes to moving home. A 13% fall in the number of new sellers coming to market compared with the previous month, and an 11% fall compared with November 2010, illustrate a growing reluctance to make big financial decisions in these times of uncertainty. Those that have chosen or been forced to sell have dropped their prices by £7528 (-3.1%) in the last month, only the third fall so far in 2011 but the biggest monetary fall since December 2007. Miles Shipside, director of Rightmove, said: “Markets dislike uncertainty, and so do people who are deciding whether or not to enter the property market. Agents report that many would-be sellers are postponing their marketing until the new year, influenced by the current wall-to-wall media coverage of the Greeks and Italians attempting to get their own far-flung houses in order. It’s no great surprise that those who have braved the stormy conditions have had to accept a substantial ‘haircut’ on their asking prices.” The month-on-month fall of 3.1% is the third largest in percentage terms ever recorded by Rightmove. Though it reported a 3.2% fall last November, this year’s price drop is coupled with a substantial fall in the number of new sellers. New listings are down 11% on the same period a year ago. The current weekly run-rate of 21,375 new properties coming to market is the lowest recorded in November since the Lehman Brothers crash-affected period in 2008, when it was similarly depressed at 20,098. Such a shortage would typically be expected to help support prices, but, unusually, coincides with the third largest percentage fall ever measured. The lack of fresh sellers and the large price fall indicate that the current negative economic outlook has caused the seasonal slowdown to come early this year. This lead indicator of consumer inactivity from the housing market will raise concerns in other sectors of the economy that are reliant on consumer spending. All regions are showing monthly price falls, the first time this has happened for over three years. However, with lower levels of new listings, especially in higher price brackets, there is some volatility at a regional level. The overall theme of a more buoyant market in the south and a harder-hit north remains, though there is nationwide consensus that the balance of power tips further still against sellers. Findings from the Rightmove  Consumer Confidence Survey for the fourth quarter show that 70% of home movers feel that it is currently a bad time to sell. Interestingly, they also hold the view that sellers’ travails give buyers much improved negotiating power, with 61% stating they felt it was a currently good time to buy. Shipside said: “While most home movers will have seen some foreign prime ministers losing their jobs, they will be much more keenly aware of the unsettled outlook for their own employment locally. When you are busy looking over your shoulder, you are unlikely to think it is a good market for selling. However, that does mean there are opportunities for those who are able to buy, especially as the earlier than usual seasonal slowdown will leave sellers who have to sell in an even weaker negotiating position. Those who are looking to trade up should not lose heart however, as while you may have to accept a lower price for your own property, you should be able to negotiate a good deal on whatever you are buying.” Those who are highly motivated to sell will have to prepare for a longer period of subdued buyer activity before the market traditionally picks up in the new year, especially in locations where there is an oversupply of property for sale. Average unsold property per estate agency branch has fallen from 78 properties to 75 in the past month, with properties coming off the market as buyers move in before Christmas. Rightmove said it would have expected it to fall more rapidly given the low level of new listings coming to market, and it is further evidence of the subdued number of sales. Some winter buying opportunities in areas of oversupply will be available for bargain hunters, and interestingly many agents report that buying activity is on the increase from investors. Buy-to-let investors looking to raise finance for new purchases are benefiting from increased lender competition, resulting in higher loan-to-value ratios and lower interest rates. With over half of tenants expecting rents to be higher in 12 months’ time, according to a recent Rightmove survey, investors will be feeling more confident about improving yields too. They have the benefit of greater access to finance than first-time buyers, with whom they are often competing when buying, and the ability to pay down the mortgage more quickly due to the prospect of improving rental returns. Shipside said: “Reports suggest that buy-to-let mortgage approvals are at their highest for nearly three years. With good prospects for long-term tenant demand from those that cannot buy and consequently solid rental returns, investors will be looking forward to seeing sellers suffer a longer than usual buyer slowdown this winter.”

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Germany is selling itself during the crisis as a haven of stability

Germany is selling itself during the crisis as a haven of stability – and the financial markets even believe it. But, in truth, it’s hardly better off than the others. And its public role of disciplinarian is arrogant and dangerous

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Thomas Cook is running low on cash and has begun talks with its banks

Thomas Cook planes parked at Munich airport last year. Photograph: Alexander Hassenstein/Getty Images

Thomas Cook is running low on cash and has begun talks with its banks, in an effort to increase its borrowings to tide it over the slow Christmas season.

Shares in the tour operator fell by more than three quarters on Tuesday morning after it admitted that trading has "deteriorated" in recent months. It is now seeking to borrow more in the short term, and has postponed the publication of its financial results until the talks are concluded.

Shares in the company, which abruptly lost its chief executive three months ago, tumbled by more than 75% to 9.3p at one stage.

Tour operators tend to run low on cash in the slower winter months, but even so, the news stunned the City. Only last month, Thomas Cook said it had agreed a further £100m in short-term funding from its banks explicitly for the winter lull.

A spokeswoman said that discussions with banks were merely a "prudent" and "pro-active" move. Thomas Cook still has cash in the bank, she said, but wants to be prepared for any unexpected shocks over Christmas. All customer orders are protected by the ATOL protection scheme and equivalent programmes, she added. "Thomas Cook still has cash on the balance sheet, but because conditions have deteriorated further [since October], particularly around trading, some of that extra funding has been used up. Thomas Cook feels it needs more headroom to be prudent," she said.

Interim CEO Sam Weihagen added: "It's business as usual. We are trading within all out business, and financial, covenants, we have all the protection in place like any other travel company, and customers should not worry at all."

The company is seeking roughly £100m more in its latest talks. It made the decision to renew talks with banks on financing after realising the scale of the recent downturn in an internal trading update meeting yesterday.

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shiny Audis and BMWs that still line the narrow streets of Benalup are a reminder that this Andalucían country town once boasted the greatest number of luxury cars per head in the south-western province of Cádiz.

 Photograph: Tracey Fahy /Alamy

The shiny Audis and BMWs that still line the narrow streets of Benalup are a reminder that this Andalucían country town once boasted the greatest number of luxury cars per head in the south-western province of Cádiz.

These days this charming place, set bull-rearing countryside inland from Gibraltar, holds a different kind of record: not only the worst unemployment rate in the country, but the worst in Europe.

"I don't know whether they can fix this," said 19-year-old Juan Carlos Gutiérrez, one of hundreds of young people who dropped out of school and now drift between part-time work, training courses and the dole queue. "I've picked asparagus and worked in a packing factory, but the jobs never last. The future is screwed."

"Everyone our age is out of work," agreed Nora Pérez, 22, as she waited for the hearse bringing her grandmother to her funeral in the picturesque square of Our Lady of Perpetual Help. "My father went to Germany when he was young. Our generation may emigrate as well. Some of my friends have already left."

A grey-bearded, bespectacled man grins from a campaign poster overlooking the tiny ornamental gardens and bandstand on San Juan Street and calls on the people of Benalup to "sign up to change". He is Mariano Rajoy, the conservative People's party (PP) leader set to become Spain's prime minister at the general election on Sunday.

Rajoy will inherit a country in crisis. Growth is zero and unemployment has hit 23%. In Cádiz province, one in three is jobless. In Benalup 1,500 adults are without work. In a country where 46% of the under-25s cannot find employment, Benalup's unqualified youngsters are getting desperate.

"Many got into debt when times were good, buying houses and cars and starting families," says Ricardo Jiménez, who runs the local branch of the Catholic charity Caritas. "Families are very close and help one another out, but we already help 80 families and more come every month. Some are asking for help to feed their babies," he said. That means almost 5% of the town needs church handouts.

Others are handed money by the town hall or given whatever jobs local politicians can invent. "If we have to dig a ditch we do it by hand, rather than with a digger, because that way we employ more people," said councillor Manuel Moguel.

When Luis Moreno, 23, left school five years ago there was no need to worry about finding a job. All you had to do was walk on to a building site. "It was very simple," he says.

Now he receives €526 (£450) a month to attend a training course designed to turn a dozen locals into graphic designers, though design jobs are not plentiful in Benalup. "We have to learn new skills," he says. He is one of the lucky ones. Courses like this are heavily oversubscribed.

As markets demand ever higher interest payments for lending Spain money, and the European Union instructs its politicians to slash its deficit, public money is drying up. Yields on Spanish debt have now overtaken Italy's and soared to the same levels at which Greece and Portugal needed to be bailed out. And if Spain – a much larger economy – fails, then it may bring down the euro.

Spain's biggest problem remains the money owed to banks for property or land bought during a decade-long boom fuelled by cheap credit. The rows of unsold new homes in Benalup are evidence of Spain's housing bubble, which burst in 2008, leaving 700,000 unsold new houses on the market.

By 2004, more than 80% of Benalup's labour force worked in construction, building homes or holiday apartments along the nearby Mediterranean coast.

"Kids left school at 16 because they could earn €3,000 a month working a three-and-a-half-day week," says Moguel. "I had university-trained engineers working in my company who were earning less than that."

As money poured into people's pockets, the number of banks in town doubled. La Caixa, a newly arrived savings bank, started a local lending war – its manager winning awards. "Kids were buying houses and cars with the loans. And those who already had a house bought another one," says Moguel.

Now the town is plastered with "For Sale" signs from Servihabitat, the real estate branch of La Caixa, which is repossessing properties – though owners must still pay off their full debt after homes have been taken away. "That's unfair. You can't have a bank saying your home is worth €180,000, lending you the money and then repossessing it at half that price," says Moguel, a Socialist. He is uncomfortably aware that Spain's torrid affair with speculative capitalism happened largely on the watch of the Socialist government led by outgoing prime minister José Luis Rodríguez Zapatero.

Even in Benalup, where the Socialists once won 90% of the vote and which still remembers the bloody suppression of an uprising by local anarchists in the 1930s, the vote is now sliding to the right. "It used to be tough in this town to be from the People's party, but we won 43% of the vote at municipal elections in May," says Vicente Peña, a 40-year-old veterinarian who heads the party's local branch.

Peña delivers the same diagnosis of Benalup's ills as his Socialist opponents. "Too many people dropped out of school to become bricklayers. They can't even write a sentence properly."

Vicente Ruiz, owner of the El Buyí bar, will vote for Rajoy. "When Caritas is the biggest employer in town, things are really bad," he says. "It is shameful to have to ask for charity. What we need is a Mrs Thatcher."

Public money is being spent on silly projects, clients in his bar agree. "I've had 60-year-old women coming to bricklaying courses," says one, Nicolás. "It is ridiculous, but they each get their own overalls and hammer."

Peña says that, among other things, people will have to go back to the land. But even there things are going badly. Local horses, bred at stud farms set up as a trophy hobby by nouveau riche local builders, are now being sacrificed for meat and exported to dinner tables in northern Spain.

Pura Raza Española ponies are going for €150. Even fighting bulls are on the decline. "Town halls subsidised many bullfights," says rancher Salvador Gaviria. "But now they have no money, so the market is sinking." The number of bullfights across Spain has fallen by a third as a result.

Benalup is too far inland from the beach to attract tourists. A golf resort set up by a Belgian company, Fairplay, is said to be struggling. The Hotel Utopia, a boutique-style establishment that opened recently, was almost empty this week.

Spaniards hope Rajoy, who has been deliberately ambiguous about his austerity programme and liberal reform plans, can fix their problems. "If changing to Rajoy is going to solve everything, then why haven't the markets – which know he is going to win — shown they trust him?" asks Moguel.

Rajoy will come under immediate pressure to reveal how he plans to square a budget that needs some €41bn of savings next year. Those must come on top of austerity measures already imposed by Zapatero, who cut civil service pay and froze pensions.

Alberto Ruíz Gallardón, PP mayor of Madrid and a probable minister, has called on the socialists to hand over power quickly. "It could be dangerous to prolong the caretaker period," he says.

But parliament does not meet again until 13 December and it may take another fortnight to appoint Rajoy formally. Even if he takes over immediately, jobs are unlikely to reappear in Benalup.

Fortunately it retains the Cádiz tradition of laughing at adversity. Benalup's carnival musical groups are already practising the typicalchirigota songs that parody the powerful. Rajoy, Angela Merkel and the European Central Bank can all expect to feature in them by the time carnival comes around in February.

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British bonds win 'safe haven' tag in eurozone debt storm

 

British government bonds are attracting strong support, in sharp contrast to their troubled eurozone peers as investors seek a safehaven from a debt crisis now spreading to Italy, Spain and even France. British government bonds, or gilts as they are known, are in huge demand largely because the Bank of England is buying them up with newly-created money that it hopes can in turn be used to stimulate an anaemic economic recovery, analysts say. But investors are also reassured by the British coalition government's determined efforts to slash state debt and avoid the severe troubles that have snared the crisis-hit eurozone trio of Greece, Ireland and Portugal.

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Saif al-Islam Gaddafi after his capture, his fingers wrapped in bandages and his legs covered with a blanket

. Photograph: Reuters Tv/Reuters

Saif al-Islam Gaddafi, the fugitive son of Libya's deceased former dictator, has been arrested in southern Libya, according to officials from the country's new government.

Libyan state TV reported that Saif has arrived in captivity and unhurt at an army base in the town of Zintan, 90 miles south-west of Tripoli.

Muammar Gaddafi's second and highest-profile son was captured along with several bodyguards by fighters near the town of Obari in Libya's southern desert, said the interim justice minister and other officials.

Saif was said to be in good health, according to the justice minister Mohammed al-Alagi.

"We have arrested Saif al-Islam Gaddafi in [the] Obari area," the minister told Reuters.

Saif was captured near the southern city of Sabha with two aides trying to smuggle him out to neighbouring Niger, militia commander Bashir al-Tayeleb said.

Zintan, a base for forces in the Nafusa Mountains which played a key part in the storming of Tripoli in the summer, is reported to have crowds dancing in the streets and waving the Libyan flag.

There are reports that an angry mob tried to storm the plane on which Saif was taken to the western mountain town of Zintan, the home of one of the largest revolutionary brigades in Libya.

Gunfire is echoing across the capital, Tripoli, where large crowds have gathered in Martyrs' Square firing volleys of automatic fire in the air. "A great day, a great day," said Abdullah, a taxi driver, stuck in one of the traffic jams that built up around the square.

A Reuters reporter said a man who appeared to be Saif, but who refused to confirm his identity, was on a plane flown by militiamen to the town.

The man wore traditional robes with a scarf pulled over his face, but his features, visible despite a heavy black beard, as well as his rimless spectacles, conformed to pictures of the 39-year-old younger Gaddafi.

The man's thumb, index finger and another finger were heavily bandaged.

Libyan TV also showed him He is sitting by a bed and holding up three bandaged fingers as a guard looks on.

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An anti-British backlash gathered pace in Germany yesterday as David Cameron and Angela Merkel struggled to disguise the gulf between them on how to tackle the eurozone crisis.

 

An anti-British backlash gathered pace in Germany yesterday as David Cameron and Angela Merkel struggled to disguise the gulf between them on how to tackle the eurozone crisis. The Prime Minister returned from talks in Berlin with the German leader having made little progress in agreeing emergency action to stop the financial contagion spreading. Tensions were inflamed after a close ally of Ms Merkel predicted Britain would eventually adopt the euro. The German media joined the clamour, with the mass-circulation newspaper Bild questioning whether it might be better for Britain to leave the European Union altogether. Behind the leaders' smiles at a joint press conference yesterday, they acknowledged fundamental differences remained on three key issues: * New eurozone rules. Ms Merkel called for "limited" changes to European treaties to impose fiscal discipline on the single currency but stressed negotiations should only be for eurozone members. Mr Cameron wants Britain involved in the talks because of the potential impact of the decisions on the UK; * Whether the European Central Bank should intervene to support the eurozone. Ms Merkel – backed by the German public – is fiercely resisting the move, which she fears would fuel inflation. But Mr Cameron insisted that all the eurozone's institutions had to "do what is necessary to defend it"; * Taxing financial transactions within the EU. Ms Merkel supports the step but Mr Cameron fears it would disproportionately hit the City and said it would work only if applied globally. The Prime Minister said: "It is obvious we don't agree on every aspect of European policy, but I am clear we can address and accommodate and deal with those differences." He also stressed the two leaders were "very good friends" and "absolutely" in agreement on the importance of completing the single market, budget discipline and stopping EU spending from rising by more than inflation. But shortly before Ms Merkel also paid tribute to the "strong bonds of friendship" between the countries, her veteran Finance Minister used less diplomatic language in which he seemed to predict the end of sterling. Wolfgang Schäuble told the news agency DPA it was Britain's right to remain outside the eurozone "for the time being". But he said it was a matter of time before non-eurozone states became convinced of the euro's advantages. "One day the whole of Europe will have a single currency and perhaps it will happen more quickly than many people on the British island think," he said. Meanwhile, in an article headlined 'The Sick Empire', Der Spiegel magazine described Britain's plans to eradicate its budget deficit by 2015 as "utopian". It added: "The situation on the island is more dramatic than in parts of the continent. It's bad news nearly every day. "But the British government gets away with it by proclaiming carry-on-as-usual policies and by blaming its economic stagnation on the eurozone." The war of words between Berlin and London erupted on Tuesday after Volker Kauder, Ms Merkel's parliamentary party leader, lambasted Britain for being too self-centred on Europe. "Just looking for their own advantage and not being prepared to contribute – that cannot be the message we accept from the British," he told a congress of his ruling conservatives. The former Prime Minister, Sir John Major, weighed in behind Mr Cameron last night as he condemned the financial transaction tax as "a heat-seeking missile...aimed at the City of London". He also warned of an "undemocratic" move towards eurozone fiscal union. In an interview with Al Jazeera, he also predicted "one or two countries" would be forced to quit the euro.

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private jets waved through customs and immigration checks

Home Secretary Theresa May (Pic:PA)

THERESA May was fighting for her job last night after damning new documents fuelled the scandal of lax security at our borders.

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Leaked emails showed that thousands of private jet passengers were allowed into the UK without going through immigration or customs.

They also revealed the Home Secretary relaxed checks at airports on at least 2,500 occasions this summer.

And the Mirror can reveal passport applications are being secretly subjected to a controversial new “postcode lottery” trial scheme.

The High Risk Applications scheme is based on fraud statistics. Staff were given a list of postcodes to check against every new passport application or renewal. Applicants in areas deemed to be higher risk face several weeks additional delay in getting their passports.

In London, the only areas which get virtually no checks are postcodes that begin with WC and EC – the most central and prosperous areas. Meanwhile applications from women aged 50 and over are often waved through.

A source said: “It’s a classic Tory policy, and it discriminates against those they deem to be living in ‘poor’ areas.

“The whole thing smacks of elitism and snobbery. A lot of people are very unhappy with the process.”

These revelations come on the day ousted Border Agency official Brodie Clark gives evidence to MPs on how he was pushed out by Mrs May.

Borders boss Brodie Clark

Labour yesterday released the leaked emails showing UK Border Agency staff were told NOT to check passengers arriving in the UK by private jets – at the instruction of the Home Office.

From March 2, 2011, anyone on a private charter did not have to show their passports and could avoid customs. Figures show there are between 80,000 to 90,000 private flights each year, carrying two to three passengers.

The emails show an unnamed official at Durham Tees Valley Airport warned the UK Border Agency that the policy was putting the UK’s security at risk.

He said that staff “continue to feel uneasy about an instruction that is at odds with national policy and is creating an unnecessary gap in border security which, if exploited by the unscrupulous, could bring the Agency into disrepute”.

He also warned there was no way of checking if the number of people arriving in the country was the same as they had been advised.

His manager at the UK Border Agency’s Border Force said the “no checks policy” was part of a “new national strategy”.

In a further blow to Mrs May, other leaked documents showed how Britain’s borders were abandoned on hundreds of occasions over summer.

The Home Secretary ordered a pilot scheme, which ran from July to October this year, under which Border Agency staff could relax checks on passengers. It meant people arriving from the European Economic Area did not have the biometric chip in their passport checked, while children under 18 could be waved through.

These “level 2 checks” were used on at least 2,600 occasions. The relaxed regime was used to speed up queues at immigration control.

According to an email from a Border Agency Border Force official, the checks were relaxed 100 times in the first week of the trial and more than 260 times in the sixth week.

We revealed last week that officials warned Mrs May the easing of border checks could lead to a rise in child trafficking.

Mrs May admits to bringing in the pilot scheme without informing MPs. But she claims that Mr Clark went further by extending it to include passengers from outside Europe.

Mr Clark, who resigned last week, denies he acted without ministerial authority. His testimony to the Commons select committee could prove very damaging to Mrs May.

Shadow Home Secretary Yvette Cooper said last night: “This is startling new information about the scale of the borders fiasco.

“Ten days on there are even more questions than answers about what on earth was going on at our borders.

“Last week the Home Secretary told us no one had been waived through without checks. But these documents show passengers on private flights weren’t even seen.

"Last week the Home Office wouldn’t admit to having figures about how often checks were downgraded. Now we know those figures exist and that checks were downgraded 260 times in one week alone.

“The Home Secretary needs to show she is capable of sorting this fiasco out rather than making it worse.”

Last night, the Home Office refused to comment on the trial.

The UKBA said: “It is not true that we don’t carry out ­passport and warnings checks on private flight passengers and will deploy officers to airfields where we have concerns.”

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Ex-policeman jailed over VAT fraud

 

former police officer who admitted his part in a £365 million VAT fraud has been jailed for 10 years and three months. The conspiracy that Nigel Cranswick directed has taken the equivalent of 25 years of work to investigate, Judge Brian Forster said. The 47-year-old ex-South Yorkshire Police officer was a director of Ideas 2 Go, and, despite its modest base in a Sheffield business park, he claimed it bought and sold £2 billion worth of goods in just eight months. He has since admitted that the firm's trading, largely in mobile phones and computer software, was fictitious, and the aim was to generate paperwork from fake sales in order to claim back a fortune in VAT from HM Revenue and Customs. Judge Forster, sitting at Newcastle Crown Court, said: "This case concerned planned dishonesty resulting in the loss to the Revenue in the region of £365 million. "There were purported sales of billions of pounds. "The prosecution rightly described the case as an unprecedented attack on the Revenue. "The case has taken 25 man-years to investigate." Cranswick was recruited to play his role in the MTIC (missing Trader intra-community) fraud by others. Also known as carousel fraud, it involves importing goods from other EU states which are then sold through contrived business-to-business transactions. Cranswick, of Danby Road, Kiveton, Sheffield, admitted conspiracy to cheat HMRC at a hearing last month. After the sentencing, Exchequer Secretary David Gauke said: "This Government will not tolerate dishonest people stealing public money. "This sentence shows that those who try to commit fraud need to think again - HMRC will find you and the courts will punish you. "The additional £917m we have invested in HMRC will see more cases like this successfully prosecuted, sending a clear and powerful message." The judge said the sentencing exercise was to punish the offending and deter others. "The figures in this case are astonishing, they reveal the blatant nature of the fraud," he said. Between June 2005 and February 2006, I2G supposedly carried out almost 6,000 deals, with a turnover of £2.4 billion. Sentencing Cranswick, the judge said: "You were immediately before this fraud a serving police officer. Almost unbelievably you retired from the police force and became the organiser of this fraudulent operation. "You set up the company, you clearly accepted the direction of others - the organisers who are not before this court." Outside court, HMRC said Cranswick went "from rags to riches" soon after retiring, having been heavily in debt as a police officer. A spokeswoman said: "He made lavish improvements to his home, rented a luxury apartment in the Spanish town of Marbella and paid for private schooling and tennis lessons for his children. "Cranswick claimed that in the first six weeks of trading Ideas 2 Go had turned over more than £527 million. "The company had traded over £47 million before they even got round to opening a bank account for the business." HMRC assistant director for criminal investigation Paul Rooney said: "As a police officer Cranswick knew full well that he was breaking the law, yet, motivated by greed, he chose to overlook it for the opportunity of making what he wrongly assumed would be easy money. "He now has to pay a very high price for his poor judgment and lack of integrity. "This was a sophisticated fraud designed to steal hundreds of millions of pounds of tax, but it started to unravel when our investigations identified sales for more than 50,000 mobile phones, which the manufacturers hadn't even begun producing in their factories." Cranswick nodded as the judge passed sentence, and gestured to members of his family in the public gallery as he was led away. Also sentenced after admitting conspiracy to cheat the Revenue were Thomas Murphy, 27, of Dinnington, who was jailed for four and a half years; Cranswick's brother-in-law, Darren Smyth, 42, from Beech Road, Maltby, and Brian Olive, 56, from Buttermere Close, Doncaster, who were sentenced to three years and four months each; and former housing officer Andrew Marsh, 28, from Sheffield, who was jailed for two years and eight months. Cranswick's 44-year-old sister, Clare Reid, married to Smyth, was handed a nine-month sentence, suspended for 18 months, and ordered to carry out 150 hours of unpaid work after admitting two counts of false accounting. Cranswick styled himself as a singer-songwriter and can be seen on his website strumming a guitar to a song called Hit And Miss with the opening lines: "I'm in trouble, falling down a hole. How I got here, I won't ever know." He was lead singer with an indie band called Not The Police.

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