Monday newspaper round-up: Austerity, bonds, Brexit, Inmarsat

A cabinet split emerged last night after Michael Gove claimed taxes should not have to rise to pay for an end to austerity despite the Chancellor's warning that ordinary working people will foot bill. Faced with increasing calls to end the public sector pay cap and put more money into schools and hospitals Philip Hammond has cautioned that money will have to be raised to pay for the extra spending. - Telegraph

Central bank officials across the world are increasingly nervous about the shock of bond issuance to hit public debt markets as they knock away the prop of quantitative easing and reverse crisis-era policies. A mere hint of monetary tightening last week sent bond yields spiraling higher in the US, Europe, and East Asia, a foretaste of how hard it may be to engineer a gentle return to normality. - Telegraph

The UK's ageing population will force the government to raise taxes, borrow more or cut back on healthcare spending even if Britons are forced to work until they are 75, according to Legal & General. Analysis of official projections showed raising the retirement age by a decade overnight would still result in “painful choices” for policymakers. - Telegraph

Initial public offerings are on the rise again in London, despite the shock election result and continued confusion around Britain’s plan for Brexit. Data from EY shows that there have been 18 IPOs in London so far this year, raising £4.2 billion in total. - The Times

Virgin Media’s £3bn network expansion plan is running badly behind schedule, threatening the growth targets of its parent company, the pan-European cable giant Liberty Global. Documents seen by The Daily Telegraph reveal that in June the Project Lighting scheme fell 61pc short of its goal for connecting new homes. - Telegraph

Plans to provide Wi-Fi internet access on planes across Europe could be grounded as satellite operator Inmarsat faces a court challenge from rivals. ViaSat, Eutelsat and Panasonic have lodged a complaint with the European Court of Justice seeking an injunction on the proposed service, which is expected to be a lucrative new business for the FTSE 250 company, which launched the required satellite last week and plans to switch on the Continent-wide European Aviation Network (EAN) towards the end of the year, after it gains clearance from national telecoms regulators. - Telegraph

British officials have quietly abandoned hope of securing the government’s promised “cake and eat it” Brexit deal, increasingly accepting the inevitability of a painful trade-off between market access and political control when the UK leaves the EU. Government insiders report a dramatic change of mood at the Department for Exiting the European Union (DExEU) since the general election, with growing Treasury influence helping force ministers to choose between prioritising economic interests or sovereignty. - Guardian

The UK is examining a potential shortcut to securing a raft of critical free trade deals, giving it potential breathing space to negotiate its own agreements after it leaves the EU. The proposal, involving an associate membership of the European Free Trade Association, could allow ministers to sign up to Efta’s existing free trade deals outside the EU, rather than negotiate them from scratch or fall back on bare WTO terms. - Guardian

Signing Britain up to a customs union with the European Union need not prevent it from striking important trade deals elsewhere, according to influential new thinking in Whitehall. Officials and business leaders are anxious to puncture what they see as myths about a customs union that have deterred ministers from considering it as a much-needed economic option after Brexit. - Guardian

Theresa May’s proposal to protect the rights of EU citizens after Brexit is so poor, it will badly damage the rights of Britons living in Europe, campaign groups have told the European commission. In an official response to the EU Brexit negotiating team, British in Europe and the3million have said that if May’s proposal is adopted it would represent a “severe reduction of the current rights” enjoyed by Britons in Europe. - Guardian

Insurers face a bigger blow from planned changes to the rules on personal injury damages than from flooding in the North of England, the head of an industry lobby group has claimed. Huw Evans, the director-general of the Association of British Insurers and a former Downing Street special adviser, told The Telegraph that the change in the rate used to determine payouts will have an impact "far greater than any of the floods combined" if the Government ignores the industry's plea for a rethink.

A severe skills gap is costing UK businesses more than £2bn a year as companies struggle to find workers with the right attributes, according to inaugural research by The Open University. The body reckons companies are having to shell out £2.2bn on higher salaries, recruitment costs and temporary staffing to fill vacancies amid a dearth of those with the skills they want. - Telegraph

The contribution of the hospitality industry to the British economy has grown more quickly than that of any other sector since the 2008 downturn and looks set to create another 500,000 jobs over the next five years. According to data from Ignite Economics, hospitality is Britain’s fourth largest employer, accounting for 3.2 million direct jobs and a further 2.8 million indirect jobs. - The Times

The private equity backer of Britain’s leading sub-prime car lender has written off its entire investment in the business and withdrawn its funding, highlighting growing fears over the state of the motor finance industry. The Car Finance Company said that there was “material uncertainty” over its future after Pine Brook, its American private equity owner, backed away from supporting the lender only two years after it had bought the business. - The Times

Whitehall backlogs have caused the Government to miss its own deadline for awarding a major rail contract, raising fears of delays to the start of the new franchise. The Department for Transport (DfT) planned to announce the winner of the West Midlands rail franchise before the end of June but the contract has not been awarded. - Telegraph

One in seven tenants privately renting from a landlord is paying more than half of their income in rent, compared with just 2% of homeowners who pay more than half their income on their mortgage, according to new research. The Local Government Association, which compiled the figures, said high rents were preventing young adults from saving up for a deposit for a home of their own, with the average deposit now costing 71% of a first-time buyer’s annual income. - Guardian

Greece is considering tapping into international bond markets after years of financial isolation. When exactly the market return will be remains unclear, but many officials within the left-wing administration of Alexis Tsipras suggest that Greece could issue bonds within weeks, which would be the first since an ill-fated attempt in 2014. - The Times

BAE Systems has won a £3.7 billion contract to build warships for the Royal Navy, safeguarding more than 3,400 skilled jobs and maintaining investment in British shipbuilding. Sir Michael Fallon signed the deal for three of eight Type 26 frigates, the first of which is due to be delivered in the mid-2020s. - The Times

Theresa May’s plans to fine technology companies for failing to remove extremist material online have been likened to the actions of a Chinese dictator by her own counterterrorism watchdog. Max Hill, QC, cast doubt over the effectiveness of the proposal to “criminalise” companies such as Google and Facebook, warning it could force them “offside” when co-operation was badly needed. - The Times

Global investor access to China’s financial markets is widening further with the launch of a bond trading link with Hong Kong. Officials banged a gong and clinked glasses of champagne on Monday morning as they officially kicked off trading on the long awaited Bond Connect link. It’s the latest channel to link up financial markets in Hong Kong, a global financial centre, and mainland China, where authorities are gradually lowering restrictions for overseas investors. - Guardian