Wednesday newspaper round-up: Brexit, China, Schengen, Sports Direct

George Osborne has hailed a £8bn rise in tax revenues from the UK's highest earners as a vindication of his decision to cut the 50p rate. The chancellor told MPs on Tuesday that the increase in tax take “completely defies the predictions” made by the Labour party when he reduced the 50p rate for those earning more than £150,000 to 45p in April 2013. – Financial Times

Moody's has warned it may downgrade China’s sovereign rating, a sign of increasing investor concern over the country’s rising debt and dwindling foreign exchange reserves. The US rating agency revised its outlook on China from stable to negative, the first major step on the country by a rating agency since Fitch downgraded its rating three years ago, the first cut since 1999. – Financial Times

Europe's deep economic malaise is the result of "deliberate" policy choices made by EU elites, according to the former governor of the Bank of England. Lord Mervyn King continued his scathing assault on Europe's economic and monetary union, having predicted the beleaguered currency zone will need to be dismantled to free its weakest members from unremitting austerity and record levels of unemployment. – Telegraph

Europe could see €28bn wiped off the value of its economies as it faces the imminent collapse of the Schengen system of open borders, according to a leading investment bank. Up to 0.2pc of the European Union's GDP could be erased as a result of the spiralling costs of cross-border travel and disruption to internal trade that would return in a post-Schengen Europe, Morgan Stanley warned. – Telegraph

Sports Direct has been relegated from the FTSE 100 following a torrid three months in which £1.6bn has been wiped from the retailer’s value after a Guardian investigation into working conditions and a slump in trading at its stores. The group’s share price is now down more than 40% since the start of December and the retailer’s demotion from the premier league of UK listed companies was on Tuesday characterised as an example of the punishment investors can mete out to large companies that appear not to treat their workers fairly. – Guardian

Its motto is “Only the best is good enough” and Lego has lived up to that by recording the best performance in its 82-year history. The maker of toy bricks, figurines and themed sets said that its net profit had jumped by nearly a third to DKr9.2 billion (£959 million) on a revenue increase of 25 per cent to DKr 35.8 billion last year. – The Times