Germany split on increasing EU's bail-out fund – papers

Important members of Chancellor Angela Merkel's coalition in Germany are resisting plans for an increase in the EU's bail-out fund to protect Spain from contagion, complicating a crucial meeting of EU finance ministers on Monday.

Guido Westerwelle, vice-Chancellor and head of the FDP Free Democrats, said there was no justification for last week's call by Brussels for an urgent boost in the size and powers of the €440bn (£371bn) fund, writes the Telegraph.

"Only a small part of the fund has been used, so there is no need to talk about increasing it," he said, adding that any further aid must come on stringent terms.

The FDP's finance spokesman, Otto Solms, said the party's parliamentary group would oppose an expansion of the fund, and warned that it must not become a "bad bank" by purchasing EMU bonds pre-emptively.

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Bank urged to keep interest rates low

The Bank of England should "hold its nerve" and avoid pressure to raise interest rates, an influential economics forecaster has said.

The Ernst & Young Item Club says any increase in the bank base rate from the current historic low of 0.5% could endanger the economic recovery, writes the BBC.

The Bank should stand firm against temporary pressures such as the VAT rise, it says.

Meanwhile, Deloitte is warning of a "bumpy road to recovery".

In its 2011 UK economic review, it says it expects GDP growth this year and next of just 1.5%.

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CBI calls for reform to woo investors

Business leaders have called for sweeping reforms of tax and regulation to encourage more long-term investors to buy UK equities.

The Confederation of British Industry (CBI) said the government needed to change tax rates and the rules that are deterrents to investment in UK companies, writes the Independent.

"It [the Government] needs to re-examine solvency and other accounting rules that discourage ownership [of shares] at certain points in the economic cycle," added the CBI, which will today publish its response to the the Department of Business Innovation and Skills's consultation paper, A Long-Term Focus for Corporate Britain.

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Goldman Sachs in the firing line over predicted $15.4bn wage bill

Wall Street bank Goldman Sachs will move centre stage in the ongoing furore over bankers' bonuses this week by setting aside an estimated $15.4bn (£9.7bn) to pay its staff for 2010, amounting to a possible average of $435,000 per employee.

Goldman, a perennial lightning rod for fury over banking excess, is likely to suffer a drop in earnings from its figure of $13.4bn a year ago, according to the consensus of analysts' forecasts, and staff payouts will be short of its record $20.2bn distribution before the financial crisis hit in 2007.

But the amounts going to Goldman's bankers will feed into an already frenzied debate about the morality, wisdom and justice of six- and seven-figure pay packets at the top of the finance industry, coming hot on the heels of parliamentary scrutiny of bonuses at Barclays, RBS and Lloyds.

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Chinese president says currency system is outdated

Chinese President Hu Jintao has said the international currency system dominated by the US dollar is a "product of the past".

Mr Hu also said China was taking steps to replace it with the yuan, its own currency, but acknowledged that would be a "fairly long process".

The remarks to two US newspapers come ahead of a state visit by the Chinese leader to Washington this week. They reflect continuing tensions over currency issues between the two powers.

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