01/12/2011 BBC News at Ten

Tonight at Ten, from the Bank of England, the starkest warning yet

of the storm to come. The governor fears the potential damage caused

by the eurozone debt crisis and warns banks to brace themselves.

They are advised to build up reserves, cutting dividends and

build up savings. It is serious and threatening. Therefore those with

responsibilities to deal with it really do need to take action.

APPLAUSE Tonight, France calls for a new start with a new European

treaty to safeguard the Euro. France and Germany have announced a

major summit to try to re-shape the EU. Also tonight: Britain's biggest

ever trial of former police officers has collapsed. The judge

said they could not be guaranteeed a fair hearing. After the warmest

autumn on record, fears of a drought. 7 And Jeremy Clarkson

apologises for remarks he made about public sector strikers.

there is discord may we bring harmony... 32 years on, we talk

exclusively to Meryl Streep with the challenges of playing the Iron

Lady. Coming up in sport, Martin O'Neil is set to take over from

Good evening. The governor of the Bank of England has revealed the

extent of his fears for the future of the British economy. Mervyn King

described a serious and threatening economic climate, dominated by the

debt crisis in the eurozone. He urged British banks to brace

themselves and set aside more money by cutting back on bonuses and

dividends. Our chief Economics Correspondent, Hugh Pym has the

details. Winter weather is bad enough, but a warning today that a

really big storm could be on its way a financial one. It is brewing

in the eurozone, it could be bat efring our shores before too long.

That forecast came from the governor of the Bank of England, no

less, and his new Committee of financial watchdogs, the words

unexpectedly blunt. No-one looking at the position could deny it is

serious and threatening. Therefore those with responsibilities to deal

with it really do need to take action. With turmoil and protests

in the eurozone and worries about Italy's finances, it is clear that

senior policy makers are now thinking through what may happen if

one or more countries goes bust. Investors certainly think that is

possible. This chart measures the market perceptions of the risk of a

country defaulting, for the UK, it is 8%. The Italian risk has risen

sharply to 40% and there is seen that as a 100% likelihood that

Greece culled go bust. To what extent are you making plans for a

possible default of a member of the Euro and the long-term breakup of

the eurozone? As you expect, the Government together with the FSA

and the Bank of England are making contingency plans against a wide

range of contingencies. Over there at the Bank of England they are

normally kaifr careful with the language that they use, but today's

message is clear, that they think that the situation is potentially

very serious. So what exactly are the fears about the threats to the

UK banking system? And what does it mean for the wider economy, for the

households and businesses? Will are concerns about the UK's banks

exposure to volume economies. Total lending to Greece and private

sectors is about �7 billion. For Portugal, it is �16 billion, but

that is dwarfed by the lending to Italy and �90 billion of British

lending to Ireland. If a chunk of these go sore, the UK banks will be

hit hard. Losses elsewhere could hamper the bank's abilities to lend

here, including to consumer credit and mortgages. There could be a cut

back in lending. So the regulators want the banks to put money aside

now and if need be cut dividends to share holders and bankers' bonuses.

The industry says it is kerbing pay packets. There may be pay packets

being kerbed, but mainly they will be paid in shares and locked up for

several years. Bankers and regulators can only prepare and

wait for the tied of events to take its course and hope that the UK's

defences can hold fast. The key to resolving the debt crisis is to

refund the European Union, based on a new European treaty that would

give the EU a new structure, that is the view of Nicolas Sarkozy of

France. He announced this even he will be holding talks with Angela

Merkel of Germany o on Monday to agree a plan to safeguard the

future of the Euro and to shore up the eurozone. We have this report

from Paris. In a landmark speech to his supporters, the French

President said that Europe would have to make crucial choices in the

weeks ahead. Europe, he said, needs to be re-thought, re-designed. He

spoke of what would have been unimaginable a short while ago,

life without the Euro. The Euro exists. Its death would have

dramatic consequences for the French. It would make our debt

unsustainable. The collapse of confidence would paralyse

everything. The French would get poor. We have no right to let is

disaster occur. Nicolas Sarkozy said that Europe could be swept

away by the crisis if it does not get a grip. He said that France and

Germany would push to give the EU a new treaty to enforce strict

budgetary discipline. TRANSLATION: France is fighting with Germany for

a new treaty, more discipline, more solidarity, more responsibility, a

true economic government. Although there would be greater control of

national budgets, the French President said that this would not

be a march towards supernationality. He knows how sensitive this would

be for the French people. He envisages closer integration, not

by giving more power to Brussels, but by forging closer links between

the governments. Nicolas Sarkozy and Angela Merkel will now meet in

Paris on Monday to work on a joint plan to safeguard the future of

Europe. Despite recent embraces, there are still differences between

the two leaders. The French hope is that if strict budgetary discipline

is in place it will weaken German opposition to the European Central

Bank, acting as the lender of last resort, the one step that could

calm the markets. Tomorrow, David Cameron is coming here to see

Nicolas Sarkozy. He will want to explore what the proposals for the

treaty change mean and whether in exchange for British support he can

win important concessions. With me is our Economics Editor, Stephanie

Flanders. We have heard the words from Mervyn King and from Nicolas

Sarkozy, how do you rate signals of progress this evening? We have been

here before. There are signs of momentum. Signs that the

politicians are starting to feel the pressure again. But it still

feels to anyone looking on the outside, that they are doing things

the wrong way around. Talking about the long-term future of theow, not

the short-term measure to fix the crisis, but that is the way that

Germany needs it to be. She needs to be able to show to her people

that the European system will be fixed in the long-term. That this

will not happen again. That's why the President, Nicolas Sarkozy, is

talking about the need for a new treaty to refund the European Union.

That is why you hear the President of The European Central Bank

talking about a fiscal pact today. The hope is if you hear these

things coming from the French, from others, then Germany is willing to

make a step towards a compromise, to take more collective

responsibility for the crisis, so that the short-term problem can be

fixed, but a lot of progress to be made. As Mervyn King made clear,

there is not very much time left to do it. Thank you very much. The

biggest trial of former police officers ever seen in Britain has

collapsed. The eight former officers from South Wales police

were charged with colluding to pervert the course of justice

during a murder choir inquiry. The judge ruled that they could not get

a fair hearing. The were accused of the wrongful murder of Lynette

White in 198. It is a tragic and scandalous case that has hung over

South Wales like a bad smell for almost a quarter of a century, the

reputation of the police and the justice system at stake it began

with the murder of a local prostitute, Lynette White, in 1988,

stabbed 50 times. Three pen were convicted of the killing but freed

in two years, victims of a miscarriage of injustice, amid

claims that they had been framed by the police. Swansea Crown Court is

where the case was it collapsed. Eight former police officers

accused of perverting the course of the situation had the trial

acquitted as evidence had been damaged. Today I'm elated. At last

I feel vindicated. I have done nothing wrong in the inquiry. I'm

delighted. Delight for many in South Wales today, but a different

mood at the Crown Prosecution Service here in England and Wales,

Keir Starmer is concerned that the collapse of a trial that has cost

millions and likely to undermine confidence in the justice system's

ability to deal with alleged corruption within its ranks.

Today's case echos another trial which also collapsed at the Old

Bailey earlier in the year. Four men accused of killing Private

detective Daniel Morgan with an axe in 1957 walked free after the

prosecutors admitted that they could not have access to all of the

key evidence. Scotland Yard admitted that police corruption

with was a debilitating factor in the investigation. One of the men

acquitted of killing Lynette White in South Wales said that the

collapse of today's trial in Swansea undermines the confidence

in the ability of the system to police itself. It was just a farce.

It was just a farce. We really believed, family, friends, close

family, that, you know, that things would be done here. You know, but

it is just disappointing, again. In 2003, Jeffery Gafoor admitted he

murdered Lynette White after DNA evidence was uncovered, but 23

years after the killing, a collapsed trial and the prospect of

further inquiries into what went wrong, means that the tragedy here

still cannot be laid to rest. The Met Office is expected to confirm

tomorrow that this autumn has been one of the warmest on record. There

has been so little rain in some parts of England, that the

Environment Agency is warning that the drought has affected parts of

the country since June and it could last into next summer. We have more

details. A salmon battling upstream at Ludlow in Shropshire, but so

little rain, the river level is too low and the fish can in the make it.

A reservoir near Hampton, low, so special permission has been given

to fill it from a river. Large areas of England are at risk of

drought. In Essex, the driest county in Britain, the reservoir is

being expanded to hold more water it is one of the largest

construction projects in the country, but the big question is

whether it will be adequate if the conditions change in the years

ahead? Even now, they have to bring water here all of the way from

Norfolk. The forecast for the climate change suggests that the

summer is here -- that the summers here may become even drier. Making

the schemes like this for storing water all the more important if the

forecasts are right. Essex is drier than many parts of the Middle East,

but will the lack of rain across many regions now become more

common? No-one can be sure. can't say one way or the other,

really. This is the problem. We don't know the answer. Will it be

as bad as people say? Will it be worse? Will it be not as bad? We

have to do what is needed. So, it is difficult planning for too

little water, and it is just as hard planning for too much. In

Nottingham, a huge new defence against floding. This was the scene

here 11 years ago -- flooding. The new scheme should protect 16,000

homes, but against what? The Environment Agency is cautious.

Building a new wall that can be raised if needed. This scheme will

have a lifetime for decades. We want to ensure that it can adapt as

the climate change materialises or does not. We don't want to

overspend foring so that may not happen in the future. The threat

may not be that bad? Maybe not, but we can adapt if it is. So, how to

prepare? I asked a top advisor to the Government. I don't think there

is a need to panic. There are decisions to put off for the future,

but looking at long-term decisions, the decisions that have a long-term

impact, if we don't get it right now, we could be sleep walking into

a disaster for future generations. Predicting when the rain tops up

the reservoirs and by how much is a tough challenge, not just for the

decades ahead, but right now with an anxious wait for rain this

Winter. Coming up. The right honourable gentlemen knows well we

had no choice but to close the school. Meryl Streep talks about

playing Margaret Thatcher and falls in love with the BBC's art editor

along the way. The Shakespearean element to it like a a Lear or a

Hamlet. Oh, I love you, Simon There's new evidence today that the

crisis in the eurozone is undermining growth across the world.

In China, the world's strongest economy, manufacturing output is

shrinking, partly because of the fall in sales to the fragile

economies of the eurozone. Our business editor, Robert Peston,

reports from China on how they're coping with the destructive forces

from the West. Shanghai, China, the world's second

biggest economy. Still growing fast while western economies stagnate.

But the umph is off the Chinese boom because the eurozone,

floundering under its debts, isn't buying as much as Chinese stuff.

All those troublesome western debts? Well some would say China is

partly to blame for them. Just look at the extraordinary wealth that

China's economic miracle has generated. But the way that China,

other Asian countries, Germany, have exported so much more than

they import have produced so much more than they consume. Well,

that's put the global economy on fragile foundations, because their

enormous surpluses, their savings have been lent to us so that we can

buy their stuff and in the process the debts of the US, the UK, much

of the eurozone, have become unsustainably large. Just a few

miles outside Shanghai is a farmer, Mr Xui, living and working in harsh

conditions of the sort we haven't seen in Britain for 100 years.

China's economic miracle allowed his son to escape the poverty of

the land. TRANSLATION: My son doesn't do farm work now. My

village is in an industrial area and light industry developed very

well here. On the farm we live at the mercy of the elements, which

means the income isn't stable. My son won't do farm work. He doesn't

want to do it at all. He is a salesman in a factory. Because of

the millions coming on to the Chinese jobs market every year,

China needs economic growth of 8% or more to prevent social unrest.

But with our economies so weak, purchases of Chinese stuff by

western consumers probably won't deliver that rise in prosperity any

longer, so I asked one of China's new generation of billionaires

whether the Chinese themselves can be persuaded to spend more?

TRANSLATION: Yes, it's happening. Consumption is

growing at a faster rate than the economy. Workers' wages have been

improving and that will drive people's consumption. The older

generation doesn't spend too much money, but the younger generation

has almost the same spending habits as their American counterparts.

If China reengineers its economy so people consume more and save less

that should help us to remake our economy so that we consume less and

export more. The sad truth about Britain right now is that we could

hardly sell less to the economy whose future may well determine all

our futures. Robert Peston's series, The Party's

Over: How the West was Bust, starts this Sunday at 7.00pm on BBC2.

European Union foreign ministers have agreed to tighten sanctions

against Iran because of concerns about its nuclear programme.

They're adding the names of 180 Iranian companies and individuals

to a list of those targeted by sanctions. The foreign ministers

also condemned the attack on the British embassy in Tehran.

The broadcaster Jeremy Clarkson has apologised for saying public sector

workers who went on strike yesterday should be shot. He said

the comments, made on the The One Show last night, were clearly not

meant to be taken seriously. The BBC, which has received almost

5,000 complaints, has also apologised. Trade unions said he

should be sacked for the remarks. Nick Higham has the story.

Jeremy Clarkson at Heathrow today on his way to China, and implying

he had been quoted out of context. See what I actually said and don't

judge... What he actually said was this:.

Do you think the strikes have been a good idea? Fantastic. Absolutely.

Never had - London today, has just been empty. Everybody stayed at

home, you can whizz about. Restaurants were empty. Then he

added this in the same satirical tone. We have to balance it,

because this is the BBC. Frankly, I would have them all shot. I would

take them outside and execute them in front of their families, I mean,

how dare they go on strike... the BBC apologised and so did

Jeremy Clarkson saying he meant it as a joke. But others, including

many supporters of yesterday's strike, failed to see the funny

side. They saw a combination of bad taste and a politically motivated

attack. For Jeremy Clarkson, a close friend of David Cameron, to

say that is not only misjudged but it's incitement to hatred. It's a

horrible thing to do. Tonight's One Show went on air with no mention of

the row. Unison welcomed Jeremy Clarkson's apology, and invited him

to spend a day on a hospital ward with one of its members. Earlier,

on ITV, the Prime Minister sounded a touch embarrassed by the affair.

Obviously, a silly thing to say and I am sure he didn't mean that. I

didn't see the remark. It's a silly thing to say. Jeremy Clarkson

actually said two things that provoked complaints. The other was

a joke about people who commit suicide by throwing themselves

under trains. The One Show team thought that was so offensive they

apologised at the end of the programme. But they didn't

apologise for the remark about strikers. Presumably because they

thought it fell just the right side of the line between edgy humour and

the offensive on the other. When Russell Brand and Jonathan

Ross crossed that line by making offensive prank calls to Andrew

Sachs, one was sacked and the other suspended. Jeremy Clarkson himself

is no stranger to controversy, suggesting truck drivers murdered

prostitutes caused offence, so did calling Gordon Brown a one-eyed

idiot. I have said that now... Reaction to his latest remarks?

was downright disgraceful. Absolutely disgraceful. Just his

sense of humour. But maybe he shouldn't have been on The One Show.

But Jeremy Clarkson can take it as well as dish it out.

Good one! This was his reaction when he went to Oxford to receive

an and -- an honorary degree. one, was that you? Great shot.

The coffee chain Starbucks has announced plans to create 5,000

jobs in the UK over the next five years. It's due to open 300 new

outlets, most of them drive- throughs. The company says the move

will particularly benefit the young unemployed. Half the chain's coffee

shop staff are under 24-years-old. Twenty one years after Margaret

Thatcher left Downing Street, the Iron Lady is being portrayed on the

big screen by the Hollywood star Meryl Streep. She's been describing

the challenge of portraying one of the most powerful women of the 20th

century, in an exclusive interview with our arts editor, Will Gompertz.

I ask the right honourable gentleman whose fault is that?

There might be only one Margaret Margaret Margaret Thatcher, but

she's had many imitaters over the years. Teachers cannot teach when

there is no heating... Now Meryl Streep is taking a turn to don the

blue suit. What did she want to bring to what is already a well-

worn part? I wanted to, in some way, capture whatever it was that drew

people to her and whatever it was that made people have just a

special venom for her as a public figure. You turn if you want to.

The lady's not for turning. most difficult thing that I had to

do was to find the breath to not only make my points, but to make

sure that you didn't get your point in at any point - and another thing.

The milk's gone up. 49p a pint. Meryl Streep plays two Margaret

Thatchers. One is the political powerhouse, the other a

fictionalised version depicts a frail old lady with dementia having

recurring visions of her decessed husband, Denis. To play one

character in two different ways is not easy. Not without standing too

grand about it, I suppose is an element, a Shakespearean element to

it, like a Lear or Hamlet. Oh, I love you! Will Gompertz, oh, my God.

It's concerned with the end game and how, you know, power

deminutishes. -- diminishes in every capacity. Here is a man who

knows Margaret Thatcher well. He found Meryl Streep's performance

totally convincing, but was uncomfortable about the portrayal

of his one-time boss in old age with failing mental health. This

will be very controversial. Margaret Thatcher is depicted as a

feeble old lady, lonely, to some extent hallucinating and I found

that very painful to watch. If it were about my mother I would feel

very, very unhappy about it. I do think you can defend it as a work

of art. Did you have qualms doing it while she was still alive?

felt that if we did it in the right way, yes, it would be OK. Members

of my family have had dementia and friends. There is a feeling that

the walls are just more permeable between the present and the past.

Meryl Streep has been nominated for more Oscars than any other actress