Britain faces more austerity pain

FINANCE minister George Osborne has warned Britons that they faced an extra year of austerity measures and insisted that reversing his belt-tightening measures now would be a "disaster".

Chancellor of the Exchequer Osborne said Britain would face spending cuts and tax hikes until 2018 - after the coalition government led by Prime Minister David Cameron had already previously extended the program by two years to 2017.

The bleak announcement in a budget update, coming alongside news that the government is slashing its outlook for economic growth, is likely to heap further pressure on the administration mid-way through a five-year term in power.

Addressing parliament on Wednesday, Osborne also admitted that the government would fail to meet its official target for reducing public debt as a proportion of British economic output by 2015-16.

"It is taking time but the British economy is healing after the biggest financial crash in our lifetime," Osborne insisted in his autumn statement.

Confirming that he was prolonging the government's austerity program to 2017-18 - beyond Britain's next general election due in 2015 - Osborne said: "We are making progress. It's a hard road, but we are getting there. Britain is on the right track and turning back now would be a disaster."

Explaining why he was extending cuts in public spending and hiking taxes again, Osborne said the British economy faced "deep-seated problems at home and abroad."

Britain's Conservative-Liberal Democrat coalition government, which came to power in 2010, has imposed a series of painful austerity measures to slash a record deficit that was inherited from the previous Labour administration.

Cameron and Osborne have overseen the loss of tens of thousands of public-sector jobs, slashing workforces in the military, health service and various state departments.

The government has also faced huge demonstrations from disgruntled workers and students in response to the cuts.

The main opposition Labour party said Osborne's economic plans were "in tatters".

The party's finance spokesman Ed Balls said: "Today, after two and a half years, we can see, people can feel in the country, the true scale of this government's economic failure.

"Our economy this year is contracting, (and) the chancellor has confirmed government borrowing is revised up this year, next year and every year."

Britain meanwhile slashed its economic outlook, forecasting the economy would shrink by 0.1 per cent this year and then return to growth in 2013, according to figures published alongside the budget update.

The new forecast, issued by the Office for Budget Responsibility (OBR) fiscal watchdog, showed a sharp drop on the previous 2012 growth estimate of 0.8 per cent that was given in Osborne's annual budget in March.

The OBR added that British gross domestic product was forecast to grow by 1.2 per cent in 2013. That compared with previous guidance for greater expansion of 2.0 per cent.

Osborne also revealed that debt as a proportion of gross domestic product (GDP) was now expected to fall in 2016-17 - a year later than the government's previous forecast.

Recent official data showed that Britain had escaped from recession in the third quarter of this year, with its economy growing by a robust 1.0 per cent.

However the return to growth was owing to one-off factors such as the London Olympics and rebounding activity after public holidays in the second quarter.

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Citigroup to axe more than 11,000 jobs

CITIGROUP says it will eliminate more than 11,000 jobs.

The bank says it's looking to cut expenses and improve efficiency.

The company said on Wednesday that the cuts will result in about $US1 billion ($A958.91 million) in charges in the fourth quarter and about $100 million in charges during the first half of next year.

It expects about $900 million in expense savings in 2013 and annual expense savings of more than $1.1 billion starting in 2014.

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Cannibal mystery as Russians found in wild

RUSSIAN investigators have opened a murder case after two fishermen were rescued following three months lost in a remote far east forest amid fears the pair could have eaten a companion to stay alive, officials say.

Four men disappeared in August on a river-fishing expedition to the vast Yakutia region in the Russian Far East, one of the most remote and inhospitable places in the world.

Rescuers finally found two of the men this month by the Sutam River some 250 kilometres from the nearest town of Neryungri in the south of Yakutia, but without two companions.

The men claimed their group had split up and said the others were likely still alive, as they were used to living in the open.

But a murder probe was opened after a team of top investigators from the regional capital Yakutsk found fragments of a human corpse close to the place where the pair was found.

"Investigators carried out an examination of two areas. Fragments of a human corpse with signs of a violent death were discovered and removed," the Yakutia branch of Russia's Investigative Committee said in a statement.

"A criminal case into suspected murder has been opened."

According to a report on the lifenews.ru website, the men have fled the hospital where they were being treated for severe frostbite and were now on the run.

Russia has no article in the criminal code for cannibalism but the state RIA Novosti news agency said that the initial theory was that the two men had eaten one companion. It was not clear what happened to the fourth man.

"What we found were chopped human bones, fragments of a skull and a bloodstained chunk of ice," an investigator, who was not named, told the Komsomolskaya Pravda tabloid daily.

"It's clear that this person did not die of his own accord," said the investigator.

Meanwhile local news site Sakhapress.ru said that their expedition had been aimed at gold prospecting and not fishing as claimed.

Two of the four are local inhabitants of the Russian Far East and the others are from the region of Saratov in central Russia who were visiting the area.

The human remains have yet to be identified.

The wife of one of the men who remains missing, named as Andrei Kurochkin from Saratov, said she had not yet given up hope for her husband.

"The police said that they had found human remains. But I believe that Andrei is alive. I am hoping other hunters have found him and he is not alone," Olga Kurochkina told the newspaper.

The rescued pair, reportedly aged 37 and 35, have denied any wrongdoing and said they had managed to survive as the winter set in a wooden hut by foraging for wild foods.

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US stocks mixed in opening trade

US stocks have opened mixed after a weak November private-sector jobs report reflected the impact of the devastating superstorm Sandy.

After five minutes of trade, the Dow Jones Industrial Average was up 41.62 points (0.32 per cent) at 12,993.40.

The S&P 500-stock index edged up 1.52 points (0.11 per cent) to 1408.57 while the tech-rich Nasdaq Composite fell 5.74 (0.19 per cent) to 2990.95.

Before the opening bell, payrolls firm ADP reported businesses added just 118,000 jobs in November to the economy, down from 157,000 in October.

Moody's Analytics estimated that Sandy, which battered the Northeast in late October, had sliced 86,000 jobs from the total.

"Abstracting from the storm, the job market turned in a good performance during the month," said Marc Zandi, Moody's chief economist.

US stocks closed slightly lower on Tuesday as Washington continued to wrangle over a budget plan that would avoid the year-end "fiscal cliff."

The Dow slipped 0.11 per cent, the S&P 500 dipped 0.17 per cent and the Nasdaq lost 0.18 per cent.

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Somali Islamists attack Puntland troops

SOMALIA'S Islamist Shebab have killed at least ten soldiers from the northern Puntland region, an area where the al-Qaeda linked militants are feared to be carving out new bases, officials say.

Khalif Issa Mudan, defence minister of the semi-autonomous region, said that ten of his troops "were killed by Shebab after a roadside bomb exploded by their vehicle" on the road to the mountainous Galgala area late on Tuesday.

"We killed seven of the Shebab... and now our troops are now hunting down the others who carried out the attack," Mudan said.

The Shebab, who claimed to have also raided an army base, said they had killed 29 soldiers, with four of their own fighters killed.

"We attacked a military camp near Bossaso," Shebab spokesman Abdiaziz Abu Musab said, referring to the main port in the region.

Shebab fighters, long active mainly in southern and central Somalia, are on the back foot, reeling from a string of losses as they battle a 17,000-strong African Union force as well as Ethiopian troops and Somali forces.

But as the fighters flee a series of once powerful strongholds - including most recently the strategic and lucrative southern port of Kismayo - Galgala in the northern Golis mountains has provided refuge.

The Golis mountains, straddling the porous border between the autonomous state of Puntland and self-declared independent Somaliland, is honeycombed with caves and difficult to access.

The northern mountains have been under the longtime control of warlord, arms dealer and Shebab ally Mohamed Said Atom, on UN Security Council sanctions for "kidnapping, piracy and terrorism."

Puntland forces battled Atom's troops in 2010-2011, damaging his militia force but failing to crush the militants, and the Shebab have since bolstered the fighters in the region.

The Shebab, who abandoned fixed positions in the war-torn capital Mogadishu last year, have also carried out a series of guerrilla attacks there, including suicide bombings.

AFP a

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Israel advances settlement plan

AN Israeli plan to build new settler homes in a sensitive area near Jerusalem has passed a first hurdle, sparking fury from the Palestinians, who said building there would end all hopes of peace.

Israel's plan for construction in a strip of West Bank land outside Jerusalem called E1 has sparked a major diplomatic backlash, with experts warning it could wipe out hopes of establishing a viable Palestinian state.

"If Israel decides to start building in E1 and approves all the settlements in it, we consider it to be an Israeli decision to end the peace process and the two-state solution, which ends any chance of talking about peace in the future," Palestinian negotiator Saeb Erakat told AFP on Wednesday.

He spoke shortly after Israeli radio stations said a defence ministry planning committee which met on Wednesday gave its green light for the plan to be deposited for public approval, pushing it one step ahead in the planning process.

The Civil Administration's planning committee "approved the program for new building in the E1 area between Jerusalem and Maaleh Adumim," public radio said.

Maaleh Adumim is a settlement some five kilometres from the eastern edge of Jerusalem.

Public radio said the committee had approved plans for 3200 homes in E1 and in annexed east Jerusalem, which would now be made available for public objections.

"For two months the public will be able to submit objections to the project and after that the debate on continuing it will continue," it said.

Army radio ran a similar report, saying the Civil Administration had "approved moving ahead with the project to build in E1 between Jerusalem and Maaleh Adumim."

Observers say Israeli plans to build in E1 and connect Maaleh Adumim with east Jerusalem would effectively prevent the future establishment of a contiguous Palestinian state, dooming the two-state solution.

Earlier, an Israeli official confirmed that the defence ministry committee had begun examining plans to build in E1 that have been on hold since 2005 following heavy US pressure.

"After that it will need to go through another few stages," he told AFP.

"Final approval for the plan will have to come from the political level. There won't be any bulldozers going in any time soon. It will take at least several months, if not years."

News of Israel's intention to push ahead with plans to build in E1 emerged on Friday, a day after the Palestinians won UN non-member state observer status, in what was a major diplomatic blow to the Jewish state as it tried to block the move.

It sparked an immediate outcry from top diplomats in Washington and Brussels, with at least six governments summoning the Israeli ambassador to protest at the move.

The UN warned the plan could deal an "almost fatal blow" to the two-state solution.

Earlier, Israel's Haaretz newspaper said that the committee was examining plans to build 1200 homes in the southern sector of E1 and another 2176 in the eastern part.

Construction there has been on Israel's radar since the early 1990s, but the plans were never implemented because of heavy pressure, largely from Washington.

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EU, US in alliance to hit web child sex

THE 27-nation European Union, the United States and a score of other countries including Australia have launched a "global alliance" to stamp out trade in online images and videos of child sexual abuse.

"Child sexual abuse online is a hideous crime and it is also a hidden crime, often perpetrated in the darkest corners of the web," the EU's home affairs commissioner Cecilia Malmstroem said at a joint news conference with US Attorney General Eric Holder.

"It is very hard and painful to talk about it. It is such a horrible thing that sometimes we just want to close our eyes in front of it," she said.

The launch follows an agreement a year ago between Holder and Malmstroem to try to place the fight against the "disgusting crimes" of online child abuse high on the global agenda.

She said images of helpless children being tortured and raped were increasingly circulating on the web, with an estimated one million such images available online and 50,000 new pictures uploaded every year.

"This is why we are here today: to say loud and clear that we are serious about combating child sexual abuse online," she said.

"When these images are circulated online, they can live on forever. Our responsibility is to protect children wherever they live and to bring criminals to justice wherever they operate. The only way to achieve this is to team up for more intensive and better coordinated action worldwide", said Malmstroem.

Holder said the initiative "will strengthen our mutual resources to bring more perpetrators to justice, identify more victims of child sexual abuse, and ensure that they receive our help and support,"

Along with the 27 EU members and the US, the members of the Alliance include Albania, Australia, Cambodia, Croatia, Georgia, Ghana, Japan, Moldova, Montenegro, New Zealand, Nigeria, Norway, the Philippines, Serbia, Republic of Korea, Switzerland, Thailand, Turkey, Ukraine and Vietnam.

One of the aims of the alliance is to establish dedicated law enforcement units for these crimes in all countries and make it easier to initiate joint cross-border police investigations.

Countries also committed to making sure that the Interpol international database of child abuse material grows by 10 per cent annually.

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