U.S., Britain most desirable spots for foreign workers - poll

LONDON (Reuters) - Britain has leapfrogged Australia to become the world's second most desirable location for professionals looking to live and work abroad, trailing only the United States, a survey found on Wednesday.

Worries about Britain's fragile economy, high household bills and squeezed wages were eclipsed by its growing reputation as a centre for fast-expanding technology companies, the poll said.

The United States held on to its status as the most popular location for professionals moving overseas, followed by Britain, Australia, Singapore, Canada and Switzerland.

"The United States is still the dominant force, but the UK is definitely on the march," said Dan Fox of recruitment company Hydrogen, which commissioned the survey of 2,000 people in 90 countries.

"We are seeing a lot of Europeans coming to work in the UK. It is all about wanting to work for the up-and-coming companies."

The biggest motivators for staff looking to work abroad were better career chances, new experiences and the potential to earn more, the survey said.

Full survey results are online: http://www.hydrogengroup.com/servlet/servlet.FileDownload?file=00PD000000Hj92wMAB

(Reporting by Peter Griffiths; Editing by Mike Collett-White)

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Britain, U.S., Australia hunt for tax evaders yielding leads

By William James and Patrick Temple-West

LONDON/WASHINGTON (Reuters) - A joint effort by Britain, the United States and Australia to track down people who conceal wealth in offshore tax structures has helped identify more than 100 individuals, Her Majesty's Revenue and Customs (HMRC) said on Thursday.

"The message is simple: if you evade tax, we're coming after you," said Chancellor George Osborne.

After a string of high-profile multinational companies were shown to be paying little or no tax in the UK, Britain has been pushing the European Union and other major economies to clamp down on tax evasion and avoidance.

HMRC said it had teamed up with Australian and U.S. authorities to help speed up analysis of 400 gigabytes of data they have obtained.

Michael Danilack, a deputy U.S. Internal Revenue Service commissioner said the United States was willing to share this information with other countries.

UK and U.S. officials declined to identify the source of the information.

"This data is another weapon in HMRC's arsenal," Osborne said.

The data may overlap with data leaked to The International Consortium of Investigative Journalists (ICIJ), the watchdog group said on Thursday.

In April, the ICIJ and media partners began reporting on alleged tax evasion cases stemming from 260 gigabytes of information, including cash transfers and incorporation dates.

"The files illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes," the ICIJ said in a statement.

HMRC said some of those identified as a result of the three-country collaboration were already under investigation for tax evasion, and more than 200 other accountants, lawyers and advisers face scrutiny over their roles in setting up offshore tax structures.

Early results from the project with the U.S. IRS and the Australian Tax Office highlighted the use of trusts and companies in territories such as Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands.

(Reporting by William James in London and Patrick Temple-West in Washington; Editing by Kevin Drawbaugh, Toni Reinhold)

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Britain should quit European Union - Nigel Lawson

LONDON (Reuters) - Prime Minister David Cameron's plan to claw back powers from the European Union is doomed and Britain would be better off leaving the 27-member bloc, former chancellor Nigel Lawson said on Monday.

Lawson, who served as Margaret Thatcher's chancellor from 1983 to 1989, is the most senior member of Cameron's Conservative Party to call for Britain to withdraw from the EU.

Cameron promised in January to renegotiate the terms of Britain's 40-year-old membership of the bloc and to hold an "in-out" referendum if he is re-elected in 2015.

Writing in the Times newspaper on Monday, Lawson said Cameron attempts to claw back powers from Brussels would probably only secure "inconsequential" results.

Lawson said the EU had become a "bureaucratic monstrosity" and Britain's economy would be stronger if it left the bloc after 40 years.

"I strongly suspect that there would be a positive economic advantage to the UK in leaving the single market," Lawson wrote. "In my judgment the economic gains would substantially outweigh the costs."

His intervention piles pressure on Cameron, days after the Conservatives were shaken in local elections by the surging anti-EU UK Independence Party (UKIP).

(Reporting by Peter Griffiths; Editing by Guy Faulconbridge)

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Champagne celebrations turn to prosecco in frugal Britain - report

By Paul Casciato

LONDON (Reuters) - More than half of British consumers refuse to spend money unless it is "absolutely necessary" in a weak economy, with prosecco now more likely to mark a special occasion than champagne, according a new consumer trend report released on Friday.

Global research firm Mintel's annual "British Lifestyles" report said one day after the country skirted a "triple dip" recession that consumers have made paying their bills and saving for a rainy day their top priorities.

Britain's Office for National Statistics provided some relief for Conservative Prime Minister David Cameron's government on Thursday when it reported that the economy grew faster than expected in the first three months of the year.

But the legacy of a sluggish economy that has flatlined since 2010 appeared clear in a report which showed that the top financial priority for 82 percent of British consumers was just keeping up with their bills.

"British consumers are adjusting to the new economic reality, with financial prudence and savvy shopping already the default for many," Mintel consumer analyst Ina Mitskavets said in a statement with the report.

Beyond paying the bills, Britons put saving up for rainy days and big ticket purchases as their other top priorities.

British consumers were also working longer hours, taking fewer holidays and more than a third said things have become more difficult in the past year.

In other trends highlighted in the report, more people were cooking and baking from scratch at home and beauty product sales remained strong because it was an affordable way for women to lift their mood, the so-called "lipstick effect."

In a sign of cooling interest in the high life for ordinary people, value sales of champagne dropped by 32 percent between 2007 and 2012 as drinkers reached for prosecco, cava and other sparkling wines instead when out in bars and restaurants.

"If you are out with all your friends celebrating your birthday you don't want to lose that celebration moment to pop the cork," Mintel drinks analyst Chris Wisson said.

"If you can save money while doing it, why wouldn't you? ... I think that's the rationalisation people have come to."

Mitskavets said other factors appearing on the horizon included a generation of youngsters who were taking on the parsimony of their parents after formative years spent watching the family struggle with the bills.

"The younger generation are also growing up extremely frugal because they came of age in that age of austerity," Mitskavets said. "The next generation is going to always have that in the back of their minds. We need to save as much money as possible."

(Reporting by Paul Casciato; editing by Mike Collett-White)

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Britain stages grand funeral for "Iron Lady" Margaret Thatcher

LONDON (Reuters) - London will stage its biggest political funeral in almost half a century on Wednesday when Britain's governing elite join the Queen and global leaders to bid farewell to former Prime Minister Margaret Thatcher, better known as the "Iron Lady".

In an event comparable to that of Winston Churchill's funeral in 1965, Thatcher's coffin will be carried atop a horse-drawn gun carriage through streets lined with admirers, and some detractors, from parliament to the city's most famous cathedral.

The bells of London's iconic Big Ben clock tower will fall silent for the first time since Churchill's funeral and more than 700 men and women from Britain's armed forces will honor a woman who led them to victory in the 1982 Falklands War as foreign dignitaries from around 170 nations look on.

The ceremony, which will be streaming live above, will cover the following events:

• The arrival of the Queen & Duke of Edinburgh
• The arrival of the coffin
• The coffin being carried into the Cathedral by Falkland Guards followed by Margaret Thatcher’s family
• The remaining military entering the Cathedral
• Departure of the coffin and loading back onto the hearse
• Departure of the Queen & Duke of Edinburgh

Thatcher, who ruled Britain from 1979 to 1990, died on April 8 after suffering a stroke.

In life, the woman the Soviets christened the "Iron Lady" divided the British public with her free-market policies which sometimes wrought wrenching change on communities. In death it is no different.

Polls have shown that many are unhappy that the estimated 10-million ($15 million) pound bill for the funeral is being picked up by the taxpayer, while some left-wing lawmakers say the pomp-filled funeral is excessive and amounts to a party political advert for her ruling Conservative party.

But her admirers, of which there are many in her party and in southern England, argue that her historical profile merits such a funeral. She was the country's first and only woman premier, was Britain's longest-serving prime minister of the 20th century, and won three general elections.

More than 2,300 mourners will attend including 11 serving prime ministers from around the world, the British government's entire cabinet, two heads of state and 17 foreign ministers.

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Members of Britain's Armed forces rehearse for the funeral of former British prime minister Margaret Thatcher, in the early hours of the morning, at St. Paul's Cathedral in the City of London April ... more 

Members of Britain's Armed forces rehearse for the funeral of former British prime minister Margaret Thatcher, in the early hours of the morning, at St. Paul's Cathedral in the City of London April 15, 2013. The funeral for the former prime minister, who died on April 8, will take place on Wednesday. REUTERS/Toby Melville (BRITAIN - Tags: POLITICS SOCIETY OBITUARY RELIGION) less 

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But there will be notable absences. Former Soviet leader Mikhail Gorbachev is too frail to attend and Nancy Reagan, the widow of Thatcher's great U.S. ally Ronald Reagan, is also unable to come.

Thatcher struck up a close relationship with Reagan during the Cold War, backed the first President George Bush during the 1991 Gulf War, and was among the first to discover that Gorbachev was a man she could "do business with".

Draped in the red, white and blue British flag, Thatcher's coffin lay overnight in a 13th-century chapel in Britain's parliament, a forum she dominated for years.

The guest list for her funeral has prompted talk of diplomatic snubbing.

On Tuesday, a spokesman for Cameron denied the United States had snubbed Britain by not sending anyone senior from the administration of President Barack Obama.

"Absolutely not," the spokesman said.

Obama is sending George Shultz, a secretary of state for Republican President Ronald Reagan, and James Baker, who had a number of senior roles in both the Reagan and George H.W. Bush presidencies. No senior serving politicians are attending.

The spokesman also said the Argentine ambassador had refused an invitation to attend, a decision colored by worsening diplomatic tensions over the contested Falkland Islands.

Relations between the two countries remain strained after a 1982 war over the islands during which Thatcher ordered a task force to retake the contested South Atlantic archipelago after Argentine troops seized it by force.

'I VOW TO THEE MY COUNTRY'

The funeral will be covered live by Britain's biggest broadcasters. Mourners will hear her favorite hymns including the well-known early 20th century celebration of British patriotism "I vow to thee my country" and bid her farewell.

St Paul's, the 300-year-old cathedral where her funeral will take place, played host to the funerals of Nelson, the Duke of Wellington and Churchill as well as to the wedding of Prince Charles and Lady Diana Spencer. It also withstood two bomb strikes during the World War Two.

The abiding domestic images of her premiership will remain those of conflict: huge police confrontations with mass ranks of coalminers whose year-long strike failed to save their pits and communities; Thatcher riding a tank in a white headscarf; and flames rising above Trafalgar Square in the riots over the deeply unpopular "poll tax" which contributed to her downfall.

But even her critics concede that - for better or for ill - she transformed the face of Britain.

In 1979, when she came to power, Britain was in the grip of a long post-war decline with notoriously troubled labor relations, low productivity and was being outperformed by continental rivals France and Germany.

Data show she turned that around by boosting home ownership and the service industry, breaking the power of Britain's trade unions, and deregulating financial services.

But the price - growing inequality and the closure of large swathes of the country's industrial base - left parts of the country struggling to create new jobs and rebuild decimated communities, leaving a bitter taste which endures.

Some of her most extreme opponents have "celebrated" her passing, holding a poorly-attended "party" in central London on April 13. Cameron, who has found comparisons to Thatcher uncomfortable, has denounced such events as "distasteful".

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Britain's Prime Minister Margaret Thatcher gives a jubilant wave from the stairs inside her Conservative party headquarters in London early in this June 12, 1987 file photo, after sweeping back to ... more 

Britain's Prime Minister Margaret Thatcher gives a jubilant wave from the stairs inside her Conservative party headquarters in London early in this June 12, 1987 file photo, after sweeping back to power for a third consecutive term of office after the general election. Former British Prime Minister Thatcher has died following a stroke, a spokesman for the family said. REUTERS/John Eggitt/Files (BRITAIN - Tags: POLITICS OBITUARY) less 

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Britain should focus on roads, not rail - survey

LONDON (Reuters) - British manufacturing firms want the government to shift public infrastructure spending away from rail to focus on upgrading the road network, a poll published on Tuesday showed.

The survey, conducted by industry body EEF, showed that 72 percent of 209 firms who took part cited the road network as the number one priority for investment in transport, compared with just 6 percent for rail.

The current coalition and the previous Labour government put rail at the heart of their infrastructure plans. Both backed the 16 billion-pound Crossrail project in London and the 33 billion-pound "HS2" high-speed rail line that will connect the capital to cities in the north of the country.

Between the fiscal years of 2005/06 and 2011/12, public capital spending on rail increased more than twice as quickly as spending on roads. In 2011/12 the government invested 6 billion pounds in rail, compared to 4.6 billion in roads.

Chancellor George Osborne delivered a budget in March that experts warned would not be enough to fix the country's infrastructure backlog or promote economic growth.

The EEF also called for the creation of an independent commission to deliver infrastructure to take the politics out of long-term decision making.

Osborne said in his budget that he plans to "make greater use of independent advice", alongside the expertise of former London Olympics CEO Paul Deighton who now works in the Treasury.

The government will publish its updated transport strategy later this year.

(Reporting By Christine Murray; editing by Keiron Henderson)

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Britain opens inquest into Berezovsky's unexplained death

By Maria Golovnina

LONDON (Reuters) - Britain opens a judicial inquiry into the death of Russian oligarch Boris Berezovsky on Thursday to establish how he died in the locked bathroom of his vast mansion near London.

Berezovsky, who survived years of intrigue, power struggles and assassination attempts in Russia, was found dead on Saturday in his home in Ascot, a town close to Queen Elizabeth's Windsor Castle.

Police said there was no sign of a struggle and the 67-year-old's death was "consistent with hanging", suggesting he might have killed himself.

Berezovsky was the king-maker behind Vladimir Putin's ascent to power in Russia but later became his number-one enemy and fled to Britain in 2000.

Berezovsky's associates have hinted he was depressed after losing a $6 billion court case against another tycoon, Roman Abramovich, last year, when a judge humiliated him publicly by saying he was an unimpressive and unreliable witness.

Other people close to him have said they were not convinced by the official account.

"If he really hanged himself why was that not known from the very beginning?" said Andrei Sidelnikov, an opposition figure who knew Berezovsky. "I don't believe it was a suicide."

In Russia, state media quoted Deputy Prosecutor General Alexander Zvyagintsev as saying the government would continue efforts to "bring back assets that Berezovsky and his accomplices acquired criminally and legalized abroad".

Mass-circulation tabloid Komsomolskaya Pravda, which supports the Kremlin, ran a front page headline on Wednesday that read: "Did Berezovsky hang himself or did he have help?"

The inquest will open in the town of Windsor on Thursday.

MANIPULATOR

A master of political manipulation, Berezovsky had been known as the "godfather of the Kremlin" and wielded immense influence during a decade that followed the Soviet collapse.

Once a mathematician with Nobel Prize aspirations, he built a massive business empire under former President Boris Yeltsin and was the first of Russia's so-called oligarchs.

He then became one of the first victims of a ruthless political crackdown of the early Putin era after falling out with his protégé.

Once in exile, Berezovsky often said he feared for his life, particularly after the fatal poisoning of his friend and former Russian spy Alexander Litvinenko with a dose of the radioactive isotope polonium-210 in London in 2006.

Another friend and business partner, Badri Patarkatsishvili, also died in unclear circumstances two years later.

For many, Berezovsky personified the decade of wild capitalism, chaos and violence that followed the Soviet fall. He left a trail of enemies in Russia and beyond, and no doubt once featured on many a hit list.

Berezovsky survived an assassination attempt in 1994 when a bomb exploded in his car, decapitating his driver.

In his final months he led a much less extravagant life, apparently bitter and broken and rarely seen in public.

He suffered another blow in 2011 when he was forced to pay one of Britain's biggest divorce settlements to his former wife Galina. Media reported the settlement topped $100 million.

"My father was not the typical parent, nothing about him was ordinary," said his daughter Anastasia in a tribute. "He has colored my life in infinite ways, and I know that what he concerned himself most with was making all his children proud."

(Additional reporting by Steve Gutterman in Moscow; Writing by Maria Golovnina; Editing by Andrew Heavens)

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Britain to offer childcare tax break to parents

By Peter Griffiths

LONDON (Reuters) - Prime Minister David Cameron will unveil a new tax break on Tuesday to help working parents with their childcare costs from 2015, the government said, seeking to placate families squeezed by austerity, a stagnant economy and weak wage growth.

The announcement comes a day before Chancellor George Osborne is due to reject calls to abandon the coalition government's deficit reduction programme when he delivers his budget statement to parliament.

Trailing in the polls before an election due in 2015, Cameron and Osborne's Conservatives are accused by the Labour opposition of choking the economic recovery with a focus on austerity rather than growth.

Under pressure to do more to revive the economy and help hard-pressed households, Cameron will visit a nursery school in London on Tuesday to set out details of the tax break. It will be open to 2.5 million families and will be worth up to 1,200 pounds ($1,800) a year per child.

Britain's childcare costs are among the highest in the world, hitting parents already struggling with years of rising household bills and economic uncertainty.

"This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs," Cameron said in a statement.

A finance ministry spokeswoman said around 1 billion pounds had been set aside for the scheme, doubling the existing budget and taking in five times as many parents. The annual breakdown of public funding for the system will be announced later.

The Labour Party, which urged Osborne on Saturday to cut payroll taxes to boost growth, said many families had already lost money in government cuts.

"This announcement will not make up for the up to 1,500 pounds that families on middle and low incomes have lost in cuts to childcare support," Labour education spokesman Stephen Twigg said.

(Editing by Alison Williams)

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China replaces Britain in world's top five arms exporters: report

BEIJING (Reuters) - China has become the world's fifth-largest arms exporter, a respected Sweden-based think tank said on Monday, its highest ranking since the Cold War, with Pakistan the main recipient.

China's volume of weapons exports between 2008 and 2012 rose 162 percent compared to the previous five year period, with its share of the global arms trade rising from 2 percent to 5 percent, the Stockholm International Peace Research Institute (SIPRI) said.

China replaces Britain in the top five arms-dealing countries between 2008 and 2012, a group dominated by the United States and Russia, which accounted for 30 percent and 26 percent of weapons exports, SIPRI said.

"China is establishing itself as a significant arms supplier to a growing number of important recipient states," Paul Holtom, director of the SIPRI Arms Transfers Program, said in a statement.

The shift, outlined in SIPRI's Trends in International Arms Transfers report, marks China's first time as a top-five arms exporter since the think tank's 1986-1990 data period.

Now the world's second-largest economy, China's rise has come with a new sense of military assertiveness with a growing budget to develop modern warfare equipment including aircraft carriers and drones.

At the Zhuhai air show in southern China in November, Chinese attack helicopters, missiles, unmanned aerial vehicles and air defenses were on public show for the first time.

SIPRI maintains a global arms transfers database base that tracks arms exports back to the 1950s. It averages data over five-year periods because arms sales vary by year.

"Pakistan - which accounted for 55 percent of Chinese arms exports - is likely to remain the largest recipient of Chinese arms in the coming years due to large outstanding and planned orders for combat aircraft, submarines and frigates," SIPRI said.

Myanmar, which has been undergoing fragile reforms that the United States thinks could help counter Beijing's influence in the region, received 8 percent of China's weapons exports.

Bangladesh received 7 percent of the arms, and Algeria, Venezuela and Morocco have bought Chinese-made frigates, aircraft or armored vehicles in the past several years.

Beijing does not release official figures for arms sales.

Germany and France ranked third and fourth on the arms exporter list. China followed only India in the acquisition of arms, though its reliance on imports is decreasing as it ramps up weapons production capabilities at home.

After decades of steep increases in military spending and cash injections into domestic defense contractors, experts say some Chinese-made equipment is now comparable to Russian or Western counterparts, though accurate information about the performance of Chinese weapons is scarce.

China faces bans on Western military imports, dating back to anger over its crushing of pro-democracy protests in and around Tiananmen Square in 1989. That makes its domestic arms industry crucial in assembling a modern military force that can enforce claims over Taiwan and disputed maritime territories.

China has faced off recently with its Southeast Asian neighbors and Japan over conflicting claims to strings of islets in the South China Sea and East China Sea, even as the United States executes a military pivot towards the Pacific.

(Reporting by Michael Martina; Editing by Nick Macfie)

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Britain to devolve public spending to boost growth

LONDON (Reuters) - A plan to devolve potentially billions of pounds of public spending to local authorities and businesses in Britain to boost a stagnant economy won a green light from the government on Monday.

The Treasury said the coalition government had approved almost all the recommendations in a blueprint drawn up by Michael Heseltine, a former Conservative deputy prime minister.

The scheme will see public money for projects such as housing and transport, now controlled by various government departments, pooled into a single pot from 2015.

Regional groupings of local authorities and businesses - known as local enterprise partnerships - will bid for the funds and, if successful, oversee how they are spent.

The amount of money to be allocated to the new "Single Local Growth Fund" will be decided in a spending review to be published in June.

Heseltine had said shifting public spending away from central government would make the country more competitive.

He said on Monday the government's decision to accept the majority of his recommendations was "the most strategic supply-side decisions" he could recall.

"In essence, it accepts that London and its functional bureaucracies should rely more on the incentivisation of England's provinces and less on central instruction," Heseltine added in a statement released by the Treasury.

One issue left for a later decision was how to devolve funding for training and apprenticeships to the local level.

Officials at the Department for Business Innovation and Skills (BIS), led by Liberal Democrat Vince Cable, have argued that fixing Britain's skills shortage required a national approach, people familiar with the negotiations said last week.

The government rejected a proposal to make greater use of its existing powers to investigate foreign takeover bids of British companies, arguing Britain was committed encouraging open markets and inward investment.

(Reporting by Tim Castle and William Schomberg; Editing by Stephen Powell)

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Britain pledges to defend distant cousins on Falkland Islands

By Shadia Nasralla and Maria Golovnina

LONDON (Reuters) - Prime Minister David Cameron warned Argentina on Tuesday that Britain would always be ready to defend citizens in the remote Falkland Islands after they voted almost unanimously in a referendum to remain British.

Argentina, 300 miles (500 km) to the west of the Falklands, has claimed the South Atlantic archipelago for almost 200 years and in 1982 invaded the islands only to be repelled in a 74-day war with Britain.

British nationals first settled in the Falklands in the 19th century and three decades after the war for ownership of the islands, many still feel strongly about their fate.

"The Falkland Islands may be thousands of miles away but they are British through and through, and that is how they want to stay, and people should know we will always be there to defend them," Cameron said in televised remarks.

"They want to remain British and that view should be respected by everybody, including by Argentina."

In a referendum on Sunday and Monday designed to send a defiant message to Argentina, all but three of those who cast their ballots on the islands voted to remain a British Overseas Territory.

In their ancestral homeland 8,000 miles (12,900 km) away, British television channels ran continuous live coverage from the chilly, windswept and sparsely populated islands over the weekend, and Britons praised the islanders for voting "yes."

"It's a British colony. The settlers out there are all British," Tony Gill, 74, a former military pilot, said in the town of Chelmsford in eastern England.

"They've made the island what it is and now the Argentineans want to take it away from them," added Gill as he headed to a meeting with other veterans, including some of those who fought in the 1982 war.

Speaking alongside Gill at a local bus stop, Brian Polson, another veteran, nodded and added: "You defend your own."

PRESSURE

Argentina's left-leaning president, Cristina Fernandez, has piled pressure on Britain to negotiate the sovereignty of the islands - something London refuses to do unless the islanders request talks.

She reiterated her demand for talks on Tuesday, calling the Falklands vote a "parody of a referendum."

"What we're demanding is a solution," she said at the presidential palace, standing beside a model bearing the image of former first lady Evita Peron. "Dialogue is what we, the Argentine people, have been repeating, calling for insistently."

About 650 Argentines and 255 Britons were killed in the 1982 war that started after Argentinean forces invaded the islands, prompting Britain's prime minister at the time, Margaret Thatcher, to dispatch a naval task force to retake them.

Most Argentines think the islands - known as the Malvinas in Spanish - rightfully belong to the South American country and they remain a potent national symbol that unites political foes.

Before that war, few in Britain even knew where the islands were located. Former Defence Secretary John Nott once recounted that he had to consult a globe in his office to remind himself of the geographical position of the Falklands. "I was a bit horrified to see how far away they were," he once said.

But now Britons seem much more emotional on the issue. In Chelmsford, a city in the London commuter belt praised as the birthplace of radio, many people interviewed by Reuters felt Britain should stand by the British on the Falklands.

"They reckon they're British, therefore it's up to us to look after them," said Joyce Maurer, 66, a receptionist at a Baptist church in Chelmsford, about 55 km (35 miles) northeast of London.

"You can't just desert the people and leave them to their own devices because if they've chosen to be British then they have to be looked after. And if it came to it, we'd have to take military action."

But some, particularly younger people, appeared less enthusiastic about the fate of the islands' inhabitants.

"I don't really care. But I do think they should remain British because it's part of our heritage. But if it doesn't, it doesn't," Liam Clancy, a 20-year-old student, said with a shrug.

"If the people that live there class themselves as being British, then Britain should defend it. ... It's not going to affect my life. I don't think my friends even know about it."

(Additional reporting by Helen Popper in Buenos Aires; Writing by Maria Golovnina; Editing by Mark Heinrich and Stacey Joyce)

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Britain, France, push EU to drop Syria arms ban

By Mohammed Abbas and John Irish

LONDON/PARIS (Reuters) - Britain and France raised the pressure on other European Union members on Tuesday to lift a ban on supplying arms to Syria, where anti-government rebels are outgunned by forces loyal to President Bashar al-Assad.

Britain warned that it could break with the embargo altogether, which requires unanimous agreement by the EU's 27 members to take effect, while France hinted it would push to get the bloc to agree to amend the ban to allow the supply of arms.

The arms embargo is part of a package of EU sanctions on Syria that currently roll over every three months, with the last extension unanimously agreed by the EU last month and which came into effect on March 1.

Without unanimous agreement to either renew or amend the ban in three months' time, the embargo lapses.

"I hope that we can persuade our European partners, if and when a further change becomes necessary, they will agree with us," Cameron told a parliamentary committee when asked whether Britain could "veto" the embargo.

"But if we can't, then it's not out of the question we might have to do things in our own way. It's possible," he added.

Britain has not explicitly said it wants to arm the rebels, but repeatedly has said it does not rule out the option, depending on events on the ground.

In France, Foreign Minister Laurent Fabius said "a new balance of power" has to be created in Syria.

"We understand the idea of not adding weapons to weapons, but that position doesn't work in the face of reality it and that (reality) is that the opposition is bombarded by others who are getting weapons while they are not. It's a difficult position to keep," he said.

France and Britain accuse Assad of gambling on a military victory against his opponents, and hope the threat of giving the rebels arms will force him into talks and a transition of power.

After weeks of wrangling last month, Britain pushed for and won EU agreement to relax the embargo to allow non-lethal but quasi-military aid such as body armor and armored vehicles to be supplied to the rebels.

However, Britain and France say more must be done, while Germany has warned that giving the rebels with arms could lead to a proliferation of weapons in the volatile region and spark a proxy war.

Fabius said France would take steps on the embargo issue in the coming days without specifying what would be done.

According a senior French official who spoke on condition of anonymity, anti-aircraft missiles are among those weapons being considered for supply to rebel fighters in Syria.

BOLSTER THE MODERATES

Critics of the plan are alarmed at the growing number of Islamists in the rebel ranks, some affiliated to al Qaeda, and are also concerned about the ability of the Syrian National Coalition opposition group to control fighters on the ground.

Addressing concerns about weapons falling into the wrong hands, a Foreign Office official said Britain was confident of the moderate credentials of those it planned to help.

"We're talking to the opposition constantly about a whole range of support and we know who the people we want to work with are ... It's important to bolster the moderate elements of the opposition. We know who these are," the official told Reuters.

Britain, which has called the crisis in Syria a "catastrophe", has warned that the longer it continues, the more likely it is to attract radical Islamists.

The two-year-old conflict started out as pro-democracy protests, but has since descended into an increasingly sectarian war between rebels mainly from Syria's Sunni Muslim majority and forces loyal to Assad, who follows the Alawite faith derived from Shi'ite Islam.

Some 70,000 people have been killed and more than one million refugees have fled the violence.

(Additional reporting by Peter Griffiths; Editing by Michael Roddy)

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Britain pledges to defend distant cousins on Falkland Islands

By Shadia Nasralla and Maria Golovnina

LONDON (Reuters) - Prime Minister David Cameron warned Argentina on Tuesday that Britain would always be ready to defend citizens in the remote Falkland Islands after they voted almost unanimously in a referendum to remain British.

Argentina, 300 miles to the west of the Falklands, has claimed the South Atlantic archipelago for almost 200 years and in 1982 invaded the islands only to be repelled in a 74-day war with Britain.

British nationals first settled in the Falklands in the 19th century and three decades after the war for ownership of the islands, many still feel strongly about their fate.

"The Falkland Islands may be thousands of miles away but they are British through and through, and that is how they want to stay, and people should know we will always be there to defend them," Cameron said in televised remarks.

"They want to remain British and that view should be respected by everybody, including by Argentina."

In a referendum on Sunday and Monday designed to send a defiant message to Argentina, all but three of those who cast their ballots on the islands voted to remain a British Overseas Territory.

In their ancestral homeland 8,000 miles away, British television channels ran continuous live coverage from the chilly, windswept and sparsely populated islands over the weekend, and Britons praised the islanders for voting "yes."

"It's a British colony. The settlers out there are all British," Tony Gill, 74, a former military pilot, said in the town of Chelmsford in eastern England.

"They've made the island what it is and now the Argentineans want to take it away from them," added Gill as he headed to a meeting with other veterans, including some of those who fought in the 1982 war.

Speaking alongside Gill at a local bus stop, Brian Polson, another veteran, nodded and added: "You defend your own."

PRESSURE

Argentina's left-leaning president, Cristina Fernandez, has piled pressure on Britain to negotiate the sovereignty of the islands - something London refuses to do unless the islanders request talks.

She reiterated her demand for talks on Tuesday, calling the Falklands vote a "parody of a referendum."

"What we're demanding is a solution," she said at the presidential palace, standing beside a model bearing the image of former first lady Evita Peron. "Dialogue is what we, the Argentine people, have been repeating, calling for insistently."

About 650 Argentines and 255 Britons were killed in the 1982 war that started after Argentinean forces invaded the islands, prompting Britain's prime minister at the time, Margaret Thatcher, to dispatch a naval task force to retake them.

Most Argentines think the islands - known as the Malvinas in Spanish - rightfully belong to the South American country and they remain a potent national symbol that unites political foes.

Before that war, few in Britain even knew where the islands were located. Former Defence Secretary John Nott once recounted that he had to consult a globe in his office to remind himself of the geographical position of the Falklands. "I was a bit horrified to see how far away they were," he once said.

But now Britons seem much more emotional on the issue. In Chelmsford, a city in the London commuter belt praised as the birthplace of radio, many people interviewed by Reuters felt Britain should stand by the British on the Falklands.

"They reckon they're British, therefore it's up to us to look after them," said Joyce Maurer, 66, a receptionist at a Baptist church in Chelmsford, about 55 km (35 miles) northeast of London.

"You can't just desert the people and leave them to their own devices because if they've chosen to be British then they have to be looked after. And if it came to it, we'd have to take military action."

But some, particularly younger people, appeared less enthusiastic about the fate of the islands' inhabitants.

"I don't really care. But I do think they should remain British because it's part of our heritage. But if it doesn't, it doesn't," Liam Clancy, a 20-year-old student, said with a shrug.

"If the people that live there class themselves as being British, then Britain should defend it. ... It's not going to affect my life. I don't think my friends even know about it."

(Additional reporting by Helen Popper in Buenos Aires; Writing by Maria Golovnina; Editing by Mark Heinrich and Stacey Joyce)

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Moody's strips Britain of triple-A rating in major blow to Osborne

LONDON/NEW YORK (Reuters) - Britain suffered its first ever sovereign ratings downgrade from a major agency on Friday when Moody's stripped the country of its coveted top-notch triple-A rating, dealing a major blow to Chancellor George Osborne.

Moody's said weak prospects for British economic growth, which have thrown the government's deficit reduction strategy off course, lay behind its decision to cut the rating by one notch to Aa1 from Aaa.

Austerity has been the watchword for Osborne's fiscal policy since his Conservative-led coalition came to power in 2010 after an election in which he vowed to defend Britain's triple-A rating, which can help keep down borrowing costs.

But a very slow recovery from the financial crisis has pushed back by at least two years the government's goal of largely eliminating the budget deficit by 2015's election.

The Labour Party blames the deficit on too much austerity.

Nonetheless, Osborne insisted now was not the time to change course. His annual budget due on March 20 is expected to show a further deterioration in the country's fiscal outlook.

"Tonight we have a stark reminder of the debt problems facing our country and the clearest possible warning to anyone who thinks we can run away from dealing with those problems," he said in a statement. "Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it."

However, the downgrade may fuel unease amongst members of his own party and his Lib Dem coalition partners that Osborne's gamble that he could slash the deficit and ensure a return to growth by the May 2015 election is failing to pay off.

Sterling fell by almost a cent to around $1.5160 after the downgrade, just off Thursday's fresh 2-1/2-year low, and analysts expected it to weaken further on Monday, even if many had seen a downgrade coming sooner or later.

"It's a pretty big deal," said Kathy Lien, managing director at BK Asset Management in New York. "We didn't see a huge reaction in the pound because it's late in the New York session. But you'll see some more aggressive selling when the markets open (in Asia) on Sunday."

Moody's said the outlook on its rating on Britain was now stable, meaning any further change is unlikely for the next year or so.

Britain joins the United States and France in having lost its triple-A rating from at least one major agency, after holding a top-notch rating from Moody's and Standard & Poor's since 1978, and from Fitch Ratings since 1994.

SLUGGISH GROWTH

Moody's said that despite considerable economic strengths, Britain's growth was likely to be sluggish due to a mix of weaker global economic activity - especially in the euro zone - and a drag "from the ongoing domestic public and private-sector de-leveraging process."

"This period of sluggish growth poses challenges to the government's fiscal consolidation program, which we now assume will extend well into the next parliament," Moody's analyst Sarah Carlson said in a telephone interview with Reuters.

But Ed Balls, the Labour Party's main spokesman on finance issues, said the Moody's decision should be a wake-up call for Osborne ahead of his annual budget statement as Chancellor of the Exchequer.

"This credit rating downgrade is a humiliating blow to a Prime Minister and Chancellor who said keeping our AAA rating was the test of their economic and political credibility."

"The issue is no longer whether this Chancellor can admit his mistakes but whether the Prime Minister can now see that, with UK economic policy so badly downgraded in every sense, things have got to change."

Howard Archer, chief UK economist at IHS Global Insight, said a new approach from Osborne was improbable.

"The strong likelihood is though that it will not materially lead to a change in his plans."

Changes are more likely from the Bank of England, which surprised markets earlier this week after it revealed that Governor Mervyn King and two other policymakers favoured restarting bond purchases to boost the economy.

They remained in the minority among their fellow policymakers but economists increasingly expect more stimulus eventually by the central bank.

This - and the central bank's tolerance of above-target inflation - have combined to put pressure on sterling while leaving British government debt relatively shielded.

Charles Diebel, a fixed income strategist at Lloyds, was sanguine about the impact of the downgrade on gilts, as U.S. and French debt was not badly affected when these countries lost their triple-A ratings.

"This has been speculated as inevitable and is most likely largely in the market. I would expect only very limited damage to the gilt curve and to sterling. Historically, losing your AAA is actually a bond bullish event," he said.

(Additional reporting by Steven C. Johnson in New York and Michael Holden in London; Editing by James Dalgleish, Jon Hemming and Eric Walsh)

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Britain publishes names of "tax cheats" for the first time

LONDON (Reuters) - HM Revenue and Customs on Thursday published the names of what it described as "tax cheats" for the first time, part of efforts to address public anger over tax evasion at a time of economic austerity.

Tax has become a sensitive issue in Britain as the government cuts spending to tackle a big budget deficit, and as more becomes known about legal loopholes firms such as Starbucks and Amazon use to sharply cut their tax bill.

The tax authority stressed that the list of individuals and businesses it had published only related to "deliberate" non-payment, not avoidance, which is legal but whose practice by some multinationals has raised public ire.

Prime Minister David Cameron on Monday ruled out changing the law to ban "aggressive tax avoidance".

"The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes - the vast majority - that there are consequences for those who refuse to (disclose) their full liability," Exchequer Secretary to the Treasury David Gauke said in a statement which described those named as "tax cheats".

The tax authority said the details of defaulters would be published on its website each quarter if the default would have resulted in a loss to the state of at least 25,000 pounds and after appeals have been exhausted.

Those named in the list included a hairdresser, a grocer and a knitwear manufacturer.

(Reporting by Mohammed Abbas; Editing by Jason Webb)

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