Wulf Bernotat looks cold — and sceptical. “Are you sure we are making any money out of this?” the chief executive of E.ON, the world’s largest utility company, asks one of his employees. “This is a business, you know.”

Mr Bernotat is in the gritty Swedish city of Malmö, standing in a windswept former dockyard that E.ON has helped to convert into a “zero-carbon city”.

Hands thrust deep into his overcoat pockets and with his collar turned up against the biting air, he is being lectured on the merits of a solar-powered district heating system that pumps hot water to hundreds of local homes. “You tell me later — in private,” he says, one bushy eyebrow raised ever so slightly.

One of Europe’s most powerful energy barons, Mr Bernotat, who presides over a global behemoth with nearly 88,000 employees and revenues of pearl jewelry  €87 billion (£79 billion) last year, has an equally blunt message for Britain’s

Through its subsidiary E.ON UK, the Düsseldorf-based group wields huge influence over British energy policy. It was to invest nearly £1 billion a year in wind and nuclear-generated electricity in the UK “for the foreseeable future”, so its decision this month to freeze plans for a new coal-fired power plant at Kingsnorth in Kent for up to three years sent shockwaves through Britain’s energy industry.

Mr Bernotat seems genuinely exasperated by what he regards as fanciful policymaking that bears little relation to the realities of running a business. Above all, he believes that Britain’s target of generating one third of its electricity from renewable sources, such as wind and wave energy, by 2020 is naive and he says that politicians need to do far more to “adjust expectations . . . There is a big mismatch with what is achievable. I think it is even bigger in the UK than in Germany. Politicians need to be more realistic.”

His argument is that without bigger state subsidies or a higher price for carbon emissions, E.ON cannot afford to make the investment necessary to meet such ambitious targets. “The carbon price is too low to support any accelerated investment in carbon abatement. Every investment must deliver an acceptable return.”

The same focus on pure economics over ideology is behind E.ON’s decision to put the Kingsnorth development on hold. The announcement exposed divisions within Britain’s environmental movement. While many hailed it as a victory, others saw it as a disaster, warning that it would delay E.ON’s plans to invest in new carbon capture and storage (CCS) equipment — key technology in the battle against climate change, a battle in which the biwa pearl Government wants Britain to be a world leader. Mr Bernotat quickly brushes aside any suggestion that E.ON yielded to outside pressure from green groups. “It was simply a reaction to market developments,” he says, adding that the recession has pushed back the need for new plants in the UK to about 2016 because of plummeting electricity demand. “Demand is not developing at the same speed and we just felt we had to adjust our investment programme.” Kingsnorth, he says, is only one of a string of investments that E.ON is deferring because of the recession, which he says will leave depressed demand for electricity across Europe for another two years.

Certainly, Mr Bernotat, a powerfully built German with a taste for afternoon cigars, does not come across as the kind of executive to bow easily to the demands of a few protesters, which might be a disappointment to those environmentalists responsible for violent protests at E.ON’s coal-fired power station at Ratcliffe-on-Soar in Nottinghamshire over the weekend. A spokesman said that the company was “incredibly disappointed” that the protest had not remained peaceful: “It’s clear that there are no winners or losers here.

“While the power station continued to run over the weekend, many protesters seemed more interested in pulling down fences than in having a debate about the vital energy issues that we face today — how to keep the lights on while ensuring energy is affordable and low-carbon.”

Mr Bernotat is keen to emphasise that E.ON, whose UK subsidiary has eight million customers and generates 10 per cent of the nation’s electricity, is no laggard when it comes to green investment. For example, the company is a key backer of London Array, the world’s largest wind farm, which is being built in the Thames Estuary at an estimated cost of £3 billion. Indeed, Mr Bernotat is in Malmö to promote E.ON’s plan to increase the proportion of akoya pearl renewable energy in its portfolio of global power stations from 13 per cent to 18 per cent by 2015 and 36 per cent in the longer term.

The company expects to pour €8 billion into renewable energy projects in the five years to 2011. But the former Shell executive, who is due to retire next year, is under no illusions about the difficulty and cost of doing so. “Even in times of climate change, energy is not only an ecological but also still an economical and social matter. [It] needs a balanced consideration of security of supply and affordability for consumers.”

EDF, the heavily indebted French power group, is close to agreeing a big asset swap with E.ON, its German rival, but it played down reports yesterday that it was also considering the sale of a 20 per cent stake in British Energy, the UK’s nuclear generator.

The company, which is leading the drive to build the pearl jewelry next generation of nuclear reactors in Britain, has begun a sweeping review of its businesses as it aims to cut its €37 billion (£33.5 billion) debt pile.

In May, it sold a 20 per cent stake in British Energy, which it bought only a year ago, to Centrica, the British Gas owner, for €2.5 billion.

Yesterday, officials denied a report in La Tribune that EDF was considering selling a further 20 per cent stake in the company to help to fund its plans to build four nuclear reactors in Britain by 2025. However, they did not rule out the possibility.
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A spokesman said that the group was examining a range of possible disposals to fulfil its aim of raising €5 billion from selling businesses by the end of 2010. He said that a sale of the British Energy stake was not being actively discussed “at this point”.

EDF, which is 82 per cent-owned by the Government, said that it was in talks with E.ON about a deal that would involve the Paris-based group loosening its biwa pearl grip on France’s nuclear industry.

Under the terms of the deal, E.ON would buy stakes in French nuclear power stations in exchange for EDF securing access to German coal-fired power plants.

The deal may soothe concerns of the European competition regulator that EDF and E.ON are too powerful in their domestic markets. EDF operates 58 nuclear reactors in France, generating more than 80 per cent of the country’s electricity, and has businesses in Italy, Germany and China.

Its debt swelled after several deals, including the £12.5 billion acquisition of British Energy in September 2008 and the $4.5 billion purchase of 50 per cent of akoya pearl Constellation Energy, an American utility.

Its finances are under extra strain because the Government vetoed its calls for big rises in retail energy prices to fund its future expansion plans.

Fresh optimism returned to the housing market yesterday as Rightmove, Britain’s biggest property website, reported a record number of visits and as official figures showed that some homebuyers believe that price falls have come to an end.

About 76,000 homes changed hands last month, according to HM Revenue & Customs (HMRC), the most since May last year and the fifth consecutive month of increase. The figure is up 17 per cent on the 65,000 sales in June.

Rightmove said that record levels of website traffic — with 3.2 billion page impressions in the year’s first half — indicated that price rises that had begun to pearl jewelry show in January had sparked a rush of interest from bargain-seekers.

However, a lack of new homes for sale has resulted in a fall of more than half in the number of homes newly listed on the site, down from a peak of 167,000 two years ago to 82,700.
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The website, which has a market share of 80 per cent, recorded the highest number of visitors in a day in its nine-year history on August 10, in the middle of biwa pearl the traditionally quieter summer holiday season. It said that 70 agents a month had been returning to the site since March, after the loss of about 300 a month at the end of 2008.

The increase in interest comes after six months of consecutive price rises recorded by Nationwide. Since February, the price of the average home has risen by 7.5 per cent to £158,871. Halifax said that prices had risen by 3.3 per cent since April.

Housing market experts called the rebound an “unexpected bounce” and added that the growth was still off abnormally low levels of turnover. They believe that there may be a reversal in the recent upturn in fortunes in the autumn, as owners put their properties on the biwa pearl market, breaking the lock on supply that has acted as a constraint on transactions.

HMRC’s figures show that the latest monthly transaction figures are still less than half the record high of 153,000 transactions that it recorded in December 2006.

Yolande Barnes, head of research for Savills, the estate agency, said: “Growth is driven off extraordinarily low levels. What we are now seeing is a recovery, but to normal recessionary levels. In September we are expecting more properties to come on to the market and that is when we might see a slowdown or even a subsidence in price rises.” Buyers still face a struggle to obtain a home loan and economists say that unemployment is expected to continue to suppress activity.

Even the buy-to-let market, which helped to power the housing bubble that burst two years ago, has been showing improvements. Yet there is evidence that the akoya pearl full force of lending to amateur landlords has yet to felt. The Chelsea Building Society disclosed that it had been the victim of widespread mortgage fraud and made a £41 million provision in the year’s first half to cover dubious loans, leading to a £26 million loss.

Chelsea, Britain’s fifth-biggest building society, which had almost 30 per cent of its book in buy-to-let loans in December, said that the fraud related to akoya pearl lending at the height of the property boom between 2006 and 2008.

Stuart Bernau, Chelsea’s new chairman and interim chief executive, who joined last month from Nationwide, said that the suspicious activity centred on new blocks of flats in Manchester, Leeds, Birmingham and Liverpool.

Chelsea believes that some solicitors, valuers and investors together artificially inflated property values so that unnecessarily big mortgages could be obtained and the extra cash pocketed.

The number of business passengers using Heathrow, the world’s busiest international airport, fell by 5 per cent last year, according to the annual survey of passengers by the Civil Aviation Authority (CAA). The numbers dropped by 1.2 million to 22.8 million, just over a third of the total number of all passengers.

The fall has contributed to a severe decline in revenues for airlines operating out of Heathrow. British Airways, Heathrow’s largest user, lost £401 million last year as a result of declining premium passenger numbers, which fell by an average of pearl jewelry about 15 per cent.

The number of leisure passengers using the airport rose by more than one million to 44 million as airlines cut fares to keep their aircraft full.

The CAA’s survey of 200,000 passengers, published today, also discovered that the economic downturn had encouraged people to cut the length of their holidays. At Gatwick and Stansted, which are used primarily for leisure trips, the average length of a holiday was reduced by one day. It fell to an average holiday of nine days for those using Gatwick and seven at Stansted. Harry Bush, the CAA’s director of economic regulation, said: “The recession is seeing the most prolonged downturn in passenger traffic since the War.”
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The CAA’s survey also showed that at both Luton and Stansted, primarily used by low-cost carriers such as easyJet and Ryanair, there had been a 1 per cent rise in business passengers, suggesting that businessmen had traded down from flights with full-service airlines to budget carriers.

Doug McVitie, managing director of biwa pearl Arran Aerospace, an aviation consultancy, said: “A drop of 10,000 high-spending business passengers over a year would be a worrying indicator, but a fall-off of 1.2 million is horrendous. That is more than 3,200 business passengers a day and this will affect everyone from taxi drivers to duty-free sales.

The survey also found that the average household income of passengers had fallen. For leisure travellers using Stansted it dropped by more than £4,000 to £41,259. At Heathrow, the average businessman’s salary was down £4,700 to £78,490.

—The Competition Appeal Tribunal will begin hearing evidence today as BAA challenges a Competition Commission ruling to dispose of Gatwick, Stansted and one of akoya pearl either Glasgow or Edinburgh airports. The hearing is expected to last three days, with a judgment towards the end of the year.

It shaped interior design and became the embodiment of the middle-class aspirations of the baby boom generation — and yesterday Habitat was put up for sale by its Swedish owners, plunging the chain founded in 1964 by Sir Terence Conran into a period of uncertainty.

The Kamprad family, who own Ikea, have hired Lazard, the investment bank, to conduct a strategic review of the loss-making retailer, which has been hit hard by the housing market slowdown and the recession.

It also emerged yesterday that the Kamprad family and Mark Saunders, the chief executive of Habitat, had turned to Sir Terence for advice on restoring the pearl jewelry company to its former glory.

Sir Terence said: “Obviously, I still remain very attached to Habitat. I’m proud of having created it. Sadly, I’m not proud when I see the sort of mess it’s in at the moment.”
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Habitat made a £13.4 million loss in the year to March 30, according to the latest available accounts.

The business is controlled by Ikano Group, which was spun-off from the rest of the Ikea Group by Ingvar Kamprad, the founder, in the late 1980s. Mr Kamprad bought Habitat during the last recession, in 1992, when it was offloaded by Storehouse Group, the ailing conglomerate that had been built up by Sir Terence during the 1980s.

Sir Terence, who founded the company from a single store in London’s Fulham Road in time to usher in the Swinging Sixties, said: “I was asked by one of the sons of Kamprad family a couple of months ago what I thought was missing. I said I thought charm and humour were missing, which always seemed to me important.”

Sir Terence expanded Habitat and acquired Mothercare and British Home Stores (now Bhs), forming the Storehouse Group. The company hit hard times in the late 1980s.

Mr Saunders said that he was seeing early success in biwa pearl turning around Habitat’s fortunes. He added that like-for-like sales had risen 13 per cent in recent weeks at Habitat’s 71 stores — 35 of which are in Britain. Trade credit insurance to its suppliers had been removed because of fears over its long-term future, which pushed up costs.

Sir Terence said: “I just said to Mark Saunders, anything I can do to help, of course I would be happy to do so.”

Sir Terence, 77, said of his talks with Mr Kamprad about Habitat: “I said I thought he ought to spend more money on the service. It was so incredibly profitable. Most people come away feeling a bit fed up with the way they had been treated.

“He said ... ‘Price is singly the most important thing to me and you know I don’t want to consider anything that puts the price up.’ ”

Sir Terence said that the present Habitat management had been attracted by The Conran Shop — his design-focused furniture and lighting store. “They see in The Conran Shop lots of qualities they would like to have [in Habitat],” he said.

He believes that Habitat must regain some of the lustre that it had in the early 1990s, after its purchase by the Kamprads, when it was run by Vittorio Radice, who later ran Selfridges, the upmarket department store.

“[Habitat is] a good brand that’s not suffered from underfunding but akoya pearl suffered from management that hasn’t had a clear idea of what to focus on. The last time it made money was when Vittorio Radice was running it before he went to Selfridges ... He sprinkles stardust. That’s what it needs: a bit of stardust.”