10 - 16, 2001
bill passes Congress
House Republicans in the US Congress have succeeded in their
effort to secure enough votes to grant President George W Bush renewed authority
to make international trade agreements.
The narrow vote — 215 to 214 — followed a day of
last-minute phone calls by President George W Bush, who busily spent Thursday
afternoon appealing to undecided House members just prior to the vote.
The bill now makes its way to the Senate, which has promised
fast action on the legislation.
"By promoting open trade, we expand export markets and
create high-paying jobs for Americans, while providing opportunities for other
nations as a result of free trade," President George W Bush said in a
written statement moments after the tight vote.
Under the bill, lawmakers have agreed to give the president
authority to make trade deals, subject only to an up or down vote of the
Republicans, who hold a slight majority in the House of
Representatives, pressed their Democratic counterparts with promises to help
both displaced workers and endangered industries if lawmakers signed on to the
Republicans and Democrats have squabbled for years over
whether to include protections for the environment and labour, with
conservatives arguing that such provisions have no place in making such trade
Mr Bush, who has made trade a top priority of his
administration, has called upon Congress several times since arriving in the
White House in January to give him the authority to make such deals.
Presidents have not enjoyed such power to make trade deals
since it expired in 1994.
But it is precisely that sort of unilateral power that has
some groups up in arms over the idea.
Japan confirms recession
Japan has entered a recession, according to the latest
official figures, which show the world's second largest economy continued to
shrink between July and September.
The news means the world's three biggest economies — the
United States, Japan and Germany — are all now in, or on the verge of,
recession for the first time since the 1970s.
Japan's prime minister, Junichiro Koizumi, pledged his
government will push through promised austerity measures to tackle the problem:
"We're taking steps. Structural reform is the best policy."
Meanwhile two members of the cabinet's economic team warned
of worse to come.
More pain ahead Trade Minister Takeo Hiranuma raised the
possibility that the economy may continue to contract in the next fiscal year
— which ends in March 2003.
"If the current situation continues, negative growth is
inevitable" in the next fiscal year, he said.
For this year, Economy Minister Heizo Takenaka warned,
"there is much possibility that the October to December figures could also
Long-awaited figures showed that Japan's gross domestic
product (GDP) shrank by 0.5% in the July to September period compared to the
previous three months, giving an annualised decline of 2.2%.
The economy shrunk by 1.2% in the April to June period
according to revised official figures.
This means Japan has now had two successive quarters of
negative growth — which is the common definition of a recession.
The economy minister's warning suggests that the recession
could be extended into a third quarter.
The US entered recession in March this year, according to the
US National Bureau of Economic Research, an official panel of senior economists
in a statement last month.
Mixed signs from US economy
Figures showing a big fall in the number of Americans
receiving unemployment benefits and a rise in factory orders have raised hopes
that the US economy could be heading for a swift recovery.
But other data suggested the outlook for the economy was not
clear-cut, with worker productivity growing at a slower rate than expected.
And a study of US retailers found the weakest sales growth
for November since the recession of 1990.
On Wall Street, the main Dow index of leading shares ended
down 15 points at 10,099.
The Dow has posted big gains in recent days on hopes the US
economy can pull out of recession relatively quickly, and on Wednesday it
finished above the 10,000 level for the first time since early September.
ECB holds rates steady
The European Central Bank (ECB) has left its key interest
rate unchanged at 3.25% at its last meeting before the introduction of euro
notes and coins in January.
The ECB lowered rates by a bigger than expected fifty basis
points four weeks ago, pushing them down to their lowest level since February
But the bank has reduced rates only four times this year
unlike the ten cuts made by the US Federal Reserve and the seven by the Bank of
The ECB has not cut rates as often as its counterparts
because inflation in the eurozone has been exceeding the 2% target.
European Central Bank President Wim Duisenberg said that
euro-zone inflation was "firmly on a downward trend" and should fall
below the 2% per cent next year.
Inflation fell to 2.1% in November from 2.4% in October.
UK leaves interest rates on hold
The Bank of England has left the cost of borrowing unchanged
at 4%, in line with analysts' forecasts.
The news came as a disappointment to manufacturers, which
have been calling for lower borrowing costs to lift them out of an eight month
But the Bank's decision was widely predicted by City
analysts, who said that a firm housing market and robust consumer spending
suggested that the risk of inflation remained too high for a further cut in
Lowering interest rates encourages consumer spending,
boosting the economy, but at the risk of higher inflation.
Inflation is currently running at 2.3% a year, just under the
BoE's 2.5% target.
Analysts added that, having reduced interest rates by an
unexpectedly high 0.5% last month, the BoE was unlikely to cut again this week.
Australia cuts rates as growth surges
Australia's central bank has taken out an insurance policy
against slower economic growth with a quarter-point interest rate cut, taking
rates to a 28-year low.
The decision came hard on the heels of news that the country
is — so far at least — bucking the gloomy global trend, with gross domestic
product leaping 1.1% between July and September.
For the full year to September, the economy expanded 2.5%, a
sharp spurt after a 1.6% gain in the year to June.
But announcing its move to a 4.25% base rate, the sixth cut
this year, the Reserve Bank of Australia made it clear that the mismatch might
not last long.
Housing spending in particular could well flag as part of
"the dampening impact on other parts of the economy of global events"
in 2002, said RBA governor Ian Macfarlane in a statement
Argentina seizes pension funds
The Argentine government has said it is to use money held in
private pension funds to help pay its bills.
The move came just hours before Economy Minister Domingo
Cavallo left for Washington for talks with the International Monetary Fund (IMF)
on Friday in a bid to secure a fresh loan.
"The people have to remain calm. Nothing new has
happened," said Mr Cavallo.
The move is the latest measure to be carried out by the
government as it struggles to avoid defaulting on its $132bn debt.
On Wednesday the International Monetary Fund (IMF) blocked a
$1.3bn loan deal for Argentina, reviving fears of a default.
UK industrial output slumps
The UK's industrial sector put in its worst performance for a
decade in October.
The figures, released by the Office of National Statistics,
showed UK industry to have shrunk 1.1% compared to the previous month and 4.2%
compared to October 2000. The 12-month slide is the worst since the UK's last
recession in 1991.
France delays gas sale
The French Government has shied away from fully liberalising
the gas market, dropping mention of gas privatisation from next year's budget.
The move is likely not only to anger the European Commission
but also other EU countries, who argue that French companies have benefited from
liberalisation in other countries.
With presidential and general elections next year, the
Socialist-led government is anxious not to upset its smaller coalition partners,
The government stuck with its original plan of transferring
the state's gas network property to state-owned gas company Gaz de France and
French energy giant TotalFinaElf.
Afghanistan's central banker invited home
Afghanistan's former central banker has been asked by the
leader of the Northern Alliance to return to run the country's monetary policy.
The 38 year-old Abdul Qadeer Fitrat left Afghanistan in 1996
to attend the World Bank's annual meeting, but while travelling through New
Delhi, Kabul was overrun by the Taleban.
De Beers may lose Russian diamonds
The Russian government is to ask Alrosa which mines one fifth
of the world's diamonds to cut its guaranteed supply to De Beers, the world's
leading diamond producer.
Taiwan targets Chinese business prospects
The appetite of Taiwanese firms for investment in China shows
no sign of letting up now both have been accepted as members of the World Trade
The island is believed to have invested at least $60bn in
China since the communist state opened up to the outside world in 1978, and
there are currently about 50,000 Taiwanese companies with a foothold on the
These figures are now expected to rise. Restrictions which
limit business between the two will be relaxed, allowing more Taiwanese firms to
invest in China.
The cosmetics company Elizabeth Arden has reported that net
profits jumped by 160% in its third quarter. Net sales for the quarter were
$302.9m compared with $163.4m for the same period a year ago.
Germany's slowdown continues
Unemployment in the Eurozone's biggest economy continued to
slide in November as service industries contracted.
The pace at which German joblessness rose, and the
contraction in the service sector, was less marked than it had been in recent
But that offered little comfort to the 3.789 million people
now out of work, amounting to 9.2% of the working population, up from 9% in
Unusually, the slowdown is affecting the Western states more
than their poorer counterparts in what had once been East Germany.
But unemployment in the East is still more than twice that in
"The global growth slowdown is having a particularly
strong effect on western Germany due to the concentration of industry
there," said Bernhard Jagoda, president of the German Labour Office.
Ireland warns of slowdown
Irish finance minister Charlie McCreevy presented his
pre-election budget to parliament, warning that the economy will slow down in
the year ahead.
Job losses and poor tax revenues have hampered Mr McCreevy's
ability to deliver the pre-election budget voters might have hoped for.
But Mr McCreevy forecast an exchequer surplus of 170 million
euros next year surprising those who expected the government to have to borrow
heavily — and promised an extra 425 million euros would be spent on health.
This year's budget was seen as heralding an end to an era of
giveaways that characterised the heyday of the Celtic Tiger.
HSBC has had its appeal over dual mortgage rates rejected by
the Financial Ombudsman, in a ruling, which could have implications for up to
one million borrowers.
HSBC, along with other lenders Halifax and Nationwide have
been taken to the Financial Ombudsman over dual variable rates, but this is the
first decision — and it could have widespread implications.
The dispute centres on two-tiered mortgage rates — when
lenders charge higher variable rates for existing customers than for new
US steel giants eye merger
US Steel is considering merging with at least three other
steel companies, including Bethlehem Steel and Wheeling-Pittsburgh Steel.
The companies believe consolidation is necessary to survive
in what has been described as a dying industry, hit by high costs and cheap
German truckers assess euro benefits
European cross-border transport companies are among those
expected to benefit the most from the introduction of the euro.
One trucking business in Germany sends drivers to every
single EU country every day.
Trucks from a sorting plant near Ulm head out on their
overnight journeys across Europe.
Profits slide for Japan Inc
Japanese companies have seen their profitability slide by
nearly a third in the three months to September — and expect things to get
worse for the full year, which ends in March.
That could trigger a reverse in the slight rise in investment
by companies, pushing the country deeper into recession.
Whether or not the recession — widely regarded as already
well advanced — is official or not will be revealed on Friday, when economic
growth figures are released.
Most observers expect a contraction, making two straight
quarters of negative growth.
Severn Trent said it was "particularly pleased"
with its purchase, and said it should start to save £15m a year after it has
been fully integrated with Biffa. Overall the group's pre-tax profits before
interest, goodwill and exceptional items grew 10.6% to £210.6m.
Stagecoach sees profits fall
UK rail and bus operator Stagecoach said that the six months
to October produced a pretax profit of £75.1m before one-off charges, down from
£91.8m in the same period the year before.