May 20 -June 02, 2002
JAPAN'S TRADE GETS A BOOST
Soaring exports to Asia helped push Japan's trade
surplus upwards by 26.6% in April compared with the same month last
year, the Finance Ministry said.
It was the second straight month the trade surplus
But the economic picture was clouded by the lowest
rise in overall exports for four months, up just 0.3%.
That figure suggests any recovery remains fragile,
particularly as the US economy is set to grow at a more moderate pace
in the next few months after powering ahead between January and March.
"If the US recovery is weak, Japan will be
pushed in the same direction eventually," said Takahiro Nakayama
of Morley Fund Management in Tokyo.
Japan's exports have been helped by the fall in the
value of its currency, which traded 6.1% lower on average last month
than in April 2002.
But this advantage has been disappearing in recent
weeks as pessimism about the US economy has dragged the dollar
But the near-doubling of demand for Japanese goods
elswhere in Asia also reflects the region's recovery.
Japanese exports to Asia rocketed up 93.1% as
Chinese shoppers rushed to buy Japanese cars and big manufacturers
around the region sucked in industrial raw materials.
"The background for the increase in exports of
plastics and other materials is the rebound in Asian economies, led by
global manufacturers," a Finance Ministry official said.
"Among the largest contributors were car
exports to China, up 97.6% over the previous year," he added.
Japan's trade surplus in April totalled 836.7bn yen
Total exports grew 1.6% to 4,400.7bn yen from April
last year, the month that marked the start of recessions in Japan and
Imports fell 2.9% to 3,564.1bn yen, the ministry
BLAIR TAKES ON BUSINESS CRITICS
Prime Minister Tony Blair has tried to fend off
criticism from business leaders over the Budget tax rises aimed at
improving public services.
In a speech to the Confederation of British
Industry (CBI) dinner, Mr Blair defended the decision to put an extra
penny on National Insurance contributions.
CBI President Sir Iain Vallance said the Budget had
left a "sour taste" in the mouths of Britain's business
Company bosses argue extra tax will make their
firms less competitive and foreign banks have said the move could
drive them abroad.
Sir Iain echoed those fears in his speech, saying
the strength of reaction to the Budget stems from anger at five years
of "stealth" tax hikes coming to a head.
He said: "Enough is enough. You cannot keep
digging your hand into the business till without squandering the UK's
advantage as a country in which to do business."
Mr Blair said he was taking such fears
He said: "Nobody likes paying taxes.
"Even after the Budget we remain a relatively
low taxed economy and one of the best of the world to do business.
"But I was elected to fix our public services,
schools and hospitals first, and that is what I intend to do."
The need for extra investment in the National
Health Service was now "beyond doubt", he argued.
Using other methods apart from general taxation
would hit business harder, Mr Blair told City leaders at the black tie
"Social insurance, as in Germany and France,
imposes huge costs on employers, as much as £60 per week per employee
on top of other costs," he continued.
EURO SOARS AGAINST DOLLAR
The euro has soared to a nine-month high against
the dollar amid persistent worries over sluggish corporate profits in
The euro was half a cent up on the day at $0.9249
on Wednesday, having earlier jumped to $0.9276 — a level last seen
Analysts attributed the euro's rise to growing
doubts over the strength of the US economic recovery following a
recent string of disappointing corporate results.
Fears over a fresh wave of terrorist attacks in the
US were also cited as a factor behind the turnaround in the euro's
GERMAN RECESSION OVER
Europe's biggest economy has begun expanding again
after six months of recession.
Germany's economy grew 0.2% in the first three
months of 2002, the Federal Statistic's Office said.
"These are the first indications that the
expected upturn has started," the German Finance Ministry said.
Germany's economy shrank 0.3% in the final three
months of last year and 0.2% between July and Septemer 2001.
The rise was roughly in line with predictions from
Germany's central bank three days ago, which was seized on Chancellor
Gerhardt Schroeder — who faces an election in November — as
heralding a fall in unemployment.
German trade unions have staged a nationwide series
of strikes over pay in recent days.
BANK HINTS AT FUTURE RATE RISE
The MPC: split down the middle on what to do next
May's decision by the Bank of England's Monetary Policy Committee (MPC)
to leave interest rates unchanged at 4% was unanimous for the third
month in a row, the latest minutes of the MPC's meeting have shown.
But despite the 9-0 vote, the minutes also
indicated fierce debate about when the next rise should be, with
several members wanting a move as soon as possible.
The committee's forecast showed that underlying
inflation — leaving out the cost of housing — would creep above
the 2.5% target set by the government in the next two years.
While some committee members said raising rates
could wait a while, others were keen to start taking action earlier,
given the long lag between rate changes and their effect on inflation.
Interest rates are at a 38-year low, following
seven cuts last year as the MPC tried to stimulate the UK economy amid
the global slowdown.
EU 'FAILS TO HELP SMALL FIRMS
Cross border trade by small and medium sized firms
has declined following the introduction of the European Union's single
market, according to a new survey.
"The entry costs for doing business abroad are
still very high," said Andrew Godfrey, a manager with accounting
firm Grant Thornton which carried out the survey.
"The legal system is probably the single
biggest barrier [along with language difficulties]."
But the survey also found that most firms thought
the single market had boosted competition, and that the introduction
of the euro had helped.
Only 42% of the small and medium enterprises
surveyed were classified as exporters.
TOTALFINAELF PROFITS FALL
The French energy giant TotalFinaElf has reported a
36% fall in net profits for the first three months of the year.
The world's fourth largest oil company saw its net
income slip to 1.42bn euros (£900m; $1.3bn) before exceptional
factors, down from 2.2bn euros a year earlier.
GOLD PRICE SOARS ON WAR FEARS
Fears of a military conflict between India and
Pakistan have pushed the price of gold to a 27-month high.
The gold price reached $319.60 an ounce on
Wednesday, its highest price since it hit $338 in October 1999, as
investors sought a safe-haven for their money.
SWEDEN 'NOT READY' FOR EURO
Sweden is not yet ready to join the euro because
its currency is too unstable and the central bank not independent
enough from the government, the European Commission has said.
"I regret that Sweden is not yet in a position
to participate fully in EMU (economic and monetary union),"
European Monetary Affairs Commissioner Pedro Solbes said in a
BRUSSELS CALLS FOR GREATER TAX POWERS
European Commission president Romano Prodi has said
he wants Brussels to be given powers to levy direct taxes across the
European Union (EU).
In a speech to the European Parliament, Mr Prodi
also called for greater coordination of the EU's economic policy.
Like all pan-EU tax issues, the proposal could be
US BLOCKS EUROPE'S WTO STEEL BID
The US has vetoed a request from Europe for the
World Trade Organisation (WTO) to rule on the tariffs Washington
slapped on steel imports earlier this year.
However, the move is unlikely to block a study by
the WTO into the tariffs in the long-run.
Any country on the receiving end of such a
complaint can veto one request to the WTO's dispute settlement body (DSB).
But it can only do so once, and the European Union
is likely to repeat its demand — along with Japan — when the body
meets on 3 June.
CITIGROUP BUYS US RETAIL BANK
Citigroup has agreed to buy San Francisco based
Golden State Bancorp for $5.8bn (£3.97bn) in a cash and share deal,
subject to shareholder and regulatory approval.
NORTH SOUTH ECONOMIC GAP NARROWS
Britain's north-south economic divide is about to
reach its narrowest point for seven years, according to the latest
Business Strategies says growth rates in the north
are likely to be just 0.7% below those in the south over the coming
Southern regions, below an imaginary line from the
Severn to the Wash, are set to grow by an average of 2.1% this year.
Those to north are forecast to grow by 1.4%.
The difference is the narrowest since 1995 and a
significant improvement on last year's 2.7% gap which was the widest
for more than 10 years.
The divide is expected to narrow even further in
2003, with growth of 2.9% in the north and 3.3% in the south.
DOLLAR HITS FIVE-MONTH LOW AGAINST YEN
The dollar has fallen to a five-month low against
the yen, raising hopes that higher exports will accelerate the US
The dollar had slipped below the 125-yen mark to
124.15 by the close of trade in the US on Tuesday, off earlier lows of
The US currency's decline came amid signs of a
long-awaited economic upturn in Japan and lingering uncertainty over
the strength of the US rebound.
US UNBLOCKS YUGOSLAV AID
The US has announced that it is lifting a ban on
millions of dollars' worth of aid to Yugoslavia, because of Belgrade's
improved co-operation over war crimes suspects.
The aid was cut off on 31 March to try to force
Belgrade to hand over more of the suspects indicted by the war crimes
tribunal in The Hague.
After a meeting in Washington with Serbian Prime
Minister Zoran Djindjic, US Secretary of State Colin Powell announced
that the aid, worth $40m, was being unblocked.
Several war crimes suspects have handed themselves
over to the tribunal in the past few weeks, after Belgrade set a new
deadline for their surrender.
SRI LANKA 'POISED' FOR IMF AID
Sri Lanka is on the verge of receiving $60m in
funds from the International Monetary Funds, the country's Finance
Ministry has said.
The news came on the same day as government
negotiators held their first talks for seven years with leaders from
the Tamil Tiger rebels, who want an independent Tamil state in the
PROFITS FALL AT EMI
EMI, the only one of the world's big five record
companies to be based in the UK, has seen profits slide 40% in what it
termed a "challenging year".
The result overall is a fall in pre-tax profits to
£153.3m in the 12 months to March 2002, from £259.5m the previous
STRIKE PROTESTS IN SOUTH KOREA
Workers in South Korea staged strike protests on
Wednesday, despite government warnings that any illegal action which
disrupted the World Cup football tournament would meet harsh
The militant Korean Confederation of Trade Unions (KCTU)
said that tens of thousands of metal workers and chemical employees
staged a four-hour walkout across the country.
CHINA HINTS AT PROTECTIONISM
China has indicated that it might follow the US
example and offer assistance to its farmers.
China insisted that the recent adoption by the US
of a farm bill has paved the way for others to introduce similar
The bill includes large scale subsidies and
protects US agriculture against international competition.
SENEGAL FIGHTS TO PROTECT FISHING INDUSTRY
The West African country of Senegal has said it
wants to charge the European Union (EU) for fishing in its waters.
The minister responsible for the sector said the
government was looking to charge the EU 20m euros ($18m; £13m) each
Since the beginning of this year the West African
country has banned vessels from the EU from fishing in its waters
after over-fishing led to a crisis for the local industry.
Talks between Dakar and Brussels have yet to
produce an agreement on how commercial fishing should continue.
NEW £5 NOTE ISSUED
Victorian prison reformer Elizabeth Fry appears on
the new high security £5 — only the second woman to appear on the
back of an English banknote.
The new note comes into circulation on Tuesday.