17 - 23, 2002
KOIZUMI GIVES IN ON TAX CUTS
Japan is to get early tax cuts in the hope of
revitalising demand in its battered economy.
But it is not yet clear where the money will come
from to pay for them.
The change of tack is the result of pressure from
senior figures within the ruling Liberal Democratic Party.
They have demanded that cuts kick in as early as
January, rather than waiting for the beginning of the financial year
Tax cuts are a thorny issue for prime minister
Junichiro Koizumi, who has been wrestling with slumping popularity all
Most parts of the government are agreed on the need
to reform the tax system, in the hope of boosting demand and corporate
But the problem is finding the money.
Mr Koizumi has vowed not to issue more than 30
trillion yen in government bonds this year, to minimise growth in
Japan's already swollen public debt.
Accelerating the tax cuts could put that at risk
— although finance minister Masajuro Shiokawa promised the cap would
remain intact and no supplementary budget was planned.
In the meantime, though, the talks between
ministers and senior figures in the traditionally faction-ridden LDP
have forced the government's hand.
The situation exemplifies Mr Koizumi's current
Despite healthy growth of 1.4% in the first three
months of this year, Japan's economy is far from secure on the path to
recovery from a decade of downturn, and observers are united in the
view that radical reform is needed.
BANK WARNS OF HIGHER INTEREST RATES
The Bank of England has given its clearest
indication yet that interest rates are likely to rise from their
historic low of 4%.
The Bank's governor, Sir Edward George, told the
Treasury Select Committee that the bank would have "no
option" but to raise rates if the economy did not slow down.
"If it doesn't happen that domestic demand
slows, and the external situation picks up, that's when it would
generate inflationary pressures.
"At some point we will have to moderate the
rate of growth of domestic demand," he said.
Official figures show that the UK economy was not
growing at all during the first three months of the year, but the
governor expressed scepticism about these figures and suggested that
they would soon be revised upwards.
"We thought we would have seen positive
growth... they are subject to revision, and we expect this would be in
a positive direction," he commented.
There was an extraordinary clash with MPs when the
deputy governor of the Bank, Mervyn King, was accused of moderating
his position on inflation in order to become the next governor when
Sir Edward's term expires next year.
Liberal Democrat MP David Laws asked if Mr King had
changed his vote, and also accused Mr King of misrepresenting the
committee's views at the press conference following the publication of
the Bank's May inflation report.
Sir Edward George interrupted: "This is an
extraordinarily cheap remark."
Mr King said: "I give you a total assurance.
The cynicism of politicians is not necessarily something you should
attribute to others — and I look forward one day to an
BRAZIL AIMS TO EASE MARKET FEARS
Brazil has announced a series of measures as it
bids to ease fears of an impending debt crisis and reassure financial
Finance minister Pedro Malan said the government
would borrow $10bn from an International Monetary Fund (IMF) to boost
the reserves of its central bank.
The value of the Brazilian real against major
currencies has slumped in recent days, along with the country's stock
Brazil's rating on The JP Morgan index, which
measures how risky it is to invest in a given country, rose to levels
last seen just before neighboring Argentina collapsed late last year.
The government said it also planned to ask the IMF
to allow it to spend more of $28bn in foreign currency reserves to
support the real.
The central bank will also spend $3bn to buy back
some of the country's international debt that is due next year and in
JAPAN ON THE MEND, CENTRAL BANK SAYS
Japan's central bank has given its clearest sign
yet that it believes the country is on the way back from a decade of
downturn and a 20-month recession.
In its latest analysts of the state of the economy,
the Bank of Japan upgraded its forecasts for the fourth straight
"Japan's economy shows signs of stabilising
with a distinct increase in exports and a pickup in production,"
But the bank warned that, despite government
statements that the worst was definitively over, weak domestic demand
meant the recovery was still at risk.
The bank also pointed to the slowing of the
economic turnaround in European and US trading partners.
AFRICA LOOTED FOR $140BN, LEADER SAYS
Africa has lost $140bn through corruption in the
decades since independence, Nigeria's president, Olusegun Obasanjo has
The huge sum — largely spirited away by leaders
and their associates — was one of the main reasons why Africa's
poverty was so severe.
Now, Mr Obasanjo told a meeting of civil society
organisations in Ethiopia's Addis Ababa, it was time to write rules to
help bring some of the money home.
"We are working to get an international
convention by which money stolen by corrupt African leaders and
stashed abroad is repatriated," Mr Obasanjo said.
NEW MONEY FOR ARGENTINA 'UNLIKELY'
Argentina has admitted it is unlikely to worm any
new money out of the International Monetary Fund (IMF) as a result of
talks going on in Buenos Aires.
The beleaguered country is desperate for fresh aid
of perhaps $9bn (£6.2bn) to stabilise its economy.
But currently the best that can be hoped for is
probably that the payments due this year will be rescheduled, a senior
ruling party figure said.
Argentina is meant to pay the IMF $5.5bn this year,
with a further $8.6bn due to international lenders next year.
FRANCE MAY CUT DOWN DEFENCE CONTRACTS
A contract with India for the sale of six
submarines that was shortly to be announced had to be put on hold as
long as India did not find a solution to its conflict with Pakistan in
Kashmir , said an official of France's Direction des Constructions
Navales (DCN), 11 of whose employees were killed in the May 8
terrorist attack in Karachi.
US, UK TO CONTINUE ARMS SALES TO INDIA
Britain and the United States have not suspended
arms sales to India amid its current stand-off with Pakistan, Defence
Secretary Yogendra Narain said on Sunday.
Narain negated reports that Washington and London
had slapped an embargo on the supply of military equipment to India
and insisted that the US was going to go ahead with an advanced radar
"The US has offered to supply automatic radars
and other defence items to India as and when needed," he said.
In April this year, an agreement was signed between
India and the US for eight US-made Firefinder counter-battery
artillery radars worth $146 million.
The US is also expected to give the green light to
General Electric to sell engines to India for its Light Combat
TESCO SALES COMFORTABLY HIGHER
Supermarket chain Tesco has said its sales rose by
11% in the three months to mid-May, with strong growth in the UK and
The supermarket chain, Britain's biggest grocer,
saw its profits shoot up by 14% to over £1bn in its last financial
CASH BOOST FOR STRUGGLING
Consignia is to be renamed Royal Mail Group plc
Consignia, the loss-making UK postal group, has received a £1.9bn
cash boost from the government on the day it detailed plans to turn
LUCENT WARNING HITS TECH STOCKS
Technology stocks suffered another sharp fall in
the US on Thursday as Lucent, the world's largest telecoms equipment
maker, issued a new revenue warning.
Lucent Technologies said it expects its
third-quarter revenues to drop by 10% to 15% from the previous
quarter, — despite analysts predictions they would match the
previous three-month period.
The news pushed Lucent shares down 15 cents to
$2.80, and helped force the technology-laden Nasdaq index down 22.23
points to an eight-month low of 1,496.89.
Lucent recently revealed a loss of $535m (£369m)
for the first three months of the year.
SURPRISE FALL IN US RETAIL SALES
Further signs of the weakness of the recovery in
the US economy came with a sharper than expected fall in retail sales
Official figures released on Thursday showed sales
down 0.9%, the biggest decline since November. Analysts had forecast a
BUYOUT STOKES HONG KONG MEDIA FEARS
The second biggest television network in Hong Kong
is to be taken over by a company with close interests to Beijing.
The deal puts Asia Television (ATV) under the
control of Liu Changle, a former senior propaganda official in China's
People's Liberation Army.
Mr Lui's close links with the Chinese authorities
have created concern in Hong Kong where many people already believe
China is building increasing influence over local media.
WIND FARM PLANS TAKE SHAPE
Plans have been unveiled to build one of the
world's biggest offshore windfarms off the north coast of Scotland.
The Canadian firm, Talisman Energy, hopes to
install up to 120 wind turbines beside its Beatrice oilfield 75 miles
north-west of Aberdeen.
The scheme would be able to generate 500 megawatts,
providing five per cent of the UK's renewable energy needs.
Talisman says the 90m high turbines would be
"barely visible" from onshore.
TANZANIAN GROWTH OUTSTRIPS
Tanzania has showed strong economic growth, while
Uganda and Kenya recorded more disappointing figures.
The three countries release their budgets on
Thursday as part of the requirements of the East African Community.
Tanzania's economy grew by 5.9% last year, and
Finance Minister Basil Mramba predicted 6.3% growth this fiscal year.
Kenya's economy grew by 1.2% last year, below the
DAIRY CREST ANNOUNCES £41M EXPANSION
Dairy foods group Dairy Crest is to pump £41m into
expanding and upgrading its cheddar-making plant in Cornwall.
The move aims at increasing sales of its Cathedral
City brand, it was announced on Thursday.
Dairy Crest said it was making the investment
following "continued strong growth" in consumer demand for
its Cathedral City and Davidstow brands.
It said sales of Cathedral City rose 18% over the
last year against a declining market for mature cheddar, which saw
sales volumes fall 2%.
YELL CUTS FLOTATION PRICE
UK telephone directory company Yell has set a lower
than expected flotation price for its shares.
The company said on Friday that it planned to offer
its shares at 270-345 pence each at flotation next month, valuing the
company at £1.8-2.3bn.
Analysts had estimated the firm's value at
BUDGET AIRLINES BOOST UK TRAVEL FIGURES
Strong growth in the no-frills airline sector has
boosted overall UK air traveller numbers.
The UK airport operator BAA said on Thursday that a
total of 10.7 million passengers flew from its airports last month,
0.8% more than in May 2001.
A sharp increase in European and domestic flights
accounted for the bulk of the increase, with bookings on lucrative
transatlantic routes falling by 4.6% compared with one year ago.