Last month, the Bank sprang a surprise by cutting UK
rates by a quarter of a percentage point to 3.5% — their lowest level
since January 1955. Industry representatives said the Bank's rate-setting
body — the Monetary Policy Committee (MPC) — had made the right
decision. "The Bank is right to take the breathing space afforded by
last month's cut and assess how the economy develops through the
autumn," said Steve Radley, chief economist at the Engineering
"There are tentative signs that the global economy
is beginning to show signs of life and manufacturers will hope that this
is translated into stronger demand in the second half of the year."
But the CBI warned that the Bank needed to keep a close eye on the
economy."Interest rates appear to be set at the appropriate level for
now," said Doug Godden at the CBI."However, business will look
to the MPC to monitor the global situation and be prepared to cut again if
the situation warrants it."
Last month, the MPC cited two main reasons — the
hesitant global recovery and signs of slowing consumer demand in the UK
— for its surprise cut. But since then US figures have hinted that it is
no longer in danger of a 'double dip' recession. And in the UK, retail
sales rebounded in June as shoppers rushed to buy barbecues and light
clothing amid the hot summer temperatures.
TURKEY GETS IMF EXTENSION
Turkey's financial markets will be encouraged by the
release of the latest tranche of the country's IMF loan. The long-delayed
announcement, which has been expected since April, means that Turkey will
receive another $475m in economic assistance from the International
Monetary Fund.In addition, the country will receive a one-year extension
on the repayment of $11bn in outstanding loans.
Turkey has borrowed $15bn from the IMF to help
stabilise its currency over the past two years as it faced its worse
economic crisis since 1945. The IMF's managing director, Horst Koehler,
praised the efforts of Turkey to rein in public spending and curb
inflation. "The Turkish authorities have made strong and welcome
efforts in recent weeks to implement their program of stabilization and
economic reform.. The Government's recent actions bode well for the
success of the Fund-supported programme," he said. Turkey has pledged
to run a primary budget surplus of 6.5% of GDP and to reduce inflation
below 20%. It is also pledged to improve banking regulation and privatise
its main banks.
The war with Iraq had threatened to hamper Turkey's
economic recovery, especially after Turkey failed to negotiate a huge loan
with the United States in return for allowing US troops to use Turkey as a
staging base. In the end, Turkey will receive a $1bn grant, or up to
$8.5bn in loan guarantees, from Washington, making the IMF loan more
important. The US Congress approved the funds in April after Ankara
decided to open its airspace for the US-led war on Iraq.
CHINA EASES MIGRANT CRACKDOWN
China's government has been too harsh in its treatment
of the country's vast army of poor, migrant workers and needs to
"adopt a fair attitude", according to Vice Minister of Police
Bai Jingfu. "It was wrong in the past to punish farmers in the cities
for having no temporary residence permit," Mr Bai told journalists in
Beijing. "It was also wrong to fine them or send them back to the
countryside," the French news agency Agence France Presse reported
him as saying. Mr Bai's unusual confession is the latest sign of a
fast-developing shift in the government's view of laws restricting migrant
CASH RESCUE FOR GERMAN CITIES
The German government has unveiled plans to relieve its
cash-strapped cities by giving more money to local authorities.Finance
Minister Hans Eichel has said that changes to local business tax will
boost city coffers by 4.5bn euros (£3.2bn) next year and by 5bn euros the
Many cities have been left struggling to keep public
services operating after weaker company profits resulted in less tax
UK INDUSTRIAL OUTPUT WEAK
Official figures have shown that Britain's
manufacturing sector remains stuck in a pattern of sluggish growth. The
Office for National Statistics (ONS) said British manufacturing output
climbed 0.2% in June from May to stand 3.5% higher than one year earlier.
The ONS said the annual rise was the sharpest since December 1994, but
stressed that the year-on-year comparison was flattered by a downturn in
manufacturing activity during the Queen's Jubilee celebrations in June
FRENCH TOURISM UNDER PRESSURE
France, one of the world's biggest tourist
destinations, is struggling this summer to cope with a number of adverse
conditions. Figures just released for July — an important month for the
tourism sector — show that visitor rates are down by an average of 20%
on 2002. "It's true that July was a weak month," Tourism
Minister Gilles de Robien said. Forest fires have hit business in the
south-eastern Riviera region, while the oil of the sunken tanker Prestige
has blighted the beaches of the south-west for months.
RWE FACES US SANCTIONS THREAT
The US has warned the German utility group RWE that it
could face sanctions because of a deal to explore for oil and gas in
Libya. The US State Department said it was examining the contract to see
if it broke the Iran-Libya Sanctions Act, passed in 1996. Under this law,
the US can punish foreign firms that invest more than $20m a year in the
energy sectors of Iran or Libya.
ZIMBABWE TACKLES CASH SHORTAGE
The Central Bank in Zimbabwe has said it is to issue
travellers' cheques for local use to ease the country's severe cash
shortage, as the country spirals into an ever deepening economic crisis.
The bank says the travellers' cheques, which are legal
tender and will be acceptable as payments for goods and services anywhere
in Zimbabwe, will go into circulation, in denominations of between Z$1,000
and Z$100,000 (approximately $1.20 to $120). The move is the latest in a
series of measures by the Zimbabwean authorities to alleviate the cash
crisis, which many blame on President Mugabe's controversial policies.
US SHOPPERS SHUN PLASTIC
US shoppers kept their credit cards tucked away in
June, prompting an unexpected fall in consumer debt figures. The Federal
Reserve said outstanding consumer credit fell by $400m in June to $1.76
trillion — the first time figures have dropped since November 2002. Wall
Street had been expecting figures to climb by about $6.9bn. The fall, led
by a $1.3bn drop in charge and credit card debt, prompted further fears
that the US economy is far from rebounding. With unemployment above 6% and
weak consumer confidence, there are fears that consumer spending — the
US economy's main ballast in recent months — will be next to suffer.
BANK APOLOGISES FOR PRAISING HITLER
A Chicago bank has apologised after praising Adolf
Hitler as a great economic leader. Glenview State Bank said it had
received "many letters and calls" from people offended by its
July economic newsletter, which credited sound economic policies for the
German boom of the 1930s — a decade when most economies were in severe
depression. The Anti-Defamation League formally complained about the
report — written by Glenview president Dave Raub — and called its
positive portrayal of Hitler "deeply disturbing".
GERMAN DOLE QUEUES LENGTHEN
The German labour market has deteriorated again, with
more than one in 10 people now looking for work, according to new
government figures. Germany's seasonally unadjusted unemployment rate rose
to 10.4% in July, up from 10.2% in June, the country's Federal Labour
Office said.That means an extra 94,500 people were out of work in July,
bringing the total to 4.35 million. Government promises to bring down
Germany's stubbornly high rate of unemployment have failed as the economy
has stagnated. Chancellor Gerhard Schroeder is currently pushing through
more labour market and welfare reforms in an effort to improve the
ICELAND TO RESUME WHALING
Iceland announced its intention to resume whaling this
month. It said it would take 38 minkes this year, in August and September,
from waters around the island to study the mammals' impact on fish stocks.
The country's whaling commissioner told BBC News Online that with 43,000
minkes currently in Icelandic waters, the "scientific catch"
would have no impact on the species' status.
EU GIVES 'LAST CHANCE' TO MICROSOFT
Software giant Microsoft has one last chance to comment
before it gets hit by sanctions for abusing its dominant position, the
European Commission has said. "The Commission's preliminary
conclusion is that Microsoft's abuses are still ongoing," the EU
executive said in a statement giving the company a month to respond.
VIETNAM REFORMS 'TOO SLOW'
Vietnam's hopes of joining the World Trade Organisation
have been given a boost by World Bank and US officials. However, they
stressed that Communist-ruled Vietnam needs to do more to open up its
markets and reform its economy to meet its goal of joining by 2005. World
Bank Managing Director Shengman Zhang has completed four days of meetings
with Vietnamese government officials.
GLAXO ANTI-MALARIAL DRUG APPROVED
Drugs giant GlaxoSmithKline has won UK approval for its
latest anti-malarial drug, paving the way for it to be made available in
Africa. Glaxo spokesman Chris Hunter-Ward said the drug was expected to
become available in seven African countries by the end of the firm's
US SHRIMPERS JOIN SEAFOOD BATTLE
Fresh from a recent legal victory over Vietnamese
catfish farmers, seafood producers in the United States are now targeting
imports of shrimp, or prawns. Last month, the US Federal Trade Commission
backed protests by American catfish farmers and imposed massive duties on
cheap Vietnamese imports. Calling for similar duties on shrimp, American
fishermen are accusing around a dozen countries, including Vietnam,
Thailand, China and India, of dumping cheap seafood on the American
ANGLOGOLD OFFERS $1.1BN FOR ASHANTI
AngloGold has made a $1.1bn (£680m) bid for Ghana's
Ashanti Goldfields. If the deal goes ahead, it will give AngloGold more
gold reserves than Australia's Newmont which is currently the biggest gold
miner in the world.
WORLDCOM BLASTS AT&T
Bankrupt US telecoms firm WorldCom has accused its
rival AT&T of deliberately sabotaging its attempt to survive. Last
month, federal prosecutors subpoenad documents from WorldCom after
AT&T claimed it was defrauding competitors by improperly routing
domestic telephone calls to avoid paying fees to other US telecoms firms.
RUSSIA AND MALAYSIA SIGN JETS DEAL
Russian president Vladimir Putin has signed a $900m
(£562.5m) deal to supply fighter jets to Malaysia while on a visit to the
south-east Asian nation. Mr Putin said he hoped the sale would help open
doors to the south-east Asian market for Russian high-tech goods.
ALSTOM CONFIRMS STATE BUY-UP
French engineering giant Alstom has announced that the
French government is to give it 300m euros (£211m; $339m) in exchange for
almost a third of the company in an attempt to bail it out of crippling
FIRST-TIME HOMEBUYERS AT RECORD LOW
UK house prices grew 1.3% in July — a rise from the
month before — but the annual rate of increase slowed to 19% as the
number of first-time buyers continued to fall, the Halifax bank has said.
The bank said the number of first-time buyers was now at its lowest level
since records began in 1974.