"Europe should not wait for growth, it should go
out and look for it," Mr Chirac said. Mr Schroeder and Mr Chirac did
not say how much their ten-point investment plan would cost, but estimates
of 3 billion euros ($3.4bn) have been reported. The Franco-German
investment plan would complement a separate proposal from Italy, which
currently holds the European Union's rotating presidency, to boost EU
infrastructure spending by 50 billion euros between 2003 and 2010.
Under the Italian plan, the bulk of the money would
come in the form of extra loans from the European Investment Bank, the
EU's long-term financing arm. But Schroeder and Chirac's proposal to
revive the economy through increased public spending is likely to draw
fire from other EU countries irked by France and Germany's failure to keep
within eurozone budgetary rules.Both countries look set to breach the
so-called Growth and Stability Pact — which limits annual government
borrowing to 3% of gross domestic product — for the second year running
IMF UPBEAT ON WORLD GROWTH
US growth is pulling the world economy out of its slump
and raising the prospect of a return to normal rates of growth in the
global economy according to Kenneth Rogoff, the International Monetary
Fund's top economist.Since it published its last official assessment of
the global economy in April, the IMF has not had to downgrade its
predictions Rogoff said.
The IMF still sees global growth of 3.2 per cent in
2003 and 4.1 per cent in 2004 he said. "The difference is that we now
see at least as much upside potential as downside risk over the next 9-12
months" Rogoff said.The driver of the recovery, he made clear is the
US economy, forecast to see a 3.9 per cent growth surge next year with
"the short- term risks until late 2004 tilted on the upside.
The US upsurge is buttressed by "a remarkable
uptick" in Japan's growth numbers which has led the IMF to revise its
forecasts upwards "even though it would be premature, to say the
least, to declare that Japan is out of the woods," Rogoff said.The
black spot, in the IMF's view, is Europe where "the most concrete
positive news seems to be the good news from elsewhere," according to
Rogoff. For the Middle East and North Africa region the IMF is expecting
growth of 5.2 per cent this year and 4.5 per cent in 2004. The IMF's
optimism for this region is, Rogoff said, heavily pegged on the higher oil
prices and higher oil production which represent significant share of
income in the Middle East.
PENTAGON 'TO PROBE BOEING DEAL'
The US Defence Department is to launch an investigation
into whether Boeing got improper support from its officials to beat
European rival Airbus in a multi-billion dollar contract battle, a US
senator has said. The Pentagon's decision was announced by Republican
senator John McCain, a member of the Senate Armed Services Committee who
has been pushing for an inquiry into the deal. The Pentagon's inspector
general Joseph Schmitz reportedly told a Congressional Committee last week
that "sufficient credible information exists to warrant the
initiation of an investigation".
The allegations — which Boeing reject — stem from a
contract, worth at least $22bn (£13.6bn), to provide the US military with
refuelling tankers. The US Air Force decided in December 2001 to lease 100
Boeing 767 planes and convert them to refuelling tankers before eventually
buying them outright. Boeing has rejected claims that it was fed unfair
information about Airbus' pricing by Pentagon officials.
UK GOVERNMENT FINANCES WORSEN
Increases in government spending aimed at upgrading
Britain's creaking public services have pushed the country's public
finances deeper into the red. Public sector borrowing — the difference
between revenues and spending — widened to £4.8bn ($7.6bn) in August,
up from £1.8bn one year earlier, according to the Office for National
Just five months into the financial year, the public
sector deficit has risen to £16.8bn, nearly two thirds of the £27bn
forecast by Chancellor Gordon Brown for the year as a whole. The widening
budget gap shows that the government is spending money more quickly than
it can collect it in the form of tax and other revenues.
TAX BREAK FOR JAPAN'S BANKS
Japan's banks saw their shares soar last week as
investors responded to recent signs of a pickup in the economy. Reports of
a massive tax settlement by the Tokyo city government which could boost
profits at the banks, long drowning in red ink, also acted as a spur to
Shares in Mizuho, the biggest bank in the world by
assets, were up more than 15% to an all-time high, and its fellow Big Four
banks gained between 8% and 13%. Stronger than expected growth and a
slight fall in unemployment levels — reflected in unusually optimistic
Bank of Japan monthly report — have stirred hopes of that Japan's
moribund economy may be poised for recovery, revitalising banking stocks.
CHINA JOINS EU'S SATELLITE NETWORK
China has struck a deal to invest in Galileo, the
European Union's space satellite navigation network. China is already one
of the biggest players in the global satellite launch industry and is
making final preparations for its first manned space flight which could
take place as soon as next month.
"China will help Galileo to become the major world
infrastructure for the growing market for location services," said EU
transport commissioner Loyola de Palacio. China will invest 230m euros
($259m; £160m) in the Galileo satellite tracking system. The EU is
developing Galileo to provide an alternative to the United States' Global
Positioning System (GPS), which is used by the Pentagon.
AMERICA'S RICHEST GET RICHER
America's richest tycoons increased their personal
wealth over the past 12 months, partly reversing a two-year decline,
according to Forbes magazine's annual snapshot of America's super-wealthy.
The total net worth of the 400 wealthiest people in the US rose by 10%
over the year to $955bn (£573bn).
Their wallets were fattened by renewed gains in
Internet and technology stocks, after the huge losses of the 2000 dotcom
crash, and subsequent doldrums for IT stocks, according to
Forbes.Microsoft chief Bill Gates remains the US' richest tycoon, worth
$46bn, or $3bn more than a year ago.
US SHARES HIT 15-MONTH HIGH
Fresh hopes of an economic recovery have powered US
shares to their highest closing level since June last year. The benchmark
Dow Jones share index settled 1.2% higher at 9,659 on September 18, its
first close above the symbolic 9,600 mark since 18 June 2002. The Nasdaq
index of technology stocks reached an even more important milestone,
closing 1.4% higher at 1,909.5, the first time it has settled above 1,900
in 18 months.
COLA SALES SET TO LOSE SPARKLE
Sales of soft drinks like Coca Cola and Pepsi are set
to decline as consumers turn to alternatives like bottled water and fruit
juices. Britons drink 130 cans of soft drinks — or 43 litres — each
per year. But the sales of soft drinks like Coca Cola and Pepsi are set to
fall. The UK spends £5bn per year on the fizzy drinks, and is the world's
tenth biggest cola market.
BUSINESS DRIVES CHINA RETAIL BOOM
Retail sales in China leapt almost 10% in the 12 months
to August, powered by demand for cars, phones and building materials. The
9.8% annual growth suggest a strong comeback from the damage done to
spending in the first few months of the year, when the Sars virus swept
across East Asia. In May the growth was just 4.3%, good by some countries'
standards but poor in an economy growing at close to 8% a year.
CHINA NETS MILLION JAPAN PROTESTS
More than one million people in China have signed an
online petition demanding that Japan compensate Chinese victims poisoned
by abandoned chemical weapons from World War II. The online petition was
launched by seven Chinese websites and is believed to be the country's
EU BLOCKS ALSTOM RESCUE PLAN
The European Commission has prevented the French
government from subsidising the beleaguered engineering group Alstom. The
European Union's executive arm said it was blocking "in
principle" the rescue plan worth 2.8bn euro ($3.1bn) and launching an
investigation into the bail-out.
Alstom, battered by cost overruns on key projects,
accounting irregularities at its US operation, and the bankruptcy of a
major client, has lost 90% of its market value and shed thousands of jobs
over the past two years.
US BOSSES STEP UP CHINA YUAN ROW
A powerful industrial lobbying group is calling on the
US government to take China to the World Trade Organisation (WTO) over its
fixed exchange rate policy. The National Association of Manufacturers
(NAM) has said it plans to file a trade complaint with the US Trade
Representative, which would force trade officials to consider an official
response. The Bush administration would have to decide whether to take the
filing to the next stage by making a complaint of unfair trade practices
to the WTO.
PROFITS SURGE AT WORLD BANK LENDER
Profits at the World Bank's private sector lending
division have tripled to $528m in the year to June 2003, thanks to
stronger developing world economies.
MERRILL BANKERS CHARGED OVER ENRON
Three former high-ranking Merrill Lynch bankers have
been charged with fraud in connection with the fallen energy giant Enron.
Robert Furst, Daniel Bayly and James Brown are accused of involvement in a
transaction that helped Enron meet a 1999 profit target through a
"sale" of three barges carrying generators moored off Nigeria.
KLM AIR FRANCE DEAL 'NEAR'
Air France and loss-making Dutch airline KLM have moved
closer to forging an alliance. The two airlines are in the advanced stages
of negotiating KLM's entry into the SkyTeam group, a statement said. Air
France — which already has ties with US carrier Delta Air Lines and
Italy's Alitalia in the SkyTeam marketing alliance — has been trying for
months to recruit KLM.
NYSE CHIEF RESIGNS
New York Stock Exchange (NYSE) chairman Richard Grasso
has resigned amid public anger over his $140m pay package.
UK UNEMPLOYMENT AT 28-YEAR LOW
The number of people out of work and claiming benefits
in the UK is at a 28-year low. The claimant count dropped by 6,900 to
930,800 — much better than the 2,000 decline forecast by economists and
the lowest level since September 1975, the Office for National Statistics
BOE HINTS AT HIGHER RATES
The Bank of England's interest rate setters have hinted
that a rise in the cost of borrowing is in the pipeline. All nine members
of the central bank's monetary policy committee (MPC) this month voted to
keep interest rates steady at their 48-year low of 3.5%.
US INFLATION SUBDUED
US inflation grew at a slower than expected pace last
month, reinforcing expectations that the US Federal Reserve will leave
interest rates at their current 48-year low of 1% for some time to come.
The broadest measure of consumer prices rose 0.3% in August to stand 2.2%
higher than one year ago.
US LOOKS FOR INDUSTRIAL BOOST
The US Government has outlined plans to safeguard
manufacturing jobs by making American heavy industry more competitive in
global markets. In a speech to the Detroit Economic Club, Commerce
Secretary Don Evans said he would set up a team to probe hurdles to fair
trade, notably what some see as unfair Chinese currency practices. With a
presidential election now just over a year away, there has been mounting
concern over the 2.5 million manufacturing jobs lost since President
George W. Bush came to power in 2000.
Many US industry lobbyists contend that cheaper
developing economies, especially in Asia, have an advantage because of the
relatively strong dollar. Despite a generally resurgent US economy,
industrial output grew by just 0.1% in August, held back by a decline in
the manufacturing sector.