an amendment by Congressmen Jim Ramstad, a Republican,
and Dennis Moore, a Democrat, to shift $98 million from Iraq
reconstruction to help troops on leave pay for their trips home.
For the first time since the Vietnam War, the military
is giving service members with 12 months in the field in Iraq or
Afghanistan a 15-day home leave. But after flying into the port of entry
in this country, they must pay for the rest of theirs trip out of their
own pockets. The Senate approved similar language in its debate.
The President and Vice-President Dick Cheney and
Secretary of State Colin Powell, pressed lawmakers to make all
reconstruction money grants rather than loans. They argued that loans
would worsen Iraq's foreign debt situation and undermine efforts to get
other nations to write-off their outstanding loans to Iraq. But the
administration was confronted by lawmakers who said constituents were
disturbed by the idea that the United States, while racking up record
federal deficits, was giving billions in aid to a nation sitting on the
second-largest oil reserves in the world.
By a 55-44 vote, mostly along party lines, the Senate
rejected an amendment by Senate Democratic leader Tom Daschle that would
have barred future US aid to Iraq unless President Bush certified that
foreign countries' contributions equalled those by the United States. In
the House, Democrats sought to convert half the $18.6 billion in the House
bill for reconstruction but lost, 226-200.
FRANCE ESCAPES DEFICIT FINE
The European Commission has decided not to impose
sanctions against France, even though it will be in breach of the EU's
strict financial rules for the third year in a row. The Commission has
given France another year — until 2005 — to bring its budget deficit
below the permitted level of 3% of Gross Domestic Product (GDP). Paris
will have to make cuts in government spending and report every six months
to explain how it is bringing its deficit under control. Some smaller
countries had asked the Commission to levy big fines on France.
They are upset that France, and also Germany, appear to
be ignoring EU rules with impunity while they — the smaller nations —
were obliged to introduce painful cuts in public spending in order to meet
them. But EU Monetary Affairs Commissioner Pedro Solbes has insisted that
the "spirit of the pact" was being kept. The Commission has
recommended Paris make bigger cuts than already planned for 2004,
especially in the health sector, to reduce the deficit by another 0.4% of
Solbes said past violators of EU spending rules —
Portugal and Germany — have managed to make the same level of cuts. If
EU finance ministers accept the recommendation on 4 November — as
expected France would have two months to demonstrate compliance or the
threat of fines could re-emerge. Germany is also expecting to go
over-budget again next year but Berlin has adopted a less confrontational
approach to avoid financial sanctions. Six leading economic forecasting
institutes in Germany have predicted that its economy will grow moderately
next year, after three years of stagnation.
US POSTS RECORD BUDGET GAP
The US budget deficit for the most recent financial
year has hit a new record, according to official figures. The Treasury
Department last week said the budget gap the amount by which spending
exceeds revenues — grew to $374.2bn (£224bn) in the year to 30
September. The figure was double the previous year's deficit, and easily
outstripped the previous record of $290bn, set in 1992. It was in line
with independent economists' expectations, but fell short of the US
government's own forecast of $455bn. The government blamed the imbalance
on sluggish economic growth, and the cost of the war in Iraq. Officials
warned that the deficit would continue to rise in the months ahead,
breaking the $500bn barrier in the current financial year.
MAHATHIR CALLS FOR FAIR, NOT FREE TRADE
Malaysian Prime Minister Mahathir Mohamad called for
fair rather than free trade, saying poorer countries have the right to
protect their "little businesses" until they can compete with
the giants. Taking sweeping broadsides at rich nations and multinational
companies, he said: "Fair trade can be free, but free trade can be
unfair. That's what we are asking for. Nothing much really. We are ready
to be exploited but we must be fairly exploited." Mahathir made his
remarks in a speech to corporate chief executives on the sidelines of the
Asia-Pacific Economic Cooperation summit. It is his last major
international appearance before he retires at the end of this month after
22 years at the helm. Mahathir, an avowed champion of the developing
world, said the poorer countries could not agree to the agenda at the
failed World Trade Organizations talks in Cancun, Mexico, last month
because "it was not our agenda."
CHINA PUSHES AUSTRALIA TRADE TIES
China and Australia have agreed to closer trade and
economic ties, after China's President Hu Jintao became the first Asian
leader to address the joint houses of Australia's Parliament. The two
countries signed a framework document which could eventually lead to a
free trade agreement.President Hu said the priority was to develop energy
and resources projects.
"We want to forge a long-term and stable
co-operation partnership," he said. President Hu also said Australia
could play a "constructive role" in reuniting China with the
island of Taiwan.Addressing the Australian parliament, Hu warned that
"the greatest threat to peace in the Taiwan Straits is the splittist
activities by Taiwan independence forces".
UK RETAIL BOOM POINTS TO RATE RISE
High Street sales grew by far more than expected last
month, making an imminent interest rate increase more likely. The Office
for National Statistics said retail sales expanded by 0.6% in September,
easily outstripping the 0.4% increase pencilled by City forecasters. The
figures suggest that consumers are still engaged in a debt-fuelled
spending spree, and could prompt the Bank of England to raise borrowing
costs in an effort to dampen down the High Street boom.
The Bank's rate-setting monetary policy committee (MPC),
which has long been concerned over rising consumer debt, earlier this
month voted by the narrowest possible margin to keep rates on hold at
3.5%. Four of the MPC's nine members voted in favour of raising interest
rates to 3.75%.
CLINTON BROKERS LANDMARK AIDS DEAL
Former US President Bill Clinton has brokered a deal to
supply cut-price Aids drugs to developing countries. An agreement was
reached with four generic drug companies in India and South Africa to
provide certain treatments at less than a third of the cost of patented
versions. Nine countries in the Caribbean, as well as Mozambique, Rwanda,
South Africa and Tanzania will receive the low-cost medication.
The world's biggest software maker, Microsoft, has
reported an increase in quarterly profits. Profits were $2.6bn (£1.53bn;
2.2bn euros), or 24 cents a share, for the three months to 30 September
compared to a figure of $2bn — adjusted to reflect stock options granted
— for the same period last year.
GERMANY REDUCES GROWTH FORECAST
The German government has cut its previously optimistic
forecast of economic growth for this year from 0.75% to zero. And in a
further reappraisal of its economic prospects it has revised down its
envisaged 2% growth figure for 2004, saying the economy might grow by only
However, the outlook still matches widespread
expectations that Germany will finally break out of three years of
near-zero growth with a moderate recovery next year. Berlin is trying to
boost recovery with a package of economic reforms, including tax cuts,
pension changes and merging unemployment benefit and social welfare
Anglo-Dutch oil giant Shell said profits rose to $2.6bn
(£1.53bn), up 16% on the same period last year, but investors had been
expecting profits to be at least $3.1bn (£1.8bn).
AOL LETS DOWN TIME WARNER
US media giant Time Warner has reported a 3.7% overall
rise in profits, although its AOL internet unit has seen revenues drop.
Time Warner said its net profit rose in the third quarter to $541m, or 12
cents a share, from $57m, or 1 cent a share, a year earlier.
GLAXO PROFITS JUMP
Drugs giant GlaxoSmithKline has seen profits rise
sharply in the third quarter of the year. The company, the third-largest
drugmaker in the world, made £1.69bn ($2.84bn) in the three months to
September, up 24% on the same period the year before.
NERVOUS NIKKEI PLUNGES BY 5%
Japanese shares have plunged by more than 5%, their
sharpest one-day drop since 12 September 2001. At the October 23 close,
the Nikkei share index had lost 554 points to 10,335.
But the mood among investors remained relatively calm.
Instead of reflecting any particularly acute crisis, the fall was mainly
seen as a reaction against recent sharp gains in the Nikkei, which hit a
16-month high at the beginning of this week.
DOLLAR SEES MORE LOSSES
The dollar has once again fallen, losing more than 1%
against the euro, the Swiss franc and the Canadian dollar. The greenback's
losses followed a dip in US stocks which was reportedly compounded by
investment funds joining in on the selling amid a data vacuum.
"There is no data... that triggered this dollar
sell-off. Lower stock markets started it and as the momentum built up,
model funds were generally pushed back into short-dollar positions,"
Rebecca Patterson, at J.P. Morgan Chase in New York told Reuters news
agency. The euro reached $1.1819 — a rise of 1.25%.
ZIMBABWE TOBACCO SALES DIVE
Zimbabwe's tobacco production has halved this year
compared with 2002, according to official statistics released in Harare.
The Tobacco Industry Marketing Board said the country's output of its main
export crop had fallen to its lowest level since Zimbabwe gained its
independence in 1980. Less than 80 million kilograms of the country's once
lucrative crop was auctioned off during this year's sales season which
started in April.
Amazon reported a net profit of $16m (£9.5m; 13.7
euros), or 4 cents per share, for the three months to 30 September. That
compares with a loss of $35m, or 9 cents per share, in the same period a
The world's fifth largest carmaker, DaimlerChrysler,
has announced a substantial drop in quarterly operating profit to 1.25bn
euros (£871m, $1.46bn).
MORTGAGE LENDING HITS RECORD
Mortgage lending hit a new record in September, the
Council of Mortgage Lenders (CML) has said. Total mortgage lending was
£25.7bn in September, putting it on course to touch £270bn in 2003,
substantially higher than the £219bn advanced in loans in 2002.
CHINA'S GROWTH RACES AHEAD
China's annual growth rate has topped 9% — fuelling
concern its economy could be overheating.
"It's growing almost too fast," Hong Kong
businessman and broker Howard Gorges told BBC World Business Report. The
figures — from the State Statistical Bureau — were at the high end of
analysts' expectations. And are in stark contrast to growth rates in the
rest of the industrialised world, which are between zero and 3%.
The figures are likely to lead to renewed pressure from
the United States on Beijing to allow its currency to rise, to reflect its
economic strength and make US manufacturers more competitive.China's Gross
Domestic Product (GDP) went up by 9.1% in the 12 months to the end of
September, the figures showed.
US CONSUMER CONFIDENCE RISES
An unexpected rise in consumer confidence has boosted
hopes of an economic recovery in the United States. The closely watched
University of Michigan consumer confidence survey suggests that in October
sentiment rose to 89.4 — above economists' forecasts of 88.0 and higher
than the reading of 87.7 in September.
Maintaining consumer spending, which makes up
two-thirds of the US economy, is the key to continuing economic growth.
The increased confidence is mainly due to the strengthening job market,
with government figures showing that the economy added 57,000 jobs in
This confirms that consumers are starting to feel an
improvement," said Kurt Karl, head of economic research at Swiss Re.