INTERNATIONAL

 

Dec 22 - 28 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


EU'S RICHEST SIX URGE BUDGET CAP

Six of the EU's richest states have called for the capping of the bloc's future budget, which could lead to a cut in aid to its poorer nations. Germany, Austria, Britain, France, the Netherlands and Sweden said the budget should not exceed 1% of the EU's gross national product from 2007 onwards. Their letter came just days after Spain and Poland blocked a deal on the EU's future constitution at Brussels talks. The European Commission has reacted angrily to the "letter of the six".

 

 

 

The letter also sparked an immediate response from Poland, where Foreign Minister Wlodzimierz Cimoszewicz said the expanding bloc "cannot function on the principle of carrots and sticks". In a reference to Germany's economic downturn, the letter says EU citizens would not understand if the EU budget were exempted from the painful consolidation efforts carried out at home. The letter's proposal would slice 25 billion euros ($31bn) from the budget which the European Commission is expected to propose. In a swift reply, European Commission President Romano Prodi said that with less money it would simply not be possible to do what EU governments and the rest of the world expected in terms of foreign aid and improved border and immigration controls. "Miracles... are not my speciality," Mr Prodi said in a statement, adding that they did not seem to come easily to EU member states either. The letter from the six countries that hold the EU purse-strings will inevitably be seen by Spain and Poland as a threat.

BRITAIN UNVEILS WIND ENERGY PLANS

Plans to develop some of the world's biggest offshore wind farms in the UK have been outlined by the government. They will be located at 15 sites in three areas the Thames Estuary, Greater Wash, and the North West. They are expected to produce seven per cent of the UK's energy needs by the end of the decade. The announcement comes just weeks after the Government announced measures to boost financial support for renewable energy. Energy Minister Stephen Timms said the proposals proved the government was committed to a greener future.

He said: "This is the biggest expansion of renewable energy anywhere in the world, and demonstrates that we are serious about moving towards a cleaner, greener future. "The Energy White Paper committed us to providing 10% of our total energy needs from renewable sources. "These new wind farms will not only put us firmly on the path to meeting this challenging target, but will help us to meet our aspiration of generating 20% of our energy from renewables by 2020."

Mr Timms said the response from developers wishing to build the farms, which should provide electricity for four million homes, had been "overwhelming". Details of the sites, together with the developers chosen to build them, can be seen on the website of the Crown Estate, which leases the seabed around the UK. The British Wind Energy Association, which represents almost 300 companies, welcomed the announcement. Its chief executive, Marcus Rand, said: "We have the best wind resource in Europe and this announcement puts the UK in the fast lane to becoming a world leader in developing it offshore.

FRANCE DUMPS MOTORWAY SELL-OFF

The French Government has rejected a controversial plan to privatise three large motorway operators. The state had been expected to sell part or all of Autoroutes du Sud, Sanef and SAPRR, which together run 6,700km of France's motorway network. The finance ministry wanted the sales which could have raised 10bn euros (7bn; $12.4bn) to help ease France's budget deficit. But privatisation was opposed by the transport ministry and by unions. Transport Minister Gilles de Robien insisted that the state needed the revenue stream provided by the firms' toll-booths; while labour activists were worried about job losses.

IMF GIVES BROWN BORROWING WARNING

Chancellor Gordon Brown has been warned by the International Monetary Fund (IMF) that he risks breaking his own rules on government borrowing. In its annual assessment of the British economy, the IMF said the government needed to cut its spending deficit. It recommended that either taxes should be raised or spending reduced to improve the public finances. But the IMF also praised the UK's economy for performing "enviably" while other major economies have struggled. In the recent pre-Budget report, Mr Brown raised his borrowing estimate for 2003/04 from 27bn to 37bn.

DOLLAR HITS NEW LOW AGAINST EURO

The dollar has slid to a new low against the euro, after reports the European Central Bank (ECB) had no plans to intervene in the market. The report, citing unnamed ECB sources, said there would be no intervention by the ECB until the euro hits $1.35. The euro traded as high as $1.2418, topping its previous $1.2383 record. The euro has risen by nearly 19% against the dollar this year and hit record highs in 12 of the past 14 trading sessions.

 

 

"Things were relatively quiet this morning until this story came out suggesting from ECB sources that they did not see the need for any intervention," said Robert Sinche, global head of currency strategy at Citibank in New York. "Whenever you put a number out there, the markets get very excited," he added.

FISHERMEN PEER INTO ANNUAL ABYSS

The annual round of European Union talks to agree permitted fish catches is starting in Brussels.

The commission, the EU's executive arm, is proposing to maintain the deep cuts in cod quotas imposed last year. Scientists say cod catches should be banned completely in the North Sea, the Irish Sea and off western Scotland, to give the stocks a chance to recover. But many trawlermen say the fish are plentiful and think the scientists are missing clear evidence of abundance.

CREDIT LYONNAIS FACES HUGE FINE

French bank Credit Lyonnais has agreed to pay $100m to settle charges that it illegally bought a US insurance firm twelve years ago. The payment forms part of a $770m settlement deal between the US authorities, the French government, and a handful of French firms. US mutual fund hit by record fine Alliance Capital is to pay $250m to settle charges of irregular trading practices, the biggest penalty ever paid by a mutual fund. Alliance had been accused of allowing big investors to execute rapid-fire trades in its shares, a practice that erodes returns for ordinary savers.

RAMPANT EURO RISE SPARKS DEBATE

The euro has hit yet another all-time record against the dollar, sparking debate on whether the trend is good for Europe's sluggish economy. The single currency hit $1.2423, the latest in a series of highs. European Central Bank (ECB) chief Jean-Claude Trichet said that Europe and the US were both pursuing "strong and stable" currencies. But European Commission President Romano Prodi warned a strong euro could derail the eurozone's slow recovery.

HIGHER FARES THREAT AT STANSTED

The British Airports Authority (BAA) has told the BBC that landing charges could rise by up to 10 to pay for the planned expansion of Stansted airport. BAA expects to raise 2bn from higher charges, roughly half the cost of the new runway due to be ready in 2011. Low-cost airlines Easyjet and Ryanair, the airport's biggest operators, are opposed to any increase in duty.

INFOSYS MAKES FIRST OVERSEAS BUY

India's leading software firm, Infosys, has snapped up Australian software firm Expert Information Services (EIS) its first overseas acquisition. The all-cash deal is valued at $22.9m (13.5m), and is expected to be completed by the first week of January.

HOUSE PRICES 'WILL REMAIN STRONG'

The UK's biggest building society has said house prices look set to increase by 9% next year. Nationwide said it expected most of the growth to come in the first half of 2004, before rising interest rates and weaker income growth dampen confidence. Its figure is more than the 8% the Halifax predicted earlier this week, but lower than the 15% prices are expected to have risen by in 2003.

GERMAN BUSINESS CONFIDENCE SURGES

German business confidence hit a three year high in December, the latest sign that Europe's biggest economy is recovering. The influential Ifo index rose to 96.8, its eighth straight monthly advance and the highest level since January 2001. A pick up in the US and increasing demand in Asia are having a positive impact, economists said.

US WATCHDOG BACKS NYSE OVERHAUL

Financial regulators have backed reforms aimed at improving the way the New York Stock Exchange (NYSE) is run. Members of the Securities and Exchange Commission (SEC) voted unanimously in favour of the overhaul, which would make NYSE directors more independent.

CHINA LIFE SURGES ON MARKET DEBUT

Shares in China's biggest life insurance company have jumped by nearly 27% on their trading debut in New York. China Life is selling US-traded shares, known as American Depositary Shares, as part of its $3bn (1.76bn) flotation the biggest in the world this year. Demand for the shares has been high, with investors keen to invest in China's economy which is growing at about 8% a year. China Life has about 45% of the mainland Chinese life insurance market.

US IN CENTRAL AMERICAN TRADE DEAL

The United States has agreed a free-trade agreement with four Central American countries.The Central American Free Trade Agreement, or CAFTA, was struck between the US and Guatemala, El Salvador, Nicaragua and Honduras. A fifth nation, Costa Rica, pulled out of the talks saying it needed more time to consider demands being made by the US.

KENYA HUNTS FOR MISSING BILLIONS

The authorities in Kenya are seeking to retrieve at least $1bn (570m) siphoned out of the country by former officials. A six-month inquiry by investigative group Kroll has tracked the stolen money to accounts in big-name banks, and shares in London hotels.

BOEING MOVES AHEAD WITH NEW JET

US plane maker Boeing has said it is to start taking orders for its new 7E7 Dreamliner passenger jet. The 200-300 seat aircraft is Boeing's first new commercial airliner for more than a decade. The new model, which is not expected to enter service until 2008, is seen as vital for Boeing's future. The US firm is facing fierce competition from Europe's Airbus, which is expected to overtake Boeing this year in terms of sales. Boeing said its board had unanimously decided to start offering the 7E7 model for sale.

YUKOS AND SIBNEFT TO END MERGER

The $11bn merger between Russian oil firms Sibneft and Yukos has all but ended after the two companies agreed to reverse the agreement.

BANK VOTED 8-1 TO HOLD UK RATES

Bank of England deputy governor Sir Andrew Large was alone in his call for a rise in interest rates earlier this month. Minutes from the Bank's rate setting Monetary Policy Committee (MPC) show that Mr Large was concerned by the rise in consumer debt levels. But the remaining eight members of the committee voted to keep the cost of borrowing on hold at 3.75%. Governor Mervyn King decided to adopt a wait-and-see policy after November's quarter-point rise in UK rates.

 

 

UK INFLATION IN SURPRISE SLOWDOWN

Inflation unexpectedly slowed last month to its weakest rate since July, official figures show. The Office for National Statistics (ONS) said the new Consumer Price Index (CPI) measure fell 0.1% to 1.3%.Analysts had predicted a rise to 1.5%. The Chancellor had set a target of 2% for the new measure, which excludes housing and council tax costs. But the old Retail Price Index "headline" rate, which includes mortgage interest payments, fell by 0.1% to 2.5%.

IMF APPROVES NEW BRAZIL LOAN DEAL

The International Monetary Fund has approved a new deal to extend its current loan to Brazil. The extension will give Brazil access to a standby loan worth more than $14bn next year. The Brazilian Government says it will not draw on the money it sees as a precaution against economic turbulence. IMF sources said the deal was approved unanimously, with board members praising Brazil's performance as exemplary.

UK JOBLESS TOTAL SHOWS FALL AGAIN

The number of UK workers out of a job has fallen during the three months to October, as the number of people in work reached a new high. The so-called ILO survey, the government's preferred method of gauging unemployment, fell by 33,000 people to 1.47 million. This equates to a jobless rate of 5.0% of the workforce.