INTERNATIONAL

 

Mar 22 - 28 , 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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BROWN SET TO MEET DEFICIT TARGET

Chancellor Gordon Brown appears on course to meet his projected borrowing requirements for the year. After 11 months of the fiscal year, Britain's public sector net borrowing (PSNB) reached 30.9bn, compared to 17.2bn in the same period last year.
In his Budget speech last week, Mr Brown projected that Britain's PSNB this would reach 37.5bn in 2003/04. The chancellor is confident that the government will meet his golden rule of balancing the budget over the cycle. Public

 

 

 

 

sector net borrowing (PSNB) in February was 1.06bn, compared with 500m the same month a year ago, the Office for National Statistics (ONS) reported. That was broadly in line with expectations, with most economists predicting PSNB of 1bn. Delayed self-assessment tax receipts helped the government run a sizeable surplus in the month, the ONS said.

That led to an increase in tax receipts in February to 13.9bn, compared to 12.4bn in the same month one year ago. But spending is also higher than one year ago.

Public sector net debt outstanding at the end of February totalled 361.1bn, equivalent to 31.7% of Britain's GDP well below the government's 'sustainable investment rule' of 40%. The news about higher tax receipts will cheer the chancellor, who predicted in the Budget that he will meet his fiscal rules going forward into the next election.

So Mr Brown is able to balance his 37bn Budget gap this year against accumulated Budget surpluses in the early years of the Labour government. The current economic cycle is expected to end by 2005/6, and there is much concern among experts about whether the chancellor will have as much room for manoeuvre in future years.

TOUGH TALKS OVER BAN ON FOIE GRAS

US and European officials have clashed at a World Trade Meeting (WTO), over an American ban on meat items such as sausages, hams, and foie gras.

The ban followed visits to 11 French exporters by American farm officials who deemed some French foods unsafe. But the French farms minister insists food standards are higher in France. If the ban were extended it could damage France-US trade worth more than 20m euros ($25m; 13.3m) annually, according to estimates. It could also cause some discomfort to some of the world's wealthiest people. Foie gras, a pate made from the livers of geese or ducks, is found on the menus of some the world's best restaurants, is popular with the rich on special occasions.

Hollywood actor Michael Douglas and his wife Catherine Zeta Jones served it at their lavish $1.7m (1.2m) wedding at a New York hotel.

The two-day meeting in Geneva of the WTO's committee on sanitary measures, could lead to a formal complaint by the trade body. US agriculture officials have denied the ban was in retaliation for an EU-wide block on US poultry and egg imports after a bird flu outbreak in Texas.

At the time of the US visit to France, between 15 January and 5 February, US Agriculture Department spokesman Steven Cohen said it was in response to worries first emerging in 1992.

Eleven French exporters were found to have "repeated problems", he said.

French farmers say US export certification requirements have become more exacting recently, and are so tough it is easy to find an excuse to de-list an exporter and ban something.

 

 

GERMAN INVESTORS LOSE CONFIDENCE

Confidence among German investors fell in March, amid fears about the speed of economic recovery and following the Madrid bombings, a survey has found.

The Mannheim-based ZEW institute said its monthly gauge of economic expectations fell to 57.6 in March, from almost 70 last month. ZEW said responses before the bombings came out at 59.1 while the responses after the attacks was 55.9. The drop was well below analysts' expected figure of about 66.

OIL PRICES SURGE TO 13 YEAR HIGH

US crude oil prices have reached their highest level since 1990 as ongoing global terrorism fears continue to put an upward pressure on the market. With last week's events in Spain still fresh in the mind of traders, the price of New York's benchmark light sweet crude surged 70 cents to $38.18. This is the highest figure since 16 October 1990 more than 13 years ago in the run up to the first Gulf War. The upward pressure is also being driven by concern of low US stocks.

It is at this time of the year that America usually stockpiles both crude oil and petrol ahead of its main consumption season in the summer. Yet a number of recent official US government reports have said that stocks are currently at historic lows.

IMF 'TO REVISE US GROWTH FIGURES'

The International Monetary Fund is to raise its forecast for world economic growth in 2004 to 4.6%, Germany's Handelsblatt newspaper reports.

The new forecast to be published in April is a 0.6 percentage point increase on the IMF's autumn prediction, the financial daily says. The Fund has also upped its estimate for US growth this year by 0.7% of a percentage point to 4.6%. But the forecast for the euro zone remains unchanged at 1.9%.

Next year, growth of the 12 nations that share the euro was likely to accelerate to 2.5%, the IMF predicts, says Handelsblatt.

NEW YORK SHARES CLOSE UP STRONGLY

Wall Street stocks closed up strongly last week, as US investor confidence continues to recover on the back of pleasing official economic data. Rebounding from the falls caused by events in Spain, traders were cheered by official US inflation data coming in as expected.

The 0.2% consumer price figure for February came a day after the Fed voted to keep interest rates on hold. By the end of trading the Dow Jones was up 1.1% or 115.63 points to 10,300.30. The Nasdaq was up 33.67 points or 1.7% to 1,976.76.

SHELL CUTS OIL RESERVES AGAIN

Energy giant Shell has dealt a new blow to investor confidence by announcing a second downgrade of oil reserves. The Anglo-Dutch firm also delayed its annual report, due on March 19, until later in the year. Shell sliced 250 million barrels off 2002 reserves, and another 220 million from the figure for 2003.

US LASHES CHINA OVER CHIP TRADE

China is facing a complaint at the World Trade Organisation for the first time since its joined in early 2002. The complaint comes from the US, and represents a further intensification of Washington DC's accusation that China's trade policy is costing US jobs.

The WTO case concerns tax breaks for Chinese semiconductor makers, which the US says gives them an unfair advantage. US trade chief Robert Zoellick said China "must live up to its obligations" to create a "level playing field". The move follows recent efforts by lawmakers on both sides of US politics as well as unions to blame China for some of the stubborn stream of job losses.

ADOBE PROFIT AND SALES AT RECORD

Software-maker Adobe has seen profit and sales climb to record levels during the first quarter. Net income for the three months ending February 29 topped analysts' forecasts and more than doubled from a year ago to $123m (67m), or 50 cents a share. Sales also surged, jumping to $423.3m and prompting Adobe to increase its revenue targets for the full year.

MORTGAGE LENDING HITS YEAR LOWS

Mortgage lending in the UK dropped to its lowest level in almost a year in February, figures show. The Council of Mortgage Lenders (CML) said a total of 20.1bn was advanced during the month, down 6.5% on January. A 1bn drop in remortaging which fell to a year low of 8.3bn was behind most of the fall, the CML explained.

 

 

Lending to property buyers also dipped 200m to 9.8bn, but the CML said it was too early to say if this signalled that consumer debt was cooling.

MERGER PASSED

The $47bn (25.8bn) merger between Bank of America and Fleetboston has been approved by shareholders. The move will create the third-biggest lender in the US with almost $1 trillion of assets and 5,600 branches.

BROWN SLASHES 40,000 WHITEHALL JOBS

A confident Gordon Brown has allocated extra cash for schools and pensioners but put the squeeze on Whitehall with 40,000 civil service jobs to be axed. Delivering his eighth Budget, the chancellor froze a range of taxes and claimed the UK was enjoying its longest period of economic growth since the Industrial Revolution. People over 70 will get a one-off 100 to help cope with council tax rises, while primary schools each get 55,000 for school improvements and secondary schools get 180,000. But he admitted that the government would have to borrow 37bn this year 10bn more than he predicted a year ago and that borrowing would remain high for some years to come.

UK JOBLESS TOTAL CONTINUES TO SLIDE

Unemployment in Britain fell by 33,000 in the three months to January to 1,436,000, official figures have shown. The ILO measure of joblessness, the favoured government method of gauging unemployment, is now just short of a record low set in March to May 2001. And the UK jobless rate is now 4.8%, the lowest since records began in 1984.

MOBILE SALES BOOST CHINA TELECOM

China Telecom's profits rose in 2003 as a result of people taking up its popular low-end mobile telephones. The country's largest fixed-line telephone company also saw growth in the sale of its broadband service. It reported net profits of 25bn yuan ($3bn) for last year, compared with a restated 10bn yuan in 2002. China Telecom also announced plans to issue shares worth roughly $3bn to fund the planned acquisition of 10 provincial phone networks.

LOSSES SHRINK AT STEELMAKER CORUS

Steelmaker Corus has seen its losses narrow, amid speculation a leading Russian businessman is seeking a boardroom role at the Anglo-Dutch firm.

Europe's third-largest maker of steel unveiled a pre-tax loss of 255m ($465.7m; 379.2m euros) for the year ending on 3 January.

GLAXO TO BUY WELLCOME IN INDIA

British pharmaceutical giant GlaxoSmithKline has announced plans to acquire the India division of Burroughs Wellcome in a $162m (89m) share swap.

GSK's India branch will offer 14 shares for every 10 shares in Burroughs Wellcome, company officials say. The parent companies of GlaxoSmithKline Pharmaceuticals and Burroughs Wellcome merged nearly 10 years ago.

FED KEEPS INTEREST RATES ON HOLD

As expected, the US Federal Reserve has voted to keep interest rates on hold for the eighth time in succession.

With government data showing that the US economic recovery is still failing to create more than a trickle of new jobs, the basic rate is to stay at 1%. The bank has now kept the rate at this 1958 low since June of last year. Its Federal Open Market Committee was no doubt swayed by latest figures showing that the US economy created a meagre 21,000 jobs in February.

 

 

ANGLERS 'NET 113M FOR ECONOMY'

Angling is worth 113m a year to the Scottish economy, according to a study.

The research also found that the sport supports 2,800 jobs north of the border and generates almost 50m in wages and self-employment income.

The lure of rainbow trout saw central Scotland record the most angler days each year, accounting for more than a third of the 1.4 million total. However, more money was spent in the Highlands and the north east in pursuit of salmon and sea trout. The report estimated that anglers spend almost 43m in the Highlands and more than 31m in the north east, compared to 21.5m in central.

CHINA MAY CUT HOME BUYING COSTS

China's authorities are considering property tax cuts that could halve the cost of buying a home for ordinary Chinese, the state media reported. The reports coincide with changes to the constitution to protect the right to private property for the first time since 1949. Economic data released last week also showed rises in consumer spending. Consumer spending grew 10.5% in January and February, compared to 9.2% in the same two months of 2002.

The government sees rising consumer spending as a vital part of its strategy to maintain China's runaway economic growth, which topped 9% in 2003 and is targeted at 7% this year.

BROWN OUTLINES SCIENCE STRATEGY

Chancellor Gordon Brown has launched a consultation document on a 10-year investment strategy for science and engineering in the United Kingdom. Speaking to senior industry figures, he pledged to protect the increases he announced in the last Spending Review. These increases will lift spending on the science sector to 3bn by 2005-6.