England is reckoned likely to raise interest rates
again next month from 4% to 4.25%. The Bank has already signalled by its
last two rate rises that it believes the UK economy is growing too fast to
keep inflation in check.
Many analysts now expect a further increase in the cost
of borrowing early in the new year, with the markets expecting rates to
reach at least 5% by the end of the year.
Retail sales were also strong in March as figures
released last week showed High Street turnover rising at an annual 6.4%.
This has led to concerns of overheating, and worries
about the runaway growth of personal debt. But in the short term, the news
is a boost to Chancellor Gordon Brown, not least because value-added tax
receipts will be buoyed.
General economic optimism leaves the government on
course to plan for a General Election within the next year.
The preliminary GDP figures for the three months
between January and March show that the economy grew at 0.6%, 0.1% slower
than expected and below the 0.9% recorded in the last quarter of 2003.
WORLD 'FAILING POVERTY PLEDGES'
A new international report warns that most developing
countries will struggle to meet agreed United Nations targets for tackling
problems of poverty.
The joint study by the World Bank and the International
Monetary Fund says the Millennium Development Goals are unlikely to be met
on current trends.
The report calls for urgent action by richer countries
to take the lead and address root causes of poverty.
It is to be discussed at ministerial meetings in
The report assesses progress towards internationally
agreed objectives for reducing poverty.
The Millennium Development Goals include halving the
proportion of the population in extreme poverty, ensuring primary
education for all children and reductions in child and maternal deaths by
On current trends, the report warns, most developing
countries will fail to meet most of the goals.
It says the rich countries need to show leadership by
living up to the promises they made two years ago at a conference on
financing for development.
James Wolfensohn, president of the World Bank, called
on governments to change their priorities and spend more on aid.
"The numbers are roughly these: $900bn on defence;
$300bn to $350bn on agriculture and $50bn to $60bn on aid, of which about
half gets there in cash. That is the fundamental imbalance," he said.
"So we can make all the noise we want, but unless
we deal with the fundamentals we'll be playing at the fringes."
FOUR 'TO BUST EUROZONE DEFICIT RULES'
The Organisation for Economic Cooperation &
Development has forecast Germany and three other EU countries will again
break eurozone deficit rules next year.
Germany, Europe's largest economy, will break the rules
for the fourth year running with a deficit of 3.2% of GDP. Worse still
will be France with 3.5%. Italy and Portugal will also breach the 3%
Germany is set to grow 1.2% next year down from 1.4% in
The OECD figures, also included lower growth forecasts
for the euro zone as a whole but did not give a figure.
Italy's deficit is predicted to be 4.3% of GDP and
Under the rules of the European Union's Stability Pact,
euro zone countries are not supposed to run budget deficits above 3% of
The European Commission wants Germany to cut its
deficit by 0.8% this year and bring it down to 3% by 2005. These figures
would suggest this will not be attainable.
Germany says that with the economy growing at its
current rate it needs more time to comply. In reports over the weekend,
German Chancellor Gerhard Schroeder said the government target of 1.5% to
2% growth is within reach.
EU Economic and Monetary Affairs Commissioner Pedro
Solbes has in the past said the public finances of these countries are not
in a good shape.
Earlier this month he said France and Italy risked
breaking the deficit rules next year while Germany seemed to be heading
N KOREAN TRAINS EXPLODE IN CRASH
Overseas officials have confirmed a massive blast in
North Korea feared to have left thousands dead and wounded. But
authorities in the secretive state have not acknowledged any disaster,
more than 24 hours after two fuel trains were reported to have collided.
South Korean media reports talk of up to 3,000 people
killed or injured in Ryongchon, 50km from China's border. Details remain
scarce and there are conflicting reports of survivors going to China, or
Pyongyang asking for help.
Confirmation of the blast came first from Washington
KERRY RELEASES MILITARY RECORDS
US Democrat presidential hopeful John Kerry is posting
his military records on the internet after questions were raised about his
Vietnam war wounds.
Mr Kerry earned three Purple Heart medals in the war
for injuries that included shrapnel wounds.
But his former commanding officer has recently said the
first medal was awarded for a minor injury.
Mr Kerry rejected the comments as unfair and said:
"Those of us who were there know what happened."
Mr Kerry's military service in Vietnam included five
months in 1968 and 1969 as the commander of a US Navy swiftboat in the
CHINA-US TALKS REACH WI-FI DEAL
China and the United States have reached agreement on
several contentious trade issues after talks between the visiting Chinese
Vice-Premier Wu Yi and US officials in Washington.
China pledged action ranging from cracking down on
rampant intellectual property piracy to opening up the country's goods
distribution system and suspending a controversial technology standard on
wi-fi wireless Internet.
The two sides hope the measures will help ease tension
over the huge American trade deficit with China which looms large ahead of
November's US presidential elections.
On the streets of Shanghai you do not have to search
hard for counterfeit brand name watches, leather handbags and DVDs. And
this counts as a city with a tough enforcement record.
JAPAN'S IMPORT SPURT BACKS GROWTH
Japan's imports jumped in March, while export growth
continued, giving further evidence that the world's second-largest economy
is still recovering.
Imports rose 6.5% from February and 12% from a year
earlier lifted by demand for European-made cars and electronics. Exports
gained 1.3% from the previous month and 13% on the year. Sales of cars,
chips and steel, especially to China, were the main drivers of growth.
The Bank of Japan said there was "no
question" of the economy stalling.
The bank's governor Toshihiko Fukui sounded a cautious
note, however, warning that any recovery this year was unlikely to
continue at its previous breakneck pace.
Growth in the first three months of this year had
probably slowed from the 6.4% expansion rate seen in the fourth quarter of
2003, he said.
ANGOLA DISCOVERS NEW OIL DEPOSIT
Angola is hoping to unveil more offshore oil wealth at
a newly discovered deposit.
Exploration is crucial to the war shattered country
since oil accounts for about 90% of its total exports.
The new deposit's potential will be evaluated by
national energy company Sonangol and French group Total.
The hope is that the new discovery should help the
African nation boost its output to more than a million barrels per day.
BANGLADESH GROWTH UNDER THREAT
Political instability and infighting are threatening
Bangladesh's economy, the World Bank has warned.
The country's opposition party, Awami League, has
accused the government of failing to tackle corruption and of being
wasteful and repressive.
It has threatened "unspecified action" unless
the government resigns by the end of the month.
The ruling Bangladesh Nationalist Party (BNP) has
called for talks to prevent the situation escalating.
CHIP MAKER SHIFTS DESIGN TO INDIA
Californian chip maker AMD is to set up a design centre
in India, the first of its kind outside the United States.
The centre to initially employ 50 engineers will be
located in the technology hub of Bangalore.
AMD has said its plan is part of an expansion and would
not involve laying off American engineers.
A row is raging in the US over whether the outsourcing
of work to the developing world where costs are lower is costing US
citizens their jobs.
DAIMLERCHRYSLER DUMPS MITSUBISHI
DaimlerChrysler has refused to bail out Mitsubishi
Motors, the loss-making Japanese carmaker in which it holds a 37% stake.
Debt-ridden Mitsubishi Motors has been talking to
shareholders about a 700bn yen (£3.6bn; $6.4bn) survival plan.
Japan's transport minister has called the decision
"a serious matter".
Dr Axel Weber, an economics professor at Cologne
University, has become the new president of the German Bundesbank.
He replaces Ernst Welteke, who resigned following
investigations into a hotel stay paid for by Dresdner Bank.
CHINA SIGNALS A YUAN PEG U-TURN
China may loosen its exchange rate system, the official
in charge of running the policy has said. China's leaders have resisted
pressure from the US, IMF and the G7 wealthy nations to end the yuan's peg
to the dollar, until now.
The peg - at 8.28 to the dollar — keeps China's
exports cheap on world markets.
Mr Guo is director general of the State Administration
of Foreign Exchange, and deputy governor of the central bank, the People's
Bank of China.
BROWN URGES 'RESTRAINT' ON PAY
Gordon Brown has insisted he will "not
tolerate" inflationary pay deals in either the private or public
In a speech to the British Chambers of Commerce last
week, the chancellor urged business leaders not to risk the UK's hard-won
Mr Brown said there must be no return to the "bad
old days of pay irresponsibility" prompted by signs of a global
LEGAL COSTS HIT MICROSOFT PROFITS
Giant software firm Microsoft's profits have been hurt
by the cost of settling a raft of law suits over patents and anti-trust
Microsoft's profits dropped 38% to $1.32bn (£744m) for
its third quarter to 31 March, compared with the same period a year
Legal settlements meant a charge of $2.5bn against its
But sales rose by a healthy 17% to $9.18bn. Technology
sector analysts were delighted at the overall picture.
FRANCE'S LAST COAL MINE TO CLOSE
France is to close its last working coal mine, bringing
to an end an industry nearly 300 years old. The last of France's miners is
to dig up a symbolic block of coal, kicking off three days of ceremonies
to mark the end of an old and proud industry.
The mine, at La Houve near Creutzwald on the German
border, is the last of an industry that once employed 300,000 and fuelled
France's industrial revolution. Nuclear power now provides 80% of the
country's energy needs.
BRITAIN HINTS AT PENSION HELP
The UK Government has given its strongest hint yet that
it may be about to help people whose company pension schemes have
Up to 60,000 people are thought be facing poverty
despite a lifetime of saving responsibly for retirement.
Pensions minister Andrew Smith said his department had
been examining the "dreadful situation".
UK CONSUMER DEBT CONTINUES TO SOAR
Mortgage lending in Britain surged ahead in March as
consumers' appetite for debt showed little sign of easing.
Total mortgage advances jumped by 19.5% in March to
£24.5bn ($43bn) — its highest level in four months — the Council of
Mortgage Lenders (CML) said.
The British Bankers' Association (BBA) also reported
bumper figures for the month, with lending through mortgages, credit cards
and loans rising.
The figures are likely to raise expectations of an
interest rate rise.
AMAZON PROFITS FROM SALES SURGE
Online retailer Amazon has seen its good fortune
continue, posting a profit for the first three months of the year.
The group said it had earned $111m (£62.7m), compared
with a $10m (£5.8m) loss for the same time last year.
RATES WILL HAVE TO RISE: GREENSPAN
Federal Reserve Chairman Alan Greenspan has said the US
economy is in vigorous expansion and may need higher interest rates to
keep inflation at bay.
But he said he was unconcerned about inflation at
present, which suggests he may not be in a hurry to raise interest rates
from their 46-year low of 1%.
He made his comments to Congress' Joint Economic
They followed similar remarks a day before, and many
investors responded by selling off shares at Wall Street open.
MGM 'IN TALKS FOR $5BN BUY-OUT'
The major US film studio Metro Goldwyn Mayer is in
talks about a possible purchase by Sony and two other buy-out firms, US
The talks are said to be at an advanced stage for a
deal that could be worth up to $5bn (£8.5bn).
Buy-out firms including Texas Pacific Group are
negotiating with billionaire financier Kirk Kerkorian to buy his 70%-plus
Talks are understood to be taking place over how to
finance any deal.
MGM, Sony, Texas Pacific Group, which may be partnered
by Providence Equity Partners in any deal, declined to comment.
PROFITS SOAR AT EBAY
Internet auctioneer eBay has nearly doubled its
first-quarter profits, raking in $200.1m (£113m), up 92% from $104.2m in
the same period of 2003.
The soaring profits came from higher sales as customers
won during pre-Christmas promotions stayed loyal.
MOTOROLA PROFIT AND SHARES SURGE
Motorola's first-quarter profit was $609m (£342m),
compared with $169m a year earlier. Sales were $8.6bn, while revenue from
mobile phones jumped 67%. The good news lifted its shares almost 25% in
New York trading last week.
FORD PROFITS DOUBLE AS SALES SOAR
Profits at Ford, the second-largest US car maker, have
more than doubled during the first three months of 2004.
Net profits rose to $1.95bn (£1.1bn) for the quarter,
up from $896m during the same period of last year.
COKE BEATS PROFIT FORECAST
Profits at Coca-Cola, the world's largest maker of soft
drinks, have beaten analysts' forecasts, helped by rising sales in Europe
First-quarter profit jumped 35% to $1.1bn (£638m) from
$835m a year earlier. Sales increased to $5bn from $4.5bn.
SONY ERICSSON RETURNS TO PROFIT
Sony Ericsson, the Japanese-Swedish mobile phone maker,
says it has closed the gap on rivals and returned to profit in the first
quarter of 2004.
Pre-tax profit was 97m euros ($119.5m) in the period,
compared with a loss of 113m euros a year earlier.
GERMANY PLANS A NEW TABLOID PAPER
Germany's largest newspaper publisher has unveiled
plans to test the market for a new upmarket national tabloid.
From 24 May, Axel Springer Verlag, publisher of the
best-selling paper Bild, will begin a trial run for a 32-page newspaper
called Welt Kompakt.
The paper will appear from Mondays to Fridays for eight
weeks, the firm said.
It will contain editorial from two other ASV papers,
Die Welt and Berliner Morgenpost, and is being sold as a companion
newspaper, costing 0.5 euros.
BANK VOTED 8-1 FOR UK RATE FREEZE
The decision to hold UK interest rates at 4% earlier
this month was approved 8-1 by the Bank of England's rate-setting body,
minutes have shown.
Only Deputy Governor Andrew Large favoured a
quarter-point rise at the Monetary Policy Committee's meeting.
Despite the decisive vote in favour of a freeze, most
analysts still believe the bank will raise rates in May.
They cited the ever-growing rise in house prices, with
the Bank itself saying they were "unexpectedly robust".
PENSIONS 'BLACK HOLE' FALLS £60BN
The pension fund deficit facing UK firms narrowed by
£60bn during the second half of 2003, the Confederation of British
Industry (CBI) has said.
In June 2003 the CBI put the difference between the
assets and liabilities of UK company pension schemes at £160bn.
But a stock market recovery has repaired some of the
damage and closed the gap to £100bn at the end of 2003.
Nevertheless, the CBI described the pension black hole
facing firms as "a major business concern".
RATO FAVOURITE TO TAKE OVER IMF
Rodrigo Rato, Spain's former finance minister, is
favourite to become the International Monetary Fund's new head.
Mr Rato's main challenger was Jean Lemierre, the
current president of the European Bank for Reconstruction and Development
DENMARK TOPS E-BUSINESS RANKINGS
Denmark is the best place in the world for e-commerce
with its Nordic neighbours not far behind, an Economist Intelligence Unit
report has found.
The UK ranked second this year, up from third in 2003.
The US slipped to sixth.
The research company also believes that the outlook for
the technology industry is better than it has been for a while.
It points to increasing global demand for mobile phones
and faster internet connections, as well as cheaper and easier-to-use
products and software.
UK HOUSE PRICES 'UP 50% ON 2002'
The price of an average home in the UK has risen to
£184,582 a 50% rise from the start of 2002, a survey by property website
Rightmove has said.
Prices have risen more than £13,000 since January and
are climbing at twice the rate of 2003, the survey said.
It added prices rose 2.8% in March from February,
taking annual price inflation to 14.4% from 11.9%.