The 26th Mercosur Presidential Summit got off to the
worst possible start when just hours before it was due to begin, Argentina
decided to impose restrictions on certain Brazilian imports, in a bid to
protect its domestic industry.
But by the time the two-day gathering ended,
significant progress had been made on several issues, and the row between
Buenos Aires and Brasilia appeared to have subsided.
Among the most important agreements was the decision to
accept Mexico and Venezuela as associate members of Mercosur, a status
already enjoyed by Chile, Bolivia and Peru.
Mercosur went on to invite Mexico to continue free
trade talks, with a view towards its eventual full admission to the South
American trade bloc.
Elsewhere, Venezuela's President, Hugo Chavez, occupied
much of the media's attention.
Just weeks before facing a recall referendum that could
put an end to his presidency, he agreed to form a strategic energy
alliance with Argentina, called Petrosur.
Mr Chavez hopes other state-owned energy companies,
like Brazil's Petrobras, will join in the future.
The Venezuelan leader, who has clashed with
privately-owned TV channels in his home country, also signed an agreement
with Argentina to create a bilateral state television channel, which he
hopes will one day compete with international news organisations.
UK INDUSTRY IN 'DRAMATIC' DECLINE
About 750,000 manufacturing jobs have been lost since
Labour came to power, a Trades Union Congress report has said.
The UK gives less support to industry than any other
European country, and has become the "weak wildebeest" of
European industry, it claims.
This would remain the case while the British workforce
was "easy to flog and easy to sack", the TUC said.
But the government defended its record, saying
subsidies were not the best way forward for UK industry.
Separately, official figures showed manufacturing
output grew for the second month in a row in May.
Output grew by 0.5% in May from April, outstripping
analysts' expectations of a 0.3% increase, the Office for National
Statistics (ONS) reported.
The annual rate of output growth was 2.0%, the highest
since October 2003, the ONS said.
The TUC urged the government to halt the
"dramatic" decline in manufacturing jobs by promoting workers'
rights and business investment.
The organisation cited the examples of governments in
France, Germany, Italy and Spain, all of which give more than double in
state aid to industry than the UK.
The TUC said employers were wrong to keep down pay,
increase hours and prevent workers' rights because of fears over losing
business to China and India.
A quarter of jobs lost to low-wage economies were in
high-tech industries, the congress claimed.
TUC general secretary Brendan Barber said the
government needed to increase its support of manufacturing if the
"made in the UK" label was to survive.
BOE KEEPS RATE UNCHANGED AT 4.5%
The Bank of England has decided to leave interest rates
at 4.5% for July.
Rates were left unchanged despite warnings from Bank of
England governor Mervyn King that rates may have to keep rising to cool
In June rates went up for a second consecutive month,
the third rise in base rates this year.
The decision will be welcomed by manufacturers and
mortgage holders, although it is less-welcome news for those with savings
The Bank's Monetary Policy Committee (MPC) is expected
to start raising rates again from August.
INDIA 'SET FOR 7-8% GROWTH'
The Indian economy, Asia's third largest behind Japan
and China, is expected to grow in the range of 7-8% this year, according
to a government survey.
But the survey, which has come on the eve of the
federal budget, suggests that interest rates may begin to move up soon.
After recording a growth rate of 8.2% last year,
largely on the back of the best monsoon rains in a decade, the Indian
economy is expected to remain on course this year as well.
The annual report card on the national economy has
however raised concerns on interest rates moving up because of a high
fiscal deficit and continued government borrowings.
Interest rates in India are currently at a 30-year low
and have been a major driver giving a boost to different sectors of the
industry, particularly housing and manufacturing.
BRITAIN URGES TRADE SHAKE-UP
The government has unveiled a new direction for the
UK's trade policy — and an attack on EU and US tariffs.
Trade and Industry Secretary Patricia Hewitt called for
an end to subsidies, dubbing them bad for business, the global economy and
Ms Hewitt's white paper has been billed as a bid to
boost the UK's reputation as a free trading nation.
But the minister risked a fresh row with trade unions
by backing UK moves to outsource jobs overseas.
Ms Hewitt claimed that sending jobs abroad to places
like India helped companies become more efficient, while aiding developing
ITALY AVOIDS EU DEFICIT WARNING
Italy has avoided a formal warning from the European
Union over its budget deficit.
Prime Minister Silvio Berlusconi went to Brussels to
personally reassure eurozone finance ministers about measures to keep the
French Finance Minister Nicolas Sarkozy said Mr
Berlusconi gave a "number of commitments" to reduce the deficit.
Brussels has repeatedly called on Italy to take action
to bring its budget deficit to within 3% of GDP.
Mr Berlusconi's appearance follows the departure of
Italy's economy minister Giulio Tremonti after it became clear he could
not push through cuts.
Austrian Finance Minister Karl-Heinz Grasser said after
the meeting: "Berlusconi is ambitious to cut the deficit next year to
below 3% - we trust him."
M&S REJECTS PHILIP GREEN OFFER
The board of Marks & Spencer has rejected the
latest £9.1bn ($17bn) proposed offer from Philip Green.
Mr Green had raised his proposed takeover offer for
M&S to £4 a share, and is now considering his next move.
Internet portal Yahoo has reported doubled net profits
to $112.5m (£60.7m) for the three months to June.
OIL PRODUCTION RESTARTS IN NIGERIA
Total has restarted its oil production in Nigeria after
a six-day stand-off with the unions.
The shutdown — caused by fears of intensifying
violence amid labour unrest — was unprecedented.
The oil giant halted production worth 225,000 barrels a
day, equivalent to 10% of Nigeria's daily production.
Pangassan, Nigeria's white-collar union, was protesting
against Total's top production jobs being reserved for expatriates.
Total has now agreed with the unions to meet demands
for Nigerians to hold more senior jobs and positions of supervision within
the oil company.
EU GIVES ALSTOM BAILOUT BACKING
France's bail out of its troubled engineering company
Alstom has been approved by the European Commission.
Alstom ran into problems after a string of business
disasters that led to a loss of 1.84bn euros (£1.23bn) in 2003, much more
than the market had forecast.
WORKERS CUT FRENCH POWER SUPPLIES
French power workers have cut around 3% of state-owned
energy group Electricite de France's (EdF) generation capacity, according
to union leaders.
The action is timed to coincide with a vote by the
French Senate to transform Edf and its sister firm Gaz de France (GdF)
into limited liability companies.
FRESH AUSTRALIA RATE RISE WARNING
An Australian economic consultancy has warned that the
government's spendings in pre-election budget could push up rates and
Canberra-based Access Economics said planned spending
increases and tax cuts could force borrowing costs up by up to half a
percentage point next year.
It added that tax rises may be needed to keep the next
budget in the black.
The budget, unveiled in May, offered an extra A$4.3bn
($3bn) in assistance to families with children.
MICROSOFT 'TO CUT COSTS BY $1BN'
Software giant Microsoft wants to slash annual costs by
$1bn after detecting a sharp rise in spending over the past three years,
The cost cut target was set out by Microsoft chief
executive Steve Ballmer in a memo sent to each of the company's 57,000
staff this week.
In it, Mr Ballmer warned Microsoft's expenses had grown
faster than revenues for each of the last three years.
VIETNAM SHRIMPERS SLATE US TARIFF
Vietnam plans to appeal against a US decision to hit
shrimp imports with an anti-dumping tariff of up to 93%.
The US Commerce Department said that the move is needed
because producers in Vietnam and China are selling shrimp at less than
Shrimp imports from China will now face duties of up to
INDIA UNVEILS NEW RAILWAY BUDGET
India's new government has unveiled a populist railway
budget with no changes in passenger and freight charges.
It is the first financial plan announced by the
Communist-backed Congress government and comes ahead of the main budget
Congress and its allies swept to power unexpectedly in
May after pledging to spread India's wealth more equally.
Investors are concerned that their efforts could slow
down India's economic reforms programme.
NIGERIA EYES RADICAL BANK REFORMS
Nigeria's central bank chief has been reported as
saying he wants to lift the capital requirement for Nigerian banks 10-fold
within 18 months.
The proposed reforms are designed to strengthen banks
by forcing mergers.
Reuters quoted Charles Soludo as saying Nigeria's banks
were "fragile and marginal" and problems could "snowball
into a crisis" if action was not taken.
GREEN LAWS 'COST BUSINESS £4BN'
Heavy-handed green regulations are costing employers
over £4bn a year, business leaders claim.
The Confederation of British Industry (CBI) says the
Environment Agency and government is failing to implement the laws in a
Firms face inconsistent enforcement, the CBI charged.
But the agency denied the claims, saying that Britain
has been highly rated for stripping away red tape surrounding green
The World Bank and Organisation for Economic
Co-operation and Development had rated the UK among the countries with the
fewest barriers to competition, said Barbara Young, head of the agency.
ZIMBABWE'S HARVEST 'INSUFFICIENT'
Zimbabwe's harvest will not meet the country's food
needs and it will be forced to import food, the UN says.
The UN Food and Agriculture Organization (FAO) says the
country faces a shortfall of 325,000 tons of cereals this year.
The Zimbabwean government has predicted a record
harvest of 2.4 million tons of maize.
US SERVICE SECTOR GROWTH SLOWING
The US services sector grew slower than expected in
June, a key survey shows.
The Institute for Supply Management's non-manufacturing
index fell to 59.9 in June, down from May's 65.2.
Wall Street had been expecting a lesser decline to 63,
in an index in which numbers above 50 indicate continuing expansion.
However, the fall had little impact on the markets, and
was balanced by two sister indexes showing that both new orders and job
prospects had improved.
The ISM's employment index rose to 57.4 in June from
56.3 in May, while new orders edged up to 62.4 from 61.3.
NAMIBIA FIRM TO DEVELOP KUDU GAS
The National Petroleum Corporation of Namibia has
signed an agreement with South Africa's Energy Africa to develop Namibia's
offshore Kudu gas field.
Kudu's proven gas reserves are estimated at 1.3
trillion cubic feet. The project's cost is $800m (£440m).
The deal had been in doubt after oil major
ChevronTexaco withdrew from it late last year.
Energy Africa will hold 90% of the project and the
National Petroleum Corporation will hold 10%.