The Bank of England has already raised the cost of
borrowing by 100 basis points since November last year to 4.5% in an
attempt to cool consumer demand and the booming housing market.
Separate figures from the Office for National
Statistics (ONS) published on Thursday, showed that UK retail sales jumped
by 1.1% in June, compared with 0.7% in the previous month.
Howard Archer, an economist at Global Insight said
that: "A 25 basis point interest rate hike in August must now be a
He went on to say that Global Insight expects borrowing
costs of as much as "5.25% by the end of the year".
UK production rose by 0.9% in the second quarter —
the fastest rate in nearly five years — boosted by gains in the
manufacturing, mining and quarrying sectors.
That followed a 0.5% contraction in the figure during
the previous quarter, the ONS said.
Meanwhile, service sector output also rose by 0.9%,
mirroring the previous quarter's rise, and taking the annual rate of
growth to 4.0%.
KERRY PLEDGES TO FIGHT FOR AMERICA
John Kerry has accepted his party's nomination as
candidate for the US presidency in a keynote speech to the Democratic
"I am John Kerry and I am reporting for
duty," the Massachusetts senator told an ecstatic crowd in Boston.
He pledged to fight for a stronger America at home and
abroad, saying strength was "more than tough words".
A well-received speech is being seen as vital for his
chance of success against George W Bush in the 2 November poll.
The BBC's Rob Watson says that the speech went down
extremely well with delegates at the convention, but the question now is
how will it have played in the wider country.
In a fitting showbiz finale to the convention, Mr
Kerry's speech was preceded by a film of his life story. Then, accompanied
by crew mates from his Vietnam war days, the candidate took to the stage.
To the 4,000 delegates and to the wider television
audience beyond, Mr Kerry described this presidential election as the most
important of their lifetime.
The US, he said, was a country at war with terrorism
and a country with economic problems at home.
In a clear swipe at President Bush, he said he would
bring back what he called the country's time-honoured tradition of never
going to war because it wanted to but only "if it had to".
"In these dangerous days there is a right way and
a wrong way to be strong. Strength is more than tough words," he
He promised to lead strong alliances abroad but was
careful to add that he would never give any nation or international
institution a veto over America's national security.
Still not well known to many Americans, Mr Kerry used
the speech to sell himself personally to US voters, paying tribute to his
parents and family who he said had "inspired me to serve".
BANGLADESH FLOOD COST PUT AT $7BN
Bangladesh's government says the nation's devastating
floods have caused nearly $7bn worth of damage.
The number of dead is now around 500 and there are
fears that unusually high tides over the coming days will stop the rivers
The flood water rose again in parts of the capital,
Dhaka, last Thursday as heavy rain fell on the city.
Across the country, millions remain homeless or
stranded, camping out on tiny islands formed by raised roads.
The water is getting dirtier in Dhaka; 500,000 cubic
metres of untreated sewage is escaping into the water every day.
It is being mixed with industrial waste from factories
that is normally carried away by the rivers.
JAPAN BANK MERGER BATTLE HEATS UP
Japan's Sumitomo Mitsui Financial Group has unveiled
plans to merge with ailing rival UFJ, potentially derailing an existing
bid from Mitsubishi Financial.
The move casts doubt on the UFJ/Mitsubishi merger, a
deal which would create the world's biggest bank.
Sumitomo's president, Yoshifumi Nishikawa, said the
bank aimed to table a merger proposal later on Friday.
UFJ said it would continue to pursue a tie-up with
Mitsubishi, but would weigh up Sumitomo's proposal.
A rival offer from Sumitomo has been on the cards since
last Tuesday, when the bank won a court order blocking merger discussions
between UFJ and Mitsubishi.
Sumitomo argued that the proposed tie-up would breach
an existing agreement it had with UFJ to buy its trust banking operations.
Mitsubishi and UFJ had originally hoped that their
merger, which would create a combined group with 188.7 trillion yen ($1.7
trillion, £0.9 trillion), would be complete by the autumn.
FRENCH BUSINESS CONFIDENCE SURGES
French business confidence has surged to a three-year
high in July. The national statistical office index, which is based on
interviews with executives at about 2,500 companies, climbed to 106 from
104 in June.
The reading is the highest since April 2001, and
strengthens the evidence that many of Europe's largest economies are on
track for long-term recovery.
Other reports this week have shown that German and
Italian business leaders also are more cheery about the future.
According to INSEE, France's statistical office, the
responses to its questions "highlight an improvement in industrial
KEY STATES REACH WTO FARMING DEAL
Leading members of the World Trade Organisation have
agreed on key farming issues, the body's head Supachai Panitchpakdi has
The US, European Union, India, Brazil and Australia
struck a deal after talks which ended on July 29.
But Mr Panitchpakdi warned that all 147 members had to
agree for the reforms to take place.
"No WTO agricultural framework deal is possible
without consensus from the entire membership," he said.
The WTO has set itself a deadline of midnight of July
30 to agree deals in the farm and industrial sectors, on services and on a
new customs code.
The Geneva meeting is the first major summit since the
breakdown of talks last September in Cancun, Mexico.
Poorer countries are demanding richer states cut
farming subsidies, which they say deny them access to markets.
ID CARD PLANS 'BADLY THOUGHT OUT'
Plans for introducing ID cards in the UK are poorly
thought out and vital details are still unclear, say MPs.
The Commons home affairs committee says ID cards should
go ahead and can help fight organised crime and terrorism.
But it criticises a "lack of clarity" over
how the scheme will work in practice, with too much information kept
secret by ministers.
FEARS EASE AS YUKOS KEEPS PUMPING
Beleaguered Russian giant Yukos can continue to produce
and sell oil despite an earlier demand to stop output, according to
The Justice Ministry said writs barring property sales
were not meant to stop Yukos pumping out oil, ending the confusion which
pushed up oil prices.
Yukos is facing bankruptcy as courts try to enforce a
$3.4bn tax debt.
The company, which pumps a fifth of Russia's crude
output, said that operations were continuing as normal.
OIL PRICE SURGE BENEFITS EXXON
US oil giant Exxon Mobil has turned in sharply higher
profits, helped by soaring world oil prices.
Exxon said net income for the three months to June came
in at $5.8bn (£3.1bn), up from $4.1bn during the same period last year.
The price rally lifted Exxon's sales by 24% from the
year before to $70.7bn.
POLISH CARS ARE CHEAPEST IN EU
Car prices are converging across the European Union but
there are still huge differences between countries, a new report has
Cars are cheapest in Poland, according to the European
Commission, and most expensive in Austria and Germany.
The Commission found that prices were gradually
flattening out, although differences of more than 20% were common,
particularly for luxury models.
The EU introduced new regulations in 2002 in order to
liberalise the market.
UK CONSUMER DEBT HITS £1 TRILLION
The amount of money owed by consumers has broken
through the symbolic £1 trillion barrier for the first time.
The Bank of England (BoE) has said that consumers owe
more than £1,000 billion pounds on cards, mortgages, and loans.
According to the BoE, about 80% of UK personal debt is
in the form of loans secured against dwellings, such as mortgages and
Debt charities are warning consumers to think hard
about whether they can manage their debt when rates rise.
According to the National Consumer Council, about six
million families are already struggling to keep up with credit
SHELL AGREES DEAL WITH REGULATORS
Oil giant Shell has agreed to pay more than £80m in
penalties to settle inquiries by US and UK regulators into the firm's
restatement of reserves.
The company slashed its reserves by 20% in January, a
move which cost three top executives their jobs.
News of the settlement came as the company unveiled
second-quarter net income of $4bn (£2.2bn) up from $2.6bn last year
helped by high oil prices.
Aero-space giant EADS said net profits for the first
half of 2004 came in at 387m euros ($466m, £251m), up from a 66m euro
loss in the same period last year.
HARRY POTTER HELPS WARNER PROFITS
Time Warner, the world's biggest media company, has
seen profits top market forecasts, partly driven by earnings from its
latest Harry Potter film. Profit in for the April to June period was $777m
DEFENCE DEALS DRIVE BOEING PROFIT
Surging military sales have seen Boeing rebound to a
$607m profit, from a loss at the same time last year.
The US giant's defence business drove its gains which
saw its revenues rise 3% to $13.1bn between April and June — with
military deals making $7.2bn.
JAPAN RETAIL SALES SLIDE IN JUNE
Japanese retail sales fell in June as bad weather and
fewer shopping days kept many consumers at home.
The Ministry of Economy, Trade and Industry said that
sales fell 2.9% from a year earlier and slid 0.6% from May.
The decline was more than analysts had forecast and has
raised a question mark over whether better economic conditions are
filtering down to consumers.
Personal consumption is a key component of the world's
second-largest economy and vital to any lasting recovery.
The concern for many observers is that wages and
employment seem to be lagging even though exports and growth forecasts
have jumped ahead.
INVESTORS BACK REYNOLDS-BAT DEAL
Shareholders in US tobacco giant RJ Reynolds have
backed its proposed $3.2bn merger with Brown & Williamson.
An overwhelming majority of shareholders voted in
support of the merger with the US unit of British American Tobacco (BAT).
TAXES HIT FRENCH TOBACCO SALES
Heavy tobacco taxes, introduced as part of a French
health drive, have triggered a 20% drop in cigarette sales in the country,
official figures show.
The cost of a pack of cigarettes has surged 30% since
the anti-smoking campaign began in October last year.
The average cost of a packet is now around five euros
CALIFORNIA STRIKES DEAL ON BUDGET
Arnold Schwarzenegger has secured a last-ditch
agreement on California's $103bn (£56bn) budget, after weeks of often
bitter wrangling with senators.
Democrat and Republican politicians finally consented
to a budget that neither raises taxes nor cuts spending too deeply.
In order to keep solvent, however, California will have
to borrow heavily.
CAR REGIME AWARDED IMF LOAN
The Central African Republic's post-coup regime has
been awarded an $8.2m (£4.5m) post-conflict assistance loan by the
International Monetary Fund.
Since seizing power in 2003, the government of General
Bozize had made improvements in the areas of public finances, the IMF's
Anne Krueger said.