Mar 21 - 27, 2005







The US Senate has voted to allow a plan that opens up a remote wildlife refuge in the northern state of Alaska to oil drilling.
Senators voted 51-49 against an amendment which would have struck the measure from the federal budget.
The plan has long been a key part of President Bush's energy plan, as a means to reduce US reliance on imports.
Democrats and some Republicans have opposed the plan, arguing that the wilderness should be left untouched.



The 19 million acre (7.7 million hectare) Alaska Arctic National Wildlife Refuge, known as America's Serengeti, is home to caribou, migratory birds and other wildlife.

It has been specifically protected by Congress from development.

New Mexico Republican Pete Domenici said before the vote that the refuge had the country's "most significant onshore production capacity".

"We should do everything we can to produce as much as we can," he said, quoted by the Associated Press news agency.

But Massachusetts Senator John Kerry, who proposed the amendment, said there was no way the US could drill its way out of its energy crisis.

Correspondents say there is not much interest among the oil companies in drilling in the refuge, as its economic potential no longer seems promising.

However, some Republicans see the plan as a political manoeuvre which could open the way for other environmentally controversial projects such as drilling off Florida or California.

Previous votes to remove the ban on drilling have failed, but the Senate's Republican majority increased after last year's elections.


Gordon Brown has insisted his spending plans are "affordable" amid opposition claims he would be forced to raise taxes if Labour wins the next election.

The chancellor doubled the level at which homebuyers pay stamp duty, unveiled a rise in child tax credit and a 200 council tax refund for over-65s.

The Tories say Mr Brown faces a 'black hole' in the public finances.

But he told BBC Radio 4's Today programme he would not "take risks" with Britain's stability.

"All our public spending plans that I have announced are affordable," Mr Brown said.

But Conservative shadow chancellor Oliver Letwin said the problems for the economy lay in the future.

"Mr Brown is borrowing, as he has shown in this Budget, 168bn across the next five years, even if you believe his sums, and that means he is borrowing and spending too much and therefore he is going to have to raise taxes after the election if Mr Blair is re-elected. That is the real problem," he told Today.

Mr Letwin added: "If Mr Blair is re-elected ... there will be about 10bn or 11bn of extra tax rises that he (Mr Brown) won't possibly be able to conceal."

Vincent Cable, for the Liberal Democrats, said the Budget did not change the "big picture" but he accused the chancellor of "tinkering with some very big problems", such as council tax.

"The 200 for pensioners is simply a one-off concession, for one year. It doesn't deal with any of the looming problems on council tax that will be associated the revaluation of council tax, when some people will get massive increases."

Mr Cable said taxation as a share of the economy would go up under all three of the main parties.


The US current account deficit reached a record $665.9bn (345.4bn) in 2004 driven by rising oil imports and consumers' appetite for foreign goods.

The Commerce Department said the deficit as a percentage of the total economy also set a record, rising to 5.7% from 4.8% in 2003.

The data is closely watched because it covers a broad measure of trade in goods, services and investments.

Some economists say the figures provide more evidence of problems ahead.

The rising current account gap the difference between the flow of money in and out of the US could lead to further interest rate rises as the Federal Reserve moves to keep inflation under control, they say.

The Commerce Department also said the fourth quarter current account deficit had widened by 13% to $187.9bn.


The Japanese economy expanded slightly in the last three months of last year, emerging from a mild recession.

Japan's gross domestic product a measure of economic growth rose 0.1% over the period, beating government forecasts of a 0.1% shrinkage.

In the previous two quarters, the economy declined by 0.3%, conforming to the standard definition of a recession: two consecutive quarters of decline.

Economists pointed out that the figure still represented almost flat growth.

The most positive contribution to the increased growth seemed to come from Japanese businesses building up inventories.

On an annualised basis, Japan's GDP rose 0.5%.

This compared with an initial government estimate of a 0.5% drop and economists' forecasts of a 0.6% decline.


The gap between US imports and exports has widened to the second-highest level on record as US shoppers continued to buy goods from overseas.

The trade deficit in January was $58.3bn (30.2bn) well above December's $56.4bn and higher than forecast.

The news put added pressure on the weakened dollar, as the euro traded up at $1.3463 from $1.3424 last Thursday.

Investors remain concerned that the widening trade gap, as well as the budget deficit, threaten future growth.

The trade deficit makes up much of the red ink in the US's current account, the measure of the divergence between the US's incomings and outgoings.

Both the current account and budget deficits the latter currently close to $500bn are funded largely by the purchase of dollar-denominated debt by foreign central banks.




Europe needs more family-friendly policies and possibly more immigration as the number of working-age Europeans continues to shrink, a new report says.

The European Commission document says the EU's population would already be in decline were it not for immigration.

Falling birth rates and growing numbers of elderly threaten to have a dramatic impact across the EU, it says.

By 2030 the EU is likely to have 35 million people over 80 double today's figure but 18 million fewer children.

"It is time to act now," said EU social affairs commissioner Vladimir Spidla.

The report aimed at kick-starting the debate on demographic change across the EU says immigration from outside the EU could help mitigate the ageing problem between now and 2025.


German Chancellor Gerhard Schroeder has unveiled corporate tax cuts aimed at helping Germany's 5.2 million unemployed people back into work.

He outlined the plan to cut corporate taxes from 25% to 19% in a speech to the Bundestag, the German parliament.

Chancellor Schroeder then met opposition leaders at what was labelled a crisis jobs summit, and said they had broadly agreed with his proposal.


US telecoms company MCI said last Thursday that it is considering an improved takeover offer from rival Qwest Communications International.

MCI said it would respond to the offer which, if accepted, could derail its acceptance of Verizon's $6.75bn (3.51bn) bid by 28 March.

Verizon and Qwest are vying for control of MCI, the second-biggest long distance phone firm in the US.

Qwest said its bid values MCI at $26 per share, or $8.45bn.

MCI said that Qwest's offer was 3.735 Qwest shares for each MCI share and $10.50 in cash.


UK retail sales inched higher last month, official figures have shown, but sales over the Christmas period were even weaker than previously reported.

Retail sales climbed 0.2% in February, but on a three month basis taking in the festive season sales fell 0.6%.

The figures may reduce pressure on the Bank of England to raise interest rates again in the short term.


Paul Wolfowitz has reassured critics of his nomination to head the World Bank that it will be safe in his hands.

"Before I have my own vision, I need to do a lot of listening," he told the Financial Times, stressing his deep belief in the "mission of development".

Mr Wolfowitz, the current US Deputy Defence Secretary, insisted he was not looking to shift the Bank's agenda away from poverty reduction. But his nomination by President Bush has sparked a cool response.


US retailer Toys R Us is to be sold to a consortium of private equity firms for $5.7bn (3bn), the Wall St Journal has reported.

The consortium comprises Kohlberg Kravis Roberts (KKR), Bain Capital and Vornado Realty Trust with each business owning an equal stake, the paper said.


Independent News & Media has posted forecast-busting results thanks to the conversion of the Independent newspaper from a broadsheet to tabloid size.

Sales of the newspaper rose 23% in 2004, despite a background of a declining market, the group said.

As a result UK revenues rose 8.7% to 201.9m euros (140.4m), and "robust growth" was seen across its business.

The Irish company added that pre-tax profits after one-off costs had risen to 186.6m euros from 64.3m in 2003.


Tough competition and lower North American sales have prompted General Motors (GM) to issue a profit warning.

The group said it now expects to lose $1.50 (78 pence) per share in the first three months of the year, compared to previous forecasts of breaking even.

In January, GM said net profits had sunk 37% to $630m in the last quarter of 2004, from $1bn a year earlier.


Sri Lanka is lobbying for an extension of debt relief after the Paris Club confirmed it would freeze payments from tsunami-hit nations this year.

The Paris Club of 19 creditor nations last Thursday formally agreed the offer, first made soon after the tsunami.

Sri Lanka's finance minister said he would now be pressing for the payment freeze to run till the end of 2007.

Sri Lanka, whose tourist industry was severely damaged by the tsunami, had already signed up for the 2005 freeze.


The number of jobless people in the UK has increased, figures from the Office for National Statistics show.

In the three months from November to January the government's preferred ILO measure of unemployment rose by 22,000 to a total of 1.41 million.

However, the number of people out of work and claiming unemployment benefit dipped by 700 to 813,000 in February.

Meanwhile, average earnings growth remained unchanged in the year to January at 4.4%.


US shoppers are recovering their will to spend, with new figures showing a 0.5% rise in retail sales for February. The Commerce Department also revised January figures upwards to 0.3% growth, from previous estimates of a 0.3% fall.

The revision, coming after a 1.3% rise in December retail sales, adds further weight to hopes for continued solid economic growth.

Excluding car sales, retail sales were up 0.4% in February and 1% in January despite the cold weather. One factor causing January sales to rise was the redemption of Christmas gift vouchers.


Jean-Claude Trichet, president of the European Central Bank, warned European governments not to weaken controls designed to keep their deficits small.

The rules state that budget deficits must stay under 3% of gross domestic product, a measure of economic growth.

Mr Trichet made it clear at a committee of the European Parliament that he does not want the rules weakened further.

EU finance ministers are divided on the issue and will debate the rules in emergency meetings on March 20.

France and Germany have both broken the rules and exceeded the deficit limit for three years in a row. Neither has had penalties imposed on them as a result.


Prices charged by manufacturers rose faster than expected in February, official figures have shown, as firms sought to cover rising costs.

The Office for National Statistics (ONS) said the price of goods leaving factory gates rose 0.4% on the month to stand 2.8% higher for the year.

Producer input prices rose 0.1% in February on higher oil costs, giving an annual increase of 10.7%.