Of the £4bn set aside by the Conservatives for tax
cuts, £3bn has already been earmarked to pay for council tax
discounts and a benefit on savings for pensions with £1bn expected to
go towards cutting tax on stamp duty.
BBC correspondent Jo Coburn said the Tories were
banking on a change of fortunes in the polls, which had so far been
disappointing for them.
The Guardian newspaper, meanwhile, has published
what it claims is a leaked memo from the Conservative's election
strategist Lynton Crosby to candidates, warning them to keep their
nerve and remain focused in the run-up to the general election.
Labour leader Tony Blair is expected to put a new
Crime Bill — to be introduced early in the next Parliament — at
the heart of efforts to reduce anti-social behaviour and crime.
Ministers will use the latest British Crime Survey
figures, published last Thursday, to highlight what they say is a 15%
fall in crime since 1997.
Labour plans include local policing teams, six
times more community support officers, local input into police
strategy, public naming of the anti-social and a new non-emergency
number to report anti-social behaviour.
UK BORROWING 'IN LINE' AT £34.5BN
UK public sector net borrowing (PSNB) is almost in
line with the chancellor's forecasts for the fiscal year 2004/5 as tax
revenues flowed in, figures show.
The Office for National Statistics (ONS) said
borrowing for the year was £34.5bn — down £1.3bn on last year.
Tax receipts rose £1.6bn in the year to £36.6bn,
leaving net borrowing broadly on course to hit Treasury forecasts.
Mr Brown had predicted that net borrowing would be
£34.4bn, though some analysts said it would top that figure.
Mr Brown has said he is in line to meet his
"golden rule" — of borrowing only to invest — with £6bn
To do this, Mr Brown will have to balance borrowing
and current spending in the public sector budget during the economic
cycle — the current cycle is expected to end early next year.
ONS figures showed that public sector spending had
been reined in, with the deficit on the current budget £16.6bn for
the fiscal year to March.
That's less than the £21.1bn seen last year, but
more than the Chancellor's budget forecast of £16.1bn.
Analysts said that the £4.5bn improvement in the
current budget position left little room for manoeuvre if Mr Brown is
to stick to his "golden rule".
The majority of analysts have predicted that even
if Mr Brown does manage to stick to the rule during the current cycle,
he will face a budget deficit in the next cycle which will force him
to raise taxes by up to £10bn a year.
"With the economy unlikely to meet Mr Brown's
forecast of 3% growth this year we still expect taxes to have to rise
after the election to put the public finances on a more sustainable
footing," Capital Economics' chief UK economist Jonathan Loynes
GASOLINE PRICES FUEL US INFLATION
The core rate of US inflation has risen at its
steepest rate in two-and-a-half years, fuelled by a sharp rise in
gasoline (petrol) prices.
The 0.4% core inflation figure for March was the
highest seen since August 2002 and double what economists had
expected. February saw a 0.3% rise.
The jump increases the likelihood of a
corresponding hike in interest rates.
The wider Consumer Price Index (CPI) figure, which
also includes energy and food costs, rose by 0.6%.
This was the biggest rise in the CPI since last
October, US Labor Department figures showed. It followed a 0.4%
increase in February.
Over the first three months of 2005 as a whole, CPI
inflation rose at an annual rate of 4.3%, a full point above the 3.3%
seen across the 12 months of 2004.
The latest figures are expected to raise concerns
that the US Federal Reserve will start increasing interest rates at a
greater pace to try to compensate for increasing inflationary
The Fed, and its chairman Alan Greenspan, have
already suggested this could be a real possibility.
This was reiterated on Wednesday, when the Fed's
latest "beige book" summary of economic conditions across
the US, found upward price pressures in a number of 12 Federal Reserve
Since last June the Fed has increased rates by
seven quarter points to 2.75%, with the last rise coming on 22 March.
During March, gasoline prices climbed 7.9%, overall
energy costs by 4%, food by 0.2%, and clothing by 0.8%.
Airline tickets rose by 2.7%, the biggest increase
in nearly four years, as the companies pass on their increased fuel
TECH REVIVAL LEADS SHARE REBOUND
Shares have revived worldwide after heavy falls on
Monday, as investors hunted for bargains.
Tuesday saw the UK's FTSE rise 0.4% by lunchtime,
with Japan's Nikkei having closed up 1.2% buoyed by overnight gains
for US tech stocks.
Markets in Asia and Europe had slumped the day
before on concerns about US growth and the health of tech firms.
Despite the rebound, caution remains about a
possible slowdown, ahead of key company earnings announcements.
In Europe, Germany's Dax index was up 0.37% despite
a weak showing for the ZEW investor confidence index, while the Paris
Cac 40 gained 0.54%.
The technology sector is still the main focus, with
chip giant Intel due to report its earnings later this week.
Techs were the main driver for Europe's gains, with
German chipmaker Infineon up 1.6%.
Monday's declines had been fed by worries about US
techs, after weak US consumer confidence data and poor results from
IBM and others took 190 points off the Dow Jones index on Friday.
Germany's Dax ended down 2.6% or 110 points at
4,202.2, while in Paris the Cac 40 lost 2.1% or 82.7 points to end at
In London, the FTSE 100 gave up 1.3% or 64.5 points
to fall to 4,827.1, further hit by investor concern that demand had
peaked for steel giant Corus, whose shares finished down 1.5%.
And in Italy car maker Fiat's shares were
temporarily suspended after they dropped 10% to a new all-time low on
reduced confidence in European car sales.
But Japan's Nikkei 225 index suffered the most on
Monday, falling 3.8% in the face of both US gloom and ongoing tensions
between Japan and China.
WILDFIRE CHINESE GROWTH PERSISTS
China's breakneck growth has continued into 2005
despite official efforts to take the economy off the boil.
The latest figures show the Chinese economy was
9.5% bigger at the end of March than a year earlier.
The expansion matches the wildfire pace of 2004,
and remains well ahead of the official target of 8%.
The government has been clamping down on both
consumer and business credit, but now says it needs even tighter
controls on investment.
China has now been growing at an annual rate of
more than 9% since the start of 2003.
China's rapid economic growth has been accompanied
by a surge in exports, up 35% from a year earlier.
It has also helped drive world prices for oil and
other commodities sharply higher.
Massive investment by China's industries, up 23%
over the year, has led the growth, but this growth is also sparking
fears that the economy could overheat amid a speculative leap in
The construction industry is one of the main
focuses for investors, with luxury apartment blocks shooting up across
China's big cities.
ANCIENT NECROPOLIS FOUND IN EGYPT
Archaeologists say they have found the largest
funerary complex yet dating from the earliest era of ancient Egypt,
more than 5,000 years ago.
The necropolis was discovered by a joint US and
Egyptian team in the Kom al-Ahmar region, around 600 km (370 miles)
south of the capital, Cairo.
Inside the tombs, the archaeologists found a cow's
head carved from flint and the remains of seven people. They believe
four of them were buried alive as human sacrifices.
MORTGAGE LENDING HOLDING STEADY
The UK mortgage market has "stabilised"
in March after several months of falling consumer demand, UK banks and
building societies have said.
The Building Societies Association (BSA) saw
mortgage lending rise, while the British Bankers Association (BBA)
said lending was a little weaker.
The Council of Mortgage Lenders (CML) said mortgage
lending rose from £17.8bn in February to £20.1bn in March. All three
groups said mortgage lending had fallen since March last year.
UK INFLATION RATE JUMPS TO 1.9%
The annual rate of UK inflation increased to a
greater-than-expected 1.9% in March, its highest level for nearly
The Office for National Statistics (ONS) said price
rises in petrol, air fares and food contributed to the rise.
The March figure is up from an annual 1.6% rise in
February but still within the government's 2% target.
Economists remain split as to whether the rise will
put pressure on the Bank of England to increase interest rates.
CAR GIANTS RACE FOR CHINA SALES
Competition is heating up between giant carmakers
for a bigger share of China's fast-growing market.
General Motors, the world's biggest auto firm, said
last Tuesday that it expects a fierce price war with its rivals to
Results from the firm are expected to show growth
flagging elsewhere in the world.
GM says it will invest $3bn to double Chinese
production by 2007, while Ford has announced a new engine plant.
Ford's new venture in the eastern city of Nanjing
is a joint operation with Chinese firm Changan and Japan's Mazda.
It will supply a neighbouring manufacturing plant,
the construction of which started in January.
SA TRADE DEAL BOOSTS GREEN ENERGY
A renewable energy trading scheme has been launched
in South Africa to encourage businesses to switch to sustainable
The scheme links companies that wish to use green
energy with companies that are producing it.
The initial phase of the project will market power
from sugar mills, which burn waste material to produce energy.
This energy will be loaded onto the national grid
in the required amounts.
Eskom, the national monopoly electricity supplier,
will measure the quantities of electricity being loaded onto the grid
as part of the scheme.
Amatola Green Power, the company brokering the
deal, expects the first agreements to be concluded on Tuesday.
G7 FAILS TO AGREE ON DEBT RELIEF
The world's most developed nations have reaffirmed
the need to provide debt relief to poor countries.
After talks in Washington, the G7 finance ministers
said they were prepared to offer up to 100% relief on a case-by-case
But they failed to announce any concrete measures
on how to do it.
Development lobby groups criticised the G7 for
"yet another missed opportunity" to deliver the debt
cancellation they promised in London in February.
The finance ministers' joint statement came after
talks hosted by US Treasury Secretary John Snow and Federal Reserve
Chairman Alan Greenspan.
Ministers and their central bank governors said
high oil prices were hampering economic growth, but the outlook for
2005 pointed to "solid growth".
AFRICA HITS RECORD GROWTH: IMF
Economic growth in sub-Saharan Africa reached an
eight-year high of 5% last year, according to a report by the
International Monetary Fund.
Inflation meanwhile fell to its lowest rate in 25
The IMF said about 20 countries in the region had
achieved growth of more than 5%, with inflation of less than 10%.
It warned though that African economies are still
not growing fast enough to reach poverty reduction targets and that
many are not business friendly.
The report says that oil producing countries such
as Angola and Gabon benefited from high oil prices.
Oil importers, on the other hand, have had the pain
of the rising price eased by the decline of the dollar — the
currency in which oil is priced. Cotton producers have been badly hit
by declining prices.
BURMA 'USED CHEMICALS ON REBELS'
An international human rights group has accused the
Burmese army of using chemical weapons in an attack on rebel groups in
The incident is alleged to have taken place near
Burma's north-western border with Thailand in February.
The attack left Karen fighters vomiting blood and
unable to walk, Christian Solidarity Worldwide says.
The group says it has evidence which suggests that
chemical weapons were responsible for the men's injuries.
MANILA AND REBELS REACH AGREEMENT
The Philippine government and Muslim rebels have
announced a breakthrough in preliminary peace talks in Malaysia.
Manila and the Moro Islamic Liberation Front (MILF)
said they had reached an agreement over ancestral land, a major
stumbling block in negotiations.
A joint statement hailed the talks as a
"breakthrough toward a just and durable solution to the Mindanao
The MILF has fought for a separate state in the
predominantly Catholic Philippines for nearly 30 years.
ISRAEL ARMY PREPARES TO QUIT GAZA
The Israeli army has begun moving equipment out of
its bases in the Gaza Strip in preparation for the pull-out from the
A spokesman said about 30 containers of
non-military equipment were leaving a base in southern Gaza.
The move comes as Israel's government considers
delaying the start of the withdrawal by three weeks.
About 8,000 Jewish settlers and the soldiers who
guard them are to leave this summer. Israel will continue to control
Gaza's external borders, coastline and airspace after the pull-out.
FIFTY BODIES FOUND IN IRAQI RIVER
The bodies of more than 50 men, women and children
have been recovered from the River Tigris in the town of Suwayra,
south of Baghdad.
Many had been badly mutilated, Iraqi authorities
President Jalal Talabani said the bodies were those
people taken hostage and killed in the town of Madain.
But police officials said some of the bodies are
badly decomposed and have been pulled from the river over a period of
about seven weeks. There were at least three blasts in Baghdad,
including one inside the heavily fortified Green Zone.
EBAY SEES HIGHER PROFITS
Internet auction site eBay saw profits rise 28% as
it beat expectations but forecasts for the future were more cautious
on fears of slowing growth.
Profits for the three months to the end of March
rose to $256.3m (£134m), compared with $200.1m a year earlier.
Sales rose $1.03bn from $756.2m a year ago buoyed
by strong overseas sales as the firm launched new auction sites.
ROVER CARS TO BE MADE IN CHINA
China's largest car maker, Shanghai Automotive
Industry Corporation (SAIC), is set to build Rover cars in China.
Officially the company says that no decision has
yet been made, but sources close to the company have told the BBC that
the plan is likely to proceed.
The Rover brand name belongs to BMW, but the
Chinese are confident they can secure the rights to call the
Shanghai-built cars Rovers . SAIC last week pulled out of a last-ditch
rescue deal for MG Rover.
VW'S PROFIT RISE FAILS TO IMPRESS
Volkswagen's first quarter results have failed to
meet market expectations, despite seeing profits almost triple.
The German car maker made a net profit of 70m euros
($91.5m; £48m) between January and March, compared with 26m euros for
the same period last year.
Sales were down to 21.12bn euros from 21.65bn a
year earlier, as VW said the global car industry had seen a
"relatively difficult start to 2005".
FORD SEES PROFITS FALL TO $1.2BN
US car giant Ford Motor saw its profits fall almost
40% in the first quarter, as falling US sales and rising prices for
raw materials ate into margins.
The company said its net profit was $1.21bn
(£630m), on sales of $45.1bn.
The news comes less than a month after Ford warned
it would fail to meet 2005 profit targets, and would miss its
long-term annual profit goal of $7bn.
But its performance contrasts with that of
arch-rival GM, which a day earlier said it lost $1.1bn in the same
BANK VOTED 7-2 TO FREEZE UK RATES
The Bank of England's rate-setting committee voted
7-2 to leave rates on hold at 4.75% earlier this month, minutes of the
It decided to keep rates on hold amid uncertainty
over slow consumer spending and the direction of consumer prices.
The majority of the nine-member Monetary Policy
Committee (MPC) said there was insufficient evidence of rising
inflation to raise rates.
Strong growth in online advertising has helped
internet media company Yahoo double its quarterly profits.
The web giant made a net first quarter profit of
$205m (£107m), compared with $101m for the same period last year.
Excluding the fees that Yahoo pays to its
advertising partners, revenues grew to $821m, up from $550m a year
EMPOWERMENT DEAL FOR OLD MUTUAL
South African finance group Old Mutual is to hand
over 12.75% of its local business to black investors and staff.
Old Mutual is complying with rules designed to
spread ownership of South African firms to the black majority.
The 7.2bn-rand ($1.2bn; £600m) deal is one of the
biggest black empowerment deals yet, with the biggest slice of the
stake, 40%, going to employees.
This should defuse criticism that such deals
usually only benefit wealthy black businessmen.
Intel has thanked strong demand for its Centrino
laptop processors for a 29% rise in quarterly profits.
The world's largest chip maker saw net income for
its first quarter ending 2 April increase to $2.2bn (£1.1bn), against
$1.7bn a year earlier.
Sales rose to $9.4bn — the second highest in the
firm's history — up from $8.1bn in the same period in 2004.
The profit figure equates to 34 cents a share,
above the average Wall Street expectation of 31 cents a share.
COSTLY CIGARETTES LIFT MARLBORO
Marlboro-owner Altria Group has thanked raising its
cigarette prices in the US for an 18% jump in quarterly profits.
During the first quarter of 2005, the company made
a net profit of $2.6bn (£1.4bn) compared with $2.19bn from the same
period a year earlier.
Total revenues rose 8.7% to $23.6bn in the three
months as Altria further benefited from improved business at its other
main subsidiary, Kraft Foods. Altria has increased the prices of its
cigarette brands by up to $1 a pack.
PFIZER PROFITS DROP
Pfizer has seen its profits drop by 87% after being
hit by a number of one-off charges including the suspension of its
arthritis drug Bextra.
The world's largest drugs maker said it earned
$301m (£157m) during its first quarter from January to March,
compared to $2.3bn for the same time last year.
COURT 'FREEZES' KEY YUKOS ASSETS
Shares in Russian oil giant Yukos fell in early
trading on news its assets had been frozen by a Moscow court.
Yukos' former oil production unit Yuganskneftegas
— now owned by rival Rosneft - wants 163bn roubles ($5.87bn;
£3.08bn) in damages from Yukos.
It says Yukos bought oil from it at below market
Yukos is already being pursued by the state for
$27.5bn (£15bn) of back taxes while former boss Mikhail Khodorkovsky
is awaiting sentence in a fraud trial.
ROMANIA TO RELAUNCH ITS CURRENCY
Romania is to relaunch its currency, knocking four
zeros off the leu in a bid to make transactions simpler.
From 1 July, a cup of coffee currently costing
about 50,000 Romanian lei will be priced at just five lei instead.
The leu's redenomination follows a similar move by
Turkey, which chopped six zeros off the Turkish lira at the beginning
of the year.
Romania is liberalising its economy, as the former
communist state seeks membership of the European Union.