Blair said it was clear that "the British
people wanted to return a Labour government but with a reduced
He said Labour, which looks set to have won 36% of
the vote, had to "focus on the things that matter" such as
the NHS, jobs and law and order.
He added: "I know too that Iraq has been a
divisive issue in this country but I hope now that we can unite again
and look to the future - there and here."
The result writes a new chapter in British
political history, with Margaret Thatcher the only other post war
prime minister to have won three successive general elections.
Blair is the only Labour leader to have won three
elections in a row but his margin of victory is less than half what it
was in the Labour landslides of 1997 and 2001 — and he has the
lowest share of the vote for a ruling party in modern times.
Conservative leader Michael Howard congratulated
Blair on Labour's win but said it was time for him to deliver on his
BREAKTHROUGH IN FREE TRADE TALKS
The World Trade Organisation has moved a step
closer to freeing up global trade after agreeing a tariff structure
for agricultural imports.
Ministers from 30 WTO members gave broad backing to
the tariff structure proposed by the European Commission.
It allows tariffs to be converted into a percentage
of a goods' price rather than a flat rate of euros per tonne.
The talks, taking place in Paris, aim to push
forward the talks in time to reach an agreement by 2006.
"Our proposal has now been accepted by the
countries, which have the greatest stake in the agricultural
negotiation," EU trade commissioner Peter Mandelson said.
"The road is now clear for rapid and
substantial progress of the DDA (Doha development agenda) across the
board, including manufactured goods and services."
The US, EU, Australia, Brazil and India agreed on
the deal, which was accepted by a larger group of nations including
However, the 148 WTO member countries must vote on
whether they formally accept the compromise when they meet at the
organisations Geneva HQ later in the year.
EU Agriculture Commissioner Mariann Fischer Boel
hailed the agreement as the first step toward a comprehensive deal on
farm goods trade. "We're not finished yet but I think we've given
an important push to the negotiations," she said.
Agricultural trade and farming subsidies have long
been a sticking point of the talks, with individual countries and
groups of nations not always keen to give up the benefits they receive
HIGHER OIL PRICES HIT US GROWTH
The US economy expanded at its slowest pace in two
years in the first three months of 2005, official figures show.
Gross domestic product (GDP) grew at an annual rate
of 3.1%, as consumers and businesses tightened their belts in the wake
of rising energy prices.
The Commerce Department figures were the weakest
since the first quarter of 2003, when GDP expanded by just 1.9%.
The weaker-than-expected growth figures knocked
more than 1% off the major US stock indexes. The Dow Jones Industrial
Average shed 1.2%, the Nasdaq technology stocks index closed 1.3%
lower, while the broader S&P 500 index lost 1.1%.
Many analysts had expected a more robust figure of
3.6% for the first three months of 2005, and the data revealed a sharp
slowdown since the final quarter of 2004, when GDP grew by 3.8%.
"Investment, which we had hoped would continue
to drive overall GDP growth, stalled badly," said Paul Ashworth,
an economist with London-based Capital Economics.
Oil prices have hovered at historically high levels
in recent months — with US light crude topping $56 dollars a barrel
before dropping back.
Many analysts now believe higher energy prices
could hit US economic growth during the second quarter of 2005.
Nonetheless, economists think the slowdown is not
steep enough to deter the US central bank from raising interest rates
to curb inflation.
HURDLE CLEARED FOR ITALIAN REFORM
Italian premier Silvio Berlusconi has won a
confidence vote in his government and the reforms he wants to push
through to spur economic growth.
The Action Plan for Growth was approved in the
upper house of parliament but still needs to be ratified by the lower
Berlusconi wants to spur growth ahead of the 2006
general election. Italy is struggling to revive growth, which has
underperformed the eurozone average in nine of the last 10 years.
Italy has cut its economic growth forecast for this
year to 1.2% from a previous target of 2.1%.
At the same time, it also raised its debt and
Analysts at Standard & Poor's claim the outlook
for growth is poor as a result of "obstacles in the areas of
physical and institutional infrastructure, regional inequalities, and
structural rigidities, especially in the labour market".
The state of the economy has rocked Berlusconi's
standing in the opinion polls.
Last month, he was forced to resign and form a new
government following a defeat in the local elections. Berlusconi
argues that his plan will spur growth at no extra cost to the state.
This latest action plan proposes welfare reform and
cuts in red tape.
Many of the proposed measures are aimed at small
businesses which have been struggling in the face of fierce
competition from Asia and Eastern Europe.
As well as tax incentives for small business, the
proposals will streamline bankruptcy laws, make it easier to start a
business, crack down on counterfeiters and also offer incentives for
'$100M GAP' IN US IRAQ SPENDING
US civilian authorities in Iraq have been unable to
account properly for nearly $100m (£53m) earmarked for rebuilding, US
financial auditors say.
Two audits found signs of potential fraud regarding
the money, which includes oil revenue and assets seized from Saddam
A third questioned the use of almost $18bn in US
taxpayers' money for reconstruction projects in Iraq.
The audits found "no assurance that fraud,
waste and abuse did not occur".
Distribution of the funds was first the
responsibility of the US-led Coalition Provisional Authority, and
later of an organisation managed by the US embassy in Iraq.
It was subjected to examination by the US Special
Inspector General for Iraqi Reconstruction (Sigir).
FOREIGNERS RUSH FOR SAUDI PAPERS
Thousands of foreign residents in Saudi Arabia have
been queuing to apply for Saudi citizenship.
A recently passed law allows those who have lived
in the country for 10 years to be naturalised.
Large crowds built up outside government offices in
several Saudi cities as people scrambled to get hold of forms to apply
In some places, the forms ran out early, prompting
applicants to try to buy original or photocopied documents.
For many, coming to Saudi Arabia was a chance to
find better-paid work than they could get at home in south Asia or
But some categories of jobs are now being closed to
non-Saudis as the government tries to reduce its dependence on its
six-million-strong expatriate workforce and bring more Saudis into
BANKS PUT $1.6BN BEHIND LAOS DAM
Global banks have agreed loans worth $1.6bn
(£842m) to build a controversial hydro-electric dam in Laos, one of
the world's poorest countries.
Disputes over whether the giant dam on the Nam
Theun river should be built have been raging for 10 years.
Environmental groups object that the dam will
destroy farm land, and disrupt fish stocks.
The banks' decision turns on the cash flow to build
the power project, which is backed by the World Bank.
It agreed to $1bn-worth of loan guarantees last
month, thereby throwing the switch for commercial funding to flow into
the project, which is 35% owned by Electricite de France.
The dam is the biggest-ever foreign investment in
Laos, a desperately poor country in the Mekong River valley whose
people rely heavily on the river system for food and transport.
Electricity from the dam will be sold to
neighbouring Thailand and produce revenues for Laos of nearly $2bn a
year for 25 years, said the Nam Theun 2 Power Company (NTPC).
BRAZIL'S REAL HITS 35-MONTH HIGH
The Brazilian real has risen to its highest level
against the US dollar for almost three years.
The high of 2.491 per dollar reached last Tuesday
follows a period of steady gains for the currency.
Brazil's central bank, which had been pursuing a
policy of real weakness, recently stopped its intervention, amid fears
about rising inflation.
Analysts say the bank is likely to stay on the
sidelines, as the stronger real is not seen as a threat to exports.
President Luiz Inacio Lula da Silva said on Monday
that the stronger real was not damaging export sales.
The real hit 2.491 per dollar in trade on before
falling back to trade at 2.4889.
"A very important psychological barrier has
been broken," said Miriam Tavares, head of currencies at the AGK
brokerage in Sao Paulo.
UK PENSION 'NEAR LOWEST IN WEST'
Britain's state pension is one of the lowest among
the richest nations, a report by the Organisation for Economic
Co-operation and Development claims.
In a comparison of pensions in OECD countries,
Britain's state pension ranks 26th out of 30 in the percentage of
average post-tax salary it pays out.
A Briton on average pay of £22,000 could expect
their pension to be less than 48% of their post-tax earnings.
The average pay-out from other advanced nations is
69% of average post-tax pay.
Luxembourg came top in terms of the proportion of
post-tax pay its citizens could expect to receive from their state
US AND EU TO PROBE CHINA TEXTILES
The US government has accepted a request from the
US textile industry to investigate the sharp increase in imports of
textiles from China.
The European Union, too, has confirmed the launch
of its long-expected inquiry into nine types of China-made clothing.
But the EU's trade commissioner made a plea for
Westerners to avoid protectionist thinking.
Concern has risen over the level of Chinese textile
imports since a system of trade quotas ended in January.
The US Commerce Secretary has promised a swift,
fair inquiry into seven types of Chinese textile items.
"We want to do it quickly and we want to do it
right," said Commerce Secretary Carlos Gutierrez.
The decision means the US now has two probes
underway into Chinese textile exports. The first one was launched
earlier in the month.
A spokeswoman for China's Commerce Ministry said
merely that China's views on the trade dispute were already well
IRAQ MAY TRIPLE OIL OUTPUT BY 2012
Once foreign energy companies return to Iraq after
it is safe for their workers, the country should be able to triple its
crude oil production to 6 million barrels per day, Iraq's former oil
minister said last Friday.
Iraq's current oil output is about 1.8 million bpd,
down sharply from a sustained 2.5 million bpd just before the US-led
war began in spring 2003. Issam Chalabi, who served as Iraq's oil
minister from 1987 to 1990, said Iraq's oil output should reach 6
million bpd by 2012, but only with the help of foreign investment
after the country becomes more secure.
Iraq is trying to boost production and bring in the
needed billions in oil revenue to help rebuild the country, but
insurgents keeping blowing up pipelines and other oil facilities.
SAUDI MONEY SUPPLY GROWS 5PC
Extended high oil prices over the first quarter of
the year have resulted in Saudi Arabia's money supply (M3) growing by
five percent in the first quarter of this year to SR506.6 billion
($135.1bn), the central bank statistics showed, extending last year's
sharp rise. M3 grew 3.46 percent in March after a slight fall of
0.47pc in February and a 1.99 percent rise in January, the daily Arab
News said quoting figures posted on the website of Saudi Arabian
Monetary Agency (SAMA).
But the first quarter figures also suggested that
the trend of steep money supply growth is continuing into 2005. Last
year the Saudi money supply grew by 17.2pc — the highest level since
the last oil boom a quarter century ago — as revenues flowed into
the world's biggest crude exporter. High levels of liquidity in the
kingdom have helped drive the Saudi stock index higher for a third
The SAMA's first quarter balance sheet also showed
the central bank's foreign assets grew 10.7pc in the first three
months of the year to SR363.4 billion.
SHELL FORGES LIBYAN GAS DEAL
Shell has agreed a major gas exploration and
development deal with Libya and its state oil company.
The deal could eventually see Shell producing more
than 100 million barrels of oil equivalent from the country.
Anglo-Dutch firm Shell will spend $105m-$450m
(£55.5m-£238m) on upgrading a Libyan gas plant and $187m on
The deal is seen as key for Shell, as it tries to
rebuild investor trust after overstating its reserves.
The deal announced follows an initial agreement in
2004 to forge a long-term partnership with Libya.
As part of this latest deal, Shell has gained the
right to explore for gas in five blocks covering 20,000 square
kilometres at the heart of Libya's major oil and gas producing Sirte
PROFITS TRIPLE AT ANIMATOR PIXAR
Profits at US animation studio Pixar have tripled
driven by DVD sales of its hit superhero movie The Incredibles.
Net income in the first three months of 2005 surged
to $81.9m (£43m) compared with $26.7m a year earlier. Sales rose to
$161.2m from $53.8m a year ago.
GM AND FORD DOWNGRADED TO JUNK
Standard & Poor's (S&P) has cut the debt
ratings of US carmakers General Motors and Ford to 'junk' status.
The US credit rating agency said its decision
reflected tough global competition in the market and slower sales of
both firms' leading vehicles.
The downgrades, affecting debt worth about $290bn
(£152bn), are the largest cuts to junk in a single day. A junk status
rating suggests that a company is more likely to default on its debt.
RANDGOLD SHARES UP AS PROFIT DOWN
Gold mining group Randgold has posted a fall in
profits as gold concentrations at its Morila mine in Mali, its only
producing pit, fell.
Quarter-on-quarter net profit fell to $12.12m
(£6.37m) in the period to the end of March, from $15.4m previously.
TIME WARNER BUOYED BY CABLE UNIT
Time Warner, the world's largest media firm, has
reported a small rise in profits as growth at its cable business
offset a slide at America Online (AOL).
Net income was $963m (£505m) compared with $961m a
year earlier in the first quarter. Sales added 3% to $10.5bn.
SWISS BANKS SEE DISCREET PROFITS
Profits at Switzerland's top banks have risen in
the first three months of 2005 on the back of soaring demand for
Net profits at UBS were 2.6bn Swiss francs ($2.2bn;
£1.15bn), while Credit Suisse made 1.9bn francs.
BASELL SELL-OFF EXCLUDES IRANIANS
Oil giant Shell and chemicals firm BASF are to sell
their joint plastics making venture Basell to a group of investors for
4.4bn euros ($5.7bn; £3bn).
News of the deal comes a day after Iran's National
Petrochemical Company said US political pressure had excluded it from
buying the Dutch firm.
The US State Department had raised concerns over a
possible Iranian deal.
Basell will now be sold to US-based investors
Access Industries and The Chatterjee Group.
SLOWDOWN HITS US FACTORY GROWTH
US industrial production growth fell to its lowest
level since July 2003, in April, after an easing of new orders and a
fall in job hiring, figures show.
The Institute for Supply Management (ISM) index
fell to 53.3 in April, from 55.2 the previous month.
The index held above 50 for the 23rd straight
month, which ISM said meant the longest growth period since 1989.
CONSUMER SPENDING BOOST FOR US
US consumer spending and personal incomes rose by a
better-than-expected amount in March, official figures show.
Spending increased by 0.6% in the month, while
incomes rose by 0.5%, the US Commerce Department reported.
The figures beat Wall Street forecasts, but came a
day after data showed the US economy grew at its slowest rate in two
years during the first quarter of 2005.
FOREIGN LABOUR ROW OVER BIGGER EU
The first anniversary of an additional 10 countries
joining the EU has sparked debate over immigration.
More than 130,000 people from eastern Europe
applied to work in the UK after their countries joined the EU in 2004.
The Recruitment and Employment Confederation (REC)
says industries including hospitality, childcare and health are
reliant on these workers.
But the group Migration Watch UK said bringing
labour in from overseas would be "self-defeating".
OIL GIANT ADMITS NIGERIA AID WOES GIANT US OIL FIRM
ChevronTexaco is to change the way it distributes
aid in Nigeria amid fears the present system is stoking conflict.
Its review of its Nigerian aid programme found it
was proving "inadequate, expensive and divisive".
It found that handing funding directly to
communities near oil installations was fuelling local tensions and
creating opportunities for corruption. Over the past decade, the firm
has donated $129m (£69m) in aid in Nigeria.
EUROTUNNEL SEES 2004 SALES SLIDE
Eurotunnel, the operator of the Channel tunnel, has
reported a drop in 2004 car and truck revenues as it faces strong
competition from ferry firms.
Revenue at its core shuttle unit fell 7% to £285m
($543m) from 2003.
Chairman Jacques Gounon said the firm had failed to
react sufficiently to "major evolutions in the cross-Channel
market in the past few years".
EURO RATE MARKS 24 MONTHS AT 2%
The European Central Bank (ECB) has decided to keep
the cost of borrowing unchanged at 2%.
The decision means the 12-nation eurozone's key
interest rate has now been set at 2% for two years.
During that time, the rate in the UK has climbed
from 3.5% to 4.75%, while the US has raised rates from 1% to 3%.
The most recent US rise, driven by inflation fears,
came last Tuesday despite concerns about fragile economic growth
concerns which the ECB shares.
Consumer and business confidence in Europe remains
gloomy, and ECB president Jean-Claude Trichet told a news conference
after the decision was announced that recent economic indicators had
suggested more short-term weakness ahead.
US FED OPTS TO RAISE RATES TO 3%
The US Federal Reserve has decided to raise its
benchmark interest rate by a quarter of a percentage point to 3%.
Analysts had widely predicted the rise as the Fed
had been caught between a sudden economic slowdown and heightened
worries about inflation. The increase was the eighth time the Fed has
tweaked rates since June.
OUTPUT FALL HITS ANGLOGOLD PROFIT
The world's second-largest gold producer, AngloGold
Ashanti, has blamed a rise in costs for a sharp fall in first-quarter
For the three months to 31 March, the South African
firm made a pre-tax profit of 68m rand ($11m; £6m).
LOCKHEED WINS $1.1BN TURKEY DEAL
US defence firm Lockheed Martin has won a $1.1bn
(£848m) contract to upgrade Turkey's fleet of F-16 fighter jets.
The firm also reported strong quarterly profit and
Work on the 117 planes owned by Turkey is expected
to start in July and should be finished by 2012. Turkey wants to
continue using the planes until 2040.
The agreement may signal an easing of the tensions
between Turkey and the US that surfaced over Iraq and were stoked by
an official state visit to Syria.
EA PROFITS SLIDE AS GAMERS WAIT
Game giant Electronic Arts (EA) has seen profits
fall 91% ahead of new consoles due out later this year.
The firm said net profits for the three months to
March were $8m (£4.2m), down from $90m the previous year, with
profits for the full year dropping 13%.
BRUSSELS OFFERS FIRST KOSOVO LOAN
The European Union's long-term lending arm has set
a precedent by agreeing to lend money to Kosovo, despite its
unresolved international status.
Although no loans have yet been agreed, the
European Investment Bank made clear its intentions at a signing
The move may encourage other banks to lend Kosovo
money, helping spur growth.
The Balkan province has been run by the UN since
the 1998-99 war, leaving it unable to qualify for loans from global
institutions such as the World Bank.
UK AID CUT PRESSURES UGANDA
The UK government has cancelled £5m ($10m) of
funding to Uganda, because it feels not enough has been done to
establish fair multi-party politics.
About half of Uganda's entire budget comes from
Political parties have for years been severely
restricted and some opposition groups have urged donors to cut aid.
Multi-party elections are expected to return next
year, but some say the government is not doing enough to ensure a
INDIA RAISES RATES ON PRICE FEARS
India's central bank has unexpectedly raised
short-term interest rates, amid fears that rising oil prices could
fuel a rise in inflation.
The Reserve Bank of India (RBI) lifted its
benchmark borrowing rate by a quarter of a percentage point to 5%, the
second increase in six months.
India has one of the world's fastest growing
economies and imports three quarters of the crude oil it uses.
EU AND US HOPES OVER AIRCRAFT ROW
The US and EU trade commissioners, Rob Portman and
Peter Mandelson, say they hope to use talks, and not legal means, to
solve the Airbus and Boeing row.
The two sides are in a trade dispute over how much
alleged state aid each is giving to help its aircraft makers.
European negotiators are keen to avert a possible
economic showdown at the World Trade Organisation (WTO).
Mandelson and Portman met at an OECD meeting in
Paris and agreed to work for a "negotiated solution".
THINK TANK WARNING OVER UK RATES
A leading think tank warned last Friday that UK
interest rates may have to rise to curb inflation.
The National Institute of Economic and Social
Research (NIESR) said that without a rise, it may be hard to keep
inflation below the 2% target.
It said the golden rule of borrowing only to invest
could be breached, possibly leading to higher taxes.
It forecast that the economy will grow by 2.7% in
2005, rather than the 3-3.5% predicted by Chancellor Gordon Brown.
JAPAN FOR FLEXIBLE EXCHANGE RATES IN ASIA
Japan favours more flexible exchange rates in Asia
but understands that China may have its own reasons for not relaxing
controls on its currency, Japan's Finance Minister Sadakazu Tanigaki
said last Thursday. Speaking on the sidelines of the Asian Development
Bank (ADB) conference in Istanbul, Tanigaki said "it would be
desirable to see a more flexible exchange rate regime," among
developing ADB member countries, including China.
"The flexible exchange rate can be one of the
factors contributing to correcting the imbalances," in the world
economy, Tanigaki said, adding that "in overall terms, it is
desirable to see further flexibility in the exchange rate
But "China has its own challenges to
tackle," he added. "There are issues on the financial front,
issues on regional disparity, so perhaps China is having its own
difficulty in trying to address its own agenda," Tanigaki said.
He said relaxing exchange rate controls is "a
delicate decision on the part of China — we hope China can make an
important decision soon."
Singapore's manufacturing sector, the main pillar
of the economy, is more upbeat about business conditions in the next
six months compared with the March quarter, a government survey
showed. However, price competition from overseas rivals is expected to
limit export orders, and global political and economic conditions
should impact on the local business environment, the EDB survey said.
Economic integration among Asian countries will be
one of the key priorities of the Asian Development Bank in order to
speed up economic growth in the region, the ADB's new president
Haruhiko Kuroda said last Monday. Kuroda, who will make his first
speech to the ADB board as president, said "economic integration
is a key strategic element of economic development of the