Pointing to last week's turbulent talks over the EU
budget, Mr Barroso said the union faced a "decisive moment".
The EU presidency would be a test of the UK's
historic pragmatism during its presidency, he added.
Last week's summit saw clashes over the UK refusal
to give up its £3bn annual refund from the EU budget unless there
were reforms to farm subsidies.
Mr Blair said he did not think Europe quite
realised the competitive challenge it faced from countries like China
He was met with both heckles and applause when he
said he had always been a "passionate pro-European". He
insisted he wanted to reinvigorate the EU, not wreck it.
He argued the French and Dutch voters' rejection of
the draft European constitution reflected a wide discontent with the
"This is not a time to accuse those who want
Europe to change of betraying Europe," he argued.
"Ideals survive through change, they die
through inertia in the face of challenge."
Mr Blair denied he had been unwilling to discuss
the UK rebate or that he had demanded the Common Agricultural Policy
be renegotiated overnight.
JAPAN HIT BY WEAK EXPORT GROWTH
Japan's trade surplus has slumped far faster than
expected, as demand for Japanese goods from China subsided and the
cost of oil hit home.
At 297bn yen ($2.7bn; £1.5bn), it was down 68.3%
in May from a year earlier.
The decline - the fourth in five months - could
implications for the Japanese economy,
traditionally heavily dependent on exports.
But although less was shipped to China, Japan
continued to expand its exports to the US.
The subdued export picture, which reinforces recent
current account data, means Japan is now relying more on domestic
demand than has been the case in the past, economists said.
"The trade balance already hit a peak last
year," said Nikko Citigroup's Kiichi Murashima.
"The big picture is that private consumption
and investment are supporting growth in Japan."
China and the US are by far the most significant
overseas markets for Japanese goods.
Between them they account for more than a third of
all exports with China, experiencing an investment-led boom, rapidly
growing in importance in recent years.
But the government in Beijing has for the past year
been trying to take its economy off the boil.
That, economists said, was hitting demand for
machinery and raw materials, while another factor could be anti-Japan
protests earlier this year, triggered by a textbook which Chinese
activists said refused to acknowledge atrocities committed by Japanese
troops during World War II.
SUGAR SECTOR 'MUST REFORM OR DIE'
Subsidies to European sugar farmers are to be cut
back by 40% under plans unveiled by the European Commission.
Europe's sugar industry faces a "slow and
painful death" without reform, EU agriculture chief Mariann
Fischer Boel said, as she unveiled the shake-up.
European farmers who stop growing sugar are to get
The reforms drew criticism from European farmers
and sugar refiners, and a lukewarm response from developing nations
opposed to EU farm subsidies.
The reforms were necessary after the World Trade
Organization last year ruled EU sugar subsidies were illegal following
complaints from Brazil - the world's biggest sugar
exporter - and Asian producers.
"It's a step in the right direction,"
said Angelo Bressan Filho, the official in charge of Brazil's sugar
The European Commission hopes that member states
will approve its plans - which will see subsidies cut by 39% by 2008
before the end of the year. Developing countries who export sugar to
Europe should also be eligible for compensation.
The Commission's Ms Boel said:
"There is no alternative to profound reform.
"I am convinced that EU sugar producers have a
competitive future but only if we act now and act decisively to
prepare them for the challenges ahead."
The EU has guaranteed minimum prices for nearly 40
years as part of the Common Agricultural Policy (CAP) and the reforms
are likely to face fierce opposition in several European countries.
To cushion the impact of the changes, the
Commission is offering a number of sweeteners.
WORLD GRAIN OUTPUT SEEN FALLING BY 2.8 PER CENT
World-wide cereal output is expected to decline 2.8
per cent this year from record levels in 2004 in response to decreases
in the United States and Europe, the UN Food and Agriculture
Organization said .
The agency also foresaw a 1.3 per cent fall in
world grain trade in the 2005-2006 marketing season to 230 million
tons in the face of lower demand for wheat.
The FAO in the latest edition of its Food Outlook
publication said prospects for global grain production remained "favourable,"
according to a statement . The expected output of 1.996 billion tons
would be just 2.8 per cent below record levels achieved in 2004.
"The bulk of the decrease is expected in
coarse grains production in the United States and Europe, where yields
are expected to return closer to average after record levels last
year," the FAO said in Food Outlook.
It added that African output could fall for the
second straight year reflecting drought in the north that would offset
a slight increase expected in sub-Saharan Africa.
For all developing countries the report forecast a
"marginal increase in the 2005 aggregate cereal output, mostly on
account of better prospects in parts of Asia."
Production is predicted to rise "only
marginally" in low-income food deficit countries in 2005.
While world cereal use is seen as rising only 0.3
per cent this year, "if production forecasts hold, world cereal
output would not meet next year's projected needs without dipping into
CHINA'S ECONOMY GROWING ABOVE 9 PER CENT: ZHOU
China's economy is still growing at more than 9 per
cent annually, the central bank governor said , but he added
conditions for beating down inflation had improved.
China grew at a breakneck pace of 9.5 per cent in
2004, and analysts expect a relatively modest slowdown this year to
just under 9 per cent. Gross domestic product (GDP) was 9.4 per cent
higher than a year earlier in the first quarter of 2005.
The economy is still growing at over nine per cent,
Zhou Xiaochuan, Governor of the People's Bank of China, said ahead of
a meeting of Asian central bank governors on the Indonesian island of
He said China wanted to achieve 1.8 per cent
inflation in 2005 and that conditions for meeting those aims were
better this year, although he added that the country must keep reining
in surging investment.
This year, the economic situation is better. In the
scope of things, we are trying to reach 1.8 per cent inflation, Zhou
BROWN PLEDGES TAX CREDIT OVERHAUL
Chancellor Gordon Brown has pledged to overhaul the
tax credit system following stinging criticism in two major reports.
Mr Brown told a TV channel that he wanted to ensure
the IT system "works better" and that tax credit forms were
However, the chancellor ruled out the blanket
writing-off of tax credit overpayments.
He said that he had "to balance the needs of
the country... with the needs of individual families".
But in cases where HM Revenue & Customs (HMRC)
was to blame for a tax credit overpayment then debts would be written
off, the chancellor added.
Where tax credit overpayment has occurred the
chancellor said he wanted to "sort out the difficulties far more
quickly than we've been able to do".
CALL FOR AFRICA-WIDE G8 DEBT DEAL
Six African leaders meeting in the Nigerian
capital, Abuja, have called for rich countries to cancel all of
Africa's debts at the G8 summit.
The G8 group of leading industrial nations will
focus on development in Africa when it meets on 6-8 July.
Two weeks ago, finance ministers agreed to full
debt relief for 18 countries, including 15 poor African countries.
The presidents of Nigeria, Ghana, Rwanda and South
Africa are among those who took part in last week's meeting.
The G8 finance ministers also said they were
prepared to renegotiate the debts of Nigeria, which alone are almost
as large as those of all the other countries who have received debt
The African leaders said in a communique that they
commended the recent decision of the G8 finance ministers to cancel
the debt of 18, mostly African nations, as "progress" and
called "for steps to be taken to include all African
INDIA CLINCHES $12BN STEEL DEAL
South Korean steelmaker Posco is to build a plant
in the Indian state of Orissa which will be the Asian nation's biggest
direct foreign investment.
Posco will invest up to $12bn (£6.5bn) in the
steel plant over 15 years, creating about 48,000 jobs locally.
The deal also grants Posco a 30-year mining lease
to extract local iron ore to supply the steel plant.
It has however prompted protests by opposition
parties, who say it will exhaust iron ore deposits in 20 years.
"The project is going to change the face of
Orissa," said Orissa's Chief Minister Naveen Pattnaik.
"Apart from revenues for the state government,
it will generate hugely-needed employment opportunities," he
The Posco plant will be in the port city of Paradip.
It is expected to employ about 13,000 people
directly, and to create jobs for 35,000 more in the east Indian state.
'REVALUING OF YUAN IN CHINA'S INTEREST'
The captains of US economic policy have strongly
warned lawmakers clamouring for China to be punished over its currency
regime not to retreat to a dangerous "protectionism".
US Treasury Secretary John Snow and Federal Reserve
chief Alan Greenspan reaffirmed their belief that it is in Beijing's
own economic interest to revalue its currency against the dollar.
But Greenspan was frank in rejecting talk that a
yuan revaluation would be a panacea for US industries struggling to
fend off fierce competition from lower-cost rivals.
There is "no credible evidence" that it
would bring back hundreds of thousands of lost manufacturing jobs, the
Fed chairman told a special Senate finance committee hearing on
US-China economic relations.
The yuan has been tied to the US dollar for the
past decade at around 8.28. That rate, according to the view in
Washington, makes Chinese goods far cheaper overseas to the detriment
of foreign rivals.
EUROPEAN GOLD PRICES LOWER
Gold eased in Europe last week as the market
digested this week's run to a three-month high at $441 per ounce, with
dealers confident that prices would attack fresh peaks in coming days.
Spot gold stood at $437.30/ 438.00 per troy ounce
from $438.50/439.25 in New York .
Currency fundamentals were not supportive, with the
euro falling against the dollar as European rate cut speculation came
back into focus following a dovish report from the Bank of England.
The currency was last at $1.2141.
BD'S PER CAPITA DEBT INCREASES 21 TIMES
Bangladesh's share of loan in external resources
swelled to 67.2 per cent in 2003-04 from 11.8 per cent in 1972-73,
while the percentage of grant declined to 33.8 per cent from 89 per
This was revealed in a report -- Flow of external
resources into Bangladesh -- prepared in the first week of June by the
country's Economic Relations Division.
Since the country's independence in 1971 to June
30, 2004, a total amount of about $41.77 billion of foreign aid was
disbursed, of which 46.2 per cent was grants and 53.8 per cent was
loans, the report says.
UK FIRM TO INVEST IN BD COAL MINE
London-based Asia Energy Corp said on Saturday it
plans to invest $1.4 billion over the next three decades in a coal
mine in northern Bangladesh. "Our drillings have established that
the Phulbari coal field in northern Bangladesh has resources of 522
million tons of high-quality coal," Brian Mooney, Asia Energy's
head of corporate affairs, told.
CHINESE TEXTILES TRADE PICKS UP
Many Chinese textiles exporters have enjoyed better
business since the country agreed with the European Union a week ago
to limit sales, state media reported , attributing the rise to the
removal of uncertainty.
"Over the past week, our orders have recovered
quickly," Li Lingmin, vice-president of the China National
Textiles Import and Export Corp., said. "The price is also on the
rise. The gloomy days are now gone."
China agreed this month to limit annual growth in
exports of various categories of textiles to the European Union to
between 8 and 12.5 per cent.
Xinhua said many firms it had contacted had
reported better sales and access to credit, often a problem in China,
since the deal was concluded.
ALCOA AXES THOUSANDS TO CUT COSTS
Alcoa, the world's largest producer of aluminium,
has announced it is to axe 5% of its global workforce.
The US group said 6,500 staff would go over the
next year as part of a cost-cutting drive, following 1,800
redundancies earlier this year.
Alcoa said the restructuring would result in costs
of $245m to $275m, but would lead to annual savings of $195m.
CHINA OIL FIRM IN UNOCAL BID WAR
China's biggest offshore oil and gas producer has
opened a bidding war for Unocal, the ninth-biggest US oil firm.
China National Offshore Oil Corporation (CNOOC) has
bid $18.5bn (£9.8bn) in cash for Unocal, which has large production
operations in Asia.
It is the biggest takeover offer by a Chinese firm
and comes a day after Haier's bid for Hoover maker Maytag.
Unocal has said it will consider the bid but
remains committed to an agreed $18bn merger with Chevron.
INDIAN CALL CENTRE 'FRAUD' PROBE
Police are investigating reports an Indian call
centre worker sold the bank account details of 1,000 UK customers to
an undercover reporter.
The Sun claims one of its journalists bought
personal details including passwords, addresses and passport data from
a Delhi IT worker for £4.25 each.
City of London Police is investigating after
receiving files from the paper.
FRANCE STARTS GAZ DE FRANCE SALE
France has started the partial privatisation of Gaz
de France in what is set to be one of 2005's biggest share flotations.
A 22% stake in Europe's third-largest gas company
is being put up for sale to raise about 4bn euros (£2.7bn; $4.9bn).
Unions have opposed the sell off, one of three
planned in the energy industry over the next 12 months, and there were
a number of protests last week.
France is pressing ahead as it needs cash to cut
its rising budget deficit.
It has already clashed with the European Union over
the size of its spending shortfall, which must be kept under 3% of
annual gross domestic product.
SUGAR FIRMS SOUR ON SUBSIDY CUT
Europe's largest sugar businesses have warned that
profits will fall if subsidies are cut.
Firms in Germany, France, Denmark and the UK said a
40% cut in the guaranteed minimum price for white sugar would hit
profits and may lead to job losses.
Shares in UK sugar refiner Tate & Lyle fell 2%
after it said that subsidy cuts would hit profits by £165m in
EU MAKES COKE THROW OPEN FRIDGES
Coca-Cola has formally agreed to change its sales
practices in Europe after an EU investigation found that its business
methods stifled competition.
Agreements with shops and bars to stock Coke drinks
exclusively will now end as will its practice of giving stores rebates
for hitting sales targets.
The European Commission said the legally binding
agreement would give consumers more choice of fizzy drinks. The deal,
first outlined in October, followed a six-year competition probe.
CHINESE BANK SHARES JUMP ON DEBUT
Shares in China's Bank of Communications surged 14%
on their first day of trading in Hong Kong.
The bank, known as BoCom, is China's first to list
in a foreign market and investors have been reassured by global giant
HSBC buying a 20% stake.
BoCom had earlier raised $1.9bn (£1.04bn) in a
share sale that was 25-times oversubscribed and the second biggest in
the world this year.
Last week, the company's shares rose 35 Hong Kong
cents to HK$2.85.
China is overhauling its banking industry, which is
weighed down by huge amounts of bad loans to inefficient state-backed
ONLINE BROKERS SEAL $2.9BN MERGER
Online share trading service Ameritrade is likely
to buy rival TD Waterhouse USA for $2.9bn (£1.6bn), in a move that is
like to spark sector consolidation.
Online share trading firms have seen business
decline since the dotcom crash in mid-2000.
The merged firm will have 5.9 million account
holders, executing 239,000 trades a day.
TD Waterhouse is being sold by Toronto-Dominion
bank, which will keep a 32% shareholding in the merged firm.
SONY PROMISES STRATEGIC SHAKE-UP
Sony has promised to unveil a new strategy by
September, to repair the damage done in recent years to its iconic
consumer electronics brand.
At an annual shareholder meeting in Tokyo, managers
acknowledged there had been strategic mistakes.
But new chief executive Sir Howard Stringer also
said the firm had spread itself too thinly, and needed to focus on
core strengths. The firm's shares have halved in value over the past
EU BLASTS PORTUGAL OVER DEFICIT
Portugal has been ordered to cut its budget deficit
to fall in line with European Union (EU) rules.
The ruling makes Portugal the second EU country to
face a formal complaint over budget shortfalls since the rules were
relaxed earlier this year.
Several countries, notably France and Germany, have
repeatedly breached the deficit limit - 3% of GDP - set out in the
EU's Stability and Growth Pact.
But to date none has faced the ultimate sanction of
huge fines. Italy was similarly criticised earlier in June.
PROSPECTS RISE OF CUT IN UK RATES
The prospect of an early cut in UK interest rates
has been raised by the latest set of minutes from the Bank of
England's rate-setting body.
Two of the Monetary Policy Committee (MPC) - Bank
chief economist Charles Bean and Marian Bell - voted for a cut.
However, they were outvoted by the other seven
members who elected to keep rates on hold at 4.75%.
The seven argued that further evidence of a
consumer slowdown was needed before any rate cuts were made.
ROYALS COST BRITAIN £37M A YEAR
The Royal Family cost Britons £36.7m last year,
equivalent to 61p per taxpayer, figures show.
Buckingham Palace said the figure, which excludes
security costs, was at its lowest since 2001 and had fallen 2.3% in
real terms since 2003-4.
Alan Reid, Keeper of the Privy Purse, said the
royals gave "value for money".
The travel bill rose from £4.7m to £5m after
Prince Andrew's overseas trips for UK Trade & Investment were
transferred to the Queen's accounts.
SCOTLAND TO 'NARROW GROWTH GAP'
Scotland is set to narrow its growth gap with the
rest of the UK this year helped by an unexpected rise in inward
migration, a new study argues.
According to Ernst & Young, the Scottish
economy is set to outperform the UK as a whole in 2005 after a
disappointing performance last year.
Scotland's economic prospects, under threat from a
falling population, were boosted by a rise in migration in 2004.
Newcomers were attracted by cheaper housing and
good job prospects.
The difference between Scotland's economic output
and that of the rest of the UK is expected to fall from 1.2% last year
to 0.7% in 2005.
CALL FOR SWEEPING RUSSIA REFORMS
Russia must transform its lumbering bureaucracy and
stamp out corruption if it is to function as an effective state, an
OECD report has warned.
The Paris-based economic club said Russian
administrative "weakness" was leaving too much power in the
hands of government officials.
The OECD called on Russia to end heavy-handed state
intervention in the economy and refocus its market reforms. The
strongly-worded report comes ahead of July's G8 summit in Gleneagles.
UK MORTGAGE LENDING SEES PICK-UP
Mortgage lending picked up slightly in May,
according to the British Bankers' Association (BBA) and Council of
Mortgage Lenders (CML).
The CML said gross mortgage lending reached
£22.4bn in May, up 3% on the month before but down 7% on a year ago.
The BBA said mortgage lending rose by £4.3bn in
May, up £300m on April.
The BBA figures also showed an increase of £117m
in credit-card lending during May, reversing the surprise £40m net
repayment of card debt in April.
OIL PRICE HITS $60
Crude oil prices hit a record $60 a barrel for the
second day on Friday last, amid concerns that strong demand will
continue over the coming months.
US light sweet crude briefly touched the $60 mark,
before dipping back to trade 39 cents higher at $59.81.
A report showing that China imported 8.2% more oil
in May than in the same month a year ago underpinned prices.
Supplies will be tight as other booming economies
also glug crude and the peak US summer season starts, analysts said.
"The big message this week was that demand is
still staying strong in the face of high oil prices," said Tony
Nunan of Mitsubishi Corp.
US BANK AGREES TO PARMALAT PAYOUT
Morgan Stanley has agreed a 155m euros ($186.5m,
£102.7m) settlement with collapsed Italian dairy group Parmalat
relating to a 2003 bond deal.
The payout "settles all existing and potential
actions and claims, including compensation of damages," the two
It is the first settlement between the Italian firm
and international banks, which it says helped it raise billions
despite knowing it was near to failure. Parmalat collapsed in 2003
when it emerged it had debts of 14.3bn euros.
US URGED TO BE PATIENT OVER CHINA
US Federal Reserve chairman Alan Greenspan and
Treasury Secretary John Snow have warned against hitting China with
During testimony to the Senate Finance Committee,
the two key policymakers said that sanctions would be a mistake and
may put the US economy at risk.
The comments come amid accusations that China is
manipulating its currency, the yuan, to keep it low and boost exports.
Calls have increased within the US for the
administration to take action.
US policymakers are considering legislation that
would slap tariffs of as much as 27.5% on many Chinese products should
Beijing not take steps to realign its currency.
China has held the yuan at close to 8.28 per dollar
for the best part of a decade, refusing to allow it to appreciate even
as the country's economy has boomed.
DIESEL 'COULD BREACH £1 A LITRE'
The cost of diesel could breach the £1 a litre
level this year, the Petrol Retailers Association has warned.
The warning came as it said petrol prices were set
to rise by 2p within days, pushing unleaded to a new record 87p a
litre on average.
Record crude prices near $60-a-barrel and a lack of
refinery capacity were to blame for the increase, the group said.