Monthly Archives: July 2005

More Evidence Of UK Slowdown

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The UK National Institute of Economic and Social Research suggest in a report published today that the U.K. economy may have grown at the slowest pace in almost four years in the second quarter.

Growth was probably 0.3 percent in three months through June, compared with 0.4 percent in the first quarter, the London-based institute, whose clients include the U.K. Treasury and the Bank of England, said in an e-mailed statement. That’s the slowest pace since the third quarter of 2001, according to government figures.

U.K. economic growth in the first quarter lagged expansion in the euro area for the first time in more than four years as manufacturing production shrank and consumer spending stalled, the government said on June 30. NIESR said the Bank of England, which meets today, should lower its benchmark interest rate from 4.75 percent, the highest in the Group of Seven Industrialized Nations.

The BoE which meets today is not expected to lower rates – although this move is not entirely excluded. Most likely a reduction will be in the offing soon.

Two peoples divided by a common language

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Clay Risen has a perceptive article in Slate today, warning non-German observers that Angela Merkel (Gerd Schr?der’s likely successor) is no Margaret Thatcher. But embedded in that article is this astounding sentence:

[T]he CDU … is actually an alliance between the more free-market-oriented Christian Democrats, from which Merkel hails, and the more economically liberal Bavarian Christian Social Union. [Emph. added.]

Would these two terms be viewed as opposites anyplace else than America? In any other country, would the term ‘economically liberal’, as applied to the CSU, make any sense at all? (For the thing about the CSU is that it is more culturally conservative and less economically liberal than its sister party.)

Which does not detract, of course, from what Risen hints at: ‘economic liberalism’ is a relative concept. If the Union, even under Merkel, proves more liberal than the SPD, it will be a difference of degree not kind; and I suspect of quite modest degree at that.

The European Superstate?

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You most probably have noticed that prominent blogad we have at the top of the sidebar, promoting a book by Glyn Morgan: The idea of a European Superstate. Well the US-based Chronicle of Higher Education have a review of the book, and, whatsmore, tomorrow, Thursday 7th July at 1 pm Eastern time (8pm CET and 7pm in the UK) the author will be available for a live online debate about the issues raised in the book. So whether you agree, or disagree with him, venez nombreux!

And just to warm things up a bit, after reading the Chronicle of Higher Education article my own view is that it will prove a lot easier to get a ‘one size fits all’ foreign policy than it ever will be to get a common monetary one. (Glyn Morgan is quoted as saying “The nightmare scenario is that the euro fails”).

Eurozone Outlook

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There is a pretty mixed bag of numbers coming in at the moment. The German economy shows some signs of a recovery of activity (here), as is the French one (here). It is important to understand however that trend growth in Germany is now extremely low, and the economy is very export dependent. The underlying performance of the Frech economy is essentially much better. However, the sick man of Europe continues (and will continue) to be Italy (here)

Levels of business activity in the Italian services economy continued to fall in June. However, rising from 47.3 in May to 48.9, the seasonally adjusted NTC Research/ADACI Business Activity Index indicated that the rate of contraction had eased and was only marginal.

A month-on-month decline in new business to Italian service providers was recorded for the third successive month. Furthermore, the rate of decline quickened again and was the sharpest in the survey history. Panel companies reported that demand for their services had continued to suffer as a depressed domestic economy led to subdued client spending.

Service providers reported that diminishing levels of new business had freed up capacity, leading to the sharpest reduction in backlogs of outstanding work in the seven-and-a-half years that data have been collected.

Employment levels in the Italian service sector fell for the fourth straight month in June. The rate of job shedding was again only marginal, although slightly sharper than in May.
Source NTCResearch

The ‘Eastern’ Alliance

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An alliance of Russia, China and central Asian nations called today for the U.S. and coalition members in Afghanistan to set a date for withdrawing from member states.

he Shanghai Cooperation Organization, at a summit in the Kazakh capital, said in a declaration that a withdrawal date should be set in light of what it said was a decline of active fighting in Afghanistan.

“We support and will support the international coalition which is carrying out an anti-terror campaign in Afghanistan, and we have taken note of the progress made in the effort to stabilize the situation,” the declaration said.

“As the active military phase in the anti-terror operation in Afghanistan is nearing completion, the SCO would like the coalition’s members to decide on the deadline for the use of the temporary infrastructure and for their military contingents’ presence in those countries,” the declaration continues.

Now what was it Brad Setser was saying about why the Unocal bid was important?

The EU’s Latest Export

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Mala leche (nothing to do with the CAP) we would probably call it here in Spain, bad blood (again not connected with mad cows) might be the English expression. We’re all off to Singapore apparently, and the fair ground side-show seems to be up and running. On this one I’m impartial, I’m being very pc and rooting for Madrid. Results known tomorrow.

“I think the Paris stadium is a wonderful stadium. I really like going there to watch rugby but unfortunately rugby is not part of the Olympics”

“I think that to deserve victory you have to respect the Olympic spirit and demonstrate fair play…..One good thing about the Stade de France is that it exists”

“The only thing they have done for European agriculture is ‘mad cow (disease)…”You can’t trust people who have such lousy cooking” labelling British cooking the worst in Europe apart from that of Finland. (No, this wasn’t Berlusconi :)).

Paris is the bookies’ favourite at 4-9 right now.

Free movement of persons, goods, capital, services and mortal remains

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Interesting piece today in the New York Times (reg. req.) on Germans having themselves cremated in the Netherlands. Wait; I should be more precise lest I alarm you — the article is about Germans arranging to have themselves cremated later. If you want to have your corpse burnt, the Dutch will do it with a lot less red tape. Much cheaper too; what’s not to love? And, thanks to the EU, Germans with bodies, but not money, to burn may freely access the Dutch cremation market.

Now that’s what Europe is all about.

Under Wraps

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The EU Observer reports on the labours of the Commission in producing a report on social models and sustainability, and the efforts they are making to try and de-politicise it. It seems our ageing societies and their implications will form the cornerstone of the report. This, at least, will mark a step forward. The October summit already bears all the hallmarks of being potentially much more interesting than the last one.

“The request for the report predates the [Franco-British] argument. This is the general awareness in the commission”, one of the study’s contributors told EUobserver. “Nothing new was stimulated by this disagreement. Whether you are on one side or another, everybody wants a viable social system”.

The source added that while the US has already done a lot of research on the problems linked with an ageing population for example, the EU situation is made more difficult by the fact that “we have 25 different systems” to take into account.

The report will be put together by a wide pool of officials from various units covering financial affairs, enterprise, employment and internal markets, as well as commission president Jose Manuel Barroso’s inhouse team of economic experts, the Bureau of European Policy Advisors (BEPA).“

British Retail Sales Continue to Decline

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The latest survey by the British Retail Consortium suggests that retail sales declined in the UK for the third month in a row in June. This is definitely one to watch carefully.

Sales in stores open at least a year fell 0.5 percent compared with June 2004, the London-based lobby group said today. The drop followed a 2.4 percent slide in May and a 4.7 percent drop in April. Same-store sales declined 2.4 percent in the three months through June from a year earlier.