Friday, August 29, 2014
Thursday, August 28, 2014
(Reuters) - British Prime Minister David Cameron will make the case for the economic benefits of Scotland staying in the United Kingdom on Thursday as a divided business community publicly take sides.
With three weeks to go until a referendum on independence, 200 Scottish business leaders, including Stagecoach head Brian Souter and engineering tycoon Jim McColl of Clyde Blowers, joined forces in a letter published in Glasgow newspaper The Herald on Thursday backing Scotland's breakaway.
A day earlier, a group of 130 business leaders, among them the heads of giants BHP Billiton, temporary power provider Aggreko and HSBC bank, had signed an open letter opposing independence, saying nationalists had failed to make the business case for an independent Scotland.
Many companies, large and small, had previously refused to take sides in the highly-charged debate.
A number of questions remain over the financial and economic arrangements of an independent Scotland, including what currency it would use, EU membership, and the future of North Sea oil.
Several recent polls have shown support for independence pushing higher. But the most recent "poll of polls", on Aug. 15, which was based on an average of the last six polls and excluded undecided respondents, found support for a breakaway stood at 43 percent against 57 percent for remaining within Britain.
The pro-independence letter said the end of the 307-year-old union with England would give Scotland the powers "to give our many areas of economic strength even more of an advantage in an increasingly competitive world".
"I think it would be good for the whole of Scotland... we will be able to control our own financial affairs and stimulate our own economy," Sandy Adam, chairman of Springfield Properties Plc, told BBC Radio.
Cameron has taken a low-profile role in the debate, aware that his privileged English background has limited appeal in Scotland, where his Conservative party has only one of Scotland's 59 seats in the London parliament.
But with nationalists starting to gain some ground in polls before the Sept. 18 referendum, Cameron will make a rare foray north of the border to argue Scotland is better off as part of a large domestic market with a shared currency, taxes, and rules.
"This is one of the oldest and most successful single markets in the world," Cameron will tell business leaders at a dinner in Glasgow.
"Scotland does twice as much trade with the rest of the UK than with the rest of the world put together...trade that helps to support one million Scottish jobs."
The major British parties and businesses opposed to independence argue Scotland is better off in the United Kingdom and could instead be given further powers to its devolved parliament to ease fears that policies made in London will continue to dominate Scotland.
Scotland has had its own devolved parliament since 1999 and can legislate on issues such as education, health, the environment, housing, and justice.
(Reporting by Alistair Smout, Writing by Belinda Goldsmith, Editing by Angus MacSwan)
Wednesday, August 27, 2014
South Africa has avoided falling into recession after second-quarter GDP figures showed the economy grew by 0.6% during the April-to-June period.
The economy had contracted by 0.6% in the first quarter. A platinum strike in the country was blamed for the poor performance in the first three months.
South Africa was last in recession in 2008 amid the global financial crisis.
By 2011 it had made a substantial recovery, but there have been worries recently that it would slip back.
Africa's most advanced economy, and the continent's second largest, grew by 1% compared with the same period a year earlier, against annual growth of 1.6% in the previous quarter.
South Africa's agriculture sector grew by 4.9% in the second quarter, while its financial sector expanded by 1.5%.
Meanwhile, the under-pressure mining sector contracted by 9.4% from the previous quarter while the manufacturing sector shrank by 2.1%.
Analysis: Lerato Mbele, BBC Africa business correspondent, Johannesburg
South Africa has narrowly avoided a recession. The focus should now be on growth.
The country has a high unemployment rate and more than eight million people out of work. To create jobs for a tenth of these citizens, South Africa would need to grow by at least 6% each year, experts say.
But even in the good years, before the 2008 global credit crisis, South Africa struggled to reach these numbers. Leaders, trade unions, researchers and voters have wondered how the most advanced and industrialised economy in Africa could fall so far back.
The answer lies somewhere in the archaic structure of the economy.
Mining is often referred to as the backbone of the economy, yet the sector makes up less than 10% of total economic activity. However, the mines earn more than 50% of the country's foreign exchange from their mineral exports.
Another major area of concern is manufacturing. South Africa's factories are not producing as much as before, mainly because of competition from Asia, and production costs are rising.
Fuel and electricity prices are higher, and the weaker South African currency has not helped the situation.
As a whole, the latest GDP figures prove that South Africa is not in recession, but clearly the fragile economy is not out of the woods.Debt worries
Economists said the effect of the five-month strike on South Africa's platinum mines had spilled over into other sectors, and the hope of a quick improvement in the country's economic fortunes was distant.
Shilan Shah of Capital Economics said: "Looking ahead, there is little reason to expect a sharp turnaround in performance over the coming quarters."
Many analysts say that South Africa is also becoming the victim of a growing credit bubble.
Earlier this month, African Bank was bailed out by the country's central bank and South Africa's four largest banks were downgraded by ratings agency Moody's.
There is evidence that many South Africans use 70% of their income to service their debts.
Dr Cas Coovadia, the chief executive of the Banking Association of South Africa, said: "People are borrowing to get into a life style that, quite honestly, they cannot afford."
South Africa has high unemployment - around 25% of the workforce, or 8.3 million people.
"For an economy that's just not growing, ultimately it's not going to create the jobs," said the South African economist Mike Schussler.
"Whether it's a recession or not is a technical term - we are not growing," he added.
Tuesday, August 26, 2014
Monday, August 25, 2014
(Reuters) - Euro zone bond yields fell sharply on Monday after European Central Bank President Mario Draghi boosted speculation that the monetary authority will eventually loosen its policy by printing money.
In stronger language than he has used in the past, Draghi said on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming, that the ECB was prepared to respond with all its "available" tools should inflation drop further.
This increased speculation the ECB could embark on a large-scale asset-purchase scheme known as quantitative easing (QE).
The ECB cut all its interest rates in June and flagged measures to pump up to 1 trillion euros into the sluggish euro zone economy by offering cheap long-term loans to banks.
The ECB has been struggling for months to lift inflation out of what it calls a "danger zone" of sub-1 percent. Euro zone consumer prices grew 0.4 percent in July and are expected to post 0.3 percent growth in August on Friday, a far cry from the ECB's target of just below 2 percent.
Germany's Ifo business sentiment at 0400 EST was expected to add to the picture of a lackluster euro zone economy.
German 10-year yields DE10YT=TWEB were down 3 basis points at 0.958 percent, close to their record lows of 0.952 percent. German Bund futures FGBLc1 were up 43 ticks at 150.70.
"(Draghi's) comments are likely to keep alive the hopes that the ECB adds more stimulus measures to push the inflation expectations back upwards," said Suvi Kosonen, an analyst at Nordea.
Trading was light due to a bank holiday in London.
Spanish ES10YT=TWEB and Italian IT10YT=TWEB 10-year yields fell 8 bps to 2.31 percent and 2.51 percent, respectively, while Portuguese yields PT10YT=TWEB fell 14 bps to 3.12 percent.
(Reporting by Marius Zaharia, editing by Nigel Stephenson)
Friday, August 22, 2014
Thursday, August 21, 2014
Wednesday, August 20, 2014
Future North Sea oil and gas revenues could be six times higher than a UK economic watchdog has forecast, according to a report.
The Scottish and UK governments have repeatedly clashed over the future of the oil and gas industry
The claim was made by N-56, which describes itself as an "apolitical business organisation".
The UK Office for Budget Responsibility (OBR) has forecast North Sea revenues of £61.6bn between 2013/14 and 2040/41.
But N-56 said the figure could be as high as £365bn, if a series of recommendations were implemented.
N-56 was founded by Dan Macdonald, who is a member of the advisory board for Yes Scotland, which is campaigning for independence.
The Scottish and UK governments have repeatedly clashed over the future of the oil and gas industry, particularly around forecasts from the OBR on the amount of cash it expects to be raised from the North Sea.
Scottish ministers have argued that the OBR forecasts are based on a "very low estimate of future total production", while its own figures have been criticised by opponents who claim they are overly optimistic.N-56 recommendations
Among N-56's recommendations, some of which were highlighted by the Wood Review of the oil industry earlier this year, is that a more competitive tax regime is established for the North Sea.
It also calls for all policy and decision-makers responsible for taxation and regulation of the industry to be moved to Aberdeen, regardless of the independence referendum result.
An oil fund should also be established to ensure fiscal stability, it added.
Graeme Blackett, from N-56, said: "Since 1970 over £1 trillion in oil and gas revenues have been produced by the North Sea and at least as much value remains to be produced as already has been, presenting a tremendous opportunity for the sector and for Scotland's public finances.
"Scotland is a net contributor to the UK public finances, in part due to our geographic share of oil and gas revenues, and this ensures that our finances are typically healthier than the UK public finances as whole.
"The OBR puts forward incredibly pessimistic forecasts on both barrel price and reserves, largely discredited by industry experts.
"What is clear is these natural resources can be maximised through implementing the recommendations put forward both by ourselves and the Wood Review, delivering considerable surpluses that we would recommend are used to invest in an oil fund to benefit future generations."
A spokesman for the pro-Union Better Together campaign said: "It's not surprising that a report by an organisation founded by an adviser to Yes Scotland has reached this conclusion."
The N-56 report was welcomed by Scotland's First Minister Alex Salmond.
He said: "This substantial new report from a leading business organisation blows another huge hole in the credibility of the OBR's oil forecasts, especially as it comes just days after esteemed Scottish economist, Prof Sir Donald Mackay, said the OBR's calculations were 'precisely wrong' and 'hopelessly at sea'.
"The report also endorses the Scottish government's plans to set up an energy fund - something Westminster have consistently failed to do to the great detriment of current and future generations.
"Instead of continuing to talk down Scotland's oil and gas sector, the No campaign should acknowledge that the sector has a bright future ahead of it."
Responding to the report, a UK Treasury spokesman said: "The Scottish government's claim that Scotland's public finances will be boosted by separation are based on inflated oil and gas forecasts.
"Every independent expert agrees that North Sea oil and gas revenues are volatile and will ultimately decline.
"The Scottish government's own stats show that over the past two years, North Sea tax revenues were around £5bn less than the Scottish government's lowest estimate.
"The North Sea is a maturing basin and it needs valuable incentives from the Exchequer to sustain investment, which the UK, with its broad and diverse tax base, is able to provide.
"An independent Scotland would have to invest almost £3,800 per head - over 10 times more than when the costs are spread across the whole UK - to match the estimated £20bn the UK government has guaranteed to provide on decommissioning relief in the North Sea. This report takes no account of these costs.
"It is not credible for the Scottish government to say they would sustain current tax incentives for the oil industry and set up an oil fund, while cutting corporation tax below the UK level and increasing welfare benefits.
"How would they fund all these tax cuts, ensure increase public spending and put money aside for an oil fund?"