Tuesday, September 30, 2014

BBC News - UK manufacturers 'want to stay in EU', poll finds

Britain's manufacturers are overwhelmingly in favour of the country remaining a part of the European Union, a survey suggests.
Modern boiler room equipment
Both UK and EU manufacturers have been suffering in recent months.
The manufacturers' organisation EEF found that 85% of those it polled would vote to stay in the EU, and only 7% would opt to leave, despite the bloc's economic troubles.
Firms with more than 250 employees were most keen on the EU, with 90% saying they would want to retain membership.
EEF represents over 6,000 companies.
The survey, carried out in August, included 160 companies.
Manufacturing companies in both the UK and the wider EU have been suffering in recent months.
Two surveys carried out in August showed that growth in the UK manufacturing sector has slowed, with both new orders and output increasing less rapidly than before.
The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) edged down in August to 52.5 from 54.8 in July, its lowest reading for 14 months.
'Makes no sense'
Meanwhile, manufacturing across the eurozone fell in September to a PMI reading of 50.5, the lowest measure since July of last year.
Commenting on the EEF poll's findings, chief executive Terry Scuoler, said: "Despite the continued problems in the eurozone, manufacturers remain overwhelmingly of the view that our economic wellbeing is inextricably linked to the EU and, we must stay in membership.
"It makes no sense to disengage from our major market and it remains fanciful to think we can just pull up the drawbridge and walk away with no consequences."

Monday, September 29, 2014

BBC News - EU and Canada set out trade agreement

The European Commission and Canada have unveiled the details of a new trade liberalisation agreement.
Container ship in the Port of Montreal along the St. Lawrence RiverThe Canada-EU trade pact could boost trade by $20bn a year
Under the deal almost all customs tariffs will be eliminated and markets for services will be opened up.
But the agreement still needs approval from the EU parliament and faces particular opposition from Germany.
Critics say the deal restricts the power of democratic governments in relation to big business.
Business benefits
It's not just maple syrup. Traded products, in both directions, range from machinery, chemicals and transport equipment to services such as insurance and communications.
The European Commission has said the deal would boost bilateral tradeby 23%. And a A joint EU-Canadian study has put the combined annual economic gains at about 20bn euros although those figures were published six years ago.
However a provision included in the deal to bolster the rights of foreign investors, known as Investor State Dispute Settlement (ISDS) could still prevent the deal being approved.
Campaigners say it gives big business too much power in relation to democratically elected governments wishing to introduce new policies.
Analysis: economics correspondent, Andrew Walker
One thing could still derail the deal.
The Germans don't like the proposal that's included for a new system of tribunals, under what's knows as ISDS. If foreign investors feel they've been mistreated they can turn to these tribunals and even in some cases apply for compensation.
ISDS has actually been around for years. But recently campaigners have begun to argue that it is undemocratic because of the constraints it puts on elected governments.
For example the tobacco company Philip Morris is taking legal action against Australia over its plain packaging laws - there has been no ruling yet on this case.
Other cases have involved regulation of energy prices, disputes over patents and alleged wrongful criminal prosecution.
The German economy minister Sigmar Gabriel has said he would reject the Canada deal if the ISDS elements remain.
That has cast new doubt on whether the deal will ever come into force and it suggests an uphill struggle for other trade negotiations still being hammered out behind the scenes.
Campaigners have called the ISDS "a powerful corporate weapon to delay, weaken and kill regulation."
Nick Dearden, director for the World Development Movement says of the EU Canada deal: "If it is agreed, it will undermine the power of democratically elected governments to make decisions in the public interest".
Supporters of ISDS say it provides foreign investors with protection against discriminatory treatment and that means they are more likely to take the plunge and invest.
The EU's top trade official, Commissioner Karel de Gucht rejects the complaints against ISDS, although he has acknowledged concerns about some agreements.
He told the European Parliament: "On investment, the agreement establishes a system that sets a new standard for investor-to-state dispute settlement procedures". He said the deal with Canada "directly addresses all the concerns that have emerged so far".
The controversy about ISDS led the European Commission to launch apublic consultation earlier this year about its inclusion in trade liberalisation negotiations with the US.

Friday, September 26, 2014

Bloomberg News - Putin Party Lawmaker Drafts Bill on Foreign-Asset Freeze

Photographer: Sasha Mordovets/Getty Images
Russian President Vladimir Putin, left, and billionaire Arkady Rotenberg.
A member of Russia’s ruling party proposed a law that would allow the seizure of foreign states’ assets in the country after the U.S. and its allies targeted President Vladimir Putin’s inner circle including a childhood friend with asset freezes and travel bans.
The draft seeks to benefit citizens or companies that had property outside Russia seized under an “unlawful” judgment from a foreign court, according to the State Duma’s website.
The government would use budget funds to compensate the victim, and the courts would have the right to go after foreign states’ assets in Russia, including property under diplomatic immunity, according to the proposal.
The EU and U.S. have targeted individuals, companies and the finance, energy and defense industries to punish Russia for the annexation of Crimea in March, while accusing Putin of supporting a separatist insurgency in eastern Ukraine. Italy froze about 28 million euros ($36 million) of properties belonging to billionaire Arkady Rotenberg for his ties to Putin. The Kremlin denies arming or financing the rebels.
If the confrontation escalates, “we could see embassies targeted, but I don’t think they’ll go after assets and property” belonging to businesses, Oleg Kouzmin, an economist at Renaissance Capital in Moscow and a former monetary policy adviser at Russia’s central bank, said by mobile. “It’s all about geopolitics and I think it’s actually unlikely to happen.”

Not Retaliating

Russian stocks and the ruble fell for the first time in three days in Moscow. The benchmark Micex Index (INDEXCF) declined 0.4 percent to 1,436.05 at the close, and the Russian currency weakened 0.9 percent to 38.4925 per dollar as of 6 p.m.
Russia will use state funds to aid businesses hit by sanctions and isn’t considering retaliating further, Prime Minister Dmitry Medvedev said in an interview with state television channel Rossiya 24 on Sept. 20. The government is holding off discussing another round of tit-for-tat measures, he said, after Russia banned some food imports from the U.S., the EU, Norway, Canada and Australia last month before the latest wave of restrictions.
The U.S. is Russia’s fourth biggest trading partner, with about $43.8 billion flowing between the nations last year, according to data compiled by Bloomberg.
Boeing Co. (BA) delivered seven jets to Russian buyers in 2013, a year when U.S. exports of planes, aircraft engines and parts to the country topped $1.94 billion, Census Bureau data show.McDonald’s Corp. (MCD) had about 400 restaurants in Russia at the end of 2013. PepsiCo Inc. (PEP) last year reported Russia revenue of $4.9 billion from products such a soda, yogurt and potato chips in flavors such as crab and caviar.

Alcoa, Exxon Mobil

Alcoa Inc. (AA), the largest U.S. aluminum maker, has two plants in Russia -- in the southern cities of Samara and Belaya Kalitva -- that make extrusions and can stock for beverage containers, according to its website. The New York-based company generated $683 million in sales in the region in its latest year.
Exxon Mobil Corp. (XOM) pumps oil and natural gas from Russia’s rich fields. Some of the biggest assets owned by Western energy companies in Russia are connected to the Sakhalin oil and gas developments located off the Northeastern coast of Sakhalin Island in the Russian Far East. Irving, Texas-based Exxon owns 30 percent of the Sakhalin-1 project.
Putin’s spokesman, Dmitry Peskov, declined to comment on the proposed law today. “We consider these sanctions to be absolutely groundless and illegal and Russia naturally has the right to take steps to defend its interests,” he said by phone.

‘Charming Story’

The draft, submitted Sept. 23 by Vladimir Ponevezhsky, a lawmaker from Russia’s ruling party, is scheduled for consideration by committee in the lower house of parliament, or State Duma, on Sept. 29. It may be heard by the chamber on Oct. 7. It would have to pass three readings in the Duma.
“It’s a charming story,” Boris Nemtsov, a deputy prime minister under former President Boris Yeltsin and now a member of the opposition, said on his Facebook page. “As they cut spending on health and education, it looks amazing, the desire to use the budget to help a billionaire like Rotenberg, whose villas in Italy were seized.”
To contact the reporters on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net; Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

Thursday, September 25, 2014

Reuters News - China currency regulator uncovers $10 billion in fake trades

(Reuters) - China has found nearly $10 billion worth of falsified trade transactions more than a year after the fake trades were first uncovered, the currency regulator said on Thursday, adding that a crackdown had now stamped out the practice.
To evade China's capital controls and sneak money in or out of the world's second-biggest economy, some companies create artificial trade invoices that are not backed by an actual exchange of goods or services.

Authorities have found nearly $10 billion worth of such deals so far and 15 cases may be linked to criminal fraud, said the State Administration of Foreign Exchange, China's currency regulator which also manages the country's $3.99 trillion foreign exchange reserves.
Global commodity markets were rattled in June when an investigation into a trade fraud in China showed companies had used fake receipts at a port in Qingdao in east China to obtain multiple loans secured against a single cargo of metal.
The incident prompted global banks and trading houses to fire off a series of lawsuits over their estimated $900 million exposure to other related cases.
"Fake trades not only increase the pressure of hot money inflows, but also provide illegal channels for cross-border capital flows," Wu Ruilin, vice-head of the management and inspection department at the regulator told a press briefing.
Some banks were found to have neglected their duties in checking the authenticity of deals, which increased fraudulent behaviors, Wu said.
Since the crackdown started last April, investigations into falsified transactions have been expanded to 24 provinces and cities this year, he added.
For now, however, China does not see any big rise or fall in its capital flows, Guo Song, the head of the capital account department said separately at the briefing.
(Reporting by Shao Xiaoyi and Koh Gui Qing; Editing by Kim Coghill and Michael Perry)

Tuesday, September 23, 2014

BBC News - Obama announces US crackdown on inversion tax 'loophole'

The White House has announced a crackdown on tax avoidance deals known as inversions.
The White House
The practice involves a US firm merging with a firm in a country with a lower tax rate and has become popular over recent years.
But President Barack Obama said new treasury department measures would make inversions less attractive.
Those include making it more difficult for an inverted company to access money made outside the US.
One way inverted companies do that is by making loans between foreign units and the US business.
The benefits of so called hopscotch loans will be removed, according to today's announcement from the US Department of the Treasury.
The treasury department is also strengthening the requirement that the US owners of the new inverted firm have to earn less than 80% of the new entity.
It says that will mean some inversion deals "no longer make economic sense".
"We've recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I'm glad that [Treasury Secretary Jack Lew] is exploring additional actions to help reverse this trend," the president said in a statement.
In a recent inversion deal, Burger King bought Canadian coffee and doughnut chain, Tim Hortons.
Under the deal the new group moved its headquarters to Ontario, Canada, where the corporate tax rate is 26.5% - much less than the US rate of 35%.

Monday, September 22, 2014

BBC News - China's Xi Jinping signs landmark deals on India visit

 India and China have signed 12 agreements in Delhi, one of which will see China investing $20bn (£12.2bn) in India's infrastructure over five years.
Indian Prime Minister Narendra Modi and visiting Chinese President Xi Jinping wave to the media before a meeting in New Delhi, India, Thursday, Sept. 18, 2014.The two leaders pledged to work towards peace on the disputed border

At a news conference with Chinese President Xi Jinping, India's PM Narendra Modi said "peace on the border" was important for progress.
Talks came as India accused China of fresh territorial incursions in Ladakh.
China is one of India's top trading partners but they vie for regional influence and dispute their border.
Mr Modi and Mr Xi made separate statements at the end of their talks in Delhi on Thursday.
Under the investment plans, China pledged to:
  • Help bring India's ageing railway system railway system up-to-date with high-speed links and upgraded railway stations.
  • Set up industrial parks in Gujarat and Maharashtra.
  • Give more market access to India to products, including pharmaceuticals and farm products.
Both sides also focussed on increasing co-operation in trade, space exploration and civil nuclear energy.
Mr Modi called for an early settlement on the disputed common border between the two countries and said the "true potential of our relations" would be realised when there was "peace in our relations and in the borders".
There have been reports in the Indian media of Chinese troops trying to construct a temporary road into Indian territory across the Line of Actual Control (the de facto boundary) in the disputed Ladakh region over the past week.
Mr Xi said he was committed to working with India to maintain "peace and tranquillity" on the border.
"China-India border issue is a problem which has troubled both sides for long... As the area is yet to be demarcated, there may be some incidents," he said.
A Chinese foreign ministry spokesman said: "After timely, effective communication, the relevant situation has already been appropriately bought under control. Border issues are leftover issues from history."
Sanjoy Majumder, BBC News, Delhi
The face-off between Chinese and Indian troops along their disputed border is being widely reported in India, with some suggesting that it could derail talks between the two countries. That is highly unlikely.
The border dispute is an old one, dating back to 1914 when Britain, India's former colonial power, signed an agreement with Tibet making the McMahon Line the de-facto border between the two countries. China has always rejected this.
Both sides also claim each other's territory - India, the Aksai Chin region of Kashmir and China refuses to recognise Ladakh and Arunachal Pradesh as part of India.
There have been several incursions of Chinese troops across the border in these areas which have been highlighted by the Indian media. Diplomats from both sides, however, play down these transgressions. The simple fact is that there are differing perceptions on where the border lies - what India believes is Chinese troops crossing into their territory is seen by Beijing as the exact reverse: Indian troops occupying Chinese land.
It is extremely unlikely that these confrontations will lead to an outright conflict or even sour ties between the two countries. But they do reflect the suspicion and distrust that exist on both sides of the border.
Mr Xi began his visit in Gujarat, the home-state of Mr Modi, on Wednesday, before heading to Delhi.
India railway tracks (File picture)China has pledged to upgrade India's ageing railway tracks
On Wednesday, the two sides signed several agreements, including one to set up a Chinese-backed industrial park in Gujarat.
Indian and Chinese companies have also signed preliminary deals worth more than $3bn (£1.8bn) in aircraft leasing and telecoms, among other sectors.
Despite the continuing tensions, trade between India and China has risen to almost $70bn (£43bn) a year, although India's trade deficit with China has climbed to more than $40bn from $1bn in 2001-2002.

Friday, September 19, 2014

Bloomberg News - Bank of England Back on Track After Scots Reject Split

Photographer: Peter Macdiarmid/Getty Images
'Better Together' supporters celebrate the result of the Scottish referendum on independence at the campaign Headquarters at the Marriott Hotel in Glasgow, Scotland, on Sept. 19, 2014.
Bank of England officials can get back on track.
With the U.K. surviving yesterday’s Scottish independence referendum, policy makers can set aside the prospect of volatility and focus on fundamentals. The decision removes a potential source of instability that would have scuppered Governor Mark Carney’s drive to safeguard the recovery and return emergency policy levels to normal settings.
Officials, who kept the benchmark interest rate at a record low on Sept. 4, no longer have to consider the possible consequences of a split, such as a run on British banks or a slide in the pound. After counting through the night, 55 percent of voters supported the “no” campaign with 45 percent backing independence.
“The result leaves the BOE on course, a lot of political uncertainty has been removed and the bank can focus on the strength of the recovery,” said Azad Zangana, an economist at Schroder Investment Management Ltd. in London. “The MPC can be confident that raising interest ratesearly next year will not hurt the recovery.”

Backup Plan

It’s a sigh of relief for the guardians of U.K. stability.
As polls two weeks ago showed the separatist “yes” camp edging ahead, officials at the BOE and Treasury gamed out their strategy to shore up the financial system by anticipating the direst of consequences. Carney told lawmakers his back-up preparations involved “considerable resources.”
There won’t be a statement from the BOE after the result, a spokesman for the central bank said today.
Uncertainty about the currency risked creating a liquidity squeeze and deposit flight, and respondents to a Bloomberg News survey saw the prospect of sterling declining 10 percent within a month. Officials would have had to act quickly to stem a panic that could have tipped the economy into another recession.
The pound strengthened as the referendum results rolled in. It rose 0.3 percent to $1.6444 as of 8:04 a.m. London time after jumping 0.7 percent yesterday.
With the passing of the vote, the nine-member Monetary Policy Committee can turn their attention to the matters they’d been looking at before polls started to show a change of heart: risks fromEuropeanemic pay growth, below-target inflation and the fastest growth in Group of Seven nations. Carney had said Sept. 9 that investor expectations for a rate increase by the spring next year were reasonable.

U.K. Expansion

Also on the agenda: changes to the national accounts that could revise past estimates of growth and affect the current assessments of productivity. These will come in at the end of the month and could impact officials’ thinking on the correct timing for increasing the key rate from 0.5 percent.
“It’s back to business as usual, markets should settle and things will continue as they were when polls were showing a wider margin in favor of the ‘no’ vote,” said Victoria Clarke, an economist at Investec Securities in London. “The accounts changes could change recent history quite significantly.”
The U.K. has expanded for six straight quarters, employment is at a record and business surveys show the recovery continued into the third quarter. Data so far hasn’t shown that the uncertainty around the referendum has affected growth, according to Stuart Green, an economist at Banco Santander SA in London.
That could lend strength to a two-member minority on the MPC who pushed for rate increases this month and last. Martin Weale and Ian McCafferty argue that the risk of wage pressures picking up rapidly means a quarter-point rise in borrowing costs is required for officials to achieve their goal of “limited and gradual” increases.

European Drag

However, the recovery still has its headwinds, and Carney is leading the majority of officials who say emergency settings are still needed. The rate of pay growth is below inflation, and consumer price gains have held below the bank’s 2 percent target for eight months. Growth in the euro area, the U.K.’s biggest trading partner, is fragile.
The prospect of a lingering demand for Scottish secession could also stoke political instability, undermine business confidence and delay the first interest-rate increase. Prime Minister David Cameron said today the vote has settled the matter for a generation.

General Election

Accepting his defeat, Scottish First Minister Alex Salmond said today there would be no “going back to business” as usual again. With 1.6 million votes for independence, he said he’ll be looking for leaders in London to make good on promises to devolve more powers to Edinburgh.
However, Cameron and the other main party leaders in Westminster will return to battle for a general election to be held in less than eight months. The U.K.’s membership in the European Union will feature heavily in that debate, with Conservatives promising a referendum in 2017.
Those votes mean that political discord and voter anger may yet weigh on the economic outlook. A departure from the EU could be a “much bigger deal” for the U.K. than Scottish vote, said Simon Wells, an economist at HSBC Bank Plc in London and a former BOE official.
“Uncertainty is the enemy of investment,” said Wells, who’s maintaining his projection for the first rate increase to come in February. “The BOE is looking for a strong recovery in investment, so anything that destabilizes that potentially means that their growth projections are too optimistic.”
To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

Thursday, September 18, 2014

Reuters News - As growth stalls, G20 seeks closure on regulations

Australian Prime Minister Tony Abbott delivers his keynote speech during the B20 Summit in Sydney, July 17, 2014.   REUTERS/Lisa Maree Williams/Pool
Australian Prime Minister Tony Abbott delivers his keynote speech during the B20 Summit in Sydney, July 17, 2014.
(Reuters) - G20 host Australia is leading a push to draw a line under the global financial crisis, urging the group of top economies to swiftly finalize regulations aimed at preventing a repeat of the crash and focus on measures to revive sputtering global growth.
But the efforts of the Group of 20 finance ministers and central bankers, meeting this weekend in the tropical tourist town of Cairns, risk being drowned out by growing alarm over geopolitical tensions and increased market volatility.
"They will do so against a backdrop of downgraded OECD growth forecasts and a deteriorating global political climate," said London-based Lena Komileva, chief economist at G+ Economics.
Indeed, headlines from the G20 will vie with any fallout from Scotland's independence vote on Thursday and ongoing U.S. interest rate speculation that has driven the dollar to six-year highs against the yen.
At home, a sweeping counter-terrorism operation across several major Australian cities on Thursday has knocked everything else from the front page.
Yet Treasurer Joe Hockey this week said he and his G20 colleagues are focused on delivering jobs and growth more than ever before.
"The changes in the economy over the last few months have made the job harder but it has not diminished our collective resolve," he said.
He acknowledged the challenges in attaining the target of bettering the global growth trajectory by 2 percent by 2018, a goal set earlier this year at a similar meeting in Sydney.
"Whether we reach the 2 percent or not – the G20 is committed to promoting further growth and to creating more jobs," said Hockey, perhaps suggesting he had already conceded the target was too ambitious.
Complicating the growth agenda, Western nations recently slapped sanctions on some of Russia's biggest firms as punishment over Moscow's role in the Ukraine crisis.
Slowing growth in China is also fueling anxiety.
Justin O'Brien, a professor at the University of New South Wales' Centre for Law, Marketsand Regulation, said the G20 was losing sight of its core mission of ensuring there was no repeat of the financial crisis.
While there was no shortage of consultation, regulatory initiatives or rhetoric on the progress being made, the reality was that much divergence remained between members.
"All battles in regulation happen at the implementation stage and in terms of implementation, there is basically trench warfare taking place," O'Brien said.
Much of the leg work on financial regulation is nearing completion after years of tortuous negotiations. Officials have expressed confidence in concluding agreements on issues such as shadow banking, derivatives and global tax rules by the time of the G20 Leaders Summit in Brisbane in November.
Last week, a draft plan on how much the world's largest banks will have to set aside as safety buffers was circulated and will be discussed at the Cairns meeting.
"It is clear that decisive reforms are needed across G20 economies to boost potential output and help ensure that growth is more balanced," Hockey said.
"This is why the importance of our efforts this year cannot be understated. Come the Brisbane Summit, every G20 member will present a comprehensive listing of their new policy actions to lift growth and create jobs."

(Editing by Kim Coghill)

Wednesday, September 17, 2014

BBC News - China's central bank said to inject $81bn into system

China's central bank is said to be injecting 500bn yuan ($81bn; £50bn) into the five biggest state-owned banks to counter slowing growth in the world's second-largest economy.
The People's Bank of China (PBOC)
China's central bank recently unveiled measures to support small rural banks and other financial institutions
The People's Bank of China (PBOC) is reportedly giving each bank a $100bn low-interest loan over three months.
The move may be the first of several stimulus measures, analysts say.
It is aimed at lifting business confidence and investment following a string of weak economic data.
China's economy showed more evidence of a slowdown with industrial production and foreign direct investment hitting multi-year lows in August.
The five lenders said to be receiving the stimulus are the Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications.
The move was first reported by local Chinese news website Sina.com. Other media reports cited a government official and a senior Chinese banking executive.
Chinese banking shares traded in Hong Kong rose on the news.
'Bigger steps'
Economists say the move may have a similar effect to a 50 basis point cut in China's reserve requirement ratio, which is the amount of money China's commercial lenders must deposit with the PBOC.
Some also believe the capital injection is meant to pre-empt any possible liquidity shortfall ahead of China's major Golden Week holiday, which starts on 1 October.
Louis Kuijs, China economist at RBS, said policymakers have been under pressure to "take additional, more significant measures to ease the policy stance and shore up growth".
"It increases the money base. If not constrained by caps on loan-to-deposit ratios or other administrative regulation, it would increase the banks' ability to extend credit," he said.
"In our view this measure reduces the chance of other, bigger steps in the monetary sphere in the very short term. We think it is likely to see measures such as supporting infrastructure and the property market."
Growth target
A woman counting Chinese yuanChina has been looking to adopt more market-based reforms
There are rising concerns that the government may miss its target for economic growth of 7.5% this year.
However, China's Premier Li Keqiang said last week that the country was on track to meet its growth target and that its structural reforms were progressing.
Following the 2008 financial crisis, China unveiled a massive stimulus programme to keep its economy afloat.
But in recent years, Beijing has been unveiling more targeted measures aimed at addressing problems such as a possible property bubble and rising local government debt.
Mr Kuijs said this stemmed from a desire by Chinese authorities to rein in financial risks that arose from its initial, much broader stimulus.
"The problem is that the use of such targeted, specific instruments runs counter to the envisaged reform of monetary policy. That reform is supposed to be making monetary policy more indirect, market based," he said.
"However, several of the measures and new instruments introduced this year move monetary policy in the opposite direction, making it more direct and less market oriented."

Tuesday, September 16, 2014

BBC News - OECD sees global economy held back by slow eurozone

A slow recovery among nations using the euro is holding back the global economy, the Organisation for Economic Co-operation and Development has said.
burned-out tank
Conflict in the Ukraine is among the factors holding back global growth, says the OECD
The market economy group downgraded its growth forecast for most big economies.
Conflicts in Ukraine and the Middle East and the referendum on an independent Scotland are areas of risk and uncertainty, it said.
Its 2014 estimate is a 0.8% increase in the eurozone economy for 2014, compared with a forecast of 1.2% made in May.
The UK's forecast was cut by 0.1 percentage points to 3.1%.
'Worrying' eurozone
US economic expansion for 2014 was cut to 2.1% from 2.6%. Japan's forecast was cut to 0.9% from 1.2%.
The OECD did not provide an update to its forecast for global growth for 2014, which it forecast at 3.4% in May.
"Continued slow growth in the euro area is the most worrying feature of the projections," the OECD said.
Among countries which are not OECD members, China's forecast was unchanged at 7.4%. The OECD said China "has so far managed to achieve an orderly growth slowdown to more sustainable rates".
India was the only economy to be judged by the organisation as likely to grow quicker, with its forecast upgraded to 5.7% from 4.9% after voting in a new government that said it would pursue growth-oriented reforms and progress in containing inflation.

Monday, September 15, 2014

Reuters News - Russia to create anti-crisis fund to aid sanctions-hit companies

Anton Siluanov, Russia's Minister of Finance, attends the opening day of the St. Petersburg International Forum in St. Petersburg May 22, 2014.  REUTERS/Sergei Karpukhin
Anton Siluanov, Russia's Minister of Finance, attends the opening day of the St. Petersburg International Forum in St. Petersburg May 22, 2014.
(Reuters) - Russia will create a multi-billion dollar anti-crisis fund in 2015 of money destined for the Pension Fund and some left over in this year's budget to help companies hit by sanctions,Finance Minister Anton Siluanov was quoted as saying on Monday.
Several waves of Western sanctions against Moscow for its involvement in the Ukraine crisis have limited access to foreign capital for Russia's largest banks and key oil companies.
Some companies have asked the government for help, including the country's top-oil producer Rosneft (ROSN.MM) which said it would need 1.5 trillion roubles ($39.70 billion) in aid.
Siluanov was quoted as saying by Russian news agencies that the decision to stop transferring money to the Pension Fund would hand the budget an extra 309 billion roubles ($8.18 billion).
He said not all of that sum would go into the anti-crisis fund, but that it would also receive at least 100 billion roubles of money left over in this year's budget.
"This 100 billion roubles will be added to the (anti-crisis) reserve next year, which will allow us to help our companies," RIA news agency citied Siluanov as saying.
"We are planning to create a reserve of a significant size."
It was not clear how big the fund would be.
It will be the second year running that Moscow has stopped transfers of funds from the budget to the Pension Fund, which provides benefits for Russia's pensioners, some invalids and families who have lost their breadwinners.

(Reporting by Lidia Kelly; Editing by Elizabeth Piper)