Wednesday, October 31, 2018

BBC News - Italy's economy stalls as eurozone slows down

RomeImage copyrightAFP
Italy's economy came to a standstill in the third quarter of the year, registering no growth at all,
It comes as the new coalition government is arguing with the European Commission over the need for an expansionary budget to boost growth.
Meanwhile, figures from the European Union showed economic growth in the 19 countries using the euro currency slowed by more than expected.
Eurozone growth slowed to 0.2%, from 0.4% in the previous quarter.
Growth across all 28 countries of the EU fell to 0.3% from 0.5%.
Italian Prime Minister Giuseppe Conte said the zero growth in Italy justified Rome's expansionary 2019 budget, which the European Commission has rejected because it breaks EU rules.
He said on Facebook; "The slowing GDP is another reason to go full steam ahead with the budget."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "This is a sobering number for the new government, though we suspect that it will meet it with fighting talk, at least initially.
"After all, with growth now stalling, fiscal stimulus is needed more than ever, or so at least the argument will go in Rome."

Waning optimism

Figures from the French statistics agency INSEE showed France's economy picked up thanks to a rebound in consumer spending.
It grew by 0.4% in the third quarter, compared with 0.2% in the previous three-month period, but the rate was less than forecast, meaning the government may miss its full-year growth targets.
Separately, the European Commission said economic sentiment dropped in the eurozone for the 10th consecutive month.
Its measure of sentiment fell to 109.8 points in October from 110.9 in September - the biggest drop since March.

Tuesday, October 30, 2018

Reuters News - Explainer: How a Democratic U.S. House could alter foreign policy

by Patricia Zengerle

WASHINGTON (Reuters) - Democrats will try to harden U.S. policy toward Saudi Arabia, Russia and North Korea if they win a majority in the U.S. House of Representatives, while maintaining the status quo on hot-button areas like China and Iran, congressional sources say.

If Democrats win at least 23 more seats on Nov. 6, they will regain control of the 435-member House of Representatives from Republicans for the first time since 2011. That means they can determine what legislation can be considered in the chamber and have a bigger role in setting spending policy and writing legislation, in their challenge to U.S. President Donald Trump’s foreign policy agenda.
But since they must still work with a likely Republican-controlled Senate to pass any bills, the Democratic majority’s greatest influence will be oversight, the ability to call hearings and, if necessary, subpoena witnesses, as they chair committees like Foreign Affairs, Armed Services and Intelligence.
If Republicans defy opinion polls and maintain control of the House after weeks of campaigning by Trump, they are expected to embrace his policies. Several influential moderates are retiring, paving the way for a more conservative Republican House that could heed Trump’s calls to cut aid for Central America and slash the foreign affairs budget by some 30 percent.


The furor over the death of journalist Jamal Khashoggi at the Saudi consulate in Istanbul has added to lawmakers’ frustration with Saudi Arabia over civilian deaths in the war in Yemen and human rights.
A Democratic-led House would vote on legislation to block arms deals with Riyadh, make it difficult to win congressional approval of a nuclear energy deal with the kingdom and take up a measure to stop U.S. aircraft refueling and other support for the campaign in Yemen.


Democrats plan Russia-related investigations, such as a probe of business ties and conflicts of interest between Trump and Russia.
But from a policy perspective, a Democratic-led House would push to punish Russia for interference in U.S. elections and activities including its aggression in Ukraine and involvement in the Syrian civil war.
The House would push for more sanctions, including measures targeting new Russian sovereign debt. They would also try to pressure Trump to enact all of the sanctions in a sweeping bill he reluctantly signed into law in August 2017.
“Trump would have to accept policies that he is not so enthusiastic to accept,” said Ilan Goldenberg, a former congressional aide and State Department official now at the Center for a New American Security.
Members of Congress have also vowed to push harder, using subpoena power if necessary, to obtain information about Trump’s summit last summer with Russian President Vladimir Putin. The White House has released few details about the meeting.


Democrats say they are determined to obtain more information about meetings by Trump and Secretary of State Mike Pompeo with North Korean Leader Kim Jong Un, worried that Trump is so eager to make a “great deal” that he will give Kim too much.
They plan to call administration officials to testify in public, and behind closed doors, about the status of talks. But they also will walk a fine line, because they do not want to be seen as interfering with diplomacy and efforts to prevent a nuclear war.


Aides and outside experts do not expect that Democratic House control will mean significant changes in China policy. Democrats will hold more hearings, and demand more briefings, but criticism of Beijing has so far crossed party lines and that is not expected to change.
Prominent Democrats, such as Representative Adam Schiff, who is in line to chair the House Intelligence Committee, have joined Republicans backing measures to clamp down on China, like legislation treating ZTE Corp and Huawei Technologies Co Ltd [HWT.UL] technology and phones as major cyber security threats.
Like Republicans, Democrats are divided on Trump’s trade war with China. Some party members see free trade as a generator of jobs, while others back tariffs to protect workers in industries such as steel and manufacturing.


Democrats were infuriated by Trump’s withdrawal from the international nuclear deal with Iran that Democratic President Barack Obama’s administration reached in 2015. But there is little they can do to change the policy as long as Republicans occupy the White House.
Lawmakers also are wary of seeming too friendly to Iran, especially given hostility to Tehran by the government of Israel. While Israeli Prime Minister Benjamin Netanyahu has worked increasingly closely with U.S. Republicans, strong ties to Israel remain a top priority for both parties.
Reporting by Patricia Zengerle; Editing by Mary Milliken and Peter Cooney
Our Standards:The Thomson Reuters Trust Principles

Monday, October 29, 2018

Bloomberg News - Zimbabwe Targets $700 Million From Controversial Payment Tax

bDesmond Kumbuka

Zimbabwe expects to raise $700 million a year from a new tax on money transfers that triggered panic buying of goods from fuel to sugar and sent its quasi-currency plunging.
The southern African nation, reeling from shortages of foreign exchange, is targeting total revenue of $5.7 billion in the current fiscal year and $6.4 billion in 2019, Finance Ministry Permanent Secretary George Guvamatanga said in a presentation in Harare, the capital, on Monday. The government is scheduled to present its 2019 budget next month.
Finance Minister Mthuli Ncube introduced a 2 percent tax on money transfers this month to broaden the country’s tax base, part of a series measures he’s implementing to stabilize the economy. The levy of 2 cents per dollar transacted replaced a previous tax of 5 cents per transaction.
“Although this is a bitter pill to swallow, we have to accept the principle that it was necessary for everyone including our large informal sector to contribute to the fiscus,” Guvamatanga said.
The country hasn’t had its own currency since it scrapped the Zimbabwean dollar in 2009 to end hyperinflation. It accepts the likes of the U.S. dollar, euro and rand as legal tender, as well as a quasi-currency called bond notes.
The value of bond notes, introduced two years ago and which were meant to be worth the same as greenbacks, has plummeted since the new tax was announced, with locals rushing to buy goods while they still hold value. The majority of transactions in the country are electronic, which are worth even less than payments via bond notes. Shops charge different prices depending on whether customers use real dollars, bond notes or pay electronically.
The new tax will increase costs for companies, which they will pass on to consumers, according to John Robertson, an independent economist in Harare. Many companies may be forced to reduce their operations or close altogether as people’s spending power is hit, he said.
— With assistance by Paul Wallace
(Updates with comment by permanent secretary in fourth paragraph.)

Friday, October 26, 2018

BBC News - Budget 2018: Labour urges Hammond to 'stump up cash'

Chancellor Philip HammondImage copyrightEPA
Labour is calling for concrete action by the chancellor in Monday's Budget to end austerity not just "financial conjuring tricks" and "vague promises".
Philip Hammond must "stump up the cash" for schools, councils and social care, shadow chancellor John McDonnell said.
Theresa May has pledged that almost a decade of budget cuts, pay restraint and benefit freezes are nearing an end.
Labour says that £30bn in extra spending would be required by 2023 to make this a reality.
Recent figures showing government borrowing in September was at its lowest level since 2007 has, economists say, given the chancellor greater room for manoeuvre in Monday's statement.
In her Tory conference speech earlier this month, the prime minister signalled the improving state of the public finances could see increased support for public services in next year's Spending Review.
People needed to know the sacrifices they had made since 2010 had paid off, she said. Ministers have already promised the health service an extra £20bn by 2023.
Mr McDonnell told BBC Radio 4's Today Programme: "If the prime minister has promised to end austerity, let's have an honest debate about that."
In a speech on Thursday, the shadow chancellor said the NHS and other public services need help now if Mrs May is to be "true to her word".
He claimed Mrs May had "surprised" Mr Hammond with her party conference announcement after pressure to reverse spending cuts from Labour and her own backbenchers.
"With a bit of chutzpah, which I quite admire, Mrs May threw the architect of austerity, the man who back in the days when the Tories were in opposition designed the austerity programme, she threw him under the proverbial bus with her unilateral announcement of the end of austerity."
Stopping departmental spending cuts planned for next year will cost £4bn, Labour says, while shelving further budget cuts for the period up to 2023 would cost another £15bn.
Abandoning welfare cuts planned over the next four years would cost £7bn while another £1.5bn would need to be found to plug the gap in social care funding by 2020 while £1bn was required to stop further cuts to per-pupil school funding.
Urging Mr Hammond to acknowledge the "scale of the hardship" caused by the Conservatives' "failed" austerity policies since 2010, Mr McDonnell said that the government has only managed to cut the budget deficit by "shifting the burden away from central government onto the shoulders of head teachers, hospital managers and local councillors".
"We need to see large scale action in this Budget to end austerity, not some vague promises for the future or a few financial conjuring tricks," he said.
"Our schools, councils and social care system are crying out for investment. If austerity is really over, it is time for Philip Hammond to stump up the cash."
The Institute for Fiscal Studies has said the chancellor will need to find £19bn a year by 2023 to stop planned cuts and meet spending pledges, a figure that excludes welfare changes.
The government said it was only able to spend more on public services because the deficit had shrunk since 2010 and debt as a share of GDP would begin to fall next year.
"This year Conservatives gave public servants their biggest pay rise in 10 years, and announced £20bn more for the NHS," said Treasury minister Liz Truss.
"Labour's plans to spend £1tn would crash the economy all over again, and just like last time working people would pay the price."

Thursday, October 25, 2018

BBC News - Stocks plunge in Asia after Wall Street sell-off

Traders work the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on October 24, 2018 in New YorkImage copyrightGETTY IMAGES
Asia stocks have joined a sell-off after a bruising session on Wall Street which saw two of the three main indexes erase their gains for the year.
Tokyo stocks slumped more than 3%, while losses pushed the Dow Jones Industrial Average and the S&P 500 into negative territory for the year.
But the falls have been less severe in Europe, however, with London's FTSE 100 down 0.9%.
Concerns over corporate profits and slowing growth has rattled investors.
In the US, the Dow Jones Industrial Average sank 2.4% to 24,583.4 points, while the S&P 500 plunged 3.1% to 2,656.1 points on Wednesday.
The technology-focused Nasdaq dropped more than 4.4% to 7,108.4 points - its worst day since 2011 - amid concerns about weak corporate profits and global trade tensions.
Dow Jones I.A.
It was the worst day since 2011 for the index, which is now 10% lower than its September peak and in "correction" territory.
Even technology firms, which have driven much of the market gains this year, did not escape the sell-off, with Amazon falling 5.9%, Facebook down 5.4%, Google owner Alphabet off 4.8% and Netflix sinking 9.4%.
Stephen Innes, Asia-Pacific head of trading at Oanda, said in a research note the tech sector had previously been seen as "impervious to weaker global growth sentiment, but escalating US-China trade tension remains that sectors undoing".

Investor anxiety rises

Wednesday's losses marked a sixth straight day of declines on the S&P and followed turbulence earlier in October.
The Dow is now on track for its worst month since May 2010.
Investors were also spooked by figures on Wednesday showing new home sales fell last month to their slowest pace in nearly two years.
They underlined other reports suggesting the US housing market is weakening - a worry given the sector is seen as a bellwether of economic health by many.
Investors have also grown nervous as growth in China slows and companies report increased costs due to labour shortages and tariffs.
Nikkei 225
Those forecasts hit companies such as Caterpillar, down 5.6%, and 3M, off 4.2%. The falls compounded declines on Tuesday in the wake of disappointing results.
Nate Thooft at Manulife Mutual Funds said: "Costs are increasing and it's often tariff-related. We also reached a potential peak for earnings - companies that show marginal weakness take a beating."
Adding to the sense of unease were a series of crude mail bombs and suspicious packages sent to prominent Democrats and critics of President Donald Trump, including Barack Obama and Hillary Clinton, less than a fortnight before the midterm elections.
Jack Ablin at Cresset Wealth Advisors said the selling appeared to be "emotionally" driven, adding: "Perhaps it's just a ratcheting up of chaos."
The losses on major European indexes were less severe. The pan-European STOXX 600 fell as much as 1% before paring losses slightly to trade down 0.7%

Wednesday, October 24, 2018

Reuters News - No new nuclear arms in Europe despite Russian treaty breach: NATO

BRUSSELS (Reuters) - NATO allies are not likely to deploy more nuclear weapons in Europe in response to what the West says is a Russian breach of a nuclear arms control treaty that Washington is pulling out of, NATO Secretary-General Jens Stoltenberg said on Wednesday.
Washington will press ahead with a plan to quit a landmark nuclear arms control pact despite objections from Russia and some European countries, senior U.S. official John Bolton said on Tuesday, after meeting Russian President Vladimir Putin.
“I don’t foresee that European allies will deploy more nuclear weapons as a response,” he told a news conference in his first public comments on the issue since U.S. President Donald Trump announced his intention to withdraw from the treaty.
The NATO chief also said that the United States was in full compliance with the 1987 Intermediate-Range Nuclear Forces (INF) Treaty and that Russia’s decision to develop what he said was a ground-launched SSC-8 cruise missile meant that the treaty was no longer “effective”.
“All allies agree that the United States in full compliance ... the problem, the threat, the challenge is Russian behavior,” Stoltenberg said.
Reporting by Robin Emmott; editing by Philip Blenkinsop, Richard Balmforth

Tuesday, October 23, 2018

Bloomberg News - Brexit Deal or No Deal, London's Housing Slump Is Here to Stay

By Anurag Kotoky
The London housing market is in bad shape -- possibly even worse than it looks on paper.
Official numbers show that prices in the capital only started to fall this year. But it feels much more brutal to real-estate agents on the ground.
James Hyman, head of the residential agency division at Cluttons, has been in the business for two decades and knows how to read the signs. The market is already down about 15 percent in central London compared with four years ago and, in his view, it may fall another 7 percent in the next year and half.
For Hyman and other realtors -- not to mention home sellers -- the list of market challenges has grown in recent years. The slowdown, triggered by a slew of new taxes and stretched affordability, has been compounded by Britain’s impending exit from the European Union, and now there’s the threat of a new levy on foreign buyers.
That’s a lot of uncertainty to deal with when you’re looking to fork out 486,000 pounds ($633,000), the average London home price -- or far more, if you’re close to the center.
The real problem is all those years of skyrocketing prices. Even with the current weakness, only a third of young adults can afford to buy a house in London on a 10 percent deposit and a maximum mortgage of 4 1/2 times their salaries, according to the Institute for Fiscal Studies.
And the cost of the average London residence is almost 14 times the median full-time salary in the city.
For its part, Brexit has put off overseas buyers, reducing demand by as much as 70 percent from 2014 levels, according to Hyman.
“Brexit was the absolute final reason why the property market in London would come to a slide down,” he said in an interview. “This is about affordability.”
To help people get on the property ladder, the government tried to crack down on equity-rich homeowners buying up property to rent out. It increased sales tax on second-home purchases and changed the tax relief for mortgage interest on rental homes.
On top of that, it announced this month plans to impose higher taxes on foreigners looking to buy property in the U.K., impacting roughly half of all residential transactions in central London.
Those changes took the steam out of the market, which has long been buffeted by a shortage of homes. Brexit came as the final nail in the coffin, according to Aneisha Beveridge, a housing market analyst at Hamptons International & Countrywide Plc.
While prices may have already bottomed in prime central London, Brexit is preventing them from picking up, she said in an interview.

Diverse Capital

The picture in the capital varies widely in different neighborhoods. A report from LSL Property Services and Acadata last week showed prices fell in 21 of 33 boroughs from a year earlier in August, with Tower Hamlets seeing a near 10 percent drop and Greenwich, Westminster and Wandsworth seeing falls of around 9 percent.
While the expensive but volatile City of London and Kensington and Chelsea saw the biggest increases, areas of on the fringes of the capital such as Waltham Forest, Brent and Redbridge also showed gains.
Prime Minister Theresa May is inching toward a deal with EU counterparts before the U.K. formally exits the bloc in March. Hopes of reaching an agreement this month have been dashed as a series of summits failed to deliver.
“While a Brexit resolution will remove some of the uncertainty weighing on London house prices, the capital faces an affordability crisis," said Niraj Shah, a London-based economist at Bloomberg Economics. “Add to that the tax changes to the buy-to-let sector as well as proposed higher stamp duty on foreign buyers and the London housing market is likely to remain subdued for some while yet."

Monday, October 22, 2018

BBC News - UK firms 'near point of no return'

by Simon Jack
Businesses are becoming exasperated at the lack of progress in Brexit talks and are pausing or cancelling investment in the UK.
A week that many had hoped would bring progress in the talks has now come and gone without a breakthrough.
Employers group the CBI says 80% of surveyed members feel Brexit uncertainty has already had a negative impact on investment decisions.
On Friday, Theresa May held a conference call with 150 top bosses.
She wanted to reassure them that she was still confident of striking a deal and that she recognised their concerns.
The chief executive of one company on the call told the BBC the PM had "done a good job and had a reassuring tone" while another said there had been "nothing new in her message".
Of the members surveyed by the CBI, 39% said they would trigger additional contingency plans if there was no further clarity by November, while a further 19% said it was already too late.
Nicole Sykes, the CBI's head of EU negotiations, says the situation is urgent, pointing to concrete examples of cancelled projects: "We heard from a fashion house that wanted to set up a new factory in the UK. £50m of investment, cancelled.
"But we're also talking about some small things. We heard from a Northern Ireland farmer who wanted to build a new machine to make their operations more efficient, grow competitive. Again, that's been cancelled. So we really are talking about real economic consequences."
Protesters in London at a march demanding a people's vote against BrexitImage copyrightGETTY IMAGES
Image captionOn Saturday, hundreds of thousands of people marched in London, demanding a people's vote on the final Brexit deal
Despite the PM's attempts to calm nerves, many businesses are in the process of stepping up their preparations for leaving the EU without a deal at the end of March next year.

Transportation worries

Supermarket executives told the BBC they were weighing up the viability of flying in fresh food from outside the EU to avoid potential log jams at the ports like Dover.
Different companies reached different conclusions.
One said: "We haven't started chartering aircraft yet but we are looking at it. We are very worried about Dover so we are also looking at alternative ports like Felixstowe as an alternative."
Another major supermarket executive said that air freight isn't the answer: "There simply isn't the capacity at a moment when every other industry will be trying to do the same thing."
However, they felt that the problem is potentially so severe that they do not believe it will come to that.
"There is no way the UK or EU would allow the UK to run out of food, but we are looking at alternative ways to transport fresh food, as stockpiling is not an option."
Stena ferries in dockImage copyrightSTENA LINE
Image captionGlobal ferry company Stena is warning that UK ports are not ready for Brexit
The car industry is also very sensitive to supply chain hold-ups.
Industry body the SMMT described the lack of progress in talks as hugely disappointing and said it had "grave concerns".
Car makers are looking at alternative ports, increased warehousing and moving the supply of some parts outside the UK.
BMW has already brought forward an annual shutdown of Mini production to coincide with the UK's departure from the EU, while Jaguar Land Rover has warned of the potential loss of tens of thousands of UK jobs.
It's not just business which is pessimistic about a deal being struck in time.
International Trade Secretary Liam Fox this week reiterated his prediction that a no deal scenario was more likely than not.
"I've said that the chance of a no deal is 60% and I'm not changing that view," he said.
He also told a gathering of business leaders this week that great opportunities in international trade await the UK outside the EU.
Most of the audience that night will hope he got the first bit wrong.