Finance ministers of the G20 group of nations are meeting in Paris to continue talks on solving the eurozone debt crisis. One question is whether the International Monetary Fund should increase in size as part of a broader global response to the situation.
However the idea has been met with some resistance by the US, reports say.
On Friday, US President Barack Obama and German Chancellor Angela Merkel spoke by phone to discuss the crisis.
US officials said Mr Obama had warned of the risks posed to the US economy, and also discussed preparations for a G20 summit in Cannes scheduled for early next month.
(BBC)
October 15, 2011 at 1:35 pm
Standard & Poor’s has cut Spain’s long-term credit rating by one notch, from AA to AA-, because of weak growth and high levels of private-sector debt. The ratings agency added that the country’s high unemployment would remain a drag on the economy.
Last week, the Fitch agency also cut Spain’s rating, a process that can raise a country’s borrowing costs.
Standard & Poor’s move comes as G20 finance ministers are due to meet on Friday to discuss the eurozone crisis.
On Thursday, Fitch downgraded the creditworthiness of UK banks Lloyds and RBS, and also Switzerland’s UBS.
Late on Thursday, S&P followed Fitch by cutting Spain’s rating by one notch.
S&P said in a statement: “Despite signs of resilience in economic performance during 2011, we see heightened risks to Spain’s growth prospects due to high unemployment, tighter financial conditions, the still high level of private sector debt, and the likely economic slowdown in Spain’s main trading partners.”
(BBC)
October 14, 2011 at 12:09 pm
The German and French leaders will propose “important changes” to the way the eurozone operates after talks on controlling the bloc’s debt crisis. Chancellor Angela Merkel and President Nicolas Sarkozy said the aim was closer and more binding economic and financial cooperation between eurozone countries.
The leaders said they would give further details by the end of October.
The nations were “determined to do the necessary to ensure… recapitalisation of Europe’s banks”, Mrs Merkel added.
Germany and France have differed over how to recapitalise Europe’s banks, said by some to require between 100bn (£86bn; $134bn) and 200bn euros to withstand the sovereign debt crisis.
Paris is believed to want to use the eurozone’s bailout fund – the European Financial Stability Facility (EFSF) – to recapitalise its own banks, while Berlin is insisting the fund should be used as a last resort.
But speaking after the talks in Berlin, Mr Sarkozy said it was “not the moment” to go into the agreement’s details but said that the Franco-German accord was “total”.
(BBC)
October 10, 2011 at 10:32 am
Italian and Spanish government debt have both been downgraded by the Fitch credit rating agency. Fitch cut Italy’s rating by one notch, from AA- to A+, following fellow agency Moody’s downgrade earlier this week.
Fitch cited the “intensification” of the eurozone debt crisis that “constitutes a significant financial and economic shock which has weakened Italy’s sovereign risk profile”.
The agency also cut Spain’s rating by two notches, to AA-.
Fitch raised concerns about the strength of Italian banks, particularly in light of the current debt crisis.
It talked of the “small but no longer negligible risk that a further worsening of the eurozone debt crisis and volatility in the value of Italian government bonds will further erode confidence in the banking system”.
The agency said a “vicious cycle” could emerge where a growing lack of confidence in Italian banks could knock confidence in government debt, which could in turn undermine the banks further.
With regards to Spain, Fitch also cited the deepening debt crisis, and raised questions about the country’s ability to cut its debt levels quickly – and its growth prospects.
The country’s high underlying budget deficit and its fragile economic recovery made Spain “especially vulnerable” to external shocks, it said.
(BBC)
October 8, 2011 at 11:10 am
Steve Jobs, co-founder and former chief executive of US technology giant Apple, has died at the age of 56. Apple said he had been “the source of countless innovations that enrich and improve all of our lives” and had made the world “immeasurably better”.
Mr Jobs had announced he was suffering from pancreatic cancer in 2004.
Tributes have been made by technology company bosses and world leaders, with US President Barack Obama saying the world had “lost a visionary”.
“Steve was among the greatest of American innovators – brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it,” said Mr Obama.
A statement from Mr Jobs’s family said they were with him when he died peacefully on Wednesday.
“In his public life, Steve was known as a visionary; in his private life, he cherished his family,” they said, requesting privacy and thanking those who had “shared their wishes and prayers” during his final year.
Apple said the company had “lost a visionary and creative genius, and the world has lost an amazing human being”.
Tim Cook, who was made Apple’s CEO after Mr Jobs stood down in August, said his predecessor had left behind “a company that only he could have built, and his spirit will forever be the foundation of Apple”.
(BBC)
October 6, 2011 at 7:00 am
Apple has unveiled the latest iteration in its iPhone range, but there was no sign of the widely rumoured iPhone 5. The iPhone 4S, as the model will be known, boasts an improved camera and significantly extended battery life.
It will run the latest iOS5 operating system, which is set for release on 12 October.
The event was the first major announcement for new boss Tim Cook who took over from Steve Jobs in August.
The iPhone 4S, which will go on sale on 14 October, will be available in 16GB, 32GB and 64GB models – in both black and white.
It has the same look and feel as the existing iPhone 4 which was launched 15 months ago.
However, Apple said that updates to iOS meant the phone would boast some “200 new features”.
(BBC)
October 5, 2011 at 11:35 am
Greece has said its budget deficit will be cut in 2011 and 2012 but will still miss targets set by the EU and IMF. The 2011 deficit is projected to be 8.5% of GDP, down from 10.5% in 2010 but short of the 7.6% target.
The government, which on Sunday adopted its 2012 draft budget, blamed the shortfall on deepening recession.
The figures come as inspectors from the IMF, EU and European Central Bank are in Athens to decide whether Greece should get a key bail-out instalment.
Greece needs the 8bn euros (£6.9bn; $10.9bn) instalment to avoid going bankrupt next month.
Bankruptcy would put severe pressure on the eurozone, damage European bank finances and possibly have a serious knock-on effect on the world economy.
(BBC)
October 3, 2011 at 9:49 am
Bank shares have fallen in London after the UK said it would “resist” a financial transaction tax on EU members proposed by the European Commission. The tax would raise about 57bn euros ($78bn; £50bn) a year and would come into effect at the start of 2014.
At close, Royal Bank of Scotland was behind by 3.64%, Lloyds Banking Group by 2.4%, and Barclays by 1.22%.
London would be hardest hit by the tax as the majority of banking transactions in Europe come through the city.
(BBC)
September 29, 2011 at 10:48 am
Japan’s government and the ruling Democratic Party (DPJ) have agreed to temporarily raise taxes to pay for reconstruction after the deadly March earthquake. The plan to raise 9.2tn yen ($120bn; £77bn) needs approval by the DPJ’s coalition partner and the opposition party.
Officials said a further 2tn yen would be raised by selling government assets. The earthquake and subsequent tsunami killed more than 16,000 people. At the same time, thousands of homes and businesses were destroyed in the country’s north-eastern coastal areas.
The new tax plan will increase taxes on incomes, companies, property and tobacco.
(BBC)
September 28, 2011 at 12:20 pm
The outline of a large and ambitious eurozone rescue plan is taking shape, reports from the International Monetary Fund (IMF) in Washington suggest. It is expected to involve a 50% write-down of Greece’s massive government debt, the BBC’s business editor Robert Peston says.
The plan also envisages an increase in the size of the European Union bailout fund to 2tn euros (£1.7tn; $2.7tn).
European governments hope to have the plan in place in five to six weeks.
Turning the present outline into a practical reality will be immensely difficult, our editor says.
But he adds that the price of failure could be a financial crisis that would probably turn anaemic growth into a recession or worse.
Investors have so far been unimpressed with the speed at which policymakers have dealt with the eurozone debt crisis, and analysts say that action, not words, are needed to calm volatile stock markets.
(BBC)
September 26, 2011 at 10:06 am
US Treasury Secretary Timothy Geithner has called on European leaders at the G20 in Washington to send a “decisive signal” that they have a strategy for tackling the debt crisis. Mr Geithner said there had been an erosion of confidence and that there was a “huge premium” on early action.
But he added he was confident that Europe would do what was necessary.
On Thursday, IMF chief Christine Lagarde said collective action was needed to remove economic uncertainty.
UK Chancellor George Osborne has also warned that European leaders have six weeks to end the crisis.
G20 finance ministers are currently meeting in Washington, which is also hosting the annual meeting of the World Bank and the International Monetary Fund (IMF).
(BBC)
September 24, 2011 at 2:27 pm
European shares have stabilised following sharp falls on Thursday. The main indexes in the UK, France and Germany were all up by about 0.5% in early trading, after falling by about 5% in the previous session.
The G20 has tried to reassure markets by declaring it is ready to take action to stabilise markets, which have continued their volatility this week.
Thursday’s slump was sparked by a Federal Reserve warning on Wednesday about the outlook for the US economy.
Gloomy comments about weak global growth from the International Monetary Fund (IMF) and the World Bank knocked sentiment further.
On Thursday, IMF head Christine Lagarde said the global economic situation was entering a “dangerous place”.
World Bank president Robert Zoellick said separately he thought the world was in a “danger zone”.
(BBC)
September 23, 2011 at 4:13 pm
Global stock markets have dropped sharply on continuing fears over prospects for the global economy. The president of the World Bank, Robert Zoellick, said the world’s economy was “in a danger zone”.
His comments came after the Federal Reserve gave a stark warning about the state of the US economy, saying it faced “significant downside risks”.
In Europe, the UK FTSE 100 was down 4.7%, while France’s Cac-40 fell 5%. In the US, the Dow Jones fell 2.8%.
Despite his warning on the global economy, Mr Zoellick said he believed a double-dip recession was “unlikely”.
However, he added: “My confidence in that belief is being eroded daily by the steady drip of poor economic news. “Delays will narrow choice and make them more costly – we all have a stake in this succeeding.”
(BBC)
September 22, 2011 at 7:15 pm
US President Barack Obama is planning a higher minimum tax rate on the richest Americans to ensure they are taxed at the same rate as the less wealthy. White House officials said Mr Obama would provide details of his proposal on Monday when he reveals his long-term plan to reduce the budget deficit.
Reports say the proposal is to be called the Buffett Rule, after the billionaire investor Warren Buffett.
Mr Buffett says loopholes mean the richest pay relatively less tax.
This is because earnings from investments are taxed at lower rates than wages.
The proposed new tax would affect Americans who earn more than $1m a year.
(BBC)
September 18, 2011 at 11:55 am
The number of Americans living in poverty rose to 46.2 million last year, nearly one in six people, according to the US Census Bureau’s annual report. The 2010 data shows the poverty rate at 15.1%, from 14.3% in 2009. The number of Americans without health insurance also rose slightly to 49.9 million.
The poverty rate was the highest since 1983, and tied with the level in 1993.
The number of Americans living below the poverty line has now risen for four years in a row.
The US definition of poverty is an annual income of $22,314 (£14,129), or less for a family of four, and $11,139 for a single person.
(BBC)
September 14, 2011 at 8:10 am
UK banks should ring fence their retail banking divisions to protect them from riskier investment banking arms, a government-backed commission has said. The firewall is intended to protect the key banking activities for individuals and businesses such as making loans.
The Independent Commission on Banking (ICB), led by Sir John Vickers, called for the reforms to be implemented by the start of 2019 at the latest.
Chancellor George Osborne must now decide whether to act on the report.
He has already said the Vickers’ report is a “good” one, because the banking industry had to change.
The ICB was set up last year to look at how taxpayers could be protected from future banking crises.
The credit crisis resulted in the government nationalising Northern Rock and part-nationalising the Royal Bank of Scotland and Lloyds .
The government now has stakes of 83% and 41% in RBS and Lloyds, respectively.
The ICB said its proposed reforms could result in a pre-tax cost of between £4bn ($6.4 billion) and £7bn for Britain’s banks.
(BBC)
September 12, 2011 at 11:53 am
International Monetary Fund chief Christine Lagarde has urged “bold action” on the faltering world economy, ahead of a meeting of the G7 group of leading economies. The G7 is meeting in Marseille to consider a “coordinated response”.
The two-day meeting comes as the Organisation for Economic Co-operation and Development predicted a global slowdown this year.
Europe is also struggling with a sovereign debt crisis.
“The key message I wish to convey today is that countries must act now – and act boldly – to steer their economies through this dangerous new phase of the recovery,” Ms Lagarde said in London, before flying to the G7 meeting.
(BBC)
September 10, 2011 at 1:29 pm
