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UK + Eurozone Crisis Live

Discussion in 'International Politics' started by sunny_10, Aug 14, 2012.

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  1. sunny_10

    sunny_10 BANNED BANNED

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    Britain is losing the economic Olympics

    As London prepares for another display of British pageantry and good humor to match the unlikely triumph of last month’s rain-sodden Royal Jubilee, a less impressive aspect of Britain’s stoical “stiff upper lip†may detract from the national pride associated with hosting the Olympics. In the global race out of recession, Britain has just been revealed as a prime contender for the wooden spoon.

    Not only was the shocking drop of 0.7 percent in Britain’s second-quarter GDP reported on Wednesday much bigger than investors and independent economists had expected but it almost matched the 0.8 percent fall in Italy’s GDP the previous quarter. And that Italian drop holds the record for the biggest quarterly contraction suffered by any G7 country since the immediate aftermath of the Lehman crisis. Much more important than such statistical trivia is the fact that Britain’s economic output is still 4.5 percent below the peak level it reached in the first quarter of 2008, more than four years ago. The U.S. and German economies, by contrast, are now significantly bigger than they were before the crisis and, in this sense at least, have left the recession behind them. And even the euro zone as a whole, despite the severity of its financial crisis, has done much better than Britain, with GDP just 2 percent below its peak in 2008.

    [​IMG]

    National economic performance is not, of course, a competitive Olympic sport, and there is more to economic success than GDP growth. Still, there is a good reason for connecting the Olympics with economics: International competitions and comparisons can teach useful lessons and create incentives to improve economic management.

    The most instructive international comparison at present is between the British and American efforts to clamber out of recession and financial crisis. This race is about as close as economics can get to a controlled experiment of the kind favored by natural scientists, in which sharply different policies are applied to two countries with broadly similar structures and initial conditions, facing similar economic problems.

    In 2008, the U.S. and Britain were two advanced economies with large financial sectors, dangerous housing bubbles, heavy consumer debt and similar government deficits and debt levels relative to GDP. Both suffered extremely severe banking crises that forced their governments to take on huge additional liabilities by guaranteeing their biggest banks. For two years after the Lehman crisis in September 2008, the two economies followed broadly similar policies: slashing interest rates to zero, allowing large expansions of their budget deficits and financing the resulting debt with newly printed money. The two economies moved closely in tandem, as economic theory would have predicted: both on the way down until mid-2009 and then on the way up until mid-2010.

    But then, in the summer of 2010, the newly elected British government set a radically different course for one very specific and controversial aspect of economic policy – government borrowing. Instead of simply tolerating the big budget deficits that had resulted from weak economic growth, as both the U.S. and British Treasuries had done until 2010, David Cameron decided his top priority would be to reduce government borrowing. He planned to do this by slashing public spending and imposing substantially higher tax rates. The U.S. government, meanwhile, continued with a fiscal policy of benign neglect. Despite all the sound and fury in Washington about deficits and debt limits, U.S. tax rates and public spending plans remained broadly unchanged through 2011 and 2012, with a small cut in payroll taxes largely offsetting the fiscal impact of cuts in local government spending and employment. In all other respects conditions in the two economies remained unchanged. Both central banks continued to print money and to keep interest rates near zero. The dollar and the pound moved very little against one another, and exports grew moderately in both countries, despite the crisis in the euro zone. In short, this really was a controlled experiment on the impact of different fiscal policies.

    Curiously enough, the two economies began to diverge from the moment this controlled experiment started, with the British economy contracting in the third quarter of 2010, while growth accelerated in the U.S. In the period since then, the U.S. economy has expanded by 2.7 percent, while Britain has contracted by 0.8 percent. The latest results of this experiment will be revealed on Friday, when the U.S. GDP figures are published and can be compared with the 0.8 percent fall in British GDP just announced.

    It may be said, of course, that the British policy of fiscal consolidation was still justified, even if the U.S. enjoys much stronger growth, as it almost surely will. After all, controlling public debt and deficits is an important national objective that counts for more than simply juicing up short-term growth.

    But this is where we get to the really significant and surprising feature of the race out of recession. Britain’s heroic spending cuts and tax increases imposed by the Cameron government may contrast starkly with lassitude and cowardice displayed by politicians in Washington. But this dramatic political contrast has made absolutely no difference on the debt and borrowing outcomes the two countries have actually achieved, because the British austerity has simply prolonged recession, while U.S. fiscal laxity has allowed the economy to grow. According to the latest IMF figures, published two weeks ago, the U.S. budget deficit has been reduced from 10.5 percent of GDP in 2010 to 8.2 percent in 2012. This reduction is a slightly bigger reduction in the deficit than Britain has managed to achieve in the same period – from 9.8 percent to 8.1 percent.

    In short, any country determined to control public borrowing should forget about fiscal austerity and instead do everything to grow as fast as it can – a fitting economic message from Olympic Britain.

    Britain is losing the economic Olympics | Anatole Kaletsky
     
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  2. sunny_10

    sunny_10 BANNED BANNED

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    Euro crisis: Eurozone unemployment at record high; hope fades for quick ECB cure

    ROME/FRANKFURT: Joblessness in the euro zone hit on Tuesday its highest level since the single currency was born, a further sign of economic desperation as hopes erode that the bloc will be saved by its central bank this week.

    An additional 123,000 people were out of work in the euro zone in June, figures from Eurostat showed, bringing the unemployment rate to a record high 11.2 percent across the 17 countries that use the single currency.

    The rate hides wide divergences, with unemployment as low as 4.5 percent in Austria and as high as 24.8 percent in Spain, where a shrinking economy makes it ever more difficult to pay off debt.

    New data showed capital fleeing Spanish banks at a growing rate. Spain has come dangerously close to losing affordable access to financial markets, raising the prospect of a bailout that would swamp the euro zone's hastily erected defences. If Spain goes, Italy, with an economy twice the size, could follow.

    Euro zone leaders have spent the past week issuing statements promising to take whatever steps are necessary to rescue the currency, but none have raised expectations as much as Mario Draghi, head of the European Central Bank.

    His announcement last Thursday that the ECB would do whatever within its mandate to rescue the currency raised expectations that he will deliver forceful new steps this week to lower Spanish and Italian borrowing costs. But market sentiment has since soured, showing that investors doubt whether he can deliver.

    Germany, which says it is illegal for the ECB to bankroll government borrowing, squelched talk of any easing of its opposition to letting the euro zone's rescue fund borrow from the ECB so it could buy almost unlimited quantities of government bonds.

    Italian Prime Minister Mario Monti, who has campaigned for concerted action by the euro zone's rescue funds and the ECB to bring down ruinous borrowing costs for Spain and Italy, struck an optimistic tone.

    "It is a tunnel but ... some light is appearing at the end of the tunnel. We and the rest of Europe are approaching the end of the tunnel," he told RAI public radio before talks in Paris with French President Francois Hollande.

    Monti said decisions taken at an EU summit last month were starting to bear fruit. "We are now seeing the results both in the willingness of European institutions as well as from the governments of individual countries, including Germany," he said.

    After lunching with Hollande, he said there was no time to lose and they had discussed deadlines, adding: "We cannot afford even a minute of distraction."

    The ECB's Draghi promise last week to act to preserve the euro raised investors' expectations of a resumption of a long-suspended government bond-buying programme. Investors are waiting to see what the ECB announces at a meeting of its policy-setting Governing Council on Thursday.

    "Today will probably be a quiet last day of the month. Everybody is waiting for Thursday to see if Draghi can deliver," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets. "He'd better pull a big rabbit out of his hat." However, central bank sources cautioned against expecting dramatic action, saying bold moves could be at least five weeks away because other elements must first fall into place.

    They said Spain would first have to formally request a euro zone assistance programme, which it has so far resisted doing, and euro zone governments would have to agree to use their rescue funds to buy bonds in tandem with the ECB.

    Safe-haven German government bonds rallied on Tuesday and European shares fell as scepticism over the prospect of bold ECB action set in and Berlin repeated its opposition to a banking licence for the rescue fund.

    MONEY FLEES SPAIN

    Monti, who will also visit Finland and Spain, said he was confident Spanish Prime Minister Mariano Rajoy would be able to tackle the country's problems.

    The scale of Rajoy's challenge was highlighted on Tuesday when figures showed that capital flight from Spain accelerated in May, the month when Madrid was forced to nationalise the fourth biggest lender, Bankia, and before euro zone countries agreed to help bail out Spanish banks.

    Capital outflows in the first five months of this year totalled 163.2 billion euros - equivalent to about 16 percent of economic output. The same period last year saw a net inflow of 14.6 billion euros.

    Spanish retail sales fell by 5.2 percent year-on-year on a calendar-adjusted basis in June, separate data showed, marking a 24th straight month of declines. Near-bankrupt Greece meanwhile reported that it is fast running out of cash as it awaits the next instalment of aid from international lenders.

    Deputy Finance Minister Christos Staikouras said that in the absence of 3.2 billion euros needed to repay an ECB bond on Aug. 20, Athens would lack the money to pay everyday public expenses ranging from police and other public service wages to pensions and welfare benefits.

    "Cash reserves are almost zero," he told state NET television. "It is risky to say until when (they will last) ... but we are certainly on the brink."

    REWARD HARD CHOICES

    Speaking to reporters in London on Monday evening, Hollande voiced support for Monti's campaign to persuade euro zone leaders and institutions to act to reduce Italian and Spanish borrowing costs. "European solidarity is of course about laying down discipline, but it's also about allowing countries that made hard choices to be rewarded with lower interest rates," Hollande said during a visit to the Olympic Games.

    "If countries undertake austerity measures and still have very high interest rates, how can they win the trust of their people?" he said. Monti spoke by telephone over the weekend with German Chancellor Angela Merkel, who is holidaying in northern Italy.

    Berlin agreed in principle at an EU summit in June that the euro zone rescue funds could buy bonds of countries that risk losing market access, but was angered when Monti said that such support should not entail any stricter economic conditions or international monitoring.

    There has also been renewed pressure from France, Italy and some central bankers to give the euro zone's future permanent rescue fund a banking licence so it can borrow money from the central bank to fight bond market contagion.

    The Sueddeutsche Zeitung said supporters of the idea were gaining ground in the euro zone, but the German Finance Ministry reiterated its opposition on Tuesday, sending markets down. A legal opinion commissioned by the ECB in March 2011 concluded that such a move would breach an EU treaty ban on monetary financing of governments.

    Euro crisis: Eurozone unemployment at record high; hope fades for quick ECB cure - The Economic Times
     
  3. sunny_10

    sunny_10 BANNED BANNED

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    Britain sinks far deeper into recession than expected
    Jul 25, 2012

    (Reuters) - Britain's economy shrank far more than expected in the second quarter of 2012, battered by everything from an extra day's holiday to budget austerity and the neighbouring euro zone crisis.

    Finance minister George Osborne said the country had "deep-rooted economic problems".

    The Office for National Statistics said Britain's gross domestic product fell 0.7 percent in the second quarter, the sharpest fall since early 2009 and a bigger drop than any of the economists surveyed in a Reuters poll last week had expected.

    The figures confirmed that Britain is mired in its second recession since the financial crisis, with the economy shrinking for a third consecutive quarter.

    It will add pressure on Osborne to get the economy growing again after a crisis that has left many Britons poorer as rising prices and higher taxes ate up meager wage increases.

    Sterling hit its lowest in nearly two weeks against the dollar after the data, and government bond prices rallied on speculation that the Bank of England may have to provide more economic stimulus than expected.

    Earlier this month the BoE has announced another 50 billion pound program of gilt purchases with newly created money to soften a grim economic outlook, but Wednesday's data is likely to add to market speculation that it may cut interest rates later this year.

    "This is terrible data. Frankly there's nothing good that comes out of these numbers at all," said Peter Dixon, an economist at Commerzbank.

    "The economy looks to be badly holed below the water line at this stage. It's a far worse period of activity than we'd expected."

    HEADWINDS

    Economists had been expecting an extra public holiday to mark Queen Elizabeth's Diamond Jubilee to reduce output by around 0.5 percent, so the latest figures suggest the economy is also contracting on an underlying basis.

    The ONS said it was too early to provide an estimate of the Jubilee effect, but warned that this and very wet weather added "uncertainty" to its calculation of economic activity towards the end of the quarter.

    Output in Britain's service sector -- which makes up more than three quarters of GDP -- contracted by 0.1 percent in the second quarter after growing 0.2 percent in Q1 2012.

    Industrial output was 1.3 percent lower, while construction -- which accounts for less than 8 percent of GDP -- contracted by 5.2 percent, its biggest drop since the first quarter of 2009.

    Overall second-quarter GDP was 0.8 percent lower than a year earlier, the biggest decline since the last three months of 2009.

    Before Wednesday's data, most economists expected a return to growth in the third quarter, as the London Olympics offer a one-off boost through ticket sales and visitors spending.

    And some argue that increasing employment levels suggest the economy is healthier than the headline GDP figures suggest.

    But the overall outlook is poor. Last week the International Monetary Fund slashed its growth forecast for Britain by more than those for any other advanced economy, and warned the government and BoE that they will need to rethink their approach if the economy fails to pick up by early next year.

    AUSTERITY

    Eliminating Britain's structural budget deficit over the next five years is the central political goal of Britain's coalition of Conservatives and Liberal Democrats, but the opposition Labour Party says the pace is too rapid.

    Over the past month the coalition and BoE have announced several measures to ease the flow of credit to households and businesses, as the euro zone debt crisis saps demand in Britain's major export markets.

    But for now, any change to the fiscal austerity program is opposed both by finance minister George Osborne and BoE Governor Mervyn King, who fear it could trigger a loss of confidence in Britain's commitment to long-term deficit reduction.

    "We're dealing with our debts at home and the debt crisis abroad. We've made progress over the last two years in cutting the deficit by 25 percent and businesses have created over 800,000 new jobs," Osborne said in a statement.

    "But given what's happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that's exactly what we're doing." (Reporting by David Milliken and Olesya Dmitracova)

    Britain sinks far deeper into recession than expected | Reuters
     
  4. sunny_10

    sunny_10 BANNED BANNED

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    and as population growth rate of Britain is 0.6% per year, this way British population might have been increased by around 2.5% since early 2008. hence we find Per Capita Income of Britain would be at least 7.5% less than its peak of early 2008, in PPP term adjusting inflation :meeting:

    also, Public Debt of Britain was around 86% in 2011 and during the first two quarters, they borrowed more and GDP also contracted so I think their Debt/GDP might be around 92% to 95% right now and would cross 100% by end of this year, as per the proposed borrowings. this way we find, Debt/GDP of Britain has increased from 50% in early 2008 to 100% by end of this year while their per capita income would have been reduced by 8% till end 2012.........

    this way, right now Britain is only borrowing to survive somehow while they are already on a slow pace of decline, even after so much borrowing of debt also to protect the whole economy from a free fall :hang2:

     
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  5. sunny_10

    sunny_10 BANNED BANNED

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    Euro zone factory sector contracts for 11th month in July: PMI

    LONDON: The euro zone's manufacturing sector contracted for the 11th straight month in July as output and new orders plummeted, a business survey found on Wednesday.

    The data, which showed the downturn is deepening its roots in the core, will provide grim reading for policymakers who are battling to contain a debt crisis that has raged across the continent.

    Markit's Eurozone Purchasing Managers' Index (PMI) for the manufacturing sector fell to 44.0, the lowest reading since June 2009 and below a flash reading of 44.1 and June's 45.1.

    The output index sank to 43.4, the lowest since May 2009, under June's 44.7 and an earlier flash 43.6. Markit said it was in line with the official measure of production falling at a quarterly rate of over 1 per cent.

    "The euro zone manufacturing sector's woes intensified again in July. Manufacturing therefore looks to be on course to act as a major drag on economic growth in the third quarter, as the euro zone faces a deepening slide back into recession," said Chris Williamson at Markit.

    After stagnating in the first quarter, narrowly avoiding a technical recession, a raft of gloomy data pushed economists in a Reuters poll last month to predict a contraction in the second and third quarters.

    In a bid to spur growth the European Central Bank cut interest rates to a record low of 0.75 per cent in June and is expected to cut them again to 0.5 per cent before the year is out.

    At its policy meeting on Thursday, it is expected to restart its dormant government bond buying programme with the aim of lowering Spanish and Italian government bond yields, which have reached levels unsustainable in the long-term.

    Bank President Mario Draghi vowed last week that "the ECB is ready to do whatever it takes to preserve the euro".

    Core Troble

    Earlier data from Germany, Europe's largest economy, showed its manufacturing sector contracted at its fastest pace in three years last month and it was a similar story in neighbouring France.

    Spain, which slid deeper into recession in the second quarter, saw the 15th straight month of contraction, while Italy chalked up a year in contractionary territory.

    The PMI for Greece, where the debt crisis began, has been below 50 since September 2009. Ireland was the only country to show signs of emerging from the downturn, Markit said, where its PMI was above 50 for the fifth month.

    Euro zone factory sector contracts for 11th month in July: PMI - The Economic Times
     
  6. sunny_10

    sunny_10 BANNED BANNED

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    UK manufacturing PMI falls to lowest level in more than 3 years

    LONDON, Aug 1 (Reuters) - Britain's manufacturing sector shrank at its fastest rate in more than three years in July, a survey of purchasing managers showed on Wednesday, dealing a blow to hopes that the country was about to come out of recession.

    The grim news supports the view that the Bank of England will add further stimulus once its current 50 billion pound ($78.3 billion) plan to buy government bonds with newly created cash ends in November. It even triggered speculation the central bank could step up its programme when its August policy meeting ends on Thursday.

    Britain fell into its second recession in four years around the turn of the year, and the economy contracted by a further 0.7 percent from April to June due to government spending cuts, euro zone turmoil, bad weather and an extra public holiday.

    Many economists have been betting that some of the output lost will be recovered in the third quarter, but the Markit/CIPS Manufacturing Purchasing Managers' Index's (PMI) drop to 45.4 from 48.4 in June raises the risk of another contraction.

    It was the lowest reading since May 2009, further off the 50 mark that separates contraction from growth, and well below even the most pessimistic economist's forecast in a Reuters poll.

    The weak survey sent sterling to a two-week low against the euro and supported gilts which outperformed their German equivalent.

    "Pretty terrible, surprisingly bad," Tom Vosa, an economist at National Australia Bank, said about the PMI. "Ultimately, this puts more pressure on the (Bank of England) to cut Bank Rate, and certainly the government now has to hope that its Funding for Lending Scheme really comes good," he said.

    "But of course, if you are a lender in the UK and you are looking at this economy, why would you necessarily want to extend credit?," he said.

    The government's scheme to get credit flowing through the economy officially started on Wednesday.

    Business lobby groups applauded the plans to boost lending, but economists warned against putting hopes too high.

    The scheme was an important step to lower banks' funding costs and ease lending conditions, but was unlikely to be a "game changer", Goldman Sachs analyst Kevin Daly said in a note.

    Tight credit together with a lack of consumer confidence has been a major drag on the economy, hitting the housing market particularly hard.

    House prices in Britain fell at their fastest annual pace in nearly three years in July, mortgage lender Nationwide said.

    However, some retailers are bucking the gloom: Britain's second-biggest clothing retailer Next's sales rose 4.5 percent in the six months to July 28, and its chief executive said he did not expect the economy to take a turn for the worse.

    CRISIS

    Britain's economy has not yet recovered the output lost during the 2008/2009 slump, and the renewed recession comes at a time when many Britons are seeing their finances squeezed by rising prices and higher taxes, eating away measly wage rises.

    "The domestic market shows no real signs of renewed life, while hopes of exports charting the course to calmer currents were hit by our main trading partner, the euro zone, still being embroiled in its long-running political and debt crises," said Markit economist Rob Dobson.

    The PMI survey showed that export orders fell at the sharpest rate since the height of the financial crisis in February 2009, and the output index slumped to 43.3 from 51.9, also the lowest level in more than three years.

    "It looks like the sector remains a major drag on the overall economy," Dobson said.

    The slump in manufacturing is also keeping the pressure on policymakers to get the economy going again.

    The government sees no room for a major spending boost, having pledged to erase a huge budget deficit within the next five years, thus leaving the onus on the central bank.

    Most economists expect an extension of the BoE's purchases of government bonds beyond the current goal of 375 billion pounds in November, but some see a chance of earlier action.

    "While we accept it is a close call, we believe that the extent of the revisions to the Bank's projections mean that the Bank will not wait until November to expand QE further - rather it will act at this meeting," said Alan Clarke from Scotiabank.

    The BoE looks likely to slash its inflation and growth forecasts in its August inflation report, which governor Mervyn King will present next week.

    The PMI survey showed that companies' cost pressures eased as prices for chemicals, oil, metal, paper and plastics fell. But firms still hiked their selling prices, Markit said.

    Consumer price inflation has fallen sharply in recent months and the British Retail Consortium said on Wednesday shop prices rose at the slowest pace in more than 2-1/2 years in July.

    UPDATE 2-UK factory slump shows no quick end to recession | Reuters
     
  7. sunny_10

    sunny_10 BANNED BANNED

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    Almost 90% would 'consider moving abroad' for better financial prospects

    Nearly nine in 10 Britons would consider leaving the UK for a better - and wealthier - life abroad within the next five years

    The current recession combined with the perception that property is cheaper overseas and job prospects better collectively accounted for nearly a third of all reasons for emigrating, according to a survey by Skyscanner.

    Sam Baldwin, Skyscanner’s travel editor, said: “For many people the idea of ‘living the dream’ abroad is very alluring. The survey revealed that our perception of life abroad is very positive – perhaps overly so – and many people come back from a holiday enamoured with their destination. Interestingly, Spain and USA were two of the most popular places even though both countries are currently suffering from their own economic problems, which suggests that the dream of moving abroad to improve financial prospects may be just that - a dream.

    The dream may be more realistic if, rather than moving abroad to look for new work, you are sent abroad as part of an existing job. Around 750,000 British workers are being posted abroad on assignments with their existing employer, and a massive 84 per cent believe this is helping them to climb the corporate ladder, according to the NatWest International Personal Banking (IPB) Quality of Life Index.

    They also feel they benefit from an improved lifestyle, backing up the Skyscanner research results, and the increasing use of temporary global workers means that the traditional definition of ‘expat’ is now being blurred, said Dave Isley, head of NatWest International Personal Banking.

    He added: “The growth of the global worker has brought with it an opportunity to share knowledge and experience around the world. The great brain exchange is a fantastic concept of other economies temporarily sharing the strengths of British workers.

    Almost 90% would 'consider moving abroad' for better financial prospects - Telegraph
     
  8. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    There has allways been recessions, depressions, economic problems, thats not going to change and everyone is in the same boat just at differant levels.
     
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  10. sunny_10

    sunny_10 BANNED BANNED

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    its interesting to see that out of total GBP 2,352 million remittance outflows from Britain in 2010, around GBP 1.16bil goes to just two countries, Pakistan and Bangladesh. while Britain itself is the 14th largest receiver of remittances from the world right now and Pakistan and Bangladesh on 7th and 11th place? :suicide2:
     
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    Anger as UK slashes army numbers
    July 06, 2012 8:27AM

    THE British army will lose 17 major units in a sweeping restructuring to handle the loss of 20,000 soldiers under the government's austerity drive.

    The UK's army is shrinking from 102,000 troops to 82,000 by the end of the decade - part of efforts to meet steep cuts to public spending ordered by Prime Minister David Cameron.

    Cookies must be enabled. | The Australian
     
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    David Cameron delivers address at Infosys Bangalore
    July 28, 2010

    The Tata Group is now the largest manufacturing employer in Britain. And more than 180 Indian companies have invested in our IT sector.

    Indian companies employ 90,000 people in the UK. Many more jobs in Britain exist thanks to the activities of British companies in India. Now I want to see thousands more jobs created in Britain, and of course in India through trade in the months and years ahead. That is the core purpose of my visit."
    :meeting:

    David Cameron delivers address at Infosys Bangalore: Full Text | NDTV.com
     
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    Merkel said Tuesday that full debt sharing would not occur "as long as I live."
    June 27, 2012

    On the eve of a European summit, German Chancellor Angela Merkel touts tighter budgetary controls and says debt sharing will not occur 'as long as I live.'

    BERLIN — As European leaders gather in Brussels on Thursday for a two-day summit aimed at resolving the Eurozone's debt crisis, German Chancellor Angela Merkel's response to the most aggressive proposal pushed by her neighbors is, in essence: Over my dead body.

    With borrowing costs for Spain and Italy approaching unsustainable levels, European Union leaders have stepped up their pressure on Germany to accept solutions it has long resisted. But Merkel, whose country has Europe's largest economy and probably will foot the highest share of the bill for rescuing its struggling neighbors, has dug in her heels.

    In response to the widespread call for euro bonds, which would allow European countries to issue debt jointly and could ease the cost of borrowing for highly indebted southern European countries, Merkel said Tuesday that full debt sharing would not occur "as long as I live."

    A road map issued Tuesday by four senior European officials — European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, European Central Bank President Mario Draghi andJean-Claude Juncker, head of the group of Eurozone finance ministers — laid out a range of proposals for discussion at the summit, including possible moves toward debt sharing.

    However, Merkel said Wednesday that the focus should be on tighter budgetary controls across the Eurozone, the 17 nations that share the euro currency.

    "I'm afraid that at the summit there will be much too much talk about joint liability and far too little about improved oversight and structural measures," Merkel said in an address to the Bundestag, the lower house ofGermany'sParliament. "Oversight and liability must go hand in hand. There can only be joint liability when adequate oversight is ensured."

    Merkel's deputy foreign minister, Michael Georg Link, likewise criticized the road map as a "wish list" that wouldn't win German backing.

    Germany is wary of proposals that would allow debt-ridden countries to relieve their burdens without first implementing painful cost-cutting measures, particularly when German taxpayers' money is on the line. But with fear growing that Italy and Spain — the Eurozone's third- and fourth-largest economies, respectively — are fast reaching the point where they cannot sustain their debt, critics say the Merkel administration is not acting with due haste.

    "In Germany, the feeling of urgency is still not strong enough," said Sebastian Dullien, a Berlin-based economist and senior fellow at the European Council on Foreign Relations.

    In Madrid, Prime Minister Mariano Rajoy told lawmakers that the cost of borrowing since Spain recently requested a bailout for its banks has climbed so steeply that the nation might not be able to finance itself much longer through debt.

    "We can't keep funding ourselves for too long at the prices we're currently paying," Rajoy said. The summit may yield agreement on a number of small measures to ease the continent's debt crisis, such as removing the so-called preferred creditor status of the Eurozone's permanent bailout fund in order to reassure other lenders to struggling countries that they would get their money back. Germany appears open to the idea, at least for Spain.

    But few expect progress at the summit on more decisive measures to reassure nervous investors, such as debt sharing. Dullien considers it unlikely that Germany will consent to the major controversial proposals of the road map.

    Germany leader opposes full debt sharing in Eurozone crisis - Los Angeles Times
     
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    sunny_10 BANNED BANNED

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    German Economy Grew More Than Forecast in First Quarter
    May 15, 2012

    The German economy grew more than economists forecast in the first quarter as exports to emerging markets offset waning euro-area demand.

    “With this morning’s numbers, the German economy has not only avoided recession but could have even helped prevent the entire euro-zone economy falling into technical recession,” said Carsten Brzeski, senior economist at ING Group in Brussels. “One thing is at least for sure: the German economy remains the powerhouse of the euro-zone economy.”

    Italy said today its economy contracted for a third straight quarter, with GDP dropping 0.8 percent in the first three months of this year.

    The Netherlands also recorded its third quarterly contraction in a row.

    France had zero growth in the quarter, in line with economists’ median forecast.

    The European Union’s statistics office in Luxembourg publishes euro-area data at 11 a.m.

    The 17-nation economy probably shrank 0.2 percent in the period after contracting 0.3 percent at the end of last year

    German Economy Grew More Than Forecast in First Quarter - Businessweek
     
  15. sunny_10

    sunny_10 BANNED BANNED

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    Nationwide Spanish protests turn violent
    20 July, 2012

    Nationwide Spanish protests turn violent (PHOTOS, VIDEO) — RT

    Spanish police have clashed with protesters who marched against the latest batch of austerity measures. Over a million public employees, trade union members and fed-up citizens have taken to the streets in over 80 Spanish cities.

    *Violence erupted in Madrid around midnight. Police used rubber bullets and tear gas to disperse the crowd as it tried to reach the congress building. In some more urban areas, activists set garbage containers on fire and tried to block police vehicle access. No injuries or arrests have been reported.

    In Barcelona, similar scenes were reported. About a dozen protesters were arrested there, outside the local parliament building.

    *Demonstrators carried flags and banners decorated with scissors, symbolizing the country's harsh spending cuts. The streets of Madrid were paralyzed by the boundless crowds of people.

    The protests were organized by unions, who have been outraged by the government’s new measures – which include an elimination of Christmas bonuses for civil servants.

    Earlier Thursday, Spanish Parliament approved a new package of spending cuts and tax hikes aiming to save $80 billion in a bid to take a bite out of the budget deficit. Since the measure was announced last week, Spain has witnessed a series of daily demonstrations, some of which have erupted into violence.

    Europe's fourth-largest economy also has the EU's highest unemployment rate. About a quarter of working-age Spaniards are unable to find work.

    Meanwhile, Germany’s lower house approved a $122 billion rescue package for Spanish banks in a bid to help the country cope with "excessive" market fears and prevent the eurozone's debt crisis from spreading further.

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    Spain, Madrid: Riot policemen remain on a street of Madrid during a protest against the Spanish government's latest austerity measures, on July 19, 2012.

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    Spain, Madrid : people demonstrate against the Spanish government's latest austerity measures in the center of Madrid on July 19, 2012

    [​IMG]
    Protesters march during a demonstration against government austerity measures, in central Valencia

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    Demonstrators fill Madrid's Puerta del Sol square during a protest against government austerity measures. (REUTERS / Sergio Perez)

    [​IMG]
    Firefighters pose naked in front of a banner during a demonstration against government cuts inside their fire station in Mieres (REUTERS / Eloy Alonso

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    Civil servants shout slogans during a protest against government austerity measures in Madrid (REUTERS / Sergio Perez

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    Firemen participate in a protest against government austerity measures in Barcelona.(REUTERS / Albert Gea)

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    Spain, Madrid : Spanish actors Javier Bardem his brother Carlos Bardem and their mother Pilar Bardem demonstrate against the Spanish government's latest austerity measures in Madrid on July 19, 2012.

    Nationwide Spanish protests turn violent (PHOTOS, VIDEO) — RT
     
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