December 15, 2019

Rise of Inflation Eases in Britain

LONDON — Consumer prices in Britain increased at a slower rate in July after hitting a 14-month high in June, relieving some pressure on households but remaining well above the central bank’s inflation target.

Inflation slowed to 2.8 percent in July from 2.9 percent in June, partly because clothing stores discounted prices and airfares were lower, the Office for National Statistics said Tuesday. A slowdown in consumer price increases would help households, which have been squeezed by more expensive utility costs and other living expenses just as many employees saw their salaries cut or frozen.

The Bank of England, which has its own inflation target of 2 percent, has been predicting that consumer price increases would remain at the current level before starting to ease toward the end of this year. But some economists warned that higher oil prices and a strengthening housing market might help to push prices up much further in the short-term.

Howard Archer, an economist at IHS Global Insight, wrote in a note to clients that consumer price inflation “might touch 3 percent in the near term, but it should start heading gradually down towards the end of the year.” He added, “Much will clearly depend on oil price developments.”

Britain’s economy has started to show signs of recovery after narrowly avoiding a triple-dip recession at the beginning of this year. Consumer confidence has been improving and the construction and manufacturing industries have returned to growth. The values of houses have been increasing, not just in London but across the country.

Still, the Bank of England’s new governor, Mark J. Carney, warned last week that the recovery would be very slow and that headwinds persisted. To help speed up the recovery, Mr. Carney linked future decisions on interest rates, which are currently at a record low of 0.5 percent, to unemployment. He said that the Bank of England planned to keep interest rates unchanged until unemployment falls to 7 percent from 7.8 percent at the moment.

The plan, which is similar to steps taken by the United States Federal Reserve, is expected to eliminate some uncertainty for consumers and companies about the future cost of borrowing. But Mr. Carney also said the central bank was sticking to its main mandate of bringing down consumer price inflation. Unlike most of its neighbors, Britain continues to be plagued by relatively high inflation that is linked to several factors, including oil and gas prices.

Cathy Jamieson, a member of Parliament for the opposition Labour Party, said that despite the slowdown in inflation in July, “prices continue to rise faster than wages as the Tory-led government’s cost of living crisis continues.”

Some lawmakers and economists have started to warn that recent increases in the prices of homes could make them even more unaffordable for many. In a separate report Tuesday, the statistical office said house-price inflation rose annually to 3.1 percent in June compared to 2.9 percent in May, bringing prices to the highest level in five years.

The values of homes rose fastest in London, an 8.1 percent increase, helped by buyers from Asia and Europe looking for a haven for their investments.

Article source: http://www.nytimes.com/2013/08/14/business/global/rise-of-inflation-eases-in-britain.html?partner=rss&emc=rss

Britain’s Recovery Picks Up

LONDON — Britain’s economic recovery still has a pulse — if a weak one.

The country’s recovery gained momentum in the second quarter as all of its main industries reported faster growth, government statistics showed Thursday. But some economists warned that it was too early to say the country’s malaise was over.

Gross domestic product grew 0.6 percent in the three months that ended in June from the first three months of this year, when the economy grew 0.3 percent, the Office for National Statistics said Thursday. Growth spanned the service sector, which accounts for about three-quarters of Britain’s economy, as well as construction, agricultural and production, which includes manufacturing. It was the first time in three years that all those industries grew at the same time.

“Growth not only accelerated appreciably but is also becoming more broadly based,” said Howard Archer, an economist at IHS Global Insight. But he also said that “significant economic headwinds persist,” meaning that the economy “will likely remain prone to periodic losses of momentum.”

The report on Britain’s slight uptick came a day after data from the long-suffering euro zone showed some sign of improvement. A survey of purchasing managers by the research firm Markit indicated that manufacturers in Germany and France had begun increasing production as demand grew, and there was evidence that a credit squeeze for consumers was easing. But there too, the recovery was likely to continue to be fragile despite the positive reports, some economists said.

In Britain, the service sector grew 0.6 percent in the second quarter; the construction business grew 0.9 percent; and the agriculture sector increased 1.1 percent. Production, including manufacturing, grew 0.6 percent, the Office for National Statistics said.

“Firms are feeling upbeat and are capable of expanding,” said John Longworth, director general of the British Chambers of Commerce. “More and more are adopting a ‘have a go’ attitude when it comes to exporting, which is really encouraging as this will go a long way to driving growth further still.”

BT Group, the telecommunications company, on Thursday reported fiscal first-quarter earnings that beat some analysts’ forecasts and said the outlook for its business was improving slightly. EasyJet, the low-cost airline, said Wednesday that its sales rose in the second quarter as it added capacity in Europe.

The economic revival in Britain is also accompanied by a rise in the price of residential property, according to the mortgage provider Halifax, a unit of Lloyds Banking Group. The value of homes rose 0.6 percent in June to the highest level in almost three years, helped by government measures that assist potential home buyers with making down payments.

But some economists said Britain’s recovery could start to lose momentum again in the second half of this year. Banks remain reluctant to offer loans, especially to smaller and medium-size companies; real wages have barely moved; and inflation continues to be above the Bank of England’s 2 percent target. A recovery is also closely linked to the strength of the economies of continental Europe, Britain’s largest export market, and Asia.

Economists and investors are waiting to hear from Mark J. Carney, who took over as governor of the Bank of England at the beginning of this month, about how he aims to strengthen the economic recovery. Mr. Carney is expected to lay out the central bank’s new policy on giving more guidance on the future levels of interest rates in early August, when the latest inflation report will be released.

Article source: http://www.nytimes.com/2013/07/26/business/global/britains-recovery-picks-up.html?partner=rss&emc=rss

British Recovery Picks Up, But Still Remains Fragile

The country’s recovery gained momentum in the second quarter as all of Britain’s main industries reported faster growth, government statistics released on Thursday showed. But some economists warned that it was too early to say Britain’s malaise was over.

Gross domestic product grew 0.6 percent in the second quarter, compared with the first three months of the year, when the economy grew 0.3 percent, the Office for National Statistics said on Thursday. Growth spanned the service sector, which accounts for about three-quarters of Britain’s economy, and construction, agricultural and production, which includes manufacturing. It was the first time in three years that all those industries grew at once.

“Growth not only accelerated appreciably but is also becoming more broadly based,” said Howard Archer, an economist at IHS Global Insight. But he also said that “significant economic headwinds persist,” meaning that the economy “will likely remain prone to periodic losses of momentum.”

On Wednesday, data released from the long-suffering euro zone similarly showed improvement. A survey of purchasing managers by the research firm Markit indicated that manufacturers in Germany and France had begun increasing production as demand grew, and evidence indicated that a credit squeeze for consumers was easing. But there, too, the recovery was likely to continue to be fragile despite the positive reports, some economists said.

In Britain, the service sector grew 0.6 percent in the second quarter, construction grew 0.9 percent and agriculture increased 1.1 percent. Production, including manufacturing, grew 0.6 percent, the Office for National Statistics said.

“Firms are feeling upbeat and are capable of expanding,” said John Longworth, director general of the British Chambers of Commerce. “More and more are adopting a ‘have a go’ attitude when it comes to exporting, which is really encouraging, as this will go a long way to driving growth further still.”

The BT Group, the telecommunications company, on Thursday reported fiscal first-quarter earnings that beat some analysts’ forecasts and said the outlook for its business was improving slightly. EasyJet, the low-cost airline, said on Wednesday that its sales rose in the second quarter as it added capacity in Europe.

The economic revival in Britain is also accompanied by a rise in the price of residential property, according to the mortgage provider Halifax, a unit of the Lloyds Banking Group. The value of homes rose 0.6 percent in June to the highest level in almost three years, helped by government measures that help potential home buyers make down payments.

But some economists said Britain’s recovery could start to lose momentum again in the second half. Banks remain reluctant to lend, especially to small and medium-size companies; real wages have barely moved; and inflation continues to exceed the Bank of England’s 2 percent target. A recovery is also closely linked to the strength of the economies of Continental Europe, Britain’s largest export market, and Asia.

Economists and investors are waiting to hear from Mark J. Carney, who took over as governor of the Bank of England this month, about his plans to strengthen the recovery. Mr. Carney is expected to present the central bank’s new policy on offering more guidance in early August, when the latest inflation report will be released.

Article source: http://www.nytimes.com/2013/07/26/business/global/britains-recovery-picks-up.html?partner=rss&emc=rss

Weak Growth, but Britain Avoids Triple-Dip Recession

Although the data were hardly robust, and were still subject to revision, for now the indication that Britain’s economy eked out growth of three-tenths of one percent in the first quarter relieved some of the pressure on architects of the country’s austerity drive.

A triple-dip recession would have been a psychological jolt to consumers and raised more questions about the government’s strict deficit-reduction program at a time when bad economic news has been piling up in Britain, and while policy makers all around Europe are starting to focus more on the need for growth.

Instead, although the economy has been broadly flat for the past 18 months, Britain’s chancellor of the exchequer, George Osborne, was able to argue on Thursday that there were reasons to be encouraged by the small uptick in the country’s gross domestic product.

The rise in G.D.P. was in comparison to the previous three-month period, when the economy contracted by the same amount, the Office for National Statistics said. Two consecutive quarters of contraction constitute a recession.

The British economy managed some growth despite continued weakness in the construction sector, which shrank by 2.5 percent, and despite cold weather early in the year that some analysts feared would hurt economic activity.

Anemic as the growth might be, they were slightly better than most analysts predicted.

“Today’s figures are an encouraging sign the economy is healing,” Mr. Osborne said in a statement. “Despite a tough economic backdrop, we are making progress.”

Analysts cautioned that estimates of the type published Thursday are often revised, as more data comes available, and so the final figures could be lower.

“While preliminary estimates of G.D.P. growth need to be treated with a degree of caution, the breakdown of this release, if taken at face value, is a welcome surprise,” James Ashley, Senior Economist, RBC Capital Markets wrote in a commentary Thursday.

Although a member of the European Union, Britain uses the pound and not the euro. That gives it the advantage of having a floating currency, which has dropped in value against the euro this year. While that has helped keep its exports relatively more competitive on global markets, Britain is still some way from having a convincing recovery.

The data also highlighted the extent to which the country remained dependent on its large service sector, despite government efforts to rebalance the economy and to promote manufacturing.

Business services and finance together account for around 29 percent of British G.D.P. They contributed 0.1 percent to the 0.6 percent increase from the services sector.

Mining and quarrying, though a smaller part of the overall economy, increased by 3.2 percent.

Construction was down 2.5 percent.

“Doubts about the British economy’s performance over the coming quarters will remain,” said Nawaz Ali, a market analyst covering Britain for Western Union Business Solutions.

“However, the positive figures end the triple-dip threat and will certainly ease pressure on the Bank of England to shift course on quantitative easing, which has been a big worry for currency investors.”

Quantitative easing refers to moves by the central bank to pump more money into the economy, mostly by buying up government debt on the open market. The Bank of England has pursued such a course, even if critics have said the amounts spent have had little stimulative effect.

But the bigger debate across Europe is about the wisdom of tough austerity policies of the sort Mr. Osborne has pursued, and whether they are trapping economies in a cycle of stagnant growth, reduced tax receipts and higher debt. This week, José Manuel Barroso, president of the European Commission, said Europe may have hit the political limit of austerity-driven policies because of growing public opposition.

Last week, the International Monetary Fund raised doubts about the pace of Mr. Osborne’s deficit-reduction strategy and Fitch became the second credit rating agency, after Moody’s, to downgrade Britain from its prized triple-A status.

Employment figures, which had been one of the rare spots of good news for Mr. Osborne, also turned sour, with a jump of 70,000 in joblessness in the three months to the end of February.

Mr. Osborne has already had to slow his deficit reduction plans. But the opposition Labour Party has been calling on the coalition government led by the Conservative prime minister, David Cameron, to go further and change course.

“These lackluster figures show our economy is only just back to where it was six months ago and continue the picture of flat-lining,” Ed Balls, Labour’s finance spokesman, said in a statement. “David Cameron and George Osborne have now given us the slowest recovery for over 100 years.”

Article source: http://www.nytimes.com/2013/04/26/business/global/britain-avoids-triple-dip-recession.html?partner=rss&emc=rss

Britain and China Set $2.2 Billion in Deals and a Goal of Doubling Trade by 2015

In announcing the deals, worth about $2.2 billion, the British prime minister, David Cameron, restated the goal of doubling trade between the countries to $100 billion by 2015. Mr. Wen said that he was “confident” of meeting that goal.

“The purpose of my visit is to promote communication, cooperation and development,” Mr. Wen said at a news conference in London. Mr. Cameron said China presented a “huge opportunity” for British companies.

Mr. Wen was more than half through a four-day European tour. He had already visited Hungary and was to travel to Germany late Monday.

After a meeting with the Hungarian prime minister, Viktor Orban, over the weekend, Mr. Wen said that China had “total trust in Europe’s economic development” and would “consistently support Europe and the euro.”

In Britain, Mr. Cameron’s government is trying to strengthen trade relations with the faster-growing China. The goal is to increase exports and bolster British manufacturing to speed an economic recovery that recently has started to slow.

British exports to China have grown 20 percent since last November, when Mr. Cameron visited Beijing with a business delegation. China has become the third-largest source of British imports, after Germany and the United States, according to the Office for National Statistics.

Britain and China agreed Monday to increase infrastructure investments in both countries and grant British businesses better access to China’s civil engineering and research markets. A ban on British poultry exports to China, which was imposed as a result of avian flu cases in 2007, was lifted, and Britain is to sell more pigs and their meat to China.

Diageo, the British spirits company, said Monday that Chinese regulators had approved its acquisition of an additional 4 percent stake in the liquor maker Sichuan Chengdu Quanxing, giving Diageo control.

Other deals announced after the talks included an agreement between Weatherly International, a British mining company, and the East China Mineral Exploration and Development Bureau to cooperate on the development of a lead zinc mine in Namibia. The BG Group, the British natural gas company, also signed a deal with Bank of China to receive as much as $1.5 billion in financing.

During the news conference, Mr. Wen dodged questions about China’s human rights record. “On human rights, China and the U.K. should respect each other, respect the facts, treat each other as equals, engage in more cooperation than finger-pointing and resolve our differences through dialogue,” he said.

On the same issue, Mr. Cameron merely repeated a statement from his last visit to China, saying, “We do believe the best guarantor of prosperity and stability is for economic and political progress to go in step together.”

Mr. Wen was to meet Chancellor Angela Merkel of Germany in Berlin on Monday. China and Germany are expected to announce 30 cooperation and trade agreements on Tuesday, the German foreign ministry said.

As part of those talks, officials were to discuss a possible order for superjumbo jets that has caused controversy. China is pushing the European Union to abandon plans to regulate the greenhouse gas emissions of airlines, including foreign-owned ones, flying to and from the 27-country bloc. China warned this month that it could block its airlines from buying new planes built by Airbus, which is based in France, if Brussels proceeded with the plans.

The issue came to a head at the Paris Air Show last week, when Chinese officials sought to derail an order for 10 Airbus A380 superjumbo jets by Hong Kong Airlines, a domestic airline that operates between Hong Kong and the Chinese mainland. Airbus had planned to announce the $3.8 billion contract, which had already been signed by the airline, at the show, but Beijing declined to give final approval, people with knowledge of the talks said.

Formal approval of the deal was expected to be granted eventually, said these people, who spoke on condition of anonymity because the situation was politically fragile. They said, however, that further Chinese orders of Airbus jets had been delayed, including a large one that Airbus had hoped to announce while Mr. Wen was in Germany. It was unclear whether that order would now be modified or postponed.

Nicola Clark contributed reporting from Paris.

Article source: http://www.nytimes.com/2011/06/28/business/global/28iht-ukchina28.html?partner=rss&emc=rss