The main economic stories of the past couple of weeks have been linked with the World Trade Organisation. The WTO as they are also known has been having extensive talks with a number of countries; they have had extensive meetings and have progressed in many areas. Part of this has been an agreement with the ACP (Africa, Caribbean and Pacific). This will benefit the countries in the ACP, which contains 79 members, forty of which are Least Developed Countries. Within the press release WTO declared it has set its objectives:
* Are to contribute to the economic development
* To the social progress of its member states.
This agreement will help the member states and encourage both organisations to co-operate more closely to provide training, technical assistance and support. The long-term aims of this agreement are to help the member states to become active members of the WTO.
This was one of many successes achieved in the WTO negotiations in Cancun, Mexico but overall as the Chairperson Luis Ernesto Derbez concluded that despite considerable movement in consultations, members remained entrenched. This caused many calls for a reform of the WTO.
Talks failed due to a split between the rich and poor countries, a group of poor countries united to oppose American and European trade policies. This caused difficulties between the rich and poor continuously through negotiations especially in the areas of agriculture
Another big news issue recently has considered the Swedish referendum on whether they will join the Euro, although it was expected the ‘NO’ vote would win the recent murder of the Swedish foreign minister Anna Lindh who was in support of the change to the single currency. Although there was a lot of talk about a slight victory either way it was actually a resounding victory by the Swedish ‘NO’ camp as they won by 14%. 56% of the country voted in support of the Crown while only 42% of the population were in support of the single currency.
Euro sceptics feared that abandoning the Krona would mean price rises, less funding for the welfare state and a loss of control over Sweden’s relatively strong economy. One of the main benefits of keeping the krona means Sweden still has the option of adjusting the interest rate to try and stave off economic hard times, rather than being tied to the euro rates. The short term affect of this vote will cause the Swedish Krona to weaken against the euro but with the strength of the Swedish economy it should quickly re-strengthen
Sweden will stay in the EU but outside the Euro with Britain and Denmark.
By contrast, Estonians have voted strongly in favour of joining the EU in 2004 with nine other states.
A factor of the British economy recently has been the steady rise of house prices this has not happened over the last six months but they have started to rise again. This is an example of the rise in house prices in the last 8 years:
This is good news for the majority of home owners but if they are first time buyers or they are trying to move up the property ladder, the difference between the value of your current house and the value of the house you want to buy becomes wider and wider. This shows that when people say the house prices are rising, and that’s good news for homeowners – it’s not necessarily true for everyone.
Something else that has recently been in the news has been the drop in unemployment rates this is at its lowest rate in 28 years. The number of people out of work and claiming benefits in the UK is at a 28-year low. The claimant count dropped by 6,900 to 930,800 – much better than the 2,000 decline forecast by economists and the lowest level since September 1975, the Office for National Statistics (ONS) said. Also the average pay packet continued to grow – up 3.4% on the same period a year ago. This is good news for the economy as there is more money to be spent. This shows how despite uncertainties about the economy it still goes from strength to strength generating new jobs in a wide range of varieties.
This could be one of the reasons why Inflation rates held at 2.9% over the last month. All though petrol and clothing costs rose cheaper holidays and more money spent helped balance this out. With inflation holding steady and interest rates meeting Bank of England expectations and now many experts do not expect interest rates to change interest rates before the end of the year.
While the youth are being looked after well by the state with interest rates and lowest unemployment in 28 years, pensioners are struggling Pensioner poverty is now at crisis levels and two million pensioners live below the government’s poverty line. Many older people are finding it difficult to cover day-to-day living costs, never mind luxuries. But the news is that many pensioners could boost their income by claiming new benefits. Next month, when the Pension Credit is introduced, half of all pensioners will be entitled to a cash top-up. It’s just the complexity of the different benefits and a lack of awareness which sometimes stops the cash from reaching older people’s pockets. Pensioners are more likely than anyone else to miss out on benefits. Each year hundreds of millions of pounds in benefits cash lies unclaimed. Once this cash has been rightfully claimed the money will be entered back into our economy given the economy a boost and helping the country as a whole.
In the first major strike action since the fire-fighters strike postmen who are members of the Communication Workers Union have been balloting. Despite pleas from Royal Mail bosses not to do so members are expected to vote overwhelmingly. The row is over pay and conditions, with postal staff rejecting a pay raise management says is worth 14.5% over 18 months, because they say it is tied to changes which would mean the loss of thousands of jobs. A strike is estimated to cost Royal Mail up to £23m a day – and the company expects to turn a profit of just £80m during the whole of 2003.
Waiters, waitresses and bar staff may soon have to start paying National Insurance on tips. The Inland Revenue is targeting restaurants in an attempt to reclaim contributions tips distributed to staff through a pooling system at the end of a shift, which have usually escaped the levy. If they find errors, the Revenue can look to recover unpaid taxes going back six years. So a business with a turnover of £10m could be looking at a liability of £350,000 per year, plus interest and penalties. Given the current economic climate and the tight margins in the industry, these claims could tip the balance for many restaurants between profitability and bankruptcy.In a surprise result this has just been voted narrowly against. The margin was less than two thousand votes.
In a international look of world economics Zimbabwe has launched a new currency – the bearer cheque – in an attempt to ease the country’s severe economic crisis. The central bank said the cheques were only a temporary measure and would not replace the Zimbabwean dollar. Inflation rose to an unprecedented 426% in August, one of the highest rates in the world. There have been massive money shortages but the government has resisted calls for larger denomination banknotes. Many banks are only allowing withdrawals of less than 10,000 Zimbabwean dollars ($12) a time. Zimbabwe’s desperate economic situation is attributed partly to the government programme which seized commercial farms from white farmers for redistribution to black Zimbabweans.
The other large breaking news story Richard Grasso quit as chairman of the New York Stock Exchange Wednesday, offering his resignation after the board held an emergency meeting to discuss his fate and his pay, the exchange announced late Wednesday. News of his $140m pay package, led to calls for him to go from politicians and high-profile figures in the world of finance.
Grasso’s main achievement in his 35 year history with the NYSE was probably getting trade started again after September the 11th for which he is reported to have received a bonus of $5billion.
This is just a summary of the major news stories and although there were other economic news items these are the ones that will affect the world as we know it the most on a macro economic scale.