Big bank
BoE to get more powers
The Bank of England’s role in the regulation of the UK economy is about to be strengthened and expanded. The Financial Policy Committee is being awarded new powers by parliament to intervene in the affairs of banks including demanding they increase their capital buffers, particularly against high loan to value mortgages, in order to safeguard the economy. This could ultimately affect the availability of mortgage finance, particularly to first time buyers and thus dampen the housing market. Meanwhile the Royal Institution of Chartered Surveyors this week said 2013 will see a resurgence of confidence in the property sector.
Engine splutters
German decline
Germany, for long the engine room of the eurozone, has seen its economy splutter quite dramatically. Early figures on the fourth quarter of 2012 suggest that the German economy shrank by a sharper than expected 0.5 per cent in the final three months of the year, dragging overall growth for the year down to 0.7 per cent as the woes of the eurozone finally begin to bite. Both export growth and equipment investment slowed from the previous year. The signs for 2013 are mixed with business confidence on the rise on signs of the euro crisis stabilising, but the official forecast for German economic growth likely to be anaemic at best.
Fuelling inflation
UK rate stays high
High and rising fuel prices have again contributed to the rate of inflation remaining above the Bank of England's nominal 2 per cent target. The consumer price index (CPI) measure of inflation remained at 2.7 per cent for the third consecutive month in December with fuel bills and food price inflation the main contributors. Meanwhile, an Office for National Statistics consultation into the disparity between the CPI and the Retail Price Index (RPI) has concluded and elected to keep the RPI as a measure of inflation which came as a relief to the bond markets and utility companies.
Toyota pulls ahead
Top in 2012
Japanese automotive giant Toyota has reclaimed its position as the top selling car maker in the world from General Motors after selling more than 9.7m cars and trucks worldwide during 2012. Toyota has reclaimed the position after a 22 per cent rebound in sales last year. It was knocked off top spot by GM in 2011 when the earthquake and tsunami in Japan and flooding in Thailand affected its operations. Prior to that Toyota had held the crown since 2008 when it became the biggest global car maker following 70 years with GM at the top of the tree. Meanwhile Volkswagen is challenging GM for second place after selling 9.1m cars, up by 11 per cent globally.
Debt duel
US division goes on
The rhetoric has stepped up ahead of bi-partisan negotiations on extending America’s debt ceiling, which need to be successfully concluded by the end of February to avoid the US economy defaulting. President Obama this week said that the notion of the US not paying its bills was ‘absurd’ and that the US is ‘not a deadbeat nation’ as he went on to warn Republicans in Congress not to play politics with the deficit this time around. But ratings agency Fitch this week warned that its AAA credit rating on the US would be downgraded if the country’s politicians indulge in another bout of brinkmanship over the deficit.
Dreamliner nightmare
Japan issues
Aviation giant Boeing has hit a patch of turbulence after the fleets of its much delayed airliner, the Dreamliner 787, belonging to Japan Airlines and All Nippon Air were grounded following a series of problems. Firstly, fuel leakage issues were reported by Japan Airlines last week then, on Wednesday, an All Nippon Dreamliner was forced into an emergency landing at Takamatsu airport in south western Japan after a battery problem and a burning smell were detected. Both airlines immediately grounded their new planes until ‘safety issues’ were resolved, without saying how long that might take.
