Join our community of smart investors
OPINION

SEVEN DAYS

SEVEN DAYS
August 28, 2014
SEVEN DAYS

EU QE coming

Deflation danger

The European Union is shifting ever closer to launching its own barrage of quantitative easing, just as the US is winding its down, in a bid to head off a dangerous deflationary spiral. The latest business confidence figures out of EU powerhouse Germany, which dipped to their lowest level in more than a year, followed by a first dip in consumer confidence there since January 2013, coupled with the ongoing threat of deflation and political upheaval in France, left commentators increasingly sure that a blast of QE from the European Central Bank is now pretty much nailed on. Last week ECB head Mario Draghi said that he would use "all available instruments" to keep inflation from dipping into negative territory.

See page 9

Onwards and upwards

House prices upped

Savills has revised its house price forecasts upwards after the rampant rises in London and the south east in the past year. UK-wide, Savills upped its forecast house price growth from 6.5 per cent to 9.5 per cent for this year, with growth in London expected to be 15 per cent. London's lead will abate in 2015, with Savills expecting 5 per cent growth followed by flat prices in 2016. Overall, Savills expects average UK house prices to be 25.7 per cent higher over the five-year period to the end of 2018.

Services slowdown

GDP threat?

The latest Confederation of British Industry survey of the crucial services sector has hinted at the potential for a slowdown in the strong rate of growth enjoyed by the economy during the latter months of the year. Companies in the dominant sector of the economy remain confident but the number reporting business ahead of the same period last year dipped to its lowest level since last August, although at a positive 25 per cent balance it remains ahead of historical averages. Meanwhile, business and professional services companies are expecting to continue expanding their workforces although almost half of then fear a lack of suitably qualified staff may hinder expansion.

Flipping burgers

Tax benefits

An $11bn deal has been struck between US restaurants chain Burger King and Canadian coffee shops business Tim Hortons which will create the world's third'biggest fast food chain. The deal, initiated by Burger King, will see the two brands continue to operate independently but will result in Burger King moving its corporate headquarters to Canada, taking advantage of lower tax rates there. The combined businesses will own 18,000 restaurants in 100 countries across the world.

Shell sell-off

Nigerian sales

Royal Dutch Shell has signalled the next stage in its managed retreat from the Nigerian oil industry with the planned sale of four oil fields and a pipeline which it owns in consortium with Total and Eni for around $5bn. As with several other recent deals in the industry, domestic buyers are snapping up the assets. It will take the value of deals for assets taken out of foreign hands to almost $10bn since the end of the last decade, with analysts suggesting another $10bn-worth of assets could be on the block over the next 10 years.

Business says no

Vote nears

A group of more than 130 Scottish business leaders have signed an open letter confirming their rejection of Scottish independence. Following what was taken to be a victory for Yes campaign leader Alex Salmond in the last televised debate ahead of the September vote, the No campaign hit back with the open letter, signed by the likes of Andrew MacKenzie of BHP Billiton and Cairn Energy chief executive Simon Thomson, which said the prospect of independence simply carries too many imponderables and potential risks. A contrasting group, Business for Scotland, has backed the Yes campaign, with support from the likes of International Consolidated Airlines boss Willie Walsh and former RBS chairman Sir George Mathewson.