Sales slide
Christmas concern
UK retail sales have slipped back in the lead up to the all-important Christmas trading period. The British Retail Consortium reported that retail sales dipped by 0.1 per cent during October compared to the same period last year, a reversal of the small improvement in trading seen in September. This illustrates the erratic nature of UK consumer behaviour at the moment as retailers try to finalise Christmas trading plans. Marks & Spencer this week reported an improved performance in the past three months, but failed to exhibit much confidence for Christmas trading.
China's choice
New leader
The Chinese Communist Party's 18 Congress began this week, by the end of which the world's most populous country will have a new cadre of leaders, led by president-in-waiting Xi Jinping. The change at the top comes as China faces a wide range of challenges from a slowing GDP growth rate to evidence of bubbles in sectors of its economy. But the biggest headache the new generation of leaders have to face is the growing demand for more political reform and liberalisation to accompany the economic reform of recent years.
UK concern
Data gloom
The UK's surprisingly strong GDP rebound over the three months to September may prove to have been a false dawn, if the latest industrial output data is any guide. With manufacturing data showing a reversal (see chart below), the National Institute of Economic and Social Research further dampened the mood by updating its GDP growth estimate to include October, showing a slide in GDP growth to 0.5 per cent. The latest indications have fuelled hopes of further QE from the Bank of England in the not too distant future.
Eurowoe
Forecasts cut
European Commission forecasts for economic growth in the eurozone have been revised downwards rather sharply. Just months after predicting growth of 1 per cent in 2013, the Commission has slashed this back to 0.1 per cent, following what is expected to be a 0.4 per cent contraction in the current year. Even in 2014, growth is only expected to hit 1.4 per cent. Meanwhile, the Commission has cast a downbeat view on the prospects for the UK economy, predicting a contraction of 0.3 per cent for this year, followed by growth of 0.9 per cent in 2013 and 2 per cent in 2014.
Tournez a droite
Hollande relents
The French socialist president, Francois Hollande, has made dramatic concessions to his leftist agenda in a bid to arrest the country's economic nose-dive. Mr. Hollande announced a €20bn business tax cut this week, reversing his previous hardline on corporate taxes. The cut could be the equivalent to a 1 per cent boost to GDP, although rebates will be phased in over the next two years. Government officials said it would result in a 6 per cent cut in the cost of a unit of labour. The International Monetary Fund recently warned that rising tax rates in France risked hitting the country's competitiveness compared with rival European countries who are reforming their tax regimes.
Emergency stop
China spat hurts
Japanese car makers are suffering from the recent spat with China over the disputed Senkaku Islands. Nissan this week said its full-year profits would be 20 per cent lower, primarily as a result of a slump in sales in mainland China, echoing recent trading hits to rivals Honda and Toyota. But luxury European car makers are still enjoying the ride in China, with BMW this week reporting continued strong sales growth there, and Jaguar Land Rover also posting a 58 per cent rise in quarterly sales. Jaguar is planning to invest in the region of £2bn in the current financial year on product development and expanding its production capacity.
