Network roads?
Government plan
Government plans to create a 'Network Rail of the roads' have been revealed as ministers look at ramping up spending on road building. The government plans to encourage the Highways Agency to become a stand-alone public company which will be given a settlement with which to carry out significant improvements to the UK's road network, with some commentators predicting a £28bn figure between now and 2020. But all is not well at Network Rail itself, where the Office of Rail Regulation this week warned that debts could rise to £50bn by 2020 and that interest payments were already eating up valuable funds.
Air wars
Plans revealed
The battle for London's next airport expansion ramped up this week, with competing plans put forward by mayor of London Boris Johnson and Heathrow airport to address the rising problem of compromised capacity around the capital. Mr Johnson's preference is for a brand new, four runway, hub airport to be built on the Isle of Grain to the east of the city, with Heathrow eventually being shut down and the area converted into a new London suburb. Unsurprisingly, Heathrow published its competing plan for its own expansion, with three different proposals for a third runway.
End of QE?
Carney strategy
The Bank of England this week hinted that its reliance on quantitative easing (QE) as the main policy lever for stimulating the economy was coming to an end. In a departure from recent Monetary Policy Committee meeting minutes, those from Mark Carney's first meeting as governor showed a unanimous vote against increasing the level of QE in the UK economy. Bank watchers assumed that this move will presage more formal guidance from the Bank in future meetings as to its future intentions, including an indication of how long interest rates would stay low.
Mixed messages
Patchy UK recovery
Chances of another round of quantitative easing also receded on news that the number of people in the UK claiming unemployment benefits fell for an eighth consecutive month in June. This represents the fastest rate for three years, and comes a week after the IMF raised its growth expectations for the UK economy, signalling that the domestic economic recovery is gathering pace. The number of people without a job dropped by 57,000 in the three months to May to 2.5m, but an unexpected fall in UK manufacturing in May suggests that any incipient recovery is likely to be patchy at best.
EU car sales plummet
Auto-asceticism
Drivers on the continent have tightened their purse strings on the back of job insecurity and continued austerity measures. New car sales in Europe recorded their worst June since 1996 with demand falling to 1.13m vehicles, a 5.6 per cent decline year on year. However, the UK bucked the trend, with sales up 13.4 per cent in June and 10 per cent during the first half of the year. Elsewhere the story of first-half sales was bleak: Germany recorded an 8.1 per cent decline; France was down 11.2 per cent; Spanish sales fell 4.9 per cent; and even the motor-obsessed Italians suffered a 10.3 per cent reversal.
Bernanke reassures markets
Gradual tapering
The greenback lost ground while equities bounced, after Federal Reserve chairman Ben Bernanke said the bond-buying programme could be pared back at a "moderate" pace later this year if US jobless numbers continue to fall and inflation stays in check. The chairman's comments reassured markets, which have already priced in a tapering of asset purchases by the Federal Reserve this year. Previous signs that the Fed was about to abruptly end its $85bn-a-month stimulus programme have triggered major sell-offs in equity markets. Bernanke also indicated that US benchmark short-term interest rates could remain "near zero" for "a considerable time" after the bond-buying programme is brought to a close.
