Oil crunch warning
US dominates
The US shale oil revolution may be acting to bring down oil prices now, especially within the US' borders, but it could be storing up a longer-term problems for the oil industry, according to the International Energy Agency (IEA). This week, the IEA warned that other major producers such as the Gulf states were holding back on investment decisions to see how the US production surge pans out and, bearing in mind the long lead times in oil field development, this could result in a supply crunch in the future. The IEA says the US will displace Saudi Arabia as the world's number two oil producer in 2015 and that many of the Gulf states, including Saudi, have no plans to increase their output capacity for many years.
Retail woe
Blockbuster and Barratts bust
Two familiar retail failures came around again this week as shoe retailer Barratts entered into administration for the third time in as many years and dvd and gaming rental specialist Blockbuster also went bust, in its case for the second time in a year. The failures caused merely a little pinprick in the growing optimism around the UK economy, but serve as a reminder of the fragility of consumer confidence. But, in both cases, the businesses were already drinking in last chance saloon and their failure did not come as a huge surprise. Administrators are looking for buyers for each business, but if they fail to find a white knight, up to 3,000 jobs are at risk.
Big four bank billions
Outsourcers thrive
Prime minister David Cameron this week signalled his party's intention to continue its policy of shrinking the state in the UK and confirmed that it is his intention that there will be no reversion to expansionary public spending once the fat trimming is complete and the deficit has been eliminated. One of the ways of keeping public spending under control is through the outsourcing of services to private sector providers, some of whom are benefiting royally from the practice. Latest figures from the National Audit Office show that the 'big four' in the public sector - Atos, Capita, G4S and Serco - booked £4bn-worth of business from the public sector in the last financial year.
Inflation cools
Jobs to fall
UK inflation fell to its lowest rate in almost four years in October, a move which sent sterling sharply lower. The consumer price index measure of inflation slipped from 2.7 per cent to 2.2 per cent during the month, confounding expectations of a more modest fall to 2.5 per cent. The prime drivers behind this were a softer-than-expected impact from tuition fees and falling petrol prices. With inflation falling back towards the Bank of England's long-standing 2 per cent target, the pressure to increase interest rates is likely to abate in the short term at least. But news that the Bank thinks there is a 50/50 chance that unemployment could fall below 7 per cent next year, the trigger set in governor Mark Carney's forward guidance for considering a rate rise, could raise expectations of a rise later next year.
Chinese change?
Opaque outcome
The end of the 'third plenum' of the Chinese Communist Party's 18th Central Committee this week offered few clues as to how exactly the leadership of the emerging economic powerhouse plans to enact some of the reforms it has hinted at. The communiqué from the four-day meeting, which has become a vehicle for the leadership to set out its strategy, hinted at deeper reforms and a wider role for the markets in the Chinese economy. There were also pledges aimed at land ownership reform and the formation of a leadership group, which will have the authority to act above the various powerful ministries in a bid to drive reforms and avoid running into roadblocks among other senior levels of the party command.
RSA rout
Irish problems
FTSE 100 insurer RSA has found itself under growing pressure in the past week. Investors began to worry recently when the company warned of higher costs and the situation has deteriorated since the senior management of RSA's Irish operations suspended last Friday amid concerns over its financial controls which are likely to lead to an additional £70m charge in the next results. There is also added anxiety that the Irish police are monitoring the investigation which has commenced into the Irish operations.
