|
Stock market
Improving
economic
data from the United States helped to add 1% to the value of the
FTSE 100 on the first trading day of the month, when
the index closed 45 points up at 4,332.6. Increasing optimism about
the state of the global economy then fuelled a rise to 4,397.0 on 14
November, the FTSE’s highest closing position since August 2002.
However, the next
week saw a fall of 89 points, sparked by a 58.1 point slide on 17
November, when the index lost 1.3% of its value amid
fears of further terrorist attacks following the bombing of two synagogues
in Istanbul. This was followed on 24 November by the FTSE’s biggest
one-day gain for seven weeks, a bounce of 63.4 points to 4,382.4 representing
a 1.5% increase in value, before it closed out the month at 4,342.6.
Oil
Fears that the
United States, the world’s largest consumer,
could experience fuel shortages in the coming winter months rising
stock levels, helped to push up oil prices during the first three weeks
of November.
In the period since
OPEC’s agreement in September to cut production
by 3.5% from November, prices rose by about 20% to their strongest
level since before the war in Iraq. Brent crude reached $29.91 per
barrel on 20 November, but subsequent profit-taking saw prices slip,
with Brent crude closing at $28.70 on 27 November.
Europe
Despite persistent
breaches of the eurozone’s Stability and
Growth Pact by Germany and France, they escaped punishment and were
given a further two years to reduce their budget deficits to within
3% of GDP. The refusal by EU finance ministers to uphold treaty law
against the two member states, overruling the European Commission,
provoked alarm at the European Central Bank which warned that the disintegration
of spending discipline could destabilize monetary policy and force
up interest rates.
Economic growth
Germany and France both showed third-quarter growth, the German economy
emerging from recession with 0.2% growth and France achieving 0.4%.
Stronger exports to the United States, with the dollar declining against
the euro, were a factor in the improvement.
In the US, the Department of Commerce reported that GDP grew by an
annualised 7.2% in the third quarter, the best showing since 1984.
Balance of trade
Data from the Office
for National Statistics showed that Britain’s
trade deficit in goods and services reached an all-time high of £3.9
billion in September, compared with the previous month’s £2.6
billion. A big contributor was oil imports, the expenditure of £63
million for the month being the highest since 1985 and making Britain
a net importer of oil for the first time in 12 years.
A 2% decline in
the export of goods to Europe, combined with a 3% rise in imports,
pushed the UK’s deficit in the trade of goods
with the EU to a new record of £2.2 billion; the corresponding
deficit with the rest of the world reached £2.26 billion, the
worst since November 2002, with exports down 3.5% and imports up 8%.
Britain’s trade in services continues to show a surplus, up
from £800 million in August to £900 million.
Interest rates
The Bank of England raised interest rates for the first time since
February 2000, as the Repo rate moved to 3.75%, in line with market
expectations, from the 45-year low of 3.5%.
The European Central Bank, under new president Jean Claude Trichet,
maintained eurozone interest rates at 2%, and in the United States
the Federal Reserve held rates unchanged at 1%.
Exchange rates
The continuing weakness of the US dollar saw it slump against all
the major currencies, with sterling reaching $1.7201 on 28 November,
its highest level since Britain left the Exchange Rate Mechanism in
September 1992. Against the euro, the dollar hit a record low of $1.1986.
Earlier in the month, the terrorist attacks against British interests
in Turkey prompted a sharp fall in the dollar, with the pound reaching
a five-year high of $1.7095 on 20 November.
Sterling slipped
against the euro during the middle fortnight, from a peak of €1.4646 on 5 November to €1.4269 two weeks later,
before recovering to €1.4405 by the end of the month.
Public sector borrowing
Treasury revenues
are reported to be up by only 3% this year, less than half the Chancellor’s hoped-for improvement of nearly 8%,
while spending has increased by 10% compared with Gordon Brown’s
8% prediction.
Consumer credit
Capital Economics, a respected think-tank, predicts a slump in house
prices of 20% by the end of 2006, to leave 319,000 homes across the
UK suffering negative equity. Those affected will be home owners who
have taken out new mortgages since June 2002, with London and south-east
England the worst-hit regions.
Consumer spending
High street sales in October showed a 0.6% month-on-month increase,
double the market predictions, and contributing to a 1.5% rise for
the quarter.
Average pay
A report from the
GMB union states that the average pay in Britain is £24,740. On a regional basis, London and south-east England
account for the top 23 areas, with the City of London showing £50,904.
At the other end of the scale, the average pay in the Scottish Borders
is £18,491.
Inverclyde, Argyll & Bute and Dumfries & Galloway also feature
among the worst-paying areas. The average for Scotland as a whole is £22,712
with Aberdeen leading the way on £27,282, and Edinburgh at £24,280
ahead of Glasgow’s £22,773.
Overtime
A report from the
TUC reveals that about 5 million workers in the UK put in an average
of 7 hours 24 minutes unpaid overtime every week,
worth £4,500 a year each. That sum doubles for professional staff,
working an average of 9 hours 36 minutes extra per week. The report
confirms that in the UK employees work longer hours than anywhere else
in Europe.
|
