UK economy heads for recession

LONDON: Britain’s economy may have entered a mild recession in the last three months of 2011, hampering the government’s core policy aim of spurring growth and raising the chances that the Bank of England will inject more cash soon.

Britain’s recovery from the 2008/2009 recession – the deepest since the depression-hit 1930s – has already been sluggish, and unemployment has crept up to a 17-year high as the government cuts spending deeply to erase a huge budget deficit.

The economy shrank by 0.2 percent at the end of 2011, the Office for National Statistics said on Wednesday, a bit more than economists expected as a stagnating services sector failed to offset a slump in manufacturing and construction.

“As we feared, a decline in GDP in Q4 is likely to be the first leg of a technical recession,” said Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club.

For 2011 as a whole, GDP expanded by 0.9 percent, less than half the pace recorded in 2010. The fourth-quarter contraction in output follows a 0.25 percent decline in German GDP, and if UK output falls in the first three months of 2012, Britain will enter its second recession in three years.

The minutes from the Bank of England’s January policy meeting showed that the central bank inched closer to pumping more money into the faltering economy as risks from the global economy still loomed large, despite some improvements.

The central bank voted unanimously to keep the total volume of quantitative easing asset purchases steady at 275 billion pounds and interest rates at their record low of 0.5 percent.

“For some members, the risks of undershooting the (inflation) target meant that a further expansion of asset purchases was likely to be required,” the minutes said in a slightly more assertive tone than last month.

But the minutes also noted that the European Central Bank’s actions to provide unlimited long-term liquidity had helped to moderate the most serious risks.

Bank Governor Mervyn King said on Tuesday that Britain faced an “arduous, long and uneven” recovery, and that the central bank had scope for another cash boost, if needed, as inflation is falling.

The drop in GDP also increases the chance that the Bank of England will approve a further 50 billion pounds of quantitative easing in February, once the current 75 billion pounds of purchases started in October are complete.

BLOW

The decline is slightly bigger than that expected by the Bank — which repeated its view that output would be broadly flat in the fourth quarter 2011 and the first in 2012 — and the independent Office for Budget Responsibility, which assesses whether the government’s fiscal plans are sustainable.

The contraction will be a blow to the Conservatives, which is facing growing criticism from the Labour Party over its flagship five-year austerity programme.

Chancellor George Osborne, who has pinned his reputation on erasing the budget deficit and bringing Britain’s 1 trillion debt burden down, was quick to reiterate that the deficit reduction was the right thing to do.

“These are disappointing figures … but they are not entirely unexpected, because of what’s happening in the world and what’s happening in the euro zone crisis,” Osborne said.

“Britain has substantial economic problems, debt built up over the past 10 years, and we are dealing with those, but the truth is dealing with those problems is made more difficult by the situation in the euro zone,” he continued.

Labour has accused the government of focusing too much on spending cuts rather than boosting growth as a way to reduce record public debt levels, which breached the one trillion pound barrier in December.

Economists are generally split as to whether the economy will continue to contract in early 2012, but all stress that any decline will be modest compared to the record 7.1 percent fall in output in the last recession in 2008-09.

Many economists have noted signs of improvement in the United States and even the euro zone, where Germany’s key Ifo business climate index rose the third month in a row, signalling the largest economy of the euro area was avoiding recession.

In Britain, manufacturing, electricity and gas, and distribution, hotels and restaurants were the main contributors to the fall in output, each subtracting 0.1 percent from GDP.

Manufacturing output fell 0.9 percent on the quarter, its biggest drop since Q3 2009. Output in the services sector, which accounts for 76 percent of GDP, was flat on the quarter, its weakest outturn since Q4 2010. AGENCIES

Thousands march in Greek general strike

ATHENS: Thousands of protesters marched in central Athens on Thursday, as unions challenged harsh austerity measures in Greece by holding their fourth general strike this year.

Members of a communist-backed labor union staged an occupation of the Labor Ministry. More than 5,000 protesters chanting “Don”t bow your heads”” filed past the ministry, while thousands more gathered for the day”s main rally to parliament. Storeowners closed up and lowered protective shutters before the march got under way.

The strike closed schools, halted ferries and trains, and kept hospitals running on emergency staff. Unions are protesting harsh measures imposed by the cash-strapped government.

europe flights

the no-fly zone across much of Britain after Iceland’s huge volcanic eruption this week is set to remain in force over the weekend, placing yet more strain on road, rail and ferry networks already struggling to cope with thousands of stranded passengers.

Lord Adonis, the transport secretary, who met officials at the Civil Aviation Authority, Met Office, and National Air Traffic Services today, said: “It is likely that significant disruption to most UK air services will continue for at least the next 48 hours”.

Few, if any flights, are expected over the weekend in England and Wales and the shutdown could carry into next week. Tonight Ryanair cancelled all flights in the area until at least 1pm Monday, citing weather trends that show little sign of blowing the plume away.

The ash cloud continued to hang over England and Wales today, held steady by high pressure.

The verdict from Adonis was the most bleak assessment yet of the impact of the eruption of the Eyjafjallajökull volcano on British air travel. Senior officials from National Air Traffic Services (Nats) said the Met Office was continuing to meet every six hours to update the restrictions and was trying to find even the smallest window to get flights in and out.

Shortly after noon today, Manchester airport opened for 30 minutes, then closed again. One flight from Barbados and another from Vancouver landed, while a plane took off for Sanford in Florida in readiness to return stranded holidaymakers when airspace opened again. The break in the ash cloud was so short that there was no time for any passengers to board the plane.

A handful of flights did leave Prestwick airport, and restrictions across much of Scotland’s airspace were lifted at 7pm tonight after the ash cloud drifted south. Nats added that there might be an opportunity for some flights to operate soon from the north into Newcastle.

“Even if there is a hole, say for example over Cardiff, there could still be areas of volcanic ash beyond that which makes opening the air space unsafe,” said Deborah Seymour, a spokeswoman for Nats. “It is a complicated and constantly changing picture. We want to get UK airspace open as soon as we can, but it is our priority to ensure safety.”

Fine sulphurous ash fell across the Shetland Islands coating cars, and many residents reported sore throats after venturing outside. A coastguard rescue helicopter had to mount a risky mission to ferry a seriously ill patient on the Out Skerries islands to hospital in Lerwick through the ash cloud. The helicopter returned coated in the fine glass-like dust.

North-westerly winds today continued to spread the vast plume, closing yet more European airspace in Germany, Poland and as far east as Russia. Europe’s skies were becalmed with just 11,000 flights today , compared with 28,000 on a normal day.

Almost two-thirds of all transatlantic flights into European airports were cancelled and authorities shut down airspace over France, Denmark, Norway, Sweden, Finland and Belgium. As the cloud moved east, flights were halted at Frankfurt, Europe’s third-busiest airport, and at 10 other German airports.

In Iceland, the volcano continued to erupt, but volcanologists said was it less explosive than at the beginning of the eruption on Wednesday, which blasted glassy abrasive ash, destructive to aeroplane jet engines, eight miles into the sky. The plume was now rising to a height of just three miles, and the volcanologists said this would deposit ash only in Iceland and in the surrounding waters. It was not high enough to travel thousands of miles across Britain and the rest of Europe.

Matthew Roberts, a glaciologist at the Iceland Meteorological Office, said they had not ruled out further big blasts but added: “There is currently no new material being added to the ash stream affecting aviation in Europe.”

He also played down fears that Katla, a neighbouring larger volcano in Iceland, to the east of Eyjafjallajökull, could be stirred into life.

“There is a historical and geological linkage of Eyjafjallajökull erupting together with Katla, but we don’t see any measurable evidence that a larger and more hazardous eruption is due,” he said.

Airlines have been counting the cost of the stoppages, with analysts estimating that British Airways was losing £10m a day. The International Air Transport Association said European airlines were together losing $200m a day. “It could not come at a worse time for the industry,” a spokesman for IATA said.

“European airlines have been the hardest hit financially, facing $2.2bn losses this year. This is going to make a difficult situation worse.”

Stena Line, the ferry company, said it carried 5,000 extra passengers to Ireland, and P&O cross-Channel ferries said they were fully booked until Monday. Every Eurostar train was full today, carrying more than 46,000 passengers.

Network Rail had cancelled some engineering works to allow train operators to run more services over the weekend, particularly on the east and west coast main lines and on routes to the channel ports.

A group of business people paid a taxi driver £700 to take them from Belfast to London after they became stranded. Some were medics who needed to get home to see their patients, said Joe Duffy, the driver. He arrived back at Belfast port this afternoon after spending 24 hours on the road, covering a distance 869 miles. “It is only once in a lifetime you get a job like that,” he said. “You have to keep the wheels going.”

stanley cup

The Stanley Cup Playoffs: wonderfully unpredictable

National Hockey League

What did we learn from the seven series-opening games that commenced the 2010 Stanley Cup Playoffs? In truth, nothing new.What did we learn from the seven series-opening games that commenced the 2010 Stanley Cup Playoffs? In truth, nothing new.

Rather, we were reminded again and again of one thing that is an article of faith among hockey fans and can’t be pounded enough into the heads of the ice ignorami: that the NHL’s playoffs are the best in professional sports. And of a related truism that even those of us who live and die with the sport — and make our livings from it — misremember every early April only to be reminded as soon as the first playoffs puck is dropped: in the short term (on any given night and in any particular series) nothing about the Stanley Cup Playoffs is predictable.

(For those of you in San Jose shaking your heads in disgust while muttering, “the Sharks floundering come playoff time is completely predictable,” let us refer you to the New York Islanders of 1976 through 1979 or the Detroit Red Wings of 1993 through 1996. Sometimes, you do have to lose in excruciating fashion in order to learn how to win.)

Alex Ovechkin scores 50 goals for fourth time in five years and leads the League in shots on goal for the fifth time in his five NHL seasons? Of course, he doesn’t hit the net — or goaltender Jaroslav Halak — once in the Caps’ Game 1 OT loss to Montreal.

The Penguins, coming off two straight trips to the Final, draw an Ottawa team that went 18-21-2 on the road and required a mid-season, on-ice dodge ball game on a rink in Manhattan’s Central Park to find itself? Naturally, the Sens win in overtime in a whited-out Mellon Arena.

Brian Boucher hasn’t won a playoff game — and has appeared in only four — since the Clinton administration? Of course, he outplays the winningest goaltender of all-time, Martin Brodeur, in Philly’s Game 1 snatching at New Jersey.

Phoenix, undoubtedly just happy to be here after six years of wandering through the desert playoffs-less, draws the closest thing the NHL has had to a dynasty over the last decade? What else but a poised and relentless Coyotes performance that grabs their Game 1 against Detroit at a jacked-up Jobing.com Arena?

And the Avalanche, icing a team full of youngsters who might still be eligible to play in the Colorado state high school tournament and a goalie who seems to be wearing down, go into the surly Shark Tank to face the battle-hardened and Cup-or-bust likes of Thornton, Marleau, Heatley, Boyle, Blake, et al? Naturally, the Avs pull one out on a last-minute goal with goaltender Craig Anderson performing superbly.

Seven series openers. Seven one-goal games — including two that go into overtime. Seventh and eighth seeds unbeaten — which of you scoring at home know it means that the first and second seeds are winless. Utter mayhem.

US condemns Myanmar blasts

WASHINGTON: The United States on Thursday condemned blasts in Myanmar that left nine people dead and said it was unsure about the motivations.

“We condemn any kind of violence that victimizes innocent civilians,” State Department spokesman Philip Crowley told reporters.

“Our thoughts and prayers go out to those who were the victims of this bombing,” he said.

Crowley said the United States did not know who was responsible or what their motivation was. No Americans were injured, he said.

Three blasts rocked a park in Myanmar”s largest city Yangon as revelers celebrated an annual water festival.

The explosions come as the junta prepares for the nation”s first elections in two decades later this year, which have drawn widespread criticism from Western nations and the opposition which fear they will be a sham.

President Barack Obama”s administration last year initiated a cautious dialogue with the junta, concluding that the previous US policy of trying to isolate the regime had failed.

US bans heads of Al-Akhter, Al-Rasheed trusts

WASHINGTON: US has banned the heads of two international trusts namely Al-Rasheed and Al-Akhter over alleged links with Al-Qaeda, Geo news reported.

The bank accounts and other assets of two trusts are already ceased in US and citizens have been ordered to minimize contacts with those two.

Pakistan And India Agree On Cotton Trade

KARACHI PAKISTAN: Cotton Association of India (CAI) and Karachi Cotton Association (KCA) have reached an agreement to abolish all existing barriers in way of cotton trade between two neighbours.

President CAI Dheran N Seth visited KCA here on Saturday wherein he called on President KCA Sohail Naseem.

During the sitting, the heads of two cotton associations resolved to mutually resolve disputed issues instead of taking them up before International Cotton Advisory (ICA).

The meeting also decided to hold visits of members cotton associations from two sides on regular basis.

PM Gilani Visit To China From Oct 12-17

ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani will pay an official visit to China from October 12-17 on the invitation of Chinese Premier Wen Jiabao.

The Prime Minister will be attending the 8th Shanghai Cooperation Organization’s Council of Heads of Government meeting in Beijing on October 14.

Apart from the SCO Heads of Government meeting, the Prime Minister will also undertake a bilateral visit to China. His programme includes meetings with President Hu Jintao, Premier Wen Jiabao and other Chinese leaders.

The Prime Minister will also meet other heads of government attending the SCO Summit.

“Both the countries are exploring new avenues of cooperation, and the Prime Minister’s visit will further consolidate multi-dimensional relations,” a Foreign Office statement said on Saturday.

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PM Gilani Visit To China From Oct 12-17 was first posted on October 10, 2009 at 4:43 pm.