Infrastructureprojects at risk
BY JAMES WATERSON
BANKING giant JP Morgan willtoday release an internal reportinto the catastrophic bet made by atrader nicknamed the London Whale, which cost the businessmore than $6bn (£3.7bn).The company, which will issue itsfourth quarter results at the sametime, is keen to be transparentabout the mistakes that allowedthe disastrous derivatives positionto be built up, according to theNew York Times. Directors facecuts to their bonus payments as aresult of their errors.
London Whalereport due out
BY JAMES WATERSON
HORSE meat has been found in beef burgers sold by leading Britishand Irish supermarkets, it emergedlast night. One sample of the meatin Tesco’s Everyday Value Beef Burgers was found to be 29 percent horse, according to Ireland’sFood Safety Authority (FSAI).Tesco has responded by pullingthe burgers from its stores. TheFSAI also said burgers sold by Aldi,Lidl and Iceland contained traces of horse. The meat came from twoIrish sites and one packaging plantnear Northallerton, Yorkshire.
Horse meat inTesco burgers
BY JAMES WATERSON
EUROSCEPTIC Tory MPs will today call for the repatriation of allemployment law from Brussels, inaddition to restrictions on theEU’s ability to regulate London’sfinancial sector.The manifesto issued by theFresh Start group, which claims thesupport of more 100 backbenchMPs, comes ahead of this Friday’sspeech by David Cameron onBritain’s future relationship withthe EU. The Prime Minister is set tocall on the bloc to return somepowers to Westminster.
Tories demandnew EU deal
BY JAMES WATERSONBY BEN SOUTHWOOD
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Y 2050, the largest Europeaneconomies will be ranked justninth and tenth globally; andthe UK will have fallen to 11th, behind Germany and France – or sosays PwC. This leads to twoconclusions: first, we really need asupply-side revolution to boost long-term UK growth as there is no reason why the UK shouldn’t be much wealthier than France by then; andsecond, that the UK must reorient asmuch of its trade as possible towardsthe emerging economies, includingMexico, Brazil and Indonesia, allnations that will have a biggereconomy than ours by then. Thedebate over Europe is obsolete; it isglobalisation or bust for Britain.
US RECOVERING AT LAST
Another intriguing fact, this timecourtesy of the American Enterprise
Forget Europe: our only hope is to trade with emerging giants
WEDNESDAY 16 JANUARY 2013
Institute. The US economy is doing better, which is good for all of us.Commercial lending by US banks dur-ing the first week of the year hit$1.526 trillion, the highest sinceMarch 2009 and just five per cent below the peak reached in October2008. At this rate, commercial lend-ing will be back to where it was beforethe recession by the end of March,analyst Mark J Perry notes. He expectsthe recovery in commercial lendingto take 230 weeks, a full ten monthsquicker than the recovery from theprevious bubble and bust back in2001. America’s banking system isrecovering, and doing so much morequickly than Britain’s.
UK’S SCANDINAVIAN WAYS
We all know that there is aScandinavian model of social policy, based on large amounts of publicspending, and a UK model, where thestate spends much less. Right? Wrong. Astonishingly, the UK actually now spends more on social spending (pub-lic and publically mandated) thansome Scandinavian countries; evenmore amazingly, the UK spends sig-nificantly more on family benefits asa share of GDP than all the Germanicand Scandinavian countries. The figures are stark: the UK spent3.6 per cent of GDP on family bene-fits, according to internationally com-and yet hardly anybody is satisfied with the outcomes delivered inreturn. Astonishingly, most commen-tators are in denial about the amountof cash already dedicated to socialspending; during the riots, there waslots of baseless talk of structurally insufficient spending being an under-lying cause for the problems. The reality is very different: thereare huge, crippling social problems inthis country, but spending ever moremoney unthinkingly and often on the wrong people (such as richer pension-ers) isn’t the solution, asScandinavians realised years ago. It ishigh time to reform the UK’s welfarestate – the coalition’s changes aremerely a small first step in the rightdirection.parable OECD data analysed by theInstitute of Economic Affairs. This ismore than the 3.4 per cent spent by Sweden, the 3.3 per cent in Denmark,the 2.9 per cent in Iceland andNorway, the 2.8 per cent in spent inthe Netherlands and of course the 1.4per cent in Switzerland.It is hard to understand, given all of this, why the UK gets so little bang forits buck. Not only is our welfare stateexpensive, it is also comparatively badat delivering outcomes. Overall, netsocial spending in the UK was 22.7per cent of GDP, more than the 20 percent spent in the Netherlands andNorway, almost identical toDenmark’s 23.9 per cent and only alittle less than Sweden’s 26 per cent. The UK long ago ceased to be aparagon of low spending virtue. Inmany categories of expenditure, wehave become pretty Scandinavian –trillion (£1.42 trillion) in 2011 to hit$3.50 trillion by 2030 and reach a totalsize of some $5.6 trillion in 2050. The biggest change in PwC’s predic-tions is China’s rise to the top, takingfirst place from the US by 2017 in pur-chasing power parity terms, and by 2027 measured at market prices. TheUS has been the world’s largest nation-al economy for almost a century. Today’s table will be almost com-pletely changed by 2050. Fourthplaced Japan is set fall from fourth tofifth place, Germany from fifth toninth and France from eighth to 10th. Taking the place of these 19th-centu-ry industrialisers will be Brazil,Mexico and Indonesia, the financialservices firm says.Brazil will jump from seventh tofourth, Mexico from 11th to seventh biggest economy, and Indonesia willleapfrog Turkey, Canada, South Korea,Spain, Italy, the UK, France andGermany in its epic rise to the world’s8th biggest economy.