Business News

Other News Articles:

Increased use of ecommerce by SMEs

Opting out of the working time directive

ICA call for simplification of Initiatives

Guidelines should help SMEs avoid VAT fraud

New recommendations on money laundering

New EC Definitions of company sizes

Insurers offer savings to vetted companies

CBI urges better help on export credit

Business Link Sued over adviser

New worries about identity fraud

Inland Revenue relents on home workers

Revisions in UK economic growth forecasts

SMEs warned over telemarketing practices

Financial Update - Thursday 4th March 2004

As expected, the Bank of England left interest rates at 4%, as policy makers assess whether the Pound's recent gains and the two rate increases made already will help rein in spending by consumers and restrain inflation.

In Europe, the European Central Bank kept its benchmark lending rate at 2%. It rejected calls from politicians, such as the German Chancellor, to help bolster an economic recovery by reducing the rate.

The ECB's decision came after some economic data showed the Euro region's economic recovery was flagging and the Euro's 11% gain against the Dollar over the past year has hurt European exporters.

In Germany, unemployment rose for a second month in February and factory orders unexpectedly fell for the first month in eight in January, according to Government reports. This is further evidence of the effect of the Euro's strength, which is hurting exporters.

In the USA, the Federal Reserve has said the US economy expanded in January and February with moderate employment growth and slowly rising retail prices.

Manufacturing activity is picking up in the USA with some modest lending by commercial banks. Personal consumption, according to the Expenditure Index, rose by 1.5% for the twelve months ending January, which some policy makers use as a working definition of price stability.

Gains in the US labour market is thought likely to lead to the Federal Reserve raising its target interest rate for the first time since 2000. On the other hand, Fed policy makers have cited the labour market's lagging performance as one of the main reasons for keeping the target for overnight bank lending at 1%. Without job growth they see little threat of inflation.

The US economy is expected to grow by around 4.6% this year, which is the highest since 1986. Overall reasonably good news coming out of the USA.

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