26 September 2005 08:19 [Source: ICIS news]
A summary of political, economic, trade, business and product news affecting the chemical and related industries.
International Economics and Politics
Global growth in doubt, says IMF
High oil prices and uncertainties in financial markets have put a question mark against economic growth, warned finance ministers and central bank governors gathering at the annual meetings of International Monetary Fund (IMF) and World Bank.
Jean-Claude Trichet, president of the European Central Bank (ECB), said high oil prices were having a "very significant impact" on growth and inflation. A statement by the IMF said: "Global growth is expected to continue, although downside risks to the outlook have increased, especially high and volatile oil prices, recently exacerbated by the effects of Hurricane Katrina, increasing protectionist sentiment and the possibility of tighter financial market conditions."
There were warnings expressed against artificial efforts to shield consumers from higher energy costs. Several Asian nations, including China, India, Indonesia and Malaysia, have been using subsidies to cushion the effects of the soaring oil prices on their citizens and businesses. The IMF statement cautioned that such measures would have "an adverse effect on the global market and should be avoided".
One of the main concerns of policymakers was the continued risk of global imbalances, driven this year by a surge in Chinese trade surplus.
Financial Times page 1, 10, 24
Kroes set out new anti-trust policy
Neelie Kroes, the European Union (EU) antitrust chief, plans to change the way the Brussels regulator operates by concentrating on countering business practices that hurt consumers.
She said dominant companies should not be pursued if their conduct only hurt less efficient rivals. Kroes also said she wanted to let big companies off the hook in cases where their abuses led to efficiencies that were greater than the harm caused by competition.
Observers said the changes would require much greater use of economic data and analysis and would probably mean that some categories of abuse would no longer be pursued by the European Commission (EC).
Financial Times page 32
UK to oppose common EU contract
The UK will spell out today (Monday) its opposition to harmonising contract law across the European Union (EU), telling lawyers and business leaders that it would be inefficient and counter-productive.
Lord Falconer, Britain's lord chancellor, is expected to say that the "common frame of reference" - the European Commission's proposal for a code of European contract law - should be used to encourage judicial recognition and cooperation between different jurisdictions, rather than create a back-door to harmonisation.
Many European businesses would welcome a single form of European contract law because the current multiplicity of national laws adds to costs. But, according to a survey carried out by Clifford Chance, the world's largest law firm, these businesses were sceptical that a single European contract law could be achieved. The survey also showed majority support for the retention of a variety of other laws rather than a single compulsory contract across the EU.
Financial Times page 4
Schroder concedes ground to Merkel
Power appears to be slipping away from chancellor Gerhard Schroder towards his rival Angela Merkel as an attempt is made to resolve the stand-off created by the recent German election.
Schoder had backed a "grand coalition" of parties but has weakened his earlier insistence on remaining chancellor. The shift has been interpreted as a signal that Angela Merkel, the CDU leader, was gaining the upper hand in negotiations.
Formal negotiations between Schroder and Merkel are expected to begin after a by-election in Dresden next Sunday.
Financial Times page 14, 22
US 'lost control' of budget, says Greenspan
Disagreements over global economic policy broke into the open over the weekend as the French finance minister claimed that Alan Greenspan had admitted America had "lost control" of its budget while China warned the US to drop demands for radical economic policy changes.
Thierry Breton said the chairman of the US Federal Reserve made the remark in a private meeting. His reporting is expected to anger the Bush administration and widen divisions between the US and France over issues such as the Iraq war and global warming.
Meanwhile, Zhou Xiachuan, the governor of China's central bank, said it would not be pressured into suddenly abandoning its currency regime. He challenged claims that the blame for the global imbalances could be laid at Beijing's door, hinting that it was driven by the strength of domestic demand in the US.
The Times page 36, 37, 38 (Need to Know)
The Independent page 56
Brown to cut UK growth forecasts
British chancellor Gordon Brown has retreated from earlier optimistic predictions for the UK economy, signalling in Washington that he will cut his UK growth forecasts.
Separately, on Wednesday UK retailers and wholesalers are expected to report a net fall in sales for the seventh month, the first time this has happened since the Confederation of British Industry (CBI) started its distributive trades survey.
The net balance of those experiencing a downturn is expected to fall from 18% in August to between 12% and 16% in September, thanks to the August interest rate cut. A small improvement is also expected in the Gfk consumer confidence index for the UK on Friday, but it is still likely to be negative.
The Times page 38 (Need to Know)
The Guardian page 20
Six must lead EU, urges Sarkozy
France's governing party has called for the six biggest countries in the European Union (EU) jointly to lead the 25-member organisation, to overcome the institutional inertia caused by the rejection of Europe's constitutional treaty.
Nicolas Sarkozy, president of the UMP party, said the Franco-German "couple" could no longer direct the EU it had done for the previous 50 years. "We must open the French-German couple to four other big European countries which among them represent 75% of Europe's population," he said. "This group of six must become the motor of the new Europe."
Sarkozy said this G6 - France, Germany, the UK, Italy, Spain and Poland - should take collective proposals to other EU leaders. The other members could accept or reject these proposals, but they should not be able to prevent the G6 from pursuing them.
Financial Times page 14
Putin turns populist to secure succession
Russian president Vladimir Putin has revealed ambitious plans for a new emphasis on social welfare while at the same time reasserting his political control over the state.
The Financial Times devotes a page to an analysis of Putin's motives in making these changes. It believes they are being because of insecurity over the leadership succession. Parliamentary elections take place in 2007 and presidential polls the year after.
Financial Times page 21 (Comment & Analysis)
Indonesia under pressure over bird flu
Indonesia is coming under international pressure to carry out a mass cull to help contain an outbreak of bird flu.
Three cases of human infection with bird flu have been confirmed by Indonesian health authorities. There have been four fatalities in the country since July. The World Health Organisation (WHO) believes that more infections are likely and that Indonesia is ill-equipped to handle a serious outbreak.
Financial Times page 11
Debt deal could herald trade settlement
Negotiations to conclude a World Trade Organisation (WTO) trade deal by the end of the year were given a kick-start at the weekend by an agreement among the world's richest nations about how to write off $40bn (Euro33.1bn) worth of debt owed by the world's poorest.
Eighteen of the world's most heavily indebted poor nations, mainly in Africa, will now have their unpayable debts to the International Monetary Fund (IMF), the World Bank, and the African Development Bank (ADB) cancelled over coming months, meeting pledges made by leaders of the Group of Eight (G8) leading economies made at the Gleneagles summit in July.
A final deal over the debt will be ratified by an unscheduled meeting of G8 finance ministers from the leading industrial nations in London in December. This gathering in London will be held two days before the WTO meets in Hong Kong to seek to complete trade liberalisation that began four years ago.
The Times page 41
The Independent page 56
The Daily Telegraph page 35
The Guardian page 20
Trade lobbying can be a profitable business
Greater openness in trade relations is often seen as a goal in itself but nations and businesses may be missing out on the substantial benefits of lobbying for change. The Financial Times reports on the commercial reasons why greater interest should be taken in trade negotiations.
Financial Times page 17
Nice plans approval within 6 months
Britain's National Institute for Clinical Excellence (Nice) has put forward a new fast-track system to allow important drugs to be approved for health service use within six months.
Currently, approval takes 14 months and take longer, leading to complaints that patients are, in come cases, denied even potentially life-saving treatments.
Financial Times page 4 (News Digest)
Oil on retreat after hurricane passes
Brent crude fell by 86 cents to $61.58 a barrel at a special Sunday trading session at the International Petroleum Exchange (IPE).
The fall came after news that Texan refineries had escaped serious damage from Hurricane Rita.
The storm appears to have caused much less damage less damage to the US refining industry than Hurricane Katrina, which left four big refineries out of business and pushed the oil price to a record. The US energy department was "cautiously optimistic" that refineries in Houston had suffered minimal damage. Valero, a top US refiner, said its recovery team had inspected its Port Arthur refinery, just inside the Texan side of the border, and reported significant damage to two cooling towers and a flare stack. Valero is already re-establishing operations in Texas City and Houston.
The New York Mercantile Exchange also opened on Sunday for a special trading session.
The Independent page 21, 57
Financial Times page 8, 24
The Guardian page 19
Company News and Results
AstraZeneca chief stresses organic growth
The outgoing head of AstraZeneca, the Anglo-Swedish pharmaceutical group, has played down the need for any merger of his company with a rival, stressing that growth could be made organically.
Sir Tom McKillop, chief executive, interviewed by the Financial Times, rebuffed speculation about another deal comparable to the merger that created his company in 1999. "I don't believe the classical scale arguments. We are certainly well beyond critical mass in sales and marketing ... There is no strategic imperative to merge." He said the company was now global, with sufficient resources to launch and invest in new products, and that industry experience suggested still larger companies became less productive in research and development.
Analysts have suggested that AstraZeneca may need to merge to sustain its growth and pipeline of drugs, with likely candidates cited including GlaxoSmithKline (GSK) of the UK and Novartis of Switzerland.
Financial Times page 25, 27
(Some of the stories may not appear in all editions of the relevant newspapers)
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