By DUNCAN SCOTT 22/10/2010
A round up of the latest major economic news and developments from the last week.
Tensions over currencies reach boiling point
This week has seen significant turbulence in currency markets as fears of a full-scale currency war show little sign of assuaging. Sterling hit a 6-month-low against the euro on Thursday, however this was overshadowed by the ongoing tension between China and the U.S. over currency manipulation. At a G20 meeting of finance ministers in Seoul, policymakers were hoping to avert a currency war by persuading figures from the 20 nations not to race to devalue their currencies in order to gain an export advantage on their rivals. With the U.S. accusing China of keeping its currency too low, Treasury Secretary Timothy Geithner pressed for a new currency accord to stabilize currency markets. However, bureaucratic and political hurdles make it unlikely that a new agreement will be introduced at November’s G20 summit, though exchange rates will inevitably be high on the agenda.
‘Unavoidable’ cuts announced by the Government
Chancellor George Osborne unveiled his long-awaited spending review this week, revealing heavy cuts to almost all government departments. With the aim of eliminating Britain’s structural deficit by 2015, the Chancellor announced an average 19% four-year slicing of departmental budgets, cut the welfare budget by an additional £7 billion (on top of £11 billion announced in June) and will raise the retirement age from 65 for men and 60 for women to 66 by 2020. 490,000 public sector jobs are expected to be lost as a result of the spending review. As expected there was no shortage of critics quick to attack the austerity measures. Amongst them, The Institute for Fiscal Studies claimed the review would ‘hit the poor hardest’. However, the ConLib coalition defended its actions, stating the measures were in fact progressive, and The Organisation for Economic Co-operation and Development praised the measures as, ‘tough, necessary and courageous’.
Retail Sales continue to fall
Enthusiastic and dedicated readers of The Week in Words may remember a commentary of falling retails sales in August, and this month sees more of the same. UK retail sales fell again in September, by 0.2%, with Augusts figures actually being worse than originally thought. The Office of National Statistics released the data with falls in clothing and car fuel the highest for the month. This data coincided with a statement from the Argos chain which saw 0.5% decline in sales with profits down 12%. It is widely acknowledged throughout the industry that they face a challenging period, which is likely to be compounded by the VAT increase to 20% in January.
And finally,
A gentleman in Wales took the law into his own hands this week in an unusual attempt to slow down speeding motorists on his street. The father of three gave up trying to get his local council to put in speed bumps or erect a camera so decided to buy an old Police van off e-bay and cover it in different coloured tape to give the impression of a speed camera van. He then parked it outside his house with a bit of elaborate art work to give the impression of a camera on the back and went about his normal life. I don’t think he would have had any problems with a certain gentleman, rescued earlier this year who was travelling 8mph down the A27 on his scooter.