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Headlines - 25/01/2016

25 January 2016 |

Outline

The reports remain similar, the situations slightly altering, EU immigration remains at the forefront of European and Western debate and issues regarding slowing economies and falling oil prices continue to be prominent this week in the news.

Immigration & Europe

Immigration is no doubt central to all political debate and commercial awareness. This week the discussion surrounding immigration remains at the forefront of Europe. Each political body is forming an opinion and taking a stance and it is important to understand the consequences of changing policy for business and the everyday person.

The European Union, a union of doubt since the recession with both its economic troubles and now its inability to curb immigration, has received a rather pessimistic outlook from French Prime Minister Manuel Valls. The Telegraph reports his comments to the BBC where he stares that immigration "might be Europe's biggest challenge yet but it is one we need to face together by creating safe and legal routes for refugees" without this he believes the EU is in '"very grave danger" of collapsing due to the pressure of migrants heading to the continent'. Whilst his comments portray his recognition of the problem, solid solutions are still to be formed. One proposal is to enforce an "emergency brake". This proposal comes as part of Britain's renegotiation. Although details are yet to be specified, the BBC sketches a picture of the results of the "emergency brake" as it suggests that when the U.K. appears threatened a brake can be enforced. Nonetheless it does hint that this emergency brake may only be applied if all EU member states all agree. Without substantial more information an opinion on these proposals cannot be made, however one thing is clear, in order for the vote to swing in favour of staying in the EU, U.K. citizens are going to have to be convinced by the reforms to curb immigration. Currently the immigration situation appears to be progressively getting worse for the UK, as the Telegraph reports how 'the UK has an opt- out on such quotas' regarding asylum seekers, 'but tree have been threats that, if we exercise it, our current right to return applicants to the first EU country of arrival might be withdrawn.' The clock is ticking on the immigration marathon, will Cameron reach the finish line or will he fall short of securing a good deal for the UK?

Currently, the grey cloud appears to be settled over Europe, as economic troubles also loom with the issue of Greece’s debt. The Guardian reports on how ‘The European Union will need to provide significant debt relief for Greece if it is to persuade the International Monetary Fund to put its financial clout behind the country’s third bailout package, the Washington-based organisation has said.’ Greece currently has debt worth 175% of its GDP and the IMF has expressed concerns that in order to ‘continue to support Greece in achieving robust economic growth and sustainable public finances through a credible and comprehensive medium-term economic programme.’ However, it notes that ‘“Such a programme would require strong economic policies, not least pension reforms as well as significant debt relief from Greece’s European partners to ensure that debt is on a sustainable downward trajectory.”’ Will Greece ever recover?

Articles:

  • The Telegraph: This open-door immigration policy can't go on
  • The Guardian: Immigration bill 'treats devolved governments as second class'
  • Sky News: PM Faces Fresh EU Immigration Battle
  • UK

    There was much optimism as 2015 came to a close for the UK economy, however in recent weeks as the negative global economic outlook has dampened the UK’s future. The media has been full of claims and criticisms concerning the role of the government and the Bank of England in securing a positive future for the economy. In particular the Telegraph reports on the arguments of Gertjan Vlieghe as he suggests that if the Bank of England had cut interest rates to below zero when the economic crisis had initially occurred, the recovery would not only have been quicker but also more beneficial. Gertjan Vlieghe has just been selected as the ‘newest member of the Bank’s nine-strong committee of interest rate setters’ reports the Telegraph. Vlieghe suggests that applying these methods ‘would have resulted in a “deleveraging process [that] might have been faster and spending might have recovered sooners.”’ Nonetheless, the past cannot be changed and the topic of debate remains as to whether the Bank of England will raise interest rates as Mark Carney has been quoted this week in favour of keeping interest rates the same as there is no need for change.

    Articles:

  • Telegraph: UK economy could be in stronger shape if Bank of England had cut rates below zero, says official
  • The Guardian: David Cameron told to put fixing UK economy ahead of networking in Davos
  • BBC: Carney: No need for interest rate rises now
  • Business News

    The deal between SABMiller and ABInBev has been hitting the headlines over recent months due to the historic loan that was granted for the merger to proceed. However, in order for the merger to be granted permission by competition authorities the Peronist and Grolsch beer brands currently owned by SABMiller have to be sold. Currently up for auction, Reuters reports how 'PAI Partners and Brain Capital have also moved to the next round of bidding'. Peronist and Grolsch are believed to be worth at least 2 billion euros however Reuters suggests that 'Asian brewers could offer up to 3 billion euros to secure control of the assets.'

    In other business news, Aviva has bought Canadian insurance firm RBC for $400 million. This comes as part of Aviva's mission to 'diversify its business in Canada' reports Reuters. Entering this market will enable Aviva to have a firm holding in the two largest markets for general insurance.

    Moreover, the online retailer Amazon plans to 'create several thousand jobs in Europe in 2016' as part of its 'expansion plans for the region' explains Reuters. This will add to the already invested '$16.3 billion on infrastructure and operations in Europe'.

    Articles:

  • Reuters: Amazon steps up recruitment as it expands in Europe
  • Reuters: Aviva buys Canadian RBC's general insurance business for $400 million
  • Global News

    We have realised so what are we going to do about it? Reuters has reported this week how experts and money managers only recently ‘realised that China’s staggeringly high growth rates will one day draw to a close.’ Hence, since the beginning of 2016 the Chinese ‘index has slumped more than 18 percent…as China’s currency has come under pressure.’ The combination of the falling index together with growth slowing within China has caused investors to leave resulting in capital flight. The People’s Republic of China however has enforced measures again this week in attempt to curb the impact of the flight. The Guardian reports on how ‘China’s central bank said it had pumped 600bn yuan (£64bn) of liquidity into the banking system ahead of the lunar new year holiday which shuts down the banks for the first week from 8 February. This included 315bn yuan in open-market operations, a sum was much larger than it provided ahead of the holiday period last year.’ This is likely to result in a devaluation of the currency which could have adverse effects. The Guardian explains that ‘many investors believe Beijing will be forced to devalue the currency sooner rather than later, with a former PBOC adviser the latest to call for the yuan to be decoupled from the US dollar and allowed to float against a basket of currencies. But a devaluation could be a trigger for much greater market volatility because it would make China’s exports much cheaper and pile pressure on other emerging nations, forcing them to follow suit and exporting deflation around the world.’ All this occurring and many of the Western nations arguing that the lack of growth is partly to do with the Chinese slowdown, nations need to act now in order to stop the adverse negative effects.

    In other global news, whilst the rest of the world appears to be at a distance with Iran, China this week has agreed closer ties with the country. The two nations according to the BBC have agreed ties with concern to politics and the economy and are believed to have ‘signed 17 agreements on a range of issues from energy to boosting trade to $600bn (£420bn).’ Whilst this news hit the headlines and may cause alarm bells for the public in the wake of the lifting of Iran’s sanctions, people must be aware that before agreements were established, China is ‘Iran’s biggest trading partner’.

    Articles:

  • BBC: Iran and China agree closer ties after sanctions ease
  • Reuters: Iran's leader says never trusted the West, seeks closer ties with China
  • The Telegraph: How China became the global threat everyone saw coming