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US Headlines Special 3: The Outcome
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15 February 2016 |
Welcoming immigrants? It may seem a surprise to hear this week that the Financial Times has reported on businesses in America formulating schemes in order to keep migrants within the country. Focusing on the construction industry which has a particular need for immigrants who often come from Mexico, the Financial Times explains how KPost a Dallas roofing company 'lends employees who are US residents the moment to apply for citizenship, about $900, and forgives the debt if they remain at KPost another year.' Whilst Western nations have been viewing immigration very negatively over the last two months, it is evident through this example of KPost how immigration can be a good thing for the economy. Schemes such as the one launched by KPost help ensure that the wealth of America remains within the country.
Meanwhile whilst the need for immigrants is growing in America, Donald Trump has argued this week that immigration will result in a "revolution" and "collapse of Europe”. The Telegraph captures his comments which state, 'what's happening in Europe can lead to its collapse. It's dramatic what (Merkel) has allowed to happened this flood'. The article goes onto explain that without the proper tactics this could lead to the end of Europe.
Building on this issue within Europe, the Guardian reports on James Brokenshire, the British immigration minister’s latest statements. Hence, one of the major fears if a Brexit should occur is the border agreement with France. Brokenshire however, tries to reassure citizens by explaining that the border check agreement with France is an independent agreement and should not be affected if the UK chooses to leave the European Union. Nonetheless, whilst he recognises that in theory it should not be an issue, in practical terms it is unlikely that this agreement will not come under question and debate.
A storm appears to be coming to the Eurozone economy once again. Reuters reports this week do not look promising as it explains how ‘Europe’s financial market turmoil could delay a rise in inflation even further and banks will need to be fixed with forceful action over time.’ Currently the ECB is attempting through its 1.5 trillion asset buying programme to increase inflation in the European economy to its 2% target. The problem remains unchanged and Benoit Coeure, a European Central Bank Executive Board member told a German newspaper that countries should look at reducing taxes on labour and creating ‘more incentives for private investment, or reduce their deficits where required’ all in attempt to try and lift the Eurozone’s inflation rate.
This news follows more negative reports from the Eurozone as Greece falls back into recession. The Guardian reports how the southern European countries, branded the ‘PIGS’ following the financial crash, are suffering once again: ‘Greece is back in recession. Italy is barely growing. Portugal expanded but only at half the expected rate. The message could hardly be clearer: the next phase of the Eurozone crisis is about to begin.’ It is only hoped that the Guardian’s remarks are not foretelling the complete truth. Whilst overall growth for the Eurozone in 2015 was not discouraging, when examining each individual country, problems arise. Germany, the Guardian points out, is supposed to be the strongest of all the Eurozone nations, with a total of 1.4% growth last year. However, with the country relying heavily on exports, it is looking likely that Germany will also suffer in 2016 as the euro appreciates. Thus, if the country that is supposedly the strongest in Europe is struggling, then it is unsurprisingly that Greece is also, with the Guardian remarking that ‘Greece is coming back to the boil.’
The clock is ticking and Cameron is almost out of time. Reuters reports on Britain’s renegotiation with the European Union, and how Cameron has secured a reform package. Nonetheless, some of the issues such as immigration have been left for this week’s summit. Many of the current concerns over immigration come from the East who is arguing against Cameron’s ambitions to prevent migrants from claiming benefits. It is important that Cameron secures the right deal for Britain later this week as many voters in Britain are waiting to see the conclusions of this deal to determine their decision. Overall details of the deal are yet to be seen, look out in next week’s City Career Series headlines article to see what they will entail.
In other UK news, the topic of nuclear weapons has risen to the horizon. US defence secretary has spoken out arguing that the UK must keep its ‘Trident nuclear deterrent to maintain its “outsized” role in the world’ reports the Guardian. These comments come following a pending decision by government on the topic of nuclear weapons as the Guardian explains, ‘MPs are expected to vote on government plans to renew the weapons system, an issue on which Labour is split.’ Keeping and upgrading the four submarines needed to carry Trident is expected to cost ‘£31bn over the course of the 20-year procurement programme, with a further £10bn set aside to meet any additional unexpected cost increases.’ What is your opinion? Do we still need nuclear weapons to act as a deterrent or are they a waste of money?
Moreover, as with the rest of the world, the UK economy also appears to be at threat. Sir John Vickers, an economist who ‘led the inquiry into the safety of UK banks following the 2008 crash’, has commented this week about the future of the UK. The Guardian summarises his perspective when stating, ‘Britain’s banks are vulnerable to a global financial shock despite efforts to shore up their finances.’ Combining the problems worldwide currently including within China and surrounding oil, Greece’s economic and political problems as well as the Eurozone’s more generally, Vickers comments that ‘if banks run out of capital, all sorts of havoc could ensue. We want to be in a position where there’s enough of a buffer to take any losses that might occur’ reports the Guardian. Vickers in turn calls for the Bank of England to revise its advice for bank’s capital stock pile.
The impending decision over the potential Brexit has resulted in international firms questioning their European headquarters, with many suggesting that if the UK opts to leave the European Union they would move their offices. However, reports over the weekend have confirmed that one of the many banks situated in London, HSBC, has confirmed that London will remain the headquarters of the firm. The BBC argues that this ‘decision was seen as a vote of confidence for the UK.’
In other business news, Chain Reactions Cycles, an online bike retailer and Wiggle have agreed to merge. This merger, smaller than ones recently reported on here at City Career Series, clearly demonstrates some of the reasons why firms merge. Hence, the two firms which have been competitors for years are now combining their efforts to build a better business reaching out to more individuals and purchasers as they gain more of the market share.
Under investigation….Over the last year Chinese steel exports have increased to 112.4 million tonnes a percentage increase of 19.9 percent reports Reuters. With the majority of the steel falling into Europe, at a time where steel is not needed as domestic demand continues to fall, Reuters explains how this has caused a ‘glut’ sending ‘prices to multi-decade lows.’ Europe however is not the only place that has been affected with 37 investigations overall commencing in 2015 as a result of Chinese steel. China has spoken out against these investigations asking for dialogue over the issues, yet the European Union decided to commence with its investigation on Friday. Will this impact political relations? Chinese dumping of steel, reports the Guardian has cost the UK alone 5,000 jobs, which in turn has caused a wave of protest amongst other steel workers who today marched in protest through Brussels. Therefore, at what point does a country stop caring about diplomatic relations and but its own country first?
These fears over steel and the impact of a market flood on the economy, comes as fears heighten over the world economic outlook. As 2016 approached many countries were welcoming the prospect of recovery and economic prosperity. However, the Telegraph reports on how this perspective has drastically changed in a month and a half. With many countries predicting to increase interest rates, including the UK, the Guardian now proposes a revised suggestion from investors who think not one of the G7 countries will conduct an increase in interest rates. How much longer will this stagnation remain?
In the meantime, the US appears to be holding on with ‘consumer spending regaining momentum in January’ reports Reuters. The article explains that ‘Consumer spending accounts for more than two-thirds of U.S. economic activity and is being supported by a tightening labor market, which is starting to lift wages. Savings, which hit a three-year high in 2015, are seen boosting future spending.’ For more analysis regarding the US’ consumer spending see the Reuters article.
Unexpected? OPEC has previously predicted that oil prices would not rise to high levels of around $70 a barrel until 2020, however Friday’s 12% surge suggested otherwise. The BBC reports on how the market had received news that the United Arab Emirates were proposing and were highly considering to reduce supply in turn encouraging investors to buy. However, the BBC draws on sources which suggest that these increases come not only as a result of these comments but also as a consequence of the US’ reduction of oil rigs. With the media reporting on various negative outcomes of the low oil prices for consumers, it would appear that this may not be the case for long, and the adverse impacts will not occur.