Upbeat mood in Britain contrasts with pessimistic eurozone surveys. Fears of recession in France grow. Eurozone composite PMI remains in expansion territory above the 50 mark at 51.5, but declines from October’s level of 51.9…
Britain’s manufacturing sector is expanding at its fastest pace for 18 years as new orders pour in, according to a new survey, rekindling hopes for a rebalancing of the economy.
The Confederation of British Industry’s monthly industrial trends survey shows manufacturing orders and output both at their highest level since 1995.
The CBI said that 36% of firms reported their order books were above normal, with 25% saying they were below normal. The resulting balance of +11% was the strongest since March 1995. Similarly, the positive balance for firms’ level of output, at +29%, was the strongest since January 1995.
Stephen Gifford, the CBI’s director of economics, said: “This new evidence shows encouraging signs of a broadening and deepening recovery in the manufacturing sector. Manufacturers finally seem to be feeling the benefit of growing confidence and spending within the UK and globally.”
The coalition will be encouraged to see signs of a revival in British industry, after fears that the economic recovery has so far been too reliant on consumer spending and an upturn in the housing market.
The chancellor of the exchequer, George Osborne, has said he would like to see a “march of the makers”, helping to double exports by the end of the decade, so that Britain can “pay its way in the world”.
Business surveys have been pointing to a revival in manufacturing for some time, but it has only recently begun to be reflected in official figures, which showed a 0.9% increase in output from the sector in the third quarter of 2013, driven primarily by the success of carmakers. However, output from manufacturing remains more than 8% below its peak before the financial crisis.
News of the upbeat mood among manufacturers in the UK contrasts with more pessimistic surveys from the eurozone where the so-called “flash PMIs” suggest that the economic recovery is petering out in several countries, including France.
While the composite PMI for the eurozone remains above the 50 mark at 51.5, this is a decline from October’s level of 51.9, suggesting that while the eurozone economy as a whole has not slipped back into recession, the pace of growth appears to have slowed.
Chris Williamson, of data provider Markit, which compiles the survey, said: “The fall in the PMI for a second successive month suggests that the European Central Bank was correct to cut interest rates to a record low at its last meeting, and the further loss of growth momentum will raise calls for policy makers to do more to prevent the eurozone from slipping back into another recession.”
guardian.co.uk © Guardian News & Media Limited 2010
Published via the Guardian News Feed plugin for WordPress.
Bubbles, tulips, booms and busts: same story, different dates
By: All Things Forex
Published December 24, 2012, in Forex News
Salutary lessons can be learned from past financial crises. Boom-bust events tend to follow a classic arc: a tale with a grain of truth in it is seized on and peddled to credulous investors by an unholy alliance of greedy optimists and swindlers…
Perhaps one of the most cheering moments of 2012 was when Sir Mervyn King summoned Barclays chairman Marcus Agius and told him that after the appalling revelations about Libor-fixing, the bank’s chief executive Bob Diamond would have to go – or, as the Sun headline had it: “Sign on, You Crazy Diamond.”
Both King’s high moral tone and the headline-writers’ cheek seemed refreshingly modern – but for anyone wandering the damp streets of London with half an hour or so to kill during this festive season, a corner of the British Museum offers a healthy dose of historical perspective on these and many other events over the past torrid five years.
Tucked away in Room 69a, just around the corner from a display of Roman pottery, is a small temporary exhibition dedicated to “Bubbles and Bankruptcy: Financial Crises in Britain Since 1700″.
One exhibit is a cartoon from Punch, published after the Bank of England bailed out Barings (yes, that Barings) in 1890. A stiff-looking woman with an apron made of banknotes – the Old Lady of Threadneedle Street – crossly hands out cash to a queue of cowed financiers, saying: “You’ve Got Yourself into a Nice Mess With Your ‘Speculation’!” It must be reassuring for King to regard himself as today’s incarnation of that starchy matron.
It’s also salutary – and somehow comforting – to see artifacts from the events of the recent crash boxed up in glass cases as historical exhibits: an empty champagne bottle from the flotation of the ill-fated Northern Rock; a Steve Bell cartoon of ravenous fat cats having their toenails gingerly clipped by George Osborne; and a handful of credit cards from the bailed-out banks.
These now-poignant objects sit alongside exhibits illustrating a bevy of other investment frenzies and financial crises: the South Sea bubble, tulip mania and the railway investment boom – and bust – of the mid-19th century.
Apart from the facile (but nonetheless true) insight that there’s nothing new under the sun, the exhibition holds one or two other lessons for today’s policymakers.
The first is that these boom-bust events tend to follow a classic arc: a tale with a grain of truth in it is seized on and peddled to credulous investors by an unholy alliance of greedy optimists and downright swindlers.
An engraving in one case shows a certain Gregor MacGregor, a dashing-looking Scottish general who went off to Latin America and came back claiming to have discovered a lush territory called Poyais. He raised an extraordinary £200,000 – detailed in minute letters on a loan document on display – from investors convinced by the tale of vast, untapped riches in a faraway colony.
Unfortunately for MacGregor and the hundreds of would-be settlers who believed his tale and boldly set out across the Atlantic from Leith, Poyais turned out to be largely uninhabitable, and his backers lost their money.
Anyone reading the wild predictions about the potential riches to be made from exploiting shale gas deposits in the US should recognise the ring of a story so compelling that, given enough time, it could easily become a vast investment bubble. Fortunes will be made, but also lost.
A share certificate from the Sheffield and Retford Bank is a reminder that when Britain’s railways arrived, they certainly transformed the economy and created millionaires; but many of the early firms set up to drive brand-new lines across great tracts of the country went bust. The Sheffield and Retford made many loans to these companies. When they defaulted, the bank failed.
Some of the items on display also highlight the way that Britain’s political and social elites have always been prone to being seduced by smooth-talking investors. An 18th-century ballad, the Bubblers Medley, printed at the time of the South Sea crash, talks of the “Stars and Garters” tempted into the scheme alongside “harlots” from Drury Lane.
However, Gordon Brown and Alistair Darling should note that while the then chancellor of the exchequer, John Aislabie, did buy shares in the South Sea company, he shrewdly sold them before the crash – as visitors can see from the bill with his signature – making them over to some more gullible citizen.
When veteran bank-watcher Sir Donald Cruickshank appeared before the parliamentary commission on banking standards recently, he also called for some historical perspective, urging its members to immerse themselves in a copy of Anthony Trollope’s The Way We Live Now.
Reading the rip-roaring adventures of shady financier Augustus Melmotte, who takes London by storm with his eye-watering wealth, drawing politicians and aristocrats into his net, it’s hard not to think of the charming chancers in charge of Britain’s banks, who convinced us (and themselves) they were financial geniuses before the crisis – and were revealed to be self-deluded at best.
True, Melmotte certainly wouldn’t resort to the vulgar “done … for you big boy” tone of the emails that surfaced in the Barclays Libor settlement, but the sentiment is similar. Or, as Cruickshank put it: “I don’t think bankers are any worse than they have been before: they always calibrate off society … We have been here before.”
guardian.co.uk © Guardian News & Media Limited 2010
Published via the Guardian News Feed plugin for WordPress.