The British economy has performed less strongly than expected and a crisis in the euro zone will constrain growth for several years, finance minister George Osborne said in a budget update to Parliament on Wednesday. The economy will grow 1.2% next year and 2.0% in 2014, according to revised projections from the Office for Budget Responsibility, Osborne said. 2015 and 2016 forecasts were revised down to 2.3 and 2.7% respectively. In March, the governments forecasting body said the economy was set to grow 2.0% next year, and accelerate to 2.7% in 2014, and to 3.0% in the following two years. A Reuters poll taken last month predicted growth of 1.1%next year and 1.7% in 2014. Its taking time, but the British economy is healing, Osborne said.
Euro zone retail sales fall 1.2% in October
Retail sales across the 17 European Union countries that use the euro slumped in October, putting new pressure on the European Central Bank to cut borrowing rates this week. Eurostat, the EU's statistics office, said Wednesday that eurozone retail sales fell 1.2% in October from the previous month, double Septembers decline and substantially more than the 0.2% drop analysts expected. The figures provide further evidence that households remain gloomy over the economy. The eurozone is back into recession, officially defined as two straight quarters of falling output. Wednesdays figures come a day before the ECB meets to decide on whether to cut its main interest rate from the record low of 0.75%.
HSBC sells 15.6% stake in China insurer for $9.4 bn
HSBC has sold its entire 15.6% stake in Chinese insurer Ping An Insurance for HK$72.7 billion ($9.38 billion) to a unit of Thai CP Group, exiting the decade-old investment as it looks to sell non-core assets. HSBC said on Wednesday it had sold the stake to an affiliate of Thailands Charoen Pokphand Group CP Group, a conglomerate controlled by Dhanin Chearavanont, Thailands richest man. The price was equivalent to HK$59 per Ping An share. The acquisition will be financed partly in cash and under a facility with China Development Bank Corp, Hong Kong. Ahead of the sale, Mizuho Securities had estimated it could earn the bank a pre-tax profit of up to $6.5 billion. The sale was expected as part of HSBCs three-year recovery plan after the 2008 financial crisis and regulatory reforms. The bank had spent $1.7 billion to build the 15.6% stake in China's second-largest insurer between 2002 and 2005.
Greece most corrupt nation in European Union
An international watchdog group says a new survey shows the countries worst hit by the European financial crisis are also seen as among the most corrupt in the European Union. Transparency Internationals annual Corruption Perceptions Index released Wednesday shows Spain, Portugal, Italy and Greece with the lowest scores in western Europe. Where 0 is highly corrupt and 100 is very clean, Greece scored a 36, Italy 42, Portugal 63 and Spain, 65. By comparison, Denmark and Finland tied with New Zealand at the top of the list with scores of 90, while Germany scored 79, the UK 74 and the US 73. Overall, the countries seen as most corrupt were Somalia, North Korea and Afghanistanall of which scored eight. Two-thirds of the 176 countries ranked scored below 50.
EADS shareholders reach outlines of a deal
Shareholders in EADS have reached the outlines of an agreement on its structure and are working out final legal technicalities before announcing a shake-up of the European aerospace group, two people familiar with the matter said. By abolishing a Franco-German shareholder pact, public and private shareholders are on the verge of the biggest shake-up of control since the maker of Airbus passenger planes, Ariane rockets and Eurofighter combat jets was founded in 2000.