Saturday, July 9, 2016
IMF cuts Eurozone growth forecast; US divided by race; More uncertainty as Tata UK sale on hold
1 IMF cuts Eurozone growth forecast (Khaleej Times) The International Monetary Fund cut its eurozone growth outlook for the next two years over uncertainties sparked by Britain's vote to leave the European Union, and warned that the conditions could worsen if confusion continues to reign in financial markets.
In its annual policy review of the 19-country euro currency bloc, the IMF said it now expects 2016 growth of 1.6 per cent, down from the previous forecast of 1.7 per cent, while the 2017 growth forecast will drop to 1.4 per cent from 1.7 per cent previously.
In its annual policy review, the IMF said a further global growth slowdown could derail the euro area's domestic demand-led recovery, and further Brexit spillovers, the refugee surge, increased security concerns and banking weakness all could take their toll on growth.
But IMF European Department deputy director Mahmood Pradhan said that if the separation negotiations drag out between the EU and the UK and continue to cause risk reductions in financial markets, euro area growth would slow further.
2 US divided by race (Jon Swaine & Tom Dart in The Guardian) The assassination of five police officers by a black army veteran in Dallas who told authorities he “wanted to kill white people” threatens to snap tense relations between law enforcement and African Americans that have now been at breaking point for almost two years.
Barack Obama will abandon a European tour and travel to Dallas early next week. The president will return to lead a nation grappling with a racial divide wider than it has been for at least a generation, and struggling with the frequent boiling over of unrest that has been simmering since the fatal police shooting of an unarmed black 18-year-old in Ferguson, Missouri, in the summer of 2014.
Dallas police chief, David Brown, said the 25-year-old gunman, Micah Xavier Johnson, said he was “upset about the recent police shootings”, “upset about Black Lives Matter”, and “upset at white people”. Donald Trump, the presumptive Republican nominee, declared that “racial tensions have gotten worse, not better” under Obama’s leadership.
A Pew poll last month found 84% of black Americans believe police treat blacks unfairly, compared with 50% of white respondents. While more than two-thirds of African Americans support the Black Lives Matter movement, a minority of white people – and just 20% of Republicans – feel the same way.
3 More uncertainty as Tata UK sale on hold (BBC) The sale of Tata Steel's UK business is on hold as the company considers a European tie-up, creating further uncertainty for British steelworkers In Mumbai, Tata said it had started talks with "strategic players in the steel industry".
They include the German company Thyssenkrupp. Tata said the uncertainty created by Brexit was a factor in its deliberations. The company declared its intention to sell all or part of its UK business in March. It employs more than 4,000 workers at its plant in Port Talbot in Wales and over 2,000 more at its speciality businesses in Hartlepool, Rotherham and Stocksbridge.
A shortlist of seven potential buyers was drawn up in May, but one of the biggest stumbling blocks to the sale of the UK business has been the legacy of the British steel pension fund which Tata inherited when it bought the business in 2007. It has 130,000 members and a deficit of £700m.
The government has been trying to break the impasse by launching a consultation on drawing up special legislation to lower pension benefits for many of the pension fund's members. European steelmakers have been struggling to compete with cheaper imports of steel from China and a fall in steel prices on the world market.