MacroScope

UK growth robust so what’s eating David Cameron?

Britain's Prime Minister Cameron arrives at the European Council headquarters ahead of a EU summit in Brussels

British GDP data are forecast to show healthy growth of 0.7 percent in the third quarter.

Britain’s economy is growing at a strong annual clip of around three percent, a pace most euro zone countries could only dream of. But the government is worried that the currency area’s new malaise could take the shine off things in the run-up to May’s general election.

Then there is the stunningly low level of wage and income growth, lower even than Britain’s sluggish level of inflation. This is a robust recovery but how many Britons are feeling it?

With elections increasingly in mind, the ruling Conservative party would not have been happy about some of the headlines from Day One of an EU summit in Brussels.

Climate change was the main business and Germany’s Angela Merkel said the EU will discuss a bridging loan to Kiev next week so that the country can pay in advance for Russian gas deliveries, as Moscow has demanded in return for turning the taps back on. That will come as a relief as any interruption to winter flows to western Europe, via Ukraine from Russia, would have dealt another blow to already struggling EU economies.

Mixed results for right in early voting

The British and Dutch got EU elections underway yesterday and gave only mixed support to the rise of the right.

An exit poll from the Netherlands showed the anti-Islam, Eurosceptic Freedom Party of Geert Wilders’ – which plans to forge an alliance with France’s far-right National Front – had fallen well short of its goal of topping the poll and may even have slumped into fourth place. That would give it three out of the 26 Dutch seats in the EU assembly, down from four in the last elections held in 2009, when it came in second place.

Britain’s anti-EU UKIP seems to be doing much better. There were no indications of how the EU parliamentary vote had gone in Britain, we’ll have to wait for Sunday for that, but parallel local government election results showed a surge in support for the party.
With those results still coming in, Nigel Farage’s party – many call it a one-man band – had secured a net gain of 90 local council seats and was winning well over 20 percent of the vote, mainly at the expense of the ruling Conservatives.

Escalation in Crimea

Worrying escalation in Crimea. Interfax reports Russian servicemen have take over a military airport in the Russian-speaking region of Ukraine and armed men are also patrolling the airport at Crimea’s regional centre of Simferopol.
Kiev has condemned the moves as an “armed invasion”.

There has been no bloodshed and there are more constructive noises from Moscow to weigh in the balance.

Russian President Vladimir Putin has ordered his government to continue talks with Ukraine on economic and trade relations and to consult foreign partners including the IMF and the G8 on financial aid.

A glimmer of hope in Kiev

A glimmer of hope in Ukraine?

Let’s not count our chickens after 75 people were killed over the past two days but President Viktor Yanukovich’s people are saying an agreement on resolving the crisis has been reached at all-night talks involving the president, opposition leaders and three visiting European Union ministers.
A deal is due to be signed at 1000 GMT apparently although no details are as yet forthcoming. There has been no word from the EU ministers or the opposition so far.

Even if the violence subsides and some sort of political agreement is reached (a huge if), there is potential financial chaos to deal with despite Russia’s only partially delivered pledge of $15 billion to bail its neighbour out.

Standard & Poor’s has cut Ukraine’s sovereign rating for the second time in three weeks, saying the political situation has deteriorated substantially, posing an increased risk of default. The rating is now deep in junk territory at ‘CCC’ and with a negative outlook, meaning further cuts are likely.