Thursday, April 26, 2012

Britain back in recession as austerity bites deeper than planned

Official data shows Britain's economy has sunk back into recession amid ongoing state austerity and the eurozone debt crisis.

The Office for National Statistics says Britain's economy has returned to technical recession - defined as two successive quarters of contraction - after shrinking by 0.3 per cent in the previous three months.

The data confounded most analysts' expectations that gross domestic product (GDP) would grow by 0.1 per cent in the quarter from January to March, compared with the final quarter of last year.

The ONS added in a statement that the decline in first-quarter GDP - the value of all goods and services produced by the economy - was driven by a poor performance by the construction and manufacturing sectors.

Britain's economy had clawed its way out of a record-length recession in the third quarter of 2009 following a downturn sparked by the global financial crisis.

But it has now returned to recession amid painful government spending cutbacks and fallout from the debt crisis in the neighbouring eurozone, which is a key trading partner.

Tuesday, April 24, 2012

Cash rate cut almost certain after consumer inflation slows dramatically

Official interest rates are almost certain to be cut next week after official consumer inflation slowed dramatically.

According to the Bureau of Statistics, the Consumer Price Index rose by just 0.1 per cent in the March quarter, making 1.6 per cent for the year.

The evidence that inflation is now less of a worry than the multi speed economy is expected to prompt the first official rate cut since December.

The question is now whether the RBA will cut by 0.25 percent or 0.5 percent to stimulate struggling sectors, some of which are in technical recession.

Here's my analysis from The World Today.

Global markets dive as Europe's austerity resolve falters

European markets fell heavily this morning on renewed concerns that Europe's commitment to budget cuts is fracturing.

In addition to uncertainty about Nicolas Sarkozy's re-election as French president, the Dutch Prime Minister Mark Rutte resigned after failing to agree with on how to impose austerity.

Here's my analysis from this morning's edition of AM.