The coalition government operating in Ireland has been significantly weakened overnight with news that a key independent deputy will no longer vote with the government. This could not have come at a worse time for the Irish authorities who seemed last week to have some kind of handle on the economic crisis with many believing the worst was possibly over. However, if the government is unable to push through unpopular budget cuts then this could delay any potential recovery and place the country's sovereign debt credit rating in danger.
South Lanarkshire Council has been conned out of more than £100,000 by fraudsters who posed as one of the council's supplies. It is unclear exactly what happened but the eventual outcome was that the council is more than £100,000 out of pocket and the threat posed by fraudulent activity in the UK is in focus now more than ever.
Goldman Sachs has today come to the rescue of the Irish authorities with a suggestion that a Greek style collapse is very unlikely. This comes after days of speculation in the investment and the money markets regarding a potential collapse of the Irish economy, which has gone into reverse in the second quarter of 2010. So why is Goldman Sachs so positive about the future?
Yesterday's news that the Irish economy, measured by gross domestic product, fell by 1.2% in the second quarter of 2010 shocked many investors. Even though it was common knowledge that the Irish economy was struggling, due to the property sector and financial sector crashes, nobody quite expected a return to a shrinking economy so soon. So should we be concerned about the economic future of Ireland?
Spencer Dale, a member of the MPC, has today stepped out to defend the UK banks policy in relation to the UK economy at the moment. Like so many other members of the MPC he is immediately concerned about the strength of the UK economy and the need to introduce fiscal stimulus programs to kick-start businesses again. However, he has also questioned the threat of inflation which many people had written off just four weeks ago as a "busted flush". So what is the outlook for the UK economy in the short-term?
The Markit Purchasing Managers Index (PMI) has today disappointed investors with a suggestion that growth in the euro zone has fallen from 1% in the second quarter of 2010 to just 0.6% in the third quarter. The PMI index itself fell from 55.9 in August to 53.6 in September which was well below the 55.5 expected by analysts.
Despite the fact that the Irish economy technically left recession in the first quarter of 2010, with a 2.2% increase in gross domestic product (GDP), the second quarter of 2010 saw a 1.2% reduction in GDP. Even if you use the gross national product figure, which excludes profits from multinational companies, even this barometer fell by 0.3% compared to the first quarter of 2010. So what does this mean for the Irish economy?
Andrew Sentance again stands alone on the Bank of England MPC with minutes from last month's meeting showing that members voted 8-1 in favour of maintaining UK base rates at 0.5%. Yet again, Andrew Sentance was the lone voice in favour of a 0.25% base rate rise as he believes a rebound in UK domestic demand could cause problems for the UK economy next year.
The CBI (Confederation of British Industry) has today come out in support of the UK economy suggesting that the UK is likely to avoid a double dip recession and indeed the CBI increased its economic growth forecast for 2010 from 1.3% to 1.6%. However, some people will be alarmed to see the CBI reduce its forecast economic growth for 2011 from 2.5% to just 2%. So in a best case scenario it seems as though the UK economy is set for a difficult 2011.
The US dollar today fell to a six-week low against the euro and saw a further decline against the yen as the Federal Reserve admitted it will introduce further easing policies if the US economy does not react to ongoing stimulus programs. There is now a major concern about the US economy which after a relatively strong start to 2010 has literally fallen by the wayside. Many elements of the US government are seriously concerned about the short to medium-term outlook for the economy bearing in mind the fact that trillions of dollars have already been pumped into the system.
