Archive for November, 2014

UK Only Article: 
standard article

Issue: 

Should digital monopolies be broken up?

Fly Title: 

America’s economy

Rubric: 

A weaker world economy does not hurt, and may help, America

THERE is a spring in America’s step these days. A revision released this week raised annualised economic growth in the third quarter to 3.9%; it has averaged more than 4% in the past two quarters. The irrepressible stockmarket keeps hitting new highs, the most recent on November 26th. Job growth is accelerating. This is all the more remarkable because the rest of the world has hit the buffers. Japan has slid into recession, Europe is flirting with deflation and China has cut interest rates as growth flags. On November 25th the OECD, a club mainly of rich countries, said its members’ economies will grow just 1.8% this year and 2.3% next, about half a point slower than projected in May. Risks, it said, are on the downside.
Why the divergence? In part, it is a statistical quirk. America’s economy shrank in the first quarter, so its recent strength is from a low base. Output in the third …

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UK Only Article: 
standard article

Issue: 

Should digital monopolies be broken up?

Fly Title: 

The European Commission’s investment plan

Rubric: 

Jean-Claude Juncker’s investment package is laughably inadequate

Main image: 

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EUROPE is in dire economic straits. Growth in the euro zone is stuck below 1%, unemployment is above 11% and inflation is hovering around 0.4%, far from the European Central Bank’s 2% goal and dangerously near outright deflation. This week the Paris-based OECD rich-country club warned that the euro zone was mired in stagnation, and added that it was dragging down the world economy. Even the pope has joined in, calling the European Union “elderly and haggard”.
Such a situation surely calls for an urgent and decisive response. On November 26th the European Commission’s new boss, Jean-Claude Juncker, duly unveiled what he sees as the centrepiece of his presidency: a grand investment plan worth €315 billion ($392 billion) that officials are claiming is the best …

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UK Only Article: 
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Fly Title: 

Discount supermarkets

Rubric: 

Ireland's grocery market shows Lidl and Aldi still have far to grow across Europe

Byline: 

C.R.

Location: 

DUBLIN

Main image: 

Even James Joyce now shops at Lidl

Even James Joyce now shops at Lidl

SHOPPERS all over Europe are gearing up for “Black Friday”, a pre-Christmas sales peak, due this week. Supermarkets are hoping it will mean bumper sales for them in the run up to Christmas. Although this shopping phenomenon originates in America, it is quickly taking hold in Europe too. Tesco of Britain and Carrefour of France are launching pre-Christmas offers this week, as are the European operations of Amazon, an American online retailer. However, after a dreadful year for mainstream supermarkets in Europe, discounters such as Aldi and Lidl are likely to continue taking market share from them.
The bosses of Europe’s supermarkets hope they can …

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Our interactive overview of European GDP, debt and jobs

Europe’s economies

CurrencyEconomyGDP per personUnemploymentYouth unemploymentDebtPublic debtBudget balancePrimary balanceGrowthLatest GDP change2015 GDP forecast2016 GDP forecast

Source: The Economist

Source: Eurostat

Source: Eurostat

*15- to 24-year-olds

Source: Eurostat

Source: European Commission

Source: European Commission

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UK Only Article: 
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Russia’s wounded economy

Fly Title: 

Free exchange

Rubric: 

Demography may explain secular stagnation

IN THE late 1930s economists trying to explain how a depression could drag on for nearly a decade wondered if the problem was a shortage of people. “A change-over from an increasing to a declining population may be very disastrous,” said John Maynard Keynes in 1937.* The following year another prominent economist, Alvin Hansen, fretted that America was running out of people, territory and new ideas. The result, he said, was “secular stagnation—sick recoveries which die in their infancy and depressions which feed on themselves and leave a hard and seemingly immovable core of unemployment.”
A year ago Larry Summers of Harvard University revived the term “secular stagnation” to describe the rich world’s prolonged malaise. Weak demand and excess savings were making it impossible to stimulate growth with the usual tool of low short-term interest rates, he argued. Demographics may play a central role in the ailment Mr Summers …

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“SECULAR stagnation” is not a new idea. It was first popularised by Alvin Hansen, an economist and disciple of John Maynard Keynes, in the stagnant 1930s. Hansen thought a slowing of both population growth and technological progress would reduce opportunities for investment. Savings would then pile up unused, he reasoned, and growth would slump unless governments borrowed and spent to prop up demand. Following the economic boom of the 1950s, interest in the hypothesis dwindled. The theory is now popular again, thanks in large part to a 2013 speech by Larry Summers, an economist at Harvard University, in which he suggested that the rich world might be suffering from “secular stagnation”. Even as asset bubbles inflated before the financial crisis, growth in the rich world’s economies was hardly breakneck, suggesting a lack of productive investment opportunities. And there are a number of reasons to think it has since become harder to invigorate growth.

Adherents of the theory of secular stagnation emphasise different factors. Demography is one. An economy’s potential output depends on the number of workers and their productivity. In both Germany and Japan, the working-age population has been shrinking for more than a decade, and the rate of decline will accelerate in coming decades. In Britain, the population will stop growing in coming decades while in America, …

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UK Only Article: 
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Issue: 

Russia’s wounded economy

Fly Title: 

Russia

Rubric: 

It is closer to crisis than the West or Vladimir Putin realise

Main image: 

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VLADIMIR PUTIN is not short of problems, many of his own creation. There is the carnage in eastern Ukraine, where he is continuing to stir things up. There are his fraught relations with the West, with even Germany turning against him now. There is an Islamist insurgency on his borders and at home there is grumbling among the growing numbers who doubt the wisdom of his Ukraine policy. But one problem could yet eclipse all these: Russia’s wounded economy could fall into a crisis (see article).
Some of Russia’s ailments are well known. Its oil-fired economy surged upward on rising energy prices; now that oil has tumbled, from an average of almost $110 a barrel in the first half of the year to below $80, Russia is hurting. More than two-thirds of exports come from energy. The rouble has fallen by 23% in three …

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