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*** Unemployment up as IMF warns Gordon Brown on tax
*** Oil hits 7 week low... slow growth for the global economy
*** MG Rover still won't repair your car either... But the FT will update you more often
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- How long can Gordon and Tony keep up the fiction that everything's just great with the UK economy? Yesterday they jointly launched the Labour Party Manifesto (why we wonder did this have only Tony's photo on it? Was it printed before they were best friends again?) and with in minutes Gordon was busy boasting about his what a splendid success his tenure had been.
- Yet just a few hours later figures came out showing that unemployment has started to rise. In the three months to February, the unemployment rate was up by 0.1% - to 4.8% or 828,700 people. The dynamic duo may be able to claim that it is still very low, and massively below the other big European countries' rate but it still brings problems, particularly as wages are rising at the same time: average earnings were 4.7% higher than a year ago in February, a jump from 4.4% in January; that's above the 4.5% considered consistent with the Bank of England's inflation target.
- This is an obvious PR hiccup. Mid-election is not the time to announce bad news - especially not on a topic you have been using as a cornerstone of your campaign. But it doesn't just look bad. It is bad.
- More unemployed people means more unemployment benefits - which in turn means the government stumping up more cash (on top of all those rising wages to the public sector workers hired to dole out the cash). And then there's all the workers from Rover...
- Just to make Gordon feel even lower the outgoing IMF head decided a parting shot was in order and sounded a warning that he had to rein in public spending or face increasing taxes after the general election. Now we know that what happens after the election is only of concern to Brown right now if he's rubbishing the Tories' tax plans - but it hardly adds to his credibility to have the International Monetary Fund suggesting he can't do his sums.
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- Crude oil, having fallen on Monday - and Tuesday - decided that Wednesday should follow suit. Following US government data showing that supply grew last week was released yesterday morning oil prices dropped by more than $1 a barrel, ending up nearly 4% down on the day. Should you be worried? Short term probably says Moneyweek's Dan Denning. Most commodities are due a correction and they'll probably get one. But they are still all in long-term up-trends or 'super cycles' so any price corrections should allow investors to pick up bargains. In this week's Moneyweek Dan lists his 9 favourite commodity stocks.
- Still supercycle or not we couldn't help smiling when we looked at a chart of the oil price this morning. Last week Goldman Sachs put out a report forecasting that oil would hit $105. It coincided almost exactly with the short-term peak in the oil price. Nice call...
- More forecasts from the IMF. Apparently if oil prices average around $46.50 a barrel this year the world will grow at a mere 4.3% in 2005 against 5.1% last year.
- To keep us all up-to-date on all the economic and business shenanigans going on at the moment the FT (Pearson's loss making national paper) has decided to up the ante in the on-going saga of the paper wars. It has announced that it will be launching a new paper by the end of this month. It will be 'made available to corporate clients, airlines and leading business hotels' every workday afternoon. It will also have a snazzy new format - A4. As Pearson has been told to make the FT profitable or sell we're not sure how giving away stuff free in the afternoon will help but we're sure they have a plan.
- Finally, the Rover saga. It just gets worse. It was revealed yesterday that it won't only be the government, workers and suppliers who lose out. The customers will too. MG Rover cannot afford to honour its warranty commitments. So if you were one of the very few people who recently bought one you'd better hope it doesn't break down.
Annunziata Rees-Mogg
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