World Economic News
Grim Economic News Follows Blair Re-Election
More 'grim news' (as characterized by the Guardian May 10) on the British economy: Just days after Tony Blair's re-election, figures released on May 10 revealed that Britain's beleaguered manufacturing output was down by 1.6% in March, the worst such fall since mid-2002, the Office for National Statistics (ONS) reported. Industrial production, including energy output, fell by 1.2% in March, and was down 0.7% overall over the first quarter. This means that first-quarter GDP growth should be revised down by a third, to just 0.4%, from the present 0.6% estimate. Manufacturing fell in six of the seven categories. Chemicals, which represent 11% of the manufacturing base, fell 3.5%. The ONS now is predicting that manufacturing will shrink by 2% in 2005! The Confederation of British Industry is warning that factories are cutting 7,000 jobs a month.
These figures do not include the debacle at Rover, once Britain's biggest carmaker.
Figures also showed the sharpest drop in one measure of retail sales since 1999, and the biggest fall in manufacturing for nearly three years. The total value of April retail sales fell by 1.3% from the year before, the worst fall in six years, and "like-for-like sales" were down 4.7% year-on-year, the sharpest fall since January 1995.
House price inflation, the entire "basis" of Britain's consumer economy, is stagnating. Average house prices in England and Wales rose just 0.3% in the first quarter compared with the previous three months, and fell. But prices fell in every part of the country except London, where they rose by more than 4%.
Shanghai Company Proposal To Save Jobs at Rover
The Shanghai Automotive Industry Corp., which had considered buying Rover before it collapsed in April, is proposing to save up to 1,500 jobs at the MG Rover plant in Birmingham. Last month, Rover had to lay off more than 5,400 of its 6,100 workers. SAIC wants to set up a British "engineering development" base, and would use Rover's technology and R&D staff. Rover had employed 500-600 engineers before it collapsed.