2010: The death of the Tiger?

Cardiff Business News

AS Ireland laments the death of its Celtic Tiger the Chinese are preparing to see out the year of tiger to ring in the new year of the rabbit. It seems 2010 has brought the death of the tiger, making it an endangered species in the West.

Tiger
The death of the Celtic Tiger in 2010

This year finance ministers in the Eurozone have struggled to keep inflation low, ensure banks are furnished with credit and balance the demands of taxpayers against investors. With all the talk of cuts and austerity, what has got us in this mess, and what does 2011 hold for Western Economies?

European Bailouts
The Eurozone has had a rocky time. In May the IMF and the European Union announced a support package for Greece to the tune of 120bn euro. In November the same pair had to come to the rescue in Ireland with an 85bn euro package, despite the country’s initial denial that it needed any help. Fears of contagion in the Eurozone have not yet been quashed as some investors anticipate bailout deals for the Iberian peninsula.

European Day Of Action: Protests In Dublin - September 29th.
The Irish banks will get around 11bn euro from the European Financial Stability Mechanism (EFSM)

Austerity
For much of the developed western world it has been a year of austerity with spending cuts, tax hikes, bank bailouts, quantitative easing and emergency summits. The UK’s coalition government announced its comprehensive spending review in October, passing the buck (certainly not literally) to regional governments. Next year VAT, a consumption tax, will rise to 20% while spending cuts in the public sector will mean around 330,000 public sector workers will lose their jobs.

Go East
“Go East young man” has been the motto of the middle class with increasing numbers of investors and students looking for better job prospects and growth in Asia. Meanwhile the Euro crisis has prompted a move by the Chinese government to pour capital into the west by buying European bonds to ensure European financial stability.

The Welsh View
As for Wales – The Ryder Cup may have brought much international attention in 2010, but in terms of the economy, Wales has received very little good news of late. The office for national statistics released data last month revealing Wales as the poorest nation in the UK. And with an workforce heavily reliant on the public sector, a drive in the private sector may be hampered by poor technological infrastructure.

Reasons to be cheerful
While there has been much doom and gloom in the past year there are still some reasons to be positive for 2011. Wales is set to cash in on London 2012 as it will host 14 football matches and be used as a training base before the games by some international teams. It has never been easier to start a business, with a boom in online start-ups and the Cardiff Bay development has brought life to the Welsh capital. One indicator we will all be watching with anticipation is GDP, as the CBI has predicted 2% growth for the UK economy in 2011.

In Europe it is yet to be seen whether the ECB issues e-bonds or will increase the EFSM to stabilise markets.

Let’s just hope there is not a double dip recession, turning the year of the tiger to the year of the Bear.

‘Snow Joke – The Cost of Snow

Cardiff Business News

At primary school nothing excited us more than snow. Although the teacher wouldn’t let us out of class until the end of the day, we talked about it, thought about it and even planned our next hiding spot to pick off unsuspecting parents and classmates.


Snow brings Cardiff City Centre to a standstill

People are curious about snow. Who would have thought a frozen bit of water could cause so much intrigue. Some people poke their heads out of their doors just to see what is happening, others inspect the ground in their front garden and on top of their cars, while others still dig a clear path outside their driveway to minimise the risk of being sued.

Then there are those who are unable to resist the juvenile desire to form a rough sort of spherical shape and launch it at a wall, lamppost or passing pedestrian.

But today thousands of people across the UK are not so intrigued or enthusiastic about the big freeze. A White Christmas could put festivities “on ice” this year.

As flights have been cancelled right across the UK, it is important to know your rights and get the customer service you have paid for.

This scenario happened to me today. At the crack on dawn I dragged a heavy suitcase through the mushy streets of Cardiff in search of a taxi or any form of transport to get to the Airport. I checked all the updates at my departure and destination airports, both reassuring that flights were operating as per usual.

Eventually a taxi driver spotted me making deep tracks in the snow-laden pavement and took me to the airport. I wasn’t too bothered about the fare, a hefty £25, as I was sure my flight was due to board shortly. When I got to the desk, however, I was told the flight had just been cancelled.

My flight has been rescheduled for tomorrow, but I will lose out on airport transfers. Is the flight company liable to pay compensation? According to the Airport Users Traffic Council compensation is not handed out when flights are cancelled due to ‘extreme circumstances’, which includes bad weather.

Under the same act, the airline is required to refund me within seven days or offer a re-routing. But I will not qualify for compensation for hotel stays or transfer costs.

Aside from the cost of the snow to individuals, businesses will be hit as employees are stranded and shoppers postpone their big Christmas shop. It was estimated earlier this year the effects of snowy and icy conditions will cost businesses £1.2bn a day.

In the meantime as I am thinking of a plan ‘B’ – it could be a good time of year for ferry companies.

To see what areas have been affected visit the interactive UKsnow website.

The BBC dosen’t tell the full story about China

Cardiff Business News

The Cardiff Business community heard how BBC coverage of UK trade with China does not show the full picture at a business event in Cardiff earlier tonight.

Over one hundred people attending the event organised by the Cardiff Confucius Institute heard from business leaders who are currently operating in with the world’s fastest growing economy.

Representatives from leading Welsh Businesses presented case studies and success stories of working China, dispelling claims in the UK media that a trade imbalance was desperately in favour of the world’s fastest growing economy, which saw its GDP increase by 8.7% last year.

Stewart Ferguson of CBBC, the China Britain Business Council, challenged reports from BBC’s business editor Robert Peston who said Chinese exports to the UK were three times the figure for imports.

In an article on the BBC website earlier this month Mr Peston said: “In 2009 we sold £8.7bn of tangibles and intangibles to China, and we bought three times as much, £25.8bn, from the Chinese,” he says.

“Although over 10 years our sales of goods and services to China have increased by a seemingly healthy 4.6 times, imports have risen by a far greater multiple, 6.6 times.”

Mr Ferguson said although this was true, there were other contributions to the UK economy from China such as £2bn per year coming from Chinese students in China.

He added there are 4,000 British enterprises in China, while UK based accountancy firms dominate the Chinese market and as over 150m Chinese residents are expected to flock to the cities over the next ten years demand could grow for UK goods and services.

Wales and the CSR: What is to be done?

Cardiff Business News

Financial terminology has never been so in vogue as it is today.

At last, financial journalism has become recognised by a wider audience as a matter of necessity to understand what is going on in the world and why the bank won’t lend any money to Mr Joe’s business or refuses to offer a mortgage to Mrs Bloggs.

Financial jargon has become part of everyday language. In fact financial terms have been overused and abused, much to the horror of the average reader.

National debt, welfare and benefit cuts, budget deficits, currency wars, bond prices, yields, fiscal consolidation programmes, capital expenditure, quantitative easing, sub-prime mortgages, financial meltdown…I could go on. These terms have almost come into the vernacular since the onset of the financial crisis in late 2007 with technical terms appearing in newspaper articles, on TV and in the workplace. It all seems overwhelming.

However, we must wrestle with these terms to bring out some of the consequences and impacts these macro decisions have on you and I.

And this evening’s meeting in Cardiff on the impact of the Comprehensive Spending Review revealed on 20th October sought to answer some of the most important questions of how Wales will be affected by systematic budget cuts.

First Minister of Wales, Carwyn Jones, said at the meeting in Cardiff University that Wales had been disproportionately hit by the spending review.

Mr Jones told hundreds of Business leaders and students at the event that the current economic challenge left to the WAG to sort out was its biggest since devolution began 13 years ago.

He cited UK Economics Nobel Laureate, Chris Pissarides, who recently criticised government measures to cut public spending as running the risk of dropping people into poverty, adding that PWC’s recent forecast was that 50,000 public sector jobs would be lost as a result of the CSR.

He said: “These measures are not fair to Wales,” as housing benefit changes would hit poorer households more proportionately.

Meanwhile capital spending allocation will reduce by 25% this year and up to 41% over the next four years. Mr Jones also hit out at the government for neglecting development projects such as the defence training base at St Athan, the closure of the Newport passport office and other sidelined projects.

He also said the Barnett Formula, the mechanism used by the Treasury to work out the amounts of public expenditure, was flawed for Wales.

…More to follow…