Posts Tagged ‘france’

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The World Economic Forum has picked out 36 start-ups which it sees as technology pioneers. The companies and their offerings are indeed impressive, and lend more support to the idea often suggested here that we are in the midst of the greatest industrial/technological revolution to date. There is one problem with the list however: none of the companies is British. It is not practical to describe every one of the 36 companies here. For the full list go to: Technology Pioneers 2014

But here is some of the companies picked out by ‘Investment and Business News’ which seem especially interesting.

A number on the list are working on cures – or at least treatments – in the medical sector. Amongst them are three firms based in Cambridge, Massachusetts. Aghios Pharmaceuticals says: “Cancer cells not only consume more nutrients than other cells, they also process them differently.” Agios believes there could be 50 to 100 metabolic enzymes on which various cancers depend for their survival, from which a new wave of cancer therapies could emerge. Another company, BIND, is working on specifically-designed nanoparticles called Accurins, which are programmed to pass through openings in blood vessels at disease sites and bind to specific types of cells and tissues, such as cancer cells, while avoiding detection and attacks by the immune system. And finally there is Bluebird Bio, which is pioneering a way to correct aberrant sections of DNA that cause disease and are passed from generation to generation. The company has identified a way to harness the natural ability of the human immunodeficiency virus (HIV) – a lentivirus – to insert a modified gene into a patient’s own cells. Bluebird uses its lentiviral vectors to transfer functional genes into a patient’s own stem cells, which are capable of changing into multiple cell types, providing the company with the opportunity of treating a wide range of genetic diseases. Er… so that is using the science behind AIDS to manipulate DNA.

Alphabet Energy (California) has developed technology that generates electricity from heat, in the same way that solar panels generate electricity from light. That is wow(ish) idea, but so is this: Cyberdyne Inc (Japan) has developed a robot suit it calls HAL, which is strapped to one or both legs and is designed to support disabled people, who are learning to walk again.

EcoNation from Belgium produces the LightCatcher, which is a solar-powered sensor system that tracks the lightest point in the sky and controls a mirror that optimizes the amount of daylight coming in. The LightCatcher also diffuses light and reflects heat. It claims energy and cost savings typically range from 50 to 70 per cent.

Then there is one that could be straight out of ‘Star Trek’. Second Sight (based in California) has developed an implant which is surgically inserted onto the retina. The patient wears glasses containing a camera; a small computer, worn on a belt, processes signals from the camera, and an antenna on the side of the glasses transmits them wirelessly to the implant. The implant sends electrical impulses to the brain, causing the patient to perceive patterns of light.

Finally, unPartner, from Aix-en-Provence, France, has developed an ultra-thin, 90 per cent transparent photovoltaic cell. It is designed to enable telephones, tablets, building and vehicle windows, billboards and greenhouses to generate electricity from any natural or artificial light source.

It is an impressive line-up., Maybe it is unfair to point at the lack of UK companies; there is no shortage of innovation in UK, including the discovery of graphene. But unfair or not, let’s ask the question: where, oh where, are the Brits on the list? Let’s hope for better things next year.

© Investment & Business News 2013

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The numbers say what the numbers say. It may not feel right; it may defy reason, but there are reasons to think the Eurozone may be set to exit recession.

The latest flash Purchasing Managers’ Index tracking Eurozone manufacturing and services hit an 18 month high.

That is good, but especially encouraging was that the July index was 50.00, which is good news because 50 is seen as the key level. Anything below 50 is supposed to correspond with contraction; anything above signifies growth. Okay, a reading of 50 is not that remarkable, and this is just the flash reading, meaning that it is an early estimate. But it is a good sign, nonetheless.

Markit, which compiles the data, said: “Manufacturers reported the largest monthly increase in output since June 2011, registering an expansion for the first time since February of last year. Service sector activity meanwhile fell only marginally, recording the smallest decline in the current 18-month sequence and showing signs of stabilising after the marked rates of decline seen earlier in the year.”

In Germany output rose at the fastest rate for five months. Service sector growth hit a five-month high while manufacturers reported the steepest monthly increase in output since February of last year. Overall job creation hit the highest since March.
As for France, the PMI hit its highest level since March 2012. It’s not the only good news out of France of late. An index showing that morale in the industrial sector recently rose for the fourth month running, led the French Finance Minister Pierre Moscovici to say: “Nous sommes en sortie de recession,” or “We are out of recession.”

On the other hand, the index measuring French industrial morale is still below the historic average. The PMI was up, but at 48.8 still pointed to contraction, and in any case, France has to enforce much more substantive reforms to its labour market before it can claim its struggle is over.

Ben May, European economist at Capital Economics, said: “There are some signs that the euro-zone economy is on the mend and might perhaps soon exit recession. Nonetheless, the PMI and other business surveys have signalled several false dawns in the recent past. What’s more, with banks still reluctant to lend and demand for credit remaining weak, it is still too soon to conclude that the region is in recovery mode.

© Investment & Business News 2013

New car registrations across the EU dipped by 5.9 per cent in May, falling to their lowest level recorded in the month of May since 1993. Intriguingly, the UK was one of the few countries in the region to see a rise in new car registrations. Meanwhile, the UK car export sector is one of the new sectors to see genuinely rapid growth. When you consider how awful the state of our main export market is, that is quite impressive.

According to the ONS: “In 2002, there was a deficit in trade in cars of around £7.5 billion. However, the value of exports of cars from the UK more than doubled over the 10 years to 2012, while the value of imports grew much more modestly so in 2012 this trade was close to break-even (that is, the levels of exports and imports were virtually the same).”

Tim Abbott, managing director of BMW UK operations, has forecast that the UK will be producing more cars than France by 2018, moving it into second place for car production in Europe.

Yet, look at car sales. According to the European Automobile Manufacturers Association, in May demand for new passenger cars declined by 5.9 per cent in the EU, reaching 1,042,742 units. In absolute figures, this is the lowest level recorded for a month of May since 1993 when new registrations stood below one million. Five months into the year, a total of 5,070,840 new cars were registered in the region, or 6.8 per cent less than in the first five months of 2012.

Sales were down 2.6 per cent in Spain and by 8.0 per cent in Italy. They fell 9.9 per cent in Germany and 10.4 per cent in France. The UK saw growth of 11.0 per cent.

So what can we read into this? Firstly, the fact that UK car registrations rose may be a sign of the UK economy picking up.

But it is genuinely impressive that the UK trade deficit in the car industry has shrunk and is possibly on the verge of going positive, at a time when our main market is stuck in depression, and at a time when UK domestic car sales are rising.

The UK car industry may actually do very well indeed once conditions return to normal. Indeed, even if they don’t return to normal, the UK only really needs to see the growth trajectory of its car exports to stay where it is, and by 2018 the UK car industry will once again be an important net contributor to UK GDP.

© Investment & Business News 2013

According to the OECD, US household gross debt to gross disposable income had fallen from 130.7 per cent in 2007, to just 107.9 per cent at the end of 2012.

According to the Fed’s latest US Financial Accounts, debt as a share of disposable income has fallen to 110 per cent, from 112 per cent at the end of last year.

At the same time US house prices have at last begun to rise, and both the Dow Jones and S&P 500 have recently hit all-time highs, which has pushed up the value of US assets. Paul Dales, Senior US Economist at Capital Economics, put it this way. He said: “The ratios of debt to net wealth and debt to assets have fallen to rates more in line with long-term trends.” He explained further: “Every $1.00 of debt is now backed by $6.30 of assets, whereas before the recession it was backed by $4.80 of assets.”

Okay, returning to OECD figures, US household gross debt to gross disposable income was just 96.4 per cent in 2000. So in comparison to that year, debt is still quite high. But the trend is clear. US households have seen their own balance sheets improve markedly.

When you think about it, the above data illustrates why the economy has struggled so much in recent years. Despite interest rates being at record lows, US households have engaged in some pretty drastic deleveraging. Economists who failed to spot the crisis in the making during the mid noughties, failed to grasp that US households had simply run out of puff, and that the combination of falling house prices and over indebtedness meant an extended period of readjustment was inevitable.

This adjustment may have a couple more years to run yet. But it is not unreasonable to assume that by the midpoint of this decade, the US consumer will be able to lead the US economy into a new growth period. In combination there are signs of companies moving their manufacturing back to the US, which is a trend that was predicted by the Boston Group some two years ago. Both Apple and Google, for example, have recently announced new products which, just like Bruce Springsteen, will be made in the USA.

In the UK we are seeing something similar, but on a smaller scale. UK household debt to income has fallen too. In fact it has fallen even more sharply than in the US, but then again it was much higher to begin with. OECD figures indicate that UK household gross debt to gross disposable income was 146 per cent at the end of 2012, around 25 percentage points down on the 2007 high, but still among the highest levels in the OECD. Maybe the OECD data is simply telling us the UK deleveraging process has longer to run. If the US will enjoy growth like it used to in 2015, maybe in the UK we will have to wait until, say, 2017.

But it is interesting to note that Tim Abbott, managing director of BMW UK operations, has forecast that the UK will be producing more cars than France by 2018, moving it into second place for car production in Europe.

So this is good news, albeit that the time frame is more stretched that we might prefer.

But good news can create bad news, and that is what the markets are worrying about. To find out why, read the next piece.

© Investment & Business News 2013

The news out of the euro area was good yesterday. Yes, it is still in recession, but it has been in recession for a record length of time. No, there is no sign of the recession coming to an end, but at least the rate of contraction seems to be falling.

See it in terms of a football team that has been thrashed three games in a row, say seven nil, six nil and eight nil. Then it only gets beaten four nil, and the manager breathes a sigh of relief, fans go home smiling, things are getting better, they say.

The latest Purchasing Managers’ Index tracking the euro area was out yesterday. The index rose to a 15 month high.

In fact, it rose from 46.7 to 48.3. As Markit, which compiles the PMI data, said: “The seasonally adjusted Markit Eurozone manufacturing PMI indicated the slowest pace of contraction since February 2012.”

It is just that any score under 50 is meant to suggest contraction.

The PMIs for Germany, the Netherlands and Austria all hit three month highs; Italy rose to a four month high; France to a 13 month high; Greece to a 23 month high, and Spain to 24 month high.

That may seem impressive, but just bear in mind that in each case the PMI index was consistent with contraction.

Yes it is good news, and maybe it is a little harsh to compare it with a football team celebrating because it had only been beaten four nil, but neither does the data provide reason for much excitement.

PS: In Spain, there are signs of a gradual improvement – although unemployment remains awful. Talk is that the Spanish economy is beginning to have a more Germanic feel about it. Maybe in a few years’ time Spain, just like Germany, will be a great exporter… maybe. Just bear in mind that the global economy cannot afford too many Germanic type models, because if every country tries to export more than it imports the result will be economic depression.

© Investment & Business News 2013

May 14 2013: put that date in your diary. For on that day in history data was released showing industrial production across the euro area rose by no less than 1 per cent in March on the month before. It was the second month in succession to see a jump in production, although in February the increase was a more modest 0.3 per cent.

Chris Williamson at Markit said: “The March rise in production was the largest since July 2011.” He added: “The data therefore bode well for GDP to show a significantly weaker decline than the 0.6 per cent contraction seen at the end of last year, and even raises the possibility of the recession having ended.”

Alas, look a little closer and the story that emerged is not quite so good. Mr Williamson put it this way: “[The rise in production] was in part buoyed by a 3.8 per cent surge in energy production. The upturn also masked worryingly strong variations within the single currency area: production surged 1.7 per cent higher in Germany but fell by 0.9 per cent and 0.8 per cent in France and Italy respectively.”

He said: “Any improvement or respite from recession looks likely to be short-lived, as the business surveys have already started signalling a renewed weakening.”

On the other hand, at least there are signs that Germany may be turning. Not only did data reveal a rise in industrial production, the latest Zew index – a measure of investors’ expectations – rose. According to Capital Economics, it is consistent with growth in the Germany economy of around 2 per cent, from just 0.4 per cent in Q4.

So there you have it, Germany is doing well but other parts of the Eurozone are not so strong. Maybe May 14th was not so unusual after all.

© Investment & Business News 2013

Twenty seven per cent! For those under 25, the unemployment rate is 57 per cent. These are staggering numbers. Spain’s government debt is out of control, not because it is wasting money, but because so few of its workforce have jobs.

Yesterday saw data on Spanish and French labour markets. The data on France was awful when measured by any normal yard stick, but in comparison to Spain it was positively brimming with optimism.

French unemployment is, in fact, now 3.2 million, compared with 6.2 million in Spain. In the UK unemployment is 7.9 per cent, or 2.56 million.

We keep hearing about how the Eurozone is slowly recovering, not that this is showing up in the data on GDP; that we just need to give the region time; that green shoots are everywhere. But look at the job stats.

Don’t compare the adjustment occurring in Spain with the UK experience under Mrs Thatcher. The Spanish experience is worse by a substantial order of magnitude.

There are structural problems with the Spanish economy – that is for sure. But what Spain, along with Greece, Portugal and the rest of the motley crew needs is massive investment.

By all means impose austerity on sectors of the respective economies. But other sectors must be recipients of a latter day Marshall Plan, or the consequences for democracy and peace in Europe will be dire.

The IMF and the French government disagree. The IMF has downgraded its previously estimated forecast for the French economy to grow by 0.3 per cent in 2013, to a 0.1 per cent contraction. The French government predicts a growth rate of 0.1 per cent in 2013. The difference between the two sets of projections is not great, but psychologically speaking there is a huge gulf between modest growth and a slight contraction. Alas, the IMF may be understating the reality.

It really boils down to culture. There is the Anglo Saxon way and the French way. In the UK, the favourite pastime of many Brits is called “let’s knock our country.” Let’s find reasons why we are… how can one put it nicely?… crap. So that’s our cars, our factories, our, well… our everything. The French have one thing in common with the Brits, and that is that they too find it easy to think of things wrong with Britain. Rarely, however, do you hear the French talking down France.

This is not meant to be a criticism of either set of cultural attitudes. It is just the way it is.

When it comes to economics, however, it is not like that. Anglo Saxon economists look at the restrictive labour laws in France, the wall of protectionism it erects – it is a kind of latter-day Maginot line of business – at its inefficient and highly protected auto makers, at French taxes, at the low retirement age at a time of an ageing population, and scratch their heads. It is a miracle, say these economists, that France didn’t fall into recession years ago, and then stay there.

French economists, on the other hand, look at the UK, at its nonsensically low minimum wage at a time when wages are falling, at the lack of maximum working hours and the high level of our retirement age at a time when unemployment is high, at the way in which Brits sit back and allow foreign companies to buy out our famous brands and businesses, at our lack of manufacturing, and scratch their heads. They say the only reason why the UK didn’t fall into recession years ago, and stay there, was because of that hugely damaging and destructive place we call the City of London.

Last year the US Conference Board put out forecasts for the 58 most important countries across the global economy for the next ten years and predicted that the French economy would be the worst performer. It forecast an average growth rate of 0.2 per cent for France over the next five years, and 0.3 per cent over the next ten years. If these forecasts are right, that may support the Anglo Saxon view. On the other hand, its forecasts for the UK weren’t much better.

Last year the ‘Economist’ ran a controversial article claiming that France was the time-bomb at the heart of Europe.

It went down in France about as well as the idea of New Zealand wine.

But looking forward, well actually, we might as look backward. The difference in French and Anglo Saxon ideology goes back centuries. And neither side has yet won the argument.

©2013 Investment and Business News.

Investment and Business News is a succinct, sometimes amusing often thought provoking and always informative email newsletter. Our readers say they look forward to receiving it, and so will you. Sign-up here

If you are a journalist, the French are great. They provide the juiciest copy, which can transform the driest topics into cannon fodder for xenophobes, and realists alike.

This time the task of ramping up Anglo/Gallic prejudices has fall to the Governor of the Bank of France Christian Noyer.  Talking to the ‘FT’, he suggested that the City of London should be stripped of its position as the financial hub of euro trading. So that’s bonds, derivatives, equities – in fact just about everything. If it’s finance and involves the euro, then London holds the position that should belong to Paris.

Mr Noyer said: “We’re not against some business being done in London, but the bulk of the business should be under our control. That’s the consequence of the choice by the UK to remain outside the euro area.”

The funny thing is, however, that Mr Noyer might be right – or at least partially right.

He is wrong about stripping London of its pre-eminent position. It is not up to governments to decide which centres should be hubs. You can’t wake up one morning, and say let’s rid London of its status as a financial capital.

But the markets can decide to do this. And there are signs that this is happening, and this is the price the UK pays for not being in the euro. It has nothing to do with the wishes of politicians, just the reality of markets.

But it doesn’t seem very likely that Paris will take over from London, however, not as long as France insists on anti-market friendly policies. A recent survey from the Conference Board in the US recently forecast that France will be the worst performing economy in the world over the next ten years or so.  The report may or may not prove to be right, but even if there is only a miniscule of truth in the report, it is hard to see Paris taking over from London in anything. See: Is France really set to be the worst performing economy in the world over the next ten years?

Moving away from France and the UK, there is the issue of tax avoidance. We hear about the evils of Amazon, Google, Starbucks and co avoiding tax, but the truth is that they are multinationals, and an advantage of being a multinational is that you can channel profits into countries where tax rates are lower. There is only one possible solution and that is to have some kind of minimum worldwide corporation tax rate (either that or have no corporation tax, at all).  Getting international agreement for such as idea is probably impossible, but a reasonable half-way measure might be an EU-wide corporation tax. Alas, the UK’s influence in the EU is such that it is unlikely to get such an idea through, even if it wanted to. This is another disadvantage of the UK’s EU cynicism.

On the other hand, a new series on ‘Sky News’ is set to expose the way the UK’s economy’s woes are focused on certain regions. As Ed Conway, the presenter of the TV series, said in the ‘Telegraph’: “It transpires that London and the South East of England never experienced a double-dip recession at all, they simply did not shrink through 2011 and 2012. The economic contraction that led to the national ‘double dip’ happened exclusively in the North, the Midlands, Northern Ireland, Scotland and Wales.” See: Prosperity across the South is hiding a recession in much of Britain

Here is the irony. While some may lament the disadvantages of not being in the euro, the UK suffers from its own single currency.

Truth is that the success enjoyed by the City has pushed up the value of the pound so much that regions outside the South East struggle to compete.

So should London and the South East have their own currency, let’s call it the Boris? Maybe an independent Catalonia needs its own currency too.

You may think this is a daft idea. You may be right.

It is probably the case that if indebted European countries left the Eurozone, their economies would, after an initial shock, enjoy a strong economic recovery.

But if you accept that the idea of London having its own currency is daft, this would suggest you believe the euro must survive, at any cost.

©2012 Investment and Business News.

Investment and Business News is a succinct, sometimes amusing often thought provoking and always informative email newsletter. Our readers say they look forward to receiving it, and so will you. Sign-up here