The International Monetary Fund is more optimistic about the economy of the 19-country eurozone after a run of elections saw populist politicians defeated and risks to its outlook abated.

 

In an update to its April projections published Monday, the IMF revised up its growth forecasts for many eurozone countries, including the big four of Germany, France, Italy and Spain, after stronger than anticipated first quarter figures.

 

Germany, Europe’s biggest economy, is projected to grow by 1.8 percent, up 0.2 percentage point on the previous estimate, while France is forecast to expand 1.5 percent, up 0.1 percentage point. Projections for Italy and Spain have been revised higher by a substantial 0.5 percentage point. The two are now expected to grow by 1.3 percent and 3.1 percent, respectively. All four are also expected to grow by more than anticipated in 2018.

 

Overall, the IMF expects the eurozone to expand by 1.9 percent this year, 0.2 percentage point more than its previous projection. That’s just shy of the IMF’s 2.1 percent forecast for the U.S., which was trimmed by 0.2 percentage point. However, it’s slightly ahead of Britain’s, whose projected growth was revised down 0.3 percentage point to 1.7 percent following a weak first quarter that raised concerns about the country’s economy ahead of its exit from the European Union.

 

The IMF’s eurozone upgrades come amid rising confidence in the bloc following a series of elections that saw populist politicians defeated, most notably in France, where Emmanuel Macron defeated the far-right candidate Marine Le Pen in May’s presidential election.

 

At the start of the year, political risks were considered the major hurdle facing the eurozone. There had been fears that radical changes in government could have seen more insular economic policies and further questions over the future of the euro itself.

 

“On the upside, the cyclical rebound could be stronger and more sustained in Europe, where political risk has diminished,” the IMF said in Monday’s report.

 

The lead eurozone economist at Oxford Economics, Ben May, thinks the IMF’s forecast may actually turn out to be too cautious. He’s predicting 2.2 percent growth as the region benefits from lower inflation, healthy global growth and a pick-up in business investment.

 

The IMF’s update came as a survey showed the eurozone economy slowed in July from a fast pace.

 

Financial information firm IHS Markit said Monday that its purchasing managers’ index for the region fell to a six-month low of 55.8 points in July from 56.3 the previous month.

 

The indicator still points to one of the strongest economic expansions in the past six years, with quarterly growth at a still-healthy 0.6 percent, down only slightly from the 0.7 percent signaled for the second quarter. Official second-quarter figures are due in early August.

 

Chris Williamson, the firm’s chief business economist, says it’s probably just a “speed bump,” with the economy “hitting bottlenecks due to the speed of the recent upturn.”

 

He noted that forward-looking indicators, such as new order inflows, suggest robust growth. As a result, job creation is “booming” as companies expand to meet demand.

 

The survey is likely to inform the ECB’s deliberations as it mulls when to start reining back its monetary stimulus. Last week, ECB President Mario Draghi sought to be neutral, worried that any indication of any change of course could cause the euro to surge. More clarity is expected at the next policy meeting on Sept. 7.

 

Much will depend on inflation. The chief purpose behind the ECB’s stimulus efforts, which has involved slashing interest rates and buying 60 billion euros ($69 billion) a month in bonds at least through the end of the year, is to get inflation up to its goal of just below 2 percent. In June, the annual rate of inflation was 1.3 percent.

 

Monday’s survey suggested that inflation pressures eased in July, which may reinforce Draghi’s belief that there isn’t “any convincing sign of a pickup in inflation.”
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Lucy Harris thinks Britain’s decision to leave the European Union is a dream come true. Nick Hopkinson thinks it’s a nightmare.

The two Britons — a “leave” supporter and a “remainer” — represent the great divide in a country that stepped into the unknown just over a year ago, when British voters decided by 52 percent to 48 percent to end more than four decades of EU membership.

They are also as uncertain as the rest of the country about what Brexit will look like, and even when it will happen. Since the shock referendum result, work on negotiating the divorce from the EU has slowed to a crawl as the scale and complexity of the challenge becomes clearer.

Harris, founder of the pro-Brexit group Leavers of London, says she is hopeful, rather than confident, that Britain will really cut its ties with the EU.

“If we haven’t finalized it, then anything’s still up for grabs,” she said. “Everything is still to play for.”

She’s not the only Brexiteer, as those who support leaving the EU are called, to be concerned. After an election last month clipped the wings of Britain’s Conservative government, remainers are gaining in confidence.

“Since the general election I’ve been more optimistic that at least we’re headed toward soft Brexit, and hopefully we can reverse Brexit altogether,” said Hopkinson, chairman of pro-EU group London4Europe. “Obviously the government is toughing it out, showing a brave face. But I think its brittle attitude toward Brexit will break and snap.”

Many on both sides of the divide had assumed the picture would be clearer by now. But the road to Brexit has not run smoothly.

First the British government lost a Supreme Court battle over whether a vote in Parliament was needed to begin the Brexit process. Once the vote was held, and won, Prime Minister Theresa May’s Conservative government officially triggered the two-year countdown to exit, starting a race to untangle four decades of intertwined laws and regulations by March 2019.

Then, May called an early election in a bid to strengthen her hand in EU negotiations. Instead, voters stripped May’s Conservatives of their parliamentary majority, severely denting May’s authority — and her ability to hold together a party split between its pro-and anti-EU wings.

Since the June 8 election, government ministers have been at war, providing the media with a string of disparaging, anonymously sourced stories about one another. Much of the sniping has targeted Treasury chief Philip Hammond, the most senior minister in favor of a compromise “soft Brexit” to cushion the economic shock of leaving the bloc.

The result is a disunited British government and an increasingly impatient EU.

EU officials have slammed British proposals so far as vague and inadequate. The first substantive round of divorce talks in Brussels last week failed to produce a breakthrough, as the EU’s chief negotiator, Michel Barnier, said Britain must clarify its positions in key areas.

Barnier said “fundamental” differences remain on one of the biggest issues — the status of 3 million EU citizens living in Britain and 1 million U.K. nationals who reside in other European countries. A British proposal to grant permanent residency to Europeans in the U.K. was dismissed by the European Parliament as insufficient and burdensome.

There’s also a fight looming over the multibillion-euro bill that Britain must pay to meet previous commitments it made as an EU member. British Foreign Secretary Boris Johnson recently asserted the bloc could “go whistle” if it thought Britain would settle a big exit tab.

“I am not hearing any whistling. Just the clock ticking,” Barnier replied.

EU officials insist there can be no discussion of a future trade deal with Britain until “sufficient progress” has been made on citizens’ rights, the exit bill and the status of the Irish border.

“We don’t seem to be much further on now than we were just after the referendum,” said Tim Bale, professor of politics at Queen Mary University of London. “I’m not sure anybody knows just how this is going to go. I’m not sure the government has got its negotiating goals sorted. I’m not sure the EU really knows what [Britain’s goals] are either.

“I think we are going to find it very, very hard to meet this two-year deadline before we crash out.”

The prospect of tumbling out of the bloc — with its frictionless single market in goods and services — and into a world of tariffs and trade barriers has given Britain’s economy the jitters. The pound has lost more than 10 percent of its value against the dollar in the last year, economic growth has slowed and manufacturing output has begun to fall.

Employers’ organization the Confederation of British Industry says the uncertainty is threatening jobs. The group says to ease the pain, Britain should remain in the EU’s single market and customs union during a transitional period after Brexit.

That idea has support from many lawmakers, both Conservative and Labour, but could bring the wrath of pro-Brexit Conservatives down on the already shaky May government. That could trigger a party leadership challenge or even a new election — and more delays and chaos.

In the meantime, there is little sign the country has heeded May’s repeated calls to unite. A post-referendum spike in hate crimes against Europeans and others has subsided, but across the country families have fought and friendships have been strained over Brexit.

“It has created divisions that just weren’t there,” said Hopkinson, who calls the forces unleashed by Brexit a “nightmare.”

On that, he and Harris agree. Harris set up Leavers of London as a support group after finding her views out of synch with many others in her 20-something age group.

“I was fed up with being called a xenophobe,” she said. “You start this conversation and it gets really bad very quickly.”

She strongly believes Britain will be better off outside the EU. But, she predicts: “We’re in for a bumpy ride, both sides.”
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Authorities in Madrid asked Spain’s anti-trust watchdog on Saturday to investigate whether Uber’s new low-cost airport transfer service constitutes unfair competition.

The city council’s request follows the ride-hailing app’s return to the Spanish capital last year after the CNMC competition regulator called for the government to lift a ban on the U.S. company.

The firm’s recently launched Uber Airport service offers a tariff of 15-29 euros for a ride between Madrid’s Barajas international airport and the city center. Standard taxi fares for the trip are fixed at 30 euros.

“(Uber Airport) could violate several articles of the Law of Unfair Competition and consumer rights, if it is proven that the service is being operated at prices below operational costs and with the sole intention of gaining customers through unfair competition,” Madrid City Council said in statement.

No one at Uber could immediately be reached to comment.

European regulations

Uber, which expanded into Europe six years ago, has come under attack from established taxi companies and some EU countries because it is not bound by strict local licensing and safety rules that apply to some of its competitors.

Spanish taxi drivers have held three strikes so far this year, arguing that ride-hailing apps, which are regulated in Spain under VTC licenses typically used for private, chauffeur-driven vehicles, constitute unfair competition because they do not meet current regulations and pay less tax.

In May, the European Court of Justice (ECJ) dealt a blow to the company by ruling that it should be considered a transport service and not an app.
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The state government in India’s capital told Philip Morris International Inc and other tobacco companies Saturday to remove all advertisements from tobacco shops in the city, warning them of legal action if they do not comply.

The order, sent by Delhi state’s chief tobacco control officer S. K. Arora, comes days after Reuters reported that Philip Morris was promoting Marlboro cigarettes, the world’s best-selling brand, by advertising them at tobacco shops and distributing free cigarette samples. Government officials say such tactics flout the law.

The strategy was laid out in hundreds of pages of internal Philip Morris documents reviewed by Reuters that cover the period from 2009 to 2016. 

​Tobacco ads illegal

Indian officials have previously said tobacco advertising using brand names or promotional slogans is illegal under the country’s Cigarettes and Other Tobacco Products Act and its accompanying rules. But Philip Morris and India’s leading cigarette maker ITC Ltd say they comply with regulations and that the law allows advertising inside a kiosk.

Arora said the federal health ministry had told him that all brand advertisements, irrespective of where they were placed, were not allowed in the country.

Philip Morris and ITC did not immediately respond to requests for comment Saturday.

Tobacco companies have continued to advertise at sale points despite repeated warnings from the Delhi state government in recent years. Philip Morris has been paying a monthly fee to some tobacco vendors to display the company’s colorful advertisements, the Reuters investigation found.

Arora also told Reuters he “will investigate and conduct raids” to check on distribution of free cigarettes at social events. 

“If violations are found, action as per law will be taken,” Arora said.

Tobacco law enacted in 2003

India enacted its national tobacco control law in 2003 and has since added rules to strengthen it, but government officials say companies get away with violations because law enforcement is weak.

The federal health ministry Friday said it planned to seek an explanation from Philip Morris and other tobacco companies about their marketing practices following the Reuters investigation that was published earlier this week. 

Philip Morris and ITC did not respond to requests for comment.
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An Australian man who died in a Sydney car crash may be the 18th death linked to faulty Takata air bags, after police said he was killed when hit in the neck by shrapnel from an air bag.

Police did not say the air bag in the Honda CR-V was from manufacturer Takata, whose faulty air bags have been linked to 17 deaths and more than 180 injuries worldwide.

However, Honda Australia director Stephen Collins confirmed on Saturday that the vehicle involved was linked to the worldwide recall.

“The vehicle involved, a 2007 Honda CR-V, was the subject of Takata airbag inflator recalls,” Collins said in a statement, in which he offered the company’s condolences to the family of the dead driver. “Honda Australia is working closely with authorities to provide whatever assistance is required.”

Takata has declared 2.7 million vehicles to have potentially defective airbags.

Takata Corp filed for bankruptcy last month after being forced to recall around 100 million air bags worldwide, but that figure could be set to double pending an ultimatum set by U.S. regulators.

Dozens of models of vehicles and nearly 20 automakers have been affected by the air bag recalls, with Takata’s automaker customers having so far borne much of the estimated $10 billion cost of replacing the faulty products.

Some automakers still use Takata inflators for replacements in the recalls, although some including Honda Motor Co, Toyota Motor Corp and Nissan Motor Co have said they will stop using Takata inflators for new contracts for future models.
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