US growth revised up again; India’s flagging economy raises concerns; UK young ‘more anxious’

1 US growth revised up again (BBC) The US economy grew even faster in the second quarter than previously thought, new figures have indicated. The Commerce Department said it grew at a 3.1% annual rate over the three months to the end of June, up from a previous estimate of 3%, which was itself revised up from an initial 2.6%.

The further upward revision came as a surprise to analysts, who had it expected it to stay the same. Higher consumer spending, helped boost the figure, as did state expenditure. The US economy is now growing at the fastest rate in two years.

2 India’s flagging economy raises worries (San Francisco Chronicle) Three years after Prime Minister Narendra Modi came to power on a euphoric wave of promises to boost India’s economy, add millions of jobs and bring “good times” to the developing nation. India’s economic prospects look decidedly grimmer.

India’s economic expansion has slowed to its lowest level in three years. Small businesses are struggling, or even shutting down, after overhauls of the nation’s currency and sales tax system. Modi’s own allies warn of a dire outlook, with some raising the specter of an economic depression.

While government ministers have urged patience, analysts and others in Modi’s governing Bharatiya Janata Party are not so sanguine about the current trends. “A hard landing appears inevitable,” Yashwant Sinha, a BJP lawmaker and former finance minister, said in a stinging commentary. He accused the government of rushing through poorly planned economic reforms, which he said will hobble home-grown businesses for years to come.

Another leading BJP lawmaker, Subramanian Swamy, said India was facing the possibility of a “major depression.” Last week, the Organization for Economic Cooperation and Development scaled back its economic growth forecast for India to 6.7 percent for the 2018 fiscal year, down from 7.3 percent predicted earlier this year. Other organizations and banks have made similar downward revisions.

Economists have said the country needs to maintain 8 percent growth to add enough jobs for some 12 million young people joining the work force every year. The warnings have been sobering for Modi, who appointed a new Economic Advisory Council this week to offer him advice independent of the finance ministry. Economists said that may be too little, too late.

Economists are most alarmed by the slowdown in manufacturing and construction — two sectors many had assumed would do well under a business-friendly government. Instead, both have seen a sharp rise in unemployment.

3 UK young ‘more anxious’ (Phillip Inman in The Guardian) A third of young people feel more anxious now than this time last year, according to a study that found the prospect of Britain leaving the European Union, money worries and the cost of housing have magnified doubts about future prospects.

The rise in anxiety sits alongside figures showing that around half of young people are struggling to make ends meet, including 10% of young people who are facing dire financial problems as stagnating wages and rising inflation hit their incomes.

Coming only a week after senior MPs called for an independent review of the UK’s rising debt levels, the Young Women’s Trust said many of the 4,000 young people aged 16 to 30 it surveyed for its annual report, Worrying Times, battled to make it to the end of the month without borrowing money from friends, family or commercial lenders.

The report found that 41% of young women and 28% of young men said it was “a real struggle to make their cash last until the end of the month”, compared with 39% and 27% respectively in 2016. The report’s authors said: “Our findings show young women are consistently more likely than young men to encounter money problems, workplace discrimination, health problems, worries about the future and low confidence. And women from the lowest socio-economic groups are faring worse still, with their situation also deteriorating in the last 12 months.”

The Young Women’s Trust said some measures of financial anxiety and wellbeing among the under-30s had recovered slightly since last year, when the poll registered a severe slump in financial confidence. But in July, when the poll was carried out, almost half of young people (47%) still said they were worried for the future.

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What could be next for Uberisation; Marks & Spencer gets into online food delivery; L’Oreal heiress is richest woman

1 What could be next for Uberisation (Simon Jack on BBC) Uber is not just a taxi-hailing app which has been baked into the lives of hundreds of millions of passengers and millions of drivers worldwide. Uberisation has come to mean the turning of traditional service industries on their head, by providing a technological platform to match users and providers on a massive scale.

It is the biggest company in the so called “gig” economy, in which short-term contracts or freelance work replace permanent jobs. Depending where you stand, that is either a great flexible working environment or a form of exploitation with little protection for workers.

Transport for London’s decision not to renew its licence may come as a shock to the 3.5 million customers and 40,000 drivers who have built this model into their urban lives. But there is no shortage of groups who will be punching the air in celebration.

Uber has been dogged with a bewildering range of controversies. It’s charged with failing to do proper background checks on its drivers and then providing them with poor working conditions, both of which Uber denies. Irate black cab drivers blame it for a rise in congestion and collisions and it’s been accused of a failure to report sexual offences, which Uber also contests.

Given that rap sheet, no wonder the company didn’t pass the “fit and proper” test, many will say. For the business community, revoking the licence of a tech giant from a global capital city sends a message that some entrepreneurs have described as unhelpful.

Others will see it as an important halt to a creeping revolution that threatens the pay, conditions and even dignity of work. It is widely thought that human drivers are only a temporary part of Uber’s business plan. Uber is a company that is looking towards a driverless future.

London is not the first city to ban Uber: several countries, states and cities have done the same. But coming from a truly global city and a hub of technology, this is perhaps the biggest red light Uber has been shown.

2 Marks & Spencer gets into online food delivery (Zoe Wood in The Guardian) Marks & Spencer has launched an online grocery service that will enable shoppers to have their dinner delivered to their front door within an hour.

The first trial is based at its Camden store in north London and offers home delivery within one- and two-hour slots within a three-mile radius. The minimum order is £10. Until now, selling food online has not made sense for M&S as its customers do not typically spend enough on each visit to make the service viable.

But the trial is tapping into a food home delivery boom as Britons increasingly use app-based services such as Deliveroo, Just Eat, UberEats to have meals delivered. There is no delivery charge for orders which are being handled by gig economy courier firm Gophr.

M&S boss Steve Rowe concluded it could no longer ignore the fastest growing section of the UK’s £180bn grocery market as new delivery services, such as AmazonFresh, which allows shoppers to order groceries at lunchtime and get the delivery in time for dinner, revolutionise the way Britain buys food. The high-street store is different from other food retailers as it stocks just 7,000 products, compared with Tesco’s 40,000. It also focuses on own-brand goods with only a limited number of big-name brands. It is not clear how the retailer would overcome these hurdles if it offered customers a full grocery outlet in the future.

3 L’Oreal heiress is richest woman (Gulf News) The death this week of L’Oreal SA’s founding family matriarch is putting the spotlight on a reclusive 64-year-old heiress who now finds herself as the richest woman in the world.

Francoise Bettencourt Meyers has shunned the glittering social life that her late mother, Liliane Bettencourt, once embraced. Bettencourt Meyers is known for playing piano for several hours a day and has written two books — a five-volume study of the Bible and a genealogy of the Greek gods.

Her seclusion will be harder to maintain as the head of Europe’s fourth-largest fortune. Through family holding company Tethys, she takes charge of her family’s 33 per cent stake in the cosmetics maker, which lies at the heart of a net worth the Bloomberg Billionaires Index values at $43.3 billion.

Bettencourt Meyers steps into the spotlight at a time of increasing discussion about the future of the family’s stake, as well as the 23 per cent of L’Oreal held by Swiss food-giant Nestle SA. The billionaire heiress has shown less interest in L’Oreal matters than her mother did, despite her role as a board member for more than two decades.

In addition to music and study, the bookish and austere Bettencourt Meyers has involved herself in charity work. Her $43.3 billion net worth puts her $5.4 billion ahead of Alice Walton, an heiress to the Wal-Mart Stores Inc. fortune, and at the top of the list of 64 women featured on the Bloomberg index, a daily ranking of the world’s 500 richest people. Of the 64 billionaires, 58 are stewards of an inheritance.

Bettencourt Meyers had a difficult and at times contentious relationship with her mother. After the death of her father, French conservative politician Andre Bettencourt, in 2007, she spent years battling her mother in court, claiming she was mentally unfit and had been manipulated by her entourage.

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Norway wealth fund value at $1trn; Britain’s debt time bomb; Unemployment seen as biggest risk to business

1 Norway wealth fund value at $1trn (San Francisco Chronicle) Norway’s sovereign wealth fund, the world’s largest of its kind, has hit a milestone value of $1 trillion, beating all expectations since its creation over 20 years ago.

The fund, which reached its record value early Tuesday, has been boosted lately by a rise in stock markets and a weaker US dollar, which increases the dollar value of its holdings in other currencies.

Norway first deposited oil and gas profits into the fund in May 1996 and CEO Yngve Slyngstad said nobody at the time had expected it to hit the trillion dollar mark, calling the growth “stunning.” The fund invests proceeds from the country’s oil and gas industry to secure pensions for future generations in Norway, a country of merely 5.3 million people.

Because of its sheer size, the fund does not reinvest all its money in Norway, or it would overheat the economy. So it places it worldwide, with some 42 percent in North America, 36 percent in Europe and 18 percent in Asia.

Of the total, 65 percent is in stocks — including a $7.4 billion stake in Apple and $5.5 billion in Alphabet. Norwegian lawmakers passed a law in 1990 to establish a government-owned oil and gas fund. In 1998, its management was transferred from the Norwegian finance ministry over to the Norges Bank Investment Management, a unit of the Norwegian central bank.

2 Britain’s debt time bomb (Larry Elliott in The Guardian) Britain’s debt time bomb is primed and ready to go off at any time. From never-never spending on credit cards to car loans, from overdrafts to payday loans, there is enough high explosive to devastate the economy for a second time in decade. All that is required is for the fuse to be lit.

The Bank of England is aware of the risks and has been issuing ever-more explicit warnings about debt. The warnings are fully justified, even if the Bank of England has itself been responsible for the build-up in debt.
After all, in the first 313 years of the Bank’s existence, official borrowing costs never once fell below 2%. In 2009 they were cut to 0.5% and left there until shortly after last year’s EU referendum when they were shaved further – this time to 0.25%.
Low interest rates were supposed to encourage people to borrow rather than to save – and that is precisely what has happened. Household debt levels as a share of national output are edging back to the record levels seen in the boom years in the build-up to the financial crisis.

For now, debt is a problem for some individuals but not for the economy as a whole. Debt servicing costs are much lower than they were before the crisis and the unemployment rate is at its lowest since 1975. Difficulties would only really arise if the Bank felt the need to raise interest rates aggressively or if unemployment were to increase sharply for any reason.

Imagining the circumstances in which the debt time bomb might go off is not all that difficult. There could be a severe run on the pound if the Brexit talks go badly, which would force the Bank of England to raise interest rates despite its concern about the impact on heavily indebted borrowers. A trade was between the US and China could derail what has been a fairly feeble global economic recovery. In truth, it would not take all that much to light what looks to be a fairly short fuse.

3 Unemployment seen as biggest risk to business (Straits Times) Unemployment is the biggest risk for businesses globally, according to a World Economic Forum survey of business leaders published on Wednesday.

The company executives put unemployment or underemployment as the top risk over the next 10 years, followed by fiscal crises and the failure of national governance, data from the WEF’s Executive Opinion Survey showed.

“Geopolitical risks and events have led to uncertainties which raise questions about how to manage resilience in uncertain times,” said John Scott, chief risk officer, commercial insurance, at Zurich. For businesses in the North America, East Asia and Pacific regions, the biggest risks were considered to be cyber attacks and asset bubbles.

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France to ban oil, gas production at home; India fears twin-front war with Pak, China; Asda to axe hundreds of jobs

1 France to ban oil, gas production at home (San Francisco Chronicle) France’s government has unveiled a law to ban all production and exploration of oil and natural gas by 2040 on the country’s mainland and overseas territories. The move is largely symbolic, however, as France’s oil and gas production represents just 1 percent of national consumption — the rest is imported.

Current drilling permits will not be renewed, according to the bill formally presented in a Cabinet meeting. France currently has 63 oil and gas drilling projects on its territory. The ban, which the government claims is a world first, is part of a larger plan to wean the country’s economy from fossil fuels, encourage clean energy and fulfill France’s commitments under the Paris Climate Agreement to curb global warming.

The bill, which was described by Environment Minister Nicolas Hulot, also includes a definitive ban on all shale gas exploration and extraction. Until now, only hydraulic fracturing, a process known as fracking, was banned. All other potential methods are now to be prohibited as well.

Hulot had announced in July that France will stop producing power from coal — now 5 percent of its total output — by 2022. France also wants to reduce the proportion of the power it gets from nuclear energy to 50 percent by 2025 from the current 75 percent.

2 India fears twin-front war with Pak, China (The Guardian) India’s army chief as said the country should be prepared for a potential two-front war given China is flexing its muscles and there is little hope for reconciliation with Pakistan.

General Bipin Rawat referred to a recent 10-week standoff with the Chinese army in the Himalayas that ended last week. He said the situation could gradually snowball into a larger conflict on India’s northern border. Rawat said Pakistan on the western front could take advantage of such a situation.

The Press Trust of India news agency quoted Rawat’s remarks at a seminar organised by the Center for Land Warfare Studies, a thinktank in New Delhi. India fought a war with China in 1962 and three wars with Pakistan, two of them over control of Kashmir, since securing independence from Britain in 1947. All three countries are nuclear powers.

Rawat said credible deterrence did not take away the threat of war. “Nuclear weapons are weapons of deterrence. Yes, they are. But to say that they can deter war or they will not allow nations to go to war, in our context that may also not be true,” the news agency quoted him as saying.

His comments came a day after India’s prime minister, Narendra Modi, and China’s president, Xi Jinping, agreed on a “forward-looking” approach to Sino-India ties, putting behind the Doklam standoff.

3 Asda to axe hundreds of jobs (BBC) Asda is to axe hundreds of jobs at its West Yorkshire head office and a further site in the East Midlands as part of a major cost-cutting drive. About 300 jobs are to go at Asda House in Leeds and George House in Leicester the chain said, with job descriptions to a further 800 roles changed.

The grocery giant said its home offices needed to “adapt how they operate to support our stores”. A spokesperson for Asda said: “In recent years, the competitive landscape in retail has changed significantly and Asda has been no different.

Figures for 2016 showed like-for-like sales were down 5.7% compared with the previous year. The chain is the third-largest UK supermarket behind Tesco and Sainsbury’s according to market researcher Kantar Worldpanel, but has been hurt by the rise of German discounters Aldi and Lidl.

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Gold spurts on North Korea tension; India credit growth slows; The rise of Snappcar

1 Gold spurts on North Korea tension (Siddesh Suresh Mayenkar in Gulf News) Gold prices spiked more than one per cent on Monday to its highest level in a year as risk averse investors sought refuge in the safe haven metal amid geopolitical tensions triggered by North Korea, which tested a hydrogen bomb on Saturday.

International spot gold prices hit a high of $1,334.33an ounce, the highest level since September of last year, before trading 0.68 per cent higher at $1,334.19.

“Safe haven assets are back in demand, following the announcement that North Korea had tested their most powerful nuclear bomb yet,” said Hussain Syed, Chief Market Strategist at FXTM. Comex Gold for December delivery was up 0.64 per cent higher at $1,338.90 an ounce. The Swiss Franc and the yen, which are also seen as safe haven assets, gained.

Gold has been a beneficiary of geopolitical tensions between the US and North Korea, even as the dollar has become weaker. The yellow metal has gained 16 per cent since the start of the year.

2 India credit growth slows (Khaleej Times) The credit growth of Indian banks slowed down to 8.1 per cent in 2016-17 from 10.9 per cent in the previous year, though the aggregate deposits improved on account of massive flow of funds after demonetisation, a Dun and Bradstreet report has said.

“The credit growth of all scheduled commercial banks slowed down from 10.9 per cent in 2015-16 to 8.1 per cent in 2016-17. The growth in aggregate deposits, on the other hand improved from 9.3 per cent in 2015-16 to 15.9 per cent in 2016-17, largely on account of a massive flow of funds into the banking system after the demonetisation of November 2016,” the report noted.

It said that the banks’ non-performing assets (NPAs) continued to display the highest level of stressed advances. “The gross non-performing advances [GNPA] of banks rose to 9.6 per cent in March, 2017 from 7.5 per cent in March, 2016. The net NPA ratio of banks stood at 5.5 per cent in March 2017,” the report said.

“At present, the Indian banking sector is going through a critical phase. The credit growth has remained subdued, particularly in the case of public sector banks. Increase in stressed assets has affected the profitability of banks and therefore, deteriorating asset quality means a major challenge for the banking industry,” Manish Sinha, managing director for India at Dun and Bradstreet, said.

The Indian banking sector has lately grappled with various challenges, including degradation in asset quality and a sharp slowdown in credit off take. The report highlights that an improvement in India’s macroeconomic fundamentals, the underlying potential in terms of a largely under-banked population and the digital push by the government can be leveraged to help the sector turn the tide in the coming years.

3 The rise of Snappcar (Senay Boztas in The Guardian)
He calls it “Airbnb for cars”, and if Victor van Tol is right, people sharing their vehicles could mean a Europe with 5m fewer of them in five years.

In 2011, Dutchmen van Tol and Pascal Ontijd launched Snappcar, a technology platform for car owners to rent their vehicles. The vision was a profitable startup, with economic, social and ecological impact.

“The 250m cars in Europe are used on average an hour a day,” says van Tol, chief executive of the Utrecht-based firm. “If a very small percentage of people start sharing, you can make a huge impact in bringing people together, cars not needing to be produced and saving money for owners and renters.”

He is, he says, 10% of the way to his goal of 500,000 cars shared, with operations in the Netherlands, Denmark, Sweden and Germany, 400,000 renter members and 45,000 vehicles on offer – all insured through Allianz.

Car manufacturers and rental firms are convinced such sharing could be one of the ways we drive in future: Europe’s largest car hire company Europcar took a 20% stake in Snappcar in June as part of a strategy to become a “global mobility solutions leader”.

Snappcar has also just completed an asset purchase of Germany’s number two peer-to-peer car sharing firm Tamyca – bringing it closer to challenging European market leader Drivy – and aims to expand to 20 European metropolitan areas, including the UK.

Like Airbnb breaking down the traditional hotel monopoly, van Tol thinks peer-to-peer car sharing gives more power to consumers and to owners: renters can pay less for an older car, for instance, while owners can (with full insurance cover) recoup part of their car costs.

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India growth rate slows; New Uber CEO suggests IPO; Millennials and the midlife crisis

1 India growth rate slows (BBC) India’s economy grew at its slowest pace for three years in the April-to-June quarter, official figures show. The economy grew by 5.7% compared with a year earlier, down from a rate of 6.1% in the previous quarter.

Many analysts had expected the economy to bounce back after the government’s crackdown on black market cash last year. However, confusion among some firms over a new tax on goods and services was blamed for holding back growth. Some retailers said ambiguous rules over the new sales tax, which began on 1 July, left them unsure over how to price their products.

But manufacturing saw the sharpest slowdown in growth, expanding at just 1.2% compared to 10.7% a year earlier. Growth in the financial, insurance, real estate and professional services sectors also slowed from 9.4% to 6.4%.

2 New Uber CEO suggests IPO (Straits Times) Uber Technologies’ new chief executive Dara Khosrowshahi told employees the ride-services company would change its culture and may go public in 18 to 36 months.

Mr Khosrowshahi, who led travel-booking site Expedia for 12 years prior to joining Uber, made the remarks as he introduced himself to Uber’s workforce during an all-staff meeting at its San Francisco headquarters. His plans include rebuilding Uber’s culture and growing market share as well as possibly conducting an initial public offering in 18 to 36 months, according to people who attended the meeting.

It is common for venture capital-backed companies to signal an initial public offering at a vague time in the future. “This company has to change,” Mr Khosrowshahi told employees, according to the Twitter feed of Uber’s communications team. “What got us here is not what’s going to get us to the next level.”

The appointment of Mr Khosrowshahi, who described himself as “a fighter”, comes as Uber is trying to recover from a series of crises that culminated in the ouster of former CEO Travis Kalanick in June. It is also a key step towards filling a gaping hole in its top management that at the moment has no chief financial officer, head of engineering or general counsel.

3 Millennials and the midlife crisis (Claire Suddath in Johannesburg Times) This month, two UK economists presented statistical proof for the existence of the midlife crisis. In a survey of 1.3 million people across 51 countries, they found that people report a measurable decline in happiness, starting in their 30s and continuing until around age 50, when they started to feel satisfied with their lives again.

“We’re seeing this U-shape, this psychological dip, over and over again. There is definitely a midlife low,” said Andrew Oswald, co-author of the study. Oswald’s co-author, David Blanchflower, adds: “I don’t know why some psychologists say it doesn’t exist. It’s blindingly obvious. All we did was plot the data points.”

The very idea of a midlife crisis originated in the early 1960s with a Canadian psychologist named Elliott Jaques. He was studying the creative habits of 310 famous artists such as Mozart, Raphael and Gaugin when he noticed a common trait: When the artists entered their mid-30s, their creative output waned. Some became depressed. A few committed suicide.

If anything, the dip recorded by Oswald and Blanchflower may simply be the statistical proof of what millennials are only starting to learn: “adulting” is hard.

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