Spain's PM says his country has turned a corner

Mariano Rajoy believes his austerity efforts have made sense and that the country can hope for better things in 2014

More than half its young people are unemployed, a double-dip recession has left the economy 7% smaller than it was five years ago, and debt has soared to nearly 100% of GDP. But Spain's prime minister, Mariano Rajoy, believes his country has turned the corner and can hope for better things in 2014, following its worst economic crisis since the Franco era.

In an interview with the Guardian and partner newspapers from Spain,Italy, France and Germany, Rajoy said the incipient turnaround proved that his austerity efforts "have made sense".

"Last year, the debate was over when Spain would get a bailout, and this year the debate is over when Spain will recover," Rajoy said. He based his optimism on recent unemployment figures which showed that the number of jobseekers had fallen in November for the first time, following positive signs in October.

"Since June 2007, the difference in the unemployment numbers for the corresponding month of the year before has been getting worse and worse and worse. There was a moment, in 2009, when comparing January 2009 and January 2008, one million extra people had registered as unemployed," he said.

"But now, for the first time, in October this year, this trend changed, and there is less unemployment than a year ago. And in November, this trend has been maintained," he added, with around 2,500 fewer people registered as unemployed last month.

"Am I satisfied with this? No. I'm not satisfied … but it is very important, because it shows that there is hope and that this country can and will move forward and that all the efforts that have been put in have made sense," said Rajoy.

Not so long ago, there were real fears that Spain could turn into the next Greece – with far greater implications for the euro and EU economy because of its greater size. The impact of the economic crisis is writ large across the nation: in the empty housing estates that were never completed as the construction boom ground to a halt, the pensioners protesting after their life savings were swallowed up by failing banks, and the vast numbers of young people moving abroad to find work.

But Rajoy thinks that the country has finally turned the corner, highlighting Spain's export industry, which has seen shipments abroad increase steadily over the course of the past year. Spain's powerful car industry is getting back on track, and foreign investors are returning, bringing with them the hope that the country can emerge from its recession.

Rajoy has been criticised for imposing strict austerity measures on Spain, which he argues have brought stability to a country that last year came close to a national bailout, but have seen unemployment spiral, particularly among the young, and deep cuts made to public services.

"It's evident that today there are far fewer people working than five years ago, that is to say that since 2008 things have not gone well in terms of employment. Logically, these people are experiencing difficult times, but it's also true that in Spain there is a very important safety net, namely public services, unemployment benefit … which have allowed people to attain a dignified standard of living," said Rajoy. He spoke of his dislike of raising taxes, but said that he had tried to be as fair as possible in doing so. "It's true that times of crisis generate great difficulties, but this crisis has generated problems for everyone," he said.

Many are worried about the kind of Spain that will emerge from the recession, in a country with one of the biggest wealth gaps in Europe, with the rich getting richer while the working and middle classes are left with rising debts, fewer public services, reduced salaries and more precarious employment.

Rajoy's government carried out labour market reforms in 2012 that made it easier for companies to fire staff, and to bring in more part-time contracts, and the prime minister said there were plans to introduce further such changes. But critics say these reforms fail to achieve what they set out to, namely to create jobs.

Rajoy defended the reforms, saying they had helped to stabilise employment. "In difficult times, it is better to go for lower salaries and to maintain the highest number of people in work," he said. "I would prefer full-time contacts, of course … but short-term contracts can help people out."

Not everyone is as hopeful as the prime minister. A report from PricewaterhouseCoopers last week suggested that Spain's economy would not recover for two decades, and would continue to experience high levels of unemployment throughout that time.

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Ikea France executives under investigation amid spying accusations

Head of Ikea France among those accused of employing private detectives to snoop on employees, particularly union activists, and even unhappy clients

Three senior Ikea executives in France were put under investigation on Wednesday over allegations they spied on disgruntled customers and former staff.

The head of Ikea France is among those accused of employing a firm of private detectives to snoop on individual employees, particularly union activists, job applicants and even unhappy customers, and of fraudulently obtaining personal information from police files.

A judge decided there was enough evidence to formally mis en examen(the equivalent of being charged) Stefan Vanoverbeke, the chief executive of Ikea France, his predecessor Jean-Louis Baillo and chief financial officer Dariusz Rychert, who were arrested on Monday and held for questioning.

Under French law, the men had to be formally put under investigation within 24 hours or freed.

Since January, a total of 10 people have been arrested and put under investigation for "fraudulent use of personal information", including four police officers and Ikea's former head of security.

The case is hugely damaging to the reputation of the flagship Swedish company famed for its family-friendly but infuriatingly difficult to assemble flat-pack furniture.

The accused are said to have requested a range of personal data, including criminal records and confidential details about the targets' dealings with the police or courts, even as witnesses or victims. Scores of people were alleged to have been snooped on, including a union official.

Last year, the satirical magazine Le Canard Enchainé obtained and published emails allegedly between Ikea's management in France and Sûreté International suggesting the security company was obtaining information from the national police information system on behalf of Ikea. The magazine said Ikea agreed to pay Sûreté International €80 (£66) for each request for information and that up to 200 demands were made at the same time.

Two unions have filed legal complaints against Ikea, accusing it of snooping on hundreds of people over a period of at least five years.

Among the claims is that Ikea asked investigators to find out if a customer, who was suing the company for €4,000 (£3,350), owned her own property or was known to the police. Other accusations centre on the tracing of car registration numbers.

Vanoverbek's lawyer, Alexis Gulbin, said his client denied involvement. "It was he who took corrective measures as soon as the problems were detected," Gulbin said.

Ikea France suspended and later fired the head of its risk management department last year along with three top-level executives, before publishing a new code of conduct.

In a statement in 2012, Christophe Naudin, head of Sûreté International, told journalists last year it had "consultancy and security contracts" with Ikea, but flatly denied snooping for the firm.

If found guilty of fraudulently using personal information, the accused face up to five years in prison and €300,000 in fines.Article Source : http://www.guardian.co.uk

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Stock markets soar on positive world manufacturing surveys

UK order books and output grew at fastest pace in 20 years while China's year-long contraction ended

Stock markets soared on Monday as surveys of manufacturing output around the world gave the strongest indication yet that the richest countries are finally shaking off the after-effects of the financial crisis.

British manufacturing order books and output grew at their fastest in almost two decades while China, which has suffered a year-long contraction in manufacturing output, saw activity expand in August. Factory sectors in Spain and Italy returned to growth for the first time since 2011. Only France and India among the world's biggest economies experienced falls in production and Paris will be comforted by indications that some areas of manufacturing stabilised during the summer.

India, though, appeared to be heading into deeper trouble after a fall in the rupee failed to arrest the country's first contraction in manufacturing for more than four years.

The FTSE 100 jumped almost 100 points to 6507 with mining groups leading the charge. Rio Tinto and Anglo American saw a sharp rise in their values as investors bet on a more widespread use of iron, coal and nickel. The French Cac and German Dax also rose strongly.

George Osborne has taken comfort in recent months that the UK's long-awaited recovery in manufacturing is under way. The services sector has expanded for more than a year, but the economy was unable to push ahead while construction and manufacturing contracted. Since the beginning of the year those sectors have stopped being a drag on growth and in recent months have added momentum to the growth figures.

The monthly snapshot from the Chartered Institute of Purchasing and Supply/Markit said the return of confidence, a rosier outlook for exporters and demand for new products had all helped UK factories in August.

The purchasing managers index (PMI) rose from 54.8 in July to 57.2 last month – its highest level in two and a half years.

The PMI is made up of various measures of industrial activity including orders, output, employment, stock levels and inflationary pressure.

Rob Dobson, senior economist at survey compilers Markit, said orders and output were growing at their fastest since the summer of 1994, a period when the UK was recovering from recession.

He said: "The UK's factories are booming again. Orders and output are growing at the fastest rates for almost 20 years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the eurozone."

Meanwhile, Britain's high streets have performed well this year and the British Retail Consortium said the trend continued into August. Sales rose 3.6% on a year ago as shops expanded to cope with rising demand. The BRC said the figures augured well for the autumn because they were strong enough to show an improvement on last August, when the Olympics was at its height.

Strong manufacturing growth has been accompanied by an increase in price pressures, the Markit report said. Companies reported rising costs for fuel and raw materials, with its input prices index up by 10.4 points on the month – the second highest rise in the survey's history.

The potential for a rise in inflation, coupled with analysis showing that much of the boost to the economy has been based on consumer spending while investment remained on hold, has persuaded some analysts to conclude that the quickening recovery is unsustainable.

Trevor Greetham, a director at Fidelity Worldwide Investment, accused the government of "unleashing the beast" of cheap mortgages to foster a dash for growth before the 2015 election.

He said a large part of the current recovery could be traced back to the government's Funding for Lending Scheme, which offers cheap money to banks, and the housing market scheme Help to Buy, which have channelled money into mortgages at the expense of business lending.

The TUC said the benefits of the recovery were being swallowed up by business managers and shareholders, leaving workers worse off.

Speaking before the TUC's annual conference next week, general secretary Frances O'Grady pointed out that UK workers have suffered a huge squeeze on their incomes over the last five years, with average pay falling by 6.3% in real terms.

She said many have remained on frozen or low pay while inflation has jumped, leaving someone earning £26,000 a year more than £30 a week worse off in real terms.

The study, part of the TUC's Britain Needs a Pay Rise campaign, compared hourly pay rates in 2007 (at 2012 prices) with those in 2012, and "shows the extent of the pay squeeze being felt by families across the UK as incomes fail to keep pace with rising prices".

O'Grady said the north-west was the hardest hit region in the UK following a fall in average hourly pay from £11.43 in 2007 to £10.52 in 2012 – an 8% drop in real terms.

France, India and Russia struggle

France's manufacturing sector is struggling to recover after a difficult year of redundancies at the state-backed car makers Renault and Peugeot Citroën and high-profile steel works closures.

While eurozone manufacturing activity expanded for a second successive month in August, in France the purchasing managers index was confirmed at 49.7, where a figure below 50 shows activity contracted. It was the only eurozone country where the measure of activity failed to improve.

However, output has fallen in France over the last four years far less than some other eurozone countries, and the slow rate of contraction was read by many analysts as a sign that the recession is bottoming out.

India also suffered a slowdown in manufacturing output in August, though much of the blame was heaped on the administration of prime minister Manmohan Singh, a former economics professor, who has run the country since 2004 and was re-elected in May.

The HSBC manufacturing purchasing managers' index fell to 48.5 after a drop in domestic and export orders. In the last two years GDP growth has more than halved to 4.4% and investment funds have flowed out of the country. The central bank has hiked interest rates, making it tougher for businesses and consumers to borrow.

India was not alone among the "Bric" countries to suffer a contraction in manufacturing. Russia's output also fell, largely because of government neglect and a high rouble. A drop in oil revenues exposed the weakness in manufacturing weakness, leading Vladimir Putin to suggest he may free several jailed business leaders to boost output and growth.

Article Source : http://www.guardian.co.uk

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