Category Archives: Economy


Coca-Cola Enterprises warns of upcoming tough conditions

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Soft drinks manufacturing giant Coca-Cola Enterprises has warned of weakness in its second quarter. The European bottler has warned of handful of headwinds which have tempered the results. The company said that it will update its outlook for the rest of the year as soon as it releases the results from the second quarter in July 2013.

John F. Brock, Chief Executive, said, “Throughout 2012 and so far this year, we have faced challenging operating conditions, including persistent underlying macroeconomic weakness, significant headwinds from poor weather, the prolonged impact of a sharp excise tax increase in France, and a dynamic competitive environment in Great Britain”. Brock went on to say that the factors have been unexpectedly persistent and they disrupt the company’s outlook regarding the second quarter of 2013.

The company expects that the factors can be lessened later in the year, but there will be a better understanding of their importance during the prime selling season in the summer. Brock was also supposed to discuss these issues at a Deutsche Bank Global Consumer Conference held in Paris on June 11, 2013.

The Coca-Cola Enterprises had split from Coca-Cola company in 1986 in order to consolidate the independent bottling groups and has been grappling with the European economic conditions. In April 2013, the company predicted a full year earnings growth of 11 % to 12%.


Global carbon emissions increased to a record high in 2012

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On June 10, 2013, the International Energy Agency said that the world’s energy-related carbon dioxide emissions have  increased 1.4 percent in 2012, reaching a record high of 31.6 billion tons. On the other hand, the US has posted its lowest emissions since the mid-1990s.

The Paris-based IEA said in its annual World Energy Outlook report that the biggest carbon polluter China had the largest emissions growth in 2012, with up to 300 million tons, or 3.8 percent since 2011. Despite that, this increase was among the lowest in a span of a decade, as China continues to make investments in energy efficiency and renewable energy.

On the other hand, the US emissions went down by 200 million tons or 3.8 percent, a drop which is due to a switch in power generation from coal to gas, while the emissions in Europe went down by 50 million tons or 1.4 percent. The agency went on to say that the energy sector accounts for approximately two-thirds of global emissions of CO2, as well as other greenhouse gases.

Maria van der Hoeven, IEA Executive Director said, “Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away – quite the opposite”. The scientists have also warned that the global temperature could rise with catastrophic consequences to follow.


Consumer spending falls in April 2013

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On May 31, 2013, a government report found that consumers pulled back on spending in the month of April 2013, as their income remained steady. The report mentions that spending decreased 0.2% in April 2013 when it was adjusted for inflation. According to economists, they expected a rise of 0.1%, so the result was disappointing.

Consumer spending accounts for more than two-thirds of the nation’s economy. One of the reasons for the pull back in spending is thought to be weak income data, which remained unchanged while adjusting for inflation. The disposable income fell by 0.1%.

Economists have feared that the cutback in consumer spending would be a drag on the economy in 2013. The cutback in spending is also known as the sequester, which includes employee furloughs. The report released might even be a warning sign of economic headwinds.

An earlier report by the government mentioned that the retail sales rose slightly in April 2013, as strong car sales helped to make up for weakness in other sectors. It was also clear that the report does not mention how consumers spend money, but just how much money they are spending, saving or paying in taxes.


International tax action demanded by Republic of Ireland

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A politician from the Republic of Ireland says that the international community must work together in order to stop large multinational firms that use cross-border tax loopholes. Richard Bruton, Enterprise minister, said that they play the tax codes one against the other.

Bruton added, “That is tax planning and I think we do need international cooperation through the OECD to deal with the aggressive nature of that.” The recent development comes as the EU leaders meet in Brussels to discuss the problem of tax avoidance. Meanwhile, UK Prime Minister David Cameron and others will be trying to crack down on those who do not pay their fair share of tax.

The PM will urge EU leaders to support global action against tax evasion and aggressive tax avoidance, which causes huge losses to nations. Chief Secretary to the Treasury, Danny Alexander, in an interview said that handling this issue was the main priority for the UK’s presidency of the G8.

Taoiseach Enda Kenny is likely to face a tough time amid accusations from overseas and within Ireland of a loose tax regime. The need for this meeting has come up as Apple is under fire over the tax use of Irish subsidiaries.


Discretionary spending not increased despite low gas prices

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Recent survey report has revealed that the gas prices in the US have slightly gone down in 2013, but this is not leading to a large consumer spending. It was noticed that about 80% of the 1000 people who were surveyed have not increased their discretionary spending in response to the falling gas prices this year.

At the beginning of 2013, it was noticed that the price of gas rose for 34 straight days and then a fall was seen during the months of March and April 2013. However, since then the prices have risen again slightly. That being said, gas is still much cheaper compared to that of 2012.

Media reports claim that a gallon of unleaded gasoline cost $3.65, which is 6 cents lower than the same time in 2012. On the other hand, economists claim that the lower prices are a good sign and many have also said that cheaper gas could even lessen the blow from the higher payroll taxes that went into effect at the beginning of the year.

Studies also mentioned that most Americans have cut on their discretionary expenses due to the higher prices of gas. Greg McBride, a senior financial analyst, said that the budgets are still tight and the households cannot lean against the crutch of credit to support their lifestyles.