Data has shown that Britain’s economy contracted by 0.3 percent in the last quarter of 2012 as first thought, keeping alive the danger of a third recession since 2008. Nineteen tourists were killed in a hot air balloon crash near the Egyptian city of Luxor. More people have been killed in Bangladesh after demonstrators protesting against the death sentence on an Islamist party leader clashed with police following several days of violence. President Barack Obama formally ordered broad cuts in government spending after he and congressional Republicans failed to reach a deal to avert automatic reductions that could dampen economic growth and in the UK Defence Secretary Philip Hammond warned that further big cuts in defence spending would lead to the loss of the UK’s armed forces capability.
1. UK Heads for a triple dip recession
Gross domestic product fell by 0.3 percent in the October-December period compared with the previous three months, in line with the Office for National Statistics’ initial estimate and economists’ forecasts. The sluggish economy has been a major concern for Bank of England policymakers. Paul Fisher said that the central bank might need to buy moderate quantities of government bonds over a longer period than before to support output.
However compared with the previous year, the economy was 0.3 percent bigger – better than the original estimate of flat output, the ONS said, noting upward revisions to some previous quarters. Consumer spending rose 0.2 percent on the quarter, while exports fell 1.5 percent and imports dropped 1.2 percent. But Alan Clarke, economist at Scotiabank warned that it was “not a good start (to the year) and really shouldn’t change anyone’s view that there’s precious little growth momentum in the UK and particularly not in manufacturing.”
2. Egypt balloon crash kills 19 tourists
British, French, Hungarian, Hong Kong and Japanese nationals are among 19 tourists killed in a hot air balloon crash on Tuesday near the Egyptian city of Luxor. The balloon crashed on the west bank of the Nile river, where many of the area’s major historical sites are located.
Ahmed Aboud, head of an association representing Luxor balloon operators, said the fire had begun in the pipe linking the gas canisters to the burner. He said it was an accident. The deaths were caused by burns and injuries sustained in the fall, said Mohamed Mustafa, a doctor at the hospital where the injured were treated. The pilot survived by jumping from the basket, Aboud said. The area was been cordoned off by police and investigators are inspecting the charred remains of the balloon. Egypt’s civil aviation minister has reportedly flown to Luxor to head the investigation into the crash.
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3. Violence in Bangladesh
Several people have been killed after demonstrators protesting against the death sentence on an Islamist party leader clashed with police. Delwar Hossain Sayeedi was sentenced on Thursday on charges including murder, rape and torture during the war of independence in 1971. Since then, at least 46 people have died in riots across the country.
Thousands of people in the capital’s Shahbag square, who support the tribunal and have been protesting for weeks to demand the highest penalty for war criminals, burst into cheers as the sentence was announced.
Mr Sayeedi is the third defendant to be convicted by the tribunal, which was set up in 2010 by Prime Minister Sheikh Hasina’s government to deal with those accused of collaborating with Pakistani forces who attempted to stop East Pakistan (as Bangladesh was then) from becoming an independent country.
Critics say the tribunal is being used by the prime minister as an instrument against her opponents in the two biggest opposition parties, the Bangladesh Nationalist Party (BNP) and the Jamaat-e-Islami. Begum Khaleda Zia, Hasina’s arch rival and leader of the BNP, has called the tribunal a farce.
4. Obama orders cuts
US President Barack Obama has signed into effect steep spending cuts which he has warned could damage the US economy. The cuts – known as the sequester and drawn up two years ago – will take $85bn (£56bn) from the US federal budget this year.
The White House predicted that the spending cuts, triggered by the inability of Obama and lawmakers to forge a broader deficit-reduction agreement, would be “deeply destructive” to the nation’s economic and national security. Half of the cuts will fall on the Pentagon. Defense Secretary Chuck Hagel said the reductions put at risk “all of our missions”.
Obama warned the cuts – if fully realised – would slow US economic growth by half of 1% and cost 750,000 jobs. Congress and Obama could still halt the cuts in the weeks to come, but neither side has expressed any confidence they will do so.
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5. Cuts in defence spending?
Defence Secretary Philip Hammond has stated ahead of the chancellor’s spending review that things were “extremely taut” after the biggest cuts since 1991 and has warned that cuts in defence spending would lead to the loss of the UK’s armed forces capability.
Downing Street said last month that the military would not be immune from further financial cuts in Chancellor George Osborne’s spending review later this year. A report this week from the Royal United Services Institute (Rusi) suggested this could lead to additional reductions of more than £1bn a year in the defence budget from 2015.
Mr Hammond said: “There may be some modest reductions we can make through further efficiencies and we were look for those, but we won’t be able to make significant further cuts without eroding military capability.”
Labour MP Paul Flynn, meanwhile, told Radio 5 live that “Every department should take these cuts“. Referring to a report by the Public Accounts Committee – which revealed the Ministry of Defence had bought £1.5bn worth of equipment between 2009 and 2011 that it had not used. He said it had been “most outrageously wasteful in spending“.
Sources: bbc.co.uk, uk.reuters.com
Image Credits: guardian.co.uk, news.bbc.co.uk