Business

NEW YORK — Hewlett-Packard (HP) Co. said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations, and eliminate another 5,000 jobs as part of its turnaround plan.

HP said its shareholders would own a stake in both  businesses through a tax-free transaction next year. Each business contributes about half of HP's revenue and profit.

The 75-year-old company has struggled to adapt to the new era of mobile and online computing.

Chief Executive Meg Whitman told Reuters the newly created HP Inc. would mostly stick to its knitting — PCs and printers — for now, while exploring related markets such as 3D printing.

The company has no plans to venture into the hotly contested consumer mobile devices market, where it stumbled years ago.

"There's still lots of opportunities in other adjacencies, where we don't chase the market leaders," said Whitman, who will be chief executive officer of HP Enterprise, the business that will sell computer servers and networking gear and data storage to businesses.

Whitman said HP's balance sheet had improved markedly over the past few years, allowing the company to come to the decision to split up from a position of strength.

"This would not have been possible three years ago," she said, referring to a proposal to spin off PCs in 2011.

Some analysts expressed scepticism about the latest move.

Barclays analysts noted that the sudden announcement in 2011 was disruptive to HP's sales, its sales force and demand.

"If the [latest] decision by HP isn't well communicated or is not well executed, the negative share shifts could be material," they said in a note.

Analysts at Bernstein Research also warned of "material negative synergies" and one-time costs associated with the spinoff, largely in purchasing but also in distribution. The separation, they said, was fuelled by weakness, not strength.

A spinoff of the PC business was last proposed in 2011 by then-chief executive Leo Apotheker. HP later ditched the plan — and Apotheker, replacing him with Whitman.

HP said it planned to cut 5,000 more jobs as part of its multiyear restructuring, raising the total under Whitman to 55,000. The company currently has more than 300,000 employees.

The separation will result in a fundamental reshaping of one of technology's most important pioneers, which is on track to generate $112 billion in revenue in the fiscal year this month.

While there were sceptics, many investors and analysts had called for a break-up of HP or a sale of the PC business so that HP could focus on the more profitable side of its operations.

"Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph Whitworth, former HP chairman and founder of Relational Investors LLC, said in a statement.

Relational owns a 1.49 per cent stake in HP.

HP is the latest in a line of companies to spin off operations in an attempt to become more agile and capitalise on faster-growing businesses.

Online auction company eBay Inc., which was formerly run by Whitman, said last week it would spin off electronic payment service PayPal.

"We like the spin and believe it could create additional value over time," UBS analyst Steven Milunovich wrote. "In our view, focus is more important than synergies, and it is hard to be good at both consumer and enterprise computing."

MOSCOW — President Vladimir Putin dismissed Western sanctions as "utter foolishness" on Thursday and said they would not stop Russia developing into a stronger economic power.

Attempting to take the higher ground in a speech to foreign and Russian investors, Putin said he was relaxed about the measures imposed on his country over Ukraine even though they had broken the fundamental principles of the global economy.

Addressing financiers worried about the weakening economy, capital flight and a possible increase in state intervention, he said Russia was well placed to weather the storm.

"We truly want a country that is strong, flourishing, free and open to the world," he told the VTB Russia Calling investment conference, ruling out restrictions on capital and currency movements out of Russia.

Making clear his aim was to soothe worried investors, he later began a question-and-answer session by saying with a wry smile: "All I have to do is smile to show the devil is not as frightening as he seems."

Contradicting some businessmen who fear sanctions could drive Russia into a new period of isolation, Putin underlined that he saw the country as part of the world economy, and, compared with others, a member playing by the rules.

He said sanctions violated the principles of the World Trade Organisation, undermined the credibility of international financial institutions and reserve currencies, and would cause long-term damage to the entire global economy.

"It is utter foolishness from those governments, which are limiting their business, preventing it working, reducing its competitiveness, freeing up niches for competitors on as promising a market as Russia," he indicated.

"I would like to hope that we can get over this period of misunderstanding," he added to applause. 

Calm and relaxed 

It was a calm performance by the 61-year-old president, who won popularity in his first spell as president from 2000 until 2008 by overseeing nearly a decade of economic growth.

Now some economists, including the World Bank, see Russia entering a period of near stagnation, with growth of the $2 trillion economy barely climbing above zero.

Inflation is running at an annual rate of almost 8 per cent, the ruble has fallen around 17 per cent against the US dollar this year and the price of oil — vital to Russia's economy — has dropped below the point at which it balances its budget.  Capital flight was $75 billion in the first half of the year.

Plenty of experts see more problems than Putin appears ready to acknowledge, including the absence of a clear strategy to pull the world's eighth largest economy around.

"Right now it is clear that in this crisis situation for business there is no clear 'Plan B' from the state," said Diana  Kaplinskaya, an economic analyst.

Acknowledging the "difficult times", Putin said he was sure the sanctions would spur domestic growth and reduce Russia's dependence on imports, enabling the economy to develop.

He expressed confidence that a recent rise in inflation, linked to Russia's restrictions on Western food imports as a response to sanctions, would be temporary given the central bank's policy — which is "balanced and flexible".

Putin reiterated the importance of developing ties with Russia's partners to the east, congratulating companies which had already done deals with Chinese companies and noted that Russia would aim to shift to national currencies in trade.

In a message to owners of firms privatised in the 1990s, when the Soviet Union's collapse gave way to chaotic capitalism, he said there would not be a wide-scale revision of such sales.

A Moscow court's decision last month to order the seizure of the stake in oil producer Bashneft belonging to oil-to-telecoms conglomerate Sistema, and the placing of its oligarch boss under house arrest, has raised investors' fears that the Kremlin wants to reclaim prized assets.

Putin said he would not interfere in the legal case.

Asked about the conflict in Ukraine, where Russia denies sending troops and weapons to support pro-Russian separatists, he said the former Soviet republic was Russia's "closest, most brotherly nation" and hoped a parliamentary election on October 26 would help bring stability to the country.

But overall, his message to those governments who imposed sanctions on Russia over its policy in Ukraine was clear — you will lose out.

Separately, the head of Russia's largest bank delivered on Thursday a blistering attack on Moscow's economic policies, warning that Russia could repeat the fate of the Soviet Union.

Speaking at an investment conference in Moscow, Herman Gref, chief executive of state-run Sberbank, pilloried a state-led model of economic development, pointing to a lack of competition and poor governance.

"Why did the Soviet Union break up?" Gref, a former liberal economy minister, told foreign and Russian investors.

"There is one key reason which determined the rest: it's mind-boggling incompetence of the Soviet leadership. They did not respect the laws of economic development," he said at the annual "Russia Calling" investment forum.

Citing a book by the key architect of Russia's market reforms, Yegor Gaidar, "Collapse of an Empire", Gref said Russia must learn lessons from history.

"We cannot allow the same situation," he said, noting that the Soviet Union also faced a combination of high oil prices and "huge structural problems”.

Russians officials are mulling how to mitigate the negative effects of Russia's confrontation with the West over Ukraine which include huge downward pressure on the ruble and intensified capital flight.

Washington and Brussels have introduced several rounds of sanctions against Moscow, and Russia responded by ordering a ban on European Union (EU) and US food and threatened to ban other imports.

The sanctions tit-for-tat coupled with the prosecution of billionaire Vladimir Yevtushenkov have severely undermined investor confidence and delivered a heavy blow to economy, which is on the brink of recession.

Gref appeared to question the Kremlin's policies including the ban on imports.

"I beg your pardon but we import nearly everything," said Gref, who has been widely praised for overhauling Russia's Soviet-era lender. 

He also pointed to an increasingly weakening ruble, saying that even if the national currency bounces back somewhat, consumer prices would not go down.

"We don't have enough competition. Half of our economy is monopolised," he indicated.

He appeared to target the state's increasingly repressive policies and what many analysts call the state's excessive role in the economy.

"You cannot motivate people through the Gulag — like in the Soviet Union," he said. "People cannot make creative products when they don't understand the current economic policies and business climate."

Gref said that "we won't fix anything before we fix the environment," and he lamented that his efforts to establish special economic zones while he served as economy minister did not bear much fruit.

"Zones have been created but there are no incentives," he said. "Zones are not something encircled by a fence, not always," he added, alluding to prison camps.

Economy Minister Alexei Ulyukayev for his part said the current combination of 8 per cent inflation and growth of gross domestic product below 1 per cent was a "crass and explosive situation".

NEW YORK — Oil prices fell for the third straight session on Thursday, with Brent hitting its lowest level since June 2012, continuing a three-month long rout as a global supply glut and concerns about demand persisted.

For US crude, some support was found from government data that showed an unexpected decrease in unemployment claims over the past week. Monthly employment data is due on Friday which economists expect to show an increase in the size of the labour force.

But overall, the sentiment remained bearish as supply from key producing regions including the United States and Middle East remained strong while economic data from Europe and Asia hinted at weak demand.

Sharp cuts in Saudi Arabia's oil sale price to Asian customers on Wednesday came as the clearest sign yet that the world's largest exporter is trying to compete for crude market share and keep the market well supplied.

"This is a structural change in the oil market, with Saudi Arabia explicitly stating that they are willing to compete on price," said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo. "I think Brent will fall below $88 before we see the bottom of the market."

Brent crude for November delivery fell $1.76 to $92.40 by 1554 GMT. It earlier hit $91.55, its lowest since June 2012.

US November crude lost 71 cents to reach $90.02 per barrel, after earlier sinking to $88.18, its lowest intraday level since April 2013.

Brent's premium over US crude  was at about $2.4 on Thursday, its lowest since August 2013.

Oil declined alongside European stocks as the European Central Bank (ECB) left interest rates unchanged on Thursday, as expected. ECB President Mario Draghi said that a planned bond purchase programme would last at least two years. US stocks also fell.

Some analysts said a cut in production from the Organisation of the Petroleum Exporting Countries (OPEC) at its meeting next month was the only move that could enable a price recovery.

With such steep losses in oil prices since June, others said that oil prices were likely to move higher.

"I don't think we have much potential to keep going lower," said Carl Larry, head of consultancy Oil Outlooks. "We are at the bottom of the range and there is a lot of room to go up."

Oil production in Russia increased by almost 0.9 per cent month-on-month in September to 10.61 million barrels per day (bpd), energy ministry data showed. 

The price of oil, the world's most important fuel source, has dropped 20 per cent since the summer.

Energy analysts initially said the price declines were largely the result of greater supply, citing the North American shale boom, the tapping of new offshore reserves worldwide and greater output of coal.

But analysts have also begun pointing to a slowdown in demand. They cite China's ebbing thirst for oil and what could its first drop in demand for coal in over a decade as indicators of a sharper slowdown in the world's second-biggest economy.

"China's initial [economic] acceleration has faded. With the US acceleration reaching its limits, we have seen our GLI [Global Leading Indicator] slip into 'slowdown'," Goldman Sachs said on Thursday in a research note. "Without re-acceleration outside the US, this may not change quickly." 

According to Goldman, China could still get close to its economic growth target of 7.5 per cent for this year, but "there is a good chance of more slowing early next year".

That would have profound implications worldwide, since the economies of China and the United States have been growing, while Europe and Japan continue to struggle in the wake of the financial crisis.

Demand shrinks, supply rises

Further affecting demand for fossil fuels, households and industries in developed economies are becoming more efficient in using energy and are moving more to renewables and other alternative fuel sources.

"Ironically, as the global demand pie is getting smaller, supplies [of fossil fuels] are increasing," indicated Michal Meidan, a director at consultancy China Matters.

Coal, the world's most important source for electricity generation, has almost halved in value since spring 2011 to levels at which most producers are losing money.

Gas prices in Europe have fallen over 6 per cent this year despite the crisis between Russia, its main supplier, and Ukraine, a vital transit route for European Union (EU) imports.

China's gas demand growth is expected to ease to its slowest in three years in 2014 and dip again in 2015, due in part to its slowing economy.

In the oil market, moves by Saudi Arabia, the world's biggest exporter, are crucial to determine volumes and pricing.

"Serving as a bearish signal, Saudi Aramco has cut official selling prices [OSPs] for November loading cargoes to all regions... The biggest cuts were again seen in Asia, the third consecutive round of downwards adjustments there," JBC Energy indicated in a research note.

The recent rise in the dollar has mitigated oil price declines in Europe and Japan, but Reuters data show that the price drop in oil has far outpaced the fall in the euro and the yen against the greenback.

KUWAIT CITY — Kuwait posted Wednesday a budget surplus of $45 billion for the latest fiscal year, its second largest on record, but the International Monetary Fund (IMF) warned of underlying risks despite the bumper returns.

The finance ministry indicated in a statement on its website that the surplus came in at 12.9 billion dinars ($45 billion) in the 12 months to March, capping a run of 15 straight years of windfalls.

Revenues came in at 31.8 billion dinars, of which oil accounted for 29.3 billion dinars, and spending at 18.9 billion dinars.

It was the second biggest budget surplus on record, after the 13.2 billion dinars achieved in 2011-2012.

The oil-rich emirate of Kuwait has now posted a budget surplus in each of the past 15 fiscal years worth a total of 92.5 billion dinars, based on official figures compiled by AFP.

Sustained surpluses have boosted the assets of the Gulf state's sovereign wealth fund to more than $500 billion, according to unofficial estimates.

A majority of the dividends are attributed to high oil revenues which make up about 94 per cent of Kuwait's overall income.

The IMF warned, however, that a drop in oil prices could plunge Kuwait into deficit in the medium term if it fails to adopt measures to halt the rise of current spending.

"A $20 decline in oil prices... would result in reversing of the fiscal position from a surplus to a deficit in the medium term," the IMF said in its latest report on Kuwait.

The fund added that the breakeven oil price — needed to balance the budget at current expenditure levels — had risen in the past few years and was estimated at $75 a barrel in 2014-15.

The price of Kuwaiti oil averaged $103 a barrel in the latest fiscal year but is currently hovering around $94.

The IMF advised Kuwait to soon start implementing measures aimed at cutting spending which has trebled in the past decade.

These included containing the number of public jobs, gradually phasing out of subsidies worth $16 billion a year, subjecting Kuwaiti companies to corporate tax, and revising fees for public services.

According to the IMF, the government has decided in principle to end subsidies on diesel and is in advanced stage of proposing a similar end on power subsidies.

Kuwait has a native population of 1.25 million, in addition to 2.8 million foreigners, and pumps about 3 million barrels of oil per day.

AMMAN — Jordan’s gross domestic product (GDP) grew by 2.8 per cent at constant market prices during the second quarter of 2014, the Department of Statistics (DoS) announced on Wednesday.

According to results of quarterly estimates of GDP indicators, most sectors recorded positive growth during the April-June period compared with the results achieved during the same quarter of 2013. 

During the second quarter of this year, water and electricity sector achieved the highest growth of 11.2 per cent, followed by wholesale/retail trade and hotels/restaurants sector at 7.1 per cent. 

Producers of private services, a not-for-profit sector, grew by 6.5 per cent 

The growth of social and personal service, net tax on products, and construction sectors came at 4.7 per cent, 3.6 and 3.2 per cent respectively.

Finance, insurance, real-estate and business services grew at 2.9 per cent, followed by the mining and quarries industries at 1.6 per cent and the manufacturing sector at 1.3 per cent. 

Regarding sector contribution to GDP, the wholesale/retail trade and hotels/restaurants sector posted the highest contribution of 0.65 per cent. Net tax followed with a 0.64 per cent contribution. 

The finance, insurance, real-estate and business services’ contribution stood at 0.57 per cent whereas that of water and electricity sector was 0.23 per cent. 

The contribution of the social and personal service sector and the manufacturing industries sector was 0.21 per cent each, while the transport, storage and communications sector contribution stood at 0.17 per cent. 

PARIS — France's public debt has topped the symbolic level of 2 trillion euros for the first time, putting Paris on a fresh collision course with the European Union (EU) as the government prepares to unveil its annual budget.

The total national debt amounted to 2.023 trillion euros ($2.57 trillion) in the second quarter of the year, which represents 95.1 per cent of the gross domestic product (GDP), national statistics agency INSEE indicated on Tuesday.

EU rules say that debt must not exceed 60 per cent of GDP, or be falling significantly towards this ratio.

In the first quarter of the year, debt stood at 1.995 trillion euros, or 94.0 per cent of GDP, INSEE noted.

President Francois Hollande stressed that he had inherited a difficult debt situation when he entered the Elysee Palace.

"In the five years before I came to power, public debt rose by 600 billion euros. Now we're at 2,000 billion. So our role has to be to get the deficit in hand so we can avoid pushing up the absolute level of debt," said Hollande.

France is already at loggerheads with the EU over its budget deficit, which is supposed to be kept under 3 per cent of GDP.

Paris promised to bring the deficit in-line by next year but, in a stunning about turn, announced last month that it was pushing back this target until 2017.

The deficit this year is forecast to be 4.4 per cent of GDP, dropping only fractionally to 4.3 per cent next year.

France is struggling with an economy at a standstill and sky-high unemployment.

There has been zero growth for the first two quarters of the year and Finance Minister Michel Sapin is banking on sluggish output of 0.4 per cent for the whole of the year.

'Very low rates'       

France will on Wednesday publish its annual budget, which is expected to confirm the gloomy outlook and reaffirm it will miss its deficit targets.

The economy ministry stressed that the government's plan to clean up the public finances and make sweeping cuts in public spending "should allow us to stop the growth in debt".

"France also enjoys the confidence of investors which allows the state, but also companies and individuals, to borrow at very low rates," the ministry said.

To combat the economic crisis, Hollande's deeply unpopular government has put in place a "Responsibility Pact" which offers companies tax breaks of 40 billion euros in return for creating 500,000 jobs over three years.

However, given the parlous state of the public finances, the tax breaks are compensated by 50 billion euros in public spending cuts.

Hollande steeled the French people for the budget by saying: "There is no painless savings plan, otherwise it would already have been done." 

"Savings are inevitably painful. No sector can accept seeing its habits, sometimes its finances, challenged," he added.

Christopher Dembik, an analyst at Saxo Bank, said: "The problem with France is there is no clear trajectory for reforms and the reforms that do exist are too unambitious and very, very slow to be implemented."

Even Economy Minister Emmanuel Macron has admitted that the French economy is "sick" due to its perennially high unemployment.

"There has been a fever for several years in this country which is called mass unemployment ... there is no choice but to reform the economy," stressed Macron, a 36-year-old former Rothschild banker, a recent surprise choice for economy minister.

Last week, former president Nicolas Sarkozy said he would change the tax system to help companies and pledged on Sunday to win back National Front voters one-by-one in his first televised interview since announcing his return to French politics.

The former president, who is seeking the leadership of the main rightist UMP party ahead of the 2017 presidential race, avoided giving policy details but sought to reassure companies and voters that he had heard their concerns.

"Today, global growth has returned to close to 4 per cent, Germany is prospering, Europe is not in crisis, and yet we continue to stagnate and have rising unemployment. Why? Because our model must be completely restructured," he said in the interview on France 2.

Sarkozy said the only question that mattered was to find a tax system that would allow businesses to create growth and jobs, and that would stop young people leaving France because they feel they cannot succeed at home.

"If you tax people and companies in France more, how can you expect them to be competitive? If companies lose market share, how can you expect unemployment not to rise? That's the key," he indicated. "What counts is giving our businesses the chance to gain market share."

Sarkozy, who as president raised the retirement age to 62 from 60, loosened the 35-hour workweek and made overtime more attractive through tax tweaks, remains a divisive figure.

CAIRO — In his first 100 days in office, Egyptian President Abdel Fattah Al Sisi has made a fast start on economic reform: slashing costly fuel subsidies, raising taxes and devising infrastructure projects to secure long-term revenues and ease unemployment.

Those are moves that have long been sought by foreign investors. But winning their full confidence will require pushing ahead with further politically-sensitive reforms and sealing an elusive deal with the International Monetary Fund (IMF).

A loan from the global lender would serve as a badly-needed stamp of approval for a country battered by political turmoil since a popular uprising ended 30 years of rule by autocrat Hosni Mubarak in 2011.

For decades, Mubarak mostly avoided politically-risky reforms that might anger a population reliant on subsidised food and fuel. His Islamist successor Mohamed Morsi also showed little sign of progress during a tumultuous year in power.

Investors hope that Sisi, a former army chief who overthrew Morsi, cracked down harshly on his followers and won the election to succeed him, will have the authority to enact measures that his predecessors could not.

"We don't want politicking, we don't want drama. We want a leader who is going to implement an investment regime for Egypt focused on the longer term," said Bryan Carter, lead portfolio manager for emerging debt at Acadian Asset Management in Boston.

Raising fuel prices and taxes may ease the burden on the cash-strapped state, which faces a crippling budget deficit around 11 per cent of economic output and double digit unemployment.

But Sisi's ultimate challenge is luring back foreign investors who remain wary of Egypt's artificially strong currency, rising inflation, stifling bureaucracy and electricity shortages.

"The solution to Egypt's longer term economic problems will not come from any sort of austerity internally or restructuring of the fiscal budget. It's got to come from the catalysation of investments," Carter indicated.

Egypt has been consulting with the IMF about implementing a value-added tax (VAT), which the government predicts would generate more than $4 billion in revenues.

Investors are eager to see the VAT pushed through without opposition or unrest, though officials have not given a time-line for its implementation.

Egypt resumed regular consultations with the IMF last month for the first time since March 2010 — a necessary step before securing a loan package. Cairo had postponed the talks with the global financial body following Mubarak's overthrow in 2011.

Suez flagship project

Cairo is pinning hopes on an international investment and aid conference scheduled for February in the Red Sea resort town of Sharm Al Sheikh. It hopes foreign governments, private investors and international donor organisations will make hefty pledges there.

Investment Minister Ashraf Salman told Reuters in an interview last month he was aiming for $10 billion in foreign investment in the current fiscal year and hopes Egypt will attract $18 billion a year by 2018, highly ambitious targets.

Foreign direct investment was about $8 billion annually before the 2011 uprising and reached only $4.1 billion in the fiscal year that ended in June.

Sisi's flagship project is the expansion of Egypt's Suez Canal, a strategic global shipping lane which brings in about $5 billion of revenue and foreign reserves each year.

He hopes that figure will more than double with the new venture and has set an ambitious one-year target for completing the initial phase.

The former army chief appears also to be banking on the canal's symbolism and geopolitical importance to raise his public stature.

Egypt nationalised the canal in 1956, prompting shareholders Britain and France to invade along with Israel. The crisis ended after Egypt sank 40 ships and the United States, Soviet Union and United Nations intervened forcing the invaders to withdraw.

Egyptians flocked to banks last month to buy $8.5 billion worth of Suez Canal investment certificates, which the government held up as a public vote of confidence in the economy.

Some foreign investors are not as enthusiastic as Egyptians, who have been longing for an economic recovery and political stability.

"We do not have a lot of details. There are still some question marks because it is a big project," said Remy Marcel, co-fund manager for the Middle East and North Africa at asset management company Amundi.

"It is too early to really figure out what would be the consequences of this project. On paper it looks very positive; it would help to create some jobs and increase revenues," he added. 

No quick fixes

Sisi seems to have space for further manoeuvre. So far, cuts to fuel subsidies have not triggered unrest as was feared, even though they have driven up prices across the board.

But the breathing room may not last if the president remains committed to fiscal discipline as promised. That would require him to make further bold moves such as pushing ahead with more subsidy cuts and introducing the VAT.

"There are no quick fixes, including the removal of subsidies, which most foreign investors wrongly seem to believe can be achieved without social unrest," said Daniel Broby, chief executive of Gemfonds, a UK-based investment boutique.

Egypt's currency, another critical factor for foreign investors, has been stable in the official market since June, but the persistence of the black market and constraints on dollar outflows are keeping investors cautious.

Expectations of a significant currency depreciation following parliamentary elections slated for the end of the year have delayed some investors' return to the market and also caused the hoarding of dollars, keeping the black market alive.

Egypt's main index has gained 18.6 per cent since Sisi's election and now stands well above its level before the 2011 uprising. That signifies a vote of confidence by domestic investors, but official data does not show a substantial increase in foreign investors returning to the bourse.

A Cairo-based fixed-income trader noted that investors have not yet returned to the government bond market either.

"We haven't heard of foreigners buying government debt in the past two months or so," he said.

Realistic prospects

Egyptian ministers appointed by Sisi to oversee the economy seem far more realistic about prospects than officials who served under Mubarak and often painted a rosy picture.

Finance Minister Hany Kadry Dimian told Reuters last month the government was aiming to boost economic growth to 5-6 per cent within three years and halve the budget deficit in seven years, while acknowledging challenges ahead.

"There's been nothing earth shattering. But it's the relentless march toward progress and the realisation of this [reform] framework that matters, and that's exactly what we want to see," said Carter of Acadian.

BIRMINGHAM, England — British Finance Minister George Osborne spelled out plans for more spending cuts on Monday, betting that voters will accept his tough approach to fixing the economy and give an election victory to his Conservative Party next year.

Osborne announced a two-year freeze on a wide range of welfare payments as he sought to regain the initiative following a split within the party of Prime Minister David Cameron's over Britain's membership of the European Union (EU).

Osborne's fortunes have turned around dramatically along with Britain's economy, which started a strong recovery in the middle of last year.

In his speech on Monday, he sought to capitalise on the government's higher ratings over the opposition Labour Party on economic policy, even as Labour commands a small but stubborn overall lead over the Conservatives in opinion polls.

"The economy may mean nothing for Labour but it means everything for the people of Britain," Osborne said as he mocked Labour leader Ed Miliband for failing to mention the budget deficit in his conference speech last week.

Sticking to his once-derided programme to curb spending and fix Britain's still large budget deficit, Osborne stressed the scale of austerity ahead.

He ruled out any tax increases but said he would clamp down on technology companies which "go to extraordinary lengths to pay little or no tax here".

Labour hit back, saying the plan showed the Conservatives were the party of a privileged few. 

"Labour will balance the books as soon as possible in the next parliament, but we will do so in a fairer way," Chris Leslie, a Labour lawmaker, said.

The left-leaning Labour Party plans to eliminate the budget deficit, excluding investment spending, during the 2015-2020 parliament, a less aggressive approach than Osborne who is aiming to kill the shortfall in absolute terms.

The Conservatives' partner in Britain's coalition government also hit out at the plan to curb welfare payments.

"It speaks volumes about the priorities of the Conservative Party that they see benefit cuts for the working age poor as a crowd-pleasing punch line for a conference speech," a senior Liberal Democrat source said.

The defection of a Conservative lawmaker to the anti-EU UK Independence Party (UKIP) over the weekend marred the start of Cameron's last conference before May's national election. Conservatives fear the rise in UKIP support could hurt them in the poll, which is already expected to be a close race between them and Labour.

‘Humbled’ by scale of budget challenge

In a speech that is likely to form the Conservative's election pitch, the 43-year-old finance minister claimed credit for returning Britain's $2.8 trillion economy to growth.

"I don't stand here marvelling at how much we have done. On the contrary: I am humbled by how much we have to do," Osborne told applauding party activists, in front of a slogan "Securing a Better Future".

On entering office in 2010 as part of a coalition government, Cameron and Osborne bet that if they could get Britain's economy growing again and reduce a record budget deficit, voters would feel richer by the time of the election.

While the economy has recovered, wages are rising at the slowest pace in more than a decade and public debt is forecast to peak at 79 per cent of the gross domestic product in 2015-16.

With the public accounts still deep in the red, Osborne has little room to offer major tax cuts ahead of the election.

In one sweetener, he said he would scrap before the election a 55 per cent tax levied on pension pots of savers when they die.

But his aides said the pain of new austerity measures would be felt by households and eat into some of the help they have received from rising tax-free allowances from income tax.

Several welfare payments would be frozen for two years to save more than £3 billion a year and help fund £25 billion of annual spending cuts to eliminate the deficit.

Osborne also said efforts to cut spending by government departments would run for an extra two years after the election, accounting for a 13 billion-pound savings. Around 9 billion pounds of welfare cuts have yet to be spelled out, something aides said would take place before May.

Andrew Hood, an economist with the Institute for Fiscal Studies, a think tank, said the planned welfare cuts looked like an effective way to reduce benefits spending, even if they represented only a quarter of the total extra savings needed.

"If you want to reduce welfare spending, a freeze is a good way to raise significant amounts of money by hitting large numbers of people for relatively small amounts," he said.

Osborne's vow not to increase taxes as part of his austerity push contrasts with Labour's plan to restore the top rate of income tax to 50 per cent and raise new levies on expensive homes and tobacco companies.

DUBLIN — Ireland is mounting a spirited fight back from economic collapse but as recovery takes hold, a housing shortage has sparked talk of another dangerous property bubble.

Residential property prices in Dublin surged 24.7 per cent in August compared with a year earlier, according to official data. Nationally, prices rose by 14.9 per cent in the year to August.

The sharp jump in prices reminds many of the decade to 2006 when cheap credit and reckless lending fuelled a property bubble that saw Irish house prices rocket by about 300 per cent.

"The Irish property bubble is back with house price increases in double-digit gains," VTB Capital economist Neil MacKinnon told AFP. 

Buying frenzy

Earlier this month, images of people queuing for days to secure a house in a new development in north Dublin triggered a media frenzy that a property bubble was under way. 

Approximately 35,000 residences changed hands in the year to July 2014, nearly double the figure for 2011. Meanwhile, new mortgage lending was valued at almost 1.4 billion euros by midyear, 63 per cent up on the same period last year.

When the bubble popped in 2008, house prices plummeted by 50 per cent, unemployment soared and the taxpayer eventually bailed-out the banking sector to the tune of 64 billion euros ($82 billion).

On the verge of running out of money, Ireland turned to the European Union (EU) and the International Monetary Fund (IMF) for emergency funding in 2010. The following year, just 18,000 residential transactions took place. 

Now almost a year since exiting the bailout programme, with growth levels not seen since the mid-2000s, more people in work and banks starting to lend, house prices are surging again.

"It was cheap money, greedy banks, excess leverage, a sharp increase in mortgage debt followed by an inevitable bursting of the bubble that brought about the last financial crisis and in the process shattered the Irish economy," said MacKinnon.

"We don't seem to have learnt any lessons from the crisis and appear condemned to repeat the same mistakes," he added.

However, other experts argue that the price rises point to a lack of supply and years of pent-up demand, rather than a credit-fuelled bubble that defined the "Celtic Tiger" years a decade ago. 

Kieran McQuinn from the Dublin-based Economic and Social Research Institute (ESRI) believes prices, which fell 50 per cent in the five years from 2007, had dropped too much.

"The market had over-corrected and property was probably somewhat undervalued. Positive signs in the economy right now coupled with high demand is driving pricing up at present," he indicated.

The surge in demand means property prices are now 41 per cent lower across Ireland than their peak in September 2007.

According to the latest survey by property website Daft.ie, the average asking price for a residential property nationwide is 187,000 euros, compared to 171,000 euros a year ago and 380,000 euros at the peak of the market.

One of those home-hunters is Karen Creed, who moved back to Ireland to start a family after working as a journalist in Paris.

Despite almost two years of trying to find a family home with her husband Peter and their young baby, she has been unable to find an affordable and suitable property. 

"I've witnessed panic bids taking place on a first viewing and I got so caught up in the panic at one point that I was going to put a deposit on a house before I had even seen plans or stepped inside a show house," she told AFP.

Government dismisses bubble fears

Dublin has been quick to dismiss speculation of another housing bubble. Prime Minister Enda Kenny insists the price increases are being driven by the "law of supply and demand".

Trinity College Dublin economist and property market expert Ronan Lyons agrees: "The math didn't add up. We had a growing population in the Dublin area but we didn't have a growing housing stock. There's a huge backlog of demand."

The ESRI forecast 25,000 housing units are needed annually to meet demand but with banks reluctant to back major projects, only a fraction of that number is expected to be built this year and next.

The bursting of the property bubble left many unfinished developments, dubbed "ghost estates" due to their unsightly abandoned look, but few of these are in areas where demand for housing is most acute.

SYDNEY — High-cost Australian miners are battling for survival as plunging iron ore prices push many to breaking point, with analysts seeing no significant short-term recovery as Chinese demand for steel wanes in line with sliding property prices.

Australia, the world's largest exporter of iron ore, is heavily dependent on China's hunger for resources even as its economy transitions away from an unprecedented mining investment boom.

A year ago, iron ore fetched about $135 a tonne. This month it hit a five-year low of $81.90, slumping 40 per cent since January.

The weaker price has also hit Australian government coffers, reducing tax revenue just as it makes a push to bring the budget back into surplus. 

Australia produces 17 per cent of the global iron ore, second only to China's output of 39 per cent.

"I think the iron ore market's got a perfect storm at the moment," ANZ's global head of commodity research Mark Pervan told AFP.

Australian junior miners Termite Resources and Western Desert Resources — which operate at a much higher cost than majors BHP Billiton, Rio Tinto and Vale — have already collapsed, and there are fears others could follow.

On the supply side, record levels of iron ore production in Australia from the world's largest miners BHP and Rio have pushed millions more tonnes into the global market.

But demand from China has weakened as the property market softens. New home prices have fallen for four straight months, according to Chinese data, weighing on steelmakers that depend on the sector as a "pillar industry", Pervan said.

While the Australian jump in supply — driven by strong prices three years ago — was forecast, the continued output from Chinese miners has exacerbated the price decline.

The plunge in the iron ore price has been so severe that Goldman Sachs this month called it "the end of the Iron Age".

In a research note, analysts Christian Lelong and Amber Cai wrote that "in our view, 2014 is the inflection point where new production capacity finally catches up with demand growth, and profit margins begin their reversion to the historical mean".

"In other words, the end of the Iron Age is here," they remarked.

According to Lelong and Cai, the "weak demand outlook in China and the structural nature of the surplus make a recovery unlikely".

Despite the tough environment, BHP and Rio, as low-cost producers, are still raking in large profits.

The falling prices could also help them by removing smaller competitors, UBS global commodity analyst Daniel Morgan said.