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Britain on trade tightrope as fresh tariffs loom in aircraft spat By Reuters

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© Reuters. FILE PHOTO: Airbus BelugaXL super transporter aircraft arrives for the first time at the company’s wing assembly plant at Broughton, near Chester

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By Tim Hepher

PARIS (Reuters) – Britain’s push away from Europe and its courting of closer trade ties with the United States have landed London in a growing dilemma over billions of dollars in looming Brussels tariffs in response to U.S. subsidies for Boeing (N:), trade sources say.

The World Trade Organization (WTO) on Tuesday is expected to publish a confidential ruling allowing Europe to impose tariffs on U.S. goods worth $4 billion a year, confirming a decision first reported by Reuters.

The tariffs echo duties on $7.5 billion of European goods including wine granted to the United States over European aid for Airbus (PA:).

Together, the cases mark the largest ever WTO dispute and a growing flashpoint in transatlantic trade ties.

Britain, where Airbus builds wings and employs 14,000 people, is involved in the 16-year-old dispute alongside fellow Airbus backers France, Germany and Spain and the EU itself.

It has long lobbied on Airbus’ behalf, but the timing of the decision puts it in a delicate spot mirroring its strategic position between the United States and Europe.

After a six-month delay due to the coronavirus crisis, the second part of the dispute – allowing Europe to strike back – is coming to a head just as trade negotiations between Britain and the EU on one hand, and with Washington on the other, heat up.

Analysts say delaying backing for the EU tariffs could avoid a damaging row with the United States, but weaken a four-nation coalition behind Airbus and infuriate Brussels at a critical point in negotiations over a European trade deal.

U.S. trade sources have warned that pressing ahead with tariffs would be seen as an aggressive signal, one potentially amplified by the rhetoric of a presidential election.

British Prime Minister Boris Johnson’s government meanwhile faces pressure to act from groups including Scotch whisky makers, who have been hit hard by U.S. tariffs over the Airbus subsidies case.

‘ALL OPTIONS’

One potential scenario floated in the UK is to preserve good faith with Airbus and the EU by imposing tariffs and aim to use this as leverage to win concessions in a future U.S. trade deal – though there is only a narrow window for such an approach.

Britain has so far indicated it is “100% behind Airbus”, said a European source, asking not to be identified.

The earliest the EU could impose tariffs would be late this month after an Oct 26 WTO meeting, but sources on all sides it is unlikely to act ahead of the Nov 3 U.S. presidential election.

Airbus declined comment. Britain’s trade ministry did not respond to a request for comment.

Britain has said it is “exploring all options” as it seeks a negotiated end to the dispute.

Its room for manoeuvre is also clouded by broader questions over its post-Brexit legal status, especially if trade talks between Britain and the EU collapse.

While Britain faces tariffs on products over the Airbus subsidies case, some EU analysts say it could find itself unable legally to impose retaliatory tariffs on U.S. goods because the Boeing case is between the United States and the European Union, which Britain has now left.

The U.S. complaint against Airbus had singled out the Airbus-producing countries, including Britain.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Japan prefers piecemeal approach to big bailout for carrier ANA By Reuters

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© Reuters. A Japan Airlines (JAL) aircraft takes off near All Nippon Airways (ANA) aircrafts, amid the coronavirus disease (COVID-19) outbreak at Haneda Airport in Tokyo

By Takaya Yamaguchi and Leika Kihara

TOKYO (Reuters) – Japan’s government is in no mood for a huge bailout plan for ailing airline ANA, sources say, preferring a piecemeal approach to direct capital injections – a stark contrast to the bold moves other countries have made to protect flagship carriers.

Forecast to suffer a net loss of about $4.8 billion in the fiscal year to March, Japan’s largest airline is expected to announce a revival plan next week that will most likely include pay cuts and reduction in its fleet of aircraft.

The government hopes a waiver on airport landing fees, a tax-funded domestic tourism campaign and a gradual re-opening of borders will be enough to keep ANA alive, said government and ruling party officials with direct knowledge of the matter.

These measures will come on top of $3.8 billion in subordinated loans to ANA Holdings Inc (T:) from state-backed and private lenders.

The loans, cost cuts and capital accumulated during Japan’s inbound tourism boom in the past few years will allow ANA to weather the hit from COVID-19 at least for now, they said.

Though nothing has been officially decided, the government is ready to offer more relief if a deepening economic slump worsens the plight of big companies with national impact such as ANA.

But ideas being floated among government and political circles centre on tax breaks for aircraft and fuel, as well as extensions of existing programmes such as the tourism campaign and subsidies to companies that retain jobs, the officials said.

More radical steps such as those taken by Germany, which did direct capital injection, are off the table for now, they said.

“As long as private banks are healthy enough (to support ANA), it’s probably unnecessary,” a senior ruling party official said of a direct bailout.

“Capital injection is a last resort,” said another ruling party official with close ties with the airline industry. “I don’t think the airlines themselves want this, because it would just show how dire their business health is.”

The Bank of Japan, too, is wary of stepping in, concerned that rescuing non-financial entities like ANA would fall into the realm of fiscal policy, said three people familiar with its thinking.

“The BOJ and government each has different roles to play,” one of the people said, ruling out measures such as directly offering subordinated loans to ANA.

There is uncertainty, however, on how long this drip-feed approach can last. Like other carriers, ANA has been burning through cash to maintain jets that are either grounded or flying with too few passengers during the coronavirus pandemic.

Most of ANA’s international routes are suspended and a resurgence of infections in Western countries means a revival of inbound tourism may be some time off.

If there is a huge wave of infections in Japan, that could also dash hopes of a rebound in domestic tourism. Once pent-up demand from the government’s campaign peters out, households may hold off on travelling as job losses and wage cuts hit income, analysts say.

Crunch time may come next year. Unless sales pick up, some companies may struggle to pay back loans, the officials said.

“Companies like ANA probably won’t run into cash problems this year. But things could turn ugly if they cannot emerge from the red next year,” said a government official.

That could force the government to take even more drastic steps.

“If conditions don’t improve by around next spring, airlines will be in a much dire state,” a third ruling party official said. “Nationalising ANA could become a real possibility.”





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Betting markets give Trump slightly improved chances after debate By Reuters

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© Reuters. FILE PHOTO: Democratic presidential nominee Biden and President Trump participate in their second debate in Nashville

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LONDON (Reuters) – U.S. President Donald Trump’s probability of getting re-elected gained slightly on online betting markets following Thursday’s final presidential debate.

Bettors on British exchange Smarkets give Democratic challenger Joe Biden a 66% chance of winning the Nov. 3 election, down from 68% before the the debate. Trump’s chances improved to 34% from 32%.

Betfair also said Trump’s odds improved on the same level following the debate, adding that punters spent over nine million pounds ($12 million) betting on the election over the last 24 hours.

The odds have narrowed since mid-October, but betting trends on gambling websites still predict a win for Biden. The former vice president has a substantial lead in national opinion polls, although the contest is closer in battleground states likely to decide the race.

The majority of big-money political betting occurs outside America as betting on politics is illegal in the United States.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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German factories hum, services shrink in two-speed economy: PMI By Reuters

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© Reuters. FILE PHOTO: General view shows restaurant of hotel castle Elmau in Kruen

BERLIN (Reuters) – German private sector activity grew for the fourth month running in October, a survey showed on Friday, but while the manufacturing sector expanded at a faster rate, services activity shrank, suggesting Europe’s largest economy is operating at two speeds.

Markit’s flash composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, slipped to 54.5 in October from 54.7 the previous month.

The reading surpassed the consensus forecast of analysts polled by Reuters, who expected a decline to 53.2, and was well above the 50 mark that separates growth from contraction.

Manufacturing proved robust, with the flash PMI rising to 58.0, its highest level since April 2018. The service sector contracted, however, with the flash PMI dipping to 48.9.

Markit economist Phil Smith said the survey data pointed to resilience in the economy in the face of a second wave of coronavirus cases, with the decline in service sector activity quite limited so far while manufacturing remained solid.

“It’s increasingly looking like a two-speed economy,” he said. “Manufacturing businesses have been able to continue operating with less disruption from any new restrictions than many of their service sector counterparts, whilst at the same time reaping the benefits of a resurgence in global goods trade.”

“As more manufacturers get back or close to pre-COVID-19 levels of activity, however, sustaining growth is going to become more challenging,” Smith added.

The German government expects gross domestic product to shrink in 2020 by 5.8% before rebounding by 4.4% next year.

Berlin has since March implemented an array of rescue and stimulus measures, financed with record new borrowing of some 218 billion euros, which it hopes will help consumers and companies get out of the crisis more quickly.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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