Morning business news - October 14

Monday 14 October 2013 10.31
Morning business news with Emma McNamara
Morning business news with Emma McNamara

IMPROVING NEWS ON IRISH ECONOMY AHEAD OF BUDGET 2014 - Construction activity grew last month for the first time in more than six years - according to a monthly survey of companies in the sector by Ulster Bank. The survey shows that the industry returned to growth last month on the back of an "accelerated" increase in new orders, the first time since May 2007 - the start of a deep recession for the industry. Meanwhile, as the shutdown continues in America the heads of the International Monetary Fund and the World Bank have warned that a US default could tip the world into recession. The US Treasury will start to run out of funds on Thursday this week if no agreement is reached for it to raise its debt limit. Back home, a day ahead of the formal announcement, we are hearing some details of what tomorrow's budget will contain.

Robbie Kelleher, head of global investment strategy at stockbrokers Davy, says that any potential US default would have serious consequences and would have major implications worldwide. But Mr Kelleher says that analysts do not actually believe that the US will default, saying that the implications of such an event could be so serious it will not be allowed to happen.

On tomorrow's Budget, the analyst says that the Government is constrained by its fiscal commitments and by the fact that we are in a bailout programme. He says that the Government has learned the mistakes of the past fiscal excesses and the very painful processes of correction. But he says that the economic data over the summer months has been more positive from a range of sectors, including the retail and construction industries. He says he expects there will be some speculative development in the construction sector over the coming months. Mr Kelleher states that he is not expecting any surprises from Finance Minister Michael Noonan tomorrow.

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MORNING BRIEFS - Construction activity grew last month for the first time in more than six years, according to a monthly survey of companies in the sector by Ulster Bank. The survey shows that the industry returned to growth last month on the back of an "accelerated" increase in new orders, the first time since May 2007 - the start of a deep recession for the industry. Since 2007 the value of the industry's output fell by €30 billion a year to €8 billion, while employment has fallen from more than 350,000 to about 100,000.

*** As the shutdown continues in America the head of the International Monetary Fund, Christine Lagarde has warned that a US default could tip the world into recession. She told a US TV network at the weekend that a default would result in "massive disruption the world over". The US Treasury will start to run short of funds on Thursday this week if no agreement is reached for it to raise its debt limit. Also speaking this weekend, the head of the World Bank, Jim Yong Kim, has also expressed his concern over the situation. He warned that the US is just "days away from a very dangerous moment" because of the government's borrowing crisis.