Tag Archives: Britain

UK terrorism reinsurance fund hopes to include cyber: CEO

LONDON (Reuters) – Britain’s 6 billion pounds ($7.3 billion) terrorism reinsurance fund hopes to extend its cover to include cyber attacks on property, chief executive Julian Enoizi said.

Pool Re, set up in 1993, acts as a backstop to insurers paying out claims on property damage and business interruption.

It is financed by the insurance industry with government backing, and pay outs depend on the British government deeming an attack to be terror-related, Enoizi said.

In 2002, Pool Re extended its cover to include chemical and biological attacks after the 9/11 attacks in the United States.

There have been several cyber attacks on property in recent years. In 2014, a German steel mill suffered damage to the plant’s network from a cyber attack.

Enoizi told Reuters that this and other incidents had been ruled out as terror attacks, but Pool Re needed to be prepared.

“Insurance is there for the unimaginable – we’re here to insure the unforeseen,” he said.

The fund has held discussions with the government and industry, and it hopes to add cyber to its coverage in the next few months, he added.

Enoizi said any increase in the premium costs to businesses for adding this cover would be accompanied by discounts for implementing government-approved cyber security policies.

The U.S. cyber insurance market is likely to have totalled about $3.25 billion in premiums in 2016, according to market survey The Betterley Report. The European market is seen as one-tenth of that, but demand has been increasing, insurers say.

Demand is expected to spike after EU legislation on data privacy is implemented by mid-2018. This will require companies to notify authorities of data breaches likely to harm individuals, similar to U.S. arrangements.

But most cyber policies relate to data loss, rather than attacks on property.

“We see this as a gap in the cover,” Enoizi said.

Cyber attacks on property worry businesses and insurers. These include an attack at some apartment buildings in Finland last year which knocked out the heating system when it was below freezing outside. This attack was not deemed an act of terror.

Insurers have said the source of a cyber attack is hard to prove, and most policies pay out regardless of the cause.

Pool Re’s cover would be limited to terror-related cyber attacks, once the British government assessed it to be an act of terrorism, Enoizi said.

(Reporting by Carolyn Cohn; Editing by Edmund Blair)

EU tries to contain East-West schism as Brexit bites

European and national flags fly outside the European Parliament while European Commission President Jean-Claude Juncker presents a white paper on options for shoring up unity once Britain launches its withdrawal process, in Brussels, Belgium, March 1, 2017. REUTERS/Yves Herman

By Alastair Macdonald

BRUSSELS (Reuters) – As Britain hands the European Union its formal notice to quit this month, Brussels is resigned to losing part of the EU’s western flank but is increasingly stressed that upset in the east is pulling the survivors further apart.

Poland, the biggest of the ex-communist eastern states to join after the Cold War, has picked a fight over the fairly minor matter of who chairs EU summits. Symptomatic of a mounting east-west friction, the spat will overshadow a meeting this week that was meant to forge post-Brexit unity.

Brexit has not created that friction but made it worse, as leaders struggle to quell popular disaffection with the EU that is by no means confined to Britain. Westerners are talking up faster integration, even if that means leaving nationalistic easterners behind in a “multispeed Europe”.

When Chancellor Angela Merkel, raised in East Germany and a key defender of eastern allies, joined her French, Italian and Spanish peers at Versailles on Monday to ram home a message that unless some states press ahead the EU will stall and break, Polish ruling party leader Jaroslaw Kaczynski hit right back.

“The decisions made in … Versailles … aim to reinforce the process of European Union disintegration which has started with Brexit,” he said on Tuesday.

Kaczynski will not be in Brussels for Thursday’s summit but his prime minister, Beata Szydlo, will give voice to his refusal to endorse the reappointment of her centrist predecessor Donald Tusk as European Council president. Tusk and the right-wing Kaczynski are old and bitter rivals in Polish politics.

BREXIT HOLE

Brexit deprives the easterners, unwilling to see diktat from Brussels or Berlin replace rule from Moscow, of their strongest ally against EU centralization and euro zone domination.

It also leaves a big hole in the EU budget for paying the subsidies that fund a large slice of public spending in the east — cash that has kept voters there sold on EU membership and which Brussels fears London may now use to court eastern favor and divide the EU to extract better Brexit terms.

On Friday, leaders will work on plans for a March 25 summit in Rome where they hope to use 60th anniversary celebrations of the bloc’s founding treaty to pledge a new unity after Brexit.

Yet the road to Rome has been marked with division over the push by founding powers and the EU executive led by Jean-Claude Juncker for more differentiated EU integration.

“The key message of Rome must be the unity of the 27,” said a senior EU official involved in looking for compromises to ease the friction. “The political context of Brexit should not be a multispeed Europe. That would be completely out of tune.”

Neither side is pushing for a split and all insist they must pull together against challenges from Russia and uncertainty about U.S. support under President Donald Trump. For that reason, officials say, the words to come out of the Brussels and Rome summits will stress unity and soft-pedal the differences.

FRICTION GROWING

But east-west friction has heated up in the past two years.

There are rows over eastern reluctance to take in Syrian refugees and Kaczynski’s new policies that Brussels calls undemocratic. New border controls to curb migrants inside the passport-free Schengen zone have fueled eastern fears of losing travel freedoms cherished since the fall of the Berlin Wall.

And there is a brewing crisis over what eastern leaders see as hypocritical protectionism inside the EU single market by western governments trying to impose their own national minimum wages on enterprising — and cheap — eastern “posted workers”, who offer services like trucking and construction in the west.

Last week Poland and its allies demanded Brussels crack down on the “double standards” of firms that offer lower quality versions of western food brands in eastern markets.

It is not just outspoken Poland and Hungary who fret at fragmentation. The worry runs from the Baltic to the Black Sea. Eastern diplomats fear a new gap could open up along the old Iron Curtain that may never close, especially if the rich states play up to voters and refuse to fill the EU’s Brexit budget gap.

Prime Minister Robert Fico told Slovakia’s parliament on Wednesday he was skeptical of the Union’s future once Britain leaves in 2019.

“I’m afraid the EU will be divided by the money issue after 2020…In the spirit of Trump’s ‘America first’, we can expect to hear ‘Germany first’, ‘France first’ etc.”

Noting that current EU arrangements already allow for states to deepen their cooperation — the euro is just one of many examples — a senior diplomat from an eastern member state said he was suspicious of assurances from Merkel and others that any new moves would always be open to any member state to join.

“The only new thing they can mean is that this has changed,” he said. “They are saying ‘No, you are not welcome any more’.

“This is very dangerous.”

(Additional reporting by Lidia Kelly and Justyna Pawlak in Warsaw and Tatiana Jancarikova in Bratislava; Editing by Gareth Jones)

Tight deadline for talks after nationalist surge in Northern Ireland

Sinn Fein President Gerry Adam sand Sinn Fein leader Michelle O'Neill speak to media outside the Sinn Fein offices on Falls Road in Belfast, Northern Ireland March 4, 2017. REUTERS/Clodagh Kilcoyne

By Ian Graham

DUBLIN (Reuters) – Northern Irish leaders prepared on Saturday for three weeks of challenging talks to save their devolved government after a snap election that could have dramatic implications for the politics and constitutional status of the British province.

The pro-British Democratic Unionist Party narrowly remained the largest party after the closest-ever election for the provincial assembly. But surging Irish nationalists Sinn Fein came within one seat of their rivals to deny unionist politicians a majority for the first time since Ireland was partitioned in 1921.

Major policy differences between the sides risk paralyzing government, dividing communities and creating an unwelcome distraction for Prime Minister Theresa May as she prepares to launch Britain’s formal divorce proceedings from the European Union later this month.

Northern Ireland is the poorest region of the United Kingdom and potentially the one most economically exposed to Brexit, as its frontier with the Republic of Ireland is the UK’s only land border with the EU.

“The election yesterday was in many, many ways a watershed election. Clearly the notion of a permanent or a perpetual unionist majority has been demolished,” Sinn Fein President Gerry Adams told reporters in Belfast.

“We need to reflect on that and so do the leaders of unionism and so does everyone on this island,” he added, standing in front of a mural of Bobby Sands, a member of the militant Irish Republican Army (IRA) who died in a hunger strike in prison in 1981.

The two largest parties have three weeks to form a new power-sharing government to avoid a return to direct rule from London for the first time since 2007. Sinn Fein said it would make contact with the other parties on Sunday.

GENERATIONAL SHIFT

With relations at their lowest point in a decade and Sinn Fein insisting among its conditions that DUP leader Arlene Foster step aside before it will re-enter government, few analysts think an agreement can be reached in that time.

An acrimonious campaign also added to the friction. Foster antagonized nationalists with her outright rejection of some of Sinn Fein’s demands, saying: “If you feed a crocodile, it will keep coming back looking for more.”

Michelle O’Neill, the 40-year-old new leader of Sinn Fein whose elevation represented a generational shift within the former political wing of the IRA, benefited most from the highest turnout in two decades.

“Foster angered nationalists and made sure they went out to vote but Michelle O’Neill is also a much more acceptable nationalist face than previously,” said Gary Thompson, a 57-year-old voter, as he went for a jog near parliament buildings.

Pensioner Tom Smyth, a DUP supporter, said Foster had to stand up to Sinn Fein but in doing so probably helped mobilize her rivals’ vote.

“This is terrible,” he said. “There will be no living with them (Sinn Fein) now. All my life there has been a Unionist political majority. I feel a bit exposed now and wonder what the future holds.”

Nationalist candidates, traditionally backed by Catholics, narrowed the gap overall with unionists, who tend to be favored by Protestants, to just one seat. Smaller, non-sectarian parties captured the remaining 12 percent of the vote.

IRISH UNIFICATION

Northern Ireland is still marginally a mainly Protestant province but demographics suggest Catholics could become the majority within a generation. The shift in the election will embolden Sinn Fein in its ultimate goal of leaving the United Kingdom and uniting the island of Ireland.

The party has increased calls for a referendum on the issue since Northern Ireland, like Scotland, voted to remain in the EU while the United Kingdom’s two other countries, England and Wales, chose to leave in last year’s Brexit vote.

Sinn Fein’s Mairtin O’Muilleoir, the province’s outgoing finance minister, described Brexit as “the gift that keeps on giving” for those that want a united Ireland.

“The massive shift towards nationalism in this election completely changes the landscape and most certainly brings the constitutional question to the foreground,” said Peter Shirlow, Director of Irish Studies at the University of Liverpool.

Britain’s Northern Ireland Minister James Brokenshire urged the parties to engage intensively in the short time available. Ireland’s foreign minister said both governments stood ready to provide whatever support was needed.

Former Northern Ireland first minister David Trimble, a key player in the 1998 Good Friday peace agreement that ended three decades of sectarian bloodshed, said the British government should find a way to give the parties more time.

Senior unionist politician Jeffrey Donaldson told BBC Radio:

“If we can’t do it in three weeks it could be a prolonged period of direct rule.

“In those circumstances, with Brexit coming down the road, we won’t have our own administration to speak for us and offer the best prospect of delivering the kind of outcome we need.”

(Writing by Padraic Halpin; Editing by Mark Trevelyan)

Northern Ireland talks to begin after transformative election

Sinn Fein elected candidates for East Belfast (L to R) Fran McCann, Orlaithi Flynn, Pat Sheehan and Alex Maskey pose on stage at the count centre in Belfast, Northern Ireland March 3, 2017. REUTERS/Clodagh Kilcoyne

By Ian Graham

DUBLIN (Reuters) – Northern Irish leaders prepared on Saturday for three weeks of challenging talks to save their devolved government after a snap election that could have dramatic implications for the politics and constitutional status of the British province.

The pro-British Democratic Unionist Party narrowly remained the largest party following the closest-ever election for the provincial assembly. But surging Irish nationalists Sinn Fein came within one seat of their rivals to deny unionist politicians a majority for the first time since Ireland was partitioned in 1921.

Major policy differences between the sides risk paralyzing government and dividing communities just as Britain prepares to leave the European Union. Northern Ireland, the poorest region of the United Kingdom, which has its only land border with the EU, is considered the most economically exposed to Brexit.

“Everything has changed and we enter into a new political landscape from Monday,” outgoing finance minister Mairtin O’Muilleoir of Sinn Fein told national Irish broadcaster RTE.

The two largest parties have three weeks to form a new power-sharing government to avoid devolved power returning to London for the first time since 2007.

With relations at their lowest point in a decade and Sinn Fein insisting among its conditions that DUP leader Arlene Foster step aside before it will re-enter government, few analysts think an agreement can be reached in that time.

An acrimonious campaign also added to the friction. Foster’s outright rejection of some Sinn Fein’s demands by saying that “if you feed a crocodile, it will keep coming back looking for more” antagonized and rallied nationalists.

Michelle O’Neill, the 40-year-old new leader of Sinn Fein whose elevation represented a generational shift within the former political wing of the Irish Republican Army, benefited most from the highest turnout in two decades.

“Foster angered nationalists and made sure they went out to vote but Michelle O’Neill is also a much more acceptable nationalist face than previously,” said Gary Thompson, a 57-year-old voter, as he went for a jog near parliament buildings.

Pensioner Tom Smyth, a DUP supporter, said Foster had to stand up to Sinn Fein but in doing so probably helped mobilize their rivals’ vote.

“This is terrible,” he said. “There will be no living with them (Sinn Fein) now. All my life there has been a Unionist political majority. I feel a bit exposed now and wonder what the future holds.”

IRISH UNIFICATION

Nationalist candidates, traditionally backed by Catholics, also narrowed the gap overall with unionists, who tend to be favored by Protestants, to just one seat. Smaller, non-sectarian parties captured the remaining 12 percent of the vote.

Northern Ireland is still marginally a mainly Protestant province but demographics suggest Catholics could become the majority within a generation. The shift in the election will embolden Sinn Fein in its ultimate goal of uniting Ireland.

The party has increased calls for a border poll since Northern Ireland, like Scotland, voted to remain in the EU while the United Kingdom’s two other countries, England and Wales, chose to leave.

Sinn Fein’s O’Muilleoir described Brexit as “the gift that keeps on giving” for those that want a united Ireland.

“The massive shift towards nationalism in this election completely changes the landscape and most certainly brings the constitutional question to the foreground,” said Peter Shirlow, Director of Irish Studies at the University of Liverpool.

Taking over the administration of Northern Ireland is not a prospect likely to please British prime minister Theresa May, already fighting a renewed independence push from Scotland as she readies her Brexit launch at the end of the month.

Her Northern Ireland Minister James Brokenshire urged the parties to engage intensively in the short time available.

Former Northern Ireland first minister David Trimble, who was instrumental to the 1998 Good Friday peace agreement that ended three decades of sectarian bloodshed, said the British government should find a way to give the parties more time.

“If we can’t do it in three weeks it could be a prolonged period of direct rule,” Jeffrey Donaldson, a senior member of the DUP told BBC Radio.

“In those circumstances, with Brexit coming down the road, we won’t have our own administration to speak for us and offer the best prospect of delivering the kind of outcome we need.”

(Writing by Padraic Halpin; Editing by Catherine Evans)

UK economy picks up in late 2016 but signs of Brexit hit appear

Workers walk to work during the morning rush hour in the financial district of Canary Wharf in London, Britain, January 26, 2017. REUTERS/Eddie Keogh

By Andy Bruce and William Schomberg

LONDON (Reuters) – Britain’s economy sped up at the end of 2016, data showed, but over the whole year it was weaker than previously thought and there were signs that the Brexit vote will increasingly act as a brake on growth in 2017.

The pound fell after Wednesday’s Office for National Statistics (ONS) figures, which no longer showed Britain was the fastest-growing major advanced economy last year.

Gross domestic product rose by 0.7 percent in the fourth quarter, faster than the preliminary reading of 0.6 percent thanks to manufacturing and the strongest growth since the fourth quarter of 2015.

The figures are likely to reinforce finance minister Philip Hammond’s view that there is no case right now to borrow more to help the economy when he announces his annual budget on March 8.

But he will keep a close eye on warning signs in Wednesday’s data.

Business investment fell and slowing household spending growth raised questions about the outlook for 2017.

The ONS also trimmed its estimate for 2016 growth to 1.8 percent from 2.0 percent, due to businesses stockpiling fewer goods and materials in early 2016.

That pushed Britain’s economic growth rate slightly below Germany’s 1.9 percent.

Separate ONS data showed Britain’s dominant services sector expanded in December at the slowest pace in seven months.

Angus Armstrong, director of macroeconomics at the National Institute of Economic and Social Research, said the familiar pattern of consumers driving the economy was likely to fade.

“The UK economy needs another driver if it is not to have a significant slowdown in 2017,” he said. “The pattern of strong consumer spending and weaker business investment can only be a limited one.”

Business investment fell 1.0 percent in the fourth quarter compared with the July-September period. Investment by companies was 0.9 percent lower compared with the fourth quarter of 2015.

Firms are expected to rein in their investment plans as Britain negotiates its departure from the EU, a process that Prime Minister Theresa May is due to kick off in coming weeks.

The outlook for wages is key for spending by households who have driven Britain’s economy since the Brexit vote. Wednesday’s data showed compensation of employees edged up by 0.1 percent in the fourth quarter, the weakest rise in more than three years.

BREXIT SQUEEZE

The ONS said household spending increased 0.7 percent on the quarter, slowing from 0.9 percent in the third quarter and marking the weakest growth in a year.

Bank of England deputy governor Minouche Shafik said after the data that the central bank still expected overall economic growth this year of 2.0 percent, much stronger than most economists polled by Reuters expect.

But the bank also predicts a growing squeeze on consumers as inflation rises due to the pound’s fall since June’s vote to leave the European Union.

There are signs this has started. Data last week showed retail sales fell in each of the three months to January.

The BoE this month signaled that it is in no hurry to raise interest rates with so much Brexit-related uncertainty ahead.

The central bank expects the economy to grow at a slower pace in subsequent years than if Britain had voted to stay in the EU.

(Editing by John Stonestreet)

Israel’s Netanyahu urges Britain to join Iran sanctions

Britain and Israel leaders

By Michael Holden and William James

LONDON (Reuters) – Israeli Prime Minister Benjamin Netanyahu urged “responsible nations” to join new sanctions against Iran on Monday during a visit to London, but Britain defended a nuclear deal sealed between major powers and Tehran.

Ahead of his talks with British Prime Minister Theresa May, Netanyahu said other nations should follow new U.S. President Donald Trump’s imposition of sanctions against Iran following a ballistic missile test.

“Iran seeks to annihilate Israel. It seeks to conquer the Middle East, it threatens Europe, it threatens the West, it threatens the world. And it offers provocation after provocation,” Netanyahu told May ahead of their meeting.

“That’s why I welcome President Trump’s assistance of new sanctions against Iran. I think other nations should follow suit, certainly responsible nations. I’d like to talk to you about how we can ensure that Iran’s aggression does not go unanswered.”

May’s spokeswoman said the British leader had repeated her backing for the nuclear deal with Tehran – which is strongly opposed by both Netanyahu and Trump – but said there was a need to “rigorously monitor” Iran’s behavior.

“The prime minister made clear that we support the deal on nuclear that was agreed,” the spokeswoman told reporters, when asked whether Britain was considering joining new sanctions.

“What happens now is that (the nuclear deal) needs to be properly enforced, and we also need to be alert to Iran’s pattern of destabilizing activity in the region.”

Earlier the spokeswoman said May would also tell Netanyahu that continued Israeli settlement activity in occupied lands captured in the 1967 Middle East War on which the Palestinians hope to create independent state undermined trust in the region.

“STRONG AND CLOSE ALLY OF ISRAEL”

Despite their differences, London has adopted a more positive approach to Israel since May became leader after last year’s vote to leave the European Union, echoing the more sympathetic tone set by Trump, with whom Britain wishes to secure a post-Brexit trade deal.

May told Netanyahu that Britain was a “strong and close friend of Israel”, and highlighted their co-operation in science, trade and security.

They agreed to set up a working group to develop trade ties both before and after Brexit, the spokeswoman said.

Last month Britain said it had reservations about a French-organized Middle East peace conference in Paris and did not back the final communique by 70 countries which reaffirmed that only a two-state solution could resolve the Israeli-Palestinian conflict. Its stance angered many EU members.

In December, Britain also scolded then U.S. Secretary of State John Kerry for a speech criticizing Israeli policy.

Netanyahu’s talks on Monday got off to an awkward start as he arrived before May was at her official Downing Street residence to greet him. Having entered her office alone, he came back outside minutes later for the customary handshake.

Small groups of pro-Palestinian and pro-Israeli protesters gathered outside Downing Street and Jeremy Corbyn, leader of Britain’s opposition Labour Party, said May’s stance on settlements was not good enough.

“Theresa May must make clear to the Israeli prime minister that the British government will stand unequivocally behind the rights of the Palestinian people,” said Corbyn, who once described members of Palestinian group Hamas and Lebanon’s Hezbollah as friends in comments he later said he regretted.

(Editing by Gareth Jones)

‘Alphabet soup’ of agencies leave UK exposed to cyber attacks: report

projection of man in binary code representing cyber security or cyber attack

LONDON (Reuters) – Britain’s government has taken too long to coordinate an “alphabet soup” of agencies tasked with protecting the country from an ever-increasing risk of cyber attack, a parliamentary report said on Friday.

The Public Accounts Committee report said that as of last April there were at least 12 separate organizations in Britain responsible for protecting information, with “several lines of accountability with little coherence between them.”

Processes for recording breaches of personal data by government departments are inconsistent and chaotic, the report said, adding that the government is struggling to meet a skills gap in the security profession.

The findings come in the wake of a spate of cyber attacks that have targeted banks, businesses and institutions, including Tesco Bank, Lloyd’s Bank, Talk-Talk, and the National Health Service.

“The threat of cyber-crime is ever-growing yet evidence shows Britain ranks below Brazil, South Africa and China in keeping phones and laptops secure,” said committee chair Meg Hillier.

“Leadership from the center is inadequate and, while the National Cyber Security Centre (NCSC) has the potential to address this, practical aspects of its role must be clarified quickly.”

The NCSC was established by the government last October as part of a 1.9 billion-pound ($2.37 billion) program to tighten cyber security.

An NCSC spokesman said in response to the report: “The government has been clear that the newly formed NCSC is the UK’s definitive authority on cyber security.”

On Thursday night, British defense minister Michael Fallon said Russian president Vladimir Putin was trying to undermine the West by spreading lies and attacking critical infrastructure with hackers.

The Kremlin called the accusation baseless.

Britain launched a cyber security review in January after U.S. intelligence agencies said Putin ordered an effort to help President Donald Trump’s electoral chances by discrediting his rival Hillary Clinton in the 2016 U.S. presidential campaign.

(Reporting by Ritvik Carvalho)

Businesses growing in face of upcoming risks

waiter carries food at British restaurant

By Jonathan Cable

LONDON (Reuters) – Business started 2017 on a solid footing, surveys showed on Friday, thriving ahead of a myriad of political risks in the coming year.

Fears of a growing protectionist agenda in the United States, whether national elections across Europe upset the status quo and just how fractious Britain’s divorce proceedings from the European Union become, are all expected to weigh in the months ahead.

Yet so far those risks seem to have been mostly ignored with firms from Asia to Europe increasing or at least largely maintaining activity. Similar upbeat results are expected later from the United States..

Euro zone businesses started 2017 by increasing activity at the same multi-year record pace they set in December.

China’s factory activity grew for a seventh month and while India’s services business contracted for a third month as firms struggled to recover from a government crackdown on currency in circulation, the pace slowed.

“The outlook for this year is reasonably bright despite all the risks. The numbers for January have generally been quite positive,” said Andrew Kenningham, chief global economist at Capital Economics.

Growth in Britain’s services sector slowed for the first time in four months in January, dipping just below its long-run average, as businesses battled the sharpest rise in costs in more than five years.

But on Thursday the Bank of England sharply revised up its growth forecast for 2017 to 2.0 percent, a view held by only the most optimistic forecaster in a Reuters poll of 50 economists taken last month.

Britain’s economy unexpectedly outpaced all its major peers last year, wrongfooting those who expected an immediate hit from June’s Brexit vote.

The Markit/CIPS British services Purchasing Managers’ Index dropped to a three-month low of 54.5 last month from December’s 15-month high, at the bottom end of a range of forecasts in a Reuters poll of economists, but Markit said the PMIs still point to first quarter growth of 0.5 percent.

IHS Markit’s final composite PMI for the euro zone, seen as a good guide to growth, held at 54.4. It has not been higher since May 2011 and has remained above the 50 mark dividing growth from contraction since mid-2013.

That points to first quarter expansion of 0.4 percent, Markit said, matching the median prediction in a Reuters poll.

“Despite the slightly disappointing outcome this remains a very strong report,” said James Knightley, senior economist at ING.

China’s factory activity expanded for the seventh straight month in January, giving Beijing more room to tackle chronic imbalances in the economy. The Caixin/Markit Manufacturing PMI fell to 51.0.

The world’s second largest economy has seen a broad-based pickup in recent months, with fourth-quarter GDP beating expectations due largely to a strong housing market and higher government spending on infrastructure projects.

A recovery in the country’s “smokestack” industries has also been supported by government mandates to close down outdated production capacity in the coal and steel sectors, as well as a rebound in investment in the property sector that came amid a record flood of credit.

India’s Nikkei/IHS Markit Services PMI remained below 50 registering 48.7 in January as firms still reel from Prime Minister Narendra Modi’s decision in November to abolish high-value bank notes.

Modi’s policy removed 86 percent of the currency in circulation, hitting consumption and capital investments, and shattered traditional cash-reliant supply chains.

(Editing by Jeremy Gaunt)

Cyprus leaders seek new U.N. peace summit in early March: envoy

Cypriot flag

ATHENS (Reuters) – The leaders of ethnically-split Cyprus have asked the United Nations to prepare for a new peace conference in early March with guarantor powers Britain, Turkey and Greece, a U.N. envoy said on Wednesday.

Greek and Turkish Cypriot leaders Nicos Anastasiades and Mustafa Akinci also agreed at a meeting to reconvene weekly through the month of February to try to resolve outstanding issues, envoy Espen Barth Eide said.

“The leaders requested the United Nations to prepare, in consultation with the guarantor powers, for the continuation of the Conference on Cyprus at political level in early March,” Eide said in a statement.

“They underscored their strong resolve and determination to maintain the current momentum,” said Eide, a former Norwegian foreign minister who has been one of a long line of envoys trying to broker peace on the eastern Mediterranean island.

Cyprus was a British colony until 1960 and its Greek and Turkish Cypriot communities have lived estranged on either side of a U.N.-monitored ceasefire line since 1974, when Turkish forces invaded the island in response to a brief coup by Greek Cypriot militants seeking union with Greece.

The seeds of partition were planted years earlier when Turkish Cypriots withdrew from a power-sharing system after the outbreak of communal violence, which spurred the dispatch of what is now one of the oldest U.N. peacekeeping contingents.

One of the 1960 treaties under which Cyprus was granted independence allows Greece, Turkey and Britain intervention rights in the event of a breakdown of constitutional order.

The foreign ministers of guarantor powers Britain, Greece and Turkey met Cypriot leaders in Geneva in mid-January to weigh security guarantees, seen as crucial to a reunification deal.

That meeting was inconclusive. Turkey and Turkish Cypriots insisted on continued guarantor status while Greece and the Greek Cypriots insisted the current system be dismantled, saying Turkey had abused it with its 1970s invasion and continued stationing of 30,000 troops in northern Cyprus.

(Reporting by Michele Kambas; editing by Mark Heinrich)

Momentum and risk: world economy enters 2017 with winds fore and aft

employee in factory

By Jonathan Cable and Nichola Saminather

LONDON/SINGAPORE (Reuters) – Factories across the world fired up – or at least kept up activity – in January with some registering multi-year output highs, just as a barrage of political risks threatens the global economy with potential harm.

Rising protectionism from the United States, concerns over how Britain’s negotiations on leaving the European Union will pan out, and national elections in Europe’s largest economies all lie ahead.

But entering 2017, economic growth gathered momentum, according to surveys released on Wednesday, following on from last year thanks to a bounce in consumption.

Euro zone factories registered the fastest activity rate for nearly six years, China’s activity expanded for the sixth month and Japanese manufacturing growth was the fastest in almost three years.

Even in Britain, where a slump in sterling since the June referendum stoked the sharpest rise in factory costs on record last month, growth remained robust.

There were also signs of growth in Brazil, where industrial output rose in December at its fastest monthly pace in 2-1/2 years after one of the worst years on record.

“So far momentum is pretty strong heading into 2017,” said Jacqui Douglas at TD Securities. “But political risks are definitely one of the biggest this year and given the surprises we had through 2016 it’s really hard to tell what’s in store.”

Among unexpected events last year was Britain’s vote to leave the EU and the election as U.S president of Donald Trump, both seen as the result of anti-establishment anger among voters who feel left out of the wealth of nations.

Signs of concern this may spread could be found on bond markets. The premium investors demand to hold France’s government debt rather than that of similar economies shot up on so-called Frexit fears – the possibility that the far-right National Front might win the presidential election and try to take the country out of the euro zone.

IHS Markit’s final manufacturing Purchasing Managers’ Index for the currency bloc rose to 55.2 in January from December’s 54.9, its highest since April 2011. A Markit/CIPS UK factory PMI edged down to 55.9 from December’s 2-1/2 year peak of 56.1, matching the consensus forecast in a Reuters poll.

Anything above 50 indicates growth.

A similar survey for the United States due later on Wednesday is expected to show factories in the world’s largest economy also increased activity.

TOKYO TEMPERING TRUMP

A stronger dollar helped major economies such as Japan, where export orders surged, Markit/Nikkei PMI numbers showed, a welcome sign for the economy along with recent data suggesting a more durable recovery may be underway.

However, those encouraging signals sit uncomfortably with the growing threat from Trump’s trade policies. Japan is moving to temper the risks with plans to show Trump its firms are ready to create U.S. jobs, according to a document whose contents were revealed to Reuters.

In export-reliant Asia, and other regions where global supply chains are closely interlinked, Trump’s election is a particular risk to both world trade and broad economic growth if the new president follows though on his “America First” policies.

“The uncertainty surrounding future market access to the U.S. is bound to weigh on investment activity as companies await regulatory certainty,” said Frederic Neumann, co-head of Asian economic research at HSBC in Hong Kong.

“I suspect there’s going to be a lot of capital expenditure expansion projects that will be put on hold as long as the uncertainty surrounding the trade environment persists.”

In China, the world’s second-biggest economy, growth was led by an investment and construction boom that has helped spur global growth. Its official PMI stood at 51.3 in January, slowing marginally from 51.4 in December.

Analysts question whether Chinese growth will be sustainable once the impact of earlier stimulus begins to wear off and if the property market cools. They warn a slowdown in the Asian economic powerhouse could ripple across the region and beyond.

“Within China, we expect that real estate will slow down, because the government is quite keen to contain housing prices,” said Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong.

Other regional economies like Indonesia showed positive momentum in manufacturing activity, while Indian factory activity returned to modest growth in January, bouncing from a contraction in December triggered by the government’s scrapping of high value banknotes.

Even in laggard South Korea where manufacturing contracted for the sixth straight month, exports rose at the fastest pace in nearly five years.

“We remain quite cautious how much of an acceleration in growth we can see in this pretty challenging climate,” Oxford Economics’ Kuijs said.

“Things like PMI are timely indicators of the hard data but sometimes they do run ahead, and the improvement in actual data doesn’t materialize.”

(Editing by Jeremy Gaunt)