UK: Economic Review - Monetary policy up for review - Third Quarter 2004 (Continued)

Last Updated: 20 July 2004
Most Read Contributor in UK, August 2017
This article is part of a series: Click Economic Review - Monetary policy up for review - Third Quarter 2004 for the previous article.

Analysis: The world economy

US economy to slow as Fed gradually raises rates

  • Three months of strong growth in payrolls have given the Fed the green light to take interest rates back towards more normal levels, starting with the 0.25% rise to 1.25% at the end of June. Nonetheless, the Fed is likely to tread carefully and raise rates only slowly (to 3% by the end of 2005 and 4% by the end of 2006) as large economic imbalances remain and underlying inflationary pressures are still subdued. We think that GDP growth will slow from 4.5% in 2004 to 2.5% in 2005.
  • The business surveys suggest that momentum in the economy is currently strong. They also signal further gains in employment, with manufacturing payrolls finally turning the corner.
  • Rising employment will help to offset the impact of rising interest rates on the household sector. Some 70% of household debt is mortgage debt taken out at fixed rates, which will be unaffected. But with debt servicing costs already relatively high despite ultra-low interest rates, consumer spending is clearly vulnerable.
  • The recent rise in inflation also needs to be put into perspective. Headline inflation has been driven up by higher energy prices and should peak soon as oil prices drop back. While core inflation (excluding food and energy) has also risen, it remains below 2%. Given that not so long ago the big threat was deflation, a moderate rise in inflation may actually be welcome. The labour market is the key to the bigger picture for inflation. Average earnings and unit labour costs will accelerate as employment picks up, but from a relatively low starting point.
  • Small and widely-anticipated increases in interest rates need not be a major problem for financial markets. Yet valuations in both housing and equity markets do look stretched. Housing is not so obviously overvalued in the US as in the UK, but the ratio of house prices to income is still close to all-time highs. At best, the rate of growth of house prices will slow, with new mortgage borrowing almost certain to fall off.
  • Conventional valuation measures, such as the price/earnings ratios, also suggest that that there is limited upside for the stock market. The non-financial corporate sector’s financial health has been buoyed by the strong rebound in profit growth led by efficiency gains, and more restraint over capital expenditure than we saw in the second half of the 1990s. However, productivity growth will slow as employment recovers, hitting firms’ bottom lines.
  • The sharp upward revision to market expectations for US interest rates benefited the dollar in the first half of the year. However, now that this adjustment has taken place and further rate rises are priced in, it is hard to see much more support for the currency from this direction. The risk now is that attention re t u rns to the huge current account deficit, which will stretch the patience of overseas investors. It is therefore too soon to call the end of the downtrend in the dollar.

Falling inflation to keep euro-zone interest rates low

  • Despite signs of economic recovery in the euro-zone, unemployment remains high, and growth is slow compared to other major economies and even to previous recoveries in the region itself.
  • In the first quarter of 2004, the euro-zone grew by 0.6% quarter-on-quarter, compared to 0.4% in the final quarter of 2003. Year-on-year, growth was 1.3%, up from 0.7% in Q4 of 2003. But personal consumption and consumer confidence remain weak, as the recovery continues to be heavily dependent on exports.
  • The purchasing managers’ indices (PMIs) have come off their recent highs and are now consistent with euro-zone growth of 2.0%. But we think this is still too high and expect growth in 2004 to be 1.8%.
  • Of the two largest euro-zone economies, France is performing better than Germany. French growth in the first quarter came in stronger than expected, at 0.8% quarter-on-quarter, and 1.7% compared to a year earlier. But the unemployment rate remains high at 9.4%, according to the EU harmonised measure, although lower than Germany’s 9.8%.
  • Given a lack of labour market flexibility, the recovery is not yet strong enough to translate into a substantial pick up in employment, or fall in unemployment. In fact, the unemployment rate in the euro-zone nudged up to 9.0% in April, from 8.9% in March. Furthermore, the PMI is pointing to only weak employment growth in the second and third quarters.
  • However, as with the rest of the euro-zone, Germany is benefiting from strong export demand, and we have revised upwards slightly our German GDP growth forecasts for 2004 to 1.5%, and for 2005 to 2.0%.
  • While the rise in the value of the euro versus the dollar, which began in 2001, has temporarily halted, we expect renewed strength in the second half of the year – and a corresponding increase in the euro’s trade weighted index – as concerns over the US twin deficits come to the fore once again.
  • Headline inflation in the euro-zone jumped to 2.5% in May, according to the EU harmonised measure, above the ECB ceiling of 2%. However, the jump in inflation was due to the 50% rise in oil prices compared to a year earlier. Core inflation has remained below the ECB ceiling of 2%. We expect oil prices to fall in the second half of the year, and so headline inflation itself should come down as well.
  • Therefore, despite recent speculation, we do not think the ECB will be in any hurry to raise interest rates. Indeed, a rate cut remains in play for later in the year, if the recovery disappoints.

Japan’s real recovery, China’s controlled slowdown

  • Although the opening up of China has grabbed the headlines in recent years, Japan remains the dominant economy in Asia. At market exchange rates the Japanese economy is roughly three times as large as that of Japan is also still the bigger player in world trade and, although China is catching up, many Chinese exports rely on Japanese components.
  • Japanese growth has been much stronger than expected – indeed suspiciously so – with real GDP reported up 5.7% y/y in the first quarter. The flying start to the year means that growth is on course to average 4% in 2004.
  • These numbers have undoubtedly been flattered by the big falls in the GDP price deflators. A review of the statistics is expected to report later in the year and will probably result in downward revisions. We have reflected this in our growth forecast of 3% in 2004 – still a great performance for an economy where adverse demographics mean that trend growth may be as low as 1%.
  • Even if growth is not quite as strong as the GDP reports suggest, other indicators are consistent with a ‘real’ recovery. These include the Tankan survey of business confidence and the monthly activity indices . The unemployment rate is falling.
  • The biggest external threats to the Japanese economy are the reliance on imported oil and the possibility of a sharp slowdown in China. Both concerns now seem overdone. Oil prices (which never rose as much in yen terms as in dollars) are falling again.
  • China is also on track for a controlled slowdown, which would still see growth of 7-8% in the coming years. Although Chinese inflation has accelerated, the rise is almost entirely due to higher food prices, reflecting a combination of poor harvests and the diversion of agricultural land to other uses In terms of resource allocation at least, higher food prices are therefore a good thing, as they will encourage greater agricultural production. And in the Chinese context, they are helping to support agricultural incomes and thus offset some of the widening gaps between rural and urban communities.
  • Concerns about over-investment are also overdone. Investment has risen to more than 47% of China’s GDP, the sort of levels that preceded the crisis in South East Asian economies in the late 1990s. However, much of the rise in Chinese investment has been in essential infrastructure, such as ports and roads, necessary to service the expansion of trade after China joined the WTO in 2001.
  • The real problem is the flurry of ‘prestige’ projects sponsored by local politicians. But the solution here is administrative controls, which do appear to be working, as investment in the problem areas is now slowing The upshot is that fears of a boombust cycle in China are exaggerated.
  • Overall, we expect world GDP growth to accelerate from 3.2% in 2004 to around 4.5% in 2004, before moderating again in 3.5% in 2005 as the US and Japan slow.

Analysis: UK output and activity

Near term outlook is robust…

  • The near term outlook for the UK economy remains strong, but with a hard(ish) landing in the household sector looking increasingly likely, growth is likely to slow significantly next year.
  • Quarterly GDP growth slowed a little to 0.7% in the first quarter of this year, compared to 1.0% in the fourth quarter of last year. But upward revisions to previous quarters pushed the annual growth rate up from 3% to 3.4 This was above the trend rate of growth of about 2.7% for the second consecutive quarter.
  • What’s more, survey evidence was consistent with quarterly growth of more like 0.9%, leading to doubts over the official data. And the activity balances of the CIPS manufacturing, services and construction surveys are again suggesting that growth will be a strong 0.9% or so in the second quarter.
  • Given the recent upward revisions to growth, we have raised our forecast for GDP growth overall in 2004 from 3.0% to 3.3%. This would be a significant acceleration from the 2.2% growth seen in 2003 and the strongest annual growth rate since 2000.
  • Not only was GDP growth in recent quarters revised up, but the breakdown of growth revealed a more balanced economy than in previous estimates. Quarterly growth of household spending was revised down from 0.9% to 0.6% in the first quarter, and has been lower than quarterly GDP growth in all of the last three quarters. Nonetheless, the divergence between the level of household spending and GDP remains at an unprecedented level. 
  • Meanwhile, other evidence suggests that the four rises in interest rates seen so far appear to have done little to dampen household sector activity. The latest data show the annual growth rate of retail sales reaching a two-year high of 7.4% in May, while household borrowing grew at an annual rate of 14.7% in April, the fastest rate since 1989.
  • One support for spending has been the rebound in household income growth, driven by continued robustness in the labour market Meanwhile, house price inflation has been unexpectedly robust, reversing all of the slowdown at the end of last year. As a result, despite reaching new record highs relative to household income, mortgage debt has stayed low relative to housing wealth.
  • However, we continue to think that the recent rates of households’ spending and borrowing are unsustainable. The debt servicing burden for households is already higher than is commonly assumed, once repayments of mortgage and unsecured debt are included. And if interest rates rise as we expect, to 5.25% by the end of the year, while debt and income continue to grow at their recent rates, it would actually surpass its 1990 peak.

… but a sharp adjustment in the household sector lies ahead

  • Indeed, the rises in the number of bankruptcies and UK banks’ credit card write-offs are an early indication that some people have taken on too much unsecured debt.
  • Meanwhile, the conditions for a housing market slowdown later this year are still in place. Aff o rdability problems at the lower end of the market continue to be reflected in the historically low proportion of new loans going to first time buyers. And buy-to-let activity, which may have been helping to delay an adjustment in prices, has now begun to slow and looks likely to weaken further.
  • Although it is too early to say for sure that the housing market has peaked, there are tentative signs that it is weakening, with the RICS balance of new buyer enquiries falling in May to its lowest level in a year. We continue to expect house prices to fall by around 20%, with monthly falls starting to come through at the start of next year.
  • Given the current resilience of the household sector, we expect household spending to grow by 2.7% or so this year. But we think that the combination of record levels of debt, rising interest rates and a slowing housing market will leave growth closer to 1% next year.
  • What impact this has on overall activity depends on the ability of other areas to compensate for the weaker contribution from consumer spending. Growth in business investment is accelerating, supported by a recovery in profits. Manufacturing investment intentions have also risen, perhaps following a gradual recovery in the sector’s profitability.
  • Also encouraging are signs that the recovery in manufacturing activity detected in the surveys could be starting to show up in the hard data, with a monthly rise in output of 0.9% in April. But given the erratic nature of the data, this rise could well be reversed in May. The annual growth rate of 1.1% was also still less than the 2-3% suggested by the surveys and when in the past the surveys have had a more upbeat message, it has been a change in their tone that has narrowed the gap.
  • Meanwhile, net trade has continued to drag on growth. Although exporters to the US appear to be benefiting from the pick-up in activity there, only 15% of all UK exports go the US.  The total trade in goods deficit widened to £4.7bn in April, the biggest since January. Moreover, the recent rise in the sterling trade-weighted index is consistent with a sharp drop in export orders further ahead.
  • Overall, then, our more bearish stance on the outlook for consumer spending compared to the consensus means that we expect a sharper slowdown in GDP growth, from 3.3% this year to 2.3% in 2005.
  • However, if a sharp household sector adjustment does cause interest rates to come back down next year, there is scope for significant falls in sterling, with the resulting boost to exports aiding prospects of a rebalancing towards the end of next year.

Analysis: UK inflation

Oil prices lift CPI higher in the near-term

  • UK inflation has remained generally benign in recent months. CPI inflation has risen only modestly from the very low levels seen over the last year or so and has stayed comfortably below its 2% target.
  • What’s more, what upward pressure there has been has come almost exclusively from an oil-related rise in petrol price inflation. Stripping this out, inflation has remained broadly unchanged. 
  • However, some commentators have suggested that the conditions might now be in place for a more meaningful pick-up in inflation over the next year or two; namely, diminishing spare capacity, rising wage pressures, and surging raw material costs. The Monetary Policy Committee itself predicted in its May Inflation Report that CPI inflation would rise above its target at the end of its two-year forecast horizon.
  • But while oil prices could push inflation a little higher over the coming months, we doubt that a significant acceleration in underlying price pressures is in prospect.
  • For a start, the link between the degree of spare capacity in the economy and the behaviour of inflation is far from mechanical, to say the least. Although some relationship appeared to exist in the 1970s and 1980s when swings in the business cycle were generally much larger, more recently the link has been notably loose.
  • In any case, if we are right in expecting GDP growth to slow to below its trend rate again next year in response to a major housing slowdown, this will obviously help to relieve any pressure on capacity which might build up in the meantime.
  • As for the labour market, recent months have certainly seen some acceleration in the rate of growth of average earnings. However, this has come largely in the form of higher bonuses in the financial sector, which were particularly depressed a year previously in response to a very weak stockmarket. Stripping these out, earnings growth excluding bonuses has picked up a little but remains fairly low by the standards of the last few years.
  • What’s more, since the pick-up in wages growth has come against a background of stronger output growth, the growth of unit wage costs – a better indicator of inflation pressures in the labour market – has remained very benign. Indeed, in the manufacturing sector, unit wage costs have continued to fall in year-on-year terms. 
  • This in turn has helped to offset the impact on firms’ costs of the rise in raw material costs as oil prices and other commodity prices have strengthened. Although producer input price inflation has climbed from -0.3% in January to +5.3% in May – its highest rate in three years – our estimate of producers’ total weighted costs has shown very little upturn.

Competitive pressure to keep inflation subdued

  • Admittedly, this has not prevented producer output price inflation from creeping higher in recent months as manufacturers have been encouraged to widen margins a little by signs of stronger demand.  And on the face of it, this points to a further pick-up in the goods element of CPI inflation over the coming months. 
  • But the pass-through from the factory gate to the high street is far from mechanical and, indeed, we suspect that two factors will help to limit any upturn in goods inflation. First, any rise in domesticallyp roduced goods inflation should be at least partly offset by further falls in import prices in response to the strength of the exchange rate. The 5% appreciation of the pound over the last year suggests that import price inflation will head further into negative territory.
  • And second, we expect any pass-through of higher costs into the high street to be limited by the intensity of competitive pressures in the high street. This continues to be most obvious in the clothing & footwear sector where, despite very strong increases in sales volumes, prices have continued to fall sharply in year-on-year terms. 
  • Meanwhile, the prices of hi-tech goods like audio-visual equipment (TVs, hi-fis etc.) and computers have continued to plummet. 
  • Price pressures on the services side of the economy have continued to be rather more stubborn. Although services inflation has eased down over the last year, it remains well in excess of the 2% CPI target, maintaining the wide gulf between goods and services inflation seen for the last seven years or more.
  • This has mainly reflected continued strong price rises in administered areas like transport, as well as in education and restaurants & hotels.
  • Services inflation looks set to remain fairly strong in the near-term, although we expect it to fall next year as activity in the household sector weakens. This would help to offset any rise in goods inflation resulting from a fall in the exchange rate next year.
  • Overall, then, while CPI inflation could rise a bit further over the next few months, depending on the behaviour of oil prices and petrol retailers, we think that fears of a major upturn in response to stronger activity in the economy are probably overdone.
  • We expect the combination of a strong pound, weaker activity next year and intense competitive pressures to keep CPI inflation below its target over the next two years. This should allow the MPC to respond to a sharp downturn in the housing market by cutting interest rates next year.

Analysis: UK labour market

Wage inflation rises as employment picks up

  • The labour market has continued to tighten in recent months, supporting household spending but also giving rise to inflationary concerns.
  • The annual growth rate of average earnings has slowed as expected since the surge in January, caused by a change in the timing of bonus payments. But with bonuses still higher than last year due to the recovery in financial markets, earnings growth has remained high throughout the bonus period, reaching 4.7% in April.
  • Moreover, excluding bonuses, underlying earnings growth has risen from 3.8% at the start of the year to 4.3% in April. Given that inflation has fallen, this means that real average earnings growth has risen by even more.
  • The rise in wage inflation has reflected increasingly robust activity in the labour market. Unemployment has fallen further, on both the claimant count and the wider ILO measures. The falls have been modest by historical standards, but with the unemployment rate already at its lowest since 1975, they have intensified concerns about a tightening labour market.
  • Meanwhile, not only has employment shown a sharp pick-up since the start of the year according to Labour Force Survey data, but the rise has been driven by growth in employees. This is in sharp contrast to the rise in employment last year, which was driven by growth in the self-employed – who may simply have turned to self employment after failing to find a job and still want to work for an employer once demand for labour picks up.  But there are also signs that there is still some slack left in the labour market. Average hours worked have remained historically low, leaving plenty of scope for employers to meet rising demand by working existing employers harder before hiring more. Despite the rise in employment, therefore, total hours worked have not yet picked up significantly. Moreover, a large proportion of the new jobs continue to be in the public sector, with the number of jobs in the private sector falling in the first quarter of this year.
  • We therefore expect the moderate tightening in the labour market to push up average earnings growth over the coming months. We expect average earnings growth of around 4.6% this year and 4.7% next year.
  • The impact of rising wage bills on firms’ unit wages costs may be partly offset, however, by rising productivity. Productivity growth has picked up, in the manufacturing sector in particular, where output per hour rose by an annual 7.8% in the first quarter. This has helped to ensure that annual growth of unit wage costs has remained relatively low
  • Overall, then, the labour market is set to remain very robust. However, this will not be enough to prevent a slowdown in household spending and the housing market next year.

Analysis: UK monetary policy

Interest rates to rise to 5.25%, before falling next year

  • The Monetary Policy Committee quickened the pace of monetary tightening from raising the cost of borrowing once every three months to raising interest rates in consecutive months – for the first time since 2000 – in May and June.
  • In response to this and the ongoing strength of the housing market and the consumer sector in general, the markets substantially raised their expectations of where interest rates will end this year and next.
  • However, interest rate expectations have eased back in recent weeks. Although some of this may be a reaction to the minutes of the Monetary Policy Committee’s June meeting – which revealed that the MPC did not talk about hiking interest rates by 50 basis points – most of it has been due to a downturn in sentiment towards the housing market.
  • Indeed, as well as a warning by the Governor of the Bank of England, Mervyn King, that "the chances of falls in house prices were greater than they were," some of the housing market activity data have weakened. The RICS new buyer enquiries balance fell by a sizeable 26 points in May.
  • As a result, bond yields have eased back and falling UK interest rate expectations relative to those in the US and the euro-zone pushed the sterling trade-weighted exchange rate down, although it remains close to its recent highs.
  • But we think that the markets may be getting a bit ahead of themselves. Even if the housing market slowdown is underway, it is still in a very early phase. Indeed, although we have been more concerned about the housing market than most, even we don’t expect annual house price inflation to turn negative until mid- 2005.
  • Given this, and the MPC’s more general concerns about wage pressures and the lack of space capacity within the economy, interest rates are still likely to rise from their current level of 4.5%, possibly to 5.25% by the end of the year, or shortly afterwards. As a result, bond yields, market interest rate expectations and sterling are likely to rise back up in the near-term.
  • But the prospect of more aggressive interest rate hikes in the near-term makes us even more concerned that when the housing market slowdown comes, it will be more abrupt than the soft landing still expected by most forecasters.
  • Coupled with low inflation, we think that this means interest rates are likely to fall in 2005, possibly back down to 4.75% by the end of the year. As a result, there is plenty of scope for market interest rates expectations, bond yields and the sterling exchange rate to fall next year.

Analysis: UK public finances

The worst is over, but improvement will be slow

  • Hopes that the UK’s public finances would begin to improve markedly this year in response to the pick-up in economic activity have so far been disappointed. Public sector net borrowing (PSNB) has followed a very similar path to that seen in the early months of 2003-04.
  • The good news is that the growth of current expenditure has slowed sharply from the rapid rates seen through much of last year. But this might partly reflect changes in the seasonal pattern of spending rather than a new-found discipline amongst departments.
  • In any case, slower spending growth has been offset by continued weakness on the revenue side of the equation. The Chancellor’s Budget forecast of 8% growth in tax receipts this year already looks very demanding in the light of recent growth rates of less than half that.
  • Accordingly, while the significant deterioration in the public finances seen over the last four or five years appears to be coming to an end, we still expect borrowing to come in somewhat above Mr Brown’s forecast of £33bn this year. We expect a figure of more like £36bn.
  • Looking further ahead, the Chancellor’s prediction of a steady decline in borrowing over the medium term is based on the twin assumptions of a very strong economy – including a second consecutive year of 3.0% to 3.5% GDP growth next year – and a steady rise in the ratio of tax receipts to GDP.
  • Our own expectation of rather weaker GDP growth of around 2.3% next year and a re-balancing of the economy away from the tax-lucrative household sector suggest that, without corrective action, borrowing is likely to hold up rather more stubbornly than Mr Brown hopes.
  • The result is that fiscal policy is likely to be significantly less supportive to the economy over the next few years than it has been over the last few. This summer’s Spending Review will confirm rather slower growth in public expenditure in the three years from 2005-06 to 2007-08, in line with the spending "envelopes" already set out in the Budget.
  • But slower spending growth is unlikely to be enough to move the current budget strongly back into surplus, suggesting that significant tax increases will also be required if the Chancellor is to meet his own Golden Rule. We still expect tax hikes of the order of £10bn after the general election, likely to be held in spring 2005.
  • The rise in public borrowing in recent years has already led to a sharp upturn in gross gilt issuance. Our forecasts for borrowing, coupled with a projected increase in gilt redemptions, suggest that gross gilt issuance is likely to stay close to recent levels of around £50bn per annum, if not rise a bit, over the next few years.

Analysis: UK external trade

The external position will improve, but not until next year

  • The UK’s external position showed signs of recovery in early 2004, as rises in the trade in services and investment income surpluses helped the current account deficit hold steady at £5.3bn in Q1. But the external position is likely to get worse before its gets any better.
  • Indeed, the trade in goods deficit is still deteriorating, reaching a record £13.9bn in Q1. And while the growth rate of imports has moderated on an annual basis, there is plenty of scope for an acceleration in the near-term given the continued strength of household spending growth.
  • Moreover, the recent rise in the sterling trade-weighted index to a 20 month high is likely to push down sterling import prices.  Although this will initially decrease import values, over a longer period it is likely to stimulate import volumes.
  • On the exports side, whereas goods export volumes were recently rising very rapidly to non-EU countries, as a result of the robust economic recoveries in the US and Asia, the growth rate is now worryingly weak. And export volumes to the EU – which is nearly 60% of the UK’s total export market – are still falling on an annual basis.
  • Sterling’s recent rise does not help either, although exporters are offsetting part, if not all, of it with lower sterling export prices.
  • Despite the recent improvement in the trade in services surplus, we now expect the total trade deficit to widen from £32.7bn in 2003 to around £35bn in 2004, compared to our previous forecast of a small narrowing.
  • This is despite the recent climb in the oil price to a 24-year high. Indeed, whereas in the past a higher oil price has improved the UK’s trade position because domestic oil production is falling relative to UK consumption, the UK’s oil surplus has been eroded. Indeed, in April of this year, the UK became a net oil importer.
  • But we think that the UK’s trade position will improve next year. Indeed, the survey data suggest that the global economic recovery will soon start to have a positive impact on export volumes. Furthermore, import volumes should ease as the consumer slowdown takes hold. And on top of this, with UK interest rates likely to fall next year relative to elsewhere (see Analysis: UK Monetary Policy), the sterling exchange rate is likely to depreciate. We think the total trade deficit will narrow to around £24bn in 2005.
  • As far as the other elements of the current account are concerned, the high oil price is likely to support the already robust investment income balance as UK oil companies repatriate profits from abroad.
  • And with the current transfers balance unlikely to do anything out of the ordinary, we expect the overall current account deficit to widen to around £23bn this year before narrowing to around £15bn in 2005.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

This article is part of a series: Click Economic Review - Monetary policy up for review - Third Quarter 2004 for the previous article.
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.