But he reckoned without even more cheap imports from the soon to be enlarged European Union. From plotting a global alliance which would have catapulted the company into the world’s top five, Corus is back to keeping the furnaces alight at home. And quite a challenge it looks, too.jeremy.warner independent.co.uk. Deflation or inflation – could the central bank guns be facing in the wrong direction?

Deflation or inflation – could the central bank guns be facing in the wrong direction?
The Bank of England’s position yesterday seems still to be that the greater danger is inflation and there are several reasons to support that view.

The US Federal Reserve has evidently made the opposite judgement. The European Central Bank seems still to be in anti-inflation mode despite the evidence of the reverse in Germany. And in Japan, well, the only issue is how to extract the country from deflation, rather than how to avoid it.So the short answer to the question above is that it depends where you look. Deflation does not yet seem to be a contagious disease for, with the possible exception of Germany, it has not yet spread from Japan to the rest of the world. But the Fed is seriously worried that it might and determined to avert the danger, while we are not.

Could the Fed be right and the Bank (and the ECB) be wrong? Or, put another way, is the US more likely to slip into deflation than the UK?The starting point must surely be the parallels between the US and UK. Both economies have serious imbalances, though in somewhat different proportions. Thus the US has a current account balance that is double that of the UK as a percentage of GDP, a bit over 4 per cent against a bit over 2 per cent. In both countries consumers are spending above their income, with US household savings even lower than British. Both have experienced a housing boom and this has helped support consumption.This last point is in contrast to all the other major economies: the left-hand graph shows how our boom has outstripped even the US, while prices elsewhere have either slumped, or as in the case of France and Italy, struggled to regain ground lost in the early 1990s. So in the sense that housing inflation is a problem, we have it to a greater extent than anywhere else You can see very obviously why the Bank is concerned.