Although stopping short of endorsing Technology Guardian's Free Our Data proposal, the report says the Treasury should investigate the benefits of making those public sector databases freely available for commercial re-use. Confusion in government policy is stifling the re-use of data - and that policy "could be better informed by a proper assessment of whether [information] be provided for free".

The 180-page report (avilable as a 707KB PDF at oft.gov.uk) also fires a shot across the bows of Ordnance Survey, the largest and most successful player in the public sector data market. It warns of "further action" unless the mapping agency changes the way it works with businesses that use its data (see below). This could include a referral to the Competition Commission, which has the power to order OS to change its business model.

Full potential

Covering many of the conflicts highlighted by the Guardian's campaign, the report - in preparation since June 2005 - says the huge resources of data created at taxpayers' expense are not being exploited to their full potential. Today, the market in maps, weather forecasts and other products created from public sector information is worth about £590m a year to the UK economy; creating a level playing field would double that sum to around £1.1bn, the OFT says.

The OFT draws a distinction between "raw" data, collected in the course of government work, and "refined" data which has been processed for sale or other use. It praises some organisations, such as British Geological Survey, for making the raw data from its notebooks available for free. Problems arise with organisations that both collect and refine data - but offer no easy way for the private sector to access the raw data. Guardian Technology's Free Our Data campaign argues that the raw data collected by government agencies should be made available for no more than the cost of simple distribution (which online is free). Furthermore, there is obvious economic benefit in making refined data generated by government bodies with a statutory duty to be comprehensive - such as Ordnance Survey and the UK Hydrographic Office - free for re-use on the same conditions.

Abuse of position

The report's concerns include:

- Organisations with monopolies in raw data may be abusing their position by providing the data to their own commercial operations on better terms.

- Organisations are reluctant to provide "unrefined" data.

- High prices and poor customer service. More than one third of businesses relying on public sector information reported problems with their supplier.

- "Significant evidence" of unreasonable licensing conditions, such as requiring a company to share its business plan with a potential competitor.

- Failure to provide separate accounts for activities involving raw and refined data.

- "Extremely limited and insufficient" resources at the sector regulator, the Office of Public Sector Information.

Despite its concerns, the report finds evidence of good practice. As well as British Geological Survey, it also commends the Met Office for transparent accounts. To create a level playing field, the OFT says government bodies should make their unrefined information available for re-use, priced at no more than the cost of producing it.

It also recommends that holders of public sector information split their accounts to show how much they earn from refined and unrefined data and set simpler and less intrusive licensing conditions. The Treasury should give the Office of Public Sector Information more resources and new powers to check compliance to the rules, to conduct unannounced "information audits", for example.

Government, led by the Department of Trade and Industry, has 90 days to say whether it accepts the OFT's recommendations. Many of the concerns raised about the market in public sector information could be resolved if government bodies pulled out of the market in value-added products and made their unrefined data available for free, the OFT says. The drawback is that barring public bodies from the market might mean some products would not be developed. Ordnance Survey, for example, says large parts of the country would no longer be mapped. The OFT says such questions are outside its remit.

Nonetheless the OFT's conclusion - that society as a whole gains from encouraging the wider re-use of public sector data - is more ammunition for this growing campaign to free our digital crown jewels.

Ordanance Survey targeted in explosive report

Of the 120 government bodies earning income by supplying information, the Office of Fair Trading selects one for special attention. Ordnance Survey (OS) not only has the largest revenues (£100m a year), it is also unique in the "nature and seriousness" of problems reported by businesses using its data. The OFT found: - OS's licensing terms allow it to refuse to allow its data to be used in products intended to compete with any product Ordnance Survey markets - or intends to market.

- Companies wishing to license OS information must share their business plans with the organisation. OS says this is essential to set fair prices; the OFT says it is unreasonable.

- One company that wanted to bid for a government contract in competition with OS could not licence information from OS on terms that would comply with the bid.

The OFT notes that "one of the more noticeable factors is the way in which previous attempts by regulators and other bodies to influence the behaviour of OS have met with resistance", and criticises OS's lawyers for relying on "the most recent statement of the outer limits" of competition law to defend its terms and conditions.

The OFT says it has discussed its concerns both with OS and its parent ministry, the Department for Communities and Local Government. It warns that if its concerns are not resolved "we would need to consider whether further action by the OFT would be warranted". OS responded that it would give the OFT's recommendations "very careful and serious consideration".

Still, OS had one piece of good news this week: the Office of Public Sector Information failed to uphold a complaint lodged in October on behalf of organisations wanting to re-use census data. However the changes called for by the OFT, especially in making raw data available without strings to competitors, will be harder to shrug off.

- Join the debate at the Free Our Data blog: freeourdata.org.uk

US banks predict sterling fall, pound coins
America's top banks expect the pound to plummet

"The UK remains the largest current account deficit country in Western Europe, with a substantially overvalued currency - about 13pc on a trade-weighted basis," said the bank in a client note.

Jens Nordvig, a Goldman Sachs currency strategist, said the credit cycle was turning as the Bank of England finished raising rates, ending the yield premium over European investments that has made UK bonds so attractive.

"There are quite a few risks in Britain, especially in the housing market, but this is more a case of Europe doing better rather than the UK falling off a cliff," he said.

Lehman Brothers is even more bearish on Britain, warning in its global outlook for 2007 that the glory days of UK dynamism are drawing to a close. It predicted that Britain's FTSE 100 would lag the other major stock markets in 2007, calling for a cut in the UK weighting of global equities from 10pc to 7pc.

The US investment bank also warned that the odds of an outright recession in the US had shortened to 4/1, though it is still betting that the housing slide will bottom out soon enough to ensure a softish "bumpy" landing.

Alan Castle, Lehman's UK economist, said the pound would fall to $1.82 in 2007 and to $1.68 by the end of 2008 as UK Inc gradually goes out of favour.

"I'm not saying that things will be terrrible, but they will feel much worse," he said. The property boom may continue for a few more months as buyers exploit interest-only mortgages and lax credit offers, but would sputter out in the second half of 2007. He expects interest rates to peak at 5.25pc early next year.

"The surprise is that the pound has been so strong. Current account deficits matter over time and we're worried that Britain's deficit could widen to 4pc of GDP in 2008," he said.

Sterling has a been favourite choice for global central banks switching reserves out of dollars over the last two years but Lehman Brothers said the effect was "starting to fade". Fresh data from the Office for National Statistics show private investors are now the main foreign buyers of UK gilts.

The Bank of Italy switched 20pc of its reserves into sterling last year, while Russia and Switzerland have both raised their share to 10pc. But the data is often out of date when published, reflecting a trend that may already have reversed.

Traders suspect that central banks and Middle East institutions are now targeting the yen, which is at a record low against the euro. The Bank of International Settlements said in its quarterly report yesterday that Saudi investors had been switching out of dollars into Japanese bonds.

Lehman Brothers expects the yen to rocket 12pc against the euro in 2007 as Japan finally claws its way out of deflation.

Start with the biggest number of the week: the Commerce Dept.'s Nov. 29 revision of third-quarter GDP. It looked positive at first glance: a 2.2%, instead of a 1.6%, annual rate of growth in GDP in the third quarter. Stocks even rallied, with strong gains from AT&T (T) and Dell (DELL) to ExxonMobil (XOM) and ConocoPhillips (COP).

Look At The Fine Print

But take a closer look. The 2.2% growth rate is still a deceleration from the first quarter (5.6%) and second quarter (2.6%), and is below the economy's sustainable path for long-term growth, which is a little below 3% per year.

What's more, the reasons for the upward revision were none too cheering. One big factor was inventory accumulation. Instead of consuming inventories, as originally thought, business actually added to inventories in the third quarter. That means there's more unsold stuff on the shelves. Also, the government lowered its estimate of import growth, which means that consumer demand for imports wasn't as robust as previously believed. Not exactly a bell-ringer of a report.

Looking ahead to 2007, it takes a sunny disposition to share the Fed chairman's view, expressed in a Nov. 28 speech, that the economy will get back on or close to its regular growth path. The buildup of inventories will tend to dampen growth because companies don't need to produce as much if there's a backlog of unsold products. Housing will continue to be a drag as well. Residential construction fell at an 18% rate in the third quarter, even worse than originally estimated. That alone took almost 1.2 percentage points off the rate of GDP growth. And the inventory of unsold homes remains exceptionally high.

"Borderline Recessionary"

There's no consolation in the less scrutinized indicators, either, like the tonnage of freight carried by trucks. On Nov. 27, the American Trucking Assn. said its seasonally adjusted truck-tonnage index dropped 1.8% in October and was down 4% from a year earlier. ATA Chief Economist Bob Costello said "the latest number fits with anecdotal reports that the traditional fall freight season was essentially nonexistent this year." That's bad news because trucking is a barometer of the U.S. economy. David Rosenberg, chief North American economist of Merrill Lynch (MER), wrote that the truck-tonnage report "looked borderline recessionary, for lack of a more polite term." He said "this was the worst October for trucking activity since 1982, when the economy was in recession."

The U.S. economy is remarkably resilient, and it may resume solid growth in the next few months. But right now, things are looking a bit precarious.

The United States's soaring trade deficits have their counterpart in Chinese surpluses racked up by exporting to U.S. consumer markets. That raises the ire of U.S. lawmakers who say an undervalued Chinese yuan allows Chinese products to be priced so low that American companies cannot compete.

"China's currency policy is a core issue in our economic relationship," Paulson said. "We have indicated to the Chinese in the clearest possible terms that more flexibility in their exchange rate will help China achieve more balanced economic growth" and have more control over its own monetary policy."

Paulson was joined on a podium by six other cabinet officers who were part of the high-powered U.S. delegation, though
Federal Reserve Chairman Ben Bernanke who also was a member left Beijing early.

TIMING AN ISSUE

The U.S. Treasury chief said there were differences about whether Beijing could speed up the pace of reform.

"We have a point of view that there's more risk in going too slowly than there is in going too fast, and the Chinese see that differently," Paulson said, noting growing protectionist sentiment that he said added urgency to the reform process.

The tangible results of the talks, which will resume in May in Washington, were modest.

China agreed to let the New York Stock Exchange and Nasdaq open offices in Beijing, while Washington gave the green light for China to join the Inter-American Development Bank.

Paulson earlier claimed agreement on the direction of the steps each side needed to take.

"We will each take measures to address global imbalances, notably through greater national savings in the United States and through increased domestic consumption and exchange rate flexibility in China, and maintaining open investment in both countries," he said.

The leader of the Chinese delegation, Vice Premier Wu Yi, said the discussions had been very successful and would help to boost trade and economic relations. She said the two sides had not seen eye to eye on every issue, but that was understandable given the economic differences between the two countries.

Paulson wants to lay a foundation to tackle complex sets of issues over the long haul. He is under pressure to deliver progress in the form of a faster rise in the yuan -- a litmus test for many of China's commitment to market reforms.

The yuan is also called the renminbi or RMB.

Bernanke said a stronger yuan would enhance China's future growth and stability by giving the central bank more control over monetary policy.

In prepared remarks, Bernanke said an undervalued yuan represented an "effective subsidy" to Chinese exporting firms but he dropped the reference to subsidies when he spoke to the Chinese Academy of Social Sciences, a leading think-tank.

A Fed spokesperson said later that Bernanke decided on his own to alter his text to make clear he was referring to the fact that an undervalued currency affects corporate decisions about production.

LAWMAKERS CHIME IN

The talks occurred against a background of new U.S. calls for speedier Chinese action to let the yuan appreciate.

"We cannot continue to wait for this longer-term goal and suffer the consequences of insignificant short-term action," Sen. Christopher Dodd (news, bio, voting record), the Connecticut Democrat who will chair the Senate Banking Committee next year, and Alabama Sen. Richard Shelby (news, bio, voting record), the outgoing Republican chairman, said in a statement.

They said experts estimated the yuan was undervalued by as much as 15 to 40 percent, costing American job losses by making Chinese-made goods unfairly cheap in America's consumer markets.

China freed the yuan from a dollar peg in July 2005, and on Friday the central bank set the currency's mid-point at a new post-reform high, 7.8185 per dollar, for the second day in a row.

Before leaving Washington, Paulson had played down expectations of dramatic results from the first round of talks with Chinese officials. That seemed to keep markets calm and the dollar made modest gains against Asian currencies on Friday.

China pushed back against U.S. claims that it was laggard in the pace of its economic reforms.

Wu on Friday again questioned Americans' "limited knowledge" of China's efforts to give market forces greater sway over the economy, while the People's Daily, the official paper of the ruling Communist Party, said the United States had China to thank for a long period of low inflation.