Rate cut unlikely until 2025 as energy prices blamed for stronger-than-expected inflation of 2.3%
Any lingering hope that the Bank of England might deliver a pre-Christmas interest rate cut next month appears to have evaporated, after official data showed inflation jumping to 2.3% in October.
The CPI measure had been expected to tick up, after dipping to 1.7% in September, but 2.3% was stronger than expected.
Continue reading...Some experts liken tariffs to a game of whack-a-mole, with trade flows simply rerouted if the potential rewards are big enough
Businesses are bracing for the economic impact of a second Trump presidency, which, if his campaign promises are to be believed, will mean tariffs across nearly all imports to the US, especially those from China.
But amid the gloom over the spectre of a renewed global trade war, some manufacturers may be looking to those who already have a playbook on dealing with aggressive US levies, such as China’s solar companies.
Continue reading...PM says budget stabilised the economy, while mortgage rates are ‘individual decisions for the banks’
Keir Starmer has conceded he was disappointed in the UK growth figures last week, but denied that his government’s budget was responsible for a recent rise in mortgage rates.
The prime minister told journalists travelling to the G20 summit in Rio: “What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step.
Continue reading...Rolling coverage of the latest economic and financial news
Begbies Traynor also reveals that their employment costs are expected to rise by £1.25m due to the increase in employers’ national insurance contributions.
The company is “reviewing options to mitigate the impact where possible”.
“Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels, increasing the need for advice and support from our insolvency and business recovery professionals.”
“We have made a very good start to the year with double digit growth in revenue and profits driven by positive momentum across the group. This gives us confidence that we will deliver market expectations for the year as a whole.
Continue reading...Prime minister wants bilateral at G20 to lead to closer ties with China, which he sees as key to faster growth
Keir Starmer will become the first UK prime minister in six years to meet the Chinese president, Xi Jinping, promising to turn the page on UK-China relations by building “a pragmatic and serious relationship”.
Starmer and the chancellor, Rachel Reeves, have been pursuing a thawing of relations with the world’s second-largest economy on pragmatic grounds, suggesting that the UK cannot achieve its growth ambitions without better terms with China.
Continue reading...New remit given to FCA by chancellor raises fears of a weakening of rules meant to avert another financial crisis
The financial regulator has been ordered to encourage more risk-taking across the City, raising concerns that the Labour government is in danger of watering down rules meant to avoid another financial crisis.
In an official “remit” letter addressed to Financial Conduct Authority (FCA) boss, Nikhil Rathi, the chancellor, Rachel Reeves, said regulations meant to protect consumers should not stand in the way of “sensible risk-taking” by investors and the wider financial sector, which includes banks, asset managers and insurers.
Continue reading...European Commission figures predict German economy, usually the engine of the EU, will contract O.1% this year
Germany’s looming general election will be fought against the backdrop of a stagnating economy, the European Commission has forecast, with GDP expected to have contracted in 2024.
The commission’s quarterly forecast suggested Germany, traditionally the engine of the bloc’s economy, will be its weakest performer in 2025, notching up growth of just 0.7% after shrinking by 0.1% this year.
Continue reading...Cash stops short of hoped-for ‘bazooka option’, with critics calling it ‘an accounting exercise’ that will not bolster growth
China has announced 10tn yuan in debt support for local governments and other economic measures, but stopped short of the “bazooka” stimulus package that many analysts had expected.
The fiscal package included raising debt ceilings for local governments by 6tn yuan (£646bn) over three years, so they could replace hidden debt, which authorities said stood at 14.3tn yuan by the end of 2023.
Continue reading...Trump has been a persistent critic of the Fed, which lowered rates for the second time in a row as inflation continues to ease
US Federal Reserve chair Jerome Powell said he would not resign if he received any pressure from Donald Trump’s new administration to step down as the central bank lowered interest rates by a quarter-point Tuesday afternoon.
Trump has been a persistent critic of the Fed and its independence, calling its officials “boneheads” in his last administration and arguing that he should have a role in setting interest rates.
Continue reading...Rare agreement among forecasters gives 96% chance of today’s MPC meeting cutting borrowing costs to 4.75%
The Bank of England policymakers are widely expected to cut borrowing costs for businesses and homeowners by reducing official interest rates from 5% to 4.75% when they meet later today.
Financial markets are overwhelmingly forecasting that the Bank’s nine-strong monetary policy committee (MPC) will reduce rates for a second time when it announces its latest decision at noon.
Continue reading...Single Trade Window designed to reduce friction on imports and exports will be halted until at least 2026 amid cost fears
A key part of the UK’s post-Brexit border strategy has been put on pause for more than a year amid government concerns over the cost of implementing the scheme.
The introduction of the Single Trade Window (STW), which is designed to reduce friction for traders moving goods in and out of Britain, had already been delayed from late October to January next year, but will now be halted until at least 2026.
Continue reading...Country has been enjoying historic growth in economy, which has tripled since it started crude oil extraction in 2019
Hundreds of thousands of Guyana citizens living at home and abroad will receive a payout of around £370 each after the country announced it was distributing its “mind-boggling” oil wealth.
The grant of 100,000 Guyanese dollars will be available to any citizen of the South American country over the age of 18 with a valid passport or ID card. Guyanese citizens who normally live abroad will be eligible but must be in Guyana to collect the payment.
Continue reading...Commitment by Mogadishu’s largest single lender is latest in series of deals to forgive ‘unsustainable’ $4.5bn debt
Somalia has announced that more than $1.1bn (£860m) of outstanding loans will be cancelled by the US, a sum representing about a quarter of the country’s remaining debt.
The announcement is the latest in a series of agreements in which Somalia’s creditors have committed to forgiving its debt obligations.
Continue reading...NIESR warns British economy would be one of the worst affected by protectionist policies
UK growth is likely to be halved by Donald Trump’s victory in the US presidential race if goes on to impose the swingeing new tariffs he has threatened, a leading thinktank has warned.
The National Institute of Economic and Social Research (NIESR) said the protectionist measures planned by the Republican challenger for the White House would result in weaker activity, rising inflation and higher interest rates from the Bank of England.
Continue reading...Markets expect his policy package to harm trade and growth but reduce business taxes
Higher share prices. A stronger dollar. A less rapid pace of interest rate cuts. The financial market reaction to Donald Trump’s return to the White House was swift and predictable.
The man who will become his country’s 47th president has made no secret of what he plans to do: cut taxes, impose heavy tariffs on imported goods, place curbs on migration, and slash red tape.
Continue reading...Later October half-term break and budget uncertainty also led to lower spending, says industry
Growth in UK retail sales slumped in October, according to industry figures that suggest shoppers have put off spending in anticipation of Black Friday promotions and because of a later school half-term break.
Figures from the British Retail Consortium (BRC) show total sales grew by 0.6% year on year in October, significantly weaker than September’s and less than half the three-month average growth rate.
Continue reading...Rachel Reeves throws down budget gauntlet to new Tory chief as party’s first black leader is congratulated on win
Labour has thrown down an immediate challenge to the new Tory leader, Kemi Badenoch, to back Rachel Reeves’s budget plans for big increases in tax, spending and borrowing, as a huge political divide threatened to open up over economic policy and the future of public services.
All the main party leaders congratulated Badenoch on Saturday on becoming the first black leader of a main UK party after she stormed to victory over former immigration minister Robert Jenrick with 56.5% of the vote among Conservative party members.
Continue reading...ATO finds 31% of large businesses reported nil tax paid as many companies deducted losses and used offsets to dial their bills down to zero
A major streaming service, media outlets, big airlines and a pizza chain are among more than 1,200 large companies that paid no income tax in 2022-23, a new ATO report reveals, as many businesses deducted losses and used offsets to dial their tax bills down to zero.
Netflix’s Australian operations generated more than $1.15bn in income in the 2023 financial year, documents show, but had no tax payable.
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Continue reading...Institute for Fiscal Studies says budget ‘looks like the same silly games’ as seen under the Conservatives
Rachel Reeves is now being interview on ITV’s Good Morning Britain.
She is being interviewed by Ed Balls, the former Labour shadow chancellor who is now a TV presenter. He asks her to confirm that workers will end up losing out because of the employers’ national insurance contributions (NICs) increase.
Continue reading...Institute for Fiscal Studies says budget allows for rise in public service spending this year and next, but not thereafter
Rachel Reeves could be forced to find more money to fix public services after her budget made a start at reversing the “unrealistic” and irresponsible spending plans of the Conservatives, the Institute for Fiscal Studies (IFS) has said.
Britain’s leading experts on the government’s finances said the chancellor’s tax measures on Wednesday had allowed for a substantial short-term increase in public service spending this year and next, but not thereafter.
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