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Why is the UK economy suffering more than other countries?

Up until now it has been difficult to pick out much difference between the UK’s economic numbers and those across Europe and the world. The size of the common global economic shocks from the pandemic and from Russia’s invasion of Ukraine has been the overwhelming driver of high inflation and slower growth for most European countries. But in recent days, the Bank of England governor, Andrew Bailey, has warned inflation is set to be higher for longer here in the UK, and growth in the economy weaker too. These gloomy ...

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China to use policy-based, developmental financial instruments to support major projects, expand work-relief programs in key projects

China will adopt policy-based and developmental financial instruments to support the development of major projects, in an effort to expand effective investment and spur employment and consumption, according to the decision made at the State Council’s Executive Meeting chaired by Premier Li Keqiang on Wednesday. The meeting highlighted the need to implement the prudent monetary policy to good effect, better harness structural monetary policy tools, and boost the capability of the financial sector to serve the real economy, so as to keep overall economic performance stable, and to secure employment ...

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Central Banks: ING’s latest calls

Federal Reserve Our call: 75bp in July, 50bp in September and November before switching to 25bp in December. Rate cuts in 2H23. Quantitative tightening (QT) to continue until rate cuts begin. Rationale: To get inflation down quickly we would ideally like to see the supply-side capacity improve to meet strong demand in the US economy. However, supply chain strains, geopolitics/energy prices, and a lack of suitable workers mean this isn’t likely in the near term. Consequently, the onus is on the Fed to respond aggressively to dampen demand, but moving ...

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Recession fears flare and June jobs report looms as jittery markets head into third quarter

Investors are greeting the third quarter with greater trepidation about a recession, and that makes next Friday’s June jobs report a potentially bigger catalyst for markets than it might otherwise have been. The jobs report and Wednesday’s release of minutes from the Federal Reserve’s last interest rate meeting are expected to highlight the four-day, post-holiday week. June’s nonfarm payrolls are expected to have slowed from the 390,000 added in May, but still show solid job growth and a strong labor market. According to Dow Jones, economists expect 250,000 payrolls were ...

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Fed gets newest policymaker, as inflation, recession fears mount

Susan Collins started her job Friday as president of the Federal Reserve Bank of Boston, becoming the first Black woman to lead a regional branch of the U.S. central bank as it faces 40-year-high inflation and mounting fears of recession. Collins will have her first chance to weigh in on monetary policy in just over three weeks, on July 26-27 when she’ll join the Fed’s 17 other policymakers to decide interest rates. They are widely expected to deliver another 75-basis-point rate hike, bringing the Fed’s policy rate to a range ...

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Some IMF staff work ‘unduly influenced’ despite strong safeguards-report

Nearly 20% of International Monetary Fund staff say their work has been “unduly influenced” by supervisors, according to an internal survey released on Thursday as part of a review of data integrity standards that generally found “robust mechanisms” for institutional governance. The review was launched last year by the IMF’s Executive Board following allegations in September 2021 that IMF Managing Director Kristalina Georgieva pressured World Bank staff to alter data to favour China in 2017 when she was chief executive of the development lender. After a weeks-long probe of the ...

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Euro zone factory production falls in June for first time in two years -PMI

Euro zone manufacturing production fell last month for the first time since the initial wave of the coronavirus pandemic two years ago as higher prices and a darkening economic outlook kept consumers wary of making purchases, a survey showed. S&P Global’s final manufacturing Purchasing Managers’ Index (PMI) fell to 52.1 in June from May’s 54.6, its lowest since August 2020 but just ahead of a preliminary reading of 52.0. An index measuring output, which feeds into a composite PMI due on Tuesday and seen as a good gauge of economic ...

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U.S. construction spending unexpectedly falls in May

U.S. construction spending unexpectedly fell in May as single-family homebuilding stalled, more evidence that the Federal Reserve’s aggressive monetary policy tightening was slowing the economy. The Commerce Department said on Friday that construction spending slipped 0.1% in May after increasing 0.8% in April. Economists polled by Reuters had forecast construction spending would rise 0.4%. Construction spending increased 9.7% on a year-on-year basis in May. Spending on private construction projects was unchanged in May after advancing 1.1% in April. Investment in residential construction rose 0.2%, though spending on both single-family and ...

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China’s improving business environment boosts foreign companies’ confidence

China’s efforts to improve the business environment boosted foreign companies’ confidence and strengthened their determination to expand investment in China, according to the China Council for the Promotion of International Trade (CCPIT). Despite the impact of the epidemic, the long-term positive trend of China’s consumer market has not changed, with trends in digitalization, quality, personalization, diversification, and brand upgrading, CCPIT spokesperson Feng Yaoxiang told a Wednesday press conference, citing a survey conducted by the trade council. Many companies surveyed said they would increase investment in innovation to meet the needs ...

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UK manufacturing loses more steam in June -PMI

British manufacturing lost more momentum in June than first estimated as new orders contracted at the fastest rate in two years, according to a survey that adds to signs of a stalling economy. The S&P Global UK manufacturing purchasing managers’ index fell (PMI) to 52.8 from 54.6 in May, downwardly revised from a preliminary “flash” reading for June of 53.4. The survey showed factory output barely grew and manufacturers were their gloomiest about the outlook since May 2020. Price pressures, while still elevated, eased further from recent all-time highs. Overall ...

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UK consumers cautious about their borrowing as inflation mounts

British consumers increased their borrowing by less than expected in May in a sign of caution among households as inflation accelerates, Bank of England data showed on Friday. Lending to consumers rose by 844 million pounds ($1.02 billion) in net terms, a lot less than the 1.3 billion-pounds increase which was the median forecast in a Reuters poll of economists and down from 1.377 billion pounds rise in April. “With interest rates rising and the squeeze on households’ real wages from higher inflation set to intensify further, we expect borrowing ...

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U.S. housing hold-ups put thousands of jobs on the line

U.S. mortgage lenders, refinancing companies and real-estate brokers may lay off thousands of employees in the coming months, industry sources said, as many Americans put off buying a home. Low interest rates, stimulus payments and working from home during the coronavirus pandemic had prompted many millennials to hunt for new homes, fuelling a red-hot U.S. housing market. But the market is now cooling amid economic uncertainty resulting from the Ukraine conflict and a jump in mortgage rates as the Federal Reserve raises the cost of borrowing. “We’re seeing a reduction ...

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India’s June factory growth at 9-month low as inflation worries bite

India’s factory output expanded at its slowest pace in nine months in June as elevated price pressures continued to dampen demand and output, according to a private survey, which also showed business confidence was at its lowest in over two years. Although inflation eased in May to 7.04% after touching an eight-year high of 7.79% in April, a meaningful decline is not seen anytime soon even as the Reserve Bank of India is expected to continue with aggressive rate hikes. While the Manufacturing Purchasing Managers’ Index, compiled by S&P Global, ...

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World Bank’s Reinhart ‘skeptical’ global recession can be avoided

World Bank chief economist Carmen Reinhart said she is skeptical that the U.S. and global economies can dodge a recession, given spiking inflation, sharp hikes in interest rates and slowing growth in China. Reinhart, who returns to Harvard University on July 1 after a two-year public service leave, said it was historically a tall order to reduce inflation and engineer a soft landing at the same time, and recession risks are clearly a “hot topic” at the moment. “What worries everybody is that all the risks are stacked on the ...

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ECB’s Holzmann tells paper he would have preferred faster action on rates

European Central Bank policymaker and fiscal hawk Robert Holzmann would have preferred earlier action on interest rates than the ECB’s current plan to raise them in July for the first time in more than a decade, he said in remarks published on Thursday. “From my Austrian point of view, I would have preferred earlier moves on interest rates but I am only one of 25 at the European Central Bank (Governing Council),” Holzmann, who heads the Austrian National Bank, said in an interview with Austrian newspaper Oberoesterreichische Nachrichten. Source: Reuters

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