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UK posts record current account gap, but urges caution on data

Britain’s current account deficit in the first quarter ballooned to 51.7 billion pounds ($62.8 billion) or 8.3% of gross domestic product, the biggest shortfall by that measure in records going back to 1955, official data showed on Thursday. The Office for National Statistics said the figures were subject to more uncertainty than usual due to the impact of post-Brexit data collection changes on trade in goods imports and foreign direct investment which are being investigated. Economists polled by Reuters had expected a deficit of just under 40 billion pounds. The ...

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The war in Ukraine is triggering a re-evaluation of global systemic risk

The world is confronting multiple intersecting geopolitical events with highly unpredictable consequences. Coming in the wake of the global COVID-19 pandemic, the Russian-Ukrainian war is disrupting global financial markets, food security and real economies. Escalating tensions between the US and China are compelling decision-makers to recalculate everything from their strategic alliances to the vulnerability of their supply chains. Making matters even more complicated, looming threats ranging from cyberattacks to climate change and the mounting possibility of nuclear war, including the erosion of norms and rules around acquiring nuclear weapons, are ...

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Rate hikes to help euro zone banks but war a drag – ECB

Euro zone banks will benefit from a gradual increase in interest rates but market volatility and the impact of Russia’s war in Ukraine could prove a drag, European Central Bank supervisor Andrea Enria said on Thursday. “The current environment, however, is marked by increased volatility and lower equity valuations, as markets anticipate that the profitability and asset quality of banks may be affected by adverse macroeconomic developments,” he told a European Parliament committee hearing. Source: Reuters (Reporting by Balazs Koranyi; Editing by Toby Chopra)

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Greek central bank cuts economy’s growth projection to 3.2% this year

Greece’s central bank on Thursday revised the economy’s growth outlook to 3.2% this year from 3.8% previously to reflect increased uncertainty due to the war in Ukraine and inflation. The Bank of Greece said in a monetary policy report that economic growth could turn out higher than its baseline projection of 3.2% if the strong performance of the first quarter continued in the next quarters. “However, the risks are tilted to the downside and relate to a further escalation of geopolitical instability, a worsening international economic climate, a disruption in ...

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China’s factory, service sectors shake off 3 months of lockdown pain

China’s factory and service sectors snapped three months of activity decline in June, business surveys showed on Thursday, as authorities lifted a strict COVID lockdown in Shanghai, reviving output and consumer spending. The official manufacturing purchasing managers’ index (PMI) rose to 50.2 in June from 49.6 in May, the National Bureau of Statistics (NBS) said. That slightly missed the forecast for 50.5 in a Reuters poll but rose above the 50-point mark that separates contraction from growth for the first time since February. While activity has sped up since various ...

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French inflation in June hit record high of 6.5% – preliminary figures

French inflation climbed further from the previous month to a record high of 6.5%, according to official preliminary figures on Thursday, adding further headwinds to the euro zone’s second-biggest economy. The INSEE statistics agency said prices in June had risen by 0.8% from May, and that 12-month June preliminary inflation stood at 6.5%. Analysts polled by Reuters had forecast preliminary annualised inflation in June at 6.3%. INSEE said food and energy prices had risen sharply due to disruption resulting from Russia’s invasion of Ukraine. French President Emmanuel Macron’s government is ...

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Russia’s 2022 inflation seen at 14.5%, more rate cuts expected

Russia’s central bank will continue cutting rates to limit the depth of economic contraction this year as inflation will be lower than previously thought, a Reuters poll suggested on Thursday. Russia’s economic landscape changed drastically after Moscow sent tens of thousands of troops into Ukraine on Feb. 24, triggering sweeping Western sanctions, including a partial freeze of Russian reserves. The average forecast among 15 analysts polled in late June suggested the Russian economy was on track to shrink by 7.1% this year. A similar poll in May had predicted a ...

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EU nod expected for restrictions on takeovers by state-backed foreign firms

Proposed rules to put a brake on state-backed foreign firms acquiring European Union companies with annual turnover of 500 million euros ($520 million) or more are likely to win the backing EU states and lawmakers, a source said on Thursday. The European Commission presented its proposals for the new takeover rules last year in a bid to stave off what it deems unfair competition from countries such as China, underlining A more protectionist approach by the 27-member bloc. The source familiar with the matter said EU countries and the bloc’s ...

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EU to adopt minimum corporate tax with or without Hungary, says France

EU member states will adopt plans for a minimum corporate tax rate in the bloc in the coming months regardless of whether holdout nation Hungary backs the reform, French Finance Minister Bruno Le Maire said on Thursday. Hungary raised last minute objections earlier this month to the European Union’s adoption of a 15% minimum corporate tax, blocking a deal that would have turned a global reform into law across the bloc. “The minimum tax will be implemented in the coming months with or without Hungary’s backing,” Le Maire told a ...

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U.S. consumer spending, underlying inflation slowing

U.S. consumer spending rose less than expected in May as motor vehicles remained scarce while higher prices forced cutbacks on purchases of other goods, another sign that the rebound in economic growth early in the second quarter was losing steam. Though the report from the Commerce Department on Thursday suggested inflation had probably peaked, price pressures remained strong enough to keep the Federal Reserve on its aggressive monetary policy tightening path. Nevertheless, cooling demand will likely be welcomed by Fed officials. Rising interest rates and tight financial conditions are stoking ...

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France presses energy, shipping firms to ease inflation pain

French Finance Minister Bruno Le Maire put fresh pressure on the country’s biggest energy and shipping companies to use part of bumper profits to help customers cope with high inflation. While eroding households’ purchasing power, the current energy price shock is fuelling record profits at some firms, prompting some governments to impose a windfall tax, such as Britain has done on gas and oil producers. France has so far eschewed that path, urging companies instead to take steps that reduce prices for customers while leaving the threat of a windfall ...

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Eurozone economy: unsure about current strength but weakness ahead confirmed

The Economic Sentiment Indicator for the eurozone fell from 105 to 104 in June, which was less than expected. In fact, it is mainly the consumer becoming more gloomy that drove the overall index down. Manufacturing and services actually saw sentiment improve in June, which is at odds with the earlier-released PMI that showed a marked decline for both broad sectors. Manufacturers actually became more optimistic about current production in June and also about production in the months ahead. Even orders improved. Services showed strong recent demand, but service sector ...

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China’s options for economic revival in 2022 narrow as HDPE demand outlook worsens

In 2014, we first flagged up the risks associated with local government spending in China being heavily tied to land sales. All was fine as long as the demand for land remained strong and land values kept rising. But not now because of the Common Prosperity policy pivot and further oxygen being removed from the real-estate market by the zero-COVID policies. Because local government finances are strained, an audit study, reported by the South China Morning Post, said that special purpose bonds were being used by local authorities for spending ...

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ECB weighs whether to put number on bond-fighting scheme, sources say

European Central Bank policymakers are weighing up whether or not they should announce the size and duration of their upcoming bond-buying scheme, designed to curb financing costs for Italy and other debt-laden countries, sources told Reuters. The ECB is set to announce the new tool on July 21, along with its first interest rate hike in more than a decade, in response to a surge in bond yields that has hit the most indebted countries hardest. ECB staff is preparing different options for policymakers, including how many of its details, ...

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China’s economic output jumped by $9.05 trillion over past 10 years: official

China’s economic output has jumped from 53.9 trillion yuan($8.06 trillion) in 2012 to 114.4 trillion yuan($17.11 trillion) in 2021, with its proportion in the world economy increasing from 11.3 percent to more than 18 percent, the country’s development and reform commission announced Tuesday. China’s per capita GDP has risen from $6,300 to more than$12,000, and its innovation index ranked 12th in the world in 2021, making historic leaps in important fields, said the authority at a press conference themed “China in the Past Decade”. In the past ten years, China ...

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