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UK growth fix can start with pampered rich savers

Keir Starmer’s growth plans can start with pampered savers. To “take the brakes off Britain”, the new UK prime minister needs infrastructure investment in areas like wind farms, housing and grids. A smarter and fairer policy on savings might help. Ideas for improving the UK’s relatively low savings rate have tended to focus on channelling a larger chunk of domestic pensions towards more growth-enhancing investments. Yet plans to consolidate smaller schemes will likely take time. A quicker fix would be to shake up Britain’s personal savings market, which has two ...

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China’s stubborn savers ignore inducements to spend as growth slows

Chinese consumer spending has failed to respond to government measures even though household deposits are slowing and banks have slashed interest rates, a sign risk-averse residents prefer to repay debt and buy wealth management products. Chinese households added 9.27 trillion yuan ($1.3 trillion) in new deposits in the first half – including 2.14 trillion in June, down 22% from a year earlier, according to data from the People’s Bank of China. Outstanding household yuan deposits rose 10.6% year-on-year in June, but remained near the lowest in at least three years. ...

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Euro zone current account surplus unchanged in May

The euro zone’s current account recorded a surplus 37 billion euros in May, the same as in April, as a drop in the goods surplus was offset by higher services income, data from the European Central Bank showed on Friday. In the 12 months to May, the bloc’s current account surplus equalled 2.4% of GDP, up from zero in the preceding 12 months, when high energy costs pushed up the euro zone’s import bill. Source: Reuters (Reporting by Balazs Koranyi, Editing by Gareth Jones)

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Softer-than-expected June inflation continues to bolster the case for easing in China

Inflationary pressures remained subdued China’s June CPI inflation edged down to 0.2% YoY, down slightly from 0.3% YoY, and coming in weaker than forecasts for a slight uptick to 0.4% YoY. Inflation has been very flat in the last four months, fluctuating between 0.1-0.3% YoY. In month-on-month terms, June’s CPI inflation dropped to -0.2%, and inflation has now seen two consecutive months of decline. This month’s slightly softer read came on the back of several factors: 1. Food prices (-2.1% YoY) saw a sharper-than-expected decline in June. This was due ...

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Greek economy to grow by 2.1% this year on slowing exports – think-tank

Greece’s economy will grow by about 2.1% this year, held back by slightly lower exports, influential think-tank IOBE said on Thursday. IOBE reiterated its previous estimate made in April. Its forecast is lower than the government’s estimate for economic growth of 2.5% this year. “The momentum of the economy has began to slow down,” IOBE head Nikos Vettas said, presenting a report that saw exports falling by 0.4% this year and the jobless rate, one of the euro zone’s highest, staying above 10%. Greece, which has recovered after a decade-long ...

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The ECB’s gentle start to the summer season

There’s the expected gentle start to the European summer season. The ECB just announced its decision to keep all policy interest rates unchanged. The official policy statement did not provide any new clues on the central bank’s future path, but confirmed that it has for now given up on forward guidance. There haven’t been a lot of important data releases since the ECB’s June meeting. If anything, the latest data has pointed to weaker growth, lower headline inflation but still sluggish core and services inflation. In more detail, dropping confidence ...

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ECB won’t debate inflation target, dot plot in upcoming review

The European Central Bank’s next strategy assessment will not involve some key issues, including a discussion on the bank’s numerical inflation target or the publication of interest rate forecasts, ECB President Christine Lagarde said on Thursday. The ECB announced the 2025 exercise when it concluded the last major review in 2021 but Lagarde made clear on Thursday that this will be more an interim assessment of the ongoing strategy and not another overarching review. “We have deliberately excluded any discussion concerning the symmetric 2% medium term (target), so the inflation ...

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Philly Fed’s manufacturing gauge rises on new orders surge

A gauge of manufacturing activity in the U.S. Mid-Atlantic region expanded more than expected in July, led by the strongest growth in new orders in more than two years. The Federal Reserve Bank of Philadelphia’s monthly manufacturing index rose to 13.9 from 1.3 in June, topping the median forecast among economists polled by Reuters for a reading of 2.9. It was the highest reading since April. The report’s new orders index shot up to 20.7 in July – the highest since March 2022 – from negative 2.2 in June. Factory ...

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BOJ wants to maintain accommodative monetary environment, Jiji reports

A senior Bank of Japan official said the central bank wants to maintain an accommodative monetary environment as much as possible, Jiji news agency reported on Thursday. The central bank’s next policy meeting will be a “very important” one, Kazushige Kamiyama, the BOJ’s Osaka branch manager, was quoted as saying by Jiji. Kamiyama, who is currently based in the western Japan city, previously held key posts such as the bank’s top economist. Some market players expect the BOJ to raise interest rates from current near-zero levels as soon as its ...

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UK pay growth slows but remains high for Bank of England

Wages in Britain grew a bit more slowly but still increased at a pace that would normally be too strong for the Bank of England, leaving in doubt the possibility of an interest rate cut in two weeks’ time. A day after official data showed stubbornly high inflation pressure, Britain’s statistics office said earnings excluding bonuses grew by an annual 5.7% in the three months to May. That was down from 6.0% in the three months to April and represented the slowest growth in core pay since the summer of ...

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Japan export growth cools amid worries about China slowdown

Japanese exports rose in June for a seventh straight month, but the pace of growth slowed to its lowest since late last year, data showed on Thursday, underscoring concerns that a slowdown in China may hamper Japan’s trade-reliant economy. Slowing exports could dash policymakers’ hopes that solid external demand may more than offset weak domestic consumption. Japan’s economy has been expected to emerge from a sharper-than expected contraction in the first quarter. Data from the Ministry of Finance (MOF) showed Japanese exports rose 5.4% year-on-year in June, smaller than a ...

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More reforms needed to tackle shadow banking’s ‘hidden leverage’, BoE regulator says

The booming non-bank financial industry has created excessive leverage that poses financial stability risks and more reforms are needed to tackle it, including improving disclosure of positions, a Bank of England regulator said on Thursday. Non-bank financial institutions (NBFIs), including hedge funds, private credit providers and insurers, have become increasingly important. They accounted for $218 trillion, or just under half, of the world’s financial assets in 2022, according to the G20’s Financial Stability Board. The Bank of England estimates that half of the funding for UK businesses now comes directly ...

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US weekly jobless claims increase more than expected

The number of Americans filing new applications for unemployment benefits rose more than expected last week, but there has been no material shift in the labor market and the data is typically noisy in July because of summer breaks and temporary factory closures. Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 243,000 for the week ended July13, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week. Claims dropped in the prior week, pulling further away from a ...

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India seeks to boost exports to Russia after Modi trip

India is exploring ways to boost its exports to Russia, including by encouraging rupee-rouble trade and pushing Moscow to lift non-tariff barriers, New Delhi said, in the wake of Prime Minister Narendra Modi’s visit to Moscow. Old partners India and Russia have stepped up trade since Russia invaded Ukraine in early 2022, but the increase has been overwhelmingly one-way, dominated by India buying Russian oil shunned by traditional customers in Europe. Surging Russian exports to India accounted for $61.43 billion of the $65.7 billion in trade between the two countries ...

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Fed’s Barkin says disinflation seems to be broadening, but wants more data

Richmond Federal Reserve President Thomas Barkin said on Wednesday disinflation now seems to be broadening through the economy, with service sector and housingcost increases beginning to slow, a development he has mentioned as necessary for him to support the beginning of interest rate cuts. “I have been very encouraged … both by the last couple months of non-housing services and by what might be the start on the housing side,” Barkin told a business group in Maryland, citing data that price pressures are easing across a broader set of goods ...

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