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☆ British retail rebound provides some hope for recession-hit economy
▼ + stars: | 2024-02-16 | by ( Jenni Reid | ) www.cnbc.com time to read: +3 min

(Photo by Alberto Pezzali/NurPhoto via Getty Images)LONDON — Stronger-than-expected January retail sales provided a glimmer of light for the struggling British economy on Friday — and suggest that the country's recession will be short-lived, according to some economists. Sales rebounded by 3.4% from December, according to the Office for National Statistics, the strongest monthly gain since April 2021. The latest figures follow the news of Thursday that the British economy entered a technical recession in the final quarter of 2023. British retail sales meanwhile remain 1.3% below their pre-pandemic level from February 2020, according to the ONS. Kris Hamer, director of insight at the British Retail Consortium, said two months of higher sales volumes over the last three months were "promising" after 19 months of decline.

Persons: Alberto Pezzali, Joe Maher, Maher, —, Kris Hamer, Hamer, Kallum Pickering, Pickering Organizations: Charing Cross, Getty, Office, National Statistics, Reuters, Gross, Capital Economics, British Retail Consortium Locations: Charing, London, England, –

LONDON (AP) — Britain's Conservative government will try to win favor with voters by cutting taxes but avoiding worsening inflation in a budget statement Wednesday, coming ahead of a likely national election next year that opinion polls suggest it will lose. Sunak said Monday that his government would “cut tax and reward hard work” but would “avoid doing anything that puts at risk our progress in controlling inflation." Political Cartoons View All 1262 Images“Now that inflation is halved and our growth is stronger — meaning revenues are higher — we can begin the next phase and turn our attention to cutting tax,” he said. The election must be held by January 2025, with speculation focusing on May or sometime next fall. Arguably, cutting personal taxes will make that “journey” more difficult because it would likely raise consumer spending, thereby ratcheting up price pressures.

Persons: —, Rishi Sunak, Sunak, Jeremy Hunt's, ”, “, ” Sunak, Liz Truss, Hunt, There's, hasn't, “ Hunt, Kallum Pickering, Andrew Bailey Organizations: Conservative, Conservative Party, Labour Party, Bank of, Bank of England Locations: Ukraine, Berenberg

☆ The UK Labour Party has a Biden-esque economic plan — but it's very different to Bidenomics
▼ + stars: | 2023-10-16 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

LIVERPOOL, U.K. - Oct. 11, 2023: Britain's main opposition Labour Party leader Keir Starmer applauds a speaker the final day of the annual Labour Party conference in Liverpool, northwest England, on October 11, 2023. Paul Ellis | Afp | Getty ImagesLONDON — The U.K.'s main opposition Labour Party last week set out the economic platform it hopes will propel it to power at next year's general election, and the transatlantic parallels were clear. Reeves promised last week to "rebuild Britain" as the party seeks to de-risk business investment in emerging technologies with a new national wealth fund, maintaining an active state while harnessing private investment to drive economic growth. Labour's desired parallels to "Bidenomics" were discussed at a host of fringe events throughout the conference in Liverpool, particularly with regards to the "crowding in" of private investment — a Keynesian economic theory that suggests increased government spending can spur increased private investment. Just because the policies may be oriented towards boosting infrastructure and investment, unless they have that debt finance component, it's not Bidenomics."

Persons: Keir Starmer applauds, Paul Ellis, Keir Starmer, Starmer, they're, Rachel Reeves, Joe Biden's, Reeves, Britain —, Biden, Kallum Pickering, Liz Truss, Truss, Rishi Sunak, Pickering, it's Organizations: LIVERPOOL, Labour Party, Afp, Getty, Labour, U.S, Biden administration's, U.S . Treasury, CNBC, Bank of England, Conservative Party, U.S ., University of Pennsylvania Locations: Liverpool, England, America, Britain, Germany, France

☆ Stocks ride wave of risk appetite; Israel conflict rages on
▼ + stars: | 2023-10-10 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

[1/2] The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 9, 2023. REUTERS/Staff/File Photo Acquire Licensing RightsLONDON, Oct 10 (Reuters) - Global stocks rose on Tuesday, as a wave of risk appetite swept through markets after Federal Reserve officials signaled the recent yield surge could justify caution on interest rates, while oil eased, but violence in Israel made for nervy trading. "Based on Monday's comments from the Fed, the market is starting to think that the central bank does take greater notice of bond yields after all," ING strategist Chris Turner said. "However, we suspect that this may not be a defining story for the bond market in that no central bank likes being backed into a corner over what bond yields mean for monetary policy." Oil prices eased after climbing more than 4% on Monday.

Persons: Treasuries, Kallum Pickering, Chris Turner, Brent, Kane Wu, Stella Qiu, Kim Coghill, Christina Fincher, Chizu Organizations: REUTERS, Staff, Federal, Hamas, Fed, ING, Garden Holdings, HK, Thomson Locations: Frankfurt, Germany, Israel, Europe's, U.S, Palestinian, Gaza, Hong Kong, Sydney

☆ Interest rate: Bank of England hikes UK rates for 14th time
▼ + stars: | 2023-08-03 | by ( Anna Cooban | ) edition.cnn.com time to read: +2 min

London CNN —The Bank of England raised interest rates by a quarter of a percentage point Thursday as inflation remains stubbornly high. Six members of the monetary policy committee voted for the quarter point hike, two for a half point hike, and one for a pause. “The UK thus faces many more months of de facto policy tightening to come even after policymakers stop raising the bank rate,” he added. Inflation in the UK is still stubbornly high despite having eased back in recent months. Core inflation — which strips out volatile food and energy costs — also dropped to 6.9% last month from 7.1% in May, which was its highest rate in 31 years.

Persons: Kallum Pickering, “, — Organizations: London CNN —, Bank of England, Berenberg, Bank of Locations: United Kingdom, —

☆ British workers keep getting pay raises — despite the Bank of England urging them not to ask for more money
▼ + stars: | 2023-07-12 | by ( Elliot Smith | ) www.cnbc.com time to read: +7 min

Both Bank of England Governor Andrew Bailey and U.K. Finance Minister Jeremy Hunt on Monday told an audience in the City of London that high wage settlements were harming their efforts to contain inflation. Much of the increase in pay has been driven by the private sector, with annual wage growth increasing to 7.6% in the three months to April. However, Bank of England Governor Bailey noted in his Mansion House speech on Monday that the British economy has proven unexpectedly resilient. Last summer saw a slew of strikes and protests as real wages, which reflect the power of a worker's pay after accounting for inflation, declined at a record rate. "No question about it, current nominal wage growth remains far too high relative to the sustainable rate of probably around 3.5-4.0% yoy.

Persons: Mark Kerrison, Andrew Bailey, Jeremy Hunt, Stuart Cole, BoE, Rishi Sunak, Danni Hewson, AJ Bell, Bank of England Governor Bailey, Sanjay Raja, Raja, Equiti's Cole, Bailey, Kallum Pickering, Pickering Organizations: National Education Union, Department for Education, Getty, LONDON, Bank of England, National Statistics, . Finance, City of, Equiti, Monetary, Deutsche Bank, MPC, Treasury, Bank, The, England's Locations: London, United Kingdom, City, City of London, Ukraine

☆ Bank of England to take Bank Rate to 5.00% next quarter as inflation proves sticky - Reuters poll
▼ + stars: | 2023-05-31 | by ( Jonathan Cable | ) www.reuters.com time to read: +3 min

British government bond prices tumbled in the days after the data was released as investors added to bets high inflation will force the BoE to carry on raising interest rates, while lenders have been withdrawing mortgage deals. Meanwhile, 27 of 47 saw Bank Rate at 5.00% or higher by end-September. Bank Rate was seen sitting at 5.00% until early next year, hitting the wallets of indebted consumers already feeling the pinch from a cost of living crisis. All but three of 39 common contributors to this poll and the last one lifted their year-end prediction. The Bank needs to push back against the risk high inflation proves unexpectedly sticky, and may need to raise interest rates further, Monetary Policy Committee member Jonathan Haskel said last week.

Persons: BoE, Simon Wells, Kallum Pickering, Jonathan Haskel, Jonathan Cable, Mumal Rathore, Anitta Sunil, Ross Finley, Chizu Organizations: Bank of England, of England, HSBC, Bank, Monetary, Thomson Locations: Berenberg

☆ Bank of England to take Bank Rate to 5.00% next quarter as inflation proves sticky, Reuters poll shows
▼ + stars: | 2023-05-31 | by ( Jonathan Cable | ) www.reuters.com time to read: +3 min

To be sure, the April inflation data hit the UK debt market like a thunderbolt. While the headline consumer price inflation rate dropped to 8.7% from 10.1% in March, as energy prices ebbed, that was still far higher than forecast and core inflation rates hit their highest in 31 years at just under 7%. And a chief concern for many households is ongoing annual food price inflation still near 20%. Sterling and real yield spreadsNew UK gilt shock? Using 5-year real yields from the index-linked bond market, that premium jumped almost 40bp this week to its highest since last October.

Two-year yields have risen from a seven-month intraday low of 3.555% last Friday as Treasuries rallied on safe-haven buying. "Some of the banks there were in the spotlight, their stock prices are starting to at least stabilize," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in Charlotte, North Carolina. The U.S. regional KBW bank index (.BKX) has tumbled about 25% this month, but has gained about 3.8% this week as tensions eased. Worries over inflation have prompted investors to reassess their expectations for monetary policy from a number of major central banks, including the Fed and European Central Bank. Oil edged lower in choppy trading as investors looked to pocket profits from two straight days of gains, and as markets debated supply tightness.

☆ Shares rise as bank support emboldens investors
▼ + stars: | 2023-03-29 | by ( Amanda Cooper | ) www.reuters.com time to read: +5 min

The sale of assets in Silicon Valley Bank (SVB), the regional lender that collapsed earlier this month, has helped prop up investor risk appetite. The MSCI All-World index (.MIWD00000PUS) rose 0.3% while European shares (.STOXX) gained 0.92%, thanks in part to a rise in bank shares after UBS (UBSG.S) said it would rehire Sergio Ermotti to lead the company after its takeover of Credit Suisse (CSGN.S). The U.S. regional KBW bank index (.BKX) has fallen 3.3% in the last week, but is still above its recent six-week lows. Worries over inflation have prompted investors to reassess their expectations for monetary policy from a number of major central banks, including the European Central Bank and the Federal Reserve. The dollar index, which measures the performance of the U.S. currency against six others, was roughly flat on the day at 102.46.

☆ Why the UK spring budget won't fix the economy's problems
▼ + stars: | 2023-03-15 | by ( Hanna Ziady | ) edition.cnn.com time to read: +7 min

London CNN —The last time a British finance minister unveiled a “budget for growth,” UK financial markets crashed and mortgage rates shot up, threatening to tip an already weak economy into a deep recession. But he will deliver his budget against essentially the same gloomy backdrop: the UK economy is stuck in the doldrums. John Springford, deputy director at the Centre for European Reform, estimates that Brexit had cost the UK economy 5.5% of GDP by June 2022. SVB could depress UK bank lendingAnother factor that could weigh on the UK economy in the near term: Silicon Valley Bank. “It is likely that UK financial conditions will remain tighter (or potentially significantly tighter) over coming months than they would have been without the US banking troubles,” Pickering said in a research note Monday.

☆ Brexit deal could resurface Britain's 'healthy fundamentals' if EU relations strengthen, analysts say
▼ + stars: | 2023-03-01 | by ( Elliot Smith | ) www.cnbc.com time to read: +2 min

Speaking at a news conference, Sunak described the new agreement — known as the Windsor Framework — as "the beginning of a new chapter" for the relationship between the U.K. and the EU. Dan Kitwood | Getty Images News | Getty ImagesLONDON — The new Brexit deal between the U.K. and the EU may help bring Britain's "healthy fundamentals" back to the fore, providing relations with Brussels continue to improve, analysts suggest. U.K. Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen on Monday announced the agreement of the Windsor Framework, which aims to fix the controversial Northern Ireland Protocol. The Protocol had been a long-standing bugbear for unionist pro-Brexit parties in Northern Ireland, and had brought the devolved Northern Ireland Assembly to a standstill over the past year, after the Democratic Unionist Party resigned in protest. "If this comes to an end, we expect the U.K.'s healthy fundamentals — well capitalised banks, cash flush households and firms, and well-regulated markets — to re-assert themselves."

☆ Brexit slammed the UK economy. The Northern Ireland deal gives it hope
▼ + stars: | 2023-02-28 | by ( Hanna Ziady | ) edition.cnn.com time to read: +8 min

It delivers “long-lasting solutions” that will work for the people and businesses of Northern Ireland, she added. It also allows the UK government to determine sales tax rates for businesses in Northern Ireland and gives the Northern Ireland government emergency powers to oppose new EU rules on some goods. A boost to BritainBeyond its importance to Northern Ireland, the deal eases the uncertainty Brexit created for Britain. The new Northern Ireland deal opens the door to closer UK-EU cooperation on financial services, energy, immigration and scientific research, according to experts. “You need to address the Protocol before you do anything else,” said Anna Jerzewska, the founder of international trade consultancy Trade & Borders.

☆ UK economy in 'a lot better shape' than bleak figures suggest, fund manager says
▼ + stars: | 2023-02-23 | by ( Elliot Smith | ) www.cnbc.com time to read: +5 min

People walk outside the Bank of England in the City of London financial district, in London, Britain, January 26, 2023. Henry Nicholls | ReutersLONDON — The U.K. has thus far avoided a widely anticipated recession, and the signs from the business world are that the economy may be holding up better than feared, according to veteran Schroders fund manager Andy Brough. Figures published earlier this month showed that the U.K. GDP contracted by 0.5% in December, as the economy flatlined over the final quarter of 2022 to narrowly avoid a technical recession. "Underneath companies' profitability x-minus today, we're seeing pretty good dividend increases, pretty good earnings statements, so, underlying, I think the economy is in a lot better shape. 'Signs of life' in business investment Uncertainty over future relations between Westminster and Brussels have hammered business investment since the U.K. voted to leave the European Union in 2016, in turn hampering productivity expansion and adding to the direct costs of Brexit on the U.K. potential growth.

☆ Bank of England readies another rate hike even as recession hits
▼ + stars: | 2022-12-15 | by ( Andy Bruce | ) www.reuters.com time to read: +4 min

The Monetary Policy Committee (MPC) has faced both encouraging and worrying news on the economy since a majority voted in early November to raise rates by 0.75 percentage point, the biggest hike since 1989. A big majority of the 54 economists polled by Reuters last week predicted a 0.5 percentage point increase in Bank Rate, which would take it to a 14-year high of 3.5%. Investors mostly agree although financial markets put a roughly 25% chance of another 0.75 percentage point hike. The annual rate of consumer price inflation dropped to 10.7% in November from 11.1% in October, a lower rate than the BoE had pencilled in last month. "We think the Bank will opt for further hikes in the first half of 2023, until inflation shows less momentum."

☆ Dollar eases, but inflation outlook stays high on investors' radar
▼ + stars: | 2022-12-12 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

The U.S. Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank will all release rate decisions. Friday's data that showed U.S. producer prices rose 7.4% year-on-year in November, compared with forecasts for a rise of 7.2%, has reminded investors of how sticky inflation is proving. Consumer inflation data for November lands on Tuesday and is expected to show a 6.1% increase in the core reading, which excludes food and energy prices, down from 6.3% in October. Against the yen the dollar rose 0.2% to 136.78. The offshore yuan was mostly flat at 6.977 per dollar, further pressured by worries over a potential spike in COVID cases as China eases its stringent COVID-19 restrictions.

☆ Dollar seesaws as inflation outlook stays high on investors' radar
▼ + stars: | 2022-12-12 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

The U.S. Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank will all release rate decisions. Friday's data that showed U.S. producer prices rose 7.4% year-on-year in November, compared with forecasts for a rise of 7.2%, has reminded investors of how sticky inflation is proving. Consumer inflation data for November lands on Tuesday and is expected to show a 6.1% increase in the core reading, which excludes food and energy prices, down from 6.3% in October. Against the yen the dollar rose 0.2% to 136.87. Reporting by Rae Wee; Editing by Lincoln Feast, Bradley Perrett and Christian SchmollingerOur Standards: The Thomson Reuters Trust Principles.

☆ Britain braces for winter of strike action as nurses walk out
▼ + stars: | 2022-12-12 | by ( Sarah Young | ) www.reuters.com time to read: +4 min

Unions are seeking double-digit pay rises to keep pace with inflation that hit 11.1% in October, the highest in 41 years. Union estimates forecast more than 1 million working days will be lost in December, making it the worst month for disruption since July 1989. Walk-outs in rail by RMT members, which started in June, are the union's biggest action for over 30 years, while for nurses, it is the first ever national strike action in the Royal College of Nursing's (RCN) 106-year-old history. MORE PROMINENT UNIONSThe walk-outs end decades of relatively stable industrial relations in Britain, compared to European neighbours such as France and Spain. "I think the world that we're in is one where we get more prominent union activity," Pickering said.

☆ UK property market at risk of major downturn as recession fears loom
▼ + stars: | 2022-11-15 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +5 min

Matt Cardy | Getty Images News | Getty ImagesLONDON — The U.K. property market may be verging on a major downturn, with some market watchers warning of a collapse in prices of up to 30% as data points to the biggest slump in demand since the Global Financial Crisis. Meantime, the MSCI UK Quarterly Property Index, which tracks retail, office, industrial and residential property, slumped 4.3% in the three months to September, marking the sector's worst performance since 2009. The investment bank now sees U.K. property prices declining by around 10% by the second quarter of 2023. Rising interest rates, soaring inflation and the economic shock from Russia's war in Ukraine have weighed heavy on the global housing market. Indeed, according to Goldman Sachs' analysis, for every one percentage point increase in the U.K. unemployment rate, mortgage delinquency tends to rise by over 20 basis points after one year.

☆ Liz Truss' 'trickle-down economics' is dead. Now the UK faces an uncertain future
▼ + stars: | 2022-10-18 | by ( Sam Meredith | ) www.cnbc.com time to read: +4 min

Britain's Prime Minister Liz Truss holds a press conference in the Downing Street Briefing Room in central London on Oct. 14, 2022. Daniel Leal | Afp | Getty ImagesLONDON — Just six weeks into U.K. Prime Minister Liz Truss' tenure and the political future of yet another Conservative leader looks to be in jeopardy. The approach has been sharply criticized by U.K. political opponents — and even U.S. President Joe Biden — at a time when Britain faces a deepening cost-of-living crisis. However, analysts at political risk consultancy Eurasia Group assign only a 10% possibility that Truss is able to hold on as prime minister. "The consensus at Westminster is now that that the Prime Minister is so weak that she can do nothing without the assent of her Chancellor.

☆ Mortgage mayhem sparks fears of a housing market crash in Britain
▼ + stars: | 2022-10-04 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

U.K. mortgage rates have skyrocketed since Finance Minister Kwasi Kwarteng's mini-budget on Sept. 23, prompting banks to pull mortgage products threatening a deepen an expected housing market downturn. Dan Kitwood | Getty ImagesLONDON — There are growing fears of a housing market crash in the U.K., after a swathe of tax cuts announced by the government sent interest rate expectations soaring, driving up lending rates for homebuyers. Economist Andrew Goodwin suggested that there could be more pain ahead — particularly when it comes to the housing market. A number of banks suspended mortgage deals for new customers, and many have now returned to the market with significantly higher rates. Interest rate expectationsLooking ahead, whether the fixed rates on mortgages remain elevated or begin to moderate will depend on the trajectory of interest rates expectations.

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