Displaying items by tag: Economy

The UK inflation rate surged to 2.6% in November, its highest level in eight months, driven by rising fuel and clothing costs, as well as higher ticket prices for events. This marks the second consecutive month of rising inflation, dampening hopes for an interest rate cut by the Bank of England. Rachel Reeves acknowledged the ongoing struggles of working families, vowing to alleviate financial pressures. However, critics blamed recent government policies for exacerbating inflationary pressures, which could prolong elevated mortgage rates. Many companies are grappling with rising fuel, utility, and wage costs, while households continue to face increased expenses on food, rent, and essentials. Economists predict the Bank of England will keep interest rates steady at 4.75% to curb inflation. While inflation is expected to fluctuate in the coming months, experts forecast a return to the Bank’s 2% target by the end of next year.

In the Niger Delta, rampant oil theft continues to threaten local livelihoods and the national economy. Armed groups siphon crude oil from pipelines in the region, often operating with impunity and even security cover. These activities cause environmental devastation, health crises, and economic losses. In 2022, Nigeria lost $23 billion to oil theft, so that it lost its position as Africa's top oil exporter. The authorities are committed to fighting this problem by deploying gunboats, engaging vigilantes, and supporting the navy. Increased oil production, now averaging 1.8 million barrels per day, has been attributed to these efforts. However, poverty and unemployment continue to drive pipeline vandalism. Nigeria's inflation rate, worsened by a devalued naira, remains high, but there is official optimism that rising oil output will stabilise the economy.

Justin Trudeau’s government is facing turmoil following the abrupt resignation of his finance minister, Chrystia Freeland. This was sparked by disagreements with Trudeau on how to handle the threats made by Donald Trump, who has vowed to impose a levy of 25% on imported Canadian goods unless the shared border is made more secure. Freeland accused Trudeau of prioritising ‘costly political gimmicks’ over addressing the economic risks posed by Trump’s policies. Her departure blindsided the government, bringing Trudeau and his shaky minority Liberals to the brink - exacerbated by losing a by-election in British Columbia. There have been calls from opposition leaders but also members of his own party for Trudeau to resign, and his approval rate is now only 28%. With the next federal election due by October 2025, Canada's political landscape appears increasingly uncertain.

UK business confidence has fallen to its lowest level since the early days of the Covid pandemic, according to the Institute of Directors (IoD). November’s economic confidence index dropped to -65, the lowest since April 2020’s record low of -69. This follows the government's autumn budget, which introduced £40 billion in tax increases, including £25 billion from higher national insurance contributions (NICs) for employers. Business leaders warn these measures will hinder private sector growth, with many firms anticipating reduced investment and workforce cuts. UK hospitality businesses have voiced concerns about closures and reduced investment due to the NIC hikes. IoD chief economist Anna Leach criticised the budget for undermining economic foundations and damaging businesses’ ability to grow. Chancellor Rachel Reeves defended the budget as necessary for stabilising public finances. The IoD hopes upcoming announcements on industrial strategy, infrastructure, and tax reform will boost economic prospects. See

UK inflation rose by more than expected to 2.3% for October, exceeding the official 2% target. This rise, up from 1.7% in September, reflects increased energy costs following a 10% hike in the energy price cap and higher prices for food and products like stamps. This news comes amid concerns about inflationary pressures, potentially influenced by global factors such as Donald Trump’s trade policies. The Bank of England’s monetary policy committee (MPC) will weigh these figures in December to decide whether to adjust interest rates further. In early November, the MPC cut the base rate to 4.75%. Additional government spending and tax adjustments from chancellor Rachel Reeves' recent budget may also drive up short-term inflation. One commentator thinks that the impact of Trump’s policies will likely have limited effects on UK GDP and inflation, even under extreme scenarios. Analysts predict the UK base rate could drop to 3.75% by late 2025.

Despite a recent Bank of England base rate cut from 5% to 4.75%, many major lenders have increased mortgage rates and withdrawn top deals, leading to higher costs for borrowers. Around 200 deals have disappeared from the market in the past month. After the Bank’s rate reduction, average two-year and five-year fixed mortgage rates have increased to 5.44% and 5.17% respectively. Experts suggest lenders are raising rates to manage demand and maintain service standards as market conditions fluctuate. Notably, smaller lender MPowered Mortgages has reduced rates, contrasting with the broader trend. Borrowers are advised to secure current deals promptly to mitigate further costs.

The UK’s largest tax increase since 1993 was announced as Rachel Reeves introduced a budget aimed at revitalising healthcare, education, and infrastructure. Taxes will rise by £40 billion, with employer national insurance contributions, capital gains tax, and VAT on private school fees among the primary targets. These funds, coupled with higher borrowing, aim to close a financial gap left by previous administrations, supporting the NHS, affordable housing, and transport projects. Reeves acknowledged the 'difficult decisions' required, defending these increases as essential to 'rebuild Britain' without directly impacting individual income tax, VAT, or national insurance. Critics argue, however, that these tax hikes may still burden working people indirectly. In response to Tory criticisms, Reeves insisted that Labour’s approach will prevent austerity and 'put more pounds in people’s pockets' while providing relief measures for small businesses and the retail, hospitality, and leisure sectors.

Amid fears of changes to tax-free ISAs in the upcoming Budget, Britons are rushing to maximise their savings in these accounts. Concerns stem from remarks by Rachel Reeves, who previously suggested a cap of £500,000 on tax-free ISAs, sparking fears that she might target ISAs for a tax raid. As a result, investments in stocks and shares ISAs have surged; one provider reported a 156% increase in contributions in September compared to the same period last year. The number of ISA millionaires has tripled in three years, with over three thousand holding more than £1 million in their ISAs, and thousands more nearing that figure. Analysts credit this growth to the power of compounding and investing in stocks and shares rather than just relying on cash ISAs. Proposed changes could reduce the £20,000 annual contribution limit or introduce a cap, worrying investors seeking to save for their future amid an increasingly taxed environment.

In September, UK inflation unexpectedly fell to 1.7%, the lowest rate in 3.5 years, down from 2.2% in August. Lower airfares and petrol prices were the main factors behind this slowdown. The inflation rate now stands below the Bank of England's 2% target, opening the door for potential interest rate cuts. The bank, which has already lowered interest rates once this year, is expected to cut them again in November by 0.25%, with another cut likely in December. While lower inflation is good news for many, economists warn that inflation could rise again due to increased household energy bills. The drop in inflation will also impact the rise of benefits like universal credit, though this will be lower than the expected 4.1% rise in the state pension. Despite the positive signs, the cost of living remains challenging, particularly for low-income families struggling to balance essential expenses like food and heating.

Brexit has had a significant impact on London’s financial sector, with an estimated 40,000 finance jobs lost since the UK’s departure from the EU, according to Michael Mainelli, the Lord Mayor of the City of London. This figure is at odds with previous estimates, including a 2022 assessment which put the job loss at around 7,000. While cities like Dublin, Milan, Paris, and Amsterdam gained positions from the migration of jobs, London’s financial centre has continued to grow, adding roles in insurance and data analysis, bringing the total workforce to 615,000. Mainelli's remarks come as Britain seeks to restore relationships with Europe amid a broader economic slowdown. Although many had hoped Brexit would reduce immigration and deregulate industries, it has proven difficult to disentangle regulations, and the economic slowdown has persisted. Keir Starmer is attempting to rebuild ties with the EU, focusing on improving business relations but ruling out rejoining the single market.