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Khaleej Times
10 hours ago
- Khaleej Times
Defence or environment? Britain faces spending choices
Torn between growing geopolitical tensions and constrained public finances, Britain's finance minister Rachel Reeves is set to unveil feared trade-offs in a government spending review on Wednesday. Prime Minister Keir Starmer is boosting the defence budget, and reports point to National Health Service (NHS) being bolstered — forcing other key ministries to tighten their belts. "Sharp trade-offs are unavoidable," said the Institute for Fiscal Studies, a respected think tank, of the Labour government's spending plans through to 2029-2030. Reeves, the chancellor of the exchequer, is to detail day-to-day spending plans in her review to parliament on Wednesday. Ahead of the announcement, the government on Monday reversed a policy to scrap a winter heating benefit for millions of pensioners, following widespread criticism, including from within its own party. Labour will raise the income threshold for receiving the subsidy, which "extends eligibility to the vast majority of pensioners", or nine million people, the Treasury said in a statement. The policy to remove the allowance from millions of pensioners began this winter and followed the government's inaugural budget in October featuring tax rises and big spending announcements on infrastructure. Since Labour won power last July, sweeping aside years of Conservative Party rule, it has unveiled also contested cuts to disability welfare payments, hoping to save more than £5 billion ($6.8 billion) by 2030. Thousands of protestors gathered in central London on Saturday, many holding placards that read "tax the rich, stop the cuts -- welfare not warfare". The government on Sunday announced £86 billion of investment in science and technology and defence by 2030. Reeves hopes the spending will boost sluggish growth, which risks added pressure from the tariffs trade war unleashed by US President Donald Trump. Reeves is set to announce a funding boost of up to £30 billion for the NHS, according to The Times newspaper. Britain's media has in recent days reported on tough, last-minute discussions between the Treasury and the interior ministry, particularly regarding the police budget, as well as with the energy department amid fears for the UK's carbon-reduction commitments. - Defence priority - Reeves has amended her fiscal rules to allow the government more headroom for investment in the run-up to the spending review. At the same time, she wishes to balance the books so that tax revenues match day-to-day spending, meaning the government borrows only to invest. The chancellor has allowed the Treasury to borrow more, particularly for infrastructure projects across the vital housing and energy sectors. This has handed her a windfall of £113 billion over five years. "When it comes to capital spending, government investment is set to be sustained at historically high levels in the coming years," the IFS noted. "If spent well, this should help contribute to growth and to better public services in years to come." Citing Russia's invasion of Ukraine, London has announced it will increase its defence budget to 2.5 percent of UK gross domestic product by 2027 -- and up to 3.0 percent by 2034, helped by cutting international aid. "While going for growth and fixing the NHS will still be central to the Spending Review, bolstering the nation's defence is now considered an urgent pressing need," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. While seeking to cut costs, it has been reported that the government may later this year announce plans to lift a cap on child benefits, also after a backlash over the policy from some of its party members. "U-turns on benefit and welfare spending, increased pressure to ramp up defence spending and higher borrowing costs have left the chancellor, Rachel Reeves, in a sticky position", concluded Ruth Gregory, deputy chief UK economist at Capital Economics. "If she wishes to avoid a political backlash and/or an adverse reaction in the financial markets, she probably has little choice but to raise taxes in the Autumn Budget." The government has already hiked a business tax that entered into force in April.
Zawya
16 hours ago
- Zawya
EU ban on Air Tanzania flights could crush London plan
The European Union's decision to ban all Tanzania-registered aircraft from operating in its airspace has raised concerns about the effectiveness of the Tanzania Civil Aviation Authority (TCAA) and cast a shadow over the country's aviation and tourism sectors. Announced on June 3 in the EU's latest update to its Aviation Safety List, the ban cites 'serious deficiencies in national aviation oversight' as the reason for blacklisting all Tanzanian carriers. Suriname was also included on the revised list. While no Tanzanian airline currently operates flights to Europe, the implications of the ban are far-reaching, especially for Air Tanzania's plans to expand its long-haul network. Air Tanzania's dream of launching direct flights between Dar es Salaam and London's Gatwick Airport could have been dashed by the stance taken by the European bloc. The Tanzanian flag carrier had long planned the Gatwick route as part of its broader ambition to expand its long-haul network from Dar es Salaam, which includes routes to Guangzhou, China, and Mumbai, India. The ban, issued by the European Commission's directorate-general for mobility and transport, also applies to the United Kingdom — despite its exit from the EU — as the UK continues to honour aviation safety advisories from Brussels.'Passenger safety remains our top priority. Following a detailed technical assessment, the European Commission has added all air carriers certified in Suriname and Tanzania to the EU Air Safety List due to serious deficiencies in national aviation oversight,' said Apostolos Tzitzikostas, the EU Commissioner for Transport.'We urge both countries to address these issues promptly. The Commission stands ready to support their efforts toward full compliance with international safety standards.'The Commission did not specify the exact deficiencies found in the TCAA's oversight or cite any particular safety violations by the affected airlines. While none of the banned Tanzanian airlines currently operate flights to the EU or the UK, the universal ban sets back any plans to enter the market. Air Tanzania, which once flew to Frankfurt, Rome, and Athens, had hoped to re-enter the European market as part of its turnaround strategy. According to its in-flight publication, Twiga Magazine, ATCL had planned to launch direct flights to Gatwick—London's second busiest airport—as early as this year. The airline announced that it had secured three weekly landing slots at Gatwick in June 2024, with plans to operate two flights a week from Dar es Salaam and one from Kilimanjaro. The EU ban now slams the brakes on these plans, casting doubt on Air Tanzania Company Ltd's long-term recovery strategy, which relies heavily on expanding into long-haul and intercontinental markets. The regional market, meanwhile, remains highly competitive, with dominant players such as Ethiopian Airlines and Kenya Airways crowding out smaller carriers. The London route has long been considered a lucrative one. Ethiopian, KQ, Uganda Airlines, and RwandAir all operate direct flights to the UK capital. Air Tanzania joins a list of African national carriers currently banned from the EU: Air Zimbabwe, Congo Airways (DRC), Eritrean Airlines, Air Libya, and Sudan Airways. While the EU updates its Air Safety List regularly, it remains unclear when Tanzanian carriers might be removed, or how long the restrictions will last. Industry analysts say the ban reflects a broader failure in aviation oversight.'It raises questions about TCAA's capacity to enforce safety standards and uphold international regulatory expectations,' one expert observed. The EU's action follows a partial ban imposed in December 2023 that targeted Air Tanzania specifically. At the time, officials from the European Commission and aviation experts were in Tanzania to assist both the Tanzania Civil Aviation Authority and Air Tanzania in closing identified safety gaps. Those efforts now appear to have fallen short. Concerns raised by the EU reportedly included the operation of aircraft beyond mandated maintenance intervals, staffing shortages in key technical departments, and weaknesses in the regulator's independence. For Air Tanzania, the impact is particularly significant. The national carrier operates three Boeing 787-8 Dreamliners—long-haul aircraft whose potential remains underutilised due to limited access to international markets. The airline has been working toward securing a Third Country Operator (TCO) certification, a prerequisite for launching flights to London Gatwick. Although the United Kingdom is no longer part of the EU, the UK Civil Aviation Authority typically aligns with EU safety assessments in its own decisions.'If Air Tanzania cannot access European destinations, it weakens its business case for operating wide-body aircraft, which are capital-intensive assets,' the analyst added. 'This affects not only revenue projections but also the airline's ability to participate fully in international partnerships and interline agreements.'From an operational safety standpoint, Air Tanzania remains a member of the International Air Transport Association (IATA) and holds a current IOSA (IATA Operational Safety Audit) certification — widely regarded as the industry's gold standard. The EU ban may therefore reflect shortcomings more on the regulator's side than the airlines. Still, the road to reinstatement could be long. Without demonstrable progress in meeting international standards, Tanzania risks further isolation from global aviation networks — affecting not only its flag carrier but the broader ecosystem of tourism, trade, and investment that depends on strong and credible air connectivity. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Khaleej Times
2 days ago
- Khaleej Times
Shaken by crises, Switzerland fetters UBS's global dream
Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. Strategy The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question."
