BOE's Greene Warns Rising UK Inflation Could Become Sticky
Bank of England rate-setter Megan Greene warned second-round effects may keep inflation above 3% for longer but said it should not prevent the central bank from pressing on with gradual interest-rate cuts.
Speaking in London on Tuesday, Greene warned that the recent increase in inflation to 3.4% from 2.6% due to higher household energy and food bills is likely to be 'more of a plateau than a hump,' raising the risk that workers seek pay hikes to catch up with a faster rise in prices.
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Forbes
36 minutes ago
- Forbes
More Startup Funding Under U.K. Industrial Plan
Leandros Kalisperas, Chief Investment Officer, British Business bank says the investment outlook is ... More positive More public money is to be invested in startups and scaleups as part of the U.K. government's 'Modern Industrial Strategy,' which was unveiled this week. Under the plan, the publicly funded British Business Bank is to commit £4.0 billion of new capital to early-stage companies working in eight sectors identified as crucial to future economic prosperity. Meanwhile, an additional £2.6 billion will be available to promising startups across all industries. Coinciding with the publication of the strategy document, the British Business Bank (BBB) has released its own research into investment patterns in 2024. The data shows that while private investment flooded into AI startups and scaleups last year, the U.K. trailed the U.S. in key sectors such as advanced manufacturing and life sciences. Thus, if Britain is to become a science-led superpower, then there is some catching up to do. So, how does the British Business Bank see the investment outlook for Britain's technology startups, and what part will the institution play in supporting companies that have the potential to become global leaders? To find out, I spoke to Leandros Kalisperas and Matt Adey, respectively, Chief Investment Officer and Senior Economist at the BBB. The bank's report presents a mixed picture of the investment landscape. On the debit side, funding declined by 2.0% to £10.8 billion while the number of deals fell by a much larger 15% to 2,048. However, Kalisperas says, those figures have to be seen in context. 'Overall, it's positive,' he says. The value of deals was still the fifth highest on record.' And as he points out, for those companies that successfully raised capital, deal sizes were on average larger. 'There was a small decline in percentage terms and a slightly higher decline in deal numbers. That means companies that are getting finance are getting more finance,' he adds. AI Leads The Way Perhaps not surprisingly, companies operating in the artificial intelligence space did particularly well in 2024. According to the report, AI-related deals averaged £8 million, 40% higher than the average in other sectors. This aligns neatly with the desire of policymakers to establish the U.K. as a leader in the field. 'AI is a growth priority, " says Kalisperas. University spinouts also had a good year, collectively raising almost £2 billion. Again, this ties in neatly with the Industrial Strategy's aim of improving and accelerating the commercialisation of university research, something that the U.K. has not always done well. 'We do think this is absolutely critical given Britain's standing in the world. Commercialisation is the challenge, but the numbers speak for themselves in terms of the growth of that,' says Matt Adey. Regions See More Investment As Kalisperas sees it, rising investment in spinouts goes hand in hand with another theme of the report. Investment in Britain's regions is rising, a trend that is seeing London's share of the overall pot fall to 61%. This, he says, speaks to the success of companies emerging from university towns and cities outside London - and not just in and around Oxford and Cambridge. 'We talk about the golden triangle (Oxford, Cambridge, London) , but we are also seeing the development of the Northern Arc,' he says. The eagerness of universities to spin out science-led companies is, to some extent, being matched by local investment trends. Angels are crucially important because they have a local presence and can spot the emergence of promising companies. There are also increasing numbers of VCs working locally. Kalisperas cites the example of Northern Gritstone, a fund specializing in science investment in the North of England. Filling Funding Gaps All of which bodes well for investment in sectors identified by the Industrial Strategy, but there are investment shortfalls. For instance, the report notes that advanced manufacturing and life sciences are both underfunded when compared to investment levels in the U.S. 'When you adjust for the size of the economy, we are behind the US. But we have some successful businesses, so we are building from a strong base. But we do need to get closer to the U.S. funding levels,' says Matt Adey. However, as he stresses, the U.K. is ahead in clean energy and financial technology. That's where the BBB has an opportunity to play a key role in directing investment at strategically important industries. 'The Bank will get considerably more financial power. It is likel that we will be tasked with dealoing those gaps robustly,' says Kalisperas. It would be wrong to suggest that the Modern Industrial Strategy is all about startups. The plan includes cheaper electricity prices for businesses, cheaper and faster grid connection to the power grid, measures to boost exports and more defence spending. There will also be increased investment in quantum computing through a £670 million funding package and five progams to increase the use of AI in the services sector The initiative also sees the government putting more emphasis on promoting growth and innovation in the regions, a development welcomed by Aline Miller, Academic Innovation Lead at Manchester innovation district, Sister. 'This strategic pivot - placing greater emphasis on regional strengths outside the Golden Triangle - marks a needed shift towards a more balanced, inclusive model of national growth,' she said. Meanwhile, the enhanced financial power given to the BBB as part of the financial Strategy will give the bank a greater role in providing strategic funding across all the key sectors, such as life sciences, defence, digital technology and clean energy.
Bloomberg
38 minutes ago
- Bloomberg
Fed's Barr Says He Expects Tariffs to Boost Inflation
Federal Reserve Governor Michael Barr said he anticipates tariffs will drive up inflation and expressed support for a wait-and-see approach to interest-rate adjustments. Barr, in remarks prepared for an event in Omaha hosted by the Kansas City Fed, said the economy is currently on sound footing, with low unemployment and inflation having eased toward the Fed's 2% target.
CBS News
an hour ago
- CBS News
$10,000 1-year CD vs. $10,000 high-yield savings account: Which will earn more interest?
Both 1-year CD and high-yield savings accounts offer savers unique benefits right now. Getty Images You never want to put your money into an account that won't earn interest. And in the economic climate of recent years, you really couldn't afford to. With inflation at a decades-high, interest rates at their highest point in years and the cost of everyday expenses elevated, your money needed to work for you as much as possible. Fortunately, for those who took advantage, both certificates of deposit (CDs) and high-yield savings accounts offered effective pathways to do this, with both savings vehicles offering interest rates over 4% and sometimes even higher. But the economy is evolving again. Inflation is down multiple points from where it was in June 2022, for example, and interest rate cuts were issued in 2024 and could be issued again later this year. This means that savers will need to be a bit more strategic in their approach and it may mean reevaluating where they keep large, five-figure amounts of money right now. With a CD, they may be able to lock in long-term protection with a 1-year term, but with a high-yield savings account, they can earn a high rate and maintain access to their funds. To better determine which option is more beneficial for a $10,000 deposit made now, it can be helpful to calculate the interest-earning opportunity for both. Below, we'll complete the calculations. See how much more money you could be earning with a high-rate CD here. $10,000 1-year CD vs. $10,000 high-yield savings account: Which will earn more interest? Calculating the interest on either account type is relatively straightforward. You'll need the deposit amount (in this case, $10,000), the interest rate (4.45% for 1-year CDs and 4.30% for high-yield savings accounts) and the length of the account (both 12 months). That said, CD interest rates are fixed and high-yield savings account rates are variable, so predicting the latter interest earnings is difficult to do with precision as the rate can and likely will change over time. That said, here's what each could earn now, assuming the high-yield savings account rate remains constant: $10,000 1-year CD at 4.45%: $445.00 for a total of $10,445.00 $445.00 for a total of $10,445.00 $10,000 high-yield savings account at 4.30% after one year: $430.00 for a total of $10,430.00 Not only will you earn around $15 more with a 1-year CD in this example, but those earnings will be guaranteed versus the high-yield savings account, which won't be thanks to the variable rate. And while that could change positively (if rates are hiked and high-yield savings account rates rise alongside it), that appears unlikely now. With the CME Group's FedWatch tool listing a rate cut at more than a 75% likelihood for September, which will lead to a reduction in savings rates, perhaps before that point, many savers would benefit from depositing their $10,000 into a CD account instead. Get started with a 1-year CD here. What about money market accounts? A money market account could be a viable alternative for those looking to deposit $10,000 or more right now. Interest rates on these accounts are high and comparable to the top high-yield savings accounts. Plus, money market accounts won't require you to forego access to your money like a CD would, and they come with other features, like check-writing. But the big caveat remains the same: These accounts also have variable interest rates, which are also subject to decline later this year, making them a risk for savers looking to exploit today's high-rate climate for an extended period. The bottom line A $10,000 1-year CD earns more interest than a $10,000 high-yield savings account if opened now and that interest will be guaranteed, unlike a high-yield savings account with a variable rate. That said, you'll only be able to earn that $445 if you keep your money in the account for the full CD term. Take it out early and you'll get hit with an early withdrawal penalty, so keep that in mind when comparing these two accounts.
