Latest news with #UKEconomy
Zawya
07-07-2025
- Business
- Zawya
Sterling slips with economic data, tariff uncertainty in focus
Sterling slipped on Monday in a lacklustre start to a week packed with economic data reports that could offer clues to the interest rate outlook, while globally investors watched the latest deadline on U.S. tariffs. Sterling slipped 0.3% and last fetched $1.3601 against the U.S. dollar, while the pound was broadly unchanged against the euro at 86.23 pence. Last week saw investors in UK assets rattled by ambiguities around the health of public finances, as a number of U-turns by the governing Labour Party over welfare reforms sparked speculation around the future of finance minister Rachel Reeves. Traders are now shifting their focus to a set of data this week, with Monday bringing a report that showed British house prices stagnated month-on-month during June as expected, after an increase in tax on property transactions took effect in April. However, "the post April dip is likely to fizzle out", said Victoria Scholar, head of investment at interactive investor. "Plus, mortgage lending is improving, thanks to four rate cuts from the Bank of England over the last year and two more priced in this year." Later in the week, traders will scrutinize a report on gross domestic product that could offer clarity on the health of the UK economy and determine the outlook on interest rates. Bank of England policymaker Alan Taylor said late on Friday that he thought it would be better to cut interest rates now rather than wait and risk needing to cut them in a hurry. Taylor expects the Bank Rate to fall to "around 3%" by the end of next year. Traders largely anticipate the next 25 basis points interest rate cut by the central bank will be in September, according to data compiled by LSEG. Meanwhile, investors globally were awaiting a Wednesday deadline ahead of which economies scrambled to strike trade deals with the U.S. to avoid sharply higher duties on their exports to the United States. Britain was the first to secure an agreement with the U.S. in May and has avoided the additional tariffs on steel and aluminium. Negotiations are ongoing to remove existing 25% duties on industrial metals altogether. The pound has appreciated about 2% since the deal with the U.S. and is trading close to its highest level since late 2021, also benefiting from a broader dollar weakness. Separately, a Deloitte survey showed British business executives now see greater opportunities closer to home, while the attractiveness of the United States as an investment destination dwindled. In other news, Reeves is expected to announce a 28.6 million pound ($39 million) investment by the National Wealth Fund in a carbon capture project that could create jobs in central and northern England, as the government strives to shore up public support. (Reporting by Johann M Cherian; Editing by Aidan Lewis)
Reuters
07-07-2025
- Business
- Reuters
Sterling slips with economic data, tariff uncertainty in focus
July 7 (Reuters) - Sterling slipped on Monday in a lacklustre start to a week packed with economic data reports that could offer clues to the interest rate outlook, while globally investors watched the latest deadline on U.S. tariffs. Sterling slipped 0.3% and last fetched $1.3601 against the U.S. dollar , while the pound was broadly unchanged against the euro at 86.23 pence. Last week saw investors in UK assets rattled by ambiguities around the health of public finances, as a number of U-turns by the governing Labour Party over welfare reforms sparked speculation around the future of finance minister Rachel Reeves. Traders are now shifting their focus to a set of data this week, with Monday bringing a report that showed British house prices stagnated month-on-month during June as expected, after an increase in tax on property transactions took effect in April. However, "the post April dip is likely to fizzle out", said Victoria Scholar, head of investment at interactive investor. "Plus, mortgage lending is improving, thanks to four rate cuts from the Bank of England over the last year and two more priced in this year." Later in the week, traders will scrutinize a report on gross domestic product that could offer clarity on the health of the UK economy and determine the outlook on interest rates. Bank of England policymaker Alan Taylor said late on Friday that he thought it would be better to cut interest rates now rather than wait and risk needing to cut them in a hurry. Taylor expects the Bank Rate to fall to "around 3%" by the end of next year. Traders largely anticipate the next 25 basis points interest rate cut by the central bank will be in September, according to data compiled by LSEG. Meanwhile, investors globally were awaiting a Wednesday deadline ahead of which economies scrambled to strike trade deals with the U.S. to avoid sharply higher duties on their exports to the United States. Britain was the first to secure an agreement with the U.S. in May and has avoided the additional tariffs on steel and aluminium. Negotiations are ongoing to remove existing 25% duties on industrial metals altogether. The pound has appreciated about 2% since the deal with the U.S. and is trading close to its highest level since late 2021, also benefiting from a broader dollar weakness. Separately, a Deloitte survey showed British business executives now see greater opportunities closer to home, while the attractiveness of the United States as an investment destination dwindled. In other news, Reeves is expected to announce a 28.6 million pound ($39 million) investment by the National Wealth Fund in a carbon capture project that could create jobs in central and northern England, as the government strives to shore up public support.
The Independent
05-07-2025
- Business
- The Independent
The markets don't do sympathy – but they want Reeves to stay (for now)
There were some in the aftermath of Rachel Reeves 's tears at Prime Minister's Questions and the markets falling who supposed the latter were showing their kindness to the beleaguered British chancellor. This was speculators saying they regretted her possible demise and they wished Reeves to stay. Certainly, the two appeared to go together – Reeves seemingly on the brink and the value of the pound and gilts plunging. None of us know what exactly prompted her anguish and what Sir Keir Starmer discussed with his aides after PMQs. They may have seen the reaction and if they had any plans to remove her decided to shelve them. In that sense, Reeves would have been saved by the City. It would, though, be wrong to make that interpretation. Investors behaved the way they did, effectively marking down the British economy, not because they are fans of Reeves the person but because they cannot abide change. They abhor uncertainty and nothing would create greater uncertainty than the sudden resignation of the chancellor. It can be argued, put like that, they did wish her to remain. It's true that with Reeves there is a case for the devil they know, that with her in place there is solidity and responsibility – she is no Liz Truss – although increasingly that description appears tenuous. More to the point was that her exit would open up a whole new level of unpredictability. Reeves is not just a jobbing chancellor; she is bound up with the prime minister. As Starmer has put it subsequently, they are in 'lockstep' together. Theirs is a joint enterprise. Ever since he was in opposition, preparing for the general election, it has been Starmer and Reeves. It was as a double act that they toured the banking and industry boardrooms and business chiefs' gatherings, persuading them that this Labour administration could be trusted with their money. It was a pairing, too, that went some way to encouraging the electorate to vote for them in substantial numbers. They were man and woman (Labour's highest ever ranked), lawyer and Bank of England and commercial bank economist (at least that is what Reeves said she was), a serious-minded duo, bringers of relative calm after the rollercoaster ride of the Tory years. Of course, Starmer and Reeves were going to implement Labour policies. But with a thumping majority underpinning them, they were not in hock, unlike previous Labour leaders, to the left. With them behind the wheel, the country was set fair on a flatter, quieter course. The first intimation that this was not the case came with Reeves's first Budget. She clobbered private schools, non-doms, farmers – all holders of values that many of those who work in business and the Square Mile hold dear. But again, the markets do not do emotion, it is never personal. What sparked disquiet was the collective effect of her measures, especially the raising of employers' national insurance contributions. Again, this was not because the investment community comprises employers but because they were worried about the likely economic effect, depressing domestic and inward investors. Still, while there was private gnashing of teeth and moaning over lunches, dinners and drinks in golf club bars, there was a certain begrudging admiration for Reeves's attempt to tackle the impossibly awkward hand she had been dealt. They did not like her or her boss, but then many of them never would. It did not matter; they did not have to. They could see that Reeves was struggling to hold it together (literally as it turned out) and, along with Starmer, despite everything that was thrown at them, she was intent on pursuing that same narrow, even course. Starmer was credited with having had a fine tariffs war to date – another premier might have fared less well with Donald Trump. It is true that worries were building over the nation's financial health, but here, too, there was analysis that highlighted how poorly other economies, notably those in the EU, were faring. The prime minister and his dogged lieutenant would harp on about going 'faster and further' in achieving growth and the City took that with a pinch of salt – the figures were indicating otherwise. It was a concern, but at the same time, the chalk and chalk, undynamic combo were never allowing their discipline to waver, and could be relied upon to strive to balance the books. There were episodes too, when Reeves seemed to wobble. Again, nothing unduly untoward. Then came this week and welfare reform. The number-crunchers who determine investors' strategy quite liked what Reeves was proposing – it was part of her and Starmer's resolution to put the country's finances on a firmer footing. But the left didn't and Starmer ordered a climbdown. Reeves found herself nursing an unexpected £5bn deficit. Further tax rises, probably on business and the wealthy looked probable; now they're inevitable. She did not like it; more to the point, the markets got jittery. Far from having absolute control as the scale of his victory suggested, only one year into his reign with, in theory, four more to go, and Starmer had allowed the left to share that wheel. Reeves's misery said everything. A government that promised to lead the UK on a truer road was now returning it to lurching mode. It was likely Reeves would depart and be replaced, but by whom? God forbid, not the leftie diehard, Angela Rayner. It was even conceivable that the whole Starmer edifice could collapse, despite his massive safety net; that ultimately, he might also have to resign. Then what? At the very least, the make-up of his rule, the strong base he originally afforded, is fundamentally weakened. This and more went through hard minds. Investors are human but there was no humanity in why those markets fell.
The Sun
04-07-2025
- Automotive
- The Sun
Hard-pressed Brits face MORE misery at the pumps as fears mount Rachel Reeves will hike fuel duty
DRIVERS already hammered by soaring motoring taxes could face fresh pain at the pump with a fuel duty hike. Rachel Reeves is understood to be 'considering everything' at the next Budget after her welfare U-turn — prompting fears for motorists. Top Tory Dame Priti Patel said a hike would mean a 'betrayal of working people'. The AA says motorists are already being squeezed, with Vehicle Excise Duty rising by £30 since 2022, plus millions more paid in parking charges, tolls and congestion fees. AA boss Edmund King also warned any rise at the pumps 'could be catastrophic' for the UK economy. He added: 'The added danger is increased duty simply fuels higher inflation. The strong message to the Chancellor is 'keep it down'.' The AA says motorists are already being squeezed from all sides, with Vehicle Excise Duty jumping from £165 to £195 since 2022, and millions more paid in parking charges, tolls and congestion fees. Drivers of older cars, including popular models like the Ford Fiesta and VW Golf, also face a £160 tax hike when they are eventually forced to upgrade to newer vehicles. The Sun's Keep It Down campaign has helped freeze fuel duty since 2011 - saving drivers thousands but ministers are under pressure to find cash after billions were pledged to reverse planned welfare cuts. A Treasury spokesperson said: 'We extended the fuel duty cut this year, saving drivers £3billion, and we're investing £1.6billion to end the pothole plague by fixing up to seven million extra potholes.' Pressed on whether she would raise taxes, Reeves said: 'Of course there is a cost to the welfare changes that parliament voted through this week and that will be reflected in the budget. 'But I'm also very, very clear that [the] stability that we've been able to return to the economy, which has enabled the Bank of England to cut interests rates four times, is only possible because of the fiscal discipline which is underpinned by the fiscal rules. "And we'll be sticking to those because they're absolutely vital for the living standards of working people and also the costs that businesses face.' 1
The Independent
02-07-2025
- Business
- The Independent
Business news live: Gilt yields spike on Reeves exit speculation and CEO of AstraZeneca discusses leaving London
The Bank of England governor Andrew Bailey believes that interest rates in the UK are still on a 'downward path' and has acknowledged that the uncertainty caused by trade tariffs means businesses are even more cautious about spending. In turn, while the overall impact from them is still yet to be seen, Mr Bailey says tightening rates further could be more harmful. Elsewhere, reports have suggested the London Stock Exchange 's biggest firm, AstraZeneca, could push for a move in its listing to the US, with the chief executive frustrated by the current environment. The pharmaceutical firm has a market capitalisation of around £160bn. Meanwhile, savers are feeling the heat from more than one angle right now, with cash ISA limits set to be cut, reform c oming to Lifetime ISAs and interest rates expected to drop in August. Gilt sell-off: Why does it matter? The rapid selling of gilts, as the government bonds are known, matters because when the price goes down, the yield - what it pays out as interest - goes up. That means borrowing costs for the government are increased and, as has been a constant theme throughout the year already, the chancellor does not have a lot of head room for any additional expenses. The sell-off today was the biggest since October 2022 and the mini budget which effectively cost Liz Truss her job as prime minister. Michelle Lawson, director at Lawson Financial, said: 'One things the markets hate is uncertainty. There is more flip-flopping from this government than a beach on a summer's day. The damage they are doing to the economy, public pockets and consumer confidence is a great concern and the markets are reacting as a result.' Karl Matchett2 July 2025 14:32 Bond sell-off sends borrowing costs up on speculation of Rachel Reeves exit After that PMQs session and Rachel Reeves reaction, traders immediately sold off 10-year government bonds - known as gilts - to send the yield soaring in little more than an hour. That came after Keir Starmer apparently dodged the question of whether Ms Reeves' job as chancellor was safe. A Labour comment later said 'The chancellor is going nowhere. She has the prime minister's full backing.' That appears to have at least stemmed the tide, with the yield on 10-year bonds dropping back slightly from 4.67 per cent to 4.62 per cent over the past hour. Karl Matchett2 July 2025 14:27 Reeves battles tears as Starmer declines to back her staying in post Chancellor Rachel Reeves appeared to cry in the Commons as Sir Keir Starmer declined to guarantee she would remain in place until the election. The Prime Minister faced MPs after being forced to scrap key planks of his welfare reforms, leaving an almost £5 billion black hole in Ms Reeves' spending plans and fuelling speculation she could be forced to hike taxes. Tory leader Kemi Badenoch said Ms Reeves looked 'absolutely miserable' and challenged the Prime Minister to say whether the Chancellor would keep her job until the next election. Sir Keir dodged the question about whether Ms Reeves would be in place for the remainder of the Parliament, saying Mrs Badenoch 'certainly won't'. Reeves battles tears as Starmer declines to back her staying in post The decision to scrap key parts of the welfare reform package has left the Chancellor facing the prospect of tax hikes to balance the books. Karl Matchett2 July 2025 14:01 US stocks set to open flat due to tariff caution President Trump has been full of soundbites again recently and most are regarding trade tariffs once more. The approaching end of his 90-day pause in theory means blanket levels of levies will come into play again for those who have not yet agreed trade deals. But the president wouldn't confirm whether or not he'd extend that deadline when asked. US stocks are set to slightly fall today upon opening, no doubt in part due to that investor uncertainty. Futures show the Nasdaq 100 down 0.2 per cent, the S&P 500 totally flat and the Dow Jones just about up at 0.1 per cent. Karl Matchett2 July 2025 13:40 Santander shares rise 3% on TSB deal news Shares in Spanish bank Santander, which is listed on the London Stock Exchange, rose more than 3 per cent this morning. That follows last night's confirmation that they are set to buy TSB and make the third-largest bank in the UK. While the purchase still has to be agreed by shareholders and regulators, The Independent understands Santander feel it will make them more able to drive innovation with product offerings. Santander shares are up 69 per cent across 2025 so far. Karl Matchett2 July 2025 12:58 Italy fear €20bn hit from tariffs - and more than 100,000 job losses Italy have given an estimation of a €20bn (£17bn) loss in exports next year, along with 118,000 job losses, if the US sticks to a blanket 10 per cent tariff on EU products. 'Italy does not just export luxury products - with a demand that isn't very sensitive to prices - but mainly machinery, means of transport, and leather goods,' said Confindustria president Emanuele Orsini to national media. A 10 per cent tariff would be 'unsustainable' for Italy, he said, due to the weakness in the dollar which would contribute to an effective 23.5 per cent price rise in the course of a year. Karl Matchett2 July 2025 12:46 Bank of England ask public about new banknotes they shouldn't The Bank of England are canvassing public opinion on the design of future banknotes. Themes, famous faces and history are given as examples by the BoE during the consultation but Brits don't have the best track record of taking these things too seriously. Ben Perks, managing director at Orchard Financial Advisers, predicted we would then end up with Banky McBankface if history repeats. 'I remember fondly when the National Oceanography Centre asked the public to name a £200m boat, and we went for Boaty McBoatface,' he pointed out. 'It's nice of the Bank of England to ask, but we never take these things seriously and I look forward to seeing Joey Essex's face on a fiver in no time.' Karl Matchett2 July 2025 12:20 Fears over £160bn blow to London's stock market as AstraZeneca considers listing move to US The boss of AstraZeneca, the biggest company on the London Stock Exchange, has discussed shifting the pharmaceutical firm's stock market listing to the US. Such a move would be the biggest hit to the stock market yet, following some huge departures such as £10bn financials firm Wise and £40bn mining business Glencore, among others. The pharmaceutical firm however is far bigger by market capitalisation, currently worth just over £161bn – more than BP, National Grid and Lloyds Bank combined. The Independent understands the company acknowledges the CEO's concerns as being longstanding, especially regarding new products, while conversations are ongoing with the UK government over support for the wider pharmaceutical industry, particularly when it comes to supporting the commercial environment to become a global superpower in the sector. CEO Pascal Soriot has not hidden his annoyance at taxes and regulations the pharmaceutical firm have to navigate Karl Matchett2 July 2025 12:00 Trump tariffs latest: Japan threatened with 30-35 per cent levy Donald Trump's self-set deadline for trade deals is fast approaching and while the UK has already agreed one, the same cannot be said for many others. The EU remain in talks having broadly agreed a 10 per cent tariff but seeking exemptions or lowered fees on some industries. Japan, however, could be set for far higher numbers based on the US president's latest thoughts. The Asian nation may have to 'pay 30, 35 per cent or whatever the number is that we determine, because we also have a very big trade deficit with Japan,' he said. 'We've dealt with Japan. I'm not sure we're going to make a deal. I doubt it.'
