Latest news with #economicoutput
Daily Mail
11-07-2025
- Business
- Daily Mail
ALEX BRUMMER: Neglect of UK innovation happening before our eyes
Another month and a second successive drop in Britain's economic output. It is starting to look as if the 0.7 per cent rise in the first quarter, which Keir Starmer crowed about in the Commons earlier this week, was an aberration. Everyone craves growth and the UK has no shortage of dynamism. The UK has world-class research universities, a thriving tech and artificial intelligence (AI) sector, great pharma and world-leading creative industries. The worry is that high taxes and a government caught in a doom loop is incapable of ending the drift. Barely a day passes without intellectual property nurtured and supported in Britain passing into overseas hands. There was hardly a murmur of dissent this week when London-based biotech pioneer Verona Pharma was sold for a whopping £7.4billion to American giant Merck. Verona operates in a sector in which the UK excels, and its roots can be traced directly to research on pulmonary diseases at King's College, London. Once listed on the City's AIM market, it decanted to the Nasdaq in 2020 as it searched for deeper-pocketed and less risk-averse investment institutions. Britain's banks and insurers claim that they are prepared to use the power of UK financial services to back British business. Deregulation of the London stock exchange listing rules and freeing up pension fund money should help. But the loss of wealth and advanced skills is happening before our eyes. Lost property Indeed, the fate of Aim-listed Warehouse REIT may not appear a matter of high national importance. Yet the decision of the group's board, headed by experienced M&A adviser Neil Kirton, to take private equity cash from Blackstone rather than a deal with UK competitor Tritax Big Box REIT illustrates how short-sighted British-quoted companies have become. It is another significant setback for UK plc ahead of Chancellor Rachel Reeves' Mansion House speech, where reviving the cult of equity investment is on the agenda. Blackstone, for all its scale and swagger, cannot be considered a good owner when it comes to British real estate. Its history in the UK will forever be associated with its ownership of the Southern Cross care homes two decades ago when it bought the company, sold the properties for a quick profit, leaving the care homes group, its employees, and patients high and dry. The industry would claim now that such incidents are a blip. But the High Street is littered with the detritus of private equity deals that went wrong. Blackstone is smart and in recent times has better understood big changes taking place in the real estate market. Traditional shopping struggles but online has prospered. Warehouse space has become valuable and could become even more so as demand for data centres to power AI grows. The private equity outfit has been developing a European-wide network of warehouses serving Amazon and other tech giants. A key to private equity returns is a financing structure based on leverage. But to service the debt often means renegotiating leases at higher prices, which eventually are passed through to end users. A more forward-looking Warehouse board would have followed the example of NHS property outfit Assura that recognised in the end that a merger with rival Primary Health Properties made more industrial sense. Warehouse shareholders should ignore the board and reject the Blackstone shilling.
Reuters
11-07-2025
- Business
- Reuters
UK economy shrinks 0.1% in May, ONS says
July 11 (Reuters) - Britain's economic output shrank by 0.1% in May, official data showed on Friday. Economists polled by Reuters had mostly forecast that gross domestic product would rise by 0.1% from April's level. Britain's economy expanded rapidly in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies. In May the Bank of England revised up its full-year growth forecast to 1%. However, much of the growth in early 2025 was likely to have been linked to the expiry of a tax break for some home purchases in April which boosted the sector before the deadline, and a rush by manufacturers to beat higher U.S. import tariffs. The BoE has said it thinks the economy grew by about 0.25% in the second quarter of 2025.
Globe and Mail
13-06-2025
- Business
- Globe and Mail
As it hosts G7, Canada under pressure to further boost military spending by tens of billions
Canada is facing hard budget choices as it plays host to the Group of Seven summit starting Sunday and prepares for a looming NATO meeting where Western allies will be asked to commit to further defence spending hikes in the face of rising threats from Russia and other rivals. Defence and security will be an underlying theme at the G7 forum in Kananaskis, Alta., where all but one of the member countries also belong to the NATO military alliance, which is poised to cement a new defence spending pact at The Hague one week later. The G7 includes Canada, the United States, Japan, Britain, Germany, France and Italy. A bigger NATO military spending target will place steep new demands on the federal treasury at a time when Canada's economy is hurting from trade wars with the United States and China, the federal budget deficit topped $43-billion last year and after a significant injection of defence money this month. It was only June 10 that Prime Minister Mark Carney unveiled $9.3-billion in new funding for Canada's military and announced the country's defence spending would hit 2 per cent of Gross Domestic Product. That meets the existing North Atlantic Treaty Organization expenditure target and represents a level of spending not seen in Canada since the Cold War. NATO Secretary-General Mark Rutte has already announced that he expects member countries will agree to boost defence spending as a percentage of their annual economic output to 3.5 per cent. Plus, it's anticipated that NATO countries in late June will also agree to a separate but related target: a further 1.5 per cent of GDP for investments in security-related infrastructure and resources − for a total of 5 per cent. Opinion: Great new military spending, Canada. Where's the money going to come from? Hiking Canada's defence spending to 3.5 per cent of GDP would require Canada to spend an additional $45-billion to $50-billion each year on its military − above and beyond the investments that Mr. Carney announced this week, said David Perry, president of the Canadian Global Affairs Institute. At the same time, Mr. Carney's Liberals promised $20-billion over four years for nation-building projects including trade corridors, infrastructure and investments in the Arctic plus another $11.8-billion for housing through Build Canada Homes, a new agency for affordable housing. Recent polling by Nanos Research found 65.2-per-cent support among Canadians for raising spending to the current NATO target of 2 per cent but only lukewarm backing for a further boost to 5 per cent. Only 17.3 per cent of respondents embraced the higher benchmark. The poll of 1,120 Canadians was conducted June 1 to June 3 and is considered accurate to within 2.9 percentage points 19 times out of 20. Pollster Nik Nanos said public support for more military spending falls off beyond the current NATO target. 'Once we get beyond 2 per cent, politically, it's going to be much more difficult, because we might not be funding social programs or health care or other important priorities,' he said. 'And you know what the research suggests, at least now, is that things like jobs and the economy and health care are rising in importance.' He said Mr. Carney will have to persuade Canadians that further military spending will create more prosperity and jobs. He said the fact that U.S. President Donald Trump has linked increased defence spending and the Canada-U.S. trade relationship has made it easier to rationalize military budget increases in order to protect market access to the United States. Opinion: Can Canada have both guns and butter? Carney shows us, yes, we can Don Drummond, a former senior Finance Department official, said the federal government will have no choice but to raise taxes in the years ahead. He said Canada's finances are in a structural deficit that can't be solved by a growing economy and it's unfair to pass bigger debt loads onto future generations. 'The pot's not big enough: They only have two choices: cut transfers to provinces or raise taxes,' Mr. Drummond said of Ottawa. Personal and corporate income taxes are already too high, in his opinion, which only leaves the goods and services tax. Canada hasn't spent 3.5 per cent of its annual economic output on the military since the early 1960s. Few NATO countries have already surpassed 3.5 per cent. Among G7 countries, the United States was expected to hit 3.19 per cent in 2024, according to estimates in a recent NATO report. Britain was expected to reach 2.33 per cent, Germany, 2.10 per cent, France, 2.03 per cent and Italy 1.5 per cent. Japan, which embraced pacifism 80 years ago, has significantly hiked military spending in recent years and is on track to reach 2 per cent by 2027-2030. Former parliamentary budget officer Kevin Page said Canada could make defence spending a priority if it chooses. He noted that the Trudeau government made Indigenous people a priority and raised federal expenditures in this area by more than $50-billion annually over a 10-year period to more than $60-billion in 2023-24 He said he expects Canada to be on track to run a deficit of about $60-billion this fiscal year, depending on the fall federal budget. Mr. Page, now president of the University of Ottawa's Institute of Fiscal Studies and Democracy, said Canada has the fiscal margin of manoeuvre to keep running significant deficits given it's financially in better shape than some peer countries. Mr. Carney may be able to free up more financial capacity: the Liberal Party promised in the recent election campaign that it would attempt to save $28-billion over three years in spending cuts, including a cap on the size of the public service.
Khaleej Times
12-06-2025
- Business
- Khaleej Times
UK economy shrinks by the most in nearly two years, ONS says
Britain's economic output contracted sharply in April in April, when shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs hit the global economy, official data showed on Thursday. Gross domestic output shrank by a worse-than-expected 0.3% in April from March - the biggest monthly drop since October 2023 and a much bigger drop than the 0.1% fall forecast in a Reuters poll. "After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs," Liz McKeown, ONS director of economic statistics, said. A fall in real estate and legal activity in April after the end of a temporary tax break on house purchases contributed 0.2 percentage points of the 0.3 percentage point fall in output in April, the ONS said. Car makers also reported lower output and exports to both the United States and the European Union. Britain's economy expanded by 0.7% in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies and prompting the Bank of England to revise up its full-year growth forecast to 1% last month. However, the BoE revised down its growth forecast for 2026 to 1.25% and said it expected the tariffs to knock 0.3% off British output in three years' time. BoE policymakers who are expected to hold interest rates next week are faced with competing forces of stubborn inflation and a relatively sluggish economy. A closely-watched business survey earlier this month suggested much of the economy returned to tepid growth. Business surveys of British firms have generally been downbeat and shown firms slowed their hiring and investment plans due to big increases in labour costs announced by finance minister Rachel Reeves last October. Data published this week showed a fall in consumer spending in May. The ONS said GDP in April was 0.9% higher than a year earlier, growing less than the 1.1% expected in the Reuters poll.
Zawya
12-06-2025
- Business
- Zawya
UK economy shrinks by the most since 2023 as U.S. tariffs hit
LONDON: Britain's economic output fell sharply in April, reflecting shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs and the end of a tax break on property sales, official data showed on Thursday. Gross domestic output shrank by a larger-than-expected 0.3% in April from March - the biggest monthly drop since October 2023 and more than the 0.1% fall forecast in a Reuters poll, following 0.2% growth in March. "After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs," Liz McKeown, the Office for National Statistics' director of economic statistics, said. A fall in real estate and legal activity in April after the end of a temporary tax break on house purchases contributed 0.2 percentage points of the 0.3 percentage point fall in output in April, the ONS said. Car makers also reported lower output and exports to both the United States and the European Union. British goods exports to the U.S. fell by 2.0 billion pounds ($2.7 billion) in April, the largest drop since monthly records began in 1997. Sterling fell by a quarter of a cent against the dollar on the back of the figures. Britain's economy expanded by 0.7% in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies and prompting the Bank of England to revise up its full-year growth forecast to 1% last month. However, the BoE revised down its growth forecast for 2026 to 1.25% and said it expected the tariffs to knock 0.3% off British output in three years' time. BoE policymakers who are expected to hold interest rates next week are faced with competing forces of stubborn inflation and a relatively sluggish economy. A closely-watched business survey earlier this month suggested much of the economy had returned to tepid growth. Business surveys of British firms have generally been downbeat though and shown firms slowed their hiring and investment plans due to big increases in labour costs announced by finance minister Rachel Reeves last October. ($1 = 0.7376 pounds) (Reporting by Suban Abdulla and David Milliken; Editing by Muvija M)
