Displaying items by tag: Economy

Paetongtarn Shinawatra, 37, has been officially endorsed by King Maha Vajiralongkorn as Thailand’s new prime minister, just two days after her election by parliament. The country’s youngest and second female leader, she follows in the footsteps of her father, former PM Thaksin Shinawatra, and her aunt, Yingluck Shinawatra, the country's first female premier. She has taken over after the dismissal of her predecessor, Srettha Thavisin, by the constitutional court. In her first speech, she pledged to govern with an open heart, emphasising stability and continuity. She has vowed to maintain key policies of her predecessor, focusing on economic stimulus, healthcare reform, tackling illegal drugs, and promoting gender diversity. The economy is a real concern for voters, with many asking why her party has failed to fulfil its promise to give about $300 to every voter in Thailand.

The UK economy showed a growth of 0.6% over three months, marking a positive trend despite a flatline in June, attributed to the general election and ongoing strikes. Businesses across various industries delayed purchases pending the election's outcome, while strikes, including those by junior doctors, further contributed to the stagnation. The June GDP figure fell from the previous month’s 0.4% growth, yet overall the UK outperformed most G7 nations in the first half of 2024. The UK’s growth, particularly in scientific research, IT, and legal services, has been the highest among G7 nations. This consistent growth has left the threat of recession behind, a significant achievement after the economy contracted at the end of 2023. The Labour government has highlighted economic growth as essential to funding public sector investments without increasing national debt.

The UK government has announced a £32 million investment in nearly 100 AI projects nationwide, despite the new Labour government's controversial decision to cancel £1.3 billion in tech funding previously promised by the Conservatives. This funding supports 98 projects, enhancing construction safety and prescription delivery efficiency, benefiting over 200 businesses and research organisations across the UK. Rick McConnell, CEO of Dynatrace, praised the investment, emphasising its potential to drive immediate value and attract private sector confidence in AI. However, the Labour government's decision to scrap major projects like the £800 million exascale supercomputer and £500 million for AI Research Resource has raised concerns about the UK's commitment to tech innovation. Minister for digital government and AI, Feryal Clark, reiterated the importance of AI for economic growth and public service improvement.

The Bank of England has cut interest rates by a quarter percentage point to 5%, marking the first reduction in over four years. This decision ends the joint-longest period of stable rates since the Bank gained independence in 1997. The nine-member Monetary Policy Committee (MPC) voted five to four in favour of the cut. Lower interest rates will impact many savings accounts and floating rate mortgages immediately, though fixed rate mortgages had already anticipated this change. The rate cut follows a drop in the consumer price index rate of inflation to 2%, the MPC’s target. However, the Bank's updated forecasts indicate that inflation will rise to around 2.75% by the year's end. Governor Andrew Bailey cautioned that while inflationary pressures have eased, rates should not be cut too quickly to maintain stable inflation and support economic growth. The forecasts will be reviewed after the new chancellor’s budget announcement in October.

Market expectations for an August interest rate cut diverge from economists' predictions. A Reuters poll of economists indicates that the Bank of England is expected to cut interest rates next week for the first time in over four years. Most economists surveyed—over 80%—anticipate the rate will drop to 5% from the current 5.25%, which is the highest it has been in over 15 years following 14 consecutive hikes. However, market sentiment is less certain. A slight majority (54%) believe rates will be held steady, while 46% anticipate a cut. Earlier predictions were more confident about a rate reduction, with 97% of economists in a June poll expecting a cut before the latest inflation data was released. The anticipated rate cut would make borrowing cheaper, as evidenced by Nationwide offering a five-year fixed-rate mortgage deal at less than 4%. The last interest rate cut occurred in March 2020 during the onset of COVID-19 in the UK. The Bank of England has maintained higher rates to combat inflation, aiming to bring it down to 2%. Despite recent drops in inflation, rates have remained at 5.25%.

A University of California study highlights the long-term damage caused by Brexit and austerity measures on the UK’s economic growth and social cohesion. The report calls for urgent action from the incoming government to address setbacks since the 2008 financial crisis. Political scandals, such as rule-breaking during the pandemic, have intensified public discontent and eroded trust in UK institutions. The study warns of interlocking crises for the next government, including signs of stagnation, particularly in addressing social and economic challenges. The report predicts a potential historic defeat for the Conservatives in the election and a challenging path for Labour to restore public trust and economic stability. Labour’s pledges include fiscal discipline, housing and infrastructure reforms, and clean energy investments. The study concludes that austerity and Brexit have left lasting scars on the UK economy, urging the government to prioritise regional planning and recovery.

HSBC has joined Barclays and NatWest in reducing mortgage rates after hints of a summer base rate cut by the Bank of England. HSBC’s new rates took effect on 26 June, with more lenders expected to follow. However, borrowers still face high costs, and average mortgage rates have been rising due to a lack of competition during the election campaign. A commentator notes that the recent rate increases are now being unwound in small steps. Fixed mortgage rates remain constant until the deal expires, after which borrowers must choose a new rate or default to a more expensive variable rate. Around 1.6 million borrowers have expiring fixed-rate deals this year. The Bank of England may cut rates at its next meeting on 1 August, influencing recent lender moves.

Over twenty Christian leaders, including former Archbishop of Canterbury Rowan Williams, have urged UK political leaders to view taxes as a societal benefit rather than a burden. In an open letter organised by the JustMoney Movement, they called on Rishi Sunak, Keir Starmer, and Ed Davey to promote fairer taxation, emphasising its role in funding public services and addressing inequality. They argue that the wealthiest should contribute more equitably, aligning with biblical principles of justice and community responsibility.

Labour, the Conservatives, and the Liberal Democrats have all pledged not to raise value-added tax (VAT) if they win the general election. Chancellor Jeremy Hunt confirmed that the Tories would maintain the current VAT rate, challenging Labour to do the same. Shadow chancellor Rachel Reeves dismissed claims of a planned VAT hike as 'nonsense,' also ruling out increases in income tax or National Insurance. Lib Dem spokesperson Munira Wilson echoed this. Ahead of the official election campaign, Labour promised economic stability and explicitly ruled out tax hikes for working people. They plan to impose VAT on private school fees to fund state school teachers. Jeremy Hunt criticised Labour's tax stance, suggesting a potential VAT rise if they win. However, Rachel Reeves labelled this claim 'absolute nonsense’, reiterating Labour's commitment not to increase taxes on working people.

The UK housing market currently has £230bn worth of homes for sale, the highest supply in eight years, keeping house prices stable for the rest of 2024. According to Zoopla, the supply of homes for sale is 20% higher than last year, with the average estate agent handling 31 homes - the highest level in eight years. Richard Donnell, Zoopla's executive director, said the increased supply reflects renewed homeowner confidence, leading to a rise in house prices as more sales are agreed upon. Sales have increased by 13% year-on-year, with a third of homes for sale having been marketed in 2023. The surge in supply is due to more three- and four-bedroom homes returning to the market as owners feel confident to move despite rising mortgage rates. The upcoming general election in July is not expected to impact the property market significantly, with 392,000 homes in the sales pipeline. Experts say that serious buyers and sellers should price their homes realistically to achieve sales despite election uncertainties.