Tag Archives: Finance (Legacy)

UK borrowing to achieve peak peacetime as the economy faces the COVID-19 emergency | Instant News


LONDON (Reuters) – Britain will borrow nearly 400 billion pounds this year to pay for a massive coronavirus attack on its economy, Finance Minister Rishi Sunak said on Wednesday, as he took his first steps to offset the country’s highest non-wartime budget deficit. .

The world’s sixth-largest economy will now shrink by 11.3% in 2020 – the most since 1709’s “The Great Frost” – before recovering less than half by 2021, Sunak told parliament as he announced a one-year spending plan.

“Our health emergency is not over. And our economic emergency has only just begun, ”he said, promising more money for health, infrastructure, defense and to fight unemployment.

The UK budget watchdog forecasts lending to reach 394 billion pounds ($ 526 billion) in the 2020/21 financial year starting in April, slightly more than expected in August.

At 19% of gross domestic product, the deficit will be nearly double its level after the global financial crisis has spent nearly a decade of unpopular spending pressure falling.

Sunak announced cuts to foreign aid spending and a freeze on the salaries of many public sector workers.

However, with many public services still being stretched, Sunak is expected to pay more attention to tax increases to cover the shortfall.

“We have a responsibility, once the economy recovers, to return to a sustainable fiscal position,” he said Wednesday.

Britain has been hit harder by the coronavirus pandemic than most other wealthy nations due to its long lockdown.

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Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.

Even with recent positive news on vaccines, the Office for Budget Responsibility (OBR) says the economy may only regain pre-crisis size by the end of 2022 – or later if Britain fails to secure a post-Brexit trade deal with the European Union before transitional arrangements end in December 31st.

Sunak did not mention Brexit in his speech.

NOT AGAIN

Since the pandemic hit Britain weeks after he took over as finance minister, a former Goldman Sachs analyst has issued emergency spending – mostly to pay subsidies to fend off a spike in unemployment – and tax cuts.

The shift from the Conservative Party’s traditional economic orthodoxy has worried some lawmakers.

Sunak said the cost of his actions to fight the coronavirus was now 280 billion pounds for this year, up from an earlier estimate of around 200 billion pounds.

Even so, the long-term economic damage of around 3% of GDP is most likely caused by COVID-19, OBR said.

Unemployment tends to peak at 7.5%, from 4.8% now.

With the damage in mind, Sunak seeks to emphasize how spending will increase in the short term as Britain grapples with the effects of the pandemic.

During this year and next year, daily spending will increase by 3.8% in inflation adjustment, the fastest growth rate in 15 years.

To fulfill Prime Minister Boris Johnson’s pledge to “raise the level” of growth across the country, £ 100 billion will be spent next year on long-term investment, £ 27 billion more than last year.

The new national infrastructure bank will be based in the north of England, where many voters broke tradition and supported Johnson in last year’s election.

Johnson later told Conservative lawmakers at a 1922 Committee meeting that he believed the British economy could revive quickly, and that his government would meet the needs of those who voted for him, said a lawmaker who attended the meeting.

The OBR said it would need 1% of GDP from spending cuts or tax increases to match day-to-day government spending with revenue. Debt is likely to increase further, to over 109% of GDP in 2023/24, up from around 101% now.

Paul Johnson, head of the Institute for Fiscal Studies think tank, said the headline figures were “truly shocking” but hid pressure on spending in three or four years that would be difficult to convey.

Sunak hinted at some initial cost-saving measures, including a salary freeze for public sector workers, except for doctors, nurses, other health staff and the lowest paid public sector workers.

And the UK will save 3 billion pounds a year by cutting foreign aid spending to 0.5% of GDP, a level that remains higher than almost any other wealthy country.

Archbishop of Canterbury Justin Welby said the cuts were “shameful and wrong”, former Prime Minister David Cameron said the government had broken promises to the world’s poorest countries, and government ministers for sustainable development were resigning.

($ 1 = 0.7499 pounds)

Written by William Schomberg; Edited by Catherine Evans and Jan Harvey

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Accenture and ION among the competing quartets for Italian Cedacri: source | Instant News


MILAN (Reuters) – IT consultancy Accenture and international fintech firm ION Group are among four bidder groups that have made indicative bids for Italian banking software and back-office group Cedacri, two sources told Reuters.

Italian IT service provider Engineering, backed by Bain Capital, is also competing for control of Cedacri along with the private equity fund consortium Apax and Italian digital services group Reply, said the source, who spoke on condition of anonymity as the matter was personal.

Cedacri and the bidders declined to comment.

Cedacri, who was advised by Deutsche Bank, aims to identify the preferred bidder by the end of the year, the sources said, adding that the deal is worth more than 1 billion euros ($ 1.19 billion).

Cedacri is supported by the Italian state-backed FSI fund, with a 27% stake, and by 14 other financial institutions including Banca Mediolanum, Gruppo Banco Desio and Unipol.

The sale is still in its early stages but discussions are expected to gain momentum in the coming weeks, the sources said.

The Italian daily Il Sole reported earlier on Wednesday that Cedacri was initially exploring an initial public offering (IPO) but its focus has gradually shifted to selling a majority stake.

The company, based in the northern Italian city of Parma, reported revenues of 383 million euros in 2019, with adjusted core profit of 81.2 million euros, up 50% compared to 2018.

Reporting by Elisa Anzolin; editing by Pamela Barbaglia, Kirsten Donovan

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Failure to secure a Brexit trade deal will wipe out an extra 2% off UK – OBR output | Instant News


LONDON (Reuters) – Britain and the European Union’s failure to agree on a free trade deal will wipe out an additional 2% of British economic output while driving up inflation, unemployment and public borrowing, official estimates showed on Wednesday.

FILE PHOTOGRAPH: Euro and pound banknotes are seen in front of the letters BREXIT in the image illustration taken on April 28, 2017. REUTERS / Dado Ruvic / Illustration

The Office of Budget Responsibility reviewed Brexit forecasts after ruling the prospect of a “no-deal” exit remained a risk, more than five weeks before Britain completely left the world’s largest trading bloc on December 31.

The OBR said the imposition of tariffs under World Trade Organization rules and disruption at the borders will hit parts of the economy such as manufacturing that have emerged relatively unscathed from the COVID-19 pandemic.

The independent body has predicted Brexit will cost Britain 4% of GDP in the long term even if the UK secures a free trade agreement with the EU, compared to if Britain remains in the bloc.

“This (no deal) will further reduce output by 2% initially and 1.5% on forecast,” he said.

The initial economic hit will be felt at the start of the following year, and OBR estimates that some of the lost output will recover over the next five years.

Unemployment, at 4.8% in the third quarter of 2020, could peak at 8.3% in the third quarter of 2021 if there is no agreement – 0.9 percentage points higher than its central estimate for the period.

Consumer prices could rise 1.5% above the OBR center forecast, and lower tax revenues and higher spending on welfare and other measures could mean borrowing more than 10 billion pounds ($ 13.38 billion) on average. a year from 2021-22 onwards, pushing up debt.

“The imposition of tariffs on EU imports, higher non-tariff barriers, and a fall in the exchange rate all raise consumer prices, making them 1.5% higher than our central estimate,” OBR said.

($ 1 = 0.7473 pounds)

Reporting by Kate Holton and William James; editing by James Davey and Timothy Heritage

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Australian, NZ shares rose as Biden’s transition, increasing the risk assets of the vaccine | Instant News


* Australian finances record their highest levels since March 5

* Australian energy stocks advanced for the third session

* Fletcher NZ Building recorded highest level in more than 2 years (Renewal closed)

November 25 (Reuters) – Australian stocks closed higher on Wednesday, lifted by the start of US President-elect Joe Biden’s official transition to the White House and as investors also expected a rapid economic revival due to advances in the coronavirus vaccine.

The S & P / ASX 200 index ended 0.6% higher at 6,683.300 points.

“Thanks to the many vaccines that will be available soon,” Joy to the World “is ringing earlier than expected,” wrote Stephen Innes, head of global market strategy at Axi in a note.

The Dow Jones Industrial Average broke the 30,000 level overnight for the first time on optimism surrounding vaccine progress and Biden’s transition.

“Get a glimpse of the current market and there’s not much to say about those worries. It’s like a positive risk nirvana has gone down in the stock market and traders have little trouble other than going with the flow ”, said Chris Weston of Pepperstone.

Meanwhile, Australia’s most populous state of New South Wales is set to loosen social distancing restrictions and allow restaurants and pubs to increase capacity starting December, after recording nearly three weeks of no local transmission of COVID-19.

Up by 4%, energy companies were the biggest percentage gainers on the benchmark as crude oil prices rose for the fourth straight session.

Finance added more than 2% with the “Big Four” bank ending in black. Analysts at UBS expect the bank to increase its payout ratio and potentially return the excess capital from fiscal 2021.

Miners also gained as benchmark iron ore futures snapped two consecutive sessions of losses with Lynas Corp and BHP Group topping the sub-index with more than 3% gains each.

In New Zealand, the benchmark S & P / NZX 50 was up for the third straight session to be 0.9% higher.

The central bank said Wednesday it will reimpose mortgage restrictions next year amid growing fears of a housing bubble.

The country’s biggest construction company surged to its highest level since November 2018 on an optimistic profit outlook and dividend payback plans. (Reporting by Deepali Saxena, Editing by Sherry Jacob-Phillips)

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Switzerland allocated 3,500 work permits for British citizens post-Brexit | Instant News


ZURICH (Reuters) – The Swiss government on Wednesday allocated up to 3,500 work permits for Britons next year to allow employers to recruit staff from the UK, which is no longer covered by Switzerland’s free movement agreement with the European Union.

“This ensures the flexibility needed for Swiss businesses,” the government said.

The British contingent permit is initially valid for one year and will be released to the canton of Switzerland every three months.

Bern maintains at 8,500 the number of permits for specialists and skilled workers from other countries outside the European Union and members of the European Free Trade Association Norway, Iceland and Liechtenstein who wish to work temporarily in Switzerland.

Reporting by Michael Shields; Edited by Alex Richardson

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