Aurelia Butler

OTTAWA (Reuters) -Canadian Prime Minister Justin Trudeau is going to carry out a wide-ranging cabinet shuffle on Wednesday to focus on the economy at a time when the cost of living is a major issue for voters.Trudeau, whose left-leaning Liberals have been in power since November 2015, will make the formal announcement at Rideau Hall, home to Governor General Mary Simon, the official representative of head of state King Charles.New ministers will be sworn in at 10:30 a.m. (1430 GMT) and Trudeau will hold a press conference at 12:15 p.m., according to his official itinerary.The Canadian prime minister looks set to leave heavy hitters such as Finance Minister Chrystia Freeland, Innovation Minister Francois-Philippe Champagne and Foreign Minister Melanie Joly in their cabinet portfolios. Instead, in a shuffle of mainly second-tier ministers, he will seek to improve messaging on the economy at a time when the official opposition Conservatives are ahead in the polls.”In the core economic files we are going to add more strength,” a senior government source said on condition of anonymity. “The idea is to put new energy in key roles, and to put experienced people into new roles. When the time comes, they will be ready to hit the campaign trail.”The timing of the next election is unclear, since Trudeau commands only a parliamentary minority and relies on support from the left-of-center New Democrats to govern. That party has agreed to keep him in power until 2025, but the deal is not binding.The right-of-center Conservatives blame what they call excessive government spending for high inflation and increasing complaints about unaffordable housing.”We have a duty to avoid the danger that is coming for Canadian workers if we continue down Trudeau’s path. Stop the inflationary spiral,” Conservative leader Pierre Poilievre wrote on social media on Tuesday.A Liberal source said Defence Minister Anita Anand was in the running to become head of the Treasury Board, which has overall control of government spending.Ahead of the shuffle, four cabinet ministers said they would leave politics. The Liberal source said Trudeau would ditch seven ministers. The Canadian Broadcasting Corp said they included Public Safety Minister Marco Mendicino and Justice Minister David Lametti. More

LONDON (Reuters) – Britain’s former finance minister Kwasi Kwarteng held back official warnings that borrowing was on course to rocket even before he attempted his ill-fated budget plans, new documents from the Office for Budget Responsibility (OBR) show.Kwarteng’s Growth Plan published on Sept. 23 formed the biggest package of tax cuts in decades and triggered a meltdown in British financial markets, exacerbated by the structure of pension funds.Even before he published the so-called “mini-budget”, Kwarteng had been widely criticised for failing to publish advice given to him by the OBR, something that unnerved investors.The OBR, the country’s official forecaster, published that advice this week, in response to an order from the Information Commissioners’ Office.Dated Sept. 5, the report showed borrowing from 2022/23 through 2026/27 was cumulatively on track to rise by 109 billion pounds ($141 billion) more than the OBR had forecast in March 2022, reflecting higher energy costs and rising inflation.The forecasts – made faster and with less data at hand than for a normal budget event – were given to Kwarteng on a “pre-measures” basis, meaning the OBR had not considered his plans for sweeping tax cuts.Kwarteng’s offices and the Treasury did not immediately respond to requests for comment.At the time of the mini-budget, a spokeswoman for then-prime minister Liz Truss said providing accelerated OBR forecasts that reflected the proposed tax changes would have compromised their quality and completeness.Kwarteng and Truss lost their jobs as a result of the mini-budget, which ended the Conservative Party’s unbroken 15-year lead over the opposition Labour Party for economic competency in the eyes of voters, according to polling from Ipsos.While current Prime Minister Rishi Sunak made restoring economic stability a central plank of his leadership, Labour maintains a large lead in opinion polls ahead of a general election expected next year.OFF-TARGETThe OBR’s September report showed Kwarteng was on track to fail the government’s fiscal target of running a current budget surplus in 2025/26.The report warned that things could pan out worse still.”The fiscal update presented here needs to be considered in the context of the elevated risks to economic and fiscal prospects at present… there are several risks that could significantly worsen this outlook,” the report said.It concluded with a message to Kwarteng about his plans.”Policies that your government announces in the coming weeks will have potentially large impacts on economic and fiscal outcomes,” the OBR said, adding that they could boost the economy but also add to borrowing, especially in the short term.In a letter published this week, OBR chair Richard Hughes said energy prices had turned out lower than was assumed since the draft forecasts last September, but interest rates were higher and government budget policy was tighter.Britain ran a budget deficit of 132 billion pounds or 5.2% of GDP in the 2022/23 fiscal year. In March the OBR forecast this would fall to 5.1% in 2023/24, and to 1.7% in four years’ time.($1 = 0.7753 pounds) More

LONDON/MILAN/MADRID (Reuters) – Europe’s major banks, including Deutsche Bank (ETR:DBKGn) and Lloyds Banking Group (LON:LLOY), on Wednesday pointed to the rising risk of bad loans as the global economy struggles with slow growth and high inflation.Financial regulators and investors are keeping a close eye on how banks navigate the uncertain economic climate and are looking in particular for any signs of stress in banks’ loan books.The latest flurry of bank earnings in Europe highlighted broader trends in global banking, where investment banks are under pressure due to a deal drought, while higher interest rates are helping profitability in retail banking. Lloyds took a higher charge for troubled loans and missed first-half profit expectations as Britain’s economic chills weighed on its finances and upped pressure on management to do more to help savers.Analysts at JPMorgan (NYSE:JPM) said Lloyds’ higher than expected charge for potentially soured loans – up 76% to 662 million pounds ($855 million) – and declining loan volumes would trigger downgrades of Lloyds’ performance for the year.Lloyd’s shares were down 3% early on Wednesday. Higher interest rates helped UniCredit strongly beat earnings expectations in the second quarter. While the bank continues to see a significant increase in its cost of risk ahead, it will be less than anticipated. “We don’t expect an Armageddon increase in cost of risk,” CEO Andrea Orcel said.”We continue to push into the future the expected shocks,” he added.DOWNSIDE TILTThe International Monetary Fund this week raised its 2023 global growth estimates slightly given resilient economic activity in the first quarter, but said that persistent challenges were dampening the medium-term outlook.Inflation was coming down and acute stress in the banking sector had receded, it said, but the balance of risks facing the global economy remained tilted to the downside and credit was tight.The European Central Bank also this week reported that euro zone companies’ demand for loans dropped to the lowest on record last quarter and a further decline is likely over the summer as banks continue to tighten access to credit.Germany’s financial regulator BaFin has been calling on banks to raise the amount of money they set aside for bad loans.Deutsche Bank on Wednesday said provisions for bad loans nearly doubled in the second quarter from a year earlier to 401 million euros.Chief Financial Officer James von Moltke told reporters Germany’s largest bank saw a “softening in some sectors”.The bank now expects provisions for souring loans to be at the “upper end” of its previous guidance.In Spain, Santander (BME:SAN), pointed to weakness in its key market Brazil, where net profit fell 52% year-on-year in the quarter due to a rise in costs driven by inflation, negative impact from a tax reversal and a fall of 4.3% in net interest income.Santander’s financial chief said bad loans in Brazil may have already peaked.Later this week, European Union banking regulators are due to publish results of stress tests to check how banks could cope with a long period of high inflation and interest rates.The European Central Bank has raised euro zone borrowing costs to their highest level in 22 years. The higher rates have helped some banks to boost performance. UniCredit was able to raise its net profit and shareholder reward targets for the year after revenues jumped by a quarter year-on-year.This sent the bank’s shares up around 2% on Wednesday, with Jefferies saying that it sees upside potential to net interest income. ($1 = 0.7746 pounds)($1 = 0.9024 euros) More