Aurelia Butler

Britain is the only leading economy likely to slide into recession this year, the IMF said on Tuesday, predicting that UK household spending would falter under the weight of high energy prices, rising mortgage costs and increased taxes. The fund upgraded its forecasts for most leading economies and said the global outlook had brightened. But it identified the UK as an exception and said the British economy would shrink by 0.5 per cent between the final quarter of 2022 and the final quarter of this year.Even Russia’s economy is now likely to outpace the UK’s, growing 1 per cent this year, according to the IMF forecasts.Pierre-Olivier Gourinchas, chief IMF economist, said the UK could expect a “sharp correction” in 2023, adding that the country faced “a quite challenging environment”.The IMF prediction that UK 2023 output will contract by 0.5 per cent represents a downgrade of its October forecast of 0.2 per cent growth for this year. By contrast, the fund upgraded its global economic forecast over the same period by 0.5 percentage points. Gourinchas said eurozone economies had been “surprisingly resilient”, while the US had a “narrow path” to avoid recession, with inflation falling and only modest increases in unemployment. The IMF also thinks Beijing’s decision to ditch its zero Covid policy will help China reach 5.9 per cent growth by the end of this year, more than double the 2022 rate of 2.9 per cent.UK chancellor Jeremy Hunt said the IMF forecast showed that the UK was “not immune to the pressures hitting nearly all advanced economies”. He added that Britain outperformed many forecasts last year and was on track to outgrow Germany and Japan in coming years if it met its goal of halving inflation.But Gourinchas said UK consumers and companies found themselves unusually exposed to high energy prices. He said borrowers would also be hit by higher mortgage rates this year as the Bank of England continued to raise interest rates to counter inflation that, while apparently past its peak, was still 10.5 per cent in December. The Bank of England is expected to increase interest rates by 0.5 percentage points to 4 per cent on Thursday.Gourinchas also noted difficulties owing to Britain’s labour market. Other European countries have experienced an increase in people seeking work following the height of the pandemic — helping keep a lid on price increases and boosting growth.

This has not been true to the same extent of the UK, which has been affected by greater reluctance to return to the labour force as well as post-Brexit labour shortages. The BoE is set to revise its own forecasts on Thursday, and is likely to produce estimates close to the IMF’s. That would be an improvement from the bleak outlook the central bank delivered in early November at a time wholesale gas prices were far higher than today. In November, the BoE forecast that gross domestic product would fall 1.9 per cent between the fourth quarter of 2022 and the equivalent period of this year. More

The unions’ protest movement is a test of Macron’s ability to push through change in his second term. WHAT’S IN THE PLAN?* Retirement age pushed back by two years to 64. The change will be gradual, increased by three months per year from September, until 2030.* From 2027, workers will have to make social security contributions over 43 years rather than 42 years in order to draw a full pension. The additional year was already foreseen in a 2014 reform but Macron is accelerating the pace of transition.* Guaranteed minimum pension income of not less than 85% of the net minimum wage, or roughly 1,200 euros per month at current levels, for new retirees. After year one of retirement, the pensions of those receiving a minimum income will be indexed to inflation. The government expects to recalibrate upwards the incomes of those already receiving the lowest pensions.* Public workers in jobs deemed physically or mentally arduous will maintain the right to early retirement, though their retirement age will be increased by the same number of years as the wider labour force. Police officers, sewer cleaners, prison guards and air traffic controllers are among those currently able to retire at 52.* The end to a grouping of a dozen so-called ‘special regimes’ with different retirement ages and benefits that currently cover, among others, rail workers, electricity and gas workers and central bank staff.This change will only apply to new entrants to the labour market. Existing workers in these sectors keep hold of their perks. However, the ‘special regimes’ covering seafarers and Paris Opera (NASDAQ:OPRA) House performers survive.* A ‘Seniors Index’ modelled on France’s gender equality index and which would measure the progress made by companies vis-a-vis the training and recruitment of seniors. WHAT IMPACT?* Boost the employment rate among 60-64 year-olds. In France, the employment rate in this age category is just 33% compared with 61% in Germany and 69% in Sweden.* The pensions of the poorest 30% will increase by 2.5%-5%, according to the government.* Gross savings of 17.7 billion euros per year by 2030.* Balanced pension budget by 2030. Existing forecasts without any reform show a pension budget deficit of 13.5 billion euros in 2030. More

TOKYO (Reuters) -Japanese factories cut output slightly in December, capping the worst quarter for manufacturers since the onset of the COVID-19 pandemic, hit by stalling global demand and rising costs.Although retail sales, a barometer of service-sector activity and consumer spending, rose more than expected, the faltering factory activity is ill-timed as companies face calls to hike wages to sustain Japan’s post-pandemic recovery.”Japan is nearing a recession if you look only at manufacturers, but solid non-manufacturers are underpinning the overall economy,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.Industrial output fell 0.1% in December from the previous month, government data showed on Tuesday. The drop was less than the median market forecast for a 1.2% decrease and followed upwardly-revised 0.2% growth in November.Outputs of items related to capital expenditure such as general machinery and metal products, which dropped 6.0% and 3.0%, respectively, dragged down the overall December index. Output of auto products was up 0.6%, posting first growth in two months.Compared with the previous quarter, factory output fell 3.1% in October-December, the first drop in two quarters. The fall was biggest since April-June 2020’s 16.8% decline, when the impact of the pandemic first fully hit the world’s third-largest economy.Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expect output to remain flat in January and increase 4.1% in February, the data also showed, although the official poll tends to report an optimistic outlook.Separate data showed on Tuesday Japanese retail sales rose 3.8% in December from a year earlier, beating a median market forecast for a 3.0% gain and its tenth straight month of expansion.Japan is set to downgrade its disease classification of COVID-19 to a lower level equivalent to the seasonal flu in May, Prime Minister Fumio Kishida said on Friday, raising hopes for further economic normalisation coupled with a tourism reopening.The jobless rate stayed unchanged at 2.5% in December, another official data showed. Jobs-to-applicants ratio, a gauge of job availability, was also flat from the previous month that posted the highest reading since March 2020.With a tightening labour market, 41-year-high consumer inflation and policymakers’ pleas, more than half of big Japanese companies are planning to raise wages this year, a Reuters survey showed this month.Yet the small companies that provide most of Japan’s jobs are struggling to increase pay, testing the Bank of Japan’s rosy picture of sustainable economic growth in tandem with wage hikes.”Rising raw material costs are increasingly tormenting small companies, who are willing to raise workers’ wages but must be realistic about their bottom line amid a cost squeeze,” said Shinkin’s Tsunoda.”Pay hikes won’t prevail outside of big firms, so the monetary policy should stay easy.”Japan’s economy, after a surprise contraction in July-September, is expected to have expanded by an 3.0% annualised growth in October-December thanks to solid consumption, according to the latest Reuters poll. More

UK households face an extra £788 on their annual shopping bills as grocery costs continued to mount in January, indicative data by market researcher Kantar has found.Grocery price inflation hit 16.7 per cent in the four weeks to January 22, the fastest pace since Kantar began tracking the figure in 2008. The January rate was 2.3 percentage points above December’s reading. Prices for milk, eggs and dog food grew at the fastest pace. “Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been shortlived,” said Fraser McKevitt, Kantar’s head of retail and consumer insight, with the rate “flying past the previous high we recorded in October”. Annualised food price inflation was 16.8 per cent in December, according to the most recent figures from the Office for National Statistics.Grocers competed for customers by boosting their own-label ranges, which rose 9.3 per cent in January, outpacing branded alternatives, which were up by 1 per cent.High food prices also prompted buyers to turn to discount chains, according to Kantar. Aldi, which demands 9.2 per cent of the market, was the fastest growing grocer for the fourth consecutive month, with sales 26.9 per cent higher from the previous year. Its rival Lidl generated 24.1 per cent more sales.Many committed to new year’s resolutions of avoiding alcohol, pushing no- and low-alcohol beer volumes up 3 per cent.UK inflation, at 10.5 per cent last month, has receded from a 41-year peak in October, leaving the Bank of England set to keeping its options open on whether interest rates will peak at 4.25 per cent or 4.5 per cent. The central bank is expected to raise rates by 0.5 percentage points to 4 per cent, a tenth consecutive increase, when it meets on Thursday. More

(Reuters) -The Biden administration has stopped approving licenses for U.S. companies to export most items to China’s Huawei, according to three people familiar with the matter.Huawei has faced U.S. export restrictions around items for 5G and other technologies for several years, but officials in the U.S. Department of Commerce have granted licenses for some American firms to sell certain goods and technologies to the company. Qualcomm (NASDAQ:QCOM) Inc in 2020 received permission to sell 4G smartphone chips to Huawei.A Commerce Department spokesperson said officials “continually assess our policies and regulations” but do not comment on talks with specific companies. Qualcomm declined to comment. Bloomberg and the Financial Times earlier reported the move.One person familiar with the matter said U.S. officials are creating a new formal policy of denial for shipping items to Huawei that would include items below the 5G level, including 4G items, Wifi 6 and 7, artificial intelligence, and high-performance computing and cloud items.Another person said the move was expected to reflect the Biden administration’s tightening of policy on Huawei over the past year. Licenses for 4G chips that could not be used for 5g, which might have been approved earlier, were being denied, the person said. Toward the end of the Trump administration and early in the Biden administration, officials had still granted licenses for items specific to 4G applications.American officials placed Huawei on a trade blacklist in 2019 restricting most U.S. suppliers from shipping goods and technology to the company unless they were granted licenses. Officials continued to tighten the controls to cut off Huawei’s ability to buy or design the semiconductor chips that power most of its products.But U.S. officials granted licenses that allowed Huawei to receive some products. For example, suppliers to Huawei got licenses worth $61 billion to sell to the telecoms equipment giant from April through November 2021.In December, Huawei said its overall revenue was about $91.53 billion, down only slightly from 2021 when U.S. sanctions caused its sales to fall by nearly a third. More