Aurelia Butler

LONDON (Reuters) – Britain’s new finance minister Rachel Reeves will announce what may be the biggest tax hikes in three decades on Wednesday in a bid to fix the country’s sagging public services, alongside billions of pounds of extra borrowing to overhaul the economy.The Labour government is betting that its first budget after 14 years of Conservative rule can fund its election pledges without triggering the kind of bond market chaos that brought down former prime minister Liz Truss in 2022.Labour promised voters it would cut long waiting lists in the state-run health service, build more housing and improve schools.”It falls to this Labour Party, this Labour government, to rebuild Britain once again,” Reeves said in an excerpt of her budget speech shared with media on Tuesday.Four months on from the election, Prime Minister Keir Starmer has said “those with the broadest shoulders” will have to pay more tax under the budget plan that Reeves will announce to parliament at around 1230 GMT.Britain’s previous Conservative government left an undisclosed 22 billion pound hole in the public finances, Reeves has argued – a claim rejected by her predecessor Jeremy Hunt.Companies face higher social security costs which, combined with planned new protections for workers and an increased minimum wage, could undermine Labour’s promises to turn Britain into the fastest-growing Group of Seven economy.Polling firm Savanta said its measure of business optimism – like recent consumer confidence surveys – hit its lowest in October since Labour won power in July.”Keir Starmer and Rachel Reeves will likely be concerned how quickly years of goodwill among businesses appears to have dissipated,” said Matt McGinn, a consultant at Savanta.The richest Britons are also likely to face higher tax bills on capital gains, dividends, inheritances and wealth held abroad, pushing up further the country’s tax burden which is already the highest since shortly after World War Two.Government sources have said Reeves plans around 40 billion pounds’ ($52 billion) worth of fiscal measures, mostly from tax increases, to meet her pledge to cover day-to-day spending.According to the Institute for Fiscal Studies, a think-tank, tax hikes of 40 billion pounds would be equivalent to 1.25% of economic output, surpassed in recent history only in 1993 by Conservative budget plans which raised taxes to shore up the public finances after a recession and currency crisis.BILLIONS IN BORROWING As well as raising taxes to cover day-to-day spending, Reeves will try to reassure investors that an expected 20 billion-pound increase in borrowing for public investment will be positive for the world’s sixth-biggest economy.”The only way to drive economic growth is to invest, invest, invest,” Reeves said in the speech excerpts. “There are no shortcuts. To deliver that investment we must restore economic stability.”Reeves has said she plans to relax the government’s self-imposed fiscal rules to allow the kind of infrastructure investment needed to speed up growth.A reported change in the rules could free up an extra 53 billion pounds ($69 billion) to borrow, prompting mild jitters in the debt market this month.Bond dealers polled by Reuters expect government borrowing this financial year to rise to 105 billion pounds from a March estimate by the Office for Budget Responsibility of 87 billion pounds, requiring bond issuance to increase to 294 billion pounds, its second highest on record.But bond strategists and fund managers say they are confident that Reeves – a former Bank of England economist – will not blow a Truss-style hole in the public finances. Unlike in 2022, when Truss shocked already nervous financial markets with her tax cut plans, interest rates are coming down in the world’s rich economies, offering a bit more leeway for Reeves.”While the new debt target may allow for more spending in the future, possibly in a second term, the government is likely to proceed cautiously, loosening policy only after establishing credibility or if market conditions change,” said Peder Beck-Friis, an economist with global bond investors PIMCO.($1 = 0.7691 pounds) More

(Reuters) – A look at the day ahead in Asian markets. Markets in Asia appear to lack clear direction at the open on Wednesday, with investors still digesting the news of a potential 10 trillion yuan fiscal boost from China, while weighing the impact of a firm U.S. dollar and buoyant Treasury yields.Political paralysis in Japan following Sunday’s inconclusive general election still hangs over markets there, although stocks could benefit from the weak yen and view that political gridlock clips the wings of the Bank of Japan’s more hawkish officials. The main events in the Asia and Pacific region’s economic calendar on Wednesday include Australian inflation and a monetary policy forum held by the Bank of Thailand, while the BOJ begins its two-day policy meeting.The flow of Asian company earnings picks up pace, with Mitsubishi and Hitachi (OTC:HTHIY) in Japan, and China’s BYD (SZ:002594), Standard Chartered (OTC:SCBFF) and ICBC among the big names reporting on Wednesday.If there is a catalyst for early Asian trading on Wednesday it could come from U.S. corporate news on Tuesday, namely Alphabet (NASDAQ:GOOGL)’s third-quarter results after the closing bell, which sent its shares up as much as 5% in after-hours trade. The Nasdaq hit a record high on Tuesday, and megacaps Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) report later this week too. Investors in Asia will still be weighing up the exclusive Reuters report on Tuesday that China is considering approving the issuance of over 10 trillion yuan ($1.4 trillion) in extra debt in the coming years to revive its fragile economy, a fiscal package that would be further bolstered if Donald Trump wins the U.S. election.The news failed to prevent Chinese stocks from falling 1% on Tuesday, however, as weakness in the energy and property sectors dragged the market lower. Perhaps the yuan’s latest slip to a two-month low could put a temporary floor under stocks. Many analysts believe China needs a weaker exchange rate to boost exports and growth, and steer the economy away from the clutches of deflation. But policymakers must balance that against the possibility that the weaker currency triggers waves of capital flight out of China.However, any positive sentiment may be tempered by another rise in U.S. bond yields and the dollar. The 10-year Treasury yield rose above 4.30% for the first time since July, while the dollar climbed to a three-month high on an index basis.The dollar is on course for its biggest monthly rise in two and a half years, and second biggest in over a decade. Many investors will be feeling the pain – a month ago hedge funds’ short dollar position was worth $14.5 billion, according to U.S. futures market data, and that has now been flipped to a net long position worth almost $10 billion.Here are key developments that could provide more direction to markets on Wednesday:- Australia inflation (September, Q3)- Bank of Thailand monetary policy forum- Japan, China corporate earnings More

(Reuters) – British finance minister Rachel Reeves will hand the UK government’s armed forces a funding boost of almost 3 billion pounds ($3.90 billion) in the Oct. 30 budget, the Telegraph reported on Tuesday.($1 = 0.7686 pounds) More

BRUSSELS (Reuters) -French jet engine maker Safran (EPA:SAF) set out plans on Tuesday to invest more than 1 billion euros ($1.1 billion) and hire 4,000 people worldwide to “radically scale up” its maintenance network as the aviation industry tackles congested repair shops.The plan follows strong demand for LEAP jet engines that Safran co-produces for Airbus and Boeing (NYSE:BA) with GE Aerospace and is expected to boost Safran’s share of the aftermarket, where engine makers make much of their income.Safran and GE Aerospace produce the engines through co-owned venture CFM International, the world’s largest engine maker by number of units sold, which is celebrating its 50th anniversary.Engine maintenance has become a major industry headache as efforts to boost fuel efficiency increased the wear and tear on engines in certain climates and engine makers struggled to bring on new capacity fast enough to keep pace with a boom in demand.Analysts say that has meant longer waiting times at repair shops, exacerbating aircraft shortages and putting pressure on engine makers to accelerate their capacity expansion plans.Jean-Paul Alary, president of Safran Aircraft Engines, said Safran aimed to quadruple its in-house capacity to 1,200 shop visits per year by 2028. “It’s a sprint,” he told reporters.Safran unveiled its strategy at a recently inaugurated engine service centre outside Brussels, the first of six new or expanded sites due to add capacity by 2026.As part of the expansion, French President Emmanuel Macron signed an agreement expanding Safran’s presence in Casablanca during a visit to Morocco late on Monday, one of a number of business deals boosting ties following diplomatic tensions.CFM’s LEAP engines exclusively power the Boeing 737 series and are available as a choice on the Airbus A320neo in competition with Pratt & Whitney’s Geared Turbofan.’QUICK TURN’ Jet engines are typically sold for little or no profit at the outset, or even at a loss, with manufacturers making most of their profit in services spread over the life of the engine. The LEAP engine, introduced in 2016, has only just started to generate major overhauls that take place every 6-8 years. But Safran’s Brussels plant is busy handling “quick turn” visits to address the harsh climate issues, ahead of the upgrade of a key engine component designed to improve durability.CFM competes for maintenance contracts with airlines and a network of 14 independent repair shops including five key players.It aims over time to supply about half the market for LEAP repair services, expected to reach a total of 5,000 engine visits a year by 2040, Safran said. Services made up 65% of Safran’s core propulsion revenues in the third quarter.The latest maintenance expansion in repair shops comes as CFM and other engine makers are struggling to keep up with demand for new engines amid kinks in the global supply chain.Airbus earlier this month singled out CFM as a “bottleneck” delaying jet deliveries, but Safran insists its services growth will not distract attention from ramp-up plans for new engines.”There is no (services) investment that would jump ahead of the investments we make for new engine production,” Alary said, adding Safran would continue to invest heavily in its factories.While Airbus is clamouring for engines, Boeing is having to balance its intake with the crippling effects of a strike.Alary said Boeing continued to take LEAP engines for its 737 assembly line to help keep a cornerstone of its supply chain in fit condition, but was doing so at a “relatively reduced rate”.($1 = 0.9242 euros) More

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