Economy

Retailers in the United Kingdom (TADAWUL:4280) are facing a challenging outlook as sentiment about their business situation over the next three months has sharply declined, according to the latest findings from the Confederation of British Industry (CBI). The CBI’s quarterly Distributive Trades Survey, released this November, indicates that retailer sentiment fell at the fastest rate in two years.In the year to November, retail sales volumes saw a moderate decline, with a weighted balance of -18%, a dip from -6% in October. Retailers have reported sales as “poor” for the time of year, a sentiment consistent with the previous month. There is an expectation that annual sales growth will further deteriorate in December, with sales volumes set to remain below seasonal norms, though the anticipated shortfall is less severe than in November.Retailers are also bracing for a decline in capital expenditure over the next twelve months compared to the past year, reflecting weakened consumer demand and falling confidence. Employment in the sector has fallen over the past year to November at the slowest rate since November 2023, and retailers predict that headcount will remain broadly the same in December.Notably, selling price inflation has eased in the year to November, with a balance of +24% compared to +30% in August, staying below the long-run average for the third consecutive quarter. However, an acceleration is expected in December, with retailers predicting a balance of +33%.The wider distribution sector, which includes retail, wholesale, and motor trades, also experienced a contraction in sales volumes at a moderate pace in the year to November, with firms anticipating sales to fall at the same rate in December.Ben Jones, Lead Economist at the CBI, highlighted the severity of the situation, stating that the level of gloom among retailers has not been seen since the peak of the inflation shock in November 2022. Jones emphasized the impact of upcoming fiscal changes, such as the rise in Employers’ National Insurance and increased business rates for higher-value properties, which are expected to hit retailers hard by adding significant operational costs. He urged the government to urgently collaborate with the business community to mitigate the cumulative cost burden that threatens to impair investment and hiring, while also leading to higher prices for consumers.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

LONDON (Reuters) -A global resurgence in industrial policies that aim to boost or protect domestic interests threatens international cooperation and could hurt poorer countries in particular, the European Bank for Reconstruction and Development said in an annual report.The annual transitions report, which this year examined data impacting trade for 140 countries, found a “remarkable global resurgence” in strategic interventions designed to shape countries’ economies. “Industrial policy is back with a vengeance,” Beata Javorcik, EBRD Chief Economist said in an interview. “It is back in rich countries as well as in emerging markets.”Such policies often include state-backed grants or loans or subsidies for local industry; 90% of those in advanced economies and EBRD regions discriminate against foreign interests in favour of domestic ones. The report found that such policies have increased rapidly since 2019 due to factors including boosting the green transition, following the lead of major economies such as China or the United States, and because citizens increasingly back a greater state role in the economy. The report found that while such policies can be effective, when they are not carefully managed they risk undermining the level playing field. “This means that industrial policy can become a force that will push the world towards fragmentation,” Javorcik said. The report, from the EBRD’s office of the chief economist, was the first compiled by it with the use of artificial intelligence, which researchers used to crunch data from the Global Trade Alert database. Javorcik said the economic upheaval in recent years – due to globalisation, automation, the green transition and now AI – had amplified support for greater state involvement – particularly among those born before 1975. The increasing use of such policies in lower-income countries that have limited administrative capabilities is particularly concerning, Javorcik said, as they tend to opt for the “most distortive”, such as import or export bans or export licensing, which bring risk of corruption. More

The ECB has cut interest rates three times already this year and investors expect further cuts at every policy meeting until at least next June as the bloc is once again skirting recession. Portuguese central bank chief Mario Centeno said the economy was stagnating and “risks are accumulating downwards” with tariffs threatened by incoming U.S. President Donald Trump a further downside risk.Centeno warned the ECB not to leave rate cuts too late because the risk of inflation undershooting the target was rising. ECB Vice President Luis de Guindos, meanwhile, said that growth was becoming the bank’s top concern and tariffs risked setting off a vicious cycle of trade wars.”Concerns about high inflation have shifted to economic growth,” he told Finnish newspaper Helsingin Sanomat. “When you impose tariffs, you need to be prepared for the other side to retaliate, which can start a vicious circle,” de Guindos said. “Eventually, this could turn into a trade war, which would be extremely detrimental to the world economy.”This could weaken growth, push up inflation and impact financial stability in a “lose-lose” situation for everyone, de Guindos said. Trump, who has said Europe will pay a big price for having run a trade surplus with the U.S. for years, this week pledged to impose large tariffs on his country’s top three trading partners, Canada, Mexico and China, as soon as he took office. Even if European growth suffered from higher U.S. tariffs, the inflation impact may not be so large, France’s central bank chief told a retail investor conference in Paris.”The inflation effect could be relatively limited in Europe, however long-term interest rates set by the market have a certain tendency to cross the Atlantic,” Francois Villeroy de Galhau said. “I don’t think it changes much for European short-term rates, but long-term rates could see a transition effect.”Finnish central bank Governor Olli Rehn, added his own warning about growth, predicting subdued activity and only a tepid recovery, which could prompt the ECB to lower its key rate to the so-called neutral level – which no longer restricts economic growth – by early spring. While the neutral rate is not an exact number, most economists see it somewhere between 2.0% and 2.5%, well below the ECB’s current 3.25% level.ECB rates are unlikely to stop at the neutral rate, however, with money markets betting the deposit rate will fall to 1.75% next year, a level that would stimulate growth. “If the U.S. imposes tariffs on other countries’ products, whether they be 10% or 20%, and everyone responds, all countries lose,” Rehn said. “In this situation the U.S. would lose the most because other countries could direct their exports elsewhere while U.S. companies would face the same tariffs everywhere.” More

NEW DELHI (Reuters) – Betting big on the clean energy goals of Indian Prime Minister Narendra Modi, billionaire Gautam Adani found backers in France’s TotalEnergies (EPA:TTEF) and the Qatar Investment Authority as he set out to build the world’s biggest renewable energy project.The crown jewel of his company, Adani Green, is an energy park in western Gujarat state planned to be five times the size of Paris on completion, and producing 50 gigawatts by 2030, or roughly a tenth of India’s clean energy goals.Now the plan faces a hurdle in the form of a U.S. indictment of Adani, his nephew and executive director Sagar Adani and managing director Vneet S. Jaain, accusing them of paying bribes of $265 million to secure Indian power supply contracts, and misleading U.S. investors during fund raises there.Since the news, stock of Adani Green has nosedived 36%, losing $9.6 billion in market value. Adani Group has denied the accusations in the U.S. indictment as baseless, and vowed to seek all legal recourse.But fund-raising could get complicated. “To the extent of raising additional capital for newer projects, any sort of regulatory issues become problematic,” said Deepika Mundra, a senior analyst at M&G Investments based in Britain.”Particularly if you want to tap international markets.”Adani Green is one of many public and private companies key to helping India achieve its goals, she added. “It is quite important that all these (Adani Green) projects go through.” The Adani Green boom is reflected in a surge of 10,000% in its shares between 2018 and 2022 as power demand in India swells, spurring it to develop the energy park in Khavda in Gujarat.”For us, this renewable energy park is a symbol of our commitment to sustainability and a symbol of national pride,” Adani wrote in his annual report in June.When complete, its output would be “enough to power nations like Belgium, Chile, and Switzerland”, he added. Adani has committed investment of $100 billion in the renewables sector, seen as core to the ports-to-airports conglomerate that is worth more than $135 billion. Now the tide is turning for Adani Green, described by U.S. prosecutors as being at the heart of “The Corrupt Solar Project”. After the U.S. indictment, TotalEnergies, which holds a stake of nearly 19.8% in Adani Green, was among the first to react, saying it would not invest more in the group for now.It had not been made aware of the bribery case, even though Sagar Adani was served a grand jury subpeona last year by the U.S. Federal Bureau of Investigation, it added.The Qatar Investment Authority, with a stake of 2.7%, declined comment.But standing firm for now is GQG Investors, which holds a stake of 4.2%. In an internal client note seen by Reuters, it said, “We believe the fundamentals of the companies we are invested in remain sound.” Adani Green added power capacity of 37% each year to reach 11.2 GW by September this year, from a mere 2 GW in the 2018-19 financial year.Its next big target is 50 GW goal by 2030, or a capacity addition of 31% each year, it told investors in a presentation in November.’RENEWABLE ENERGY MARVEL’ Adani Green’s revenues of $574 million during the period from April to September this year were up 20% on the year, boosting its cash profit 27% to $313 million over that time.With large solar, wind and hybrid power developments in Gujarat and the desert state of Rajasthan, it is developing smaller pumped-storage hydro power projects in five Indian states.The facilities in Rajasthan and Gujarat were to have supplied the power contracted for in the Adani deals that U.S. prosecutors allege to have been granted after payment of bribes. One of them is the partly developed marquee project in Khavda, just 18 miles (30 km) from the international border with Pakistan. It is described by Adani as “a renewable energy marvel in the making”.Adani is targeting a massive jump in operational capacity at the location to 30 GW by 2029, up from 2.25 GW now. Energy from the park can power 16.1 million homes each year, Adani says.Reuters was among media which toured the project site in April, when thousands of labourers worked on construction and scores of solar panels were being installed. Engineers that day talked up the potential of the project, which would sprawl across 540 sq km (210 sq miles) when complete, saying it would be visible from space.”The kind of support being provided by the central government, and I must say, the state governments also, is extraordinary,” Managing Director Vneet S. Jaain said at the time.Jaain, one of three Adani executives, besides Gautam and Sagar Adani, indicted for offering bribes to Indian state officials to secure deals, has not responded to a request for comment from Reuters. More

(Reuters) – Several British police forces have largely withdrawn from Elon Musk’s X social media platform as concerns over its role in promoting violence and extreme content persist, a Reuters survey of forces’ social media output showed.X, formerly Twitter, was used to spread misinformation that sparked riots across Britain this summer, and has reinstated British-based accounts that had been banned for extremist content.Musk’s comment in August that civil war in Britain was “inevitable” drew rebukes from Downing Street and police leaders. Critics argue that Musk’s approach fosters hate speech, though Musk has said he is defending free speech and has described Britain as a “police state”.Reuters reported in October that North Wales Police had ceased posting on X. Others are moving in that direction, according to Tuesday’s survey.Reuters visually monitored posts on X from 44 territorial police and British Transport Police over the three months to Nov. 13 and focused on ones that had noticeably fewer posts, comparing their output to a year previously. Reuters then contacted those eight forces. West Midlands Police, one of Britain’s biggest police forces which serves the second city of Birmingham, reduced its X posts by around 95% in annual terms in that period. Lancashire Police in the north of England, cut its usage of X by around three-quarters compared with a year ago.”We understand that, as the digital landscape changes, so too does our audiences’ channels of choice,” the force said.And Derbyshire Police, which serves around a million people in central England, made its last original post on Aug. 12 and has responded only to queries since. It said it was reviewing its social media presence.X-COMMUNICATION Other forces said X remained useful for updates on things like road closures, but platforms like Facebook (NASDAQ:META) and Instagram were better for reaching communities. X did not respond to a request for comment.X has been a primary communication tool for the British government, public services, institutions and millions of people for over a decade. It had just over 10 million British app users in October, compared with 4.5 million for Threads and 433,000 for Blue Sky, according to data from digital intelligence platform Similarweb (NYSE:SMWB).But usage is dropping, with X’s British app users down 19% on a year ago, Similarweb data showed.The government still posts to X but does not use it for paid communications. It does, however, advertise on Meta’s Instagram and Facebook, a government source said last month.Several well-known organisations, including the Guardian and non-profit Center for Countering Digital Hate, have quit X due to concerns over its content.Cary Cooper, professor of organisational psychology and health at Alliance Manchester Business School, said many institutions were wary of Musk’s power over the platform, as well as his “very substantial views”. Asked why more police forces had not quit, Cooper told Reuters: “Institutions, just like individuals, get addicted. They invested in it over a period of time.” North Wales Police is the only force to officially quit X completely. “As X was no longer an effective communication medium, this change hasn’t affected our abilities to reach our communities,” it said. More

WASHINGTON (Reuters) – Federal Reserve officials say they are likely to keep reducing interest rates for now, and investors still expect them to do so at the U.S. central bank’s Dec. 17-18 meeting.But how far they will go beyond that remains a wide-open question, with the minutes of the Fed’s meeting earlier this month expected to show the start of a debate that will shape the financial landscape faced by the incoming Trump administration.The minutes of that session are due to be released at 2 p.m. EST (1900 GMT) on Tuesday and will provide a detailed account of the Nov. 6-7 session where officials grappled with data showing stronger-than-expected economic growth and higher-than-expected inflation. While job growth slipped in October, the sense among policymakers was that the U.S. economy was continuing to beat expectations.”It’s actually remarkable how well the U.S. economy has been performing, with strong growth, a strong labor market, inflation coming down,” Fed Chair Jerome Powell said in a Nov. 7 press conference after the central bank announced it was cutting its benchmark policy rate by a quarter of a percentage point to the 4.50%-4.75% range.”We’re on a path to a more neutral stance … We’re just going to have to see where the data lead us … I’m not ruling (December) out or in,” Powell said of the Fed’s plans to make monetary policy less restrictive and eventually be neither stimulating nor restraining economic activity.Public commentary since the meeting, which often reflects the positions staked out during the two days of deliberations, has shown a broad divide among Fed officials who feel monetary policy may already be close to the neutral level and, as a result, near a possible stopping point for rate cuts, and those expecting a likely more extended cutting cycle. Powell just a week after the meeting said the economy was “not sending any signals that we need to be in a hurry to lower rates,” and that the central bank could decide on further reductions in borrowing costs “carefully.”His comments contributed to what has been a steady slip in market expectations for a rate cut next month, with a quarter-percentage-point reduction given just a 53% probability as of Monday afternoon.TRUMP EFFECTWhile officials like Fed Governor Lisa Cook have focused on what she sees as a steady easing of inflation still to come alongside possible improvements in productivity, others say they still see inflation risk as paramount.”We have seen considerable progress in lowering inflation since early 2023, but progress seems to have stalled in recent months,” Fed Governor Michelle Bowman said last week at an event in Florida, adding that the central bank “may be closer to a neutral policy stance than we currently think.”If so, it may imply fewer Fed rate cuts overall, a possibility that has grown more distinct in the minds of many investors and economists since Republican former President Donald Trump won the Nov. 5 presidential election on a platform to cut taxes, restrict immigration, and raise import tariffs. The fallout from those policies, including possibly heightened inflation and wage pressures, could also lead to more caution about cutting rates too far and too fast. Investors now see the Fed’s benchmark rate falling only to around 3.9% next year, and no further, stopping a full percentage point higher than policymakers foresaw in their last set of projections in September. More

(Reuters) – President-elect Donald Trump on Monday pledged big tariffs on the United States’ three largest trading partners – Canada, Mexico and China – detailing how he will implement campaign promises that could trigger trade wars.Trump, who takes office on Jan. 20, said he would impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs, particularly fentanyl, and migrants crossing the border, in a move that would appear to violate a free-trade deal.Trump separately outlined “an additional 10% tariff, above any additional tariffs” on imports from China. It was not entirely clear what this would mean for China as he has previously pledged to end China’s most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60% – much higher than those imposed during his first term.The two posts on Truth Social represent some of Trump’s most specific comments on how he will implement his economic agenda since winning the Nov. 5 election on promises to “put America first”.”On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” Trump said.The U.S. accounted for more than 83% of exports from Mexico in 2023 and 75% of Canadian exports. The tariffs may also spell trouble for overseas companies like the many Asian auto and electronics manufacturers that use Mexico as a low-cost production gateway for the U.S. market. Trump’s threatened new tariffs would appear to violate the terms of the U.S.-Mexico-Canada Agreement (USMCA) on trade. The deal which Trump signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.Canada and the United States at one point imposed sanctions on each others’ products during the rancorous talks that eventually led to USMCA. Trump will have the opportunity to renegotiate the agreement in 2026, when a “sunset” provision will force either a withdrawal or talks on changes to the pact. After issuing his tariff threat, Trump held a conversation with Canada’s Prime Minister Justin Trudeau in which they discussed trade and border security, a Canadian source familiar with the situation said. “It was a good discussion and they will stay in touch,” the source said. Trump could be counting on the threat of tariffs to prompt an early renegotiation of USMCA, said William Reinsch, a former president of the National Foreign Trade Council.”This strikes me more as a threat than anything else,” Reinsch said. “I guess the idea is if you keep hitting them in the face, eventually they’ll surrender.”Mexico’s lower house leader Ricardo Monreal, a member of the ruling Morena party, urged “the use of bilateral, institutional mechanisms to combat human, drug and arms trafficking.””Escalating trade retaliation would only hurt the people’s pocketbooks and is far from solving underlying problems,” he said in a post on social media platform X.Trump’s announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 1.6% against the Mexican peso, while share markets in Asia fell, as did European bourses in early trade. S&P 500 futures were little changed.[FRX/][MKTS/GLOB] CHINA: NO ONE WINS TRADE WARSOn China, Trump accused Beijing of not taking strong enough action to stop the flow of illicit drugs into the U.S. from Mexico. “Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said.A Chinese embassy spokesperson in Washington said China believed that China-U.S. economic and trade cooperation was mutually beneficial. “No one will win a trade war or a tariff war,” Liu Pengyu said. The embassy also cited steps it said China had taken since a 2023 U.S.-China meeting after which Beijing agreed it would stem the export of items related to the production of the opioid fentanyl, a leading cause of drug overdoses in the United States.”All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality,” the spokesperson said.Chinese foreign ministry said in a statement that China was willing to continue anti-drug cooperation with the U.S. on the basis of “equality, mutual benefit and mutual respect.””The U.S. side should cherish China’s goodwill and safeguard the hard-won sound situation of Sino-US drug control cooperation,” the ministry said.Chinese Vice President Han Zheng, speaking at a supply chain expo in Beijing on Tuesday, said China was ready to work with other countries to build an open world economic system and maintain the stability of global industrial and supply chains. China’s economy is in a vulnerable position amid a prolonged property downturn, debt risks and weak domestic demand.In the run-up to the Nov. 5 election, Trump floated plans for blanket tariffs of 10% to 20% on virtually all imports. He also said he would put tariffs as high as 200% on cars coming across the U.S.-Mexico border. Mexico’s finance ministry said of Trump’s tariff pledge: “Mexico is the United States’ top trade partner, and the USMCA provides a framework of certainty for national and international investors.”Economists say Trump’s overall tariff plans, likely his most consequential economic policy, would push U.S. import duties back up to 1930s levels, stoke inflation, collapse U.S.-China trade, draw retaliation and drastically reorder supply chains. More

Villeroy, who is head of the French central bank, said that President-elect Donald Trump’s plans to hike tariffs and cut taxes increased risks for the world economy, adding to U.S. inflation and weighing on growth abroad.”The inflation effect could be relatively limited in Europe, however long-term interest rates set by the market have a certain tendency to cross the Atlantic,” Villeroy told a retail investor conference in Paris.”I don’t think it changes much for European short-term rates, but long-term rates could see a transition effect,” he added. More