Economy

Some of her ideas build on unfinished business in President Joe Biden’s economic agenda but expand their scope and size.Here’s what we know so far:INDUSTRIAL INCENTIVESHarris on Wednesday pledged new tax credits to spur more domestic manufacturing and to invest in sectors that will “define the next century,” including biomanufacturing, aerospace, artificial intelligence, quantum computing and blockchain, advanced nuclear power, and batteries.She also said she would offer tax incentives for expanding “good union jobs” in long-standing iron, steel, coal and other traditional industrial communities. Details on the size and scope of the incentives and investments were not announced.Harris announced new investments in U.S. basic technology research, through the National Science Foundation, the Department of Energy’s National Laboratories and other institutions.She also announced plans to cut red tape to speed the construction of new infrastructure and industrial projects and to use the Defense Production Act and other tools to boost U.S. capacity to process critical minerals and reduce reliance on supplies from China.TAX ON THE WEALTHY  Harris has echoed Biden’s promise not to raise taxes on households that earn less than $400,000 a year.She has quietly endorsed most of the nearly $5 trillion in tax hikes over a decade in Biden’s fiscal 2025 budget proposal, which would boost the top income tax rate to 39.6% from 37%.These include a new 25% minimum tax on people with fortunes exceeding $100 million, including on unrealized capital gains. For those earning more than $1 million annually, Harris has proposed raising the long-term capital gains tax rate paid after selling assets like stocks to 28% from 20%, an increase far smaller than the 39.6% full top income tax rate proposed by Biden.TAX ON BUSINESSES Harris has proposed increasing the corporate tax rate to 28%, partially reversing former President and Republican rival Donald Trump’s 2017 tax law, which cut company tax rates to 21% from 35%. The step would raise $1 trillion for the federal government over a decade, budget experts estimate, but cut into company profits, Wall Street says. Big U.S. companies pay a far lower effective tax rate than their foreign competitors at an average of 16%, a Reuters analysis showed. Any broad corporate tax changes would need to be passed by Congress. CHILD TAX CREDIT Harris has kept Biden’s proposal to permanently restore a one-year, COVID-19-era increase in the Child Tax Credit to as much as $3,600 per child from $2,000 currently, which is scheduled to drop to $1,000 after 2025. She also has proposed a $6,000 bonus onetime credit for families with newborns.Trump’s vice presidential running mate, JD (NASDAQ:JD) Vance, has floated raising the annual Child Tax Credit to $5,000, but the idea has not been adopted as an official Trump policy proposal.AFFORDABLE HOUSINGHarris has detailed plans to spur new construction and reduce costs for renters and homebuyers, largely through tax incentives. They include tax credits for builders of homes for first-time buyers and affordable rental units, along with a $25,000 tax credit to help first-time buyers with down payments for the next four years. Harris is also proposing a $40 billion “innovation fund” to encourage local governments to build more affordable homes, doubling a Biden budget proposal that would make competitive grants to local governments that show they can get results.     U.S. home prices have risen 50% in the last five years and rents have risen 35%, according to real estate firm Zillow (NASDAQ:ZG), largely due to a housing shortage. Harris has set a goal to increase U.S. housing construction by 3 million units over the next four years.SMALL BUSINESS TAX CREDITHarris also has deviated from Biden’s economic plan by proposing to increase the tax deduction to up to $50,000 for new small business start-up costs from $5,000 currently to support entrepreneurs. The 33 million U.S. small businesses were responsible for 70% of net new jobs created since 2019, according to Small Business Administration data.CHILD CARE “My plan is that no family, no working family, should pay more than 7% of their household income in child care,” Harris told the National Association of Black Journalists in September. U.S. parents are currently paying as much as 19.3% of median family income per child for care, Department of Labor figures show. The 7% figure echoes the Child Care and Development Block Grant, a program Harris has touted that currently supports about 1 million children in low-income families. Harris’ campaign has not detailed how the child care plan would work.HIGH GROCERY PRICES Harris has vowed to enact the “first-ever federal ban on price gouging on food and groceries” that aims to stop big corporations from unfairly exploiting consumers while generating excessive profits. Defining such excessive price hikes is not clear, but some proposals in the U.S. Senate show a potential path to enactment. More

LONDON (Reuters) – British consumers have grown more gloomy over the past month following the new Labour government’s removal of a welfare benefit for pensioners and warning of tax rises at next month’s budget, a new survey from a trade body showed on Thursday.The British Retail Consortium said households’ assessment of the general economic situation over the next three months sank to -21 in September from -8 in August. This reading – which represents the difference between the percentage of respondents with positive and negative views – is the lowest since the survey’s initial reading of -23 in March.”Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations,” BRC Chief Executive Helen Dickinson said.September is the first time that the BRC has published the results of its survey, which was based on a sample of 2,000 adults conducted by market research company Opinium between Sept. 10 and Sept. 13.The results chime with those last week from the much longer-running GfK consumer survey, which fell to a six-month low this month due partly to concerns about the upcoming budget.Prime Minister Keir Starmer and finance minister Rachel Reeves were elected in July, vowing to rebuild the economy after inheriting what they said were the worst economic circumstances since World War Two.Reeves has said she will remove an annual 200-pound ($265) fuel subsidy from 10 million pensioners and warned taxes were likely to rise by more than she had said was planning to before Labour’s July election victory.The BRC survey showed that households’ assessment of the outlook for their personal finances sank to -6 from -1, its lowest since the start of the survey, although spending intentions edged up marginally to -8 from -9.Last week, S&P Global reported a softening in business activity, as some companies put plans on hold until there was more clarity on changes to taxation and employment law.However, a separate survey released on Wednesday by the Recruitment and Employment Confederation showed employers’ sentiment over the third quarter of 2024 was slightly less negative than in the three months to June. More

Islamabad had been working on implementing conditions that Sharif had previously called “strict” from the IMF to complete the 37-month loan programme agreed to in July, which the country hopes will be its last.The IMF said the new program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”An immediate disbursement of about $1 billion will take place. Sharif, on the sidelines of the United Nations General Assembly, told Pakistani media this week that Pakistan had fulfilled all of the lender’s conditions, with help from China and Saudi Arabia.”Without their support, this would not have been possible,” he said, without elaborating on what assistance Beijing and Riyadh had provided to get the deal over the line.Rollovers or disbursements of loans from Pakistan’s long-time allies, in addition to financing from the IMF, have helped the country meet its external financing needs in the past.The government had also vowed to increase its tax intake, in line with IMF requirements, despite protests in recent months by retailers and some opposition parties over the new tax scheme and high electricity rates. Pakistan has been struggling with boom-and-bust economic cycles for decades, leading to 22 IMF bailouts since 1958. Currently the country is the IMF’s fifth-largest debtor, owing the Fund $6.28 billion as of July 11, according to the lender’s data.The latest economic crisis has been the most prolonged and has seen Pakistan facing its highest-ever inflation, pushing the country to the brink of a sovereign default last summer before an IMF bailout. Inflation has since eased and credit ratings agency Moody’s (NYSE:MCO) has upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to ‘Caa2’ from ‘Caa3’, citing improving macroeconomic conditions and moderately better government liquidity and external positions. More

PITTSBURGH, Pa. (Reuters) -U.S. Vice President Kamala Harris said on Wednesday she would offer tax credits to domestic manufacturers and invest in sectors that will “define the next century”, as she detailed her economic plan to boost the U.S. middle class.Speaking at the Economic Club of Pittsburgh in the battleground state of Pennsylvania, the Democratic candidate in the Nov. 5 presidential election said she would give tax credits to U.S. manufacturers for retooling or rebuilding existing factories and expanding “good union jobs,” and double the number of registered apprenticeships during her first term. Harris also promised new investments in industries like bio-manufacturing, aerospace, artificial intelligence and clean energy.Harris’ speech, which lasted just under 40 minutes, did not detail how these policies would work. She highlighted her upbringing by a single mother, in contrast with Trump, the wealthy son of a New York real estate developer. “I have pledged that building a strong middle class will be the defining goal of my presidency,” Harris said, adding that she sees the election as a moment of choice between two “fundamentally different” visions of the U.S. economy held by her and her Republican opponent Donald Trump.The vice president and Trump are focusing their campaign messaging on the economy, which Reuters/Ipsos polling shows is voters’ top concern, as the election approaches.The divide between rich and poor has grown in recent decades. The share of American households in the middle class, defined as those with two-thirds to double that of median household income, has dropped from around 62% in 1970 to 51% in 2023, Pew Research shows. These households’ income has also not grown as fast as those in the top tier. Trump, Harris said, is “only interested in making life better for himself and people like himself, the wealthiest of Americans.” She said she was committed to working with the private sector and entrepreneurs to help grow the middle class. She told the audience that she is “a capitalist” who believes in “free and fair markets,” and described her policies as pragmatic rather than rooted in ideology. Harris in recent months has blunted Trump’s advantage on the economy, with a Reuters/Ipsos poll published on Tuesday showing the Republican candidate with a marginal advantage of 2 percentage points on “the economy, unemployment and jobs,” down from an 11-point lead in late July.Trump discussed his economic plan in North Carolina on Wednesday and said Harris’ role as vice president gave her the chance now to improve the economic record of the Biden administration.”Families are suffering now. So if she has a plan, she should stop grandstanding and do it,” he said.While Trump has proposed across-the-board tariffs on foreign-made goods – a proposal backed by a slim majority of voters – Harris is focusing on providing incentives for businesses to keep their operations in the U.S.Boosting American manufacturing in industries such as semiconductors and bringing back jobs that have moved overseas in recent decades have also been major goals for Biden. The Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act – all passed in 2021 and 2022 – fund a range of subsidies and tax incentives that encourage companies to place projects in disadvantaged regions. More

Speaking on the sidelines of the U.N. General Assembly, Lula said his country was surprising investors and credit rating agencies with stronger than expected growth, and offering new stability now that tax reform has advanced in Congress.”If the EU is ready we can sign the trade agreement during the G20 meeting in Brazil,” he told reporters, referring to the Group of 20 rich nations summit in Rio de Janeiro in November.”I have never been so optimistic about the EU-Mercosur accord,” the Brazilian leader added.A European diplomatic source said there had been progress towards resolving differences at a face-to-face meeting of negotiators in Brasilia on Sept 5-6.The diplomat said the plan was to close negotiations as soon as the opportunity allowed, but added that there was “still a gap.”Brazilian diplomats have said advances have been made in overcoming differences on environmental safeguards and government procurement that had stalled negotiations.Mercosur is comprised of Brazil, Argentina, Uruguay, Paraguay and more recently Bolivia. The bloc is a sought-after destination for EU manufacturing exporters, though European farmers, especially in France, fear the competition it will bring. More

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Data released earlier this week showed that eurozone business activity contracted sharply and unexpectedly this month, with the downturn appearing to be  broad-based as Germany, Europe’s largest economy, saw its decline deepen while France – the bloc’s second biggest – returned to contraction.HCOB’s preliminary composite eurozone Purchasing Managers’ Index (PMI), compiled by S&P Global, sank to 48.9 this month from August’s 51.0, below the 50 mark that separates growth from contraction for the first time since February.“The risks of a sharper slowing in activity have clearly grown,” said analysts at HSBC, in a note dated Sept. 25. “In turn, a risk-based approach to setting monetary policy might favour earlier and (at least initially) faster easing. With the deposit rate currently at 3.50%, it can probably be cut multiple times while keeping policy restrictive.”Additionally, disinflationary news from commodities and the euro, the favorable trajectory of wages and inflation expectations, and the fact that the eurozone’s largest economies are stuttering strengthens the case for more near-term easing, the bank added.In its September forecast, the ECB projected headline inflation below target in 2026. A further weakening in the demand outlook could raise the risk of a more material inflation undershoot of target, HSBC said. “So even if the supply side of the economy remains weak and the labor market only cools gradually, more policymakers may be persuaded that some ‘insurance’ rate cuts might be necessary.”HSBC now expects the ECB to cut rates by 25 bps at every meeting from October until April 2025, when the key deposit rate reaches 2.25% “Previously we had expected cuts every other meeting until the key deposit rate hit 2.50% in September 2025.” More