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    U.S. lawmakers say Hong Kong is becoming hub for financial crime, WSJ reports

    Hong Kong has turned into a hub for many violations of U.S. trade controls, including export of controlled western technology to Russia and the creation of front companies to buy Iranian oil, the bipartisan leaders of the House Select Committee on the Chinese Communist Party said in a letter to Yellen, reviewed by the Journal. The letter, which is scheduled to be publicly released on Monday, said that Hong Kong has shifted from being a trusted global financial center to a critical player in the deepening authoritarian axis of China, Iran, Russia and North Korea.”We must now question whether longstanding U.S. policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate,” it said, according to the Journal.The letter, signed by John Moolenaar, a Michigan Republican who chairs the committee, and Raja Krishnamoorthi, an Illinois Democrat who is the committee’s ranking member, cited research that shows nearly 40% of goods shipped from Hong Kong to Russia in 2023 were high-priority items such as semiconductors that Russia could use to prosecute its war in Ukraine, WSJ said.The U.S. Treasury department and the House Select Committee did not immediately respond to Reuters’ requests for comments. Hong Kong’s trade office in New York could not be immediately reached for comment. More

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    UK employers warn tax rise will hit investment and pay

    LONDON (Reuters) -British employers have been caught off guard by a 25 billion-pound ($31 billion) tax rise at last month’s budget and plan to cut training, investment and jobs in response, a leading employers group said on Monday.The Confederation of British Industry said a survey of its members showed 61% viewed Britain as a less attractive place to invest and nearly half intended to cut staff levels or lower pay rises after a big increase in employers’ social security payments.”The rise in National Insurance and the stark lowering of the threshold caught us all off guard,” CBI Chief Executive Rain Newton-Smith said as the organisation met for its annual conference.”Set alongside the expansion and rise of the National Living Wage … and the potential cost of the Employment Rights Bill changes … they put a heavy burden on business,” she said.Prime Minister Keir Starmer and his finance minister Rachel Reeves – who say speeding up economic growth is their top priority – argue the move will allow them to spend more on public services including the National Health Service.”I’m not surprised, quite frankly, that as we’re doing the tough stuff, there are plenty of people who say, ‘well, I’m impacted, I don’t like it’,” Starmer told ITV (LON:ITV) television.”But we’ve got to make the sort of big calls on the NHS and on schools that are really important for the here and now and for the future.”The CBI’s complaint comes amid broader signs of an economic slowdown in Britain both before and after the budget.Reeves has said she does not expect to have to raise taxes again by 40 billion pounds, part of the Labour Party’s first budget in 14 years.But Britain’s budget watchdog reckons Reeves has left little room to absorb any increase in government borrowing costs without either raising taxes or missing her goal to reduce debt.”Tax rises like this must never again be simply done to business,” Newton-Smith said.The big rises in national insurance and the minimum wage particularly hurts CBI members such as big retailers and hospitality chains who employ many low-paid part-time staff.Newton-Smith said greater economic stability under Labour was not enough on its own to boost growth, as reduced profits directly hit businesses’ ability and willingness to invest. “Profit’s not a bad thing.  It’s not a dirty word,” she said. Britain has low investment by international standards and many economists see this as a key cause of its weaker productivity compared to the United States, Germany and France.($1 = 0.7996 pounds) More

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    The climate cash that’s not going to come

    $75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    Making sense of the COP29 outcome

    $1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    UK cannot yet declare victory over inflation, warns BoE deputy governor

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    Thai banking system has large excess liquidity, central bank says

    Banks’ lending decisions will depend on debtors’ ability to repay debts, Sakkapop Panyanukul said in an article published on the Bank of Thailand’s website.The banking system has had a lot of excess liquidity over the past 10 years, as reflected by deposits and investments of commercial banks at the BOT in the past, he said. Those were as high as 4 trillion baht to 5 trillion baht ($115.64 billion to $144.55 billion), he added. Thailand’s government has cited high household debt as an impediment to its efforts to spur growth in an economy that has been slow to recover from the pandemic. It has been urging commercial banks to boost and widen credit access. The central bank’s responsible lending rules only state that banks must consider setting instalments that are appropriate for the debtors’ living expenses, Sakkapop said.Earlier on Monday, the Federation of Thai Industries said car production and sales have been hit by weak demand as financial institutions have tightened lending for vehicles.($1 = 34.59 baht) More

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    India’s central bank governor says economy ‘well placed’ to handle shocks

    $1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    Trump’s big tax-cut plans could be slowed by a wary bond market

    WASHINGTON (Reuters) – Donald Trump’s Republicans are promising to hit the gas next year when they assume full control of the U.S. Congress, with little to stop them from executing the president-elect’s promises to slash taxes and reorder the global trade landscape.But the $28 trillion Treasury debt market is flashing a red warning light against adding excessively to a debt load already expanding at a pace of $2 trillion a year.What is yet to be seen is whether these concerns will be enough to slow Republican lawmakers’ ambitions or push them to find offsetting savings on a tax break agenda estimated to cost nearly $8 trillion over 10 years.Markets are betting that Trump’s tax cuts and tariffs will fuel inflation as investors demand stronger returns on longer-term Treasuries. Yields on the benchmark 10-year U.S. Treasury note have risen to 4.4%, up about 75 basis points since “Trump trades” began dominating Wall Street in late September.That trend is driving higher interest rates for mortgages, car loans and credit card debt, counteracting Federal Reserve rate cuts and potentially putting U.S. growth at risk.It is also raising the cost of financing U.S. deficits and eating up the federal budget. Interest on the public debt topped $1 trillion for the first time during the fiscal year ended Sept. 30, making it the second-largest single expenditure after the Social Security retirement program. “In a weird way, the bond market is now on the verge of running this country,” said Republican Representative David Schweikert, who sits on the House of Representatives’ tax- and trade-focused Ways and Means Committee.The market signals mean there are no “blank checks” for Congress and the tax cuts will need to be paired with spending cuts, he said in an interview. “It is a hurdle in the financing of the U.S. government.”Managing that hurdle will fall to Trump’s pick to lead the Treasury Department, hedge fund manager Scott Bessent. Bessent has argued that Trump’s economic agenda will unleash stronger economic growth that will in turn drive up revenue and boost market confidence. His appointment could also reduce the chance of severe tariffs. The budget math is daunting. Trump has promised to extend the tax cuts passed in 2017, during his first term in the White House, for individuals and small businesses that are due to expire next year, which tax experts say will add $4 trillion to the current $36 trillion in total U.S. debt over 10 years.That’s on top of debt already forecast by the Congressional Budget Office to grow by $22 trillion over the same period, based on current laws. Trump also promised voters generous new tax breaks, including ending taxes on Social Security, overtime and tip income and restoring deductions for car loan interest.The tab is likely to reach $7.75 trillion above the CBO baseline over 10 years, according to the Committee for a Responsible Federal Budget, a non-partisan fiscal watchdog group.GROWTH REVENUEConcern over the bond market’s influence on Trump’s agenda is more the exception than the rule among congressional Republicans interviewed some two weeks after he won the Nov. 5 presidential election and his party took control of Congress.Some fell back on the party’s long-held view that tax cuts can pay for themselves with stronger growth – a line that was used to sell Trump’s original 2017 tax cuts. Budget forecasters including the Joint Committee on Taxation have estimated that those cuts added more than $1 trillion to deficits over 10 years.An analysis of economic feedback on extending the tax cuts by the Committee for a Responsible Federal Budget found that increased growth would only offset 1% to 14% of the revenues lost directly by the cuts, leaving the bulk to be financed through borrowing. Still, Republican Senator Mike Rounds said he believed the stability and growth that will come from extending Trump’s 2017 tax cuts will allay some market concerns.”What we have to do is show them that we’re going to build an economy so that the ratio between the size of the economy and the debt changes positively in our favor,” Rounds said.MUSK’S CUTSRepublican House Budget Committee Chairman Jodey Arrington said accelerating economic growth to more than 3% annually – it’s already on that pace for the third quarter – would increase revenues by $3 trillion over a decade, but that additional spending cuts would be needed.Rising bond market yields were “a motivating factor to rein in deficit spending,” he said.Arrington and fellow Republican Representative Joe Wilson said they were hopeful the non-government panel led by billionaire Tesla (NASDAQ:TSLA) and SpaceX CEO Elon Musk and former presidential candidate Vivek Ramaswamy would be able to find ways to cut the budget, including on “mandatory spending” programs other than Social Security and the Medicare health insurance program for the elderly, which Trump has vowed to preserve.”With Elon Musk I think we have a real opportunity to actually identify waste and cut things that can be cut,” Wilson said.A key target is rescinding Democratic President Joe Biden’s clean energy subsidies, estimated by the CBO to cost nearly $800 billion over 10 years, and some $60 billion in funds to modernize the Internal Revenue Service, although that would expand deficits in the long run by curbing audits.AGENDA UNCLEARRepublicans in the new year will likely rely on budget procedures that bypass Senate rules requiring 60 of the 100 members in the chamber to agree on most legislation to pass Trump’s tax agenda with a simple majority.Republican Senator Mike Crapo, the incoming chairman of the Senate Finance Committee, said it was too early to determine which tax policies would be included in initial legislation, adding that there was market “misinterpretation of what Trump is doing or going to do.”   “A lot of people are saying, well, which tax policies are you going to do?” Crapo said. “And the answer to that is, the ones that we figure out are the right ones.”      BOND VIGILANTESFormer President Bill Clinton’s political strategist James Carville famously said in 1993 that he wanted to be reincarnated as the bond market, because “you can intimidate everybody.”If Congress’ moves signal too big of a deficit hike, some market analysts are concerned that excess debt issuance will cause market indigestion that drives up yields sharply. “One can’t exclude the risk that trust in U.S. economic policymaking might be lost, the bond vigilantes could come out in full force and pressure rates significantly higher, and the U.S. and global economies could be badly shaken,” said Mark Sobel, a former U.S. Treasury official who is now the U.S. chairman at the Official Monetary and Financial Institutions Forum, a think tank.Nathan Thooft, chief investment officer and senior portfolio manager for Manulife Investment Management, said Congress and Trump’s administration will likely adjust course based on market reactions.”They will react to incoming feedback as it comes,” Thooft said. “Dollar gets too strong, they’re probably going to back away a little bit. Equity markets act up too much, they might back away a little bit. They care about these things.” More