Economy

Reeves is under pressure to address massive under-investment by UK pension funds in domestic assets, with a recent collapse in allocations cited among the reasons for Britain’s lacklustre economic growth.Speaking on the eve of her first Mansion House address to the UK financial industry, Reeves said she would consolidate about 60 defined contribution pension schemes and 86 Local Government Pension Schemes, to make them more cost-efficient and large enough to bankroll ambitious projects.”Last month’s budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth,” Reeves said in a statement.”That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off,” she said.Local Government Pension Schemes and defined contribution pension pots in the UK are expected to collectively manage 1.3 trillion pounds in assets by the end of the decade, but many funds lack scale individually to pursue big-ticket investments like roads, rail and airports. According to government analysis which will be published in the interim report of the Pensions Investment Review, pension funds are better placed to invest in a wider range of assets once their assets under management reach 25-50 billion pounds. Funds holding more than 50 billion in assets can harness even greater benefits, the analysis continued, including investing directly in large scale projects at lower cost.The government said it would consult on measures to facilitate pension fund consolidation via a new Pension Schemes Bill next year, which would also seek to empower fund managers to more easily move savers between schemes.These so-called “megafunds” resemble pension schemes in place in Canada and Australia, where infrastructure investment volumes are respectively four times and three times greater than those managed by UK Defined Contribution schemes. “They (Canada and Australia) probably have the best pension funds anywhere in the world,” Reeves told the BBC. “Our pension funds in Britain are too small to be making the investments that get a good return for people saving for retirement and to help our economy to grow.”The government said the funds would be authorised by the Financial Conduct Authority and subject to heavy scrutiny to ensure performance for savers, including delivering value for money in investment decisions.Tom Frost, head of UK institutional clients at abrdn, said the public was largely in favour of using pension savings to power UK businesses, housing and infrastructure but over-consolidation would usher in different risks.”If the number of schemes is reduced to too low a number, this could limit innovation and lead to decreased competition, thereby resulting in poorer outcomes for current and future pensioners,” he said.($1 = 0.7844 pounds) More

(Reuters) -New York Governor Kathy Hochul will announce on Thursday that the state plans to revive a congestion charge for driving in parts of Manhattan that she indefinitely put on hold in June, a source told Reuters.New York City’s congestion pricing program, the first of its kind in the U.S., was initially to have charged a toll of $15 during daytime hours for passenger vehicles driving in Manhattan south of 60th Street starting June 30.Hochul plans to announce a revised program that is expected to have a base charge of $9 for passenger cars, the source said. The plan was reported earlier by media outlet Gothamist. London implemented a similar charge in 2003.The revised plan will need the fast-track approval of the U.S. Transportation Department and the new toll is expected to be implemented before President Joe Biden leaves office on Jan. 20. The Metropolitan Transportation Authority is expected to vote next week to approve the charge, the source added. A Transportation Department spokesperson declined to comment.Hochul had cited high inflation and a desire to not deter commuters or tourists because of the additional charge for her decision to halt implementation.A spokesperson for Hochul said the governor on Thursday “will announce the path forward to fund mass transit, unclog our streets and improve public health by reducing air pollution.”A group of five New York House Republicans led by Representative Mike Lawler urged incoming President Donald Trump in a letter to kill the charge, asking him to end “this absurd congestion pricing cash grab once and for all.” A Trump spokesperson did not immediately comment.In the aftermath of the delay, the MTA in June said it was putting $16.5 billion in capital projects on hold.MTA has said congestion pricing would cut traffic by 17%, improve air quality and increase mass transit use by 1% to 2%, generate up to $1.5 billion annually and support $15 billion in debt financing for mass transit improvement.In 2019, state lawmakers approved the plan to help fund improvements in mass transit using tolls to manage traffic in New York City, the most congested of any U.S. city.Congestion pricing had been projected to start in 2021 but the federal government under Trump took no action. It was approved under Biden in 2023.New York says more than 900,000 vehicles enter the Manhattan Central Business District daily, which reduces travel speeds to around 7 miles per hour on average.Riders Alliance Executive Director Betsy Plum said “congestion pricing cannot happen soon enough. Once the first tolls are collected, we will finally breathe easier.” More

Speaking at an event hosted by Bradesco Asset Management, Galipolo, who is currently the central bank’s director of monetary policy, but who will take over as governor in January, noted that recent data has shown the Brazilian economy’s resilience. He emphasized that the central bank will continue to assess data on a meeting-by-meeting basis, without providing guidance or reacting mechanically to variables.The central bank accelerated its monetary tightening with a 50-basis-point interest rate hike last week, pushing rates to 11.25%. In the minutes of the decision, policymakers stressed that further deterioration in inflation expectations could prolong the monetary tightening cycle.Annual inflation in Latin America’s largest economy reached 4.76% in October. Even with the central bank hiking rates, economists have raised their inflation forecasts through 2026 due to stronger-than-expected economic activity, a tight labor market and a weaker currency.The recent depreciation of the Brazilian real has been driven by a combination of local fiscal concerns and a stronger U.S. dollar after the nation’s presidential election.With the market awaiting new fiscal measures to support the real and reduce long-term interest rates, Galipolo acknowledged that changes often take longer than the market would prefer, but said he favors the “pains of democracy.”After the central bank sold all $4 billion offered in two dollar-denominated auctions with repurchase agreements on Wednesday, Galipolo said the intervention was related to year-end seasonality, when there is usually “additional demand that tends to cause a bit of stress on the exchange-rate coupon.””I think the action was well understood, well received, and served its purpose,” he added. More

Reuters had exclusively reported earlier this month that EU antitrust regulators were investigating whether fees charged by card giants Visa and Mastercard (NYSE:MA) had a negative impact on retailers.The EC informed Visa about the investigation on Aug. 30, it said, adding that the company was cooperating with the regulator in connection with the investigation.Last month, Mastercard also disclosed that the EC had sought documents tied to a broader investigation into alleged anti-competitive behavior in the European Union.Visa and Mastercard have long dominated the market for payment cards and often been subject to scrutiny and allegations of a duopoly.Additionally, Visa said that the EC informed it on Oct. 1 that a separate investigation into the company’s incentive agreements with clients had been closed. More

At around $1.06, the euro has slumped nearly 5% from more than one-year highs in September when a weakening economic outlook stopped it in its tracks.Euro/dollar is the world’s most actively traded currency pair. Here’s a look at what’s driving the move in the euro and what could be next for the currency. 1. Could the euro hit $1?It’s possible. Parity is just 6% away and the euro has traded below that level before – once in the early 2000s and again for a few months in 2022, when U.S. interest rates were rising faster than euro zone ones as Europe grappled with the energy price surge that followed the war in Ukraine.For traders, the $1 mark is a key psychological level. So a fall below here could exacerbate negative euro sentiment, leading to a further depreciation.Big banks including JPMorgan and Deutsche Bank (ETR:DBKGn) reckon a drop to parity could happen, depending on the extent of tariffs. Tax cuts could also fuel U.S. inflation and limit Federal Reserve rate cuts, making the dollar potentially more attractive than the euro.  2. What does it mean for businesses and households? A weak currency typically raises the cost of imports. That can lead to prices of food, energy and raw materials rising, aggravating inflation. Since hitting double digits two years ago, inflation has fallen quickly so the hit to prices from currency weakness shouldn’t be a big worry for now. Most economists see inflation back at its 2% target next year after some volatility at the end of 2024.    Conversely, a fall in the euro makes exports cheaper – good news for Europe’s automakers, industrials and luxury retailers, for example, and for individuals or investors with overseas incomes.It’s especially positive for Germany. Long-considered Europe’s export engine, the German economy has suffered from a number of headwinds including a weak Chinese economy. 3. Is the euro being singled out?Not necessarily. Many currencies of major U.S. trading partners have been hit hard in the past six weeks by tariff worries.The euro has lost 4.75%, while the Mexican peso has lost nearly 5% and the Korean won has fallen 5.4%. The euro actually rallied 6% over the course of Trump’s last term, but fell by nearly 6% in the six weeks following the 2016 result, before recovering. And look at Japan’s yen. It’s down almost 9% this year against the dollar; the euro has fallen less than half of that.4. Is it really that bad?        Not everyone has a bearish long-term view of the euro. Many banks see parity as possible, but not necessarily probable.Faster interest rate cuts from the European Central Bank (ECB) than in the United States would be negative for the euro, but on the positive side that easing could also support the currency longer term by boosting the economic growth outlook.The euro zone economy grew 0.4% in the third quarter from the previous three months, faster than forecast, positive for the euro. The collapse of Germany’s government that potentially paves the way for growth-boosting spending under the next one could also be supportive.”Everyone is gloomy on Europe and we understand the gloominess but we could have some positive surprises,” said Edmond de Rothschild CIO Benjamin Melman, adding he does not see a significant euro downturn from here. 5. What does it mean for the ECB? The ECB is in a better position than the last time the euro weakened sharply – that was in 2022 and inflation was surging so the euro’s drop below $1 added pressure on the central bank to hike rates.Fast forward to today and inflation is trending lower. There are other reasons why a fall to $1 would not be a huge worry for the ECB. The ECB pays more attention to how the euro performs against a basket of the currencies of the euro area’s main trading partners. Viewed this way, it’s not looking so weak. The trade-weighted euro is down around 1.25% in the past week and well above levels seen in 2022.Economists also note that the pass-through from currency moves to inflation is relatively small, so euro weakness shouldn’t stall rate cuts for now. More

By Nell Mackenzie and Ludwig BurgerLONDON/FRANKFURT (Reuters) – Hedge fund D.E. Shaw took a 102 million euro ($108 million) short bet against Bayer (OTC:BAYRY) on Tuesday, a regulatory filing in Germany showed, following an earnings presentation that sent its shares to a 20-year low, A short position reflects a view that the price of a financial asset will fall.New York-based D.E. Shaw, one of the hedge fund industry’s biggest managers overseeing more than $60 billion in assets, declined to comment. Bayer did not immediately comment. Bayer warned on Tuesday that weak agricultural markets would be likely to cause further falls in next year’s earnings, after releasing a lower-than-expected quarterly adjusted profit. The remarks presented by Chief Executive Bill Anderson sparked a sharp fall in the company’s shares and increased pressure on the CEO to deliver on his turnaround efforts. Bayer shares fell to a new 20-year low on Wednesday closing the session 3.5% lower. On Tuesday, they fell as much as 15.8% from the previous day’s close. ($1 = 0.9444 euro) (This story has been corrected to fix the short amount in the headline and paragraph 1, and changes the word to ‘than’ from ‘then’ in paragraph 5) More

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