Economy

GamCare said it had increasingly received calls from people receiving state welfare payments who had gambled in the hope they could cover soaring energy and food bills, and lost.The charity reported that some people who it had helped successfully in the past had relapsed into gambling again under the growing financial pressure.British households are grappling with the highest rate of inflation out of the Group of Seven advanced economies, which hit a new 40-year high of 9.1% in May. The Bank of England has warned of inflation exceeding 11% by October.A YouGov survey of more than 4,000 people commissioned by GamCare and published on Thursday showed 46% were worried about their financial situation. More than half of those polled said they had gambled over the past 12 months, and most of this group had lost money.”Our helpline advisers are hearing that the cost of living is impacting people’s gambling behaviours – particularly those gamblers who have recovered,” said Anna Hemmings, chief executive of GamCare.”We also know that our team are hearing from more and more people who are reaching out for help around crypto trading.”Someone who paid in sterling to invest in Bitcoin six months ago to help hedge against the rising cost of living would have lost 55% of their investment as of Thursday.GamCare said 43% of problem gamblers had invested in cryptocurrency, and 25% out of this group said they wanted to invest more to chase losses – compared with only 7% of the wider population of crypto investors. More

The president is trying to balance his campaign promise to cancel thousands of dollars in student debt for tens of millions of borrowers with concerns such a move would be seen as a handout.WASHINGTON — The soaring cost of food, gasoline and other staples is further complicating a fraught debate among President Biden and his closest advisers over whether to follow through on his campaign pledge to cancel thousands of dollars of student loan debt for tens of millions of people.While Mr. Biden has signaled to Democratic lawmakers that he will probably move forward with some form of student loan relief, he is still pressing his team for details about the economic ramifications of wiping out $10,000 of debt for some — or all — of the nation’s 43 million federal student loan recipients.In meetings this spring, Mr. Biden repeatedly asked for more data on whether the move would primarily benefit well-off borrowers from private universities who might not need the help, according to people involved in the process. The country’s 8.6 percent inflation rate, a four-decade high, has added another layer of complexity to the decision: What would it mean for the economy if the government forgives some $321 billion in loans?“You’re talking about millions, possibly billions of dollars that could be spent. You should do it with eyes wide open,” said Cedric Richmond, who stepped down as a senior adviser to Mr. Biden last month. “He wants to make sure that it’s based in equity and it doesn’t exacerbate disparities.”While Mr. Biden has yet to make a decision on student debt cancellation, his aides say he will before the end of August. The White House has been deeply divided over the political and economic effects of loan forgiveness. Mr. Biden’s chief of staff, Ron Klain, has argued that it would galvanize a base of young voters increasingly frustrated with the president. Other aides have presented data showing that many Americans who saved money to pay off tuition for themselves or their children would resent the move.Some economic advisers have made the case to Mr. Biden that the move might actually relieve inflation, at least a little, if he pairs debt forgiveness to a restart of the interest payments on student loans, which have been paused since early in the pandemic.Mr. Biden’s deliberations are emblematic of his attempts to straddle deep ideological divides in the country, often within his party. According to people familiar with his thinking, Mr. Biden is struggling to balance his promise to deliver sweeping proposals to address racial and economic disparities with concerns that loan cancellation would exacerbate inflation and be seen as a giveaway, undermining his image as a champion for labor and the working class.Mr. Biden is considering a framework for student debt relief that his economic aides have assured him would not exacerbate inflation and could potentially ease price growth slightly.Under the plan, Mr. Biden would cancel some debt for certain borrowers, likely up to $10,000 each, which would effectively give some of those borrowers more money to spend on goods and services, like buying furniture or dining out, potentially creating additional demand that could further push up prices. Any move to relieve debt would include some type of income limits on those who qualify.But at the same time, he would end a pause on student loan interest payments for all borrowers, which was imposed in March 2020 and has been extended seven times, most recently until Aug. 31. That would effectively force many of those borrowers to spend less on goods and services to resume their loan payments.Mr. Biden’s aides believe that pairing the two policies could pull a small amount of consumer buying power out of the economy. By some administration estimates, the two policies could bring inflation down very slightly. At minimum, aides say, they would cancel each other out.“Given that fighting inflation is the president’s top domestic priority,” Jared Bernstein, a member of the White House Council of Economic Advisers, said in an interview, “the key economic fact here is that if debt payment restart and debt relief were to occur at roughly the same time, the net inflationary effect should be neutral.”Designing a plan to be inflation-neutral, at worst, under the administration’s accounting would require limiting the debt relief to far less than what more liberal Democrats have pushed Mr. Biden to grant.Opponents of debt cancellation would prefer Mr. Biden restart loan payments and not forgive any debt, which they say would have a better chance of dampening inflation. And they say the administration is making its inflation math appear rosier by looking at the resumption of interest payments as a new policy that could work as a counterbalance to canceling some debt, when the pause was always intended to be only temporary.The administration’s math showing the paired policies to be neutral for inflation “is not the way I would prefer to think about it,” said Marc Goldwein, the senior policy director at the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group in Washington, and a critic of cancellation proposals. “But it’s not totally bizarre for somebody to think about it that way.”Mr. Biden told reporters this week that he was close to making a decision on student debt. A White House official, speaking on the condition of anonymity to discuss internal discussions, said the administration wanted to wait until the end of August to assess how much of a problem inflation is by then, as well as any legislative movement in Congress.The White House has said it would prefer that Congress pass legislation on student loan relief, but Senate Democrats lack the votes, leaving executive action as the only apparent pathway. And pressure is building from Democrats who want Mr. Biden to make good on his campaign promise.President Biden has signaled that he will probably move forward with some form of student loan relief.Haiyun Jiang/The New York TimesDuring a White House meeting in May, Senators Elizabeth Warren of Massachusetts, Chuck Schumer of New York and Raphael Warnock of Georgia, all Democrats, presented data to Mr. Biden showing that debt cancellation would benefit borrowers who failed to obtain a degree to rebut the notion that relief would be a giveaway to the privileged, according to a person briefed on the meeting. Vice President Kamala Harris has also met with Mr. Biden to break down the groups that would benefit, another official said.Democrats have often cited a report from Temple University showing that nearly 40 percent of full-time undergraduates who enrolled in the 2011-12 academic year accumulated some debt but did not have a degree after six years.Republicans in Congress have attacked the White House as fiscally irresponsible. Representative Virginia Foxx of North Carolina, the top Republican on the Education and Labor Committee, said in a letter to the Education Department this month that she was “gravely concerned the department will further harm borrowers and taxpayers if it acts on student loan forgiveness, in part because of its inability to follow through on its grandiose proposals.”Student Loans: Key Things to KnowCard 1 of 4Corinthian Colleges. More

Taiwan has long campaigned for such a deal, in what would be a strong show of support for the Chinese-claimed island in the face of unrelenting diplomatic and military pressure from Beijing. It says it is a reliable partner for the United States with shared democratic values.While Taiwan has strong bipartisan support in Congress and the Senate, the Biden administration last month excluded Taipei from its Asia-focused economic plan designed to counter China’s growing influence, the Indo-Pacific Economic Framework, or IPEF.AmCham Taiwan said they called “urgently” for the administration to start talks on a Bilateral Trade Agreement (BTA) with Taiwan, with a “completed text presented for passage in 2024”. Such a deal would encourage other like-minded partners to enter into similar arrangements with Taiwan, further open Taiwan’s economy and “effectively” address the economic and security implications of the island’s key chip industry.”In addition to these strategic trade elements with their clear implications for U.S. defence preparedness, a BTA would bolster both the U.S.’ and Taiwan’s economic and thus overall security vis-à-vis China.”However, the chamber, which has members from more than 500 international companies, noted the lack of progress on such an agreement, saying its passage was their top request to Washington.Chamber President Andrew Wylegala told reporters in Taipei there were “no clear indicators” the Biden administration was contemplating a BTA in the near term, but one could come further down the line.”I would put Taiwan in that small and rare group of partners that the U.S. would view as particularly desirable to pull into an FTA,” he added, referring to a free trade agreement. Taiwan and the United States are due to hold high-level trade talks in Washington at the end of this month under a new U.S.-Taiwan Initiative on 21st-Century Trade.(This story corrects first sentence to say by 2024, not next year). More

    A year and a half after Britain left the EU, Johnson is looking to boost trade with the Commonwealth, a network of 54 countries that are mostly former British colonies.     The Commonwealth, headed by Queen Elizabeth, is not a formal trading bloc with a free-trade agreement. But the network includes about a third of the world’s population and some of its fastest-growing economies.    A day before the heads of Commonwealth governments meeting begins in Kigali on Friday, Johnson will say he wants to start a new trade system to reduce costs and simplify rules for 65 developing countries, including many in the Commonwealth. This will reduce tariffs on foods, clothes and other items by 750 million pounds a year, he will say.The new system would see Britain replace the European Union’s Generalised System of Preferences, which applies import duties at reduced rates, with what will be known as the Developing Countries Trading Scheme.     “It is an under-appreciated fact that our unique union of nations is buzzing with economic activity,” Johnson will say.”The new initiatives we are launching today will ensure the UK is at the forefront of seizing opportunities, driving shared growth and prosperity for the benefit of all of our people.”Earlier this year, Britain struck a 120 million pound ($148 million) deal with Rwanda to deport asylum seekers to the East African country but the first such flight was halted last week by the European Court of Human Rights.The scheme has been widely criticised as inhumane. Prince Charles, the heir to the throne, who is representing his mother at the Commonwealth summit, privately described the plan as “appalling”, according to newspaper reports. More

Workforce activity increased slightly in the first two weeks of the month, according to the firm which tracks shift work in real time. It mostly declined during the prior three months.Particularly notable, the firm said, was an increase in demand for workers in retail, the first such increase since the start of the year. That could be good news for Fed Chair Jerome Powell. On Wednesday he told U.S. lawmakers the Fed was committed to bringing down too-high inflation, with a plan to raise borrowing costs high enough that demand for labor, goods and services subsides to levels more in line with supply.Continued strength in the labor market casts doubt on the view of those like former New York Fed President Bill Dudley who say a recession in the next year or so is inevitable. And it may provide some grist for Fed policymakers who believe a soft landing for the economy is possible, if difficult. Powell on Wednesday said he does not see current recession risks as being particularly elevated, though a downturn will be “challenging” to avoid, especially because so many of the factors putting upward pressure on prices are beyond the Fed’s control, such as Russia’s war and China’s COVID-19 lockdowns. But Powell also said he believes the labor market is “unsustainably hot,” suggesting that he would welcome some cooling.The U.S. Labor Department releases its jobs monthly report in on July 8. More

TUNIS (Reuters) – The International Monetary Fund said on Wednesday it welcomed an economic reform program announced by the Tunisian government this month and is ready to start negotiations in coming weeks over a loan program.Tunisia, which is facing a financial crisis, is seeking to reach a deal on a $4 billion IMF loan in return for an unpopular reform package to shore up its struggling public finances. The IMF statement comes after Jihad Azour, director of the Fund’s Middle East and Central Asia Department, met President Kais Saied and Prime Minister Najla Bouden. “The national reform program announced by the government achieves several benefits, such as increasing credibility, making the chances of success greater than in the past,” Azour said in the statement.”After months of technical discussions with Tunisian authorities, the IMF is ready to start negotiations on the program in the coming weeks,” he added.Tunisia’s reform plan includes freezing wages, stopping recruitment in the public sector, cutting energy and food subsidies, and selling some shares in state companies.But the powerful UGTT Labor Union has strongly rejected the proposed program and launched a national strike last week in public companies.The union, which has about 1 million members, said it plans to launch a national strike in the public service as well.Last week’s strike compounded the challenges facing president Saied, who has tightened his grip on power since July 2021 when he froze parliament and sacked the cabinet – moves his opponents called a coup against Tunisia’s young democracy.Defying opponents, Saied is now seeking to overhaul the constitution so the president wields more power. More

(Reuters) – The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, U.S. central bank chief Jerome Powell said on Wednesday.”We are not trying to provoke, and I don’t think we will need to provoke, a recession,” Powell said at a hearing before the U.S. Senate Banking Committee, although he acknowledged that a recession was “certainly a possibility” and events in the last few months around the world had made it more difficult to reduce inflation without causing one.”It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all,” Powell said. The Fed in coming months will be looking for “compelling evidence” of slowing price pressures before it eases up on the interest rate increases it kicked off three months ago.Inflation continues to run at least three times higher than the Fed’s targeted level of 2%. A gauge of price increases that excludes volatile food and energy costs may have eased somewhat last month, Powell testified, but Russia’s invasion of Ukraine and COVID-19 lockdowns in China are putting continued upward pressure on inflation.One week ago, the Fed raised its benchmark overnight interest rate by three-quarters of a percentage point – its biggest hike since 1994 – to a range of 1.50% to 1.75%, and signaled rates would rise to 3.4% by the end of this year.That steep rate hike path, designed to slow the economy, has sparked widespread concern about a recession and a weakening of labor markets, which Powell on Wednesday said were unsustainably hot.On Wednesday, Powell reiterated that ongoing increases in the Fed’s policy rate would be appropriate, with the exact pace dependent on the economic outlook. He declined to rule out a 100-basis-point move if it proved warranted.”Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” he said, repeating that policymakers would need to be nimble in response to the incoming data.’COUGHING UP BONES’Since the June 14-15 policy meeting, a number of Powell’s fellow policymakers have lined up behind his comments last week that the central bank will very likely need to raise rates by either 50 or 75 basis points at its next meeting in July.Earlier on Wednesday, Philadelphia Fed President Patrick Harker said incoming data would govern which of the two options to deliver. Chicago Fed President Charles Evans signaled later on Wednesday that he also is comfortable for now with continued rapid rate hikes, even as he nodded to the rising recession risk.”To think that we can fine tune something like this with tremendous precision — I mean, we just don’t have that ability,” Evans said. Even so, he added, there’s “tremendous” consensus at the Fed for getting rates into modestly restrictive territory. “The first thing that we’re looking at is to make sure we take the steam out of the inflation pressures,” he said. But in an indication of how inflation has emerged as a thorny political issue that threatens to tip the balance of power in Congress to Republicans in elections this November, Powell found himself under fire from both the left and right.Senator Elizabeth Warren, a Democrat representing Massachusetts, took the Fed to task for pushing through rate hikes that raised the risk of a recession that could put millions out of work.Republican Senator John Kennedy of Louisiana, in one of the more heated criticisms of the Fed’s response to inflation, said inflation was hitting his constituents “so hard they are coughing up bones.”Overall, Powell did not stray far from his remarks in his news conference that followed the Fed’s latest policy meeting, but his assertion that financial conditions had “tightened significantly” seems significant and may herald a slower pace of rate hikes, Karim Basta, chief economist at III Capital Management, wrote in a note.Interest rate futures ticked higher through the course of Powell’s appearance, as traders moderated expectations for additional big rate increases at the Fed’s remaining four policy meetings of the year.Economists polled by Reuters before the appearance see the Fed delivering another 75-basis-point interest rate hike in July, followed by a half-percentage-point rise in September, with no scaling back to quarter-percentage-point moves until November at the earliest.Fed officials’ latest projections see economic growth slowing to below trend this year while the U.S. unemployment rate – currently 3.6% – starts to tick higher. Meanwhile, they now expect inflation by year-end to drop only to 5.2% by their preferred measure, which registered 6.3% as of April. More

The IMF board also increased total access under Senegal’s 18-month credit facility to about $777 million from $650 million initially approved in June 2021, it said. Senegalese authorities are taking temporary and targeted measures to support the most vulnerable and to stabilize food prices, while preserving debt sustainability, the IMF said.”Performance under the program has been broadly satisfactory despite a challenging environment,” said Kenji Okamura, IMF Deputy Managing Director and Acting Chair.”The Senegalese economy entered 2022 with strong growth momentum but the spillovers from the war in Ukraine are hampering this rebound.”Public debt is expected to reach 75% of GDP in 2022, the statement said. More