Economy

Rishi Sunak has given a strong hint that he will cut taxes on fuel in this week’s Spring Statement, while warning that the days of higher UK public spending — including on defence — are over.The chancellor said he would help families struggling with the cost of living when he presents updated economic forecasts on Wednesday, saying: “Where we can make a difference, of course we will.”Sunak admitted that energy prices were “the number one priority” for people at the moment and that, as MP for the rural Yorkshire constituency of Richmond, he knew fuel prices were “a big issue”.“It’s something that’s challenging to families, I get that,” he told the BBC’s Sunday programme. He said his policy was to take “targeted action where we think there is most acute pressure”.Sunak is under pressure to go further in cutting taxes more generally and said that they would come down “over time”; he blamed the pandemic for the fact Britain has its highest overall tax burden since the 1950s.But he refused to say whether he would cut income tax or change the threshold for the payment of national insurance in the Spring Statement, as many Tory MPs would like.Sunak made it clear that he would now strongly resist pressure to increase public spending and borrowing — some of it coming from his Downing Street neighbour, Prime Minister Boris Johnson, in recent weeks.In particular, Sunak appeared to rule out an emergency increase in defence spending, arguing that the military budget had already been allocated a further £24bn, despite the Russian invasion of Ukraine.“We acted and did this before this happened, and that’s a good thing,” Sunak said, referring to the war in Ukraine.Sunak insisted the government’s integrated defence and foreign policy review last year recognised the Russian threat, although critics claim the document was overly preoccupied with a “tilt to the Asia-Pacific”.He said his priority was to get value from the money the government was already spending, notably in the NHS, and announced an efficiency drive to save £5.5bn, which he said would be put back into public services.The chancellor said his priority was to cut taxes over the rest of the parliament, after analysis showed he had raised taxes more in two years than Gordon Brown, former Labour chancellor, did in a decade.Sunak insisted that Brown had not had to contend with a pandemic, but his credibility with Conservative MPs now rests on his ability to control spending and push down taxes before the election.Rachel Reeves, shadow chancellor, told Sky News’s Sophy Ridge on Sunday programme: “He keeps saying he’s a low-tax chancellor. On Wednesday he has a chance to prove it.” The Labour party is calling for a reversal of the £12bn national insurance rise, which Sunak insisted would go ahead in April to help fund the NHS and deal with a treatment backlog. Labour also wants a windfall tax on North Sea oil companies.But Reeves said Labour would not “stand in the way” if Sunak decided to cut fuel duty by 5p a litre in his statement next week. More

Trump ended negotiations over the so-called Transatlantic Trade and Investment Partnership (TTIP) and instead pressed a number of trade disputes with the EU.”We should resume negotiations on a transatlantic free trade agreement. Especially now in the (Ukraine) crisis, it is becoming clear how important free trade is with partners around the world who share our values,” Christian Lindner, the finance minister of Europe’s largest economy, told Handelsblatt.It is unclear to what extent there is support for such talks in Europe. In recent years, some officials have spoken in favour of a resumption, while others have been more cautious.Germany’s finance ministry didn’t immediately respond to requests for comment.In a statement, the U.S. embassy in Berlin didn’t respond directly to Lindner’s proposal but said an existing U.S.-EU Trade and Technology Council ensured that trade and technology policies support broad-based growth.”The current crisis shows the United States and Germany, and the European Union, are indispensable partners,” it added. More

ISLAMABAD (Reuters) – The International Money Fund (IMF) has asked Pakistan to explain how it would fund a $1.5 billion subsidy package announced by Prime Minister Imran Khan, Finance Minister Shaukat Tarin said on Sunday. “There are no issues. We have given them details as to where the funds would come from,” Tarin said, adding the IMF wanted details of the resources to fund the subsidy in fuel and electricity, which Pakistan has frozen for the next four months until the new budget. The IMF has begun the seventh review of the $6 billion rescue package agreed with Pakistan in 2019, and Tarin said he will have a final meeting with the lender on Tuesday.The IMF asked it will need to see the agreements of the dividends of State Owned Enterprises (SOEs) as well as details of the spare funds the central government will get from provinces. “We have done our homework,” Tarin said.Some of the subsidy money would also come from above-target revenues Pakistan was getting this fiscal year, he had said previously. Earlier this month, Tarin said revenue would hit 6.1 trillion Pakistani rupees ($34.2 billion), compared to a target of 5.8 trillion rupees.Embattled Khan, facing a no-confidence move to oust him from office by opposition parties, had announced a cut in petrol and electricity prices despite a steep rise in the globaloil market.The south Asian country had to undertake fiscal tightening measures to pass its last IMF review, which was delayed by months as the government struggled to complete prior action required by the lender to release $1 billion in February. (Additional Reporting by Syed Raza Hasan; Editing by Muralikumar Anantharaman & Shri Navaratnam) More

Argentina’s Senate voted on Thursday to approve a $45 billion debt deal with the IMF, converting the agreement into law and ensuring that the economically battered country can avoid another messy default.The deal still needs to be signed off by the IMF’s board. The IMF spokesman, Gerry Rice, said in a statement that “the legislative approval is an important signal that Argentina is committed to policies that will encourage more sustainable and inclusive growth.” More

The writer is chief executive of the Food and Drink Federation The world is uniting against Russia’s brutal invasion of Ukraine. The UK government’s decisive action on sanctions has support from across the food and drink industry, as we watch an escalating human tragedy unfold before our eyes. We agree a cost must be imposed on President Vladimir Putin and his government for their actions. Russia cannot invade its neighbour and remain part of the global economy and trading system.But our members are well aware of the implications that sanctions, trade restrictions and the supply chain disruption that flows from them will cost UK businesses and shoppers. This will translate into food price rises and, possibly, temporary shortages.The situation is more acute because the pandemic, during which global supply chains struggled to meet unpredictable demand, pushed up prices. With Ukraine and Russia — for different reasons — no longer exporting goods to most nations, global shortages loom that exacerbate existing inflation. The UK is not dependent on food supplies from Ukraine and Russia, but we suffer the impact from the price rises caused by shortages in world markets. This month, global wheat prices spiked at more than 80 per cent higher than a year ago. Sunflower oil — 80 per cent of it produced by Ukraine and Russia — is rapidly becoming unavailable, pushing up the cost of alternatives. Other products, such as white fish and the wood pulp used in packaging and labels, are becoming scarce as supplies from Russia and Ukraine dry up.Food and drink manufacturers are in a bind. They cannot see a let-up this year in the inexorable rise of input costs — ingredients, raw materials, energy and so on. One company told me it expects energy costs to rise by up to 500 per cent this year. Businesses are urgently stripping further costs out of their processes. But there are limits. With margins squeezed suddenly and severely, higher prices are inevitable.The UK already has a mounting cost-of-living crisis. Now food price rises will run alongside rapid increases in household bills, fuel and borrowing costs. Incomes are under significant pressure, with low-income families particularly vulnerable. The government cannot do much about prices in global markets. But it can mitigate food price inflation in the UK and eliminate gaps on shelves. We have three suggestions. First, these pressures are unprecedented and the response must be too. Supply chains will be highly unpredictable in coming months. The UK and devolved administrations must allow the industry to use safe, alternative products where ingredients become unavailable, often with little notice — starting with sunflower oil. If we are to keep products flowing freely, manufacturers need swift agreement on substitutes.Second, the UK’s prized food security and resilience must be guarded fiercely. Our manufacturers and producers are in every part of the country — and we want to keep it that way. We need a robust, cross-government mechanism, a National Food Security Council, to work alongside the industry and enable us to respond collectively, and fast, to the impact of supply chain disruptions. Some effects are already clear but others will take longer to understand. We need to react to immediate issues of ingredient and energy costs and the longer-term impacts of fertiliser, petrochemical and CO2 shortages. Third, ministers must urgently remove complexity and cost from upcoming regulation. Businesses must be able to focus on keeping afloat and feeding shoppers. From new packaging rules to where food promotions can be placed in shops, we urge ministers to pause, reflect and consider whether regulation is fit for purpose — and whether now is the time to pass additional costs to consumers.The government has more power over how the crisis in Ukraine affects the UK than it thinks. It should use this power wisely. More

The two leaders were meeting to strengthen security amid the Ukraine crisis and improve economic ties between the two nations. Japan in recent years has supported India’s urban infrastructure development and the high-speed railway based on its bullet train technology.In 2014, then-Japanese Prime Minister Shinzo Abe announced 3.5 trillion yen in investment and financing over five years during a visit to India.($1 = 119.1700 yen) More

Inflation hit 54% in February and economists expect it to continue rising towards 70% in coming months, after Russia’s invasion of Ukraine sent commodity prices soaring and knocked the lira.Speaking at a business conference in the southern resort of Antalya, Nebati said a government-backed scheme that protects lira deposits against depreciation had helped eliminate concerns over what he called “attacks” on the lira’s exchange rate.”What we have seen in recent months is that the exchange rate is stable and moves forward within acceptable limits,” he said.The lira is down 11% against the dollar this year, mainly due to the economic fallout from Russia’s invasion of Ukraine.The currency had declined 44% last year, mostly after a series of rate cuts, long sought by President Tayyip Erdogan, which sparked a currency crisis and sent inflation to a 20-year high.The lira protection scheme as well as costly forex market interventions by the central bank helped stem the currency crisis in December.The central bank cut its policy rate by 500 basis points to 14% between September and December but has kept it unchanged at the last three meetings. Erdogan’s new economic plan prioritises a current account surplus, exports, credit and growth, while keeping interest rates low.However Russia’s actions in Ukraine, which it terms a “special operation”, risk widening Turkey’s current account deficit, due to rises in commodity prices and a potential decline in tourism revenue. More

The farmers, who staged weeks of protests over high energy prices earlier this year, say their costs are so high they will be forced to produce less and also raise prices for consumers.The government has so far spent about 3.7 billion euros ($4.08 billion) since September to alleviate pain from soaring energy and fuel costs for farmers, households and businesses.It cut a sales tax on fertilisers by 46% to 13% and on Thursday announced it would be lowered further, to 6%, and also announced a tax rebate on fuel for agricultural vehicles.Farmers say the measures do not go far enough and everything has become too expensive, from fuel to animal feed.”Our survival is really at stake this year,” said one protester, Giorgos Laoutis. “With the cost of production, electricity, agricultural supplies, fuel.”Farmers from across Greece joined the rally. Some protesters hung black flags on shepherd’s crooks or sticks.”The situation has become unbearable,” said another farmer, Diamanto Kritikou.”We can’t work our fields, we can’t cultivate, we can’t put gas in our vehicles, and (we can’t buy) seeds, fertilizers… there will be a problem with food supply in the country,” she said.Russia’s invasion of Ukraine has driven retail gasoline and diesel prices to record highs.Russia is also a big producer of potash-, phosphate- and nitrogen-containing fertilisers, and a leader in fertilizer exports, accounting for 13% of world output.This month, its trade and industry ministry told the country’s fertilizer producers to temporarily halt exports.As a result of the conflict in Ukraine, the United Nations food agency said last week that international food and feed prices could rise by up to 20%.($1 = 0.9062 euros) More