Economy

BERN (Reuters) – Switzerland said on Tuesday it was concerned by U.S. President-elect Donald Trump’s proposals to raise tariffs and is considering how to respond if his new administration does so.Trump aims to shift the aggressive trade agenda from his first term into higher gear with across-the-board 10% tariffs on imported goods and even higher levies on imports from China.That could hurt the export-oriented Swiss economy, which has the United States as its biggest market, experts say. Around a fifth of Swiss exports of goods currently go to the United States, customs data shows, making the country a more important market for Switzerland than Germany, China or France.”Switzerland is concerned about Donald Trump’s announcement to impose additional tariffs on all goods imported in to the U.S.” a spokesman for the Swiss State Secretariat for Economic Affairs (SECO) said on Tuesday.”Switzerland clearly rejects the plans,” they said of the proposals, adding they contravene the rules-based international trading system which is crucial to the Swiss economy.SECO said Bern was examining “sensible responses” and seeking discussions with the relevant U.S. authorities, as well as counterparts in Germany, France, Italy and the EU.SECO did not give details on what responses were being considered, although Switzerland’s leeway could be restricted after it scrapped all industrial tariffs this year.Currently the U.S. has low single-digit tariffs on the import of industrial goods, with many Swiss industrial exports to the U.S. duty-free.While experts and central bankers in Europe have warned about the damage from rising trade barriers, governments have so far been cautious on how to respond on Trump’s plan.Economists have estimated that Swiss economic output could be reduced by 1% if severe amplification effects like a trade war broke out or companies started relocating to avoid tariffs.The Swiss pharmaceutical industry, manufacturers of machinery, appliances, precision instruments, watches and foodstuffs, for example, would suffer significantly from higher tariffs, economists at the ETH university in Zurich have warned.Other countries have also warned about fall-out from tariffs, with Bundesbank President Joachim Nagel saying earlier this month that Germany’s economy could lose 1% in economic output. More

The company, a bellwether for the retail industry, said its U.S. sales rose 5 percent in the third quarter, as cost-conscious consumers of all incomes sought bargains.Walmart has told its workers that it plans to “win” the holiday season. Ahead of the peak shopping period, the nation’s largest retailer appears well positioned, citing “broad-based strength” across its product range.Walmart said Tuesday that U.S. sales increased 5 percent in the third quarter, to $114.9 billion, easily surpassing analysts’ estimates. Its U.S. e-commerce business jumped 22 percent, aided by pickup and delivery options and its expanding online advertising and marketplace business.Operating profit for the quarter rose 9.1 percent at the retailer’s U.S. unit. Walmart raised its full-year forecast for sales and profit, higher than the estimates it had already increased last quarter.Doug McMillon, Walmart’s chief executive, said the company had “momentum.”“In the U.S., in-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that,” he said in a statement Tuesday.Walmart, which brings in millions of customers each week, is a bellwether of U.S. consumer trends. The period between Thanksgiving and New Year can make or break a retailer’s year, and companies are unsure about how freely shoppers will spend in the weeks ahead.Stung by inflation, consumers have shown that they are looking for low prices and convenience, such as free or fast shipping. The squeeze has been acute on lower-income shoppers, a core customer base for Walmart, and more higher-income customers have been trading down to Walmart in recent years. Walmart said those more affluent shoppers continued to buoy sales in its latest quarter.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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BENGALURU (Reuters) – The Bank of England will keep Bank Rate on hold in December as global inflation worries resurface, according to a Reuters poll of economists who were split on the impact U.S. President-elect Donald Trump’s proposed tariffs would have on the UK economy.Trump’s proposed tariffs, a 10% levy on imports from all foreign countries and 60% on imports from China, was expected to slow global growth and reignite inflationary pressures, limiting room for most central banks to ease policy.Nearly 90% of economists, or 22 of 25, who answered an additional question in the Nov. 13-19 poll said the proposed tariffs would be implemented early next year.However, they were split on the impact it would have on the UK economy over the next two to three years. While 11 of 21 said it would be insignificant, the rest said significant.Those findings contrasted with a Reuters survey on the euro zone economy, where a majority of economists, 34 of 39, said Trump’s proposed tariffs would have a significant impact.”A universal U.S. tariff could significantly impact the global economy…although the UK has a goods trade deficit with the U.S. and may not face the most severe tariffs,” said Stefan Koopman, senior market economist at Rabobank.SLOW AND STEADY FOR BOEStarting its easing cycle in August, the BoE has taken Bank Rate from a 16-year high of 5.25% to 4.75% with two cuts of 25 basis points.All 66 economists surveyed expected no change from the BoE in December. Poll medians showed rates falling 25 basis points every quarter next year, dropping to 3.75% by end-2025.Every respondent who expressed a view predicted the next cut would come early next year.Of 58 economists who provided forecasts until end-2025, 50% or 29 of 58, predicted Bank Rate to fall 100 basis points next year. While 19 said 125 bps or more, 10 said by 75 bps or less.Among 15 Gilt-Edged Market Makers, five each predicted 125 or 100 basis points of cuts, three said 75 bps while two said 150 bps.”The Autumn Budget was notably more expansionary than anticipated – raising the prospect of stronger demand in the near term – while the increase in employer National Insurance Contributions is likely to add to inflationary pressures,” noted economists at Goldman Sachs.”We look for wage growth to fall back notably given that headline inflation is now close to target.”Poll medians showed inflation would average 2.5% in 2024, 2.3% in 2025 and 2.1% in 2026, broadly unchanged from last month’s survey.The UK economy was forecast to grow 0.9% this year and 1.4% in 2025 and 2026, close to the BoE’s own predictions. Earlier in November the BoE cut its growth forecast for this year to 1.0% from 1.25% but raised its 2025 forecast to 1.5% from 1.0%.(Other stories from the Reuters global economic poll) More

MILAN (Reuters) -ECB policymaker Fabio Panetta said on Tuesday the European Central Bank should cut interest rates so they no longer curb economic growth, or so they even stimulate it, and give more guidance now that post-pandemic shocks are abating and inflation is normalising. Panetta’s comments bring into the open a growing debate inside the ECB about how far the euro zone’s central bank should cut rates at a time when inflation is close to the bank’s 2% target and economic growth is stagnating.The Bank of Italy’s governor, one of the ECB’s most outspoken advocates of looser monetary policy, said the ECB needed to “focus on the sluggishness of the real economy” and move official interest rates into “neutral, or even expansionary, territory”.”With inflation close to target and domestic demand stagnant, restrictive monetary conditions are no longer necessary,” he said in a speech at Milan’s Bocconi University, adding that inflation could fall well below target in the absence of a sustained recovery.”A scenario that would be difficult for monetary policy to counteract and should therefore be avoided,” he said.The ECB has cut interest rates three times since June after seeing inflation, which hit double digits in the wake of Russia’s invasion of Ukraine in 2022, drop to its 2% target.Panetta said the euro zone economy was returning to “charted territory” after the “exceptional shocks of 2022-2023″ and inflation forecasting errors were normalising.The ECB’s most recent cut, in October, saw it reduce the rate it pays on bank deposits by a quarter of a percentage point to 3.25%.”We are probably still a long way from the neutral rate,” Panetta said.Economists define the neutral rate as one that neither restricts nor spurs economic growth and see this in the euro area at between 2% and 2.5%, although estimates are as high as 3% and as low as 1.75%.Investors expect the central bank to lower borrowing costs by another quarter of a point at its next meeting on Dec. 12, followed by more cuts through the spring. This would leave the ECB’s deposit rate at 1.75% to 2.0%.Having managed to steer the euro zone’s economy through uncharted waters, the ECB should change its “meeting by meeting” approach to monetary policy dictated by the exceptional circumstances of the past two years, which forced it to give less weight to forecasts, Panetta said.”We can now return to a more traditional, genuinely forward-looking approach to monetary policy, in line with our medium-term orientation.” Panetta also said the ECB should “provide more guidance on the expected evolution of our policy than has been the case in the recent past.”This will help firms and households to form their views on the future path of policy rates, thereby supporting demand and the recovery of the real economy.”That view pitches Panetta against leading hawk Isabel Schnabel, who said last week such “forward guidance” was “of limited use” in what remained a “volatile environment”.Wrong-footed by a surge in inflation in 2021-22, the ECB has ditched its habit of providing official guidance about the future path for monetary policy.Instead, it has insisted it would make decisions ‘meeting by meeting’ based on incoming data – albeit not without the occasional hint about what to expect. More

Europe’s largest economy unexpectedly grew, albeit only by 0.2%, in the three months to September but the Bundesbank said there was little to suggest this would continue as demand from abroad and investment both remained weak.”All of the key demand components therefore currently offer little reason for a noticeable short-term recovery in the German economy,” the Bundesbank said in its monthly report. In addition, it warned “political demands for new tariff barriers pose considerable additional risks for international trade”, a likely reference to the protectionist stance of U.S. President-Elect Donald Trump which could hit Germany’s export-oriented economy hard.A bleak domestic picture helps explain a shift in the Bundesbank’s stance inside the European Central Bank from a laser-focus on fighting inflation to a greater emphasis on stimulating growth via lower borrowing costs.High wage growth, until recently a source of worry about a potential new leg-up in inflation, had likely peaked in the third quarter at 8.8% for collective agreements and was now likely to be “noticeably lower”, the Bundesbank said. “In view of the long-lasting economic weakness and significantly lower inflation rates, it is to be expected that the upcoming wage negotiations will result in noticeably lower agreements than in the past two years,” it said. More

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