Economy

In its latest report, the National Institute of Economic and Social Research painted a bleak picture for Britain’s economy over the coming years – even without Trump’s tariff plan – with growth seen slowing to 1.1% in 2026 from 1.2% next year and only reaching a lacklustre 1.7% in 2030.But the country, which is sensitive to changes in global trade flows, could post economic growth of just 0.4% next year if the U.S. implements tariffs like those Trump has promised, said Ahmet Kaya, principal economist at NIESR.The world economy would also suffer if Trump imposes tariffs of 60% on Chinese imports and 10% on imports from everywhere else, he said.”Relative stability is under serious threat by the potential raising of import tariffs in the United States,” Kaya said during a presentation of NIESR’s latest forecasts.The Bank of England would probably have to raise interest rates to counter a rise in prices caused by higher U.S. tariffs but inflation would still probably rise by between 2 and 3 percentage points over two years, he said.That kind of increase in borrowing costs would deal a major blow to the plans of the new UK government to use more borrowing in addition to tax rises to fund increased spending.Trump, who is in a tight race for the White House against Democratic Vice President Kamala Harris, has described tariffs as “the most beautiful word in the world” and says his plan would boost U.S. manufacturing, jobs and incomes and earn trillions of dollars in federal revenues over 10 years.Feeble British growth would be a setback for Prime Minister Keir Starmer, who has promised voters he will turn the economy into the fastest-growing in the Group of Seven.A rise in social security contributions paid by employers – the biggest tax rise in the government’s budget plan announced last week – would lead to a small rise in unemployment over the next five years, NIESR said. More

(Reuters) – A look at the day ahead in Asian markets. Investors in Asia are bracing for a day of potential high drama and volatility on Wednesday as the outcome of Tuesday’s U.S. presidential election begins to emerge.Whether the final result is known in Asian hours remains to be seen – that could take days if the count in certain key swing states is tight – but the yen, gold, dollar and Treasury futures could be most sensitive to election-related swings in sentiment.Wednesday’s trading in Asia may ultimately be marked by volatility and uncertainty, but markets may open on a solid footing after a strong reading of U.S. service sector activity sparked a broad-based rally on Wall Street on Tuesday.The three main U.S. equity indices rose at least 1.00%, while gauges of implied stock market volatility remained subdued. U.S. equity investors, at least, went into election day in a reasonably upbeat mood. The dollar weakened significantly and U.S. bond yields also rose, which is often a bad combination for Asian and emerging markets. Implied U.S. bond market volatility remains elevated too, with the “MOVE” index at its highest in a year.Currency market volatility is also high. A broad measure of G10 FX implied “vol” is hugging the 18-month high struck last week, while one-week dollar/Mexican peso implied vol is at the highest since March 2020 and one-week implied vol for China’s offshore yuan is at a record high. The Mexican peso and Chinese yuan are two currencies that could be hit hardest by extra trade restrictions and import tariffs imposed by Washington, a scenario most likely to play out if Donald Trump wins the election. Investors will also be sensitive to the announcement of any economic support measures from China’s Standing Committee of the National People’s Congress that is convening this week in Beijing. Shanghai stocks closed at a four-week high on Tuesday, boosted by upbeat comments from Premier Li Qiang on China’s recovery and improving economic data. Services activity expanded in October at the fastest pace in three months, a private survey on Tuesday showed.The Asian calendar on Wednesday, meanwhile, includes an interest rate decision from Malaysia, inflation data from Taiwan and Thailand, and services PMI data from Japan and India. The Bank of Japan releases minutes of its September policy meeting, and Reserve Bank of India (NS:BOI) Governor Shaktikanta Das speaks, while on the corporate front the world’s largest automaker Toyota (NYSE:TM) releases second-quarter results. Toyota is expected to post a quarterly operating profit of almost $8 billion, marking its first profit drop in two years and signaling cooler demand after a run of robust earnings helped by a consumer shift away from electric vehicles.Here are key developments that could provide more direction to markets on Wednesday:- Reaction to U.S. presidential election result- Malaysia central bank decision- Japan services PMI (October) More

When the votes are counted in the U.S. presidential election, will it be the gender gap, the income gap, the Latino vote or the media and marketing campaigns that turned out to be decisive?
CNBC senior economics reporter Steve Liesman sat down with four polling experts for an in-depth look into the data to see which ones could turn the election to either Vice President Kamala Harris or former President Donald Trump. The panel included Steve Kornacki, NBC News national political correspondent; Mark Murray, NBC News senior political editor; Micah Roberts, Public Opinion Strategies partner and CNBC’s Republican pollster; and Jay Campbell, Hart Research partner and CNBC’s Democratic pollster.

The conclusion? Yes, it is likely to be the economy. But it is also other factors such as character and turnout, which candidate represents change, who generates enthusiasm and who the persuadable voters finally decide to support that will help determine the outcome.
See the full video above to hear the discussion.

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WASHINGTON (Reuters) -With Republican Donald Trump and Democrat Kamala Harris locked in a dead heat in the race for the White House, political forecasters will be eyeing a clutch of counties across the country for clues on who has the edge once polls start to close on Tuesday evening.Here is a list of bellwether counties Reuters compiled, based on research by UBS, Goldman Sachs, Morgan Stanley (NYSE:MS), Deutsche Bank (ETR:DBKGn), Barclays (LON:BARC), Beacon Policy Advisors in Washington and Larry Sabato’s Crystal Ball (NYSE:BALL) with the University of Virginia’s Center for Politics. The list, which is not exhaustive, includes the most pivotal counties in the seven battleground “swing” states that will determine the winner. ARIZONAArizona’s Maricopa County, home to 4.5 million people — over half of the state’s population — is seen as one of the most pivotal battlegrounds across the United States, both for the presidency and the Senate.Biden in 2020 was the first Democrat to win the county since President Harry Truman in 1948, according to Beacon, and a strong performance by Harris would bode extremely well for her in the swing state.Polls there close at 9 p.m. ET (0200 GMT), but the state does not begin reporting results until roughly 10 p.m.   Election officials have warned it could take up to 13 days to tabulate all the ballots in Maricopa, according to local media reports. In 2020, the Associated Press and Fox News called the state for Biden hours after polls closed, but other outlets waited nine days to declare him the winner.FLORIDAWith Trump holding a near double-digit lead over Harris in Florida polls, the Sunshine State is not a battleground. But politicos will be watching Miami-Dade County, the state’s most populous, which is also expected to report results relatively early after polls close there at 7 p.m. ET. The county was solidly Democratic from the 2008 election cycle through to 2016, when Hillary Clinton won it by 30 points, but by 2020 Biden only had a seven-point edge.As such, it’s seen as a critical county for Harris. Further erosion of support for the vice president in the Miami area, particularly among Hispanic voters, could spell broader trouble for her, according to Beacon. Goldman Sachs analysts noted that the U.S. dollar reacted strongly to that weaker Democratic Miami-Dade result in 2020, as investors raised their bets on a potential Trump win.GEORGIAGeorgia’s DeKalb, Fulton and Gwinnett counties are also seen as bellwethers for Democrats’ performance in the state. Biden built strong margins in the urban counties, helping him narrowly win the swing state in 2020. Analysts also point to nearby Cobb County, where Democrats have been gaining votes over the last two presidential elections and which may indicate how well Harris is performing with suburban voters, a key voting bloc. Barclays also flagged Fayette County, south of Atlanta, as a county that has trended toward Democrats in the last two elections.Polls close in Georgia at 7 p.m. ET but early-vote counting starts at 7 a.m. ET, meaning the state could post results faster than some other battlegrounds. MICHIGANSaginaw County has backed the candidate who went on to win the state in every presidential race since 2008, according to Sabato’s Crystal Ball. Biden narrowly won the state in 2020.UBS and Morgan Stanley also flagged Wayne County, which includes most of the Detroit metro area, as another critical Michigan county. Biden won Wayne by a roughly 2-1 margin in 2020, but if Trump improves his margins there it could bode well for the former president in the swing state. Most polls in Michigan close at 8 p.m. ET, and the state has adopted policies since the 2020 election that should speed up vote counting. NEVADAIn Nevada, which was won by Biden by less than 3 percentage points in 2020, Clark County is the heavyweight with more than half the state’s population, including the Las Vegas area. For Trump to win Nevada, he has to minimize Democratic votes in the county. Washoe County, home to Reno and Nevada’s second most populous county, is also one to watch in the swing state, said analysts. Republicans are hoping to eat into Democratic margins there as well. Nevada polls close at 10 p.m. ET, although much of the state is expected to vote by mail, which could delay some results. NORTH CAROLINADemocrats have not won a presidential race in North Carolina since President Barack Obama in 2008, but close polling has made it a swing state in 2024. Wake and Mecklenburg counties, which host North Carolina’s biggest cities and have become Democratic strongholds, are the ones to watch, said Beacon analysts. Harris would have to run up large margins there to win back the state.Sabato’s Crystal Ball also flagged suburban Cabarrus County, which neighbors Charlotte, as another county to keep an eye on. Trump comfortably won Cabarrus in 2016, but his margin slipped by 10 percentage points in 2020, the biggest swing away from him in the state. Nash County and New Hanover County are also two counties that flipped from Trump in 2016 to Biden in 2020, according to Barclays.Polls in North Carolina close at 7:30 p.m. ET, and state officials can begin tabulating early votes at 5 p.m. ET.PENNSYLVANIAPennsylvania ultimately handed Biden the presidency four days after Election Day in 2020, and is widely seen as a critical state for both candidates in 2024. UBS analysts say a good bellwether for which way the state will go is Erie County, a working-class area that Trump won in 2016 and Biden narrowly took in 2020. Northampton County similarly flipped to Biden in 2020, and Barclays said if Trump can win Bucks County — one he narrowly lost to Biden in 2020 — it could put him on track to win the key swing state.Analysts at Sabato’s Crystal Ball also flagged Lackawanna County, home to Scranton, Biden’s birthplace. Lackawanna is another working-class county, but in contrast to Erie it has trended Republican in recent years. A strong turnout for Trump there could suggest a robust performance statewide. Polls close in Pennsylvania at 8 p.m. ET, and state officials cannot begin processing early ballots until 7 a.m. ET, which could slow results — several other swing states allow for ballot processing weeks before Election Day. WISCONSIN In 2020, Biden won over 75% of the vote in Wisconsin’s Dane County, and Harris would likewise have to lock in a large block of support there to take the state. Waukesha County, once a Republican stronghold that has drifted towards Democrats in recent elections, is another on analysts’ watchlist. Sauk and Door counties are another two swing state counties that flipped from Trump to Biden that will be on analysts’ radar as well.Polls in Wisconsin close at 9 p.m. ET, although analysts caution results could be slow as early ballots are processed on Election Day, and votes from Milwaukee sometimes are not reported until early the following morning. More

The BoC slashed its key policy rate by 50 basis points to 3.75% last month, its fourth cut in a row and the first larger-than-usual move in more than four years, after declaring an almost victory over inflation.The members of the rate-setting committee, however, discussed the merits of a 25 basis point cut but saw a strong consensus among them for the larger step, the summary of deliberations said. “Governing Council members wanted to convey that a larger step was appropriate given the economic data seen since July,” it said.There was concern among the members that many would construe the bigger rate cut as a sign of economic trouble, leading to expectations of further moves of this size or to assumptions that the policy interest rate would need to become very accommodative in the future.”Members felt that a larger step was appropriate given the ongoing softness in the labor market and the need for stronger economic growth to absorb excess supply,” it said. Inflation in Canada eased to 1.6% in September, falling below the bank’s mid-point of the 1% to 3% control range as over a 23-year high interest rate shrunk consumer prices. But it has also throttled growth with the GDP stalling in August and expectations are that it would miss the BoC’s revised 1.5% target in the third quarter.The central bank and economists feel the latest government’s efforts to curtail population growth would soften the GDP and consumption in the coming quarters. “The slowing rate of population growth would act as a brake on total consumption growth,” the minutes said, adding it could slow in the near term even though reductions in interest rates would ultimately support stronger growth in consumption. Prime Minister Justin Trudeau’s government announced measures last month which could lead to a population decline of 0.2% in both 2025 and 2026 before returning to a marginal growth in 2027.The six-member committee also discussed the risk that lower interest rates, pent-up demand, and new rules for mortgage qualification could increase demand for housing and boost housing prices more than expected. By Promit Mukherjee, editing by Dale Smith(promit.mukherjee@thomsonreuters.com) More

MADRID (Reuters) -Damages to businesses in towns hit by floods in eastern Spain could rise to over 10 billion euros, with banks loan exposure to the area worth alone around 20 billion euros ($21.82 billion), representatives for local firms and a Bank of Spain official said on Tuesday.On Tuesday, the government earmarked around 10.6 billion euros to help victims of some of Europe’s worst flooding in decades. At least 217 people died and more are still unaccounted for.Spanish banks’ loans to areas worst hit by floods mainly in Valencia region would rise to around 13 billion euros to households and 7 billion euros to companies, said Angel Estrada, the central bank’s head of financial stability.In total, the central bank identified 23,000 companies with outstanding loans and 472,000 loan holders in those regions.Of those 150,000 were mortgage contracts on which the government and banks agreed to offer loan moratoriums. Clients will be spared from paying monthly instalments for the first three months and just pay interests for an additional nine months on their mortgages.Estrada said it was important to make sure that those moratoriums would not lead to reclassification of credits that might trigger higher provisions.Jose Vicente Morata, Chairman of Commerce for Valencia region, said that the damage to businesses in the worst affected area of this region would provisionally rise “well over” 10 billion euros.Estrada said it was still too early to assess the precise economic impact of the floods though he acknowledged that there had been a more “significant destruction of capital” than during the COVID-19 pandemic.He said the banking sector would be “able to absorb” any impact, though they had laid bare that climate risks were materialising faster than expected and banks should now focus on measuring accelerating physical risks as well as addressing the transition risks of shifting to a lower carbon economy.Mirenchu del Valle, chairman of Spain’s UNESPA insurance association, said the Valencia floods would represent Spain’s “most significant damages claim for a climate event”, without putting a potential figure on it. A spokesperson for the Economy Ministry, which oversees the insurance sector, declined to provide a figure for the claims so far.So far, the most costly economic event by floods took place in Bilbao in 1983, when claims rose to more than 821 million euros and 1.08bln included associated damage for high winds, according to data from the Spanish insurance consortium.($1 = 0.9175 euros) More

LONDON (Reuters) – Hedge fund performance, on average, is better when the U.S. president is a Democrat, data from research firm HFR showed on Tuesday, as U.S. voters headed to the polls.Under Democratic Party presidents, hedge funds averaged a 10.2% annualized return, whereas under a Republican president hedge funds returned 8.7% on average, showed the data from Hedge Fund Research’s main index which tracks the returns of global hedge funds.This data from HFR’s HFRI Fund Weighted Composite Index tracked hedge funds’ performance averaged over presidential terms from 1990 to 2024.Hedge funds performed roughly twice as well when the House and Senate majority were in one party than they did with a split legislative body, the HFR data showed.    Performance when Democrats had a majority in the U.S. Congress came in higher than with Republicans, the data also showed.By strategy, stock hedge funds fared the best under Democrats — averaging a 12.7% return compared to 9.6% under the Republicans, over the last 34 years, said HFR data. Hedge funds trading M&A deals and the relative value between different financial assets also had higher returns during years when the president was a Democrat, the data showed.Funds speculating on macroeconomics or so-called macro hedge funds were the only strategy listed with higher returns during Republican presidents, according to HFR. The dispersion between hedge fund performance, or the difference between the best and worst performing funds differed the most during years when the president was a Democrat, it added.  Hedge funds’ annualized performance averaged the highest during the first year of a president’s term and came in lowest during two term presidencies in the second, sixth and last year.With 2008 and the financial crisis removed, the result skewed marginally towards Republicans. Hedge funds returned 10.7% with Republicans during these years, compared to a 10.2% result with presidents from the Democratic Party, HFR said.   (This story has been refiled to fix a typo in ‘tracked,’ in paragraph 3) More

COPENHAGEN (Reuters) -Demand for green power in the United States will grow regardless of who is the country’s next president, major players in the wind energy sector Vestas and Orsted (CSE:ORSTED) said on Tuesday.Offshore wind developers have seen profits shrink in recent years due to rising raw material costs, high interest rates, inadequate grid connections, supply chain bottlenecks, and Chinese competition, prompting companies like BP (NYSE:BP) and Equinor to scale back their ambitions.In the United States, the nascent offshore wind industry has been roiled by cancelled projects, postponed lease sales and a construction accident at the country’s first major offshore wind project.Orsted on Tuesday flagged construction problems and higher costs at a large U.S. offshore wind project.Democratic Vice President Kamala Harris has championed ambitious offshore wind targets as part of President Joe Biden’s administration.She is in a tight race with Republican candidate Donald Trump, who has said he will scrap offshore wind projects through an executive order on his first day in office if he retakes the White House, claiming wind turbines ruin the environment and kill birds and whales.”We see many – both corporates and states – having an increased demand from reshoring of industries and from the tech industry,” Orsted CEO Mads Nipper told journalists on Tuesday.”We see it as an all boats rise situation where all energy sources, not least for electricity, are needed no matter who ends up in the White House.”NEW GREEN ELECTRICITY NEEDEDShares of Vestas, the world’s largest wind turbine manufacturer, slumped more than 10% on Tuesday after the company warned of lower profit margins this year.Vestas CEO Henrik Andersen downplayed investor concerns around Tuesday’s election outcome.”I don’t think there’s any of the order intake that is dependent on today’s election,” he said at an analyst call.”There is a general need and demand higher than the supply right now for new green electrons to data centres among other things,” he added.Orsted, the world’s biggest offshore wind farm developer, last year booked massive impairments for cancelled U.S. offshore projects due to rising inflation, higher interest rates and supply chain delays.”It’s an industry being built from scratch and it is being very strongly supported by not least the northeastern states, where the alternatives for energy supply and especially green energy supply are difficult,” Nipper said.Orsted said scarce installation vessels and problems with installing an offshore substation at the 704 megawatt (MW) Revolution Wind project contributed to costs rising by another 1.7 billion Danish crowns ($248 million) in the third quarter. Group operating profit fell 14% to 4.44 billion crowns in the quarter. Analysts had on average forecast 4.61 billion in a company-provided poll.Profits were helped by a reversal of some of the losses Orsted booked last year in the United States. Its shares were down 1.5% at 1239 GMT. They have risen some 12% this year but are down more than a third from their peak in early 2021.($1 = 6.8472 Danish crowns) More