Economy

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The Treasury set a growth target of 1% this year and 1.2% in 2025 in its multi-year budget plan unveiled in September.Italian gross domestic product stagnated in the third quarter compared with the previous three months, preliminary data showed last week, missing forecasts and casting a shadow over growth prospects in the euro zone’s third largest economy.Barring further revisions, reaching 1% growth this year would require a very strong GDP reading in the fourth quarter, which the Bank of Italy said looks unlikely.”According to recent data, which is still insufficient to paint a complete and reliable picture, economic activity is seen struggling to regain momentum at the end of this year,” the central bank said in parliamentary testimony on Rome’s 2025 budget.Italy’s strong growth rebound from the COVID-19 pandemic, fueled by costly government-funded building incentives, is already petering out.ING economist Paolo Pizzoli said after the third quarter flash estimate that without a strong fourth quarter rebound this year’s growth would be no higher than 0.5-0.6%, following last year’s 0.7% rate.Budget watchdog UPB also warned on Tuesday that the government’s estimates were increasingly subject to downside risks.” Next (LON:NXT) year’s target relies heavily on domestic demand, which depends to a large extent on the implementation of Italy’s post-COVID recovery plan,” UPB said.Italy has spent around 45% of the more than 100 billion euros ($108.96 billion) it has received so far from European Union COVID-19 recovery funds, short of a target set in 2022.Implementation of the plan is seen by investors and rating agencies as an important measure of Italy’s ability to boost its sluggish economy and keep in check the country’s creaking public finances.($1 = 0.9178 euros) More

LONDON (Reuters) – The global monetary easing cycle ground along in October, with central banks across developed and emerging economies lowering interest rates ahead of the year’s biggest geopolitical event, the U.S. election.Three of the four central banks overseeing the 10 most heavily traded currencies that held meetings in October lowered benchmarks. Central banks in New Zealand and Canada each shaved 50 basis points off their interest rates while the European Central Bank delivered a 25 bps cut.Japan left rates unchanged while the U.S. Federal Reserve as well as central banks in Australia, Switzerland, Norway and the UK did not hold rate-setting meetings. Attention has now moved on to how deep and how long the rate-cutting cycle across developed markets will be. The U.S. election results could play a key role in shaping U.S. and global monetary policy going forward, with the Fed widely expected to cut rates by 25 bps on Thursday.Democrat contender Kamala Harris is seen as broadly maintaining the status quo in terms of growth and inflation in the world’s largest economy. Republican candidate Donald Trump had pledged to ramp up trade tariffs, likely sparking a tit-for-tat trade war, which would probably be inflationary and limit rate-cutting potential.Across emerging markets, 13 of the Reuters sample of 18 central banks in developing economies held rate-setting meetings in October. Six of them delivered cuts, with China, South Korea, Thailand, the Philippines and Chile trimming benchmarks by 25 bps each and Colombia lowering by 50 bps. Russia was the sole emerging market central bank to hike, upping rates by 200 bps, while the remaining six kept rates unchanged. Emerging market central banks had frontrun their developed market peers in the latest rate-cutting cycle. Recent easing by developing nations’ policymakers had bolstered emerging market bonds this year, analysts said. “We think those rate cuts may soon be paused,” Jean Boivin, head of the BlackRock (NYSE:BLK) Investment Institute said in a note to clients. The latest moves in emerging markets took the tally of cuts since the start of the year to 1,710 bps across 42 moves – outstripping last year’s total of 945 bps of easing. Total (EPA:TTEF) hikes so far in 2024 stood at 1,300 bps. More

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Any downward pressure on banks’ margins would be countered, at least in part, by a “more favourable evolution of the volume of activity,” the bank said in its semiannual financial stability report.Spanish banks benefited when interest rates rose following an inflation hike in 2022 and 2023 by increasing the rates they charged on loans, while limiting the rates they paid on deposits.That tailwind is now reversing and European lenders are having to adapt to a changing market environment as benchmark interest rates fall.In the first half of this year, the consolidated net profit at Spanish banks rose 22% year-on-year, boosting their return-on-equity ratio (ROE) by 2.2 percentage points to 13.9%.Net interest income, earnings on loans minus deposit costs, rose 14.5% year-on-year to June, down from a 27% rise in the first half of 2023.Banks expect lower borrowing costs will bolster lending activity. Against that backdrop, the stock of loans to the private sector in Spain has returned to an upward trend and grew a seasonally adjusted 0.5% between May and August.The central bank said the main risk to the banks’ stability was a possible escalation of tensions in the Ukraine and the Middle East as well as the outcome of the U.S. elections because of potential repercussions on trade relations. More

UK Chancellor Rachel Reeves detailed £40 billion of tax hikes to plug shortfalls while also adding just over £30 bn in annual borrowing to the previous government’s Spring Budget projections.Following on from the budget, gilt yields have risen. Short-term interest rate expectations have picked up, and higher interest costs have added effectively another £5 bn in debt servicing costs to the Chancellor’s bill, eating further into her fiscal headroom.“To be sure, for the Autumn Budget to pay off, we will need to see a bigger growth dividend from both day-to-day spending and capex. At present, the OBR expects sustained growth improvement to only crystalise between 2030 and 2035. The faster it does, the better,” analysts at Deustche Bank aid, in a note dated Nov. 5.Following the Budget, Reeves noted that the public finances were now unequivocally on stabler footing. However, “despite the big tax raising event, big challenges remain for the Chancellor. New fiscal rules have shifted the fiscal headroom arithmetic – but given that the Chancellor has opted to use much of this, fiscal constraints will continue to be a big feature of future fiscal events,” the German bank added.And more risks linger going forward. “The Chancellor may have to return to raise more taxes or cut spending – or more borrowing may ultimately be inevitable over the course of parliament’s session,” Deutsche Bank said. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to receive the newsletter every weekday. Explore all of our newsletters hereGood morning and welcome back to FirstFT. Today we’re covering:After a tumultuous campaign that has seen two assassination attempts, a candidate withdraw and months of deadlocked polls, we have finally made it to voting day.After entering the race for the White House only in July after President Joe Biden withdrew, Kamala Harris made her final pitch to voters outside the Philadelphia Museum of Art in Pennsylvania. She gave voters an upbeat message and called on them to back her “fresh start” for America. Donald Trump was also in Pennsylvania, the biggest prize of the seven swing states, on the final day of campaigning where he focused on his key themes of the economy and immigration. He promised supporters in Pittsburgh a new “golden age” before finishing his campaign in Grand Rapids, Michigan, at 2am. Both candidates revealed last-minute endorsements to cheering supporters. Harris was backed by rapper Fat Joe, whose parents are of Puerto Rican and Cuban descent. He called on Latinos to vote for Harris.Trump, meanwhile, was backed by podcaster Joe Rogan, who has a large, young male following, and Fox News host Megyn Kelly at the Pittsburgh rally.In the closing days of campaigning the Harris camp has been lifted by polling that suggests support from late-breaking undecided voters, particularly women who have been flocking to her and the message on reproductive rights. Trump, on the other hand, has tapped into male anxieties and grievances to build up a strong lead among male voters. What to look out for as results come in: Expect a long evening. Polls will start closing at 6pm Eastern time (11pm GMT), with the last polls closing at midnight ET in Alaska. News agencies will project results for each state, not just for the presidency but also for races in the House of Representatives and Senate. The winner needs 270 of the 538 electoral college votes to clinch the presidency. The FT will be following the results as they are announced on this live map.But we may not have a clear result for several days. Each of the swing states counts votes at different speeds, with Arizona, for instance, estimating it could take 10 to 13 days to report full results. Razor-thin margins could lead to recounts, and legal challenges could drag out the process. Just after midnight local time, the tiny hamlet of Dixville Notch, New Hampshire, became the first to declare results, with Trump winning three votes and Harris winning three. Make sure you are signed up to receive our US election newsletter, with editions both today and tomorrow. And here is more analysis, including on how authorities are braced for the prospect of civil unrest, the corporate winners and losers and Mohamed El-Erian on the five crucial economic areas for the incoming president.Here’s what else we’re watching today:Results: Apollo Global, Ferrari, Burger King owner Restaurant Brands and commodities group ADM report results.Five more top stories1. Boeing workers have voted by 59 per cent to support an improved pay offer and end their strike. The industrial action, which began on September 13, has cost Boeing an estimated $50mn a day and halted production of the 737 Max at Boeing’s Washington factories. Here’s more on the terms of the deal. 2. Shares in Palantir Technologies surged as much as 15 per cent in after-hours trading yesterday as Peter Thiel’s data analytics group reported record quarterly income and raised its revenue forecast, citing high demand for its artificial intelligence software. Read the full story.3. Ukrainian officials said yesterday that their forces had fired at North Korean soldiers for the first time since the latter’s deployment by Russia to its western Kursk region. The clashes mark the first direct intervention by a foreign army since Russia’s full-scale invasion of Ukraine began in 2022. We have more updates.4. Taiwan’s soaring energy prices and growing outages are affecting TSMC, the world’s largest chipmaker. Following a series of price increases, the company now expects to pay more for power in its home country than anywhere else. Here’s how Taiwan’s shaky energy transition is straining its industry.5. Lawsuits over decisions taken by previous governments in Argentina, from expropriations to changes to bond payments, are winding their way through courts in the US and Europe, and plaintiffs are piling pressure on the government of Javier Milei to negotiate. Billions of dollars in damages are at stake and could complicate the president’s attempts to fix the country’s struggling economy.The Big Read© FT montage/GettyOver the past three years, Europe’s largest economy has slowly but steadily sunk into crisis. Germany has seen no meaningful quarterly real GDP growth since late 2021, and annual GDP is poised to shrink for the second year in a row, with the car, chemicals and engineering sectors all in a slump. What is happening right now is “unprecedented”, one analyst said, and “of a completely different order of magnitude” from previous crises.We’re also reading . . . Israel unbound: Buoyed by military gains, Israeli Prime Minister Benjamin Netanyahu now wants to dismantle Iran’s forces across the Middle East and reshape the region.Chinese property: After a more than three-year slowdown, there are some signs of life in the country’s real estate market. But interviews in six cities show there are lingering doubts about its longer-term prospects.Trade policy: Politicians reach easily for tariffs, but problems such as climate change and inequality have more effective but less popular solutions, writes economist Minouche Shafik.Chart of the dayThe frenzied contest between Trump and Harris, and Joe Biden before her, has generated reams of data, shedding light on US public opinion and voter attitudes on everything from the economy and foreign policy to the candidates’ character. Here are seven charts that have defined the 2024 presidential election.Some content could not load. Check your internet connection or browser settings.Take a break from the newsQuincy Jones worked with artists including Michael Jackson, Frank Sinatra and Billie Holiday More