Great Britain

Latest story

113 Shares99 Views

E.U. Relaxes Trade Rules on Electric Cars From Britain

by

The NewsThe European Union plans to postpone strict local-content rules that would have led to costly tariffs imposed on cars traded between the bloc and Britain beginning Jan. 1.“This removes the threat of tariffs on export of E.U. electric vehicles to the U.K. and vice versa,” Maros Sefcovic, the European Union’s executive vice president, told journalists in Brussels Wednesday.The tariffs would have forced consumers in Britain and the European Union to pay more for many electric vehicles. Andrew Testa for The New York TimesWhy It Matters: Relief for carmakers that were facing tariffs.The proposal provides for a three-year delay in the trade rule, and represents a huge reprieve for many carmakers, especially those with plants in Britain. Eighty percent of cars made in Britain are exported, with 60 percent of them going to the European Union. The delay means that British electric vehicles with batteries made outside Europe will no longer face tariffs of up to 10 percent starting in three weeks.European carmakers would have faced similar hits in their sales of cars to Britain, a major market. The delay will probably be seen as a win for Prime Minister Rishi Sunak’s British government, which lobbied for the change along with the European car industry.Background: Europe and Britain do not make enough batteries.The rule would have made it virtually impossible for cars made in Britain with batteries from Asia to be imported tariff-free into the European Union. Neither Britain nor the Europe Union is manufacturing enough batteries for the rising number of electric vehicles expected to be produced in coming years. Batteries are the most expensive components of electric vehicles.Local origin rules are designed to discourage automakers from importing expensive parts, and to encourage local production. But this rule would have been counterproductive, the auto industry argued, by forcing consumers to pay more for many electric vehicles. Those higher prices could have opened the door for electric vehicles from outside Europe, especially China, whose makers are churning out low-cost models that have gained traction in Britain.What Happens Next: Time for the battery industry “to catch up.”The proposal still needs the support of European Union governments. Early indications are that it will be welcomed by auto industry. An extension would give “the European battery industry time to catch up,” the Society of Motor Manufacturers and Traders, a British trade group, said Wednesday in a statement.Mr. Sefcovic also said the European Union planned to provide 3 billion euros ($3.25 billion) to encourage local manufacturing of batteries. More

More stories

  • 138 Shares149 Views

    in Economy

    At COP28, More Than 20 Nations Pledge to Triple Nuclear Capacity

    by

    The group, including Britain, France and the United States, said the agreement was critical to meeting nations’ climate commitments.The United States and 21 other countries pledged on Saturday at the United Nations climate summit in Dubai to triple nuclear energy capacity by 2050, saying the revival of nuclear power was critical for cutting carbon emissions to near zero in the coming decades.Proponents of nuclear energy, which supplies 18 percent of electricity in the United States, say it is a clean, safe and reliable complement to wind and solar energy. But a significant hurdle is funding.Last month, a developer of small nuclear reactors in Idaho said it was canceling a project that had been expected to be part of a new wave of power plants. The cost of building the reactors had risen to $9.3 billion from $5.3 billion because of increasing interest rates and inflation.Britain, Canada, France, Ghana, South Korea, Sweden and the United Arab Emirates were among the 22 countries that signed the declaration to triple capacity from 2020 levels.Tripling nuclear energy capacity by 2050, which would also help Europe reduce its dependence on Russia oil and gas, would require significant investment. In advanced economies, which have nearly 70 percent of global nuclear capacity, investments has stalled as construction costs have soared, projects have run over budget and faced delays. On top of cost, another hurdle to expanding nuclear capacity is that plants are slower to build than many other forms of power.Addressing the issue of financing, John Kerry, President Biden’s climate envoy, said that there were “trillions of dollars” available that could be used for investment in nuclear. “We are not making the argument to anybody that this is absolutely going to be the sweeping alternative to every other energy source — no, that’s not what brings us here,” he said. But, he added, the science has shown that “you can’t get to net-zero 2050 without some nuclear.”Nuclear power does not emit carbon, and an International Energy Agency report last year that said nuclear was crucial to helping to reduce carbon emissions in line with the Paris Agreement goals outlined in 2015. President Emmanuel Macron of France said nuclear energy, including small modular reactors, was an “indispensable solution” to efforts to curb climate change. France, Europe’s biggest producer of nuclear power, gets about 70 percent of its own electricity from nuclear stations.Mr. Macron and other leaders, including Prime Minister Ulf Kristersson of Sweden, called on the World Bank and international financial institutions to help finance nuclear projects. Mr. Kristersson said that governments must “assume a role in sharing the financial risks to strengthen the conditions and provide additional incentives for investments in nuclear energy.”While world leaders on Saturday called nuclear the most effective alternative to fossil fuels, some climate activists said nuclear energy was not a panacea.David Tong, a researcher at Oil Change International, said the pledge was divorced from the reality of nuclear energy — that it was too costly and too slow. “It’s a self-serving political pledge that doesn’t reflect the role that nuclear is likely to play in the energy transition, which is menial,” he said. “There is very small growth in nuclear — certainly nothing like tripling.” He said he rejected the stance that there was no pathway to limit global warming to 1.5 degrees Celsius above preindustrial levels, a goal set in the Paris Agreement to avoid the worst effects of global warming, without nuclear. Masayoshi Iyoda, an activist from Japan with 350.org, an international climate action campaign, cited the nuclear disaster at Fukushima in 2011 and said that nuclear power was a dangerous distraction from decarbonization goals. “It is simply too costly, too risky, too undemocratic, and too time-consuming,” he said in a statement.“We already have cheaper, safer, democratic, and faster solutions to the climate crisis, and they are renewable energy and energy efficiency,” Mr. Iyoda said.All but four of the 31 reactors that have begun construction since 2017 were designed by Russia or China, with China poised to become the leading nuclear power producer by 2030, the International Energy Agency said. This year, Germany shut its last three nuclear plants.Nuclear capacity rose in the 1980s, particularly in Europe and North America, but dropped sharply over the subsequent years after accidents at Three Mile Island in Pennsylvania in 1979 and Chernobyl in 1986. New technology and tighter regulations have been put in place since then. Americans are conflicted about nuclear power, but a growing number favor expansion compared with a few years ago, according to a Pew Research Center study published in August. More

  • 125 Shares189 Views

    in Economy

    For Many Small-Business Owners, a Necessary Shift to Digital Payments

    by

    The pandemic accelerated a transition to cashless payments, forcing a reckoning among small-business owners. But there are benefits: One owner said the switch saved her $3,000 a month.“Making It Work” is a series about small-business owners striving to endure hard times.When Egypt Otis opened her business, Comma Bookstore and Social Hub, three years ago in Flint, Mich., the pandemic was full blown. But her neighbors welcomed the literature and art she sold in her store that celebrated people of color, as well as the community programs she hosted.Despite the warm reception, Ms. Otis quickly found that she had a sales problem: Her customers wanted to pay with their cellphones.“I realized that people were hardly keeping a wallet or a physical card, which limited my ability to sell and make money,” Ms. Otis said. So she upgraded her transactions platform to include tap-and-go purchases on mobile devices. “People are not carrying cash,” she said. “It’s becoming obsolete.”The number of Americans who say they are “cashless” has jumped in the last five years. Forty-one percent of Americans said they did not use cash for their purchases in a typical week in 2022, up from 29 percent in 2018, according to a Pew Research Center survey released last October.Small-business owners increasingly are making the switch to cashless payments for several reasons, including rising consumer demand, faster checkout, lower labor costs and increased security. Those who wait risk losing revenue, experts say.But there are drawbacks to going cash-free, including a learning curve for entrepreneurs who may not understand how to set up digital payments, a lack of accessibility to credit cards for low-income consumers, and privacy concerns.Signs at a pizza joint in New York indicating it takes multiple forms of cashless payments, a switch that accelerated in the pandemic.Karsten Moran for The New York TimesJuanny Romero was an early adopter of digital payments for her small business. Fifteen years ago, when she founded Mothership Coffee Roasters, a chain of coffee shops in Las Vegas, she began using Square, a low-cost digital payments system for small businesses.“​​I was a young businesswoman and not astute,” she said. But Square saved her $3,000 a month in merchant fees for credit card processing.As Ms. Romero expanded her businesses (to four locations in Las Vegas, with two more on the way), she added more payment options, including Apple Pay and Google Pay.But she noticed a shift during the pandemic: Her customers no longer wanted to use cash, and her employees did not want to handle it. “We didn’t know where Covid was coming from,” she said. “There were still people bringing in cash, but it was scary and dangerous.”When the coin shortage hit in 2020, she ran out of cash altogether, but Ms. Romero found it saved on labor costs. “My managers were standing in line for two hours to deposit the cash,” she said. “I can’t get an armored car service to pick up $100 in cash.”Even so, customer demand prompted her to return to cash sales, which Ms. Romero said are holding steady at about 11 percent of her overall revenue. She said she would go cashless if the share dipped below 10 percent.A digital transaction at Mothership Coffee Roasters in Las Vegas.Bridget Bennett for The New York TimesThe pressure to adapt is growing. More that 2.8 billion mobile wallets were in use at the end of 2020, and that is projected to increase nearly 74 percent to 4.8 billion — nearly 60 percent of the world’s population — by the end of 2025, according to a study released in 2021 by Boku, a fintech companyThe United States lags other countries in adopting cashless payments. Among the most cashless countries in the world is Britain, where the pound makes up only 1 percent of all transactions, according to a report from Merchant Machine, a payment research firm based in London. But in the United States, some small-business owners do not understand the complexities of digital payments.“Smaller merchants, they don’t always have the knowledge and resources to know what to do,” said Ginger Siegel, who leads the North America small-business segment at Mastercard, which offers training to business owners like Ms. Otis of Comma Bookstore.Ms. Otis said she noticed an increase in sales when she began offering mobile payments, which made the checkout process faster. “As a retailer, you want to make the experience as efficient as possible,” she said. “It is a matter of survival.”A veteran using a tap-and-go device to collect donations for the Royal British Legion in London in 2020.Guy Bell/AlamyBenefits include immediate payment, increased sales and the ability to sell to customers who might use other currencies. “You have to set it up, but it’s worth it,” said Kimberley A. Eddleston, a professor of entrepreneurship at Northeastern University.But some business owners say they are hesitant to move too quickly, worried that today’s technology could become obsolete tomorrow. And there are compatibility and cost issues to consider, said Wayne Read, the chief executive of Forged & Formed, an online jeweler with a physical store, Studio D Jewelers, in Woodstock, Ill. In his jewelry sales, where items can be pricey, he said a speedy transaction might not be suitable. “We don’t want people to feel they have rushed their decision,” he said.Despite advances in technology, many Americans still have little or no access to financial services like credit cards and mobile wallets, although that is slowly improving. An estimated 5.9 million households did not have a bank account in 2021, down from 7.1 million households in 2019, according to a survey by the Federal Reserve.Rewards points displayed on a checkout screen at Mothership. Mobile apps allow for cashless payments and can increase customer loyalty.Bridget Bennett for The New York TimesAnother obstacle to adoption is privacy concerns: Some people prefer the anonymity that cash provides. And cash is perceived as a way for consumers to remain aware of expenditures. Complicating the transition to the digital economy, the recent banking turmoil in the United States has made many depositors question the security of financial institutions.But experts agree that cash is unlikely to go away. Consumers in lower income households continue to rely on cash for payments, according to the Fed survey.And small-business owners say that despite the speed and efficiency that cashless payments offer, cash is still a viable option for their customers.“At the end of the day, I know the people I serve,” Ms. Romero said. “I would feel conflicted if I didn’t do the right thing.” More

  • 100 Shares109 Views

    in Economy

    Facial Recognition Spreads as Tool to Fight Shoplifting

    by

    Simon Mackenzie, a security officer at the discount retailer QD Stores outside London, was short of breath. He had just chased after three shoplifters who had taken off with several packages of laundry soap. Before the police arrived, he sat at a back-room desk to do something important: Capture the culprits’ faces.On an aging desktop computer, he pulled up security camera footage, pausing to zoom in and save a photo of each thief. He then logged in to a facial recognition program, Facewatch, which his store uses to identify shoplifters. The next time those people enter any shop within a few miles that uses Facewatch, store staff will receive an alert.“It’s like having somebody with you saying, ‘That person you bagged last week just came back in,’” Mr. Mackenzie said.Use of facial recognition technology by the police has been heavily scrutinized in recent years, but its application by private businesses has received less attention. Now, as the technology improves and its cost falls, the systems are reaching further into people’s lives. No longer just the purview of government agencies, facial recognition is increasingly being deployed to identify shoplifters, problematic customers and legal adversaries.Facewatch, a British company, is used by retailers across the country frustrated by petty crime. For as little as 250 pounds a month, or roughly $320, Facewatch offers access to a customized watchlist that stores near one another share. When Facewatch spots a flagged face, an alert is sent to a smartphone at the shop, where employees decide whether to keep a close eye on the person or ask the person to leave.Mr. Mackenzie adds one or two new faces every week, he said, mainly people who steal diapers, groceries, pet supplies and other low-cost goods. He said their economic hardship made him sympathetic, but that the number of thefts had gotten so out of hand that facial recognition was needed. Usually at least once a day, Facewatch alerts him that somebody on the watchlist has entered the store.Mr. Mackenzie adds one or two new faces a week to the Facewatch watch list that stores in the area share.Suzie Howell for The New York TimesA sign at a supermarket that uses Facewatch in Bristol, England. Suzie Howell for The New York TimesFacial recognition technology is proliferating as Western countries grapple with advances brought on by artificial intelligence. The European Union is drafting rules that would ban many of facial recognition’s uses, while Eric Adams, the mayor of New York City, has encouraged retailers to try the technology to fight crime. MSG Entertainment, the owner of Madison Square Garden and Radio City Music Hall, has used automated facial recognition to refuse entry to lawyers whose firms have sued the company.Among democratic nations, Britain is at the forefront of using live facial recognition, with courts and regulators signing off on its use. The police in London and Cardiff are experimenting with the technology to identify wanted criminals as they walk down the street. In May, it was used to scan the crowds at the coronation of King Charles III.But the use by retailers has drawn criticism as a disproportionate solution for minor crimes. Individuals have little way of knowing they are on the watchlist or how to appeal. In a legal complaint last year, Big Brother Watch, a civil society group, called it “Orwellian in the extreme.”Fraser Sampson, Britain’s biometrics and surveillance camera commissioner, who advises the government on policy, said there was “a nervousness and a hesitancy” around facial recognition technology because of privacy concerns and poorly performing algorithms in the past.“But I think in terms of speed, scale, accuracy and cost, facial recognition technology can in some areas, you know, literally be a game changer,” he said. “That means its arrival and deployment is probably inevitable. It’s just a case of when.”‘You can’t expect the police to come’Simon Gordon, the owner of Gordon’s Wine Bar in London, founded Facewatch in 2010. As a business owner, “you’ve got to help yourself,” he said. Suzie Howell for The New York TimesFacewatch was founded in 2010 by Simon Gordon, the owner of a popular 19th-century wine bar in central London known for its cellarlike interior and popularity among pickpockets.At the time, Mr. Gordon hired software developers to create an online tool to share security camera footage with the authorities, hoping it would save the police time filing incident reports and result in more arrests.There was limited interest, but Mr. Gordon’s fascination with security technology was piqued. He followed facial recognition developments and had the idea for a watchlist that retailers could share and contribute to. It was like the photos of shoplifters that stores keep next to the register, but supercharged into a collective database to identify bad guys in real time.By 2018, Mr. Gordon felt the technology was ready for commercial use.“You’ve got to help yourself,” he said in an interview. “You can’t expect the police to come.”Facewatch, which licenses facial recognition software made by Real Networks and Amazon, is now inside nearly 400 stores across Britain. Trained on millions of pictures and videos, the systems read the biometric information of a face as the person walks into a shop and check it against a database of flagged people.Facewatch’s watchlist is constantly growing as stores upload photos of shoplifters and problematic customers. Once added, a person remains there for a year before being deleted.‘Mistakes are rare but do happen’Every time Facewatch’s system identifies a shoplifter, a notification goes to a person who passed a test to be a “super recognizer” — someone with a special talent for remembering faces. Within seconds, the super recognizer must confirm the match against the Facewatch database before an alert is sent.Facewatch is used in about 400 British stores.Suzie Howell for The New York TimesBut while the company has created policies to prevent misidentification and other errors, mistakes happen.In October, a woman buying milk in a supermarket in Bristol, England, was confronted by an employee and ordered to leave. She was told that Facewatch had flagged her as a barred shoplifter.The woman, who asked that her name be withheld because of privacy concerns and whose story was corroborated by materials provided by her lawyer and Facewatch, said there must have been a mistake. When she contacted Facewatch a few days later, the company apologized, saying it was a case of mistaken identity.After the woman threatened legal action, Facewatch dug into its records. It found that the woman had been added to the watchlist because of an incident 10 months earlier involving £20 of merchandise, about $25. The system “worked perfectly,” Facewatch said.But while the technology had correctly identified the woman, it did not leave much room for human discretion. Neither Facewatch nor the store where the incident occurred contacted her to let her know that she was on the watchlist and to ask what had happened.The woman said she did not recall the incident and had never shoplifted. She said she may have walked out after not realizing that her debit card payment failed to go through at a self-checkout kiosk.Madeleine Stone, the legal and policy officer for Big Brother Watch, said Facewatch was “normalizing airport-style security checks for everyday activities like buying a pint of milk.”Mr. Gordon declined to comment on the incident in Bristol.In general, he said, “mistakes are rare but do happen.” He added, “If this occurs, we acknowledge our mistake, apologize, delete any relevant data to prevent reoccurrence and offer proportionate compensation.”Approved by the privacy officeA woman said Facewatch had misidentified her at the Bristol market. Facewatch said the system had ”worked perfectly.”Suzie Howell for The New York TimesCivil liberties groups have raised concerns about Facewatch and suggested that its deployment to prevent petty crime might be illegal under British privacy law, which requires that biometric technologies have a “substantial public interest.”The U.K. Information Commissioner’s Office, the privacy regulator, conducted a yearlong investigation into Facewatch. The office concluded in March that Facewatch’s system was permissible under the law, but only after the company made changes to how it operated.Stephen Bonner, the office’s deputy commissioner for regulatory supervision, said in an interview that an investigation had led Facewatch to change its policies: It would put more signage in stores, share among stores only information about serious and violent offenders and send out alerts only about repeat offenders. That means people will not be put on the watchlist after a single minor offense, as happened to the woman in Bristol.“That reduces the amount of personal data that’s held, reduces the chances of individuals being unfairly added to this kind of list and makes it more likely to be accurate,” Mr. Bonner said. The technology, he said, is “not dissimilar to having just very good security guards.”Liam Ardern, the operations manager for Lawrence Hunt, which owns 23 Spar convenience stores that use Facewatch, estimates the technology has saved the company more than £50,000 since 2020.He called the privacy risks of facial recognition overblown. The only example of misidentification that he recalled was when a man was confused for his identical twin, who had shoplifted. Critics overlook that stores like his operate on thin profit margins, he said.“It’s easy for them to say, ‘No, it’s against human rights,’” Mr. Ardern said. If shoplifting isn’t reduced, he said, his shops will have to raise prices or cut staff. More

  • 138 Shares99 Views

    in Economy

    Bank of England Raises Rates More Than Expected, as Inflation Persists

    by

    ‘We know this is hard,’ the central bank’s governor said, after increasing interest rates by a half point, to 5 percent.The Bank of England raised interest rates by half a percentage point on Thursday, a larger-than-expected move, as policymakers struggle to bring down Britain’s persistently high rate of inflation.The central bank’s rate-setting committee lifted rates for a 13th consecutive time, to 5 percent, the highest since early 2008. The move is likely to intensify fears about the depth of Britain’s cost-of-living crisis, as homeowners prepare for jumps in monthly repayments while millions of households are already struggling to pay higher energy and food bills.The action came a day after the latest inflation data underscored the bank’s challenge: Consumer prices rose 8.7 percent in May from a year earlier, the same as the previous month, instead of falling as economists had predicted.The Bank of England’s decision is in sharp contrast to some of its international peers. Last week, the Federal Reserve decided to hold interest rates steady, at a range of 5 to 5.25 percent, and the European Central Bank raised rates by a quarter point.“The economy is doing better than expected, but inflation is still too high and we’ve got to deal with it,” Andrew Bailey, the Bank of England governor, said in a statement on Thursday. “We know this is hard — many people with mortgages or loans will be understandably worried about what this means for them. But if we don’t raise rates now, it could be worse later.”Indeed, there is accumulating evidence that inflation will be harder to stamp out than previously expected. In the past week, data has shown that pay in Britain has increased faster than expected, inflation in the services sector has accelerated and food inflation is still near the highest level in more than 45 years.The scale of the surprises in the data, especially for wage growth and services inflation, suggested a half-point rate increase “was required,” the minutes of the committee’s meeting said.The data “indicated more persistence in the inflation process, against the background of a tight labor market and continued resilience in demand,” the minutes said.The Bank of England’s rate increases could end up outlasting the recent rate-raising periods of both the Fed and the European Central Bank. Fed officials paused after 10 consecutive increases, and after eurozone policymakers raised rates for an eighth consecutive time last week, analysts predicted there would only be one or two more increases.The British central bank has pushed through a dramatic tightening of monetary policy in the last year and a half, raising interest rates from near zero since December 2021, in order to restrain the economy. But as British inflation data continues to take policymakers and other economists by surprise, traders are betting that the bank will have to raise interest rates higher and for longer to get inflation down to the 2 percent target. Before the policy decision was announced, traders were betting interest rates would reach 6 percent by early next year.The persistent price pressures in Britain are causing turmoil in the mortgage market, because they raise expectations that the bank will need to increase rates further. Traders, betting that the Bank of England will continue raising rates, have pushed up yields on government bonds. As mortgage offers reflect those higher interest rates, homeowners are growing concerned about jumps in their monthly repayments. Recently, some lenders pulled mortgage deals, in response to the rapid changes in the market.On Thursday, the central bank said is was monitoring closely the impact of its “significant” increases in interest rates, noting that because more people have fixed-terms on their mortgages, the full impact of higher interest rates “will not be felt for some time.”About 80 percent of mortgage holders have fixed-rate terms now, compared to about a third a decade ago. By the end of the year, about 1.3 million households are expected to reach the end of their fixed-rate term by the end of the year, prompting a reset in the rate that applies to their loan, the Bank of England said last month. The average mortgage holder in that group will see their monthly interest payments increase by about 200 pounds ($255), or £2,400 over the course of a year, if their mortgage rate rises 3 percentage points, which is what mortgage quotes suggested last month, the bank said.Since then, rates have risen even higher. Last weekend, the average rate for a two-year fixed-rate mortgage hit 6 percent for the first time this year.The extra financial burden on mortgage payers compounds the stubborn cost-of-living crisis, as inflation has outpaced pay for the past year and a half. About two-thirds of adults in Britain said their cost of living had increased in June compared with a month ago, and almost all of them said it was because of the higher cost of grocery shopping, according to a survey by the Office for National Statistics.Two members of the nine-person committee, Swati Dhingra and Silvana Tenreyro, voted to hold interest rates flat at 4.5 percent, arguing that the impact of past rate increases were still working through the economy, and so the bank was at risk of tightening policy more than necessary. They also said there were forward-looking indicators that suggested inflation and wage growth would fall significantly.But they were outvoted by all seven of the other members who chose a half-point increase, concerned that the impact on domestic prices and wages from external shocks, such as the war in Ukraine, would take longer to fade than they did to emerge. They predicted that lower wholesale energy prices would bring down the headline rate of inflation later in the year, but services inflation, which is dominated by companies’ wage costs and reflect domestic price pressures, would be “broadly unchanged” in the short term.As prices in Britain have continued to rise faster than expected, and faster than in the United States and Western Europe, the Bank of England has come under increasing scrutiny. Last month, the central bank’s governing body decided to commission a “a broad review” into the institution’s “forecasting and related processes during times of significant uncertainty.” More

  • 88 Shares129 Views

    in Economy

    U.K. Inflation Remains Stuck at 8.7 Percent

    by

    The rate, which had been expected to edge lower in May, shows that Britain’s cost-of-living crisis persists, and is likely to prompt the Bank of England to raise interest rates again.Britain’s inflation rate held steady in May, frustrating expectations that price increases would slow down, according to data released Wednesday, the day before the country’s central bank is widely expected to raise interest rates again.Consumer prices rose 8.7 percent from a year earlier, the same as in April, the Office for National Statistics said. Economists had forecast it would dip slightly. The data is likely to compound concerns that Britain’s cost-of-living crisis may intensify in the coming months as mortgage holders confront the burden of higher interest rates pushed through to tackle stubbornly strong inflation.The Bank of England on Thursday is expected to lift interest rates for a 13th consecutive time, by a quarter-point to 4.75 percent, the highest since early 2008.Last week, wage data showed pay growing faster than expected. On Wednesday, the statistics agency said core inflation, which excludes energy and food prices and is used to assess how deeply inflation is embedding in an economy, rose to 7.1 percent in the year through May, the fastest pace since 1992. Services inflation, an indicator that is closely watched by policymakers, climbed to 7.4 percent, from 6.9 percent in April.“The overwhelming impression is that this is a disappointing set of numbers that shows broad-based strength” in prices, Sandra Horsfield, an economist at Investec, wrote in an analyst note. “This is simply not good enough.”The rise in core inflation is “something that may cause some concern,” Grant Fitzner, the chief economist at the statistics agency, told the BBC.That’s because it has been pushed higher by price increases in services, such as at restaurants and hotels, much of it reflecting higher wage costs for companies, Mr. Fitzner said. “Services prices are quite sticky,” he said. “It can take longer for them to pick up but likewise longer for them to unwind as well.”This is leading to worries that overall inflation will be much slower to fall that it was to rise, he added.And that is what Britain is experiencing, as inflation data over the past few months has repeatedly defied expectations and stayed higher than predicted.Britain’s headline inflation rate has slowed from a peak of 11.1 percent in October, but it’s still uncomfortably high, especially compared with its international peers. In the United States, the Consumer Price Index rose 4 percent in May from the year before, and in the eurozone, inflation averaged 6.1 percent last month for the 20 countries that use the euro. The Federal Reserve has paused its interest rate increases, and traders are betting that the European Central Bank will raise rates just once or twice more; in Britain, though, investors are predicting the central bank will be forced to raise rates for longer to stamp out inflation.“We are in a situation now where markets are saying they’ve lost faith and that requires a big reaction from the bank,” said Andrew Goodwin, an economist at Oxford Economics. The central bank “needs to acknowledge that the game has changed,” he said, adding that he wouldn’t be surprised if the central bank raised rates by half a point on Thursday.Andrew Bailey, the governor of the Bank of England, said last week that policymakers still expected the inflation rate to come down, but “it’s taking a lot longer than expected.”Mr. Bailey’s predecessor, Mark Carney, said recently that Britain’s departure from the European Union was part of the reason Britain was suffering from stubbornly high inflation. There were other economic shocks at the same time, such as rising energy prices following Russia’s invasion of Ukraine, but Brexit is a “unique” part of the adjustment that will take years to resolve, he said.“We laid out in advance of Brexit that this will be a negative supply shock for a period of time and the consequence of that will be a weaker pound, higher inflation and weaker growth,” he told The Daily Telegraph last week.Traders are betting that the Bank of England’s interest rate could reach 6 percent by early next year. These expectations are shown through rising yields on government bonds, which now exceed the levels reached during Liz Truss’s brief but turbulent stint as prime minister last fall.In response, mortgage rates are rising too. Last weekend, the average rate for a two-year fixed-rate mortgage hit 6 percent for the first time this year.Last month, the central bank warned that many mortgage holders had not experienced the cost of higher interest rates yet. About 1.3 million households are expected to reach the end of their fixed-rate term by the end of the year, prompting a reset in the rate that applies to their loan. And the average mortgage holder in that group will see their monthly interest payments increase about 200 pounds ($255) a month, or £2,400 over the course of a year, if their mortgage rate rises 3 percentage points, which is what mortgage quotes suggested last month, the bank said.The additional financial strain follows months of higher prices, from energy bills to groceries. Food and nonalcoholic drink prices rose 18.3 percent in May from a year earlier, data showed on Wednesday, a slight slowdown from previous months when food inflation hit a 45-year high. The moderation in food and fuel prices was offset by rising prices at restaurants and hotels and for secondhand cars and live music events.“We know how much high inflation hurts families and businesses across the country,” Jeremy Hunt, the chancellor of the Exchequer, said in a statement on Wednesday, adding that the government’s plan to halve the rate of inflation would be the best way to keep costs and interest rates down.“We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy,” he said.In January the government, led by Prime Minister Rishi Sunak, vowed to halve inflation by the end of the year, which would mean a rate of about 5 percent, amid waves of public and private sector strikes from workers frustrated by declining living standards.When that promise was made, it seemed almost guaranteed to succeed based on economic forecasts. But as the months have worn on, inflation has been harder to slow down than expected and that pledge is now at risk of being missed.Adding to the government’s challenges, separate data published on Wednesday estimated that Britain’s public sector debt exceeded 100 percent of gross domestic product for the first time since 1961, as the government paid out more money for energy support programs and social benefits to mitigate the cost-of-living crisis. More

  • 138 Shares199 Views

    in Economy

    U.K. Moves to Use Frozen Russian Assets to Help Ukraine Rebuild

    by

    As Russia’s ruinous attacks on Ukraine mount, Britain’s government is proposing legislation that would enable it to divert frozen Russian assets to the rebuilding of Ukraine and keep sanctions in place until Moscow pays compensation to its war-torn neighbor.The British announcement is in line with a decision last month at the annual Group of 7 meeting in Hiroshima, Japan, to freeze the estimated $300 billion worth of Russian assets held by banks and financial institutions in those countries — including Britain — “until Russia pays for the damage it has caused to Ukraine.”The issue of seized assets is highly contentious. While governments have the power to freeze assets, the European Central Bank has privately warned Brussels that confiscating Russian funds or giving the earned interest on those accounts to Ukraine could undermine confidence in the euro and shake financial stability, according to a report in The Financial Times. Investors might be reluctant to use euros as a reserve currency if they fear their funds could be grabbed.Ukraine’s reconstruction costs are estimated to top $411 billion, according to the most recent numbers from the World Bank, the European Commission and the United Nations. The ravaged landscape of the eastern city of Bakhmut, which President Volodymyr Zelensky of Ukraine laid out at the G7 meeting, is just one sign of the damage. “You have to understand that there is nothing,” Mr. Zelensky told reporters. “They’ve destroyed everything. There are no buildings.”The bank’s estimate was calculated before the vast devastation unleashed by the destruction of the Kakhovka dam in southern Ukraine this month.Calls to seize Russian assets and use them for Ukraine’s reconstruction have increased as the war has stretched well into its second year. Last week, the United States Senate introduced a bipartisan bill to confiscate Russian assets and use them for Ukraine’s reconstruction. And the issue is also expected to come up at a Ukraine Recovery Conference being held in London on Wednesday and Thursday.Since Russia began its full-scale invasion of Ukraine early last year, Britain has frozen roughly $23 billion in assets and imposed sanctions on 1,550 individuals. The government’s latest proposal will require people under sanctions to disclose their holdings in Britain.“Through our new measures today, we’re strengthening the U.K.’s sanctions approach,” James Cleverly, Britain’s foreign secretary, said in a statement on Monday accompanying the announcement, “affirming that the U.K. is prepared to use sanctions to ensure Russia pays to repair the country it has so recklessly attacked.” More

  • 138 Shares169 Views

    in Economy

    Britain’s Economic Health Is Withering With Sick Workers on the Sidelines

    by

    Many people who want to work can’t because of long-term health problems, a persistent issue that is causing Britain’s economy to go “into reverse.”Christina Barratt was used to the 12- to 14-hour days. For years, she would get into her car each morning and set out to department stores and other retailers all over northwest England, selling greeting cards for a large manufacturer.“It’s a very demanding, busy job,” she said, recalling how she had to make sales, manage client accounts and grow the business, while often traveling long distances.In March 2020, at the age of 50, Ms. Barratt got Covid. She hasn’t been able to work since.Ms. Barratt is among 3.5 million people — or about one in 12 working-age adults in Britain — who have long-term health conditions and are not working or looking for work. The number ballooned during the first two years of the pandemic when more than half a million more people reported they were long-term sick, with physical and mental health conditions, according to analysis by economists at the Bank of England. The sharp rise in ill health is a startling problem itself, but there has also been a growing awareness in Britain about the negative effects on the economy of having so many people unable to work.Sickness is adding to the growing sense of malaise in a country troubled by high inflation and the economic costs of Brexit, where the National Health Service is overwhelmed and workers across industries are striking in ever larger numbers, coming after a year of severe political upheaval.With the unemployment rate near its lowest point in half a century, businesses have loudly complained that they have been unable to hire enough workers, leaving the government grappling with how to expand the labor market. Before the pandemic, a growing labor market had been “the single cylinder of growth in the economic engine,” Andy Haldane, the former chief economist of the Bank of England, said in November during a lecture at the Health Foundation, a nonprofit organization. It “has now gone into reverse gear.”Britain is in “a situation where for the first time, probably since the Industrial Revolution, where health and well-being are in retreat” and acting as a brake on economic growth, said Mr. Haldane, who currently serves as the chief executive of the Royal Society of Arts, an organization in London that seeks practical solutions to social issues.The economy is probably already in a recession, according to forecasts by the Bank of England and others, and is expected to return to only meager growth in 2024. Some economists have warned that shortages of workers could deepen the cost-of-living crisis if it causes employers to raise wages to attract workers in a way that threatens to entrench high inflation into the economy. That could prompt the central bank to keep interest rates high, pushing up borrowing costs and restraining the economy.At the heart of the problem is a high economic inactivity rate that has barely budged despite the end of pandemic lockdowns, a boom in labor demand and a high cost of living. As of October, over half a million more people were counted as inactive than before the pandemic, according to the Office for National Statistics. In a separate study looking at data for the first two years of the pandemic, Jonathan Haskel and Josh Martin, economists at the Bank of England, found that nearly 90 percent of the increase in economic inactivity could be attributed to people who were long-term sick.The extent to which sickness is forcing people to leave the work force is still being debated among researchers in Britain because the reasons for not working can change over time. But there is little disagreement that the economy is being held back by having so many people who say ill health has kept them from working.A sign outside a pub in Hampshire, Britain, that takes a creative tack in advertising for workers.Chine Nouvelle, via ShutterstockBusinesses have loudly complained that they have been unable to hire enough employees.Paul Ellis/Agence France-Presse — Getty ImagesContributing to the rise in sickness are not only tens of thousands of cases of long Covid, which Ms. Barratt is suffering from, but also a vast backlog of people — about seven million — with a variety of health problems who are on waiting lists for N.H.S. care. The latest numbers add to a longer-term trend. In the 25 years before the pandemic, the tally of people reporting long-term sickness grew about half a percent a year. Since then, it accelerated to 4 percent a year, according to the study by Mr. Haskel and Mr. Martin.Britain’s aging population means there are more sick people, but “the prevalence of poor health has been growing” as well, said David Finch of the Health Foundation, which has studied links between illness and economic inactivity. In the past few years, the foundation found, there has been a large increase in the number of people with cardiovascular problems, mental illness, and a range of other ailments, which would include respiratory conditions and long Covid symptoms.Britain is one of just seven countries in the Organization for Economic Cooperation and Development that still has a higher rate of economic inactivity than it did before the pandemic, the Office for National Statistics reported. The United States is also in this group, but its missing workers are mostly explained by retirement and a decline in participation by middle-aged men without college degrees, rather than sickness. The increase in the rate of economic inactivity in Britain is more than twice as large as the increase in the United States. These missing workers face a number of barriers in returning to work. For some, the severity of their health condition prevents them from working, while others are unable to return to the job they used to do. . Ms. Barratt, the greeting card saleswoman, has no illusions about going back to a similar job.“There’s no way I could do that kind of role any more,” Ms. Barratt said. “I’m just not well enough to sustain any kind of level of energy.” Just getting up and down the stairs at home is a challenge, she said.She is feeling the strain of living on government benefits for more than two years and would like to return to work. “If I continue to have this condition, which can go up and down in severity, I’d have to find some kind of employment that was very flexible,” she added.Although there has been a worrying increase in the number of economically inactive people — sick or not — who don’t want to work, there are still 1.7 million who do but are unable to look for a job and start work soon, according to the Office for National Statistics.Kirsty Stanley said the transition back to work for people with long Covid can be difficult. “They basically expect people to go from potentially zero to 100” within four to six weeks, she said.Nicholas White for The New York Times“This has been a long-term issue in keeping people with disabilities in the workplace,” said Kirsty Stanley, an occupational therapist. There are a lot of challenges, including some employers not understanding legal requirements to make reasonable accommodations for employees with health problems, Ms. Stanley said. She is an associate for Long Covid Work, a group that works with unions and employment groups to improve access to work for people with long Covid. Mr. Haskel and Mr. Martin estimate that there are 96,000 people who are economically inactive because of long Covid.Ms. Stanley, who also suffers from long Covid, said one problem was that the gradual period for returning to work that employers offer to people after a long absence doesn’t work well for those with long Covid.“They basically expect people to go from potentially zero to 100” within four to six weeks, she said. “What happens is people crash.”A little over two years ago, Michael Borlase did a four-week phased return to work after being sick with Covid. But at the end of the period, after getting back to an eight-hour shift, he got sick again and could not go back to work.He was a newly qualified nurse working in a psychiatric ward for men with mental health issues who have committed a crime. He was there for just eight months before he got Covid in April 2020.Michael Borlase used to be a nurse in a psychiatric ward. Now he’s not sure he could go back to that work. Nicholas White for The New York Times“I’d been so poor for so long as a student nurse,” he said. “I was thrilled to be working, work for the N.H.S. and felt very proud of the work I was doing. And then Covid hit.”“I was very early on in my career,” he added. “And now I don’t know if I can ever go back again.”At age 36, he said he felt “stuck in a professional limbo,” where he could not do the job he spent years training for but was too unwell to train for something else. Until September, Mr. Borlase received full pay because of a provision for N.H.S. workers with Covid. Since then, Mr. Borlase has been receiving reduced wages from sick pay, which will expire in April.Delays in getting health treatment have made it difficult for Andrea Slivkova, 43, to return to work. A Czech native who came to Britain 10 years ago, she left her job cleaning offices in mid-2021 because of pain from a prolapsed pelvic organ. It was more than a year before she could have the surgery to address the problem. Since then, she said, she is still unwell but has not been able to have a follow-up appointment with a specialist. Last summer, she was told it would be a five-month wait.“They told me that the waiting list is long because other people are waiting, too,” Ms. Slivkova said, with her daughter, Kristyna Dudyova, translating from Czech.Ms. Slivkova still hasn’t returned to work. She described the strain of having a physical health condition but also the struggle to navigate the health care system and the financial stress of relying on government benefits.Ms. Dudyova recalled how her mother used to be a workaholic, who found time to bake, go to the gym, work multiple jobs if necessary, all while raising her and her younger brother.“But now everything is just gone,” she said. More

  • 138 Shares139 Views

    in Economy

    U.K. Rail Strike May Scuttle Post-Holiday Plans to Return to Work

    by

    Public sympathy for striking nurses and other health workers is particularly strong, posing a challenge for Prime Minister Rishi Sunak, who has promised to confront trade unions.The winter holiday season across most of Britain ends on Tuesday, but the return to work for millions of Britons comes on the same day as yet another train strike, promising a commute as unpredictable as the country’s increasingly erratic rail network.Britain begins the new year just as it ended the old one, in the middle of a wave of labor unrest that has involved as many as 1.5 million workers so far, concentrated in the public sector and formerly state-owned businesses. Nurses in England, Northern Ireland and Wales walked out twice last month; ambulance crews have staged their largest work stoppage in decades; and border agents, postal staff and garbage collectors have taken similar action in a “winter of discontent.”With wages lagging galloping inflation, many, including nurses, plan to stop work again this month, leading some British news outlets to raise fears of a de facto general strike that could bring the country to a grinding halt.Yet while months of disruption have eroded some sympathy for rail workers, with the public roughly split over train strikes, support for health workers, whose tireless efforts during the coronavirus pandemic were widely lauded as heroic, remains buoyant.“January will be the test: Will the British public shift?” said Steven Fielding, an emeritus professor of political history at the University of Nottingham. He added that while further rail strikes might prompt a long-predicted backlash against the unions, “It’s remarkable how much it hasn’t happened.”Sympathy for strikes by nurses and ambulance workers has been stoked by a sense than Britain’s National Health Service is overwhelmed.Andrew Testa for The New York TimesThat is not for want of effort by Britain’s conservative tabloids. One newspaper nicknamed Mick Lynch, the combative leader of a rail union, “The Grinch,” accusing him of wrecking Christmas, spoiling office parties and hampering family reunions. In the city of Bristol, one pub canceled a rail workers’ Christmas party in retaliation for strikes thought to have hurt the hospitality trade.But in general, support for the strikers has stayed strong, according to a YouGov opinion poll last month, which showed 66 percent of respondents supported striking nurses and 28 percent opposed them, 58 favoring firefighters with 33 against, and 43 percent in favor of rail workers with 49 opposed. Another poll, by Savanta ComRes, found the same percentage in support of further rail strikes, but only 36 percent opposed.Even many Britons who support the governing Conservative Party say they believe that health workers have a case, a reflection both of the popularity of the country’s National Health Service and concerns about its ability to cope with huge pressures. And, underscoring a growing sense of malaise, another poll recorded a majority agreeing with the statement that “nothing in Britain works anymore.”That may pose a challenge for Britain’s prime minister, Rishi Sunak, who insists that agreeing to raises could embed inflation, which he sees as the real enemy of working people. Instead, he promises new, and as yet unspecified, laws to restrict labor unrest, while critics of trade unions argue rail workers are risking their futures as commuters stay away from a network already suffering from the growth of working from home.“It’s difficult for everybody because inflation is where it is, and the best way to help them and everyone else in the country is for us to get a grip and reduce inflation as quickly as possible,” Mr. Sunak told a parliamentary committee in December, when asked about the plight of striking workers.Nurses striking in London last month. A poll last month found 66 percent of respondents in favor of the strike, with 28 percent opposed.Maja Smiejkowska/ReutersNews reports suggest that an agreement to end the rolling series of rail strikes could be close, but despite holding the purse strings over the employers of rail staff, the government has resisted direct involvement in negotiations.The wave of strikes comes amid Britain’s cost-of-living crisis and follows years of constrained public spending, and unions say they are responding to a decade of neglect of vital services.“I think the fact that this comes after 10 to 12 years of austerity has affected the public mood and is maybe what’s helping the unions and their members not to lose public support,” said Peter Kellner, a polling expert. “The evidence so far is that public opinion hasn’t materially shifted. I don’t see any particular reason why it should, especially with the health service,” he added.At King’s Cross Station in London last week, there were certainly signs of annoyance among commuters at the disrupted services.“Most of the time my train is canceled or delayed,” said Daisy Smith, an airline worker from London who was waiting to travel to York, about two hours north of the capital. “It is ridiculous that they are on strike.”King’s Cross Station in London last week. Britons have long found their train service unreliable.Hollie Adams/Getty ImagesBut Ms. Smith said she sympathized with the strikers, believed they deserved a pay rise and was frustrated by the standoff. “The government needs to do something about it,” she said, adding that the dispute had been allowed to fester for months.Andrew Allonby, a public-sector worker who was traveling home to Newcastle, in northeast England, said he, too, supported the strikers.“I know there is no money around, but there has got to be a line,” he said, referring to reports that some health workers were relying on donated groceries. “Nurses having to go to food banks is ridiculous.”Public sympathy is being driven by a widespread feeling that the health system is understaffed and overwhelmed. One senior doctor made headlines by warning that as many as 500 patients a week could be dying because of long delays in emergency rooms across the country. And on Monday the vice president of the Royal College of Emergency Medicine said many emergency departments were in a state of crisis.Pay levels for nurses are recommended by an independent body whose suggestion of a 4.3 percent increase, issued before much of last year’s inflation was evident, had been accepted by the government.That is well short of the 19 percent demanded by nurses, but ministers have refused to budge, pointing to a 3 percent annual raise for nurses in 2021, when the pay of many others was frozen for the year.Britain’s health secretary, Steve Barclay, raised hackles last month by saying that striking ambulance unions had made a “conscious choice to inflict harm on patients” — a statement described by Sharon Graham, general secretary of the union Unite, as a “blatant lie.”Prime Minister Rishi Sunak has promised new laws to restrict labor unrest.Kin Cheung/Associated PressMark Serwotka, general secretary of the Public and Commercial Services Union, told the broadcaster Sky News, “We have had 10 years where our pay has not kept pace with inflation.” He added that 40,000 government staff members used food banks and that 45,000 of them were so poor they had to claim welfare payments.Dawn Poole, a striking border force officer at London’s Heathrow International Airport and representative of the union, said that rising food and energy costs, combined with a hike in mortgage interest rates, had been the final straw for already-struggling staff.“We have had people selling houses to downsize or struggling to pay the rent,” she said. Mr. Sunak’s tough stance is a gamble. If the strikes collapse, that could build his reputation as a leader able to stand firm and administer tough measures to stabilize the economy. It could also bolster his leadership within a fractious Conservative Party, where standing up to trade unions is associated with former Prime Minister Margaret Thatcher, who came to power in 1979 after labor unrest also known as the winter of discontent and faced down striking miners.Mrs. Thatcher, however, prepared for her standoff with the miners, ensuring that coal stocks were high and confronting them at a time when unions were widely seen as too powerful.Inflation in Britain has been running at an annual rate of over 10 percent.Andy Rain/EPA, via ShutterstockBy contrast, today’s unions appear to be more in sync with the popular mood, analysts say, because Britons know that well before the strikes, their railways were unreliable and their health service was creaking under acute pressure.“The argument that ‘We’re on strike to save the National Health Service,’ which is what the nurses have been saying, resonates with what people know from their own experience,” said Professor Fielding.Mr. Kellner, the polling expert, said he believed that the government should separate the nurses and ambulance crews from other strikers.“As long as the health workers are on strike, the other unions have some degree of cover,” he said. “If in a month’s time we are where we are now, with nothing settled, I think the government will be in a really bad position.”In the meantime, rail travelers must decide whether to even try to head to the office this week. As one rail operator warned: “Until Jan. 8, only travel by train if absolutely necessary.” More