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The UK is facing a deeper and longer recession than many expected, which will lower living standards for at least two years.
This is the opinion of the new head of the CBI Brian McBride who told the FT in his first interview since leading the UK’s largest employer group that the country’s businesses face an uphill battle to protect consumers from a cost-of-living crisis that could be as damaging to the economy as the pandemic.
McBride’s comments ended the week with sad news about the state of the British economy.
On Wednesday, the Governor of the Bank of England Andrew Bailey told the assembled central bankers that UK inflation, which reached 9.1 in May and is projected to top 11 per cent in the autumn, according to the Bank of England, will remain higher for a longer time than in other comparable economies due to unique pressures, such as capping energy prices by the government and the country’s tight labor market, the situation is exacerbated by Brexit.
The effect of leaving the EU was also noted in yesterday’s trade datashowing that the UK’s Q1 figures fell to their lowest level on record due to weak exports and a surge in imports.
Exports have been falling since 2021, when the UK left the EU single market and new border regimes were introduced. Brussels (no wonder) repeats the point of viewbut Downing Street remains reluctant to assess the economic impact of the withdrawal.
FT Poll: How are you coping with rising inflation?
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Rupture of post-Brexit trade agreements for Northern Ireland also raised concerns. This is “a time of economics, not politics,” McBride replied. You can read more here from political editor George Parker and economic editor Chris Giles on how the true extent of the damage from Brexit is becoming clearer as the effects of the pandemic unravel.
Read PMI meanwhile, UK manufacturing hit a two-year low of 52.8 in June today, up from 54.6 in May, where 50 marks the gap between expansion and contraction.
The cost of living squeeze was also highlighted today by new data showing UK mortgage rates growing at the fastest pace in a decade, and yesterday’s numbers showed a record number of workers paying higher wages income tax following the government’s decision to freeze rapids for four years.
“People’s Expenses [and] Living standards will no doubt fall in the next year or two,” says CBI’s McBride. “Tough times ahead for individuals and businesses.”
The FT is running a cost-of-living drop survey – how are you coping with higher prices? To find out more, click here.
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What you need to know: economics
eurozone inflation rose more than expected in June to new record high 8.6 percent from 8.1 percent in May as food prices (up 42 percent) and energy prices soared. With the exception of these two volatile items, core inflation slowed slightly from 3.8 percent to 3.7 percent.
New for the UK and Europe
employment agencies have been heavily criticized by the UK government’s plans to allow outside workers replace striking employees as the summer of discontent continued. Employees in BTBritain’s largest telecommunications group was the latest to go on strike. the first such step in 35 years. Negotiations to prevent further railway strikes said that “constructive“.
Withdrawal of Russian troops from snake island in the Black Sea can open the way to ship grain from Ukraine. The UN is in quadripartite talks with Turkey to lift a port blockade that has cut off export routes and threatens to cause starvation in countries in the Middle East and Africa that depend on Ukrainian wheat and corn.
Our Big Read explores the future Hong Kong on the day Chinese President Xi Jinping visited the city to mark the 25th anniversary of the British handover of power. Xi said the territory would stick to its “capitalist system” but should be run by patriots when he sworn in new leader John Lee.
Israel scheduled for fifth election less than four years after ruling coalition collapsed, crippled by a series of desertions. The November poll could lead to the return of former Prime Minister Benjamin Netanyahu, despite him fighting allegations of fraud and bribery.
CPI in Sri Lankan The capital Colombo passed 54 percent in June, moving into spheres of hyperinflation (defined as over 50 percent) as the island nation struggled with a currency crisis that led to protests and fuel shortages. Food prices have risen by more than 80 percent.
What you need to know: business
US stocks recorded their worst first half in over 50 years following attempts by the Federal Reserve to curb inflation and concerns about global growth. The S&P 500 fell 0.9% yesterday, sending the blue chip index down 20.6% in the first six months of 2022. Corporate Fundraising also it got colder. Chinese shares on the other hand were set for them biggest monthly increase almost two years
splash megadeals meant global volumes of mergers and acquisitions reached $2 trillion in the first half of this year, despite high inflation, rising interest rates and the war in Ukraine. There were 25 deals worth more than $10 billion, up 12 percent from last year, although total deals fell by one-fifth.
Vladimir Putin ordered transfer of all rights to Sakhalin-2 natural gas of a Russian company. The Kremlin nationalized the company for the first time since the multinationals announced their plans to withdraw from the country. The move could force foreign investors, including Shell, Mitsubishi and Mitsui, to abandon the project.
Shares in GazpromRussia’s state-backed gas group plunged 25% yesterday after its dividends have been blocked investors. The company has stopped gas supplies to European consumers, including Germany. Uniperwhich was forced to release profit alert and start negotiations with the government for a bailout.
Citygroup is negotiating with Russian buyers to sell off its local operations, making it the first major foreign bank to leave the country after the Russian invasion of Ukraine. UK parliamentary report lashes out at governmentslack of readinessFor solutions money laundering in Russia.
The EU has reached a landmark agreement on regulate trade or crypto assets curb the “wild west” of financial markets. FT journalists analyze the global measures taken to prevent the cryptocurrency massacre. infect core finance.
Oxford BioMedica has agreed a new three-year contract with AstraZeneca. produce Covid-19 vaccines if the British drug maker continues to mass-produce the shot.
New Omicron options increased to 34 percent jump in Covid infections in England in a week, according to new data today. The virus spreads quickly, but existing immunity protects most people from developing severe infections, while the number of people requiring intensive care remains low.
How should we worry about these new options? FT Science Editor Clive Cookson and Global Pharmaceutical Correspondent Hannah Kuhler answered your questions about rise in cases and vaccine efficacy.
US government advisers recommended design change vaccines against Covid-19 aimed at Omicron variantwhich is expected to lead to a spike in infections in the fall.
A new study has shown that a break in immune suppression treatment will improve reaction to Covid injections for millions of people.
BioNTech / Pfizer said that new data showed that his strikes aimed at Omicron produced strong immune response and were a significant improvement over their previous vaccine.
Scientific commentator Anjana Ahuja draws parallels between fight against monkeypox and second-rate status given to the global south in search of Covid vaccines.
Covid cases and vaccinations
Total global cases: 540.7 million
General doses: 12.1 billion
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