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McDonald’s abrupt resignation shatters Labour show of unity

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McDonald’s abrupt resignation shatters Labour show of unity

After a rocky run-in to Labour’s conference in Brighton, Keir Starmer was hoping Monday would be the moment his party set internal divisions aside and turned to face the voters.

Chatting to journalists in the press room, he said his package of rule changes passed by delegates on Sunday would allow Labour MPs to focus on the public instead of looking over their shoulders at angry grassroots members.

He praised Rachel Reeves for her speech setting out her stall as Labour’s next chancellor: radical but responsible. Little more than an hour later, however, the show of unity was shattered when Andy McDonald, the last remaining Corbynite on Labour’s frontbench, abruptly resigned.

McDonald, who had been shadow secretary of state for workers’ rights, objected to being ordered by the leader’s office to oppose a union demand for Labour to back a £15-an-hour minimum wage.

In his resignation letter – distributed to journalists without warning and before he had spoken to Starmer – McDonald claimed the labour movement was “more divided than ever”.

Starmer’s team regarded his departure as a deliberate attempt to detract from Reeves’ speech and destabilise the leadership.

It is understood that Angela Rayner, who has worked closely with McDonald on workers’ rights, was not forewarned.

Rayner’s relationship with Starmer has come under close scrutiny after he distanced himself from her strongly worded remarks about Tory “scum” at the weekend, saying he would talk to her about them.

The pair have broadly patched up their differences since Starmer stripped Rayner of the jobs of party chair and elections coordinator in May’s reshuffle, but they have very different political and personal styles.

Starmer’s robust leadership style and tendency to take decisions with the advice of a tight inner circle can irk even close colleagues, some of whom were taken aback by his rule-change plan.

Ed Miliband found his approach to energy nationalisation undercut on Sunday when Starmer said Labour would not take the big six energy companies into public ownership.

That appeared to contradict recent remarks in which Miliband, the shadow energy secretary, had suggested public ownership was part of the solution to shifting the economy to green energy. Labour insiders said Miliband was frustrated by Starmer’s flat “no” when asked about nationalisation, with one party source suggesting the two men were barely speaking – though Miliband denies this.

While Starmer’s team were clearly shocked by McDonald’s resignation on Monday, they believe another row with the party’s left – over rejecting radical demands from trade unions – will not do his public reputation any harm.

However, there is also a fear that McDonald’s determination to air his concerns in public marks a new, more militant phase for the party’s left wing.

The Corbynite campaign group Momentum responded to Starmer’s rule change package last week by warning it would spark a “civil war”, claiming “conference will get very messy, very fast – and there is no saying who will come out on top”.

The former shadow chancellor John McDonnell wrote on Sunday that he could no longer behave as an “elder statesman”, and he has since begun criticising Starmer more directly, even suggesting that the Labour leader should consider his position if he has not improved the party’s poll ratings by January.

Jeremy Corbyn’s outriders believe they faced a deliberate programme of sabotage from centrist MPs in the parliamentary Labour party, and after Starmer took them on so publicly over leadership rules they now feel the gloves are off.

They may not have the 40 MPs necessary to muster a leadership challenge, but they may become increasingly noisy in the coming months just as Starmer hopes to show the public the Labour party is a government in waiting.

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UK’s Truss defends economic plan that sent pound tumbling

UK’s Truss defends economic plan that sent pound tumbling

British Prime Minister Liz Truss on Thursday defended her economic plan and shrugged off the negative reaction from financial markets, saying she’s willing to make “difficult decisions” to get the economy growing.

In her first public comments since the government’s announcement of billions in uncosted tax cuts roiled markets and drove the pound to record lows, Truss said Britain was facing “very, very difficult economic times.” But she said the problems were global and spurred by Russia’s invasion of Ukraine.

She spoke after the Bank of England took emergency action Wednesday to stabilize U.K. financial markets and head off a crisis in the broader economy after the government spooked investors with a program of unfunded tax cuts, sending the pound tumbling and the cost of government debt soaring.

Truss told BBC local radio that “we had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.”

“Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight,” she said. “What is important is that we are putting this country on a better trajectory for the long term.”

In a series of interviews, Truss said her government’s decision to cap energy bills for households and businesses would help tame inflation and help millions of people facing a cost of living crisis.

But it was not that decision that alarmed the markets. It was the government’s announcement on Friday of an economic stimulus program that included 45 billion pounds ($48 billion) of tax cuts and no spending reductions — without an independent economic assessment of the cost and impact.

The Bank of England warned that crumbling confidence in the economy posed a “material risk to U.K. financial stability,” and said it would buy long-term government bonds over the next two weeks to combat a recent slide in British financial assets.

The bank’s former governor, Mark Carney said that the government and the central bank appeared to be pulling in different directions.

“Unfortunately having a partial budget, in these circumstances — tough global economy, tough financial market position, working at cross-purposes with the Bank — has led to quite dramatic moves in financial markets,” he told the BBC.

The pound traded at around $1.08 on Thursday, above its record low of $1.0373 on Monday. It has lost some 4% of its value since Friday.

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Stimulus Packages Provided During Pandemic Triggered Inflation- CBN

The Central Bank of Nigeria (CBN) has attributed the rising inflationary rates to the stimulus packages provided to citizens during and after the pandemic.

It added that although this increased spending, it also created global supply challenges.

CBN’s director, Monetary Policy Department, Hassan Mahmoud, said this on Wednesday at a post-MPC briefing tagged: “Unveiling Facts behind the Figures’’.

The Monetary Policy Committee had on Tuesday, unanimously voted to increase interest rate to 15.5 per cent.

“A lot of households and small businesses were injected with stimuluses; the U.S did two trillion dollars, Nigeria did about five trillion Naira, these increased the ability of people to spend.

“But the supply side could not meet up with the demand because that volume of injection was far more than the regular intake for those economies, this made prices go up,’’ he said.

Mahmoud also blamed the Russian-Ukraine war, as well as the resurgence of COVID-19 in China for the rise in global inflationary trend.

“That region accounts for more than 50 per cent of global commodity supply and 38 per cent of global oil and gas supply. The war resulted in some shortages which made prices go up.

“Then the COVID-19 lockdown in China. The country is the largest importer of commodities across the globe,’’ he added.

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China’s yuan slides to 14-year low against US dollar

China’s yuan slides to 14-year low against US dollar

China’s yuan fell to a 14-year low against the dollar Wednesday despite US central bank efforts to stem the slide after U.S. interest rate hikes prompted traders to convert money into dollars in search of higher returns.

A weaker yuan helps Chinese exporters by making their goods cheaper abroad, but it encourages capital to flow out of the economy. That raises costs for Chinese borrowers and sets back the ruling Communist Party’s efforts to boost weak economic growth.

The yuan fell to 7.2301 to the dollar, its lowest level since January 2008. One yuan was worth about 13.8 cents, down 15% from its March high.

The yuan has exceeded expectations it might fall to 7 to the dollar after the Federal Reserve started aggressive rate hikes to cool inflation that is at a four-decade high. The Fed has raised rates five times this year and says more increases are likely.

By contrast, the People’s Bank of China has cut interest rates to boost growth that fell to 2.2% over a year earlier in the first six months of 2022 — less than half the official 5.5% target.

The yuan is allowed to fluctuate up or down 2% from its starting price each day in tightly controlled trading. That prevents big daily swings, but down days can add up to a big change over time.

To shore up the exchange rate, Beijing cut the amount of foreign currency deposits Chinese banks are required to hold as reserves to 6% from 8% as of Sept. 15. That increases the amount of dollars and other foreign currency available to buy yuan, which should push up the exchange rate.

Still, that reserve cut is unlikely to stop a slide that is driven by “a strong U.S. dollar and the expectation of more Federal Reserve hikes,” said Iris Pang of ING in a report.

“Less aggressive rate hike talk” might help the yuan rally, but it might weaken further “if the Fed maintains its very hawkish tone” into next year, Pang wrote.

Chinese officials have previously promised to avoid “competitive devaluation” to gain an advantage in trade.

The yuan sank in 2019 during trade tension with then-President Donald Trump. That prompted suggestions Beijing was trying to reduce the impact of U.S. tariff hikes, but there was no official confirmation. The currency later strengthened.

Other governments also are struggling to manage capital flows under pressure from Fed rate hikes. On Friday, Vietnam’s central bank raised a key interest rate in what economists said appeared to be an effort to stop an outflow of money in search of higher returns.

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