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Rishi Sunak to announce £500m ‘plan for jobs’ extension

Rishi Sunak

Rishi Sunak to announce £500m ‘plan for jobs’ extension

Rishi Sunak will announce a £500m extension to his “plan for jobs” on Monday as the government tries to avoid a surge in unemployment after the furlough scheme came to an end.

The chancellor will use his speech at the Conservative party conference in Manchester to promise extra support in finding a job for the over-50s and workers coming off furlough. Sunak is expected to claim he is “doubling down” on his 2020 promise to do “whatever it takes” to support people through the crisis.

However, the government is pressing ahead with its decision to remove the £20-a-week uplift to universal credit despite warnings from charities and campaigners that it will increase poverty.

Measures included in the new package will include prioritising those coming off furlough for one-to-one support from jobcentres and extending until 31 January the £3,000 incentive for employers to take on apprentices.

The furlough scheme, which supported a cumulative 11.6m jobs during the crisis, came to an end on 30 September. Unions and business groups urged the chancellor not to scrap it, and the jobs package appears to be an attempt to cushion the impact.

A £500m hardship scheme announced last week to be administered by local councils to ease the impact of the cost-of-living crisis was branded a “sticking plaster” by charities and the Labour party.

With a tough spending review coming up on 27 October, Sunak is expected to highlight the government’s plans for investing in infrastructure and skills.

“We are going to make this country not just a scientific superpower, not just the best place in the world to do business, I believe we’re going to make the UK the most exciting place on the planet,” he will say.

The chancellor used his conference speech last year, when the event was held virtually, to say the Tories have a “sacred duty” to repair the public finances.

The shadow work and pensions secretary, Jonathan Reynolds, said: “The government’s struggling plan for jobs has failed to hit its original targets; it is not creating the number of jobs needed and has failed to address the supply chain crisis Britain is experiencing.”

Meanwhile the foreign secretary, Liz Truss, suggested the UK could pursue a more interventionist foreign policy, during her first conference speech on Sunday. She cited a desire to sign more deals akin to the Aukus defence pact with Australia and the US, referencing Japan as an ally where the UK was seeking more military access and operational support.

Truss said the UK should be an active member of the “network of liberty” pursuing global democratic values. “The democratic world order faces a stark choice. Either we retreat and retrench in the face of malign actors or we club together and advance the cause of freedom,” she said.

She said the west must “win this battle for economic influence” in developing nations from a “position of strength”.

In a nod to Conservative backbenchers who have rebelled against the government in order to promote a hardline approach towards China, Truss said trade with the superpower was important but added that the UK would be “tough on those who don’t share our values and don’t play by the rules”.

She said the UK would “reach out to more countries who haven’t historically been aligned to Britain and encourage a freer, more prosperous world”.

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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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