Business

UK rejects French claim of steps towards agreement over fishing rights row

A dispute between the UK and France over post-Brexit fishing rights has escalated significantly after a meeting between Boris Johnson and Emmanuel Macron, with Downing Street rejecting a French claim that the two leaders had agreed a path towards resolving the issue.

Johnson and the French president met alone for half an hour on Sunday morning on the fringes of the G20 summit in Rome, where they discussed the fishing row, as well as tensions over Northern Ireland and this week’s Cop26 climate summit.

In an unusual turn of events, Downing Street denied French officials’ claim that the two countries had agreed to work on “practical and operational measures” to resolve the dispute in the coming days.

In a post-G20 press conference, Macron said Britain must give ground or France would trigger threatened trade reprisals this week. “The ball is in Britain’s court. If the British make no movement, the measures of 2 November will have to be put in place,” he said.

The disagreement threatens to distract from the vital climate summit in Glasgow, where Johnson will greet more than 120 world leaders on Monday.

After the two leaders had met, with no officials present, Macron’s staff talked about “space for de-escalation in the coming hours”. But Johnson’s spokesman denied any agreement had been reached, or that there were even formal plans for more talks to discuss the situation.

“It will be for the French to decide whether they want to step away from the threats they have made in recent days about breaching the Brexit agreement,” he said. “Of course, we would welcome that if they want to de-escalate the threats that they have made.”

Asked if this meant no agreement had been reached, the spokesperson said: “You would have to ask the French government about whether they want to proceed with the threats they have made.”

Questioned about the comments by French officials’ comments that the leaders had agreed to more “exchanges” between the two sides, Johnson’s spokesman said: “If the French government wishes to come forward with how they want to de-escalate the threats that they have made, then we would absolutely welcome them.”

Boris Johnson sought to slightly play down divisions at a post-G20 press conference, saying only: “The position is unchanged.” However, he did profess himself “puzzled” by a letter that the French prime minister, Jean Castex, sent to Ursula von der Leyen, the European Commission president, seeking an EU-wide response to the row.

Johnson also said the letter called for the UK to be “punished for leaving the EU”, which is not the case, with Castex giving the standard EU line about it having to be shown that being outside the EU could not have the same advantages of being a member.

Downing Street officials declined to say why, in their view, the French had given a seemingly misleading account of the meeting, but they did raise the possibility that the “mooted” exchanges were simply a reference to more standard, lower-level contact between officials that would be expected anyway.

Before the meeting, France’s Europe minister, Clément Beaune, argued in a Twitter thread that the UK seemed to be making a “political choice” to target French fishing boats, saying that while 90% of overall EU requests were granted, “all the missing ones are French”, meaning 40% of French requests had not yet been approved.

Johnson’s spokesperson rejected this: “We’ve seen comments ahead of the meeting from Clément Beaune that were completely untrue to suggest that all outstanding licence decisions are for French vessels.

“We’re applying a reasonable, evidence-based approach to all EU vessels, irrespective of what member state they belong to.”

Business

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.

Business

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.

Business

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.