International
UK faces ‘recession risks’ as interest rates bite
UK faces ‘recession risks’ as interest rates bite
The UK economy is on course to shrink in the three months to the end of September and could tip into recession, a closely-watched survey suggests.
The S&P Global/CIPS UK purchasing managers’ index found rising interest rates and weaker household spending contributed to a sharp drop in demand for goods and services in August.
The index fell to 47.9 in August – its lowest level in two and half years – down from 50.8 in July.
Anything below 50 marks a contraction.
Economists suggested that PMI figures, which are a measure of the health of the economy, showed that the Bank of England’s efforts to tame inflation – the rate at which prices rise – were beginning to work.
After the report, the pound fell and City analysts lowered their expectations of where the Bank’s interest levels would peak to 5.5% from 6%. Rates currently stand at 5.25%, up from close to zero in late 2021.
However, Chris Williamson, chief business economist at S&P Global Market Intelligence, said the figures also suggested “the fight against inflation is carrying a heavy cost in terms of heightened recession risks”.
“A renewed contraction of the economy already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector’s spring revival,” he said.
According to official figures, UK inflation was 6.4% in July which, although slower than the previous month, is still near record levels and much higher than the government’s aim of 2%.
In response the Bank has put up interest rates 14 times since 2021, hoping that by making it more expensive to borrow money, consumer demand will cool and price rises will slow.
However, repeated interest rate rises tend to drag on economic growth as it becomes more expensive for consumers and businesses to borrow and spend.
Paul Dales, economist at Capital Economics, said the survey would encourage the Bank “that higher rates are working” but added that economic would soon contract and a “mild recession is on the way”.
According to the PMIs, both the UK activity fell in both the manufacturing and services sectors in August.
Rhys Herbert, a senior economist at Lloyds Bank, added that “the sharper-than-expected drop in retail sales in July” was also a warning of “further possible weakness as we enter autumn”.
“Some businesses continue to also experience challenges with recruitment, resulting in upward pressure on wages,” Mr Herbert added.
Pay has been rising at a record rate but the Bank of England has warned that wage increases will make it harder to get inflation down.
UK faces ‘recession risks’ as interest rates bite
International
Relief as Israel agrees to ceasefire with Lebanon
Relief as Israel agrees to ceasefire with Lebanon
Israeli Prime Minister Benjamin Netanyahu has said he will bring a US-brokered proposal for a ceasefire with Hezbollah in Lebanon to his government for approval as soon as Tuesday evening.
He said in a televised address that he would put “a ceasefire outline” to ministers “this evening”.
He however did not say how long the truce would last, noting “the length of the ceasefire depends on what happens in Lebanon”.
But it later learnt that the ceasefire would is for 60 days.
During the period, Hezbollah fighters are expected to retreat 40 kilometres from Israel’s border, with Israeli ground forces withdrawing from Lebanese territory.
“If Hezbollah violates the agreement and attempts to rearm, we will strike,” Netanyahu warned.
Key Israel backer the United States has led ceasefire efforts for Lebanon alongside France.
US President Joe Biden is optimistic the deal will lead to a “permanent cessation of hostilities”.
Biden added that the US would lead another push for a ceasefire in Gaza.
“In full coordination with the United States, we are maintaining full military freedom of action,” Netanyahu said, outlining the seven-front war Israel says it faces in Gaza, the occupied West Bank, Yemen, Iraq, Syria, Lebanon and Iran.
Even as Netanyahu spoke about the ceasefire, the Israeli military carried out multiple strikes on heart of Beirut while the army said some 15 projectiles had entered Israeli airspace from Lebanon.
Demonstrators raise placards and Israeli flags during a protest in front of the Israeli Defence Ministry in the coastal city Tel Aviv on November 26, 2024, against a possible ceasefire with Hezbollah in Lebanon. – Israel’s security cabinet has started discussing a proposed ceasefire deal in its war with Hezbollah in Lebanon, an Israeli official confirmed to AFP on November 26. (Photo by Jack GUEZ / AFP)
The war in Lebanon escalated after nearly a year of limited cross-border exchanges of fire begun by Hezbollah, which said it was acting in support of Hamas after its October 7, 2023 attack on Israel, which sparked the war in Gaza.
The war has killed at least 3,823 people in Lebanon since October 2023, according to the health ministry, most of them since September.
On the Israeli side, the hostilities have killed at least 82 soldiers and 47 civilians, authorities say.
Netanyahu said the ceasefire would allow Israel to focus on “the Iranian threat” and ramp up its fight against Hamas in Gaza.
“With Hezbollah out of the picture, Hamas is left on its own,” he said.
“We will increase our pressure on Hamas and that will help us in our sacred mission of releasing our hostages.”
During last year’s Hamas attack, militants took 251 hostages, of whom 97 are still held in Gaza, including 34 the army has declared dead.
International
Israeli strikes pound central Beirut, suburbs
Israeli strikes pound central Beirut, suburbs
BEIRUT: Israeli strikes pounded a densely-populated part of the Lebanese capital and its southern suburbs on Tuesday, hours ahead of an anticipated announcement of a ceasefire ending hostilities between Israel and Lebanese armed group Hezbollah.
A strike on Beirut hit the Noueiri district with no evacuation warning and killed at least one person, Lebanon’s health ministry said in a preliminary toll.
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Minutes later, at least 10 Israeli strikes hit Beirut’s southern suburbs. They began approximately 30 minutes after the Israeli military issued evacuation orders for 20 locations in the area, the largest such warning yet.
As the strikes were under way, Israel’s military spokesperson Avichay Adraee said the air force was conducting a “widespread attack” on Hezbollah targets across the city.
Israeli strikes pound central Beirut, suburbs
ARAB NEWS
International
Over $100m wasted, Trump mocks Democrats for targeting him
Over $100m wasted, Trump mocks Democrats for targeting him
Former U.S. President Donald Trump has fiercely criticised the legal cases brought against him, calling them “empty and lawless”.
He accused Democrats of weaponising the judicial system to target him as a political opponent.
In a strongly worded statement, Trump alleged that over $100 million in taxpayer money had been wasted in what he described as a politically driven effort to undermine his influence.
“Nothing like this has ever happened in our Country before,” he said, pointing to high-profile prosecutors, including Georgia’s Fani Willis and New York Attorney General Letitia James, as key figures in what he called a “political hijacking.”
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Trump also accused Willis of colluding with Nathan Wade, whom he described as “her lover” and lacking the experience to handle such cases.
He claimed Wade was paid “millions,” allegedly enabling lavish trips and cruises.
Letitia James, who is pursuing a civil fraud case against Trump, was also criticised.
He claimed she had campaigned on a promise to “get Trump” in her bid for office, an action he labelled “unethical” and “probably illegal.”
Trump also mentioned Manhattan District Attorney Alvin Bragg, alleging that Bragg initially resisted prosecuting him but was pressured into action by the Justice Department and the Democratic Party.
Describing the series of legal actions as a “low point in the history of our Country,” Trump maintained his resolve, declaring: “I persevered, against all odds, and WON.”
Over $100m wasted, Trump mocks Democrats for targeting him
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