Connect with us

Economy

Analysis-UK’s Brexit woes threaten another flagship policy: levelling-up

Published

on


© Reuters. FILE PHOTO: The European Union and Union Jack flags are flown outside the Houses of Parliament, in London, Britain February 9, 2022. REUTERS/Tom Nicholson

By Andy Bruce

LONDON (Reuters) – Dashed hopes, so far at least, that Brexit would tilt Britain’s economy towards growth driven by trade and investment are threatening another of Prime Minister Boris Johnson’s flagship policies: “levelling up” the regions outside of London.

Six years on from the vote to leave the European Union, the classic low-productivity British model of growth driven by consumption, supported in part by rising house prices, looks as strong as ever.

Britain has missed out on much of the global recovery in goods exports as economies re-opened from COVID-19 lockdowns, leaving it bottom among Group of Seven rich industrialised nations by this measure over the last 12 months.

The Resolution Foundation think tank this week said that lacklustre performance reflects a more closed economy since Brexit.

It also represents a missed opportunity for Johnson’s levelling-up agenda, which aims to reduce regional inequalities.

Had British goods exports grown in line with the average among the other six countries in the G7, they would have been worth around 38 billion pounds ($47 billion) more during the year to April 2022, based on a simple extrapolation.

This represents several billions of pounds of lost revenue for British factories and by extension the regions outside of London, since around 95% of manufacturing output takes place outside the capital, according to 2017 official data.

Manufacturing comprises only about 10% of British economic output overall.

But it is a key driver of growth and investment in many of the parts of England and Wales that voted heavily to leave the EU in 2016, such as the East Midlands and North East regions.

Unless Britain can meaningfully improve its trade performance, it could mean more missed opportunities to level up.

“The regions that probably asked for Brexit are the most likely to have seen the biggest impact negative impact from trade,” said Flaheen Khan, senior economist from the Make UK manufacturing trade group.

On Wednesday the Resolution Foundation said Brexit was unlikely to result in a big restructuring of the main sectors of Britain’s economy – but it would have consequences for levelling-up.

“Our assessment finds that the North East, one of the poorest regions in the UK, will be one of the hardest hit, and that Brexit will increase its existing – and large – productivity and income gaps,” the think tank said.

Estimates of regional economic growth hint at the scale of the opportunity already lost.

In the first quarter of 2022, London’s economy – dominated by services firms – was 2.6% larger than its level of late 2019, before the onset of COVID-19.

By comparison, no other regional economy in the United Kingdom except for Northern Ireland had fully recovered its pre-pandemic size.

GETTING ON WITH IT

Proponents of Brexit say it is a long-term project that cannot be judged over the space of a few years, before the benefits of an independent trade and regulatory policy become fully apparent.

“Regurgitations of Project Fear don’t seem to get anyone anywhere,” said Britain’s minister for Brexit opportunities, Jacob Rees-Mogg, of this week’s Resolution Foundation report.

Britain’s government wants to boost exports of goods and services to reach 1 trillion pounds per year in current prices by the end of the decade, up from their pre-pandemic level of 700 billion pounds.

The highest rate of inflation in the G7 is likely to be a big driver behind meeting that goal but an improved underlying trade performance would go a long way to boosting economic activity across the United Kingdom.

Businesses, however, need more help to get there, the British Chambers of Commerce said.

It pointed to five practical measures that would boost trade with the EU which accounts for more than 40% of British exports, ranging from less red tape for food exports and a sales tax deal for small businesses trading digitally with the EU to arrangements for markings and testing of industrial goods.

“Businesses in the UK and EU still have good relationships and trust each other. We need decision-makers to follow our lead and negotiate practical improvements to the Brexit trade deal,” said William Bain, head of trade policy at the BCC.

Khan from Make UK said part of the problem for policymakers was that manufacturers had different needs in different parts of the country, with companies in the south of England seeking more spending on digital infrastructure, while those in the north were demanding better transport links.

One thing that is shared across the country is an acceptance that Brexit is now an economic reality, for better or worse.

“In an ideal world, trade would be frictionless, but they’ve accepted that’s not going to happen and most businesses, despite the impact, are getting on with it,” Khan said.

($1 = 0.8148 pounds)

Economy

Albemarle plans major U.S. lithium processing plant

Published

on


© Reuters. FILE PHOTO: A sign at the approach road leads to Albemarle’s lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. REUTERS/Ernest Scheyder/File Photo

By Ernest Scheyder

PHOENIX, Ariz. (Reuters) -Albemarle Corp plans to build a lithium processing plant in the United States that would produce as much of the electric vehicle battery metal as the entire company produces today, a bullish bet on America’s all-electric future, an executive said on Monday.

The plan reflects Albemarle (NYSE:ALB)’s emerging strategy to lead the U.S. lithium renaissance, from mine development to processing to manufacturing types of the metal used to make high-end EV batteries.

Eric Norris, head of Albemarle’s lithium division, said the company has seen a major shift in the last nine months in the United States with an “unprecedented” number of EV manufacturing plants announced, a harbinger the company believes will fuel a surge in lithium demand.

The company as a result aims to build a processing plant with 100,000 tonnes of annual capacity in the U.S. Southeast somewhere within rail access of a major port, Norris said.

“There isn’t enough (lithium) supply yet to supply the ambitions of the U.S.,” Norris told the Fastmarkets Lithium Supply and Battery Raw Materials conference in Phoenix, Arizona. “This (processing plant) will be essential for our success in the future.”

Albemarle is in active discussions with automakers on buying supply from the facility, Norris said. Albemarle already supplies Tesla (NASDAQ:TSLA) Inc, as well as several other major automakers.

While Albemarle had spoken vaguely in the past about building a U.S processing plant, it used Monday’s conference to announce the specific plan and said it will be key as the company aims to boost its overall lithium production capacity fivefold to 500,000 tonnes annually by 2030.

The U.S. plant would be of a similar design to a processing plant Albemarle recently opened in Kemerton, Western Australia, though it would need to cost less than Kemerton, whose costs ballooned far above its initial target of $1.2 billion, Norris said.

Albemarle plans to self-fund the facility, though it could apply for U.S. Department of Energy loans, he said.

The plant would be supplied from lithium extracted from the company’s Kings Mountain mine in North Carolina, which is currently mothballed but may reopen as soon as 2027.

The Kings Mountain facility would likely compete with a planned lithium mine and processing complex in a nearby North Carolina county from Piedmont Lithium Inc (O:PLL), which faces regulatory and local pushback.

Unlike Piedmont’s mine, Kings Mountain would be a reopening of a facility that closed in the 1980s, a distinction that Norris said he expects to work in Albemarle’s favor.

“This is an existing mine in a town that is very mining oriented,” Norris said. “We’re very present in the community.”

Continue Reading

Economy

Dollar retreats as markets rethink Fed rate bets, eye ECB hikes

Published

on


© Reuters. FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic

By Hannah Lang

WASHINGTON (Reuters) – The U.S. dollar struggled versus its major rivals on Monday as softening inflation expectations prompted a reassessment of the prospects for aggressive interest rate hikes but volatile markets cushioned a broader decline.

Aggressive rate hike bets have boosted the dollar with an index rising to a near two-decade high of 105.79 earlier this month. But with some high-frequency data indicators showing economic momentum starting to cool and a broader drop in commodity prices, investors are becoming cautious.

“It’s hard for Wall Street to confidently say there is a bottom in place, so a lot of traders are still looking to fade whatever rallies emerge,” said Edward Moya, senior market analyst at OANDA.

Against its rivals, the dollar edged 0.12% lower to 103.9. Earlier this month, it hit 105.79, its highest since late 2002.

Futures pricing shows traders now anticipating the U.S. Federal Reserve’s benchmark funds rate stabilizing around 3.5% from March next year, a pullback from pricing in rates zooming to around 4% in 2023.

“Today is a consolidation day,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.

“I think that we’re just waiting for more data, and that data comes out later this week,” he added, pointing to a readout expected on Friday detailing consumer prices in the euro zone.

Meanwhile, the euro was buoyed by expectations that the European Central Bank will soon raise interest rates for the first time in more than a decade.

“Everyone is looking forward to this first rate hike that we’re going to get from the ECB, and I think that the risks of a dovish hike are fading,” said Moya.

The euro was up 0.27% at $1.0587.

The euro led gainers versus the dollar as the European Central Bank’s annual forum on central banking in Sintra, Portugal, got under way with ECB President Christine Lagarde and U.S. Federal Reserve Chair Jerome Powell both attending the meeting. Markets will watch for any signs of future policy moves.

Commodity currencies came under pressure on Monday as data showed profits at China’s industrial firms shrank again, albeit at a slower pace, in May after a sharp fall in April.

Elsewhere, Russia’s rouble weakened in the interbank market as Russia headed for its first sovereign default since the Bolshevik revolution a century ago.

Cryptocurrencies stumbled, with the world’s biggest cryptocurrency Bitcoin down 1.7% trading at $20,810.34. It fell to as low as $17,588.88 earlier this month.

========================================================

Currency bid prices at 3:26PM (1926 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 103.9000 104.0300 -0.12% 8.610% +104.2100 +103.6600

Euro/Dollar $1.0587 $1.0558 +0.27% -6.88% +$1.0615 +$1.0550

Dollar/Yen 135.4450 135.2100 +0.17% +17.66% +135.5400 +134.5300

Euro/Yen 143.40 142.69 +0.50% +10.04% +143.4800 +142.0600

Dollar/Swiss 0.9562 0.9586 -0.22% +4.85% +0.9620 +0.9549

Sterling/Dollar $1.2278 $1.2273 +0.07% -9.19% +$1.2332 +$1.2239

Dollar/Canadian 1.2878 1.2888 -0.07% +1.86% +1.2916 +1.2865

Aussie/Dollar $0.6925 $0.6941 -0.22% -4.72% +$0.6958 +$0.6906

Euro/Swiss 1.0122 1.0113 +0.09% -2.38% +1.0157 +1.0104

Euro/Sterling 0.8621 0.8601 +0.23% +2.63% +0.8627 +0.8578

NZ $0.6297 $0.6314 -0.29% -8.01% +$0.6326 +$0.6283

Dollar/Dollar

Dollar/Norway 9.7880 9.8545 -0.57% +11.23% +9.8810 +9.7740

Euro/Norway 10.3671 10.3937 -0.26% +3.54% +10.4415 +10.3601

Dollar/Sweden 10.0809 10.1325 -0.10% +11.79% +10.1422 +10.0480

Euro/Sweden 10.6734 10.6842 -0.10% +4.29% +10.7092 +10.6439

(Reporting Hannah Lang in Washington; additional reporting by Saikat Chatterjee in London; Editing by Muralikumar Anantharaman, Jane Merriman and Susan Fenton)

Continue Reading

Economy

UK public inflation expectations fall to lowest since January -Citi/YouGov

Published

on


© Reuters. FILE PHOTO: People shop at market stalls, with skyscrapers of the CIty of London financial district seen behind, in London, Britain, January 15, 2021. REUTERS/Toby Melville/

LONDON (Reuters) – The British public’s expectations for inflation in future years receded this month to the lowest level since January, a survey showed on Monday in good news for Bank of England officials who fear price pressures are becoming embedded.

U.S. bank Citi and pollsters YouGov said the expectations for inflation in five to 10 years fell to 4.0% in June from 4.2% in May, a move Citi described as encouraging.

Inflation expectations for 12 months time were steady at 6.1%, the survey showed.

BoE rate-setters are watching surveys for signs that high inflation – which hit a 40-year record of 9.1% last month – is becoming entrenched in the psychology of the British public, which would make it harder to bring inflation back to the BoE’s 2% target.

Citi economist Benjamin Nabarro said inflation expectations were still elevated.

“However, we see little in today’s data that should provide a further impetus for an outsized 50 basis point move (in interest rates) in August,” Nabarro added.

Financial markets show a roughly 73% chance that the BoE will raise its Bank Rate to 1.75% from 1.25% at its next policy decision on Aug. 4.

Continue Reading

News

Economy14 mins ago

Albemarle plans major U.S. lithium processing plant

© Reuters. FILE PHOTO: A sign at the approach road leads to Albemarle’s lithium evaporation ponds at its facility in...

Forex14 mins ago

The ‘Big Package’: How Russia was driven to default

© Reuters. FILE PHOTO: European Commission President Ursula von der Leyen arrives for the European Union leaders summit, as EU’s...

World15 mins ago

U.S. Supreme Court abortion ruling ignites new legal battles over state bans

2/2 © Reuters. FILE PHOTO: Abortion rights campaigners participate in nationwide demonstrations following the leaked Supreme Court opinion suggesting the...

Stock Markets15 mins ago

Bankman-Fried’s FTX internally mulling Robinhood deal – Bloomberg News

© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s...

Economy15 mins ago

Dollar retreats as markets rethink Fed rate bets, eye ECB hikes

© Reuters. FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic By Hannah...

Sports & General15 mins ago

Biden swipes at China with memorandum to combat illegal fishing

© Reuters. U.S. President Joe Biden attends a welcoming ceremony on the first day of the G7 summit at Bavaria’s...

Sports & General15 mins ago

Amtrak train derails in Missouri after hitting truck, injuries reported

(Reuters) -Several cars on an Amtrak train derailed in Mendon, Missouri, on Monday after hitting a dump truck at a...

Stock Markets15 mins ago

FTX Said Exploring Potential Robinhood Acquisition, News Seen as ‘Positive’

FTX Said Exploring Potential Robinhood (HOOD) Acquisition, News Seen as ‘Positive’ By Sam Boughedda FTX, the crypto exchange founded by...

World15 mins ago

At least 13 killed in Russian missile strike on shopping mall, Ukraine says

2/2 © Reuters. Ukraine’s President Volodymyr Zelenskiy attends a working session of G7 leaders via video link, as Russia’s attack...

Commodities44 mins ago

Oil up 2% on Bets G7 Move Versus Russia Will Further Tighten Supply 

© Reuters. By Barani Krishnan Investing.com — Crude markets rallied on Monday on speculation that the predominantly-Western Group of Seven...

Stock Markets45 mins ago

Bankman-Fried’s FTX seeking path to buy Robinhood – Bloomberg News

© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s...

Stock Markets45 mins ago

Refining Tightness to Persist, Even in a Recession – Piper Sandler

© Reuters. Refining Tightness to Persist, Even in a Recession – Piper Sandler By Sam Boughedda Piper Sandler Senior analyst...

World1 hour ago

U.S. Supreme Court overturns Roe v. Wade, ends constitutional right to abortion

9/9 © Reuters. Demonstrators gather in front of Planned Parenthood after the United States Supreme Court ruled in the Dobbs...

Cryptocurrency1 hour ago

Ethereum liquidity provider XCarnival negotiates return of 50% stolen ETH

Ethereum liquidity provider XCarnival negotiates return of 50% stolen ETH XCarnival, a liquidity provider for the Ethereum ecosystem, recovered 1,467...

Cryptocurrency1 hour ago

Holonus to announce its listing on LBank

© Reuters Holonus to announce its listing on LBank Holonus – Blockchain-based Best Ecosystem Platform for Next Generation Humanity in...

Sports & General1 hour ago

Biden administration signals fight over medication abortion

2/2 © Reuters. FILE PHOTO: Abortion rights protesters demonstrate after the U.S. Supreme Court ruled in the Dobbs v Women’s...

Economy1 hour ago

UK public inflation expectations fall to lowest since January -Citi/YouGov

© Reuters. FILE PHOTO: People shop at market stalls, with skyscrapers of the CIty of London financial district seen behind,...

Stock Markets2 hours ago

Mining firms poised to lead capital raisings in Canada, TSX CEO says

© Reuters. FILE PHOTO: Visitors to the BHP (formerly known as BHP Billiton) booth speak with representatives during the Prospectors...

Sports & General2 hours ago

Biden signs memorandum to combat illegal fishing

© Reuters. U.S. President Joe Biden attends a welcoming ceremony on the first day of the G7 summit at Bavaria’s...

Economy2 hours ago

GE CEO Culp expands role to head aviation unit

© Reuters. FILE PHOTO: General Electric Co. Chief Executive Officer Larry Culp mingles with shareholders at the company’s annual meeting...

Economy2 hours ago

Wall Street edges lower, weighed by growth stocks

© Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in New York...

Stock Markets2 hours ago

Judge orders new trial in Tesla worker’s race bias lawsuit

© Reuters. FILE PHOTO: The Tesla factory is seen in Fremont, California, U.S. June 22, 2018. REUTERS/Stephen Lam//File Photo By...

Coronavirus2 hours ago

Ottawa police call in Canada Day reinforcements for ‘freedom’ protests

© Reuters. FILE PHOTO: A man poses for a photo in front of the National War Memorial as truckers and...

Stock Markets2 hours ago

Brazil’s antitrust body settles case with Citibank, Société Générale related to currency manipulation probe

© Reuters. The logo for Citibank is seen on the trading floor at the New York Stock Exchange (NYSE) in...

Cryptocurrency2 hours ago

BTC price tops 10-day highs as Bitcoin whale demand sees ‘huge spike’

BTC price tops 10-day highs as Bitcoin whale demand sees ‘huge spike’ Bitcoin (BTC) made the most of weekend volatility...

Stock Markets2 hours ago

Cathie Wood’s ARK Gains Significant Recent Inflows Despite Disastrous Year – Report

© Reuters Cathie Wood’s ARK Gains Significant Recent Inflows Despite Disastrous Year – Report By Sam Boughedda According to a...

Commodities2 hours ago

Brazil’s Petrobras elects new CEO as fuel price pressures mount

© Reuters. FILE PHOTO: Gasoline and diesel prices are displayed near a gas station, following the announcement of updated fuel...

Stock Markets2 hours ago

Factbox-Global baby formula makers send products to restock U.S. shelves

© Reuters. FILE PHOTO: Shelves with baby formula are pictured at Skippack Pharmacy with a shopper limit amid continuing nationwide...

Economy2 hours ago

G7 to stand with Ukraine ‘for as long as it takes’

2/2 © Reuters. FILE PHOTO: A well head and drilling rig in the Yarakta oilfield, owned by Irkutsk Oil Company...

Cryptocurrency2 hours ago

NFT​.NYC — How the Web3 space is validating the work of digital artists

NFT​.NYC — How the Web3 space is validating the work of digital artists Following the conclusion of the fourth annual...

Trending