British Prime Minister Sunack plans to introduce new measures to reduce government spending
The British authorities want to introduce a strict regime to cut government spending amid a worsening energy crisis and rising energy prices. As one of the measures, Prime Minister Rishi Sunak intends to reduce funding for schools, police, municipalities and the transport sector, the newspaper Times, cited sources.
Ways to reduce government spending
“The prime minister and British Treasury chief Jeremy Hunt intend to slow the growth of government spending after 2025 from the planned 3.7% to 1%. This will allow the government to close the “black hole” in the budget of 55 billion pounds (more than $62 billion),” – stated in the material.
Austerity measures will also reduce government spending by a total of about £25 billion (more than $28 billion) by 2027-2028. Plans of the government of Britain must first affect the budgets of the Ministry of the Interior, Ministry of Justice, transport sector and municipalities, it is specified in the article.
On November 3, the Governor of the Bank of England, Andrew Bailey said that he did not currently see any way for the country’s economy to get out of the current energy and financial crises painlessly with minimal losses. With rising energy prices, the local government must take a number of measures to mitigate the rate of inflation in the country.
Earlier, we reported that India has saved more than $4 billion through using solar energy.
Fed Chair Powell to testify at US Senate June 22
Federal Reserve Chair Jerome Powell will testify at the U.S. Senate Banking Committee on June 22 at 10 am Eastern time, panel chief Sherrod Brown said on Friday.
The testimony marks the second iteration of the Fed chair’s twice-yearly reports to Congress on the state of U.S. monetary policy, and will come a week after the Fed’s upcoming interest-rate-setting meeting at which it is expected to leave borrowing costs unchanged despite still-high inflation.
S&P spares France from rating downgrade
Ratings agency S&P spared France on Friday the embarrassment of downgrading the country’s sovereign debt, but remained cautious about the outlook on account of the strained public accounts.
S&P left the country’s AA rating untouched after a regular review and said that the outlook remained negative due to “downside risks to our forecast for France’s public finances amid its already elevated general government debt”.
A downgrade would have been the second in six weeks after rival agency Fitch cut its rating at the end of April to AA- over concerns about potential political paralysis and social unrest.
Finance Minister Bruno Le Maire told weekend newspaper Le Journal du Dimanche that S&P’s decision to keep its AA rating was a “positive signal” and that the government’s public finance strategy was credible.
President Emmanuel Macron’s government is under pressure to prove that the government can stick to its deficit and debt reduction plans in the face of stubbornly high public spending and a rising cost of interest payments.
ECB’s Visco says falling energy prices should help tame inflation
The rapid decline in energy costs should help to tame inflation in Europe, Bank of Italy governor Ignazio Visco said on Saturday, urging companies not to seek to boost their margins by leaving prices higher for longer.
Visco, a member of the European Central Bank’s governing council, said the key issue was what happened to inflation now that energy prices had retreated from peaks hit after last year’s Russian invasion of Ukraine.
“I expect that at this point there will also be a cooling in the increase in core inflation, as we call it, which should reflect this reduction in the cost of energy,” Visco told the International Economy Festival in Turin.
“If this happens, (ECB) monetary policy is certainly the correct one at the moment even if I would perhaps have pressed for a more gradual approach,” he added.
Euro zone inflation eased more than expected in May fuelling a debate about the need for further ECB rate hikes beyond an increase expected later this month.
Inflation in the 20 nations sharing the euro eased to 6.1% in May from 7.0% in April, below expectations for 6.3% in a Reuters poll of economists.
Core inflation, which excludes volatile food and fuel prices and which has played an increasing role in the ECB’s policy deliberations, fell to 5.3%.
Visco warned against a wage-price spiral, saying salary rises should come against a backdrop of a growing economy rather than chasing inflation.
He also said companies had a role to play in ensuring that inflation was brought under control so that the ECB did not keep having to push up the cost of borrowing.
“It is not in the interest of companies themselves … to fail to reflect the lower cost of energy in their prices because then the cost of financing would rise,” he added.
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