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BoE eyes longest recession since 1930s

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The United Kingdom’s central bank hiked its key interest rate by a whopping 0.75 percent on Thursday in its latest attempt to tame the rampant inflation that has contributed to the country’s worst cost-of-living crisis for decades.

The Bank of England’s decision to push its interest rate up from 2.25 percent to 3 percent was aimed at encouraging people to save instead of spend, in order to edge inflation back down from its current 10.1 percent toward the bank’s 2 percent target.

The rise was the largest the UK had seen since 1989 and takes the interest rate to its highest level since 2008.

The bank also said it believes the UK will soon enter its longest recession since the depression of the 1930s, with economic contraction likely to continue for two years and with unemployment set to double.

Sky News said analysts at Deutsche Bank said the UK’s economy is entering “a deeper and more prolonged recession” than previously expected.

The BBC quoted the UK’s finance minister, Chancellor of the Exchequer Jeremy Hunt, as saying the bank had no choice but to act.

“Inflation is the enemy and is weighing heavily on families, pensioners, and businesses across the country,” he said.

The bank’s nine-member monetary policy committee has now delivered eight back-to-back interest rate hikes since December, when the rate was only 0.1 percent.

Karen Ward, chief strategist at JP Morgan Asset Management and a member of the Treasury’s economic advisory council, told The Times newspaper a smaller interest rate hike would have triggered a new round of market selling.

Experts said the rise will further calm financial markets in the wake of the disastrous mini-budget former chancellor of the exchequer Kwasi Kwarteng unveiled in September.

But critics said the rate rise will push up the cost of mortgages by several hundred pounds and cause real hardship.

Clare Moriarty, head of the Citizens Advice Bureau, said on Radio 4’s Today program: “Mortgage lenders do have to consider how they can help people in financial difficulties. This might be by payment deferrals, or removing additional fees and charges.”

She said the bureau, which offers free legal advice, is urging people in difficulty to talk to their lender.

The rate hike will also push up the cost of credit card debt, car loans, lines of credit, and other loans.

Rachel Reeves, the opposition Labour Party’s spokesperson on the economy, said it means “families with already stretched budgets will be hit by higher mortgage payments” and that there will be “higher financing costs for businesses”.

“For many firms who have had a tough couple of years, this will mean desperately difficult decisions about whether to carry on,” she added.

The value of the pound fell immediately after the Bank of England’s announcement, by 1.4 percent, to 1.123, against the US dollar, and by 0.8 percent against the euro.

But the UK is not alone in making significant recent rate hikes. On Wednesday, the United States’ Federal Reserve raised its rate by 0.75 percent. Last week, the European Central Bank pushed its interest rate up by 0.75 percent and said more rises will follow.

Source(s): China Daily Global

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Sri Lanka seeks investments from Maldives amid economic woes

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Sri Lankan President Ranil Wickremesinghe has requested Maldives to invest in the Sri Lankan economy, mainly in agriculture and tourism sectors.

Wickremesinghe made the request during a meeting with Maldivian Vice President Faisal Naseem, who called on him at the Presidential Secretariat on Friday.

During the meeting, Wickremesinghe highlighted on the long-standing friendship between Maldives and Sri Lanka, and invited Maldives to invest in the country’s agriculture sector, and cruise and high-end tourism sectors.

Wickremesinghe also requested the Maldives to join hands with Sri Lanka in establishing the climate change university.

Discussions during the meeting also focused on the growing threat of drug trafficking affecting the region.

Both Wickremesinghe and Faisal agreed to enhance cooperation in combatting drug trafficking.

According to the Sri Lankan press, Wickremesinghe told Faisal he intends to invite Maldivian President Ibrahim Mohamed Solih on an official visit to Sri Lanka once his residence, which was destroyed during the July protests, is rebuilt.

Sri Lanka, which was once a model for developing countries, is currently facing one of the most severe economic meltdowns to strike any nation in decades. Earlier this year, a widespread fuel and food crisis led to national protests that forced then-President Gotabaya Rajapaksa to temporarily flee the country, and later resign. The country has defaulted on its external debt, and has declared bankruptcy.

Source(s): sun.mv

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HDC announces tourism mega project Urban Isle

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Housing Development Corporation (HDC) has announced an integrated urban tourism mega project called Urban Isle.

Managing Director of HDC Ahmed Athif made the announcement at the Gold 100 Gala event at CROSSROADS Maldives. He said the project is for large businesses as well as small and medium businesses and that it will significantly develop the tourism industry in the Maldives as well as provide job opportunities.

The project will be developed on the northern side of Hulhumale’ which is designated for tourism development. Once developed, the Urban Isle will have a variety of accommodation facilities for visitors staying for the holidays or those waiting in transit or on business trips. As such, the island will have luxury villas, service apartments, city hotels, midscale and upscale hotels, guesthouses, branded retail, and upper-class restaurants. The project will allocate 10 land plots for serviced apartments, nine land plots for commercial purposes, three land plots for midscale hotels, three land plots for upscale hotels, four land plots for city hotels, 21 land plots for guesthouses, and 11 land plots for luxury villas.

HDC stated that the integrated tourism island presents an expansive range of properties to invest in, as the island will welcome every type of traveler, from international and domestic visitors to budget travelers and those seeking an extravagant stay. The properties are positioned to offer short-term stays for transit purposes, as well as long-term stays for residents and digital nomads.

HDC further stated that the business models proposed by Urban Isle include the lease model, fixed lease model, and JV model. Investor proposals are not restricted to any model, and investors have the opportunity to propose any business model.

Source(s): psm news

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Inflation clouds Black Friday sales in US shopping season

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US retailers unveiled a trove of fresh promotions on Friday, as they try to coax sales from reticent shoppers whose holiday cheer has been tempered by inflation and worries over a softening economy.

Cautious shoppers have hunted for the best deals at stores and online as retailers offered new Black Friday discounts to entice consumers eager to start buying holiday gifts but weighed down by inflation.

Due to elevated prices for food, rent, gasoline and other essentials, many people were more selective and reluctant to spend unless there was a big sale on Friday.

Some were dipping more into savings, turning to “buy now, pay later” services that allow payment in instalment, or running up their credit cards at a time when the Federal Reserve is hiking rates to cool the US economy.

This year’s trends are a contrast from a year ago when consumers were buying early for fear of not getting what they needed amid supply-network clogs.

Stores didn’t have to discount much because they were struggling to bring in items.

Online discount rates were 31 percent on Thanksgiving, up 7 percent from the previous year, according to Salesforce data.

Shoppers wait to enter the Nike store at the Opry Mills Mall in Nashville, Tennessee. (AFP)

High customer traffic

Macy’s Herald Square in Manhattan, where discounts included 60 percent off fashion jewelry and 50 percent off select shoes, was bustling with shoppers early on Friday.

The traffic was “significantly larger” on Black Friday compared to the previous two years because shoppers feel more comfortable in crowds, Macy’s CEO Jeff Gennette said.

Customer traffic was also higher than last year at Mall of America in Bloomington, Minnesota, according to Jill Renslow, executive vice president of business development of the shopping centre.

She said 10,000 people were at the sprawling mall during the first hour after the 7 am opening, though inflation prompted many shoppers to figure out what to buy before showing up.

Major retailers, including Walmart and Target, stuck with their pandemic-era decision to close stores on Thanksgiving Day, moving away from doorbusters and pushing discounts on their websites.

Shoppers walk the aisles of Walmart for Black Friday deals in Dunwoody, Georgia. (AFP)

Spike in online sales

Rob Garf, vice president and general manager of retail at Salesforce, said Salesforce data showed online sales spiked in the evening during the holiday this year, suggesting people went from feasting to phone shopping.

Shoppers spent $5.3 billion online on Thanksgiving Day, up 2.9 percent from the holiday last year, according to Adobe Analytics, which monitors spending across websites. Adobe expects that online buying on Black Friday will hit $9 billion, up just 1 percent from a year ago.

Black Friday saw some of the labour unrest that has rippled through the retail industry over the past year.

A coalition of trade unions and advocacy organisations are coordinating strikes and walkouts at Amazon facilities in more than 30 countries under a campaign called “Make Amazon Pay.”

READ MORE: Amazon: Black Friday and Cyber Monday 2020 biggest online sales ever

Fears of mass shootings

At Walmart stores, some employees had Wednesday’s deadly shooting at a company store in Virginia in the back of their minds.

Jude Anani, a 35-year-old who works at a Walmart store in Columbia, Maryland, said the company offers training on how to react in such circumstances, but he would like to see more protection.

He was happy to see police officer standing outside the store, as is typical on Black Friday, and wished that was the case “most of the time during the year.”

Analysts consider the five-day Black Friday weekend, which includes Cyber Monday, a key barometer of shoppers’ willingness to spend.

The two-month period between Thanksgiving and Christmas represents about 20 percent of the retail industry’s annual sales.

Source: TRT

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