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Ghar Kharcha: Going Broke By Paying For Essentials
Most items on your thali, even excluding tomatoes, saw a rise in prices.
India's retail inflation surged to 7.44% in July, its highest since April 2020, due to a spike in food prices. This was higher than what most economists predicted, but are households surprised?
Households continued to see a near-collective rise in grocery bills, having to pay higher prices for atta, breads, milk and milk products, fruits, vegetables, and spices.
Food and beverage inflation rose to the highest level since January 2020, having spiked to 10.57% in July from 4.69% in June. Vegetable prices rose by 37.3%, with tomato inflation at over 200%. Compared to the previous month, when tomatoes had already seen a sharp rise in prices, prices rose by 213%.
Are Tomatoes The Only Culprit?
Would excluding or limiting tomatoes have helped bring down grocery bills? According to a research note by IDFC Bank, headline inflation excluding tomatoes rose to 6.1% on an annual basis in July from 5.3% in June.
Specifically, within food and beverages, around 71% of the items by weight saw inflation higher than 6% in July, compared to 59% in June. It is likely that most items on your thali also continued to see an escalation in prices, including atta, rice, and dal, along with vegetables.
Among vegetables, potatoes, onions, cabbage, cauliflower, etc. also saw significant sequential momentum.
Daily food prices indicate that tomato prices have begun to moderate over the last few days as supplies have improved, according to market watchers. Don't celebrate just yet! For all we know, onions could be the next tomatoes, with prices seeing a sequential rise of 18.9%. Eggs, meat, and fish saw a modest fall, likely because of the month of Shravan.
Spices and condiments have also seen a sharp rise.
Jeera was up by over 100% from last year. So if dal remains your one-stop source of protein, skip the tadka!
While you can always use less jeera, the prices of ginger and garlic have soured. Prices of ginger were up 177.1% on an annual basis, while those of garlic shot up 70.1%. On a sequential basis, too, the prices of both were up by over 20%.
Maybe it's time to cook a Satvik meal!
There is some relief. Core inflation—all items excluding food and fuel—has eased. Prices of clothing and footwear, household goods, and services are providing respite after rising through most of last year.
Among utilities, electricity bills saw a rise on account of higher tariffs, while your other bills are unlikely to have seen much change.
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Inflation
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Rishi Sunak and his government ministers have been busy making speeches and giving interviews at the annual Conservative party conference.
Here are some of the claims from their time in Manchester.
Would Labour take 100,000 of Europe's asylum seekers?
In his speech, Mr Sunak said: "Labour's plan is to cook up some deal with the EU which could see us accepting around 100,000 of Europe's asylum seekers."
The Conservatives first used this figure in September, after Labour said it would seek a returns agreement with the EU.
But the 100,000 figure is misleading. The Conservatives worked it out by claiming that Labour would be forced to take a share of the EU's migrant quota, worked out according to population size.
The party's press release said around a million asylum seekers arrived in the EU in 2022. The UK's population is just under 13% of the EU's, so - it claimed - this would mean Labour taking more than 100,000 asylum seekers a year.
But the EU has no such scheme in place. It is negotiating a deal which includes relocating at least 30,000 asylum seekers a year between EU member states based on several criteria, including population size. The countries would not be forced to take asylum seekers and could choose to make a payment instead.
Labour has said it would not join an EU quota scheme because the UK is no longer an EU member. It has not said how many asylum seekers it would accept under any future deal it negotiated.
Is Labour planning a meat tax?
Energy Secretary Claire Coutinho told the conference: "It's no wonder Labour seems so relaxed about taxing meat".
We asked Labour whether they were considering introducing a meat tax. They replied: "Taxing meat is not Labour policy".
Pressed by Sophy Ridge on Sky News about her claim, Ms Coutinho said it was "good to have a light moment in your speech".
Is inflation a tax?
Speaking on the BBC's Laura Kuenssberg's programme, the prime minister would not promise to cut taxes and instead wanted to focus on inflation.
He said: "The best tax cut I can deliver for the British people is to halve inflation."
When challenged on this he repeated: "Inflation is a tax."
Inflation is not a tax, although high inflation can clearly make people worse off because it means higher prices.
A tax is a charge or levy made by a government, typically to pay for services.
Mr Sunak also wanted to highlight his record in reducing inflation. He said: "I spent the first year stabilising things, making progress on bringing inflation down."
The PM's pledged to halve it from 10.7% at the end of 2022, to 5.3% by the end of 2023 and it has been coming down.
Despite the recent falls - to 6.7% in the year to August - analysts remain divided about whether the PM's goal will be achieved.
However, the Bank of England said that it expected inflation to be about 5% by the end of the year.
Core inflation, which strips out factors like energy and food - which are more vulnerable to global price swings - has seen only a modest reduction.
Does HS2 cost 10 times more than similar projects in France?
Before the prime minister scrapped part of HS2, his chancellor Jeremy Hunt was already warning about spending on the project.
He said "it costs 10 times more" to build high speed rail in the UK than France.
BBC Verify asked the Treasury how this figure was calculated. It did not provide the detail, directing us instead to the Conservative Party, which did not reply.
There are no recent comparisons between the cost in France and the UK.
In 2015, a House of Lords report estimated the cost of building HS2 at "up to nine times higher than the cost of constructing high speed lines in France".
The report estimated the HS2 Phase One construction (which started at 2017) cost at around £90m per kilometre while similar projects in France, carried out between 1990 to 2011, cost between £9m-£15m per kilometre (in 2010 prices).
The report said possible reasons for the price difference include expensive tunnelling required in the UK but not in France, the cost of a new station at Birmingham and renovation of Euston station, as well as the state of the UK railway construction industry.
Has the UK decarbonised faster than any other country?
Mr Sunak also told BBC News the UK had decarbonised faster than any other country in the G7.
The G7 (Group of Seven) is an organisation of the world's seven largest "advanced" economies, which includes the UK.
It is true the UK has decarbonised faster than other countries in this group when comparing cuts to greenhouse gas emissions since 1990.
UK emissions had fallen by 48.7% up to the end of 2022, according to government data.
This figure refers to greenhouse gas emissions within the UK. It does not account for the UK's total carbon footprint, which includes emissions related to the manufacture of products that the UK imports from abroad, for example.
Is the UK the second biggest contributor of military aid to Ukraine?
Defence Secretary Grant Shapps told the conference: "We have provided billions in military aid (to Ukraine) - second only to the contribution of the US."
The US is by far the largest contributor of arms to Ukraine - providing £24.6bn ($29.8bn) in security assistance to Ukraine since Russia invaded in February 2022.
The UK gave £2.3bn ($2.8bn) billion in 2022, and pledged the same amount in 2023 - taking its total commitments to £4.6bn ($5.6bn) since the start of the war.
However, Germany has committed to providing £6.4bn ($7.7bn) over the same period, which would put it second to the US, in front of the UK.
Germany provided £1.7bn ($2.1bn) in military aid in 2022 and pledged a further £4.7bn ($5.7bn) for 2023.
It is possible that Mr Shapps was basing his claim on 2022 military aid alone, but this wasn't made clear in his speech.
We have asked the UK Ministry of Defence to clarify his comments.
The Kiel Institute, a team of researchers which tracks the amount countries have pledged in military aid to Ukraine, also puts Germany in second place ahead of the UK.
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Inflation
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The prospect of real-terms cuts to benefits in the government’s autumn statement has been described as “catastrophic” for families, after it was suggested that Jeremy Hunt was considering the move to make space for pre-election tax reductions.
Sources close to the chancellor declined to deny a report by Bloomberg that he was considering breaking with the tradition of lifting working benefits in line with inflation.
A spokesperson for the Department for Work and Pensions said the government had increased benefits by more than 10% this year “in order to protect the most vulnerable from the impact of high inflation”.
“As is the usual process, the secretary of state will conduct his statutory annual review of benefits and state pensions in the autumn, using the most recent data available,” the spokesperson added.
The Bloomberg report, which cited people close to Hunt, said real-terms benefits cuts were among cost-saving options being drawn up for the chancellor before the autumn statement, scheduled for 23 November.
The Labour party declined to comment on tax speculation.
Rebecca Long-Bailey, a former shadow chief secretary to the Treasury, said: “If Jeremy Hunt is genuinely considering cutting benefits for the most vulnerable in society then that is wholly unacceptable.
“It’s also clear that people are still struggling with a cost of living crisis on top of soaring energy costs. It would be catastrophic for families.
“This would be morally unacceptable but also it just would not yield an economic benefit as it would lead to people having to lean more on services and reach out for assistance. I would hope that our position in the Labour party would be to oppose this if it does materialise.”
Hunt last month played down the prospect of pre-election tax cuts despite news that the public finances were in less bad shape than the government’s spending watchdog had forecast in the spring budget.
Stronger tax receipts from an economy that has so far avoided recession meant the UK’s budget deficit stood at £4.3bn in July – the fifth highest for a July since modern records began in 1993 but £1.7bn below the estimate from the Office for Budget Responsibility.
Treasury sources on Thursday would not comment on the record on tax changes “outside of a fiscal event”, but said the fiscal position was tight as a result of borrowing high sums to support households and businesses throughout the pandemic and the energy crisis.
Sources close to former prime minister Liz truss eagerly flagged up the report, stressing that it was very much part of her plan to kickstart economic growth last year, when she wanted to raise benefits in line with wages rather than with inflation.
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Inflation
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- Rampant bot activity on Twitter helped pump the price of FTX-listed and Alameda Research-traded cryptocurrency, a new study found.
- Researchers at the Network Contagion Research Institute also found that bot activity and price action significantly increased after X Corp. CTO Elon Musk shared Tweets about two altcoins.
- Bankman-Fried and his executives were acutely aware of the influence that Twitter had on the crypto markets.
Rampant bots on Twitter helped to pump up the price of cryptocurrency, including coins traded by insiders at FTX hedge fund Alameda Research before its collapse, according to a new study from the Network Contagion Research Institute published Wednesday.
NCRI researchers conducted a scaled analysis on Twitter (now known as X) examining over 3 million tweets from Jan. 1, 2019, to Jan. 27, 2023, pertaining to 18 different cryptocurrencies in partnership with New Jersey GovSTEM Scholars. They also shared their findings with X Corp. days ahead of publication.
Mentions of certain altcoins by Tesla and SpaceX CEO Elon Musk, who led an acquisition of Twitter that closed last October, appear to have caused prices to spike by as much as 50% within one day, the researchers found.
The NCRI study pointed to Musk's June 24, 2023, retweet of a post featuring a kitten and the caption, "I wake up there is another PSYOP," a coin created by a pseudonymous Twitter influencer known as Ben.eth. Trading of this altcoin nearly doubled in volume over the next day, according to CoinMarketCap data.
Separately, a Musk tweet on May 13, 2023, featuring Pepe the Frog memes led to a more than 50% increase in the price of altcoin PEPE within 24 hours. Musk's tweet fueled both authentic discussion and bot and promotional tweets about the altcoin, which is based on a popular far-right meme.
The NCRI findings raise significant questions about social media driven market manipulation in the broader crypto markets. The study also highlights the considerable challenge Musk faces in reigning in bot activity that was pervasive on the social media platform for years and still persists there.
Musk has claimed, without providing data, that bot activity has fallen since he acquired Twitter.
According to Alex Goldenberg, Lead Intelligence Analyst for NCRI, "Since Musk's team took over Twitter last year, API changes were made to deter bot creation, possibly reducing crypto promotion and scams. However, these changes come with trade-offs as they also hinder independent audits by third-party researchers."
Goldenberg recommends that if bot activity remains high, X Corp. could "consider stricter account verification, machine learning for bot detection, and special permissions for certified researchers to ensure transparency while combating malicious bot activity and other forms of online harm."
X Corp. has been increasing the price to access data for researchers, while also filing lawsuits and threats against researchers looking into hate speech and other online harms on its platform. In recent weeks, X Corp. sued Bright Data and the Center for Countering Digital Hate, for example, raising the ire of House Democrats. NCRI partners with Bright Data for pro-bono access to social media data, Goldenberg noted.
X Corp. did not immediately respond to a request for comment.
The NCRI study also highlights how inauthentic activity on Twitter helped drive up the price of tokens listed on FTX in the months before the crypto exchange collapsed. "Bot-like accounts were used to manipulate market sentiment and drive up the price of FTX-listed tokens," Goldenberg told CNBC in an interview.
Six small-cap tokens listed by FTX were significantly influenced by inauthentic social media activity on Twitter, NCRI found. The researchers said that "inauthentic chatter" was "successfully and deliberately deployed to influence changes in FTX coin prices," for six tokens: BOBA, GALA, IMX, RNDR, and SPELL.
Alameda held at least five of these tokens before they were listed on FTX, and as bot-like activity on Twitter amplified the visibility of the tokens. For one crypto asset, RNDR, inauthentic posts and activity on Twitter concurred with or preceded double-digit percentage jumps in its price.
On four separate dates from 2022 to 2023, spikes in bot activity on Twitter preceded increases in RNDR's price ranging from 11% to 30% within a single day, the NCRI analysis found.
FTX founder Sam Bankman-Fried and his team were well aware of Twitter's influence on the crypto markets, and how sophisticated investors could extract value from social-media driven price action.
"People on crypto Twitter, or other sort of similar parties, go and put $200 million in the box collectively," Bankman-Fried said in an 2022 interview on Bloomberg's Odd Lots podcast. "In the world we're in, if you do this, everyone's gonna be like, 'Ooh, box token. Maybe it's cool. If you buy in box token,' you know, that's gonna appear on Twitter and it'll have a $20 million market cap."
FTX was one of the largest crypto exchanges in the world before it filed for bankruptcy in 2022.
Bankman-Fried, 31, now faces a federal indictment for allegedly committing securities and wire fraud. He's also the subject of Securities and Exchange Commission charges, which alleges that he built his empire on a "foundation of deception."
Representatives for Bankman-Fried declined to comment. The SEC and FTX did not immediately respond to a request for comment.
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Crypto Trading & Speculation
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It's not easy eating green, especially if you're buying organic. That's according to a Lending Tree analysis that found organic foods are seeing the steepest price hikes amid stubbornly high inflation.
Prices for organic fruits and vegetables rose 13.1% over the past year, compared with just under 10% for conventional produce, according to Lending Tree, which drew on weekly retail pricing data over the last year through January from the U.S. Department of Agriculture (USDA).
Among all the food groups included in the analysis, organic chicken prices increased the most, at 19.5%. That's more than three times the price jump for conventionally raised chicken, which rose 5.9% over the last year, the report shows.
For households already struggling with the nation'sin 40 years, such spikes could force many consumers to opt for nonorganic options instead.
federal guidelines on soil quality and animal-raising practices. Not surprisingly, that has generally translated into higher costs for shoppers.are produced without use of toxic pesticides, synthetic fertilizers, antibiotics, hormones or genetic engineering techniques, while producers must adhere to
But that hasn't deterred U.S. consumers from eating organic. Nationwide demand for organic foods hasover the past 10 years, according to the Organic Trade Association, with sales reaching $62 billion in 2020.
Whether or not you're shelling out for organic items, food has gotten much more expensive. Government figures show that prices for food at home — what people buy at retailers to prepare their own meals — jumpedfrom a year earlier. On average, Americans spend $260 a week on food prepared at home, according to Lending Tree.
With the median U.S. household income at $70,784, that means half the country is spending more than 19% of their annual income on groceries.
"Americans love dining out and spend a ton of money in restaurants, but the truth is that we do most of our preparing, cooking and eating at home," Matt Schulz, chief credit analyst at Lending Tree, said in the analysis. "And though eating at home is often recommended to help keep expenses down, it's not necessarily inexpensive."
The cost of specialty health food products, such as gluten-free flour and starches, has also skyrocketed. Jennifer Kinkade, the owner of gluten-free bakery in Tucson, Arizona, recently told Celiac.com, a website for those with gluten-sensitivity, that prices for gluten-free ingredients like tapioca starch have tripled.
"The flours are one of the hardest things right now... gluten free [was] always expensive, but I think it's even more expensive now," she told the site.
For the most part, soaring grocery prices have been attributed to ongoing supply-chain issues, as well as climate issues and. Some lawmakers, such as Sen. Elizabeth Warren, have also big food companies of price-gouging.
Saving tips
To find better deals at the grocery store, Schulz offers three tips.
Shop around, compare prices: "We tend to get very territorial about our favorite grocery stores," he said, "but the truth is that our favorite store around the corner may not have the best prices. Traveling a little further to another store may cost you some extra gas, but the savings at the grocery checkout counter can be worth it."
Search out store-brand options: Store brands are "worth looking into," Schulz said, as they often cost less than bigger brands without sacrificing quality.
Get a grocery credit card: "Plenty of cards offer extra rewards specifically for grocery spending," said Schultz, who urges consumers to take advantage of them. "If a big portion of your monthly spending goes to groceries — and whose doesn't? — you're doing yourself a disservice if you don't at least consider a grocery credit card."
for more features.
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Inflation
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The World Economic Forum states that Africa has an average annual demand for 2.4 million cars and 300,000 commercial vehicles. This demand is increasing because of a continent-wide increase in disposable income, strong middle-class growth and rapid urbanization. But while most cars meeting this demand are used, car ownership in Africa is less than 45 cars per 1000 people, in contrast to the global average of 203 cars per 1000 people.
We’ve featured automotive industry startups, spotlighting notable players like Autochek and Moove, each addressing ownership by serving consumers and drivers, respectively. However, vehicle financing extends beyond the purview of consumers and drivers; a substantial opportunity exists to offer services tailored for dealers. Vehicle financing is crucial for small car dealers as it helps them with daily transactions and keeps costs down. When credit is affordable, it benefits customers, too, leading to more cars on the road in Africa. This highlights the need for affordable financing and business solutions for car dealers.
Operating within this strategic domain is YC-backed Shekel Mobility. The B2B auto dealers marketplace has secured over $7 million in funding, comprising $3.2 million in equity and over $4 million in debt. Co-founder Benjamen Oladokun shared in an interview with TechCrunch that the funds will be instrumental in quadrupling the startup’s current ARR of slightly over $2 million and leveraging this momentum as it gears up for its next priced round. Just this January, the upstart announced a $1.95 million pre-seed investment led by Ventures Platform with participation from Y Combinator, Voltron Capital and Zedcrest.
These investors followed on in Shekel Mobility’s seed round. This time, Ventures Platform co-led its seed round alongside MaC Venture Capital. Other investors include Y Combinator, Rebel Fund, Unpopular Ventures, Maiora Capital, PageOne Lab Inc., Phoenix Investment Club, Heirloom VC, Pioneer Ventures, and other angel investors. Meanwhile, Zedvance, VFD Microfinance Bank, Zenith Bank, and Fluna, amongst others, provided the debt component; some have leveraged Shekel Mobility’s platform to finance auto dealerships, according to the startup.
Oladokun founded Shekel Mobility with Sanmi Olukanmi. Their combined expertise in the automotive industry, including the launch and exit of Eazypapers Technologies, a digital vehicle documentation platform catering to FMCG, mobility and logistics companies, laid the groundwork for Shekel Mobility.
The self-described mobility fintech helps car dealers find, finance and sell cars in the $30 billion African used car market. Shekel Mobility aspires to position itself as the premier platform to launch and grow a car dealership locally or virtually (it wants to build the largest auto dealership ecosystem with transactions amounting to $10 billion annually by 2025). To date, the auto dealer marketplace has powered transactions worth over $56 million, facilitating the growth of over 1,400 auto dealers by augmenting their inventories and sales across 7,000 cars.
At the heart of the startup’s growth is its flagship product, Shekel Credit, which offers auto dealers immediate access to financing, with credit limits extending up to $200,000 for vehicle purchases, typically falling within the $5,000 to $20,000 range. The financing mechanism involves the dealer contributing 30% of the total cost, amounting to $3,000 in the case of a $10,000 car purchase. Shekel provides the remaining 70% as a loan to the dealer. Subsequently, upon the sale of the vehicle to the end customer, usually within a three-month timeframe, the auto dealer remits payment to Shekel, covering interest on the loan and transaction fees associated with the car sale.
This model, in which Shekel Mobility controls the end-to-end process of buying and selling cars through dealerships, ensures that it records a 0% default rate, Oladokun noted on the call. Olukanmi, in a statement, also highlighted that while there’s a big gap in providing financing directly to auto dealers, Shekel Mobility only finances auto dealers it “believes will have a lasting positive impact on the consumers.”
Building on its growth in the last 20 months through its credit product, Shekel Mobility is set to introduce more offerings, including Shekel Business. This product, the founders say, will look to digitize the informal trading processes within the auto dealership vertical. The suite of tools is designed to assist dealers not only in financing their inventories but also in streamlining sales and structuring processes. “One of the fundamental things we’ve built is the ability to buy a car without collateral,” Oladokun said. “We started out lending to dealers, but now we’re looking to provide additional digital tools and physical infrastructure to reduce the cost of owning car dealerships.”
Kola Aina, the founding partner at Ventures Platform, noted that Shekel is building a crucial market-creating innovation that is important to expanding Nigeria and soon Africa’s automotive industry. In the same vein, founder and managing partner at MaC Venture Capital’s Marlon Nichols, speaking on the round, said Shekel Mobility has the potential to transform and ignite the automotive industry in Africa as it finances and empowers small businesses that require financing to survive. “The team is enabling millions of dollars to move through the Nigerian economy and simultaneously providing locals with affordable automobiles,” he noted.
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Africa Business & Economics
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Families face the threat of even tougher benefit sanctions, Jeremy Hunt will announce in his Tory conference speech.
The Chancellor will pledge to "look again" at the regime governing sanctions to make it harder for some people to claim. It comes despite a Government report warning that claimants who have faced a sanction get back into work less quickly and earn less when they do.
In his speech to Tory delegates on Monday, Mr Hunt will vow to set out his proposed changes in the Autumn Statement next month. The Chancellor will confirm that he and Mel Stride, the Work and Pensions Secretary, will "look again at the benefits sanctions regime".
They will "make it harder for people to claim benefits while refusing to take active steps to move into work," the Conservative Party said. He will also confirm that he will stick to the party’s pledge to increase the National Living Wage in line with earnings.
Based on current forecasts this means that the minimum hourly rate for workers aged 23 and over will increase from £10.42 to £11.16 next April. Mr Hunt will herald this as a “pay rise for over 2 million workers”.
In comments that are likely to be seized on by charities as a return to the divisive coalition austerity-era rhetoric, Mr Hunt will say on his plan for benefit sanctions: "Since the pandemic, things have being going in the wrong direction.
"Whilst companies struggle to find workers, around 100,000 people are leaving the labour force every year for a life on benefits. As part of that we will look at the way the sanctions regime works. It is a fundamental matter of fairness. Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.”
But the Liberal Democrat Work and Pensions spokesperson Wendy Chamberlain said: "It's utterly ludicrous for this Conservative government to claim to be on the side of working people. They have in face punished them through crashing the economy and failing to get a grip on inflation."
She added: "For the Conservative party to turn around and blame the poorest in society for the state of the economy after they wrecked it takes some nerve.
"Politics is about choices and this Conservative government chose to cut taxes for the big banks and let the oil and gas giants off the hook whilst families up and down the country had to choose between heating and eating. The blame for the economic carnage lies at the feet of the government and no one else."
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Workforce / Labor
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Sam Bankman-Fried testified before the jury on Friday, detailing his version of events.
He said he was alarmed by Alameda Research's risks and lack of hedging.
He added that he doesn't show it when he's "freaking out," contrary to testimony by former execs.
Sam Bankman-Fried took the stand on Friday to tell a jury his side of the story of how his cryptocurrency empire collapsed.
The rare move for the defendant comes after he spent weeks listening to his inner circle, several of whom have pleaded guilty to financial crimes, describe their version of events. (A prosecutor even accused Bankman-Fried of shaking his head amid the testimony, though former CEO's attorney denied it.)
Taking the stand before the jury in Manhattan federal court, Bankman-Fried described learning about the $8 billion hole in the finances of his cryptocurrency exchange, FTX, in mid-2022.
Prosecutors have alleged the hole came about after Bankman-Fried funneled billions of dollars of customer funds from FTX to Alameda Research, his crypto trading firm, and then loaned the money to himself and his fellow executives. They have charged him with seven financial crimes, including fraud and conspiracy.
In June 2022, a "nervous" Caroline Ellison alerted Bankman-Fried, along with FTX executives Gary Wang and Nishad Singh, that she was concerned Alameda may have just gone bankrupt. At the time, she was a co-CEO of the firm.
"I was very surprised and fairly concerned," Bankman-Fried testified. "I had not expected that Alameda would be bankrupt."
Ellison's assessment came on the heels of a tumultuous summer in the crypto market in the summer of 2022, but Bankman-Fried didn't think Alameda's assets on FTX had fluctuated enough for the firm he founded in 2017 to go bankrupt, he testified.
Upon investigating, Wang and Singh informed Bankman-Fried that there was a bug in FTX's code that caused a miscalculation of $8 billion, suggesting that Alameda's balance was actually positive. Developers ran the numbers and confirmed them, bringing about a "relieved" demeanor in Ellison, Singh, and Wang, Bankman-Fried testified.
Though they believed a crisis had been averted, the situation did cause Bankman-Fried to consider shuttering Alameda altogether as he was "fairly concerned about Alameda's risk."
Ellison didn't want to shut down the firm and wrote up a list of things "Sam is freaking out about," including what he saw as risks the firm had taken without hedging – something he repeatedly told Ellison to do, Bankman-Fried testified.
Asked by defense attorney Mark Cohen if he was, indeed, freaking out, Bankman-Fried said: "I don't tend to show a lot of freak-out-ness, but relative to my standard, yes."
Bankman-Fried noted he cancelled a planned trip from the company's head quarters in the Bahamas to Washington, D.C. to testify before Congress on a cryptocurrency regulation bill.
"I was not going to fly to DC when Alameda might be bankrupt," he said.
It contrasts with earlier testimony from Singh, FTX's top engineer who flipped against his former friend and has been cooperating with the prosecution. Singh testified that Bankman-Fried had tells, including "physical twitches for when he gets angry."
Read the original article on Business Insider
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Crypto Trading & Speculation
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The trial of Sam Bankman-Fried is likely to be more consequential than just whether the man himself is found guilty. Depending on what evidence is introduced during the trial, it could be rough for the entire crypto industry.
“How much damage can this trial do to the already beaten-down reputation of the industry at this point?” asks Yesha Yadav, a law professor at Vanderbilt University. “This trial is going to be an excruciating moment for the industry because no one knows what kind of evidence might come out.”
Bankman-Fried, the founder of FTX and Alameda Research, is facing seven counts of criminal charges: two counts of wire fraud, and five counts of conspiracy charges. FTX was a failed cryptocurrency exchange founded in 2019. According to a now-deleted profile from FTX investors Sequoia Capital, FTX was founded because of Bankman-Fried’s frustration with other exchanges when he was running Alameda Research, his crypto trading firm. According to the SEC, FTX was a fraud “from the start,” diverting customers’ funds to Alameda.
“Really just old-fashioned embezzlement.”
What’s left of FTX is now being led by John J. Ray III — you may remember him as the guy who cleaned up Enron and who also said FTX is worse than Enron. Just before the trial began, the FTX lawyers filed suit against Bankman-Fried’s parents, saying they should give back millions of dollars they got from their kid. Ray has also referred to Bankman-Fried’s conduct as “really just old-fashioned embezzlement.”
We have some inkling of what the government will be arguing thanks to the filings prosecutors are making in this case. They argue that Bankman-Fried lied about consumer protection and that Bankman-Fried’s statements that FTX was “avoiding or managing conflicts of interest” and that “as a general principle FTX segregates customer assets from its own assets across our platforms” were lies, in a superseding indictment filed August 14th.
The indictment also says that there were special features in FTX’s code that “permitted Alameda to spend and withdraw unlimited amounts of money from FTX,” which were created at Bankman-Fried’s direction. That effectively exempted Alameda from the kinds of risk management other customers faced. At the same time, the government alleges, “Bankman-Fried publicly and repeatedly asserted that Alameda did not have privileged access to FTX.”
Bankman-Fried is accused of using “billions of dollars in misappropriated FTX customer deposits” to help buy more than $200 million of real estate for himself, make billions of dollars of investments for his own interest, and repay Alameda’s lenders, according to the indictment, Additionally, Bankman-Fried allegedly used more than $100 million of customer funds to make political contributions; prosecutors can show evidence of those contributions in this trial, even though they aren’t part of the charges brought. A second trial is scheduled for March 2024, with additional charges.
Before his fall, Bankman-Fried made himself out to be the Good Boy of crypto — the trustworthy face of a sometimes-shady industry. He was also very interested in publicity, sitting for many interviews both before and after the fall of FTX. The quick rise of FTX as an industry force was at least in part due to Bankman-Fried’s appetite for attention. Here are the hits:
- FTX purchased naming rights to a stadium in Miami, FTX Arena, now Kaseya Center
- FTX ran ads featuring Tom Brady and Gisele Bündchen as well as a Super Bowl ad featuring Larry David
- The company threw Crypto Bahamas, a conference attended by former US president Bill Clinton and former UK Prime Minister Tony Blair
- Bankman-Fried testified before Congress, at the Senate Committee on Agriculture, Nutrition and Forestry, the House of Representatives Committee on Financial Services, and the House Committee on Agriculture
- Bankman-Fried set himself up as a political megadonor, backing Democrats
- Bankman-Fried offered to bail out failing crypto companies Voyager Digital and BlockFi, leading some to compare him to J.P. Morgan
Bankman-Fried gave interviews freely — and quickly rose to public prominence in the industry. Though FTX hadn’t been in the business as long as competing exchanges such as Coinbase, Kraken, or Gemini, Bankman-Fried positioned himself as an important, boyish face for crypto. (At one point, Bankman-Fried told a colleague at FTX that “I honestly think it’s negative EV [this may mean “expected value,” as in poker] for me to cut my hair. I think it’s important for people to think I look crazy.”)
Because he was so successful at this kind of public relations, his fall from grace was another mark against an industry that was already roiled by bankruptcies and scandals. Some additional trouble for the crypto industry is likely to come from one crucial element of the fraud trial — the part where the government must prove intent.
The first part of proving the government’s case is pretty simple and a little boring: prosecutors must show that certain transactions took place. Whatever records the Southern District of New York has for the transactions will be shown.
“What conversations happened between him and his co-conspirators that are now cooperating against him?”
The second part is where all the drama is likely to come, says Christopher LaVigne, a litigation partner and co-chair of the cryptocurrency practice at the law firm Withers. Prosecutors have to connect those transactions to Bankman-Fried, show that he knew what he was doing was wrong, and prove that he lied about it anyway.
“What was he saying to his parents and his other advisors about this?” LaVigne says. “What conversations happened between him and his co-conspirators that are now cooperating against him?”
To further establish intent, the government can use Bankman-Fried’s own words. The indictment calls Bankman-Fried’s tweets in November 2022 “false and misleading.”
“We had him going out directly to the internet,” LaVigne says. If he wrote things on Twitter or said things in interviews that weren’t true, that’s more fodder for the government’s case. “They can point to that and say, ‘This is what he said, this is what actually happened.’”
Other evidence may include Signal messages and testimony from co-conspirators who plead guilty to their own charges. Alameda Research CEO Caroline Ellison, who was also sometimes Bankman-Fried’s girlfriend, may play an important role — Bankman-Fried leaked her diaries to The New York Times and was consequently jailed for witness tampering. The government has indicated FTX co-founder Gary Wang and engineering head Nishad Singh will also be among the witnesses called to give testimony about Bankman-Fried.
Bankman-Fried’s defense can also introduce risks for people who dealt with him
There may be testimony from lenders, venture capitalists, and customers in order to establish the basis for some charges. In the indictment, the prosecutors allege that Bankman-Fried lied to FTX investors. Some of those investors may be called on to testify, which is not the kind of thing VC big shots generally enjoy — and which might create collateral damage for the industry.
If, for instance, Sequoia Capital did due diligence around its investment in FTX, whatever Bankman-Fried told its partners could be important. Was FTX already sending Alameda customer funds at that point? Did Bankman-Fried know about it? And did he tell VCs at the time? (If he told them it wasn’t happening, that would establish intent). Binance was also an early investor in FTX, and former executives may be called on to testify as well, says Hermine Wong, the former head of policy at Coinbase and a former SEC regulator.
Bankman-Fried’s defense can also introduce risks for people who dealt with him. Defense lawyers have several simultaneous objectives. First and foremost, they’re trying to prove their client is not guilty. But just in case they don’t get the outcome they want, they’re also laying the groundwork for appeals and sentencing arguments. Any piece of evidence they want to introduce for those two purposes has to come into play in the trial.
Already, Bankman-Fried’s lawyers are marking arguments that his constitutional rights are being violated by his pretrial incarceration because, among other things, his internet connection wasn’t good enough for him to plan his defense, notes LaVigne. That could be grounds for an appeal.
“Is he going to throw the entire industry under the bus?”
Bankman-Fried’s behavior after the fall of FTX suggests he’s something of a wild card. He may suggest he was acting on the advice of his lawyers. But he may also introduce other evidence that could be troublesome — implying, for instance, that he was engaged in standard industry behavior or that everything that happened was Binance’s fault. That may be risky, but we already know that Bankman-Fried loves risk.
“Is he going to throw the entire industry under the bus?” Wong asks. “An idea like, ‘Everyone was doing this, it’s not fair I’m the only one who was charged?’” That may not fly in a court of law, but it could absolutely damage public perception of crypto at large.
For instance, just before he was arrested, Bankman-Fried brought forward messages from a crypto group chat in testimony he planned to give before Congress. In that testimony, he primarily blames Binance and his lawyers at the firm Sullivan & Cromwell.
It’s possible other messages from group chats may be brought into evidence during the trial. That can potentially be embarrassing for the whole industry, Wong says.
“You can imagine some of these founders, CEOs, people of that echelon talk to each other somewhat informally about what’s going on,” she says. If it seems like his peer group supported him, or worse, fawned over him, that’s a real problem for the industry’s reputation.”
After FTX declared bankruptcy, Bankman-Fried went on an extensive media tour, doing interviews with The New York Times’ Andrew Ross Sorkin and Good Morning America. Even under house arrest, he did interviews, including with The New Yorker. Bankman-Fried seemed to think that if he just explained things, everyone would understand that what he did was a mistake, not a crime.
Big legal cases like this often bring embarrassing correspondence to light — think of Elon Musk’s text messages in the Twitter case revealing VC Steve Jurvetson asking Musk to get his kid a job or Elizabeth Holmes’ cringey texts with her ex. Bankman-Fried has already leaked his ex’s diary to The New York Times. Who else can he humiliate?
There’s no question the Bankman-Fried trial is going to be embarrassing for the crypto industry. The salacious details — his ex-girlfriend and a friend he met at a childhood math camp testifying against him, possible recreational drug use, and complicated love lives — mean the public will likely be tuned in to the trial. The real question is how embarrassing, and given Bankman-Fried’s appetite for risk, the sky may well be the limit.
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Crypto Trading & Speculation
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- As Americans increasingly lean on credit to make ends meet, new reports show some signs of potential problems ahead.
- Total credit card debt reached a record $1 trillion in the latest quarter, the Federal Reserve Bank of New York reported Tuesday.
- The average balance rose to $5,947, the highest in 10 years, a separate report by TransUnion found.
- Still, there are opportunities out there for cardholders that will provide a "tail wind on a path to debt repayment," one expert says.
As Americans increasingly lean on credit to make ends meet, new reports show signs of potential problems ahead.
Total credit card debt surpassed $1 trillion for the first time ever, the New York Federal Reserve reported Tuesday.
Credit card balances are up almost 20% from a year ago, according to a separate quarterly credit industry insights report from TransUnion. The average balance per consumer rose to $5,947, the highest in 10 years, TransUnion found.
Not only are balances higher, but more cardholders are also carrying debt from month to month, according to another Bankrate report. Of those carrying card balances, 60% have been in debt for at least a year.
"We also can't discount the importance of higher interest rates on the costs of borrowing for households," said John Sedunov, associate professor of finance at Villanova University's School of Business. "Not only are goods and services more expensive, but so is money."
At nearly 20%, if you made minimum payments toward this average credit card balance, it would take you more than 17 years to pay off the debt and cost you more than $8,366 in interest, Bankrate calculated.
"People aren't financing purchases at 20% because they have other options," said Greg McBride, chief financial analyst at Bankrate. "They're doing that because it's their only option."
Factor in a personal savings rate that was hovering around 4.3% in June — well below a decadeslong average of roughly 8.9% — "I think it is painting a picture of an economy in which inflation has taken its toll on households," Sedunov said.
Overall, an additional 19 million new credit accounts were opened in the latest quarter, boosted in part by originations among Gen Z, or adults ages 18 to 25, gaining access to credit cards. The tally of total credit cards hit a record 530.6 million, TransUnion also found.
"Like the overall population, many Gen Z borrowers are facing the same financial challenges brought on by high interest rates and inflation," said Michele Raneri, vice president of U.S. research and consulting at TransUnion. "As a result, they are tapping into these available credit products to help them cope with rising expenses."
As the number of credit card accounts in the U.S. rose, delinquencies notched higher, the report said. TransUnion defines a delinquency as a payment that's 90 days or more overdue.
"The increase in delinquencies over the past several quarters is something to monitor," Raneri added. Already, lenders have started to restrict access to less-experienced credit users, she said.
"It's still a tremendous opportunity to grab a 0% balance transfer card," McBride said. Cards offering 12, 15 or even 21 months with no interest on transferred balances are out there, he added, and "if you have credit card debt, that is your first step — to transfer that balance and give yourself a tail wind on a path to debt repayment."
Borrowers may also be able to refinance into a lower-interest personal loan. Those rates have climbed recently, as well, but at 10%, on average, are still well below what you currently have on your credit card.
Otherwise, ask your card issuer for a lower annual percentage rate. In fact, 76% of people who asked for a lower interest rate on their credit card in the past year got one, according to a LendingTree report.
"The fact that card issuers are still willing to give breaks like that, even in the wake of a year of frequent rate hikes, is very, very good news for cardholders," said Matt Schulz, chief credit analyst at LendingTree.
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Banking & Finance
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The Biden administration on Thursday issued a call to action for the nation’s employers to hire, train, and retain people in recovery from addiction.
Recovery-Ready Workplace, as the new program is known, includes a new toolkit for employers and promotes a model state law that would create incentives for businesses to hire people in recovery and become certified as “recovery-friendly” workplaces.
More broadly, it takes aim at the discrimination people with addiction often face when seeking work. The White House also cast the initiative as a win-win — beyond helping people in recovery achieve stability, it could help businesses’ bottom lines.
“There are more than 20 million Americans living in recovery today,” Rahul Gupta, the director of the White House Office of National Drug Control Policy, said in a press briefing. “We fully expect more people to enter recovery, and that is why this is so important to do right now.”
He continued: “Obtaining and maintaining a job is a critical part of any recovery journey. A job offers stability for tens of millions of Americans in recovery, or those struggling with substance use disorder, and their families and communities.”
The new program reflects a growing understanding of substance use, addiction, and recovery not as conscious choices but as complex processes influenced by countless factors — including, among others, financial stability and day-to-day routine.
It also underscores the immense toll that the overdose crisis continues to exact on the U.S. economy. In addition to claiming tens of thousands of American lives each year, a 2021 Centers for Disease Control and Prevention study estimated that opioid use and opioid overdoses, specifically, cost the U.S. economy over $1 trillion in 2017, a number that is likely far larger today.
The initiative does not include substantial, binding commitments from the federal government. Given that it largely relies on states and individual employers to act, it is unclear whether it will have a significant impact. Its potential, however, is immense: Roughly 46 million Americans met the criteria for a substance use disorder as of 2021, according to the White House. Roughly 27 million of those people were employed.
Others, however, face discrimination and other roadblocks in seeking employment. Even those who do hold jobs often hide their past substance use from their supervisors or colleagues.
The new initiative would encourage employers to make clear that those who openly acknowledge their recovery won’t face discrimination, and for those companies to create a pro-recovery work culture that includes peer support groups and time off for recovery-specific activities.
Doing so, Gupta argued, wouldn’t just help workers in recovery — it would help businesses retain talent and save an average of $8,500 annually, according to one study, by reducing staff turnover and employee health care costs associated with ongoing substance use, like hospitalization, heart complications, or contracting infectious diseases like HIV or hepatitis C.
The White House announcement also included the de facto endorsement of a model state law that would create tax credits and stipends for employers that hire people in recovery, and establish other state-level systems for funding programs that help people in recovery get and keep jobs.
As part of the announcement, Chris Sununu, New Hampshire’s Republican governor, also unveiled a new nonprofit known as the National Recovery-Ready Workplace Institute, aimed at helping both states and employers develop recovery-friendly policies.
Google, too, announced “enhancements” to its existing policies on fostering a recovery-ready workforce, though a White House press release did not include additional detail.
“We know that people in recovery are talented, they’re hardworking, and they deserve to have the same opportunities to learn and grow and have an impact with everybody else,” said Karen DeSalvo, Google’s chief health officer.
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Workforce / Labor
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Home Secretary Suella Braverman has defended the prime minister's approach to green policies as "pragmatic" after it appears he is set to weaken some green commitments.
The plans could include delaying a ban on the sales of new petrol and diesel cars from 2030 to 2035.
The news has sparked anger among the car industry, opposition MPs and some Conservatives.
The BBC has been told that Labour would reinstate any car 2030 ban, if elected.
Ms Braverman said the government could not tackle climate change by "bankrupting the British people".
As part of climate change obligations, the UK has said it will reach net zero carbon emissions by 2050 - meaning the country aims to take out of the atmosphere as many greenhouse gas emissions - such as carbon dioxide - as it puts in.
Speaking to BBC Breakfast, Ms Braverman said the government remained "absolutely committed" to the 2050 target but that it should be delivered in a "sustainable way that doesn't impose undue and disproportionate costs".
The prime minister's announcement, detailing a shift in approach, is expected this week, and could come as early as today.
In addition to postponing the petrol and diesel car ban from 2030 to 2035, other potential policy shifts could include:
- easing the reductions of gas boilers - with only 80% to be phased out by 2035
- no new energy efficiency regulations on homes for landlords and homeowners
- a delay to the ban on off-grid boilers from 2026 to 2035, with an aim of 80% being phased out by that date
- no new taxes to discourage flying, no government policies to change people's diets and no measures to encourage carpooling.
Mr Sunak is also likely to rule out what he sees as burdensome recycling schemes.
Conservative MP Sir Alok Sharma - who led the international climate conference in Glasgow in 2022 - expressed concern about the changes, saying: "Frankly the last thing the business community wants is chopping and changing of policies.
"This also says something about a political party's approach to its values - do we want to leave the world in a better place for future generations?"
Sir Alok questioned whether the shift would be popular with voters, but Downing Street is hoping it will provide a clear dividing line between Labour and the Conservatives.
Labour has promised to invest £28bn a year in green industries until 2030 - although earlier this year it slightly watered down this pledge - saying the investment would be ramped up over time.
Darren Jones, Labour's shadow chief secretary to the Treasury, said retreating from green commitments would damage the economy.
Appearing on BBC Breakfast, he would not say whether Labour would reinstate green targets if they are removed by Rishi Sunak.
There were concerns in the party that reinstating the target in such quick succession would only cause further confusion for businesses.
But it is understood that after private conversations with the car industry Labour now believe the sector wants to stick with the 2030 target anyway.
Delaying the ban of petrol and diesel cars would represent a significant shift in government policy.
In July, senior minister Michael Gove said the 2030 target was staying in place and earlier this week, transport minister Mark Harper said decarbonising cars and vans represented the "greatest opportunity to reach net zero by 2050".
Some in the car industry have reacted angrily to the news, with Ford's UK chair Lisa Brankin said: "Our business needs three things from the UK government, ambition, commitment, and consistency... a relaxation of 2030 would undermine all three."
Mike Hawes, head of the Society of Motor Manufacturers and Traders, said the potential delay to banning the sale of new petrol and diesel cars was "a bit of a concern".
"The view of the industry is we are on track for ending fossil fuels vehicles - it is not for turning back and the UK should be leading it both as an industry and a market."
Conservative MP Chris Skidmore, the former chairman of the UK government's net zero review, said the prime minister risked making "the greatest mistake of his premiership" and warned that diluting green policies could see the UK missing out on "growth, jobs and future prosperity".
However, others in the party have welcomed the move. Craig Mackinlay, who leads the net zero scrutiny group, said the current deadlines were "clearly unachievable".
Another Conservative MP, Karl McCartney also argued for the 2030 target to be pushed back telling the BBC: "The costs to normal drivers will be too high, the electric charging infrastructure will not be in place, and the technology is too reliant on China."
According to surveys by YouGov, over the past few years around 15-25% of Conservative voters have considered the environment to be the most important issue facing the country.
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Renewable Energy
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City National Bank has shuffled its top leadership team, recruiting banking veteran Howard Hammond as CEO while Kelly Coffey shifts to a new role as CEO of City National Entertainment.
The transition, effective Nov. 27, was prompted in part by City National’s desire to focus more deeply on its entertainment client base across TV, film, music, theater, touring and related sectors. Coffey, who is based in Beverly Hills, has served as City National CEO since 2019, having joined the company from JPMorgan’s private wealth management division.
More from Variety
“For me, banking has always been about clients — the people, businesses and nonprofit organizations we support,” Coffey said. “The entertainment industry is incredibly dynamic, and City National’s role in supporting this community is more important than ever as we remain at the forefront of industry developments and hone our services to meet the evolving needs of our clients. I’m excited about the opportunity to work more closely with clients and help City National serve them even better.”
JaHan Wang, City National’s executive VP of entertainment banking, continues to report to Kelly. Martha Henderson, another CNB veteran, remains vice chairman of entertainment banking.
Hammond joins CNB from Fifth Third Bancorp, where he was most recently executive VP and head of consumer banking. He reports to Greg Carmichael, City National Bank executive chair.
“Kelly has had a tremendous impact on City National over the last five years. Her client focus has ensured that client-centricity has remained a hallmark of the bank’s culture and that it remains a differentiator for the bank,” Carmichael said. “Her new role will build on City National’s 70-year legacy of supporting the entertainment community and allow her to focus her significant talents on helping our entertainment clients thrive.”
Hammond will also join CNB’s board of directors and sit on the executive committee of RBC’s U.S. holding company.
“City National has an incredible reputation for putting its clients, colleagues and communities first,” said Hammond. “I look forward to working closely with Greg, Kelly and the rest of the leadership team to build on the strength of City National and lead the business into the future.”
(Pictured: Kelly Coffey at the Tony Awards in 2022)
Best of Variety
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Banking & Finance
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SBI Shares Rise As Bank Proposes To Acquire 20% Stake In SBI Pension Fund
The acquisition is expected to be completed by Dec. 15 and post this the bank's holding will increase to 80%.
Shares of State Bank of India rose on Wednesday after it proposed acquisition of additional stake in SBI Pension Funds.
SBI will acquire an additional 20% stake in SBI Pension Funds for Rs 229.52 crore from SBI Capital Markets for better governance, an exchange filing said. The acquisition is expected to be completed by Dec. 15 and post this the bank's holding will increase to 80%. "Proposed transaction of acquisition is being done on arm’s length basis, which is based on the valuation report of Deloitte Touche Tohmatsu India."
Shares of SBI rose as much as 5.75%, the highest since Aug. 1, before paring gains to trade 0.30% higher at 11:13 a.m. This compares to a 0.34% advance in the NSE Nifty 50.
The stock has fallen 0.57% on a year-to-date basis. Total traded volume so far in the day stood at 2.2 times its 30-day average. The relative strength index was at 73.
Of the 52 analysts tracking the company, 47 maintain a 'buy' rating, three recommend a 'hold,' and two suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 2.5%.
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Banking & Finance
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A benefits loophole means single parents who are working two days a week can rake in the same income as someone earning £60,000 a year, according to reports. New analysis reportedly found a single mum or dad with two children who is on Universal Credit could get a total of up to £45,000 by working just 16 hours a week. The parent wouldn't pay any income tax on their benefits payments or their work earnings. This is because universal credit is tax-free and their work earnings would be below the standard Personal Allowance of £12,570 (the amount of income you do not have to pay tax on). A full-time worker would need to be earning almost £62,000 a year to take home the same amount of money after tax. Chancellor Jeremy Hunt has been urged to close the loophole, with one furious MP claiming it "beggars belief". READ MORE: Man gets extra £6,600 a year with 10-minute Money Saving Expert tip Analysis by The Telegraph showed a single parent paying £2,000 a month for rent in London would receive £36,336 a year in Universal Credit. This amount includes a Local Housing Allowance rate of up to £365.92 per week for a two-bed flat, a standard allowance payment plus an extra monthly allowance for children, and childcare costs. If that parent worked 16 hours a week at £9.50 an hour, the national living wage for workers aged 23 and older, their earnings would take their gross annual income to over £44,000. Universal credit is capped for a single person but a working single parent is exempt, reported the Sun. Tory MP for Ashfield, Notts, Lee Anderson said: "This is not fair on the hardworking taxpayer who can only dream of earning this amount of money. It beggars belief and needs to stop." A DWP spokesperson said: "Universal Credit is designed so that working always pays more. We have reduced the Universal Credit taper rate from 63% to 55%, and increased work allowances by £500 per annum meaning 1.7 million households will on average keep around an extra £1,000 on an annual basis. "These examples are selective, not representative and don’t reflect the wider work incentives in the Universal Credit system – incentives which we continue to build on. This includes announcing in the Autumn Statement that over 600,000 more working Universal Credit claimants will be required to meet a dedicated work coach to increase their hours or earnings." READ NEXT: DWP's £900 cost of living payments for 2023 - here's who can claim them Leicester tops the list of towns and cities with the weakest annual growth in house prices in England for 2022 Important DWP updates, dates and money changes in 2023 to be aware of Martin Lewis' Money Saving Expert on best savings accounts currently available People with these common health conditions could qualify for Personal Independence Payment of up to £627 Story SavedYou can find this story in My Bookmarks.Or by navigating to the user icon in the top right.
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Inflation
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JPMorgan Says Unsecured Loans To China Developers A ‘Risky Move’
China is considering allowing lenders to issue loans backed up by no collateral to some builders, which could potentially free up capital for debt repayment.
Any step by China to allow banks to provide unsecured loans to qualified developers “would be a risky move” for the lenders, according to JPMorgan Chase & Co.
Such a measure “would be negative for banks as it would raise concerns about national service risk and credit risk in the medium term,” analysts including Katherine Lei and Karl Chan wrote in a note. What’s more, implementation “would be challenging, as banks could circumvent such guidance due to credit risk concerns.”
China is considering allowing lenders to issue loans backed up by no collateral to some builders, which could potentially free up capital for debt repayment, Bloomberg News reported on Thursday, citing people familiar with the matter.
The unprecedented move would be part of a package of new measures to ease China’s ongoing property crisis, which has seen numerous defaults and stoked fears of contagion in financial markets. Authorities are also reportedly finalizing a draft list of 50 developers eligible for financial aid that includes Country Garden Holdings Co. and Sino-Ocean Group.
Though the developments sparked a rally in property shares as well as the broader China market on Thursday, stocks fell again on Friday. A Bloomberg Intelligence gauge of developer stocks retreated more than 2% on Friday while a broader index of Chinese stocks traded in Hong Kong dropped as much as 1.8%.
Bank shares have remained under pressure as the latest report adds to investor concerns about their profitability and asset quality. Chinese lenders have been battling with shrinking margins and rising bad loans since they were drafted by authorities to backstop the struggling economy and prevent risk spillover from the sluggish property sector.
The brokerage suggests going long property shares and shorting banks if the report on unsecured loans eventually pans out. Continuous positive news flow may support property shares in the short-term, the analysts said, while warning it may not be sustainable. More liquidity support to private developers may come only selectively and conditionally, they added.
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Banking & Finance
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How ‘Excuseflation’ Is Keeping Prices — And Corporate Profits — High
One-off disruptions can provide cover for companies to keep prices high.
(Bloomberg) -- “Whether it’s rye flour, or bird flu that impacts eggs,” said Ken Jarosch, the owner of Jarosch Bakery, “when it makes national news, just running a business, it’s an opportunity to increase the prices without getting a whole bunch of complaining from the customers.”It’s not the kind of thing you typically hear a business owner express publicly but Jarosch was simply stating late last year his philosophy about when it’s safe for a business such as his — a midsized bakery in the Chicago suburbs — to hike prices for cookies, cakes and other carbs. He had the idea long before Covid upended supply chains, realizing he could quickly push through price increases when news hits of some big shock to the economy because there’ll be less pushback from customers right then.
Now, a growing body of analysts and researchers see this pattern playing out across Corporate America, with companies using unusual disruptions as an excuse to raise prices for their goods and services, thereby allowing them to expand profit margins.
And over the last few years, businesses have been able to point to a smorgasbord of “once-in-a-lifetime” emergencies stemming from the pandemic and Russia’s invasion of Ukraine, which together have effectively roiled everything from semiconductor production to commodities markets and shipping.
The key question is, in an economy where the consumer continues to spend freely, how sticky this ‘excuseflation’ proves to be and how high the Federal Reserve will have to drive up interest rates to prompt businesses to lower prices, or at least stop raising them. At 6.4%, annual inflation is down from its peak last year but still well above the Fed’s 2% target.
“A lot of companies had these one-off or very, very rare excuses to raise prices and begin to find how much the consumer would take,” Samuel Rines, a managing director at Corbu LLC, says in the latest episode of the podcast. “Once you get that price push, once you figure out that the consumer’s willing to pay it, that is margin expansive over time, as you begin to have a normalization in your input cost.”
He cites a plethora of companies that are taking price over volume, or the ‘POV’ strategy, as he’s dubbed it. These include all-American favorites like PepsiCo Inc. and Home Depot Inc. and even two retailers long known for their discounted prices: Walmart Inc. and Dollar Tree Inc.
And while any company would naturally like to always be able to raise prices without taking a major hit to market share, in this environment of sub-3.5% unemployment and average hourly earnings growth running over 4% annually, consumers are by and large stomaching these price hikes. They’ve typically only sparked modest hits to customer demand. That explains why the Fed is so focused on cooling off the labor market — and wage growth, in particular — to get inflation back under control.
In the meantime, a defining factor of this excuseflation — and one potential reason it’s proving difficult to stamp out — is that it gives companies a cover to raise prices together, limiting in the process customers’ ability to vote with their feet by shopping elsewhere.
Pepsi Pricing Power
“We call it the new PPP,” says Rines, short for “Pepsi Pricing Power.”
It effectively allowed the soft drink giant to raise prices, he says, to make up for volume sales losses in Russia following the invasion of Ukraine. This is very different than the conventional narrative that the war was inflationary because it rocked key commodity markets — particularly oil, gas, and wheat.
As Rines sees it, Pepsico all around the world started paying more in order to compensate Pepsico for losing the Russian consumer market. And while traditional economics would argue that consumers eventually turn to lower-priced alternatives or to Coca-Cola Co., that hasn’t really been the case so far.
“You shouldn’t have Pepsi being able to push price, in theory, right? It should be Pepsi and Coca-Cola battle it out and you have very minimal price increases and they don't have the ability to really play catch up with inflation,” Rines says. “And that's simply not the case right now.”
Asked recently on a call with analysts if Pepsi might consider rolling back price increases if demand weakens, CEO Ramon Laguarta argued that the company was “trying to create brands that can stand for higher value to consumers and consumers are willing to pay more for our brands.”
So, basically, no. (Pepsi didn’t respond to a request for comment).Once companies enact higher prices, there isn’t a lot of motivation to reverse them.
The result is a surge in profit margins at both Pepsi and Coca-Cola — and across major companies in general.
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It’s a point picked up by UMass Amherst economists (and frequent guest) Isabella Weber and Evan Wasner,. They cite an explosion in corporate profit margins to a record 13.5% in the second quarter of 2021 as evidence that companies are going beyond simply passing on higher input costs to customers.
In new research published last week they named the phenomenon “sellers’ inflation,” noting that a series of “overlapping emergencies” in recent years had effectively given companies the peg they need to collectively raise prices.
“Bottlenecks can create temporary monopoly power which can even render it safe to hike prices not only to protect but to increase profits,” Weber says. “This implies that market power is not constant but can change dynamically in a changing supply environment. Publicly reported supply chain bottlenecks and cost shocks can also serve to create legitimacy for price hikes and create acceptance on the part of consumers to pay higher prices, thus rendering demand less elastic.”
Because these disruptions and shocks have tended to affect entire industries, firms can hike prices without fear of losing market share, even for two notorious competitors like Pepsi and Coca-Cola.
“Firms do not lower prices, as doing so may spark a price war,” Weber writes. “Firms compete over market shares, but if they lower prices to gain territory from other firms, they must expect their competitors to respond by lowering their prices in turn. This can result in a race to the bottom which destroys profitability in the industry.” That means there’s little motivation to roll them back once enacted.“When these cost increases are not unique to individual firms but experienced by all competitors, firms can safely increase prices since they have a mutual expectation that all market players will do the same,” she notes.
Wings won’t stop
Rines loves to talk about a chicken-wings restaurant chain named Wingstop as one example of corporate actions helping inflation take off.
When the wholesale cost of wings was soaring back in 2021 — it jumped 125% over one 12-month period — Wingstop “began to push price, push price, push price and they had zero pushback from the consumer,” he says. “The consumer just continued to buy chicken wings, and it’s not as though there are a limited number of places to go buy a spicy chicken wing.”
When wholesale wings prices started to fall from their recent peak, Wingstop didn’t reverse course. The cost is down about 50%, Rines says, but “Wingstop is not exactly stopping pushing their price. In fact, they’re saying and guiding towards a typical 2% to 3% type price increase.” (Wingstop didn’t respond to a request for comment.)The chain’s profit margins are up, and its stock has soared almost 250% from the low it hit during the depths of the Covid-sparked market rout in early 2020.
“Yeah, over the course of the year, we've been taking price. We have another opportunity in front of us where we are actively working with our franchisees and they are going to put in somewhere between 4 to 5 points of additional price, hopefully during this quarter, certainly over the next few months, that will culminate in a total of a targeted 10% overall increase, which we believe is in line with where inflation is and aligned with consumer demand as well. So, like other brands, we're making sure that we're taking our price in this environment to offset some of the near-term headwinds.”
- Charlie Morrison, former Chairman and Chief Executive Officer, Wingstop Q3 2021 conference call.
The mismatch between declining wholesale prices and stubborn retail ones may help explain why inflation has proven so tough to stamp out even as many of the one-off shocks — such as the pandemic fiscal stimulus or the initial commodity effect of the war — fade into the past. It also poses a challenge to economists who might assume that margins should dissipate through competitive pressures.
“Most economists have considered the return of inflation from the perspectives of the dominant interpretations of the 1970s: Inflation originates from macro dynamics, with the (New) Keynesian interpretation positing a matter of excess aggregate demand in relation to capacity on the one hand, and the classic Monetarist postulation of too much money chasing too few goods on the other,” Weber writes. “In so far as costs are considered to play any role from either perspective, it is purely a matter of inflated wages.”
There are some signs that policy makers are starting to pay more attention to corporate behavior as a driver of prices, with Lael Brainard, the former vice chair at the Fed who now runs President Joe Biden’s National Economic Council, arguing in January that: “Retail markups in a number of sectors have seen material increases in what could be described as a price–price spiral, whereby final prices have risen by more than the increases in input prices.”
And while higher profit margins on the surface would seem to be a benefit for investors, when every company is in a position to raise prices, that’s the behavior that keeps prompting members of the Fed’s Federal Open Market Committee to ratchet up interest rates again and again, putting a lid on stock prices.
It’s going to be tough for policy makers to stop hiking rates “until they begin to actually see corporations decelerate pricing,” Rines says. “And when Smuckers says for 2023 it's 8%, that is not good for the FOMC. When Cracker Barrel’s saying wage increases are 5% to 6%, that's not good for the FOMC. You know, one is a consumer good and one is middle America getting a pay raise. When Walmart's raising their minimum wage, again, that's a pretty big deal when it comes to consumption on the lower end.”
“It’s going to be easy” to get fooled by CPI prints pointing to slower inflation in coming months, Rines says, “and then all of a sudden get caught a little off guard when corporations continue to push pricing, trying to find the elasticity on their margin.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Inflation
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Just over a decade ago, I was in Downing Street planning our country’s pathway through the global financial crisis, completing our long-planned exit from Iraq, anguishing over soldiers’ deaths in Afghanistan and implementing the second stage of the Good Friday agreement on policing in Northern Ireland. I never once imagined that, just over a dozen years on, I would be having to negotiate a supply of 1.5m toilet rolls for my local family centre’s anti-poverty work.
And because 2023 finds mothers reusing nappies, sharing toothbrushes, going without period products, washing their clothes without washing powder and washing themselves and their children without soap, next week fellow helpers and I have set ourselves the task of securing all these essential toiletry products for families in need.
These are the latest supplies being added to the 600,000 surplus goods (worth around £10m) that 30,000 families have so far received from the new multibank that volunteers have created in Fife, where I live. Helping the hungry is the life-saving work of food banks, now more than 3,000 in number, alongside the growing number of community kitchens, pantries and larders. But now communities need not only a local food bank but a multibank – a bedding, furnishings, toiletry, clothes and baby bank all rolled into one. The biggest demand over the winter has been for duvets, blankets and sheets to keep people warm and given to our multibank by Amazon, Fishers laundry, Scotmid and the Textile Services Association. As spring moves to summer, these founding corporate donors are being joined by Tesco and the Online Home Shop, which are donating clothes and homemaking goods, tins of food from Morrisons, PepsiCo, Scotmid and Heinz, toiletries from Accrol and Unilever, paint from local suppliers, and we are now about to receive mattresses thanks to Whitbread. This is the kind of distribution revolution we need for the urgent relief of the poverty in our midst.
After last month’s punishing rise in food price inflation, telecoms, council tax and other prices, hardship – and the requirement to relieve it – is not diminishing but increasing. For sadly, under this government, coronation Britain is also a divided Britain, a country in which, with every month that passes, the poor are becoming even poorer.
The fanfare for a king cannot obscure what is unfair for others – rising deprivation among those without money or power. Regrettably, too, the national mood seems different from the last coronation. After years of wartime and postwar austerity, the British public of 1953 was optimistic about the future. This time, as charities take over from the welfare state as our national safety net and the food bank, not the social security system, is fast becoming the last line of defence against destitution, it is difficult not to fear for the future.
“The record is clear,” declared an in-denial Rishi Sunak in a prime minister’s questions answer to Keir Starmer a few days ago. “The number of people in poverty is lower.” The most generous way to explain his interpretation of the data is that he is looking at charts upside down, for the official government statistics actually show that last year there were 14.4 million people living in poverty, 1.4 million more than in 2010-11.
To call his claims fake news elevates what he is saying to what Churchill once called “a terminological inexactitude” – a more worrying kind of misinformation designed to mislead the public about the kind of society we are becoming. And when this erroneous claim of declining poverty is born of complacency, ignorance becomes a form of arrogance. Child poverty is now rising inexorably to 4.2 million children and soon it could entrap a record 5 million children, so we should be debating solutions to the problems we face, not denying there is a problem, and these grim statistics explain why 2.1 million people are using food banks and why most poor children are in families on low pay, with this decade 1.5 million more working households unable to make ends meet even after working all hours God has given them.
I’m talking to mothers who can’t sleep at night because they are worried sick about not having breakfast for their children before they go to school and who are ashamed they have to queue to use food banks. There are some images that never leave you. Images that are so haunting they encapsulate the trials and tribulations of the times we are in: the story of a 10-year-old sleeping on bare floorboards with only a threadbare sheet covering him; of a mother feeding her children at the expense of herself and relying only on leftovers, trying to sleep through her hunger; of a single father who says he can’t cope any more, dumping his 16-year-old son in floods of tears at a charity warehouse – leaving the desolate young boy to the compassion of staff and later the mercy of a care home.
These are real-life tragedies that capture a poverty that seems even worse and much more entrenched than what I saw growing up in a mining and textiles town, at a time when slum housing was still rife and the children of travelling people regularly turned up at my school ill-clad and dishevelled, in poorly fitting, secondhand clothes.
It is because this new face of poverty in our Carolean era recalls the Victorian age of a century and a half ago – more so than the Elizabethan one we have just left behind – that more than a hundred public figures led by the Joseph Rowntree Foundation and the Trussell Trust have pleaded that the government introduce a new anti-destitution guarantee that it will meet the cost of basic essentials to end the growing reliance on charity for food. The Cottage Family Centre in my own community recently came across four children who took it in turns, one night in every four, to sleep on a threadbare secondhand settee. The family had not one bed to their name. Some time ago, a Leeds teacher was so shocked to see her kids falling asleep in her classroom that she began collecting beds for the children in her care. The “right to a bed” campaign that she inspired has given birth to bedding banks all over the country. When rising energy and food prices are not the fault of the millions in poverty, we have to take the shame out of need. To meet this new epidemic of rising poverty, we have no alternative but to launch a nationwide appeal with a view to uniting the country around the immediate relief of poverty.
This week a pamphlet, The Multibank and How to Create One, will set out the Fife experiment, which is already being replicated by The Brick by Brick project in Greater Manchester. The multibank is a very simple idea: to connect the companies that have surplus goods that people need to the charities, social workers, teachers and health visitors who know the people who urgently need the goods.
We are now asking retailers and supermarket chains to donate their surplus goods, informing them that, instead of destroying leftovers, they can join an anti-pollution initiative that transfers their goods to families in need and helps create a circular economy. And we are asking manufacturers to do special production-line runs of essential products at cost price, reminding them that the recipients will be families who cannot afford to buy their goods this year or next but may be their customers in the future.
I want churches, community groups, charities, councillors and companies who have all shown great concern about this new epidemic of poverty in our midst to come together in a new UK-wide coalition of compassion.
To his credit, King Charles has called for today and bank holiday Monday to be The Big Help Out, a day of community volunteering as a lasting legacy of his ascension to the throne. If we all travel under the same banner of a poverty-free Britain, the irresistible force of public pressure can defeat a currently immovable object of demeaning poverty, and begin to change post-coronation Britain for the better.
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Nonprofit, Charities, & Fundraising
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There’s a lot more wrong with UK public investment than HS2. I see that as a governor of a small primary school relying on parents to support new playground and IT equipment, and, rather less personally but just as clearly, in our Resolution Foundation research. There are four related problems.
First, the UK state simply invests too little: the average OECD advanced economy has invested 50% more (relative to GDP) than the UK this century. The results are everywhere, from Raac-infested schools to potholed roads. Our politicians have strong incentives to cut public investment for tomorrow (it’s easier than firing nurses or raising taxes today). And our fiscal rules focus narrowly on net debt, ignoring the value of assets on the public sector balance sheet.
Second, public investment is too volatile. Departments’ investment spending changes are six times more volatile than day-to-day spending, preventing long-term planning and guaranteeing poor value for money. When we do want to invest, trying to increase spending quickly means paying through the nose or failing to get the money spent (the government fails to spend £1 in every £6 of investment planned).
Then there are the immediate cuts. Public investment levels now are higher than we have seen for some time. But the government has pencilled in significant cuts (from 2.5% of GDP to 2.2% in 2027-28). That is mad when Britain needs to be investing more, not less, not least for the net zero transition.
Lastly, how we invest is plagued with problems. HS2 spells out the madness of opaque political decision-taking, stop-start project approvals and chronic cost overruns.
There is no plausible path out of current stagnation that doesn’t include us becoming a higher – and better – investing nation. Time to invest for the future and stop living off our past.
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United Kingdom Business & Economics
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US Calls For New Limits To Wall Street Bank Backstop After March Crisis
US officials will seek to limit some access to Federal Home Loan Banks after multiple failing lenders turned to the $1.3 trillion system in desperate bids to survive March’s banking crisis.
(Bloomberg) -- US officials will seek to limit some access to Federal Home Loan Banks after multiple failing lenders turned to the $1.3 trillion system in desperate bids to survive March’s banking crisis.
After a review of the system that lasted more than a year, the Federal Housing Finance Agency will move FHLBs away from serving as lenders of last resort for financial firms in turmoil, and back to their roots in housing finance. The plans ratchet up federal oversight and seek to push banks toward the Federal Reserve’s discount window in times of extreme stress, according to a report to be published Tuesday.
Banks borrow hundreds of billions of dollars from the government-chartered FHLBs each year to fulfill short-term funding needs. The practice came under scrutiny after the FHLBs, which have implied backing from the government, lent heavily to Silicon Valley Bank, Signature Bank and First Republic Bank as they careened toward failure.
Among the major changes, the Federal Housing Finance Agency, which oversees FHLBs, will propose a rule to force many banks to hold 10% of their assets in mortgage loans to maintain access to the FHLBs. The regulator is also exploring new guardrails for lending money to troubled institutions and tougher stress tests.
A big structural overhaul may also be in the offing: The regulator is looking at consolidating some of the 11 FHLBs scattered across the country. The FHFA didn’t say which of the institutions could be on the chopping block. Sandra Thompson, who runs the agency, could slash the number to eight without any involvement from Congress.
‘Elevated Compensation’
“The FHLBs have always had as a part of their mission providing general liquidity, and that’s not going to change,” Joshua Stallings, the FHFA deputy director who oversees the FHLB system, said in an interview. “But the fact of the matter is that we have to ensure the Federal Home Loan Banks are operating in a safe and sound manner. They have to do a better job.”
Some changes would require congressional action. Officials will ask lawmakers for help to rein in “elevated compensation” for some FHLB executives and to “at least” double the amount of profit that the FHLB system must spend on affordable housing.
The chief executives of FHLBs typically earn well over $1 million annually, and average pay per employee can rival that of Wall Street banks. Last year, the average compensation and benefit expense per employee at the FHLB in San Francisco was in line with Goldman Sachs Group Inc. at more than $310,000 per year, according to regulatory filings.
The FHLBs were set up in the Great Depression to boost mortgage lending, but have since morphed into a financial backstop for banks and credit unions. At the same time, their importance in housing finance has declined as nonbank mortgage firms grew to predominate home lending.
“There’s a culture shift that’s going to be needed in the banks,” Stallings, the FHFA official, said. “That’s going to need to change from being passive liquidity providers to being active supporters of housing and community development.”
The FHFA found that in March some large, troubled institutions had become so reliant on borrowing from the FHLBs that they hadn’t set up the ability to borrow from the Fed’s discount window. In one week in March, the FHLBs funded $676 billion in loans, a record, the report found.
Going forward, “there are going to be times when a Federal Home Loan Bank will need to work with the appropriate Federal Reserve Bank to ensure borrowing can be moved over,” Stallings said.
--With assistance from Heather Perlberg and Stephanie Stoughton.
©2023 Bloomberg L.P.
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Banking & Finance
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Former President Trump on Thursday blasted New York Judge Arthur Engoron and defended his sons Donald Trump Jr. and Eric Trump, who he said are being "persecuted in a political witch hunt."
Both of Trump's sons took the stand this week in the non-jury civil trial stemming from New York Attorney General Letitia James’ lawsuit against Trump's family and businesses.
Trump slammed Engoron, saying he was "hurting my very good children" and working to "damage & defame" him in an effort to interfere with the 2024 presidential election.
The former president and 2024 Republican presidential primary frontrunner posted to his Truth Social account Thursday afternoon, as his son Eric Trump was on the stand testifying.
"When Judge Arthur Engoron, one of the most overturned, on Appeal, Judges on the ‘bench,’ stated that a Billion Dollar House is only worth 18 Million Dollars, & made numerous other mistakes, as well, he is the ‘Fraudster,;’ not me," Trump posted.
"He is just doing this out of his personal ‘Hatred of TRUMP,’ his love of the publicity that this case is getting him, & his lack of respect for the Appeals Court (He is in total violation of their order ending much of this Witch Hunt right now. He refuses to do what they say he must!)," he continued.
"Engoron is a wacko who is having a great time endlessly sanctioning, fining, & pushing around ‘TRUMP,’ hurting my very good children, & working to damage & defame me for purposes of Interfering with the 2024 Presidential Election, all this while never admonishing our failed & corrupt Attorney General, whose 'Star Witness' admitted he lied, & that I did NOT tell him to inflate values, a total reversal," Trump wrote. "Their whole case was based on this single LOSER, so it should be dismissed!"
Trump’s post came amid his son Eric Trump’s testimony, and a day after his eldest son Donald Trump Jr. took the stand to defend their business.
"So sad to see my sons being PERSECUTED in a political Witch Hunt by this out of control, publicity seeking, New York State Judge, on a case that should have NEVER been brought," Trump said. "Legal Scholars Scream Disgrace!"
Again, Trump maintained that his worth is "far greater than on financial statements, plus they contain a full DISCLAIMER CLAUSE telling readers of this information to do their own due diligence and analysis."
"Banks and Insurance Companies made money, not even a minor default, and there were NO VICTIMS, except for the people getting mugged and murdered on the sidewalks of New York while our Corrupt Attorney General sits on her ass in Court all day watching the Trump family be abused by a Trump Hating Judge that said a Billion Dollar house is only worth $18,000,000 Million Dollars!!!" Trump posted.
Engoron imposed a partial gag order in the trial, blocking all parties from making derogatory statements about his court staff.
Engoron first fined Trump $5,000 for violating the order on social media, and threatened imprisonment if further violations were committed.
Last week, Engoron fined Trump another $10,000, claiming he was again in violation of the order by making a comment about a member of his staff.
It is unclear if Engoron will view this Truth Social post as a violation of the gag order.
Meanwhile, the "star witness" Trump referred to is his former attorney Michael Cohen, who testified as part of the civil trial last week. After Cohen testified that Trump did not specifically direct him to inflate assets, Trump’s legal team demanded an immediate verdict and case dismissal, but Engoron rejected their effort. Trump, in another post, again said Cohen "admitted on the stand that he lied."
The former president’s daughter, Ivanka Trump, was also set to testify this month, but her attorneys filed an appeal Wednesday to reverse her requirement to do so.
The trial comes after James, a Democrat, brought a lawsuit against Trump last year alleging he and his company misled banks and others about the value of his assets. James claimed Donald Jr., Ivanka and Eric, as well as his associates and businesses, committed "numerous acts of fraud and misrepresentation" on their financial statements.
Engoron in September ruled that Trump and the Trump Organization committed fraud while building his real estate empire by deceiving banks, insurers and others by overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.
Engoron’s ruling came after James sued Trump, his children and the Trump Organization, alleging that the former president "inflated his net worth by billions of dollars" and said his children helped him to do so.
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Real Estate & Housing
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ITR Filing: What Is AIS? All You Need To Know About It
Annual Information Statement records all financial transactions of the taxpayer in a specific financial year.
New taxpayers are unaware and confused about several terms, processes, and forms when in comes to Income Tax Returns and their filings.
It is significant for any taxpayer to understand and know the different statements required for ITR filing and how they make the process convenient.
One of these statements is AIS (Annual Information Statement).
What Is AIS?
Annual Information Statement records all financial transactions of the taxpayer in a specific financial year.
This statement shows the reported and modified value under each section such as SFT (Statement of Financial Transaction), TDS (Tax Deducted at Source), and others.
What Is The Purpose Of AIS?
Displays complete information to the taxpayer with a facility to capture online feedback
Promotes voluntary compliance and enable seamless prefilling of return
Deters non-compliance
This statement is significant as it makes it convenient for taxpayers to check all information regarding income and taxation. It reduces the taxpayer's hassle in the ITR process.
What Are The Components of AIS?
Part A- General Information
All details including Masked Aadhaar Number, PAN, Name and Birth Date of the taxpayer, company, incorporation, email address, mobile number, and address of the taxpayer are mentioned in this section.
Part B- TCS/TDS Information
Statement of Financial Transactions (SFT), payment of taxes, demand and refund and other information such as interest on refund, data pertaining to Annexure II salary, outward foreign remittance, or purchase of foreign currency.
Steps to view Annual Information Statement online
Step 1: Log in to the official Income Tax website -https://www.incometax.gov.in/.
Step 2: The dashboard will display AIS on the menu
Step 3: Click on the Proceed option, it will redirect to AIS portal and you can click on AIS to view the statement
If this process does not work , you can follow the alternate process:
Step 1: Visit the official website: https://www.incometax.gov.in/
Step 2: Login into the portal and click on e-File option
Step 3: Select the Income Tax Return option, you will be directed to the AIS portal, and you can select the AIS option to check the statement.
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Personal Finance & Financial Education
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Shop staff at Pret a Manger are to receive their third pay rise in a year.
The average pay base will have increased by 19% in the twelve months up to April at the British coffee and takeaway food chain.
But the latest hike is to ensure the company does not fall foul of a boost to the minimum wage, which will change by law on 1 April.
The latest announcement means its worst-paid staff will get an increase of 2.9%, from £10.30 an hour to £10.60 an hour.
Above inflation pay boost in last year
Nearly 8,000 (7,870) of Pret's UK shop staff are to receive an additional 3% pay rise from 1 April, in addition to the 5% rise from December 2022.
Next month, typical pay will grow to a range between £10.60 and £11.90 an hour, up from an hourly rate between £10.30 and £11.55.
Barista pay is slightly higher and will increase from between £10.85 and £12.50 an hour to between £11.20 and £12.85. Pay rates depend on location and experience.
The 19% total pay rise over the last year far surpasses the rate of inflation, which stood at 10.1% in the year up to January.
Pret said pay was being upped in an effort to support staff with the high cost of living. The company also gives free food to employees and introduced a discounts portal offering supermarket items and other goods at a lower cost.
There are 429 Pret shops in the UK, with 121 overseas. The firm plans to double in size by 2026.
Pret is just one of a number of large employers to raise wages as workers pay more for goods and bills, and competition to attract staff remains high.
While the number of job vacancies has declined, unemployment, at 3.7% is still near a low not seen since 1974.
Other food retailers such as Sainsbury's and Tesco have also upped pay for its shop workers.
Sainsbury's staff outside London should now get at least £11 an hour, up from £10.25, while those working in the capital saw see their hourly wage rise from £11.30 to £11.95, the company said.
Tesco last month increased hourly pay for shop floor staff by 7% to a minimum of £11.02 an hour. Like Pret, this is the company's third pay rise in a year.
The national living wage - which is independently calculated based on what people need to live on - will rise to £10.42 an hour from April, an increase of 9.7%.
Higher wages have been a concern for the Bank of England in its effort to bring inflation down to 2%.
"We are concerned about persistence [of inflation] and that's why, frankly, we raised interest rates this time," the Bank of England governor told the Treasury select committee last month.
"I am very uncertain, particularly about price-setting and wage-setting in this country. We have got the largest upside skew in our forecasts that we have ever had on inflation," Andrew Bailey said.
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Workforce / Labor
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There’s a distinction between the lower, middle and upper classes, but did you know that there’s also a category in between the latter two called the “upper middle” class? While those in the middle class are often considered fairly financially stable, the upper middle class tend to have a higher net worth and even more financial security — just perhaps not quite as much as the truly wealthy.
As you start improving your income and building your net worth, you may be wondering just when you’ve gone from the middle to upper middle class. While there’s no one-size-fits-all definition, and monetary amounts tend to vary, there are certain signs that you’ve made the jump. Here’s what the upper middle class is, and the top signs that you’re there.
Upper Middle Class Defined
People in the middle class and the upper middle class may both benefit from a higher standard of living, less financial stress, and more financial freedom or stability. However, there are some differences between the two tiers.
Here’s how Nicole Nicolet, owner of Let’s Make Life Great, defined the two categories.
“The middle class can be defined as anyone who is able to afford a reasonable standard of living, including owning a home, going on yearly or bi-yearly vacations, and being able to support future investments like part of a college education for their children. In most cases, they will have to work up to the expected retirement age. The upper middle class is able to afford a little above the standard of living of the middle class.”
The upper middle class often gets to enjoy more vacations, has minimal to no debt, and is on track to retire — and live comfortably once retired — without issue.
“Middle class typically involves stable income and some savings, with incomes between $50,000 and $125,000, according to the U.S. Census Bureau. Upper middle class might mean earning 15-50% above the median with a comfortable financial cushion, while the upper class generally refers to the top 1-3% earners with substantial wealth and investment-derived income,” said Jeff Rose, CFP and founder of GoodFinancialCents.com.
Some sources define upper middle class as anyone who’s making a lot of money but hasn’t quite crossed the threshold to become truly wealthy yet. These individuals often have a net worth of at least $500,000 to $2 million.
I’m a Financial Advisor: Here Are 6 Things My Clients Don’t Like to Hear — and Why I Tell Them Anyway
Key Signs You’re in the Upper Middle Class
In addition to having a high income and net worth, here are eight other key signs that you’ve made it to the upper middle class.
1. You Have Extra Money After Investments and Expenses
People in the middle class often have disposable income, but those in the upper middle class have money left over even after they’ve maxed out their retirement account contributions and taken care of their other major investments and expenses. They also have far less concern or stress about using said money since they’re more financially secure.
“Cracking into the upper middle class? You’ll probably notice a few key things,” said Rose. “First off, you’ve got some wiggle room in your budget for the fun stuff — think vacations and regular nights out. You’re not just socking money away for retirement, but you’ve got a mix of investments like stocks or maybe even a rental property.”
2. You Own a Mix of Assets
When you’re in the upper middle class, you have more than just cash at your disposal. You also have a diversified portfolio with assets such as stocks and rental properties that can boost your income and enhance your financial security. Even if your total net worth is distributed across multiple assets, it still adds up to a significant amount.
You may also have fully paid off your mortgage, though this isn’t necessarily required. “One sign that you are in the upper middle class may include being able to pay off big investments, like a mortgage, years early, without restricting your lifestyle,” said Nicolet.
If you do have a mortgage, it’s one that you’re very comfortable with and isn’t dragging you down financially.
3. You Live in a More Expensive Neighborhood
Another way to see if you’ve made it to upper middle class is to simply take a look at where you live. According to Rose, if “your home is in a ZIP code where folks want to live,” that’s a good sign that you’re there.
Keep in mind that it’s not all about appearances. People in the middle class might try to keep up with the Joneses — that is, they might compare themselves with their neighbors and try to match their level of wealth or status. Those in the upper middle class, however, do not. They don’t need to worry about whether their house is big enough or their car is luxurious enough. They can afford many of these high-end things without needing to stretch their financial means.
4. You Have Minimal Financial Stress
One of the biggest indicators that you’ve made it to the upper middle class is if you have little to no stress when faced with an unexpected bill or expense. If a financial emergency does come up, you also know that you can cover it without a problem.
“If an unexpected bill popped up, you could cover it without panicking,” said Rose.
5. You’ve Experienced Positive Lifestyle Changes
Having significantly more disposable income and a higher net worth often comes with major lifestyle changes. This doesn’t mean you’re suddenly living above your means. Rather, it means you can afford more than you ever could before, including goods and services that you used to view as being a luxury or out of reach. It also means you can afford things like medical expenses, travel, and more expensive hobbies or interests.
“Being in the upper class means almost no restrictions on lifestyle. Not billionaire rich, but certainly without any limitations to enjoy most standards of living,” said Nicolet. “Additionally, being in the upper middle class means that you are able to easily afford more leisure purchases like recreational vehicles, sporty cars, and maybe even a small vacation home in popular vacation spots.”
This is similar to what you might experience in the upper class, but perhaps a tier lower.
“If you are in the upper class, then you will be able to afford essentially any purchase you want, without ever having to choose a payment plan or worry about future financial deficits,” added Nicolet. “The upper class is an interest-free, and interesting life.”
6. You Can Afford Higher Education
The cost of higher education is high, and many people who go to college or university end up with student loan debt. Those in the upper middle class, meanwhile, can afford to attend college — or send their children to college — without having to take on this debt.
“You can swing the better educational opportunities for your kids (or yourself!) without sweating over the price tag,” said Rose. “These are all little financial wins that hint you’re sitting pretty in the upper middle class.”
7. You Can Retire Early
Retiring early is the dream for many people, but it might not feel that achievable if you’re struggling with debt or everyday expenses. For the upper middle class, this isn’t as much of an issue due to factors like diversified investments, passive income, and overall financial security.
“In most cases, being in the upper middle class also signifies that you can retire early, without much concern for financial troubles down the road,” said Nicolet.
8. You Have Multiple Income Streams
While those in the lower and middle classes may only have one source of income, wealthier individuals almost always have two or more income streams. This could include a high-paying job. But it could also include owning a business or having a passive income source like dividends from investments or rental property income.
Bottom Line
By no means is this a comprehensive list of signs that you’ve made it to the upper middle class. Everyone’s situation is different, and definitions of class vary broadly. What one person might consider as upper middle class could be a tier higher or lower than another’s definition of it.
What matters is determining where you’re at right now financially, and where you want to be. If there are still things that stress you out financially, you might still have a ways to go. But if you’re living comfortably and enjoying the lifestyle of your dreams, chances are you’re already where you want to be.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: 8 Key Signs You’ve Made It to the Upper Middle Class
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Personal Finance & Financial Education
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Bitcoin (BTC) moved through the east Asia afternoon trading day just shy of $29,500, sitting comfortably at $29,404, as the CoinDesk Indicies bitcoin trend indicator put the world’s largest digital asset at neutral.
Ether, the second-largest cryptocurrency by market value, slid down 0.66% to $1,864, according to CoinDesk data.
In a recent market update note, Singapore-based QCP Capital said this is the season of accumulators.
Despite BTC and ETH's indifferent response to macroeconomic factors and their current sideways trading, the market anticipates a rise in volatility and a possible significant BTC price increase by year's end due to factors like the Blackrock spot ETF ruling and the Bitcoin Halving, with Accumulators emerging as an effective strategy for accredited investors to acquire coins at discounted prices steadily, they wrote.
Elsewhere, Galaxy Digital’s Mike Novogratz recently said in an interview with Bloomberg that “the most important thing that happened this year in Bitcoin is Larry Fink,” emphasizing his bullishness about the world’s largest digital currency post-ETF filing.
“Larry was a nonbeliever. Now he says, ‘Hey, this is going to be a global currency.’ People around the world all trust it,” Novogratz said, while also mentioning that Galaxy Digital is committed to maintaining a presence in New York.
Novogratz also said that his ideal portfolio for a young person with risk tolerance is shares of Alibaba, silver, gold, bitcoin, and ether.
Meanwhile, Joe DiPasquale, the CEO of crypto fund manager BitBull Capital, said bitcoin’s ability to shrug off macroeconomic events, or even material technical events like the Curve Finance exploit, has created a recent “sustained sentiment shift” to the upside in the markets.
“Notably, now that the Fed's interest rate hike is also priced, the fact that Bitcoin and ETH have both maintained their price levels, should give bulls additional confidence,” DiPasquale wrote in a note to CoinDesk.
BitBull’s DiPasquale is not expecting “an overnight surge in the market,” and sees 2024’s halving as the next major price spur. “Until then, bulls will do well to accumulate when opportune and bears may want to practice vigilant risk management,” he wrote.
Elsewhere in the market, Curve’s CRV token has begun to recover, up 6.4% in the last hour to 64 cents. It’s down nearly 12% in the last 24 hours after an exploit put $100 million worth of crypto at risk.
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Crypto Trading & Speculation
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FMCG, Dairy Firms Expect Strong Double Digit Sales Growth This Summer
Companies are ready with new and innovative offerings, while anticipating strong demand for their products this season and have started building inventory.
The demand for ice creams and cold beverages have surged on the back of an early onset of summer season, which could likely drive sales in strong double digits, according to top executives of fast moving consumer goods and dairy firms.
The Coronavirus pandemic abating with increased consumer mobility will act as a tailwind for the summer season. This will also help the out-of-home (OOH) segment, where the companies expect a sharp rise in sales after a slump of two years.
Companies are ready with new and innovative offerings, while anticipating strong demand for their products this season and have started building inventory.
Mother Dairy, one of the leading sellers of milk, dairy beverage products and ice creams, said it is already "witnessing a surge in demand" with rising temperature and expects the trend to continue in the coming days.
"In line with the same, we have already beefed up our value-chain to cater to any surge in demand across channels."
"For a category like ice creams, which is a highly infrastructure-led business, we have ramped up our production, cold-chain infrastructure, refer vehicles and have invested in asset deployment at our consumer touch points to ensure shelf strength," said Mother Dairy Managing Director Manish Bandlish.
In addition, Mother Dairy is also geared up to entice consumption with the launch of about 15 new variants and flavours this season and excite consumers to explore for more, he said.
"We expect our ice cream category to grow by about 25% in the upcoming season," Bandlish added.
The organized branded ice cream market is around Rs 8,000 crore per annum. This year the market is expected to grow by 12% on volume basis and value wise about 22%, as price has increased by 10%, Indian Dairy Association President R S Sodhi told PTI.
Expecting a good season, companies have also increased their marketing spends on endorsements, brand campaigns etc. targeting the consumers.
Beverage maker PepsiCo said it is 'excited' about an early onset of summer and this could signify for the beverage sector in 2023. The company is 'optimistic' that its portfolio of beverage brands will be able to meet consumer demand and to help them beat the heat, said PepsiCo India Senior Vice President, Beverages George Kovoor.
"Most of our high-octane, brand summer campaigns are being launched in February itself, and they feature celebrities with mass appeal to further strengthen the connect with consumers and ensure brand love."
"We look forward to a great summer while remaining committed to providing consumers the right products at the right occasions across the beverage portfolio," said Kovoor.
Similarly, home-grown FMCG major Dabur India Ltd. said a warmer and longer summer would be good for its summer-centric products, particularly its beverages and glucose portfolio. "We are already witnessing good demand for these products and have started building inventory for the same, both at the retail and stockist end," said Dabur India Chief Operating Officer Adarsh Sharma.
According to Nuvama Group Executive Director, Institutional Equities Abneesh Roy, this year the summer season would be positive for summer categories like ice cream, cola, fruit juices, beer, cooling hair oil. He expects strong double-digit sales growth in these categories.
"Both urban and rural markets will see good demand for these categories but urban will be faster," Roy added. However, he also added that last time also summer was harsh, so the base is not soft.
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Consumer & Retail
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Hardline Tory Deputy Chairman Lee Anderson has lashed out at families who he claims "abuse" food banks - then take their children to McDonald's.
The controversial right-winger was accused of "political cowardice" over his comments, which were described as a "demonisation" of those in poverty.
Mr Anderson, who regularly rants about the use of foodbanks by struggling Brits, claimed people were using them as a "weekly shop" in a Commons debate.
He said it was a "myth" that hard-pressed families reliant on Universal Credit are in poverty - and also said he had contacted a school in his area to find out why they were giving free breakfasts to children.
Labour MP Ian Byrne hit out at the remarks, saying the "demonisation" of those in poverty is an act of "political cowardice".
It comes after Mr Anderson previously ranted that poor Brits can't budget or "cook properly" and claimed foodbank users are short of cash because they fritter money on cigarettes, alcohol, expensive TV subscriptions and holidays.
His tone deaf comments ignored the brutal cost of living pressures facing Brits, with rocketing energy bills, inflation and rising prices hitting household budgets.
Research for Food Foundation recently found that 21.6% of households with children struggled with access to food in January as cost of living pressures put the squeeze on family budgets.
This means that some 3.7 million children experienced food insecurity, such as skipping meals, eating less, or going hungry all day.
But speaking during a Westminster Hall debate, Mr Anderson told MPs: "I asked why are some families unable to feed their families a breakfast and they struggled to answer me.
"Eventually they said there's a cross of living crisis. I thought Weetabix and a bowl of milk - what does that cost? Not even the 30p that I'm famous for."
He then said he had asked to speak to some of these families - but claimed not to have heard anything back.
"It's far too easy to say there's a cost of living crisis, you can't keep throwing taxpayers' money (at families)," he told MPs.
The Ashfield MP said: "Being on Universal Credit alone isn't an indication that a family is in poverty, I completely dismiss that."
"But I do admit that some families in this country are struggling."
He went on: "We have got this culture now in some of these deprived areas where people are so dependent on food banks it is like a weekly shop for them.
"One particular family I was helping, really helping, and they were going to the food bank two or three times a week to get their groceries and then, you know, I see them in McDonald's two or three times a week.
"I am thinking, my goodness, I don't want to stop the children going for a treat once in a while but it is all about priorities.
"If you are really struggling for money and you are going to a food bank two or three times a week, you shouldn't be going out for fast food, takeaways every week. You shouldn't be doing that."
And he continued: "Food banks are being abused. Constituents tell me every single day, now they are either making it up or telling lies or whatever, but they are abused.
"They are abused, food banks are abused by people who don't need the food banks - we should target the food banks."
Mr Anderson claimed that fast-food restaurants were springing up all the time, adding: "These are in deprived areas, why are they coming to these areas? Because they know there's a market."
As other MPs protested, the Ashfield MP added: "You can shake your head all you want."
He later clarified that he wasn't suggesting all families abuse food banks, and said he doesn't do "divisive politics".
Labour MP Mr Byrne said: "I want to make it clear that the catastrophe of hunger in our communities is the result of political choices made by this government."
He said the rise in food inflation was at its highest rate since the 1970s, adding: "Demonisation of people in food poverty is an act of political cowardice."
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Inflation
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Ministers have been urged to "rocket boost" fostering to tackle a shortage of carers.
Dame Rachel de Souza, the Children's Commissioner for England, has warned that 71% of people who complete a fostering form subsequently drop out.
She fears bureaucracy may be putting people off and has suggested ministers could learn from the success of the Homes from Ukraine scheme.
The government has said it is investing £27m in the foster care system.
Nearly 70,000 children live with almost 55,000 foster families across the UK each day, according to the Fostering Network charity.
This is nearly three-quarters of the 98,000 children in care away from home on any one day in the UK, the charity has said.
Dame Rachel said the Homes for Ukraine scheme, which found homes for 100,000 Ukrainian refugees last year, showed there was an "untapped well" of people who can foster.
She told BBC Radio 4's Today programme the number of people who enquired about foster care and then did not go ahead with their applications seemed "very high".
"We need to make sure that bureaucracy don't get in the way," she said.
She urged the government to run a national fostering campaign.
The Department for Education (DfE) said it had increased the national minimum allowance for foster carers by 12.5% and was piloting a foster care recruitment hub in the north east.
Earlier this year government figures showed there were 4,500 in West Yorkshire alone.
Rising costs and a fallout from Covid were blamed for the increase in the number of children going into foster care and for the shortage of foster families.
Children's minister Claire Coutinho told the BBC the pilot programme in the north east put together local hubs guiding families who wanted to foster.
"You can't just fund a system with money, you do need to make sure the reforms work properly," she said.
She explained that last year 138,000 people made enquiries to become a foster carer but only six per cent of them became one.
"People call up and say they want to be a foster carer and then they don't necessarily get that hand-holding to make what is ultimately a big decision in your life," she added.
Ms Coutinho said £11bn was being spent on the children's social care system overall.
Last year the MacAlister review of children's social care in England called for £2.6bn of new spending over four years.
The government later faced criticisms for announcing £200m of investment in response.
But Ms Coutinho said the funding was not falling short.
She said the £200m was for testing out "really ambitious" plans to respond to the MacAlister review.
"We have got two years to make sure that the plans we have got in place work well on the ground," she added.
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Nonprofit, Charities, & Fundraising
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The parcel delivery companies that ranked the worst for performance have been revealed, with none of the major firms able to secure a three-star rating.
An annual survey by charity Citizens Advice examined the top five delivery companies by parcel volume and measured their performance against criteria including customer service, delivery problems and accessibility needs, such as people needing longer to answer the door.
Evri and Yodel ranked at the bottom of the league table, both managing an overall score of just two stars out of a possible five.
But there was not much between the top and bottom positions, with Royal Mail and Amazon in joint first position with 2.75 stars.
Meanwhile, 13.3 million people - 34% of consumers - said they had experienced a delivery problem in the last month.
Common complaints included parcels being left in insecure locations or arriving late, a survey for the charity found.
The worst offenders were Yodel, with 40% of customers reporting a problem, DPD at 37%, and Evri at 34%.
Of those customers, nearly half (43%) had a further issue when trying to resolve the problem. Individuals were often unable to find the right company contact details or did not receive a response.
This was especially the case when meeting the needs of disabled customers or individuals who require adjustments to how they receive parcels.
An estimated 7.2 million people had an accessibility need they wanted to share with their chosen company, but 45% were unable to do so, the survey found.
Read more:
Post Office to offer DPD and Evri parcel delivery options
When you should send your Christmas cards
Royal Mail is fined £5.6m for missing delivery targets
Overall, 53% of customers found it difficult to resolve their problem, which rose to 60% of people with a disability.
The charity said there had been no improvements on delivery problem scores since last year.
Dame Clare Moriarty, Citizens Advice chief executive, said: "For the third year running, our league table reveals online shoppers are being let down by a substandard delivery service. This is an issue we feel has been neglected for far too long.
"With a seasonal surge of deliveries on the horizon, parcel companies must take action to protect shoppers and get to the root cause of these persistent failings."
What have companies said in response?
Chris Ashworth, the chief customer officer for Evri, said the company was "disappointed" with where it ranked on the league table, adding it has invested more than £130m to improve UK operations.
An Amazon spokesman said "the vast majority of deliveries make it to customers without issue", with the company working with customers if something does go wrong.
A spokesperson for Royal Mail said they were pleased to come in joint first position but is working to improve the quality of its service.
They said it had introduced an option for households to register their accessibility needs for parcel deliveries or collections via Parcel Collect.
Yodel said the report was not reflective of its own data, which indicated 98.7% of the 200 million parcels handled over the last 12 months were delivered correctly on the first attempt.
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Consumer & Retail
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Government To Exceed Rs 18.23 Lakh Crore Full-year Direct Tax Collection Target: CBDT
As per government data, the net direct tax collection between Apr. 1 and Nov. 9 this fiscal has swelled 22% to Rs 10.60 lakh crore.
The government will exceed the Rs 18.23 lakh crore direct tax collection target set for the current fiscal, CBDT Chairman Nitin Gupta said on Wednesday.
"We will exceed the Budget target. The economy is doing well, and we will get a better picture of full-year tax collection once the third instalment of advance tax numbers come in by Dec. 15," Gupta told reporters here.
As per government data, the net direct tax collection between Apr. 1 and Nov. 9 this fiscal has swelled 22% to Rs 10.60 lakh crore.
"On a gross basis, the direct tax collection has been growing at 17-18%, while on a net basis, we are growing at 22%. We are also issuing refunds simultaneously. So, we have no doubt about tax collection exceeding estimates," Gupta said after inaugurating the taxpayers' lounge at the India International Trade Fair.
Refunds totalling Rs 1.77 lakh crore have been issued between Apr. 1 and Nov. 9.
The 2023-24 Budget has pegged direct tax collection at Rs 18.23 lakh crore, 9.75 per cent higher than Rs 16.61 lakh crore in the last fiscal.
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India Business & Economics
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HDFC Bank Rides On Premium Cards To Grab Market Share
Analysts say the bout of revenge spending has now evolved into a trend of rising consumer expenditure on premium products.
India’s largest private lender HDFC Bank is pinning its efforts to grab maximum share of the industry’s credit card business by tapping on the premiumisation trend.
Over the last few months, HDFC Bank has entered into partnerships with several entities such as Swiggy, Retailio, IRCTC and more for co-branded credit cards to expand its presence in credit cards segment. These cards cater to mass-affluent as middle income segments.
At the launch of its first co-branded credit card in the hospitality industry, with Marriott Bonvoy on Thursday, HDFC Bank's cards chief Parag Rao said the move is driven by Indians resorting to “revenge spending” on both domestic and international travel post the Covid-19 pandemic.
However, analysts believe that the bout of revenge spending has now evolved into a trend of rising consumer expenditure on premium products across all income groups.
"We are using the demand that came in after Covid-19 period now, but it is definitely behind us. There's an economic upcycle taking place in a big way. People are earning more, they are ready to spend, so banks are capitalising on that," Asutosh Mishra, lead BFSI analyst at Ashika Stock Broking said. "Premiumisation is happening across the chain and India, as a society, is more open to take credit," he added.
The bank had lost a chunk of its pie after the Reserve Bank of India, in December 2020, had barred HDFC Bank from issuing new credit cards or digital launches following a slew of outages in its online network. It continues to lose market share on year-on-year basis at 20.7% in June compared with 25.6% before the embargo.
On an incremental basis, HDFC Bank aced credit card transactions in value as well as in volumes in June within Indian banking industry, according to the latest RBI data. During the month, the total value of credit card transactions for the lender stood at Rs 38,751 crore, followed by State Bank of India at Rs 24,980 crore and ICICI Bank at Rs 23,042 crore.
On a year-on-year basis, HDFC Bank saw a 30.8% rise in the value of these transactions, from the previous Rs 29,578 crore in June 2022.
Even in terms of the volume of credit card transactions at point-of-sale terminals, e-commerce and other channels in June, HDFC Bank led the show with a record-high 6.55 crore transactions, followed by ICICI Bank with 4.99 crore transactions and SBI with 4.49 crore transactions.
The bank's outstanding credit cards stood at 1.83 crore in June.,
“At the same time, we will continue to identify relevant categories where customers are spending and focus on getting wonderful partnerships where we get significant value and thereby get the full customer wallet,” Rao added.
HDFC Bank is in talks with the iPhone manufacturer Apple, too, to launch its credit card, dubbed as “Apple Card,” in India, Moneycontrol had reported last month. This potential partnership, if comes to fruition, would cater to premium Apple customers. In the US, Apple currently operates a premium credit card, which is positioned as a high-end offering.
On being asked about disruptions in the lower income category under credit card segment due to a rise in digital lending, Rao said apart from convenience and product, the key is “strong underwriting standards.” Credit cards, which require recurring annual fees, are not affordable by lower income customers. Hence, they resorted to easy credit lines such as Buy-Now-Pay-Later. However, global recession fears, aggressive rate hikes and rising inflation has hampered the growth of the BNPL industry across the world.
The Reserve Bank of India, in June last year allowed individuals to link their credit cards to the UPI.
"The expectation is that the UPI-linked Rupay credit cards will increase adoption and issuances. We are seeing uptick on issuance and usage of credit cards and that too also at all the different price points," Asim Parashar, partner at PwC said.
This facility offers benefits across categories, including travel, shopping and fuel, where HDFC Bank in particular, is seeing “good traction,” Rao said.
“The RuPay’s programme of linking credit cards with UPI has very strong surrogate to the BNPL product, and we are seeing many new members joining the credit card space through that route. It’s early days, but decent good response,” Rao told BQ Prime on the sidelines of the launch event.
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Banking & Finance
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This morning the prime minister tweeted: "In January we said we'd halve inflation. Today we've done that - inflation is now 4.6%."
When inflation started to accelerate early in 2022, Rishi Sunak as chancellor attributed the rise to global factors. Now as prime minister, he's claiming it as a success for government policy that it's come down.
However, leading economists are sceptical that the halving of inflation compared to last year has much to do with any government plan - or indeed is something within the government's power.
Paul Johnson, director of the IFS, an influential economics think tank, said: "The job of cutting inflation is for the Bank of England not the government. So it was always inappropriate for the government to have a target/pledge to halve inflation.
"That's not their job and not something over which they have a lot of control. It was an opportunistic pledge given the fact that Bank was, in January, forecasting that inflation would easily halve."
Falling energy prices
The Office for National Statistics (ONS) points this morning to lower energy costs as the biggest factor pulling inflation down - a global, not a domestic factor. Economists have predicted for more than a year that the difference between prices now and prices a year ago would shrink once the big hikes in energy bills of October 2022 were more than a year in the past.
Since then, as predicted, wholesale gas prices have dropped sharply and gas costs are down 31% - the sharpest drop since 1989 - and electricity prices are down by 15.6%. That was the biggest downward pressure on this October's inflation figure followed by food.
Those factors have little to do with domestic fiscal policy and much more to do with an easing of global inflationary pressures - as reflected in other countries, such as France, where the official measure of inflation is now 4.5% - or the US, where it's 3.2%.
Bringing inflation down is officially the job not of the government but the Bank of England, which is expected to regulate inflation through monetary policy - meaning measures such as raising or cutting interest rates.
The government does have control over fiscal policy - meaning taxes and spending. Chancellor Jeremy Hunt's office said the plan to halve inflation includes being disciplined on spending, resisting calls for reckless borrowing, and helping people back into work to address the high number of job vacancies - one of the main domestic drivers of inflation.
It's true of course that if the government had borrowed and spent recklessly inflation might have been worse; but that has its greatest effect on the public finances, not inflation.
Measures such as keeping public sector pay settlements limited to 5-7%, as opposed to paying inflation-linked rises, will have meant slightly less spending. But that's a mere percentage point or two of the public sector pay budget - a matter of a few billions, compared to total overall government spending of £1.9 trillion.
Income tax effect?
Ironically, the main fiscal measure which may well have had a big effect on inflation is raising much more from households in income tax.
"It is right to say the government hasn't made things worse since January: no big new tax cuts or spending increases," says Mr Johnson. "The main thing government has done to reduce inflationary pressure has been to raise income tax a lot - not that that was the purpose of the increase, it is there for public finance reasons."
By freezing tax thresholds while wages are rising faster than they have in decades, Jeremy Hunt's raising far more in tax and national insurance each year - leaving less money for families to spend, and therefore reducing upward pressure on prices.
However, raising taxes isn't listed as part of the government's official inflation reduction plan.
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Inflation
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Pay Attention To Your Tax Refund Situation To Prevent Adjustments
Many taxpayers have a refund to collect and this is where attention needs to be focused.
The tax return filing process has ended for most individuals, and now it’s time to ensure that the remaining part of the cycle is completed.
This deals with the handling of any requirements related to the assessment of the tax returns. Already, a significant number of taxpayers have found that their assessment has been completed. Many of them have a refund to collect, and this is where attention needs to be focused.
Refund Intimation
The assessment order, which is sent by the Income Tax Department, has all the details of the income that has been submitted, along with the tax paid and any additional tax to be paid or refund that is due. In the event that the refund that has been claimed and the assessment arrive at the same figure, this should be received by the taxpayer in their bank account.
This is where the problem starts for many people, and there are two main issues that they face. One is that the refund does not come at all, and the other is that the refund is adjusted against some other demand under Section 245 of the Income Tax Act. Tackling both of these situations is important so that the amount is received.
Bank Account Details
There are a lot of cases where there is a problem with the bank account that has been given or mentioned in the income tax return, due to which the refund gets stuck and is not received by the taxpayer. One common thing that has been witnessed is that the bank account mentioned for receiving the refund has been closed. The account would have been mentioned as the one where the money should come in the past year, but now that the account no longer exists, it cannot receive the amount.
The other thing that happens is that the bank account where the refund is to be received has not been verified. The way to tackle this situation is to check the bank account details to make sure they are correct. If there is a wrong bank account number, then this needs to be updated, and then the account has to be verified. All this can be done through the login on the income tax return filing website.
Once this is done, the refund will be credited to the bank account.
Adjustment Against Demand
The Income Tax Department can also set off the refund that is due against some demand that is outstanding under Section 245 of the Income Tax Act. If this is done, then the taxpayer might receive nothing or only a partial payment, depending on the amount that is due for the past year.
The taxpayer should first check the demand amount in the past year to see if this is actually correct, because lots of times there might be a dispute that is pending or the amount might have been paid. If the details are not correct about the past demand, then this needs to be tackled by submitting a response saying you do not agree with the demand, either in part or full, and then giving the reason why this is not agreed upon. If this is done, then the tax department will take your objection into consideration, and you are likely to get the refund that is actually due to you.
Never Ignore Intimations
One of the things that should never be done is to ignore the notification from the tax department.
The taxpayer has to respond as quickly as possible to such a situation, within 15 days if they have an objection. If this is ignored, then it will be assumed that the taxpayer has no problem, and the refund will be set off. In fact, if the demand is greater than the refund, then additional amounts will also have to be paid. This is why the taxpayer has to ensure that they respond to any such detail and clear up this situation.
Arnav Pandya is founder at Moneyeduschool
The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.
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Personal Finance & Financial Education
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FTX founder Sam Bankman-Fried’s lawyer on Tuesday said the now-bankrupt cryptocurrency exchange’s investments were not “reckless and frivolous,” pushing back against testimony by former executive Nishad Singh portraying its spending on marketing and celebrity endorsements as excessive.
Singh, FTX’s former engineering chief, testified for a second straight day at Bankman-Fried’s fraud trial in Manhattan federal court. Under cross-examination, Singh told the jury that he thought FTX would be able to stay in business upon learning in September 2022 of a $13 billion shortfall in customer funds, potentially bolstering Bankman-Fried’s argument that he believed the exchange’s troubles were manageable.
FTX declared bankruptcy on Nov. 11, 2022.
Singh testified on Monday that the company’s venture investments and $1.1 billion in planned marketing deals, including naming rights to the arena where the NBA’s Miami Heat play and featuring NFL quarterback Tom Brady in commercials, “reeked of excess and flashiness.”
Defense lawyer Mark Cohen on Tuesday asked Singh, one of three former members of Bankman-Fried’s inner circle who have pleaded guilty to fraud and agreed to cooperate with prosecutors, whether promoting FTX’s brand could be useful.
“I understood it had business benefits and costs,” Singh said in testimony that defense lawyers could use to argue that Bankman-Fried was making what he believed to be good-faith business decisions in shelling out funds for marketing and investments even if others disagreed.
Bankman-Fried is in the third week of his trial on charges involving the looting billions of dollars in FTX customer funds to make investments, donate to US political campaigns and prop up his hedge fund, Alameda Research. He has pleaded not guilty.
Singh testified on Monday that he worried a deal the company had with an investment firm called K5, which Bankman-Fried described as a “one-stop shop” for brokering relationships with celebrities, would prove “toxic” for FTX’s culture.
On Tuesday, Singh said K5 also helped Bankman-Fried invest in a tequila brand run by a “famous celebrity,” when asked by Cohen whether the firm was anything more than a relationship broker.
“Yesterday (Monday) we were told these were all reckless and frivolous investments, and I’m entitled to show that there was way more to it than we were told yesterday,” Cohen said, after a prosecutor objected to his questioning about K5.
In a lawsuit filed against K5 in June seeking to claw back $700 million, FTX’s current management said a Bankman-Fried-controlled shell company used $214 million in FTX funds to buy a stake in celebrity Kendall Jenner’s 818 Tequila brand at a time when the tequila company’s assets were valued at just $2.94 million. K5 said the lawsuit was without merit.
Bankman-Fried has argued that while he made mistakes running FTX, he never intended to steal funds. His lawyers have said he is considering taking the witness stand in his own defense.
Jurors have already heard from Gary Wang, FTX’s former chief technology officer, and Caroline Ellison, Alameda’s onetime chief executive officer and Bankman-Fried’s former girlfriend.
Cohen questioned Singh on Tuesday about a confrontation he had with Bankman-Fried in September 2022 after learning Alameda owed billions of dollars to FTX customers. He confronted Bankman-Fried on the balcony of the $35 million Bahamas penthouse they shared with many FTX and Alameda employees.
Singh acknowledged that he was anxious at the time, and said he was suicidal then and for several more months. He testified on Monday that Bankman-Fried was angry during the conversation.
After telling Cohen he thought FTX could stay in business “for some amount of time” despite the shortfall, Singh said he had previously told US authorities he thought the company could survive for years.
Cohen also pressed Singh about a $3.7 million home he purchased using FTX customer funds in Washington state in the fall of 2022. Singh acknowledged buying the Orcas Island home, but said he was “ashamed” and had agreed to forfeit it as part of his plea agreement.
“I was putting myself ahead of customers,” Singh said.
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Crypto Trading & Speculation
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TD Bank has promised to refund any potential fees accrued during its hours-long, direct-deposit outage Friday.
The outage is still ongoing at this time.
“We'd like to assure customers that any fees incurred due to missing direct deposits will be refunded once the issue is resolved,” said TD spokesperson Mick Ramos in an email to the Star. The specifics have not yet been revealed.
In a message posted to TD Bank’s app, the company said “Some Direct Deposits are delayed. We are working to ensure the deposits are made to your account as quickly as possible.”
TD Bank outage reported early Friday morning
Users have flagged thousands of outages of TD Canada Trust’s website as of Friday afternoon, according to DownDetector, with 85 per cent of issues concerning deposits and the remainder regarding funds transfers and online banking. Reports started cropping up around 6 a.m.
The cause of the outage is yet unclear.
The issue appears to be Canada-wide, with outage reports coming from most every province and territory, reads DownDetector’s outage map. Some reports were also made from the U.S.
TD customers report issues at ATMs trying to withdraw money
In the comments and across social media, customers also report that their debit cards aren’t working, that ATMs aren’t allowing them to withdraw or deposit money. “Our whole town is down and unable to do anything,” one Twitter user posted.
TD Bank has not yet acknowledged any issues outside of direct deposits. In an email, Ramos told the Star: “We're aware of an issue causing delayed direct deposit payments to some customers. We apologize for the inconvenience and are working to resolve the issue as quickly as possible. We thank our customers for their patience and understanding.”
On social media, users were furious over the delays. “I’ve been on hold over an hour. My pay wasn’t deposited. What gives?!” one user wrote on Twitter.
“Where is my money? An explanation? A planned solution?” another said on social media.
TD Bank’s response to frustrated customers
TD Canada responded to their post, writing: “We understand your concern at not seeing your paycheque deposited. We have been made aware of an issue with direct deposits that we have escalated and is being investigated. We appreciate your patience while we get this fixed.”
In a response to another customer, the bank wrote: “We will continue to update the Service Interruption banner on the TD App/EasyWeb as more information becomes available.”
A user responded to their post asking: “Is TD going to cover all the charges in case bills bounce??”
TD has not yet provided information on how many people are affected, the cause of the outage and when the situation might be resolved.
This is a developing story.
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Banking & Finance
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A few years ago, it was hard to imagine that finance would become one of the most innovative industries in tech. And yet, the world of fintech is an ever-evolving one with entrepreneurs trying to modernize financial services, simplify payments and embed financial products everywhere.
That’s why we added a Fintech Stage to TechCrunch Disrupt 2023 — and invited some of the brightest minds in fintech to learn how they pulled it off. Today, we’re thrilled to announce that the Fintech Stage agenda is at full capacity!
We’ll discuss the future of payments, open banking, embedded finance and . . . well, check out all the fintech topics for yourself below. (Go here for the full Disrupt agenda.)
The complete Fintech Stage agenda at TechCrunch Disrupt 2023
Making Money Move with Embedded Finance
Creating a bank account, storing money, receiving a payment card and lending money should be as easy as opening an account on a social network. Or at least, that’s the promise of embedded finance. That’s why a new wave of finance infrastructure companies are reinventing banking — and they could potentially turn any company into a fintech company.
With Peter Hazlehurst, co-founder and CEO, Synctera; Laura Spiekerman, co-founder and president, Alloy; and Amanda Swoverland, chief compliance officer, Unit.
The Future of Payments
Payments startup Checkout.com cashed in on the tech funding boom of 2021 and reached a valuation of $40 billion. Since then, both Stripe and Checkout.com had to lower their internal valuations. But Checkout.com president Céline Dufétel is here to prove that the payments company is still in growth mode and has big expectations for the U.S. in particular.
With Céline Dufétel, president and COO, Checkout.com.
Plaid’s Zach Perret Opens Up on Open Banking
Plaid has had a thousand lives. After a $5 billion acquisition deal with Visa that fell through due to regulatory concerns, the company didn’t hit the pause button. Instead, it has been relentlessly rolling out features and raising money to make the dream of open banking a reality. What if you could connect to your bank account from anywhere? What if sending money was as easy as sending a text message?
With Zach Perret, co-founder and CEO, Plaid.
Startup Banking in a Post-SVB World
The collapse of Silicon Valley Bank left a hole in the world of startup banking that numerous startups and big banks alike are trying to fill. Hear from some of the players that have stepped in to help fill that gap about what they are doing to offer startups and investors meaningful alternatives in this post-SVB world.
With Immad Akhund, co-founder and CEO, Mercury; Wendy Cai-Lee, founder and CEO, Piermont Bank; and Melissa Smith, co-head of Innovation Economy, head of Specialized Industries, Commercial Banking, JPMorgan.
What’s Robinhood’s Next Chapter?
Robinhood was founded 10 years ago with a mission to give more people, not just the wealthy, access to the financial markets. It has since grown to offer more than just stock trading. People can now also use Robinhood to trade crypto, save for retirement and manage their cash. The company found itself the subject of controversy in early 2021 when it decided to freeze trades for GameStop. It has since recovered but other challenges remain. What’s next for the popular trading app?
With Vlad Tenev, co-founder and CEO, Robinhood.
A16z’s Arianna Simpson on the Promise of Web3 Investments
Yes, there are still crypto-focused investors out there doubling down their web3 strategies as other VCs look to other horizons (ahem, AI). Arianna Simpson is a general partner deploying capital for a16z’s multi-billion-dollar crypto fund(s). While other investors move away from the crypto industry amid the market downturn, we want to learn about why and how a16z is holding on to their strategy, how they view the investing landscape and more. We’ll also dive into what the regulatory landscape means for VCs and the projects they invest in.
With Arianna Simpson, general partner, a16z crypto.
Building up Blockchains for Mass Adoption
As the crypto ecosystem gains more traction from developers, traditional institutions and big brands, it needs mainstream adoption to grow as well. In order to do that, blockchains need to be able to support greater — and faster — transactions per second, while keeping fees low. But what will it take to get to that next level? And what are major blockchains and crypto projects alike doing to help accelerate that mission?
With Mo Shaikh, co-founder and CEO, Aptos Labs; Grace Torrellas, VP of product, Polygon Labs; and Anatoly Yakovenko, co-founder, Solana Labs.
Fintech Investing Is Not for the Faint of Heart
Venture capitalists have poured billions into fintech companies in recent years, making it one of the most invested categories in the startup world. While the pace of funding has slowed, there are plenty of investors who are still bullish on the potential of financial technology. What sectors within fintech show the most promise? Which have seen too much hype? Which have proven to be resilient?
With Mark Fiorentino, partner, Index Ventures; Emmalyn Shaw, co-founder and managing partner, Flourish Ventures; and Jillian Williams, partner, Cowboy Ventures.
Harnessing the Power of Strategic Partnerships and Collaborative Innovation
Presented by Navan.
Visa Everywhere Initiative: The Ultimate Fintech Pitch Competition
Fintechs startups inspire — Visa enables. Join the Visa Everywhere Initiative, where we welcome the next generation of fintechs. Visa has selected five visionary startups from across the globe, and they’re ready to pitch their game-changing solutions to a panel of fintech industry leaders. It’s your chance to witness the future of payments unfold and learn how you can join us in the fintech revolution. #EverywhereInitiative.
Presented by Visa Inc.
Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2023? Contact our sponsorship sales team by filling out this form.
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Banking & Finance
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Mastercard has won long-awaited approval to expand its offerings in China’s huge payments market, days after the country’s leader personally sought to improve business ties between Beijing and Washington.
The US credit card giant announced Monday that it had received clearance from China’s central bank and the financial regulator to launch a bank card business in China through its joint venture with partner NetsUnion Clearing Corporation (NUCC).
China is an almost cashless society, with $434 trillion in electronic transactions annually. Alipay and WeChat Pay, the ubiquitous digital wallets from Chinese tech giants Alibaba and Tencent, respectively, are the dominant platforms, accounting for a combined 91% market share.
The approval comes more than three years after regulators agreed in principle to allow Mastercard (MA) and NUCC to set up a domestic bank card clearing institution, according to a statement from the New York-based company.
On Wednesday, Chinese leader Xi Jinping met US President Joe Biden in the San Francisco Bay Area for hours of landmark talks.
At a dinner later that night, Xi dined with American business leaders and told them China was willing to be “a partner and a friend” of the United States.
Mastercard CEO Michael Miebach took part in a CEO summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum that Xi and other leaders from across the Pacific were in town to attend. Other attendees included Tesla CEO Elon Musk and Apple CEO Tim Cook.
Miebach said in the statement that the approval was a “milestone.”
The move was framed in Chinese state media as proof of the country’s continued efforts to open up its economy.
Like other foreign payments providers, Mastercard has campaigned for years to expand its business in China. Previously, it was only authorized to issue co-branded cards, such as those with China UnionPay, the state-owned bank card network.
Those transactions were processed on the UnionPay network when used within mainland China for yuan payments, and on Mastercard’s network when used abroad for US dollar payments. Now, with direct market access, Mastercard can process and collect fees on many more transactions.
It is the second foreign firm to obtain direct market access after American Express, which received its license in 2020. Amex launched its first debit cards for yuan transactions a year later.
— CNN’s Nectar Gan contributed to this report.
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Banking & Finance
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Japan Church Cited As Motive In Shinzo Abe Killing Offers Compensation Fund
The head of a fringe religious group cited as a motivation in the assassination of former Japanese Prime Minister Shinzo Abe offered to set up a compensation fund, as the group faces lawsuits and demands for donations to be returned.
(Bloomberg) -- The head of a fringe religious group cited as a motivation in the assassination of former Japanese Prime Minister Shinzo Abe offered to set up a compensation fund, as the group faces lawsuits and demands for donations to be returned.
Speaking to reporters in Tokyo, Tomihiro Tanaka, head of the former Unification Church’s Japan branch, said the group was considering depositing between ¥6 billion ($39.9 million) and ¥10 billion with the government. He added there was no danger the South Korean-based group would move funds out of Japan.
Tetsuya Yamagami, the accused in last year’s fatal shooting of the former premier, has said he targeted Abe because of his connections to the church, which Yamagami blamed for bankrupting his family by taking excessive donations. The group has a long list of court judgments against it over its fundraising tactics.
READ: Japan Asks Court to Dissolve Church Cited in Abe Shooting
Current premier Fumio Kishida’s government has asked a court to remove the church’s legal status as a religious organization — a move that surveys show is backed by the majority of voters. While it wouldn’t force the group to halt its activities, the step would remove its tax advantages.
Tanaka offered a “sincere apology” to those who have suffered, while saying he opposes the government’s request, citing freedom of religion and the rule of law. The group has about 100,000 active members in Japan, he said.
The press conference came as Japan’s ruling parties discuss a potential change to the law that could enable the freezing of the church’s assets in order to make sure funds are available to compensate victims.
©2023 Bloomberg L.P.
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Nonprofit, Charities, & Fundraising
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An online petition calling on the UK Government to allow people to pay their mortgage through their wages before any tax or National Insurance deductions are made, in a similar way to pension contributions, has passed the support threshold that triggers an official response.
The petition, created and posted on the official petitions-parliament website by Aqad Zane, has received more than 20,085 signatures (at time of writing) - the threshold is 10,000. At 100,000 signatures of support it would be considered for debate in Parliament.
The ‘Allow people to pay their mortgage through salary sacrifice’ petition proposes that amending the ‘salary sacrifice’ process “would allow more people to become mortgage-free sooner” and could help struggling households during the ongoing cost of living crisis. It states: “The Government should allow all mortgage contributions towards an individual's main residence or family home to be made through salary sacrifice, prior to tax and national insurance deductions (similar to pension contributions).”
The petition continues: “This would allow more people to become mortgage free sooner in life and put more towards their and their children's future. It could also help divorced couples, where people are having to start life all over again, on their own, at a late age.
“The rising cost of living and house prices makes paying off a mortgage extremely challenging for many people. The value of the mortgage that people could pay off using salary sacrifice could be capped, so that it only benefited those who are in need.”
The petition is open until August 28, 2023. - read it in full here.
Salary sacrifice - what is it and how does it work?
For those that have never heard of ‘salary sacrifice’, Jonathan Watts-Lay, Director at WEALTH at work, breaks it down and how it could be something more people could benefit from.
He explained: “One way to save money is by paying for things through your company payroll using your pre-tax salary, so you pay less income tax and National Insurance. This is known as salary sacrifice and can offer employees significant savings.”
Jonathan said that higher rate taxpayers can make a saving of 40% in income tax and 2% in National Insurance, while employees who pay tax at the basic rate can make a saving of 20% in income tax and 12% in National Insurance.
He continued: “Many people pay their pension contributions in this way, but it can also be used to pay for transport such as company cars, bikes, and bus passes, and even mobile phones, gym passes and health and dental care. However, many benefits such as mobile phones and company cars are now seen as ‘Benefits in Kind’, and while savings can still be made, many do now have high tax charges.
“Tax free benefits however are still available on employer provided pension savings and pensions advice, certain types of employee share plans, and cycle to work schemes.”
He added that childcare vouchers and contracted childcare can also be paid for through salary sacrifice, although these arrangements are closed to new applicants .
Jonathan also said it is one of the best ways to buy a new electric car. He explained: “For those looking for a new car, salary sacrifice is one of the most cost-effective ways to drive an electric vehicle, as the benefit in kind value applied to electric cars is currently 2%. This means the income tax and National Insurance saving outweigh this relatively small ‘Benefit in Kind’ cost, whereas the cost for drivers of petrol and diesel and cars can be up to 37%.
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He added: “Salary sacrifice can also mean that there is the potential for your employer to negotiate corporate discounts for things like car parking, mobile phones, laptops, gym memberships, cars and bikes. But it could mean that you have less choice as they may only be available through selected providers.
“It will also mean that you will have less salary coming in each month, so make sure that you will still have enough.”
Jonathan advises anyone interested in salary sacrifice should speak to their employer to find out what options are available.
To keep up to date with the outcome of this petition, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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Real Estate & Housing
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Some people in the South West have no money left at the end of the month after they have paid all their bills, Citizens Advice Cornwall has said.
The charity said those who were struggling with their mortgages in 2019 had about £60 a month left after they had paid for essentials.
Now on average they have already gone over their budget by £118.
Citizens Advice urged people who were struggling to talk to their lenders now.
One nurse, who lives in Cornwall but wanted to remain anonymous, said her monthly mortgage payments had doubled in the last 18 months.
Her husband died five years ago and she has been working part time.
She has had to cut out any luxuries she had in her life.
"I don't drive the car because the fuel prices went up. I eat very little food because the food prices have gone up," she said.
"I live on next to nothing. I try not to think how much it impacts on me because I work with the public and I have to make sure that I still have the smile, and the caring, and the sense of humour.
"But deep down in my heart, despite the smiley face, I'm hurt. I'm struggling."
Landscape gardener Simon Sharples has also seen his monthly mortgage payments double.
He is struggling to pay his bills and is already working 10-hour a day.
Some of his customers have already started paying him more because they know of his situation.
"It potentially could mean we would have to sell and downsize," he said.
"We're lucky in so much as we have quite a lot of capital within the house and the mortgage is relatively small.
"But the actual mortgage payments are quite steep and there is only so much work I can do to cope with those bills."
Wailim Wong of Citizens Advice Cornwall said people who were struggling with their mortgages needed to talk to their lenders now and seek help.
He said: "People will be taking out loans from elsewhere.
"It might even be from relatives and friends, just to try and get by or plug the gap, but that is really not a sustainable situation going forward. You are not going to be able to do that in the longer term."
Mortgage broker Andrea Drew from Landers Mortgage Services in Truro said there were things mortgage holders can do if there is still some time before they finish their fixed-term deal.
"They can overpay their mortgage if they can afford to, especially if they are on the advantage of the lower rates at the moment." she said.
"At least when their interest rate comes out for renewal in six months or 12 months time, their balance is going to be reduced."
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Real Estate & Housing
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Rachel Reeves today will promise to clamp down on ministers using private jets when they could get a regular flight.
Following her Labour conference speech this morning she said she wants “people to say ‘I can trust her with my money’.”
In an interview with the Mirror, she said: “I will give the commitment that with Labour I will treat taxpayers' money with the same respect that people treat their own money. You haven't had that from this government whether it was the Covid contracts signed off by Rishi Sunak when billions went in fraud or ministers going around on private jets rather than on normal flights.”
During his time in Downing Street so far, Mr Sunak has used private jets and helicopters to zip around the UK more than any other Prime Minister. The PM has taken one flight every eight days on average. Many of the journeys have been incredibly short, such as when he used a helicopter to visit Southampton, which would have taken just over an hour by train.
In the year to March, the total cost of non-scheduled flights for ministers including the PM £4.7million.
Ms Reeves, 44, told how she learned the value of money as a child growing up in South East London, saying: “When I was little I saw my mum every month go through her bank statement with her receipts. She kept all her receipts and she'd go through and tick it all off against the bank statement. We were not poor, but money mattered. And every penny mattered to my mum.”
Asked if she is annoyed that she is painted by some as a penny pincher holding the purse strings tightly closed, she said: “I want people to know they can trust me with their money. If that upsets some people that I'm not willing to empty the vaults then so be it. What people want to know is that you've got a Chancellor who's going to get a firm grip on the public finances and who focuses day in day out and how to make working people better off.
“Not through some sugar rush, which you get with the Tories, but with a serious plan to grow the economy, but grow the economy in a way that benefits ordinary working people.”
The party conference in Liverpool is expected to be the last before the next general election. Polls give Labour a significant lead over the Tories, putting Ms Reeves on course to move into No11 as the country’s first female chancellor.
Asked what motivates her, she said it is knowing the difference Labour would make compared to the current government. “It makes me so angry because there is so much potential in this country,” she replied. “I see the damage that they've done to our public services in a way that is even worse than what they did in the 80s and 90s. I'm determined that Labour wins the next election because we can't do anything from opposition. And then we can start to turn around this mess that they've made.”
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United Kingdom Business & Economics
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As inflation and interest ratesthis year, some Americans are having trouble keeping up with mortgage payments.
Although the number of U.S. mortgages delinquent for 30 days or more fell slightly to 2.6% in August 2023 from 2.8% at the same time last year, Americans are still facing figures from CoreLogic., according to the most recent
"U.S. mortgage performance remained strong in August, supported by a robust job market and a healthy economy. However, this thriving job market comes at a time when interest rates are quickly rising," Molly Boesel, principal economist for CoreLogic, said in a report.
The currentfor a 30-year fixed-rate mortgage continues to , the highest it's been since .
For homeowners struggling to make their monthly mortgage payments, there are options to protect you from falling too far behind. Here are four tools and tips for mortgage holders in need of assistance.
Get forbearance
The financial institution that handles your mortgage can grant forbearance, which is a temporary suspension of payments that typically last for three to six months. During the forbearance period, your account is marked as current and paid. Once the forbearance period ends, a homeowner must either repay the missed payments in a lump sum or through an installment payment plan.
To obtain forbearance, you'll have to prove that you're in financial hardship. Each lender requires different documentation from those applying for forbearance.
Refinance the loan
Another option for homeowners experiencing financial difficulty is to take out a new mortgage — hopefully at a lower interest rate — and to use the funds generated from a new loan to pay off the pre-existing one. If done correctly, borrowers will walk away with new financing that comes with a lower mortgage payment because the new loan has a lower interest rate. Most mortgage experts, however, don't recommend homeowners use this refinance strategy, unless they can find a new mortgage plan that will reduce their interest rate by at least 1%.
Homeowners should strive to increase their credit score before refinancing, experts said. Many refinancing options require homeowners to pay closing costs typically ranging from 2% to 6% of your loan amount, according to Lending Tree.
Try getting a loan modification
A loan modification enables homeowners to change the terms of their existing home loan rather than taking out a new one.
Loan modifications usually come in four forms — reduced interest rate, extended loan term, changed loan type (from conventional to adjustable rate, for example) or principal reduction. Any of those forms would result in a lower mortgage payment and, ideally, something more manageable for the homeowner. Borrowers must contact their loan servicer and be able to provide proof of financial hardship to be eligible for this tool.
Seek government assistance
Homeowners can apply to federal programs designed to help them stay in their homes and keep up with the mortgage. Examples include:
- The Federal Housing Administration (FHA) loss mitigation programs. The U.S. Department of Housing and Urban Development offers several options for FHA-insured homeowners whose mortgage is either in default or at risk of default.
- The U.S. Department of Veteran Affairs (VA) offers financial counselors to military families facing foreclosure.
- The Consumer Financial Protection Bureau (CFPB) Homeowner Assistance Fund. This is a federal assistance program for homeowners financially impacted by COVID-19 who need assistance to pay their mortgage or other home expenses.
for more features.
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Real Estate & Housing
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Britain has an ageing problem – and it’s going to cost a fortune.
With Baby Boomers retiring, the global workforce will lose its largest contingent at a time when too few children are being born to replace them.
It means our population is on course to grey at an “unprecedented degree”, taking the share of people aged 65 and above to about one quarter by 2040, according to a new report by the Centre for Policy Studies (CPS).
That is up from just 5pc in 1908, when the state pension was introduced, and 19pc today.
This will bring with it unprecedented costs for pensions, medicine and care, with government spending on the elderly expected to quadruple from £225bn to £950bn by 2072, according to CPS estimates.
More crucially, this expenditure is set to double as a share of GDP to 21pc over the period.
That means more tax will be needed to pay for it, or other spending will have to fall – threatening a vicious cycle where a shrinking, younger workforce has to fork out ever-larger sums to support the elderly.
Avoiding a calamity will require a herculean effort on many fronts, says Karl Williams, deputy research director at the CPS.
To offset the impact of the ageing population, the UK economy would need to grow by 2.9pc every year, for the next 50 years.
But on present trends, growth for the next five years will average an annual rate of just 1.4pc, according to the Office for Budget Responsibility.
“We’re at risk of accepting a doom loop narrative,” says Williams. “But actually, none of this has to be inevitable - there are ways we can avert it.”
So what are the best suggestions?
Perhaps the most simple answer is that people could have more children, boosting economic output and generating more tax.
Yet Britain’s birth rate today languishes well below the “replacement rate” of 2.1 children per woman, following decades of decline.
Women in the UK had 1.61 children each in 2021. That is down from the post-war peak of 2.9 in 1964 and 1.9 as recently as 2012, official figures show.
We are by no means alone in this, with birth rates generally falling across the West.
But campaigners say the problem is exacerbated in Britain, where would-be parents face a plethora of high costs, ranging from unaffordable housing to extortionate childcare fees and muddled tax incentives.
The UK suffers from some of the highest childcare costs in the world, at about £936 per month, according to Money.co.uk. That compares to £511 in France, £271 in Germany and just £115 in Sweden.
Meanwhile, the price of a typical home costs £351 per sq ft, according to property tech firm Moverly, compared to £212 in France and £236 in Germany.
When combined with a punishing tax regime, it can make having a child less attractive for women who also value their careers.
Alys Denby, editor of CapX, an opinion-focused news website owned by the CPS, found childcare swallowed up 70pc of her post-tax earnings when she returned to work part-time after having her daughter, Matilda.
“We were lucky because we were able to afford it, but it felt like going to work was an expensive lifestyle decision,” she explains.
A plethora of policy solutions have been suggested. In France - which has Europe’s highest fertility rate - families are given money off their tax bills.
Hungary has also managed to reverse its declining birth rate in the past decade through a mix of pro-natalist policies, including a total exemption from income tax for women who bear four children.
In this vein, one Conservative cabinet minister sparked the headline “Bonk for Britain” last year when they suggested similar tax breaks here.
Phoebe Arslanagić-Little, co-founder of pro-families campaign Boom and a policy analyst, argues the best thing the Government can do is “focus on lifting the barriers that parents and prospective parents face to growing or starting their families”.
This includes making childcare more affordable, building more homes, extending paternity leave for fathers and ensuring more women can access in vitro fertilisation (IVF) through the NHS.
But even so, that may not be a surefire way to boost the birth rate, warns Michael Murphy, emeritus professor of demography at the London School of Economics.
He has just returned from a trip to Finland, where childcare and housing are much cheaper than in the UK - but where the fertility rate is even lower.
“There doesn’t appear to be any magic bullet,” he says.
Another way to boost the young population is by allowing more working-age migrants into Britain.
This is one of the solutions often advocated by business lobby groups, which have urged ministers to loosen restrictions to help ease staff shortages.
But Murphy warns this is a “Ponzi scheme” in the long run because eventually migrants will grow old and require care as well. Research by the Office for National Statistics (ONS) concurs that, at best, immigration can only “slow down the effects of population ageing”.
Williams, at the CPS, is equally as scathing. “The argument that increasing immigration is necessary to offset an ageing population is frankly, complete nonsense,” he says.
This is because the productivity of workers, not only their total numbers, will need to go up to counteract the ageing population.
Record migration over the past couple of decades has coincided with the lowest period of productivity growth in the last two centuries, Williams argues.
“What we should care about is not the number of people in the workforce but how productive they are, because ultimately that’s what drives growth,” he says.
Interestingly, it is not only humans who can play a part: one way to boost productivity is by employing more robots.
At the moment, the UK has 111 industrial robots in service for every 10,000 manufacturing workers, according to the International Federation of Robotics.
That compares to 274 in the US, 397 in Germany and 1,000 in South Korea. Globally, the UK is at the bottom of the G7 and ranked 24th in the world.
As well as boosting industry, artificial intelligence (AI) software can also make a difference in white-collar roles by taking on repetitive or formulaic tasks, thus freeing up humans to focus on creative work.
“Clearly, if we change our economic model slightly there is massive potential there,” says Williams.
In Japan, where the birth rate is one of the lowest in the world, the government even wants robots to be deployed en masse in elderly care homes.
But it is not yet proving to be the panacea some hoped for.
Dr James Wright, author of the book Robots Won’t Save Japan, spent 18 months in the country studying how robots were being made and then used in care settings. He found they were actually making life harder for staff.
In some cases, he found the machines were only briefly used before being hidden away in storage cupboards.
There was often a “disconnect” between the people developing the machines and the people who would end up using them.
A robot designed to lift people out of bed had to be cumbersomely moved from room to room. It also wasn’t comfortable for many care home residents.
“And there’s all this other invisible work: Introducing the robot to the elderly, moving it around, maintaining it, and cleaning it,” adds Wright.
“All of these things actually take time, and it creates new work for caregivers.”
He believes robots can still play a role but that more useful inventions, such as better sensors to monitor people in bed and the automation of paperwork, will be more immediately useful.
Back in the UK, we will probably need some combination of these things to get the transformational growth we need.
And with the final few Baby Boomers set to retire in the 2040s, time is ticking away.
It is a daunting challenge, admits Williams, at the CPS: “But I’m hoping the scariness of the numbers will jolt people into thinking ‘Actually, let’s take some action so we don’t have this future’.”
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United Kingdom Business & Economics
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Supermarkets have not been using high rates of inflation as a cover for making higher profits, the boss of the UK's second largest grocery chain has said.
Sainsbury's had made less money, to keep prices down, Simon Roberts said.
Critics have accused food retailers of "greedflation" - putting prices up to bolster profits.
The competition watchdog has said it will look at how the grocery market is operating.
As well as the new focus on high food prices from the Competition and Markets Authority, some politicians have called for action on food prices.
But Mr Roberts told the BBC that Sainsbury's and other grocery chains had spent money to "battle inflation" and avoid passing all of the rising costs onto consumers.
"We made less profit year-on-year and that's because we made really conscious decisions to keep our prices as low as we could," Mr Roberts said.
Sainsbury's made £690m in pre-tax profit in the year to March, a fall from £730m the previous year.
There have been growing calls for more clarity over how food prices are set.
General inflation has fallen to 8.7%, and energy prices and some wholesale food prices have started to fall back. But food price inflation remains stubbornly high at 19%.
Ged Futter, a former senior buyer at supermarket Asda and now a retail analyst, said suggestions that supermarkets were "raking in" profits were misplaced, pointing to lower profits across the sector.
"There is no evidence from a single supermarket that this is profiteering," he said. "What they are doing is absorbing some of the higher costs."
The large supermarkets all made lower profits or losses in the last year, he said. Tesco, the UK's largest supermarket chain, earned pre-tax profits of £1bn, half of what they earned the previous year.
Profit margins in the industry were below 5%, Mr Futter said, much lower than in food manufacturing. Costs in the agricultural sector have risen by 30%, he added, suggesting farmers and retailers were absorbing some of the price rises.
The latest retail sales figures showed volumes rebounded in April after trading in March was hit by the wet weather.
Sales volumes rose 0.5% last month, the Office for National Statistics (ONS) said, while sales at food stores were up 0.7%.
However, the ONS figures show the divergence between sales volumes, the quantity of goods sold, and the value of sales, the amount spent, over the past few years due to rising prices.
Compared with their pre-pandemic level in February 2020, total retail sales are 16.5% higher in value terms, but sales volumes are 0.8% lower.
Pay rises
In recent days, several supermarkets have announced lower prices for some basics that are common to most shopping baskets: bread, milk and butter.
"We invested over £560m in the last year, others have done similarly," Mr Roberts said.
Mr Roberts said pay rises for Sainsbury's staff of more than 10% last year had contributed to rising prices, but were "locked in", while he hoped the cost of other inputs such as energy and food commodities would continue to fall.
Tesco, Morrisons and Asda have also raised staff wages in recent months, as have budget retailers Aldi and Lidl.
While the headline rate of food inflation was around 19%, that didn't mean households were spending 19% more on their food, Mr Roberts added, since most shoppers had decided to buy less, trade down to less expensive choices, or shop more frequently to avoid waste.
Shoppers were increasingly turning to own-label products, Mr Roberts added.
Sainsbury's has relaunched its own-label value range under a new brand name, Stamford Street, to help shoppers find the cheaper options quickly, he said.
The range will include 200 products, and will include new staples such as king prawns and cheese tortelloni pasta.
It is named after the spot near Blackfriars in London where Sainsbury's had its head office for over a century, but which has now been demolished.
Sainsbury's is not the only grocer hitting back at criticism over profiteering.
On Wednesday, Marks & Spencer chief executive Stuart Machin also denied the sector was guilty of "greedflation" and said his company had also invested to protect customers from the full force of inflation, impacting its profit margin because it was "the right thing to do"
There are structural reasons why prices may not fall rapidly even when energy and wholesale and commodity prices fall, the industry has pointed out.
Many retailers sign long-term contracts for products and so will have baked in some of the higher prices, the British Retail Consortium said.
Unilever boss Alan Jope has also dismissed accusations of greedflation, saying the company was only passing on three-quarters of the higher costs it was facing.
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Inflation
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ONGC Q2 Results Review - Ramp Up In Production To Be Key Monitorable: Prabhudas Lilladher
Net oil realisation post windfall tax came in at $73 / barrel of oil while gas realisation stood at $6.5/mmBtu
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Prabhudas Lilladher Report
Oil and Natural Gas Corporation Ltd.’s result was below estimates with Ebitda/profit after tax of Rs 183.6 billion (-6% QoQ, our estimate: Rs 199 billion) and Rs 102.2 billion (+2%Q/Q, our estimate: Rs 107.4 billion) respectively on a standalone basis.
On a QoQ basis, oil and gas production fell 1% and 0.6%, respectively. Total volume is expected to increase with commencement of rest of production from KG Basin and we have estimated a 4% compound annual growth rate and 6% CAGR in oil and gas production, respectively over FY23-FY26E.
ONGC is currently trading at 4.7 times FY25 price/earning and 2.7 times FY25 enterprise value/Ebitda.
We maintain our ‘Buy’ rating with a target price of Rs 237, valuing the standalone business at seven times FY26 adjusted EPS of Rs 28.2 and add the value of investments of Rs 39.
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This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
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Energy & Natural Resources
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Unlike policies, a childhood cannot be reversed, nor revised at a later date. Each of us only have one childhood, and the experiences we have in these formative years shape the rest of our lives. Every child matters equally whether they are the first, or the third or later born in a family. Eliminating child poverty cannot be put on the waiting list of issues to address or pushed to a later date, but must be made a priority now.
Last week, Keir Starmer confirmed that a Labour Government would continue the current Government’s policy of the two-child benefit cap. This policy limits the payments that families in receipt of Universal Credit receive to only their first two children and was introduced in 2014 to ensure that ‘people on benefits face the same choices as those in work’.
The reasoning behind the policy does not stand true, as 58 percent of families affected by the limit are in fact households with at least working adult. The cap has instead had a detrimental impact on the lives of families across the country, and the Child Poverty Action Group estimates that the policy is pushing approximately one million children into poverty for prolonged periods.
Child poverty increases the likelihood of lower educational outcomes, as well as poorer mental and physical health. Those who experience it are also more likely to require support from public services later in life, negating any short-term benefits to the country’s finances that continuing to implement the cap would have. Removing the two-child limit would be the most cost-effective way of reducing the number of children living in poverty and would immediately lift an estimated 250,000 children out of poverty.
The Labour and Conservative parties have expressed their desire to achieve economic growth, yet both parties have neglected to approach the issue of growth with a long-term vision. Their priorities must be reconsidered. Sustainable economic growth requires a population that is skilled and healthy – both factors that suffer due to experiencing poverty in childhood. Continuing to implement such a policy limits the future opportunities and life chances for children today and will have a detrimental long-term impact on not only individual lives, but the country as a whole. Failing to tackle child poverty now will create greater problems in the long term.
Over the past year, my Private Members’ Bill to abolish the two-child limit has been making its way through Parliament and is awaiting its first reading in the House of Commons this Autumn. My hope is that this Bill will bring an end to this cruel policy, allowing all children to flourish and reach their full potential, regardless of the number of siblings they may have. I recognise that due to both Parliamentary processes and the current political climate this Bill will not become law. It requires Government support and action.
The two-child limit has now been law for six years, creating six years of irreversible damage. It has removed the safety net that Universal Credit is intended to provide if families unexpectedly fall into poverty and denies them the support needed to help them back on their feet.
Every child matters; each one is valuable in God’s sight. How a society values and supports its most vulnerable, which must include children, is a mark of its true worth. Abolishing the two child limit policy is urgent, as we each only get to experience these early foundational years once. I therefore urge all parties to truly consider the consequences of continuing to implement the two-child limit. Although a policy may not be permanent, its impact can last a lifetime.
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Inflation
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What retirement looks like may vary for people but it generally means taking a step back from their working life. However, for many retirees the reality is very different as they are spending their retirement days working, a T. Rowe Price report found.
Key Takeaways
- One in five retirees is working at least part-time in their retirement, according to a T. Rowe Price study.
- Close to half of retirees who are working credit financial reasons, though almost as many cite social and emotional benefits.
- More than half of U.S. workers say they intend to continue working in their retirement, according to a survey by the Transamerica Center for Retirement Studies.
One in five retirees (20%) is going back to work, and an additional 7% are looking for work, the study found. For retirees going back to work, financial and health-related benefits motivate their decisions, though the line between the two reasons may not be as clear as one might imagine.
Why Retirees Are Going Back to Work
People "unretiring" could in part be due to the high rates of retirement seen during the pandemic, the report explained. The pandemic caused 2.4 million excess retirements, in which people retired, even if they didn't previously intend to, according to Federal Reserve Bank of St. Louis research.
For some, the return to work is driven by financial need. Close to half or 48% of retirees T. Rowe Price surveyed who are working credited financial reasons, though almost as many at 45% cited social and emotional benefits they receive from employment.
Most retirees said they don't need to work, but a portion work out of necessity or preference. Sixty percent indicated they don’t need to work, while 12% can’t, compared with 10% who have to work and 18% who want to work, the study said.
Most American Workers Intend to Work in Retirement
Among those currently working in the U.S., more than half (55%) expect to continue working in their retirement, a recent survey by the Transamerica Center for Retirement Studies found.
Of those planning to work during retirement, 80% cited health-related reasoning while 78% credited financial drivers. The most common healthy aging concerns are being active, at 50%, and wanting to keep their brains alert, at 42%.
The biggest financial driver is simply wanting an income, according to 52% of workers in the study.
Finances Drive Retirees' Decision to Work More Than Health-Related Reasons
Finances may play a bigger role in people’s decision to work in retirement than they realize, Shawn Stone, a Retirement Planning Counselor (CRPC) and Director of Advisory Services at Retirement Planners of America, told Investopedia.
Retirees who struggle to maintain the standard of living that they want in retirement may be more eager to go back to work, even if they credit the decision to healthy aging.
“You've got to dig into the psychology of it with [clients],” Stone said. “It may not be as much of the ‘I just want to stay active.’ It's, ‘you told me I can't afford to spend $10,000 a year on a travel budget. I'm gonna go make that money so we can do the trip.’”
Stone said that when preparing for retirement, clients are often worried about the “fun stuff” like travel and hobbies to stave off boredom, but once they actually retire those concerns shift.
“Once they get to retirement, then the rubber meets the road and they're kind of starting to think about the health-care costs, taxes, inflation, all those other basics, but it just seems like people are going into retirement with more euphoria than they should have,” Stone said.
Inflation Leads Retirement Planning Concerns
When asked what their biggest worries are in planning for retirement, financial challenges pulled ahead of health worries, with over half of U.S.-based respondents surveyed by HSBC citing inflation.
More than half at 54% said they worry about inflation devaluing their retirement savings. Other concerns driven by finances include higher health-care costs and worries about saving enough for a comfortable retirement.
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Personal Finance & Financial Education
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Sen. Bob Menendez’s wife, indicted alongside him last month in a sprawling corruption case, was on the payroll of a medical lab that drew down more than $10 million in federal COVID-19 funding—a company, like the firms at the center of the federal charges, with ties to Egypt.
Nadine Arslanian Menendez faces allegations that she received bribe payments from multiple New Jersey businessmen to influence her husband on behalf of the regime of Egyptian President Abdel Fattah El-Sisi, among other crimes. The Justice Department alleges that some illicit payments flowed to Strategic International Business Consultants, a limited liability company she reportedly established for this purpose.
But on his 2021 and 2022 personal financial disclosures, the New Jersey Democrat reported his bride had two sources of income—not only Strategic International Business Consultants, but also Fusion Diagnostics Laboratories, an entity in the Garden State. The reports show her arrangement with this medical testing facility started some time after her October 2020 marriage to the senator—but coincided with the period in which the company sucked in massive sums the federal government allocated to deal with the pandemic.
The federal indictment does not mention the Fusion job, and as of this writing prosecutors have not alleged any wrongdoing at the lab. But like the schemes described in the criminal complaint, the situation involves a strange tangle of local, national, and international intrigues and interests.
New Jersey sources told The Daily Beast that Fusion accessed at least some of the federal monies thanks to testing programs local authorities coordinated in Hudson County, Menendez’s political home base. What’s more, the personal Facebook page of Fusion CEO and co-owner Moataz Abdalla reveals him to be an ardent and abiding supporter of Sisi’s government—while the company’s LinkedIn reveals that a substantial portion of its staff is based in his home city of Alexandria, Egypt’s ancient port on the Mediterranean. Business filings further show that one of Abdalla’s former co-owners in Fusion is a New Jersey anesthesiologist trained at the Alexandria Faculty of Medicine and who has a relationship with a Cairo hospital.
Menendez’s disclosures do not provide his wife’s title at Fusion, the start or end dates of her employment, or an exact figure for her compensation, but show only that the firm paid her a salary exceeding $1,000. Representatives for the couple did not respond to repeated queries from The Daily Beast regarding these details, or about how she learned of the position’s availability, what kind of application and interview process she went through, or what specific projects and responsibilities she handled there.
Arslanian Menendez’s only prior experience in the medical sector The Daily Beast could confirm was as an unpaid volunteer on the children’s health advisory committee of a New Jersey hospital.
Reached by The Daily Beast via text message, Abdalla would not answer these questions, nor inquiries as to where he publicly posted the job opening, how many candidates he considered for the role, or whether he or any of his associates had at any point been in touch with federal law enforcement. The businessman, who told the Wall Street Journal prior to the indictment that Arslanian Menendez had worked in “sales and marketing,” would only respond with blanket denials of wrongdoing.
“I believe you are barking up the wrong tree which is why there is no even accusations [sic] against [F]usion or myself, and there never will be,” Abdalla, who did not respond to calls or emails, wrote.
Abdalla would not even answer if Arslanian Menendez’s job was one of the 28 positions he reported preserving with an eventually forgiven $290,112 Paycheck Protection Program loan Fusion received in February 2021.
The purpose of the PPP initiative was to prevent mass layoffs at companies compelled to close their doors amid COVID-19 lockdowns and the resulting economic slump. But public records and news reports show that at the time of receiving its loan, Fusion was both adding staff—as in the case of Arslanian Menendez—and building out a testing operation for the novel coronavirus, first in Jersey City, then Hoboken and Bayonne, three of the largest municipalities in Hudson County.
Records indicate that this expansion began in late Nov. 2020, predating by a few months both the loan and Arslanian Menendez’s reported period of employment. Sources in Bayonne told The Daily Beast that Jersey City health authorities had referred Fusion to them, but Jersey City Mayor Steve Fulop’s office insisted that “no recommendations were made under the city’s directive.”
Fulop’s team refused to provide details about how the city came to work with Fusion, and insisted only that the company never had any formal financial relationship with Jersey City’s local Department of Health and Human Services.
“Fusion offered free testing at no cost to the city,” press secretary Kimberly Wallace-Scalcione wrote in an email. “Once HHS verified they were a legitimate operation, no contract was needed as the city paid nothing and HHS did not provide any oversight.”
In Hoboken, Fusion operated under the auspices of another firm, Bespoke Health. Bespoke and its president did not respond to calls or emails from The Daily Beast requesting information about its dealings with Fusion.
Hudson County sources told The Daily Beast that they believed Fusion primarily received payment via a federal relief fund established under the CARES Act—and a database operated by the labor-backed nonprofit Good Jobs First reports that by July 2021, Fusion had drawn down $3.6 million in such reimbursements.
By the time the federal relief fund expired at the close of March 2022, a period that overlapped with Arslanian Menendez’s tenure at the lab, that figure had ballooned to nearly $10 million.
But while Fusion hoovered up federal cash, it left New Jersey residents frustrated and even infuriated with its work. The lab’s failure to turn around results in a reasonable period generated such a scandal in Hoboken in late 2021 that the city abruptly shuttered one of its test sites, and Bespoke Health announced it would switch to a different testing facility.
The Daily Beast also obtained multiple complaints dating to early 2022 from residents in Jersey City, who reported waiting a week or more for test results from Fusion that the city’s webpage had promised would arrive in just 24 hours.
These almost exactly match complaints about Fusion a year earlier out of Bayonne.
“Although many people were tested, there were issues concerning test result notifications, entering data in the state system in a timely manner, and other concerns,” former Bayonne Assemblyman Nick Chiaravalloti, who helped set up the city’s first free test site with Fusion, wrote in a statement to The Daily Beast.
Similar gripes litter the “Reviews” section of the company’s Facebook page.
“Ridiculously unresponsive. Still waiting on results for a PCR COVID test from 9 days ago,” wrote one resident of Union City, Menendez’s hometown in Hudson County.
“The biggest issue, is the Government wants you to get tested, you go expend over 2 hours to get tested, and later no results,” wrote another Union City user. “I am sure they are billing and getting well pay [sic], without completing their job in the timely matter.”
Curiously, most of the positive reviews left on Fusion’s Facebook have come from accounts belonging to individuals based in Egypt.
Abdalla, the Fusion co-owner and CEO, did not respond to a text request for comment on the complaints. Both he and representatives for the Menendezes refused to answer repeated queries about whether the power couple had ever contacted any municipal or federal authority on Fusion’s behalf, as the senator allegedly did repeatedly for the three businessmen accused of bribing him.
No official or individual from Hudson County with whom The Daily Beast spoke for this piece reported ever speaking with the Menendezes, or with any of the senator’s staffers or advisers, about Fusion, and several expressed shock when informed of Arslanian Menendez’s employment there. Others voiced no surprise at all, but still pleaded ignorance about the arrangement.
However, Fusion definitely pulled at least some local political strings to secure its test sites, The Daily Beast can report. Multiple sources recalled that Khemraj “Chico” Ramchal, a disgraced former Jersey City councilman aligned with Mayor Fulop, helped the lab obtain space and municipal support. Ramchal confirmed this in an interview with The Daily Beast, and said he had even coordinated directly with Jersey City Health and Human Services Director Stacey Flanagan.
But despite describing Abdalla as “like family,” Ramchal—forced from office in 2016 after pleading guilty to drunk driving and accepting a no-show job—insisted to The Daily Beast that he was oblivious to Arslanian Menendez’s presence on Fusion’s payroll. He also denied having any line to the accused duo himself.
“Hell no! I don’t even have a connection with Menendez,” Ramchal maintained. “That’s big league for me, man. I’m a little city guy.”
Ramchal additionally asserted he had nothing to do with arranging any Fusion test sites outside of Jersey City, and claimed to have no idea how they got them.
Questioned about his relationship with Ramchal, Abdalla again refused to answer questions directly.
“As I have mentioned previously, if there were even the slightest allegation against me or my company, it would have posed a significant issue,” Abdalla wrote. “However, since there is no suspicious activity, and I haven’t been accused, I kindly request that you focus your attention on the individuals who have been indicted by the government, rather than continuously targeting Fusion.”
“Alternatively, if you choose to disregard the concept of karma, that is entirely up to you,” he added.
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Consumer & Retail
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NEW YORK (AP) — Days after former President Donald Trump got a taste of the witness stand, his New York civil business fraud trial is turning to the question of whether his daughter Ivanka will have to testify, too.
Friday’s court session is set to start with a hearing on the issue. Ivanka Trump has been dismissed from the case, and lawyers for her family and its business contend that she shouldn’t have to take the stand. New York state lawyers say she should, and they argue that the former Trump Organization executive vice president has relevant information.
It’s unclear how soon Judge Arthur Engoron will decide, or when Ivanka Trump would testify if ordered to do so.
The civil case, brought by New York Attorney General Letitia James, accuses the former president, sons Donald Jr. and Eric, and the company of overstating the patriarch’s wealth for years on financial statements that were given to banks, insurers and others to help secure loans and deals.
The Trumps and their business deny the allegations, and the former president and current Republican 2024 front-runner has called the trial a politically motivated “sham.” James is a Democrat.
The ex-president and his sons are expected to testify at some point. In a surprise preview, the elder Trump ended up briefly on the witness stand Wednesday to answer Engoron’s questions about an out-of-court comment.
Ivanka Trump’s lawyer argued in court papers that it’s unreasonable to make her take the stand. Noting that she’s no longer a defendant or a New York resident, attorney Bennet Moskowitz said the attorney general’s office was trying “to impose a heavy, unnecessary and improper burden on Ms. Trump to fill apparent gaps” in the state’s case.
In a separate filing, Donald Trump’s defense accused the state of belatedly endeavoring “to needlessly haul Ms. Trump into a highly publicized trial for the obvious purpose of harassment of both Ms. Trump and her father.”
A state appeals court in June dismissed the claims against her as too old. Ivanka Trump announced in January 2017, ahead of her father’s inauguration, that she was stepping away from her Trump Organization job. She soon became an unpaid senior adviser in the Trump White House.
State lawyers, however, maintain in court papers that Ivanka Trump “was a key participant” in many events discussed in the case and “remains financially and professionally intertwined” with the family business and its leaders.
___
Associated Press writer Michael R. Sisak contributed to this report.
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Banking & Finance
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(Photo: Mark Wilson/Getty Images)
Under Trump, IRS Targeted Low-Income Families at Higher Rate Than Millionaires for First Time
"House Republicans want to return to the lawless days of rampant tax evasion by the nation's wealthiest."
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"House Republicans want to return to the lawless days of rampant tax evasion by the nation's wealthiest."
During the final year of Donald Trump's presidency, the Internal Revenue Service audited low-income families at a higher rate than millionaires for the first time, according to an Americans for Tax Fairness analysis released as congressional Republicans work to further hamper the agency's ability to crack down on rich tax cheats.
As a result, ATF noted in its analysis, "audits of millionaires have dropped 92% over the last decade." Audits of Earned Income Tax Credit (EITC) recipients have also fallen over the past 10 years, but not nearly as dramatically.
(Credit: Americans for Tax Fairness)
Inadequate scrutiny of the rich has allowed more than a million wealthy Americans to evade close to $66 billion in federal taxes in recent years, according to IRS data.
In an effort to reverse the damage done by chronic underfunding, Democratic lawmakers and President Joe Biden approved an $80 billion budget increase for the IRS over the next decade, money that has already helped the agency increase its full-time staff, improve customer service, and collect tens of millions of dollars in delinquent taxes from rich Americans.
But that hasn't stopped Republicans from attempting to roll back the agency's recent budget increase and drumming up hysteria about armed IRS agents targeting ordinary Americans.
Across their appropriations bills, House Republicans have proposed $67 billion in IRS cuts, which would add to the deficit by undermining the agency's ability to pursue wealthy tax dodgers. The House and Senate must pass appropriations bills to fund the government and avert a shutdown next month.
"Extreme MAGA Republicans are demanding that their rich donors get a green light to evade taxes as the price of keeping our government open," said David Kass, ATF's executive director. "Just as restored IRS funding contained in the Inflation Reduction Act that President Biden and congressional Democrats enacted last year is beginning to bear fruit in the form of tougher tax enforcement on wealthy and corporate tax cheats, House Republicans want to return to the lawless days of rampant tax evasion by the nation's wealthiest."
ATF's analysis, released last week, shows that U.S. millionaires are now audited less than 1% of the time despite receiving a sixth of the nation's total household income.
"Mega-corporations have also benefited dramatically in the past decade from an underfunded IRS," the group observed. "Over the past decade, audits of corporations with over $1 billion of income have dropped 87%, to an historic low. Audits of corporations with over $100 million of income have dropped by 91%."
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Inflation
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No 10 has denied Rishi Sunak will scrap the winter fuel allowance for most elderly people, after reports that he was looking at means testing the allowance.
The prime minister was said to be considering cutting back on the allowances of £250 to £600 each winter in order to maintain the triple lock for pensions.
No 10 sources said Sunak was not looking at scrapping the allowance as a policy and that he had not received advice on it. “That is not something we are going to do,” a government spokesperson said.
Nevertheless, government sources told Sky News that he had been looking at the idea: “Rishi understands the politics of the triple lock, although he thinks it’s far from fair from an intergenerational point of view, so he’s trying to redress that a little bit.”
The broadcaster reported that officials had drawn up options including removing winter fuel payments for those not on pension credit.
Rachel Reeves, the shadow chancellor, said ministers should “not be breaking those commitments” that they made to older people in the last election. She said Labour would be bringing in a proper windfall tax on oil and gas companies that would fund help for elderly and vulnerable people with their energy bills.
Wendy Chamberlain, the Liberal Democrat work and pensions spokesperson, said: “Scrapping the winter fuel allowance would be a slap in the face for pensioners facing soaring energy bills this winter.
“Rishi Sunak must be living on another planet if he thinks this is the answer to the country’s problems. Pensioners have worked hard and paid their taxes all their lives. They shouldn’t be made to pay the price for the Conservative party crashing the economy.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said that any such move would be a “death sentence” for pensioners.
He said: “Last year alone we saw around 5,000 excess winter deaths caused by living in cold, damp homes. Many more saw their health conditions deteriorate. Now Rishi Sunak wants to condemn more pensioners to live in these conditions.
“Energy bills are likely to stay high for the next two years according to expert predictions so this proposal – even if it only starts next year – is highly dangerous.”
Sunak is casting around for savings to be made from public spending before next year’s election as he comes under pressure from his party to offer tax cuts.
He is considering scrapping the Birmingham to Manchester leg of the HS2 railway line and looking at keeping benefit increases down below the level of inflation.
Several government sources said they did not think Sunak would go for the option of reducing pensioner allowances just before an election when energy bills are still high.
But the prime minister is mulling ways to be able to afford tax cuts such as a reduction in income tax, capital gains or inheritance tax before next year, which he may gesture towards in his party conference speech in Manchester next week.
At the annual gathering, Grant Shapps, the defence secretary, is expected to unveil a long-term investment worth about £4bn in the three-country Aukus nuclear powered submarine project in his keynote speech on Sunday, defence sources said.
The spending pledge is likely to be presented as a boost for jobs at the BAE Systems dockyard in Barrow, where jobs are expected to increase from 11,000 to 16,000, and Rolls-Royce in Derby, where the nuclear reactors are built.
The UK and the US have agreed to help Australia build its own nuclear-powered attack submarines based on a British design, but while construction is not expected to start until the end of the decade, experts and Labour say the industrial base needs to be developed now.
Sunak is also expected to make pro-motoring policies a cornerstone of his conference announcements, and continue to promote his decision to scale back on net zero targets.
On Friday, Philip Dunne, a Tory MP and former minister who chairs the environmental audit committee, wrote to the prime minister describing the net zero moves as “disappointing”.
He said: “It concerns the committee that these announcements were not accompanied with a clear plan setting out how the UK’s decarbonisation commitments are now to be met, and the committee today calls for a revised carbon budget delivery plan to be produced urgently.
“There is a high degree of consensus – in parliament and amongst the public – on the need to reduce emissions in the face of the threat of climate change. While pragmatic implementation is vital, pace must be maintained.
“In today’s letter the committee calls on the prime minister to avoid falling into the trap of presenting net zero as an all-or-nothing, binary choice. The environment and the economy are not in opposition to one another. On the contrary, green policies are a key part of sustainable growth.”
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Inflation
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Football fans are being warned to watch out for ticket scams, after it recorded a jump in reported incidents last season.
Lloyds Bank said, based on analysis of reported fraud cases among its own personal banking customers, the number of people being scammed when buying football tickets more than doubled (a 101% increase) last season compared with the season before, with victims losing £154 on average.
The bank's data indicated that many scams originate on social media and people aged 18 to 24 are particularly likely to fall victim.
It also indicated that supporters of Liverpool and Manchester United fell victim most often last season, along with Arsenal and Chelsea fans.
When tickets for big events are scarce or in high demand, fraudsters know they can cash in on desperate fans willing to pay much more.
They create fake posts on social media or online marketplaces to advertise tickets that do not exist. Often they will include pictures of real tickets to convince the buyer that they are genuine.
The victim is often tricked into sending money via bank transfer.
The bank looked at reports made by Lloyds Banking Group customers between August 2022 and May 2023, compared with the same period a year earlier.
Read more:
Fraudsters' tactics are becoming more complex - here is what to look out for
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'Pig butchering' among four convincing new scams Which? says you should know about
Fans of some of the biggest clubs in England, where demand for tickets is particularly strong, are particularly likely to be targeted, Lloyds warned.
Once the money has been transferred, the fraudster simply disappears, and the victim receives nothing.
Liz Ziegler, fraud prevention director, Lloyds Bank, said people should look to buy directly from football clubs or their official ticket partners.
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Consumer & Retail
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New Bitcoin ETFs Now? Amid The Crypto Crackdown?
Big investment companies like BlackRock, Fidelity and Invesco are still trying to create an easy way to buy digital assets.
(Bloomberg Businessweek) -- It’s been a brutal stretch for crypto. Almost $2 trillion of market value in cryptocurrencies has been wiped away since the market peak in late 2021. Major digital asset companies have collapsed amid allegations of fraud and market manipulation. US regulators are cracking down on many of the businesses still standing. But one corner of the market is suddenly garnering enthusiasm: Bitcoin exchange-traded funds.
Some of the biggest and most established names on Wall Street are filing or refiling applications with the US Securities and Exchange Commission in an attempt to be the first to release such a product. A Bitcoin ETF would invest in the cryptocurrency on behalf of its shareholders. In other words, investors could easily get direct exposure to crypto by going to their brokerage and buying shares the way they would a stock.
BlackRock Inc., the world’s largest money manager, applied for a Bitcoin ETF in mid-June, setting off a frenzy of filings from the likes of Fidelity Investments, Invesco and WisdomTree. The Nasdaq and Cboe Global Markets exchange operators, which filed applications on behalf of BlackRock and Fidelity, respectively, have since resubmitted the paperwork after the SEC said the initial filings were insufficient and lacked certain information.
Pushback from the SEC is nothing new. Various fund companies have been trying for years to get crypto ETFs approved in the US, and they’ve consistently been rejected. So why the flurry of applications now, at a time when crypto has lost much of its former buzz?
The timing coincides with a closely watched lawsuit brought in federal court by Grayscale Investments LLC against the SEC. The company runs the publicly traded Grayscale Bitcoin Trust, which holds Bitcoin the way a fund would but doesn’t have the ETF structure that allows it to keep its share price in line with the token’s price. It currently trades for about 28% less than the value of the Bitcoin it owns. Grayscale wants to be allowed to convert the trust to an ETF and is disputing the SEC’s reasoning in rejecting its application. A decision is expected as soon as this month.
Oral arguments in the case in March sparked speculation that the court could clear the way for an ETF. Judges on an appellate panel in Washington grilled the SEC on its stance that Bitcoin ETFs shouldn’t be allowed because Bitcoin is more susceptible to fraud and manipulation than Bitcoin futures contracts. The SEC has already approved ETFs that invest in Bitcoin futures, which have been trading on the Chicago Mercantile Exchange since 2017. The judges questioned why the futures market and the direct spot market for Bitcoin would be so different when both rely on the same underlying asset pricing.
“The industry sees the court case moving forward, and they realize there’s a nonzero probability that, like it or not, the SEC will be forced to allow a spot Bitcoin ETF,” says James Angel, an associate finance professor at Georgetown University, who signed on to one of the amicus briefs in support of Grayscale. “When a spot Bitcoin ETF is approved, there’s going to be a competitive scramble to be the winner, and everybody is lining up at the starting gate, just waiting for the starting gun to go off.”
Following the arguments, Bloomberg Intelligence analysts, who had predicted the SEC would prevail, adjusted their outlook to give Grayscale a 70% chance of winning. They also said that the wording of the ruling would be key. The court could tell the regulator to revisit its reasoning, giving it an opening to deny Grayscale’s application on different grounds. The SEC could also appeal a decision in Grayscale’s favor, further delaying any approval.
A Bitcoin ETF would not only open the door for more retail investors to trade crypto, it could also offer a more appealing avenue for wealth advisers investing on behalf of their clients or institutional participants; they’d be more comfortable placing money into a product with which they’re familiar. Exchange-traded funds are a huge business. BlackRock managed about $3 trillion in client assets in ETFs at the end of March, invested in an array of assets including stocks, bonds and commodities. Salim Ramji, global head of BlackRock’s ETF and index investing business, told Bloomberg Television that the company’s interest in crypto is a logical extension of its model: “How do we help investors gain access to parts of the market that had otherwise been more difficult or really expensive or opaque?”
Chief Executive Officer Larry Fink seems to have had a turnaround on Bitcoin. About six years ago, he said cryptocurrencies were a proxy for how much money laundering was in the world. But he recently told Fox Business that Bitcoin is an “international asset” akin to “digitizing gold.”
Over the past year, BlackRock has expanded into crypto, working with Coinbase Global Inc. to make it easier for institutional investors to manage and trade Bitcoin and setting up a private Bitcoin trust. According to filings, Coinbase would be in charge of safekeeping the Bitcoin in the BlackRock ETF and helping to keep tabs on market integrity. Coinbase is the largest US crypto exchange, which gives it visibility into American trading activity. But it’s also been a target of regulators. In June the SEC sued Coinbase for listing tokens the agency considers unregistered securities. Coinbase says nothing it lists meets the definition of a security and is fighting the suit.
A Fidelity representative says “a meaningful portion” of its customers already own or are interested in crypto. The company found in a survey last year that a Bitcoin ETF is the most appealing idea in the US for a new digital asset product, and that more than three-quarters of high-net-worth investors, family offices and financial advisers want to buy digital assets.
But some things many institutional investors have said they like about crypto—such as diversification and inflation hedging—are looking shakier these days. Bitcoin prices tumbled last year right along with tech stocks and the broader market, amid the highest inflation seen in decades. Cryptocurrencies are volatile: Bitcoin skyrocketed 305% in 2020 and 60% in 2021 before plunging 64% in 2022. In recent remarks to reporters in the wake of the applications, SEC Chair Gary Gensler said investors in crypto couldn’t be as confident in the fairness and integrity of the market as they could be with US stocks.
Crypto remains largely unregulated, as investors learned when a string of high-profile companies imploded last year, costing some their life savings while setting off a contagion in crypto markets. “It’s an incredible danger for consumers,” says John Reed Stark, a former SEC enforcement attorney who now runs his own consulting company. “Whenever these entities like Fidelity and others start transacting in crypto, it just adds a level of legitimacy that is not warranted because the space is so rife with manipulation and fraud.”
For now, the finance industry’s heavy hitters are waiting on judges and the SEC to rule on whether the ETFs can go forward. The process could take months. But Bitcoin traders appear to like the odds and are welcoming Wall Street’s advances: The price has jumped more than 20% since the day before BlackRock’s filing.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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As a dyed in the wool Conservative I believe in freedom of choice, but smoking is not a matter of free choice.
The only free choice is whether to smoke that first cigarette. Two thirds of those trying just one cigarette, usually while they are still children, go on to become daily smokers, and daily smokers are addicted smokers. Most adult smokers want to stop smoking, but on average it takes 30 attempts to succeed, and only one in ten smokers a year successfully quit. Two out of three long-term smokers die prematurely, often after years of disability, from the cancers, respiratory and cardiovascular diseases caused by their smoking.
For me, this is deeply personal. Both of my parents died of cancer caused by smoking. My late mother was only 47 when she died of lung and throat cancer, as she was a very heavy smoker for most of her life.
I do not want to see families go through what my family had to go through during those terrible days. That is why I supported the ban on smoking in public places and why I support the government’s smokefree ambition, and the tough legislation needed if it is to be delivered. For make no mistake, without tough action, and soon, we will not drive smoking rates down to 5% or less by 2030, the smokefree ambition.
I know there will be those concerned that this is the “nanny state”, but I don’t agree and neither do the voters. More than three quarters of the public support government action to limit smoking with nearly two thirds of them thinking government should do more. Fewer than one in ten think government is doing too much. Two thirds support raising the age of sale from 18 to 21, with little opposition.
The majority of independent tobacco retailers also support raising the age of sale to 21, and in the US where it has been the law since 2019 it has been responsible for reductions of 30% in smoking among young adults. The New Zealand legislation which will raise the age of sale from 18 by one every year from 2027 onwards, is supported by half all adults in Britain.
So there is majority support even before the government has consulted the public on the issue. The lesson from the smoking ban in England is that public debate leads to growing support. In 2004 before the debate got going, half the public supported banning smoking in pubs and clubs.
After a consultation and 18 months public debate support rose to two thirds, then to seven out of ten just before the legislation came into force in 2007. After implementation support rose to eight out of ten, with little opposition, largely because of growing support from smokers. Compliance with the ban was 97% from the outset because there was widespread public support and it was self-enforcing.
Ending smoking is not just about health and wellbeing, it is a vital plank in the government’s strategy to deliver a workforce fit for the 21st century and grow the economy. Half the difference in healthy life expectancy between the most and least advantaged is due to smoking. Over half a million smokers are admitted to hospital each year for treatment for diseases caused by their smoking. Smokers need social care on average ten years earlier than non-smokers and the sickness and disability caused by smoking is a significant factor in the numbers unable to work. Stopping smoking has an immediate impact on the quality and length of life of individual smokers.
Tobacco apologists say that tobacco taxes bring in far more than the cost to the NHS. But NHS costs are a tiny part of the cost to the public finances and to the economy. In 2022 smoking cost the economy £22 Bn nearly double the £11 Bn tobacco brought in by taxes. The £2.2 Bn cost to the NHS and £1.3 Bn to social care were far outweighed by the £11.8 Bn lost income tax and national insurance for smokers unable to work; and £5 Bn in social security payments. Every percentage point decline in smoking brings people back into the workforce, benefiitting public finances by around £800 million.
Neither the Government nor the Opposition originally supported legislation to ban smoking in public places, it was called ‘an extreme solution’ by political advisers, something hard to imagine now.
However, following a campaign by all the leading health organisations, supported by the CMO, backbench MPs were convinced by the evidence and the wishes of their constituents, and legislation was passed by an overwhelming majority on a free vote. The ban on smoking in public places is now claimed as a legacy by all political parties and the tradition that this is not a party political issue is well established, with standardised packaging and the ban on smoking in cars carrying children both carried on free votes.
I urge the Prime Minister not just to consider raising the age of sale, but also all the other measures to make smoking obsolete set out in the APPG report and the Khan review. He can be assured that he will get strong cross party support for all the actions needed to deliver the Government’s smokefree 2030 ambition. What a legacy that would be for this government.
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Workforce / Labor
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Tiger Global’s Biggest Venture Fund Has 18% Loss After Markdowns
Tiger Global Management's largest venture fund, Private Investment Partners 15, reportedly experienced an 18% loss at the end of September due to markdowns in valuations for several portfolio companies.
(Bloomberg) -- Investors in Tiger Global Management’s biggest venture fund were sitting on an 18% paper loss at the end of September after the firm slashed valuations for multiple portfolio companies, according to people familiar with the matter.
The nearly $13 billion Private Investment Partners 15 fund marked down AI-powered email company Superhuman by 45% and cut its valuation for privacy search engine platform DuckDuckGo by 72%, said the people, who asked not to be identified because the information is private.
Tiger Global also marked down its stakes in Bored Ape Yacht Club, a collection of nonfungible tokens, by 69%, and NFT marketplace OpenSea by 94%, the people said. All of the figures represent how much Tiger Global has written down the valuations since first investing in each company.
A representative for Tiger Global, which manages about $50 billion, declined to comment.
The venture capital industry is facing a reckoning as startups struggle with cash flows amid higher interest rates. Philippe Laffont’s Coatue Management also slashed its internal valuation for OpenSea by 90%, and marked down its stakes in Calendly and Notion, Bloomberg previously reported.
Last week, Tiger Global told investors that VC head Scott Shleifer is stepping down from that role and transitioning to become a senior adviser, effective Jan. 1. He will remain a partner. The firm, which is based in New York, said he made the decision because he wishes to remain in Florida with his family.
Tiger Global cut valuations in its venture funds last year by about 33%, resulting in a $23 billion decline in value. The PIP 15 fund had its final close early last year.
©2023 Bloomberg L.P.
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Stocks Trading & Speculation
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The Rapid Bond Rally Is Looking Fragile
For a moment this week, the brutal bear market in US government debt appeared on its last legs. By Friday, concerns about the Federal Reserve and mammoth auction sizes were back in force, underscoring the fragility of any gains.
(Bloomberg) -- For a moment this week, the brutal bear market in US government debt appeared on its last legs. By Friday, concerns about the Federal Reserve and mammoth auction sizes were back in force, underscoring the fragility of any gains.
A disastrous auction of 30-year Treasury bonds Thursday sent long-maturity yields soaring as investors demanded additional compensation for funding a ballooning fiscal deficit. An hour later, Fed Chair Jerome Powell told reporters at the International Monetary Fund conference in Washington that another interest-rate hike aimed at curbing inflation is still possible, unleashing a surge in short-term yields.
As measured by the performance of the Bloomberg Treasury Index it was the worst day in more than six months. Long-dated Treasury yields had reached the lowest levels in more than a month just a day earlier, attributed to investors and traders positioning for the end of the Fed’s historically aggressive tightening cycle.
“It’s still too early to call the all-clear on rates and inflation,” said Alberto Gallo, chief investment officer and co-founder of Andromeda Capital Management. “The Fed might be done hiking, but that doesn’t mean a lot of cuts are coming soon,” as interest-rate futures markets continue to anticipate.
Powell and other Fed policy makers have repeatedly voiced the idea that rising bond yields, by tightening financial conditions, can avert the need for additional interest-rate hikes. From that standpoint, declining yields quickly run into trouble.
Traders continue to see another rate increase as unlikely and to anticipate that the Fed will pivot to cuts next year as the cumulative effect of its hikes since March 2022 takes its toll on the economy. However they priced in a later start — in July, from June — after Powell’s comments.
The bond auction, meanwhile, illustrated that investors aren’t tolerating yield declines well. The market rally that preceded the sale meant that the auction produced a yield of 4.769%, lower than last month’s 4.837% result, which was the highest since 2007.
The auction yield was significantly higher than expected, though, making it one of the worst 30-year bond sales of the past decade. It signified that buyers of Treasuries on the whole are becoming more price-sensitive, a problem for the US government as it seeks to raise larger sums via its auctions.
“What the auction result said is that every one is worried about supply now,” said Mark Nash, head of fixed-income alternatives at Jupiter Asset Management. “Things are changing in the market in terms of support.”
A cyberattack that disrupted trading for clients of the Industrial & Commercial Bank of China Ltd., the world’s largest bank, probably contributed to the poor result, said James Wilson, senior portfolio manager at Jamieson Coote Bonds Pty in Melbourne.
Wilson remains bullish on Treasuries, expecting a reckoning for the US economy.
Still, he said, “after a 50-basis-point rally in the week prior, appetite for the 30-year issue was always going to be questionable.”
Buyers of the auction were rewarded Friday as the new 30-year rallied back in yield terms to around 4.715%, around where it was trading just before the sale for a steep price gain.
“Longer term we’re very bullish on Treasuries and the rates market and we think that they offer really good value,” said Jamie Patton, co-head of global rates at TCW Group, a Los Angeles-based investment firm with about $200 billion under management. “We’ve never, in the history of modern monetary policy, seen the Fed raise rates by over 500 basis points and not had any accident or correction or recession.”
--With assistance from Cormac Mullen.
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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The White House has a gender pay gap of 20 per cent, according to an analysis of its annual pay report.
The names, positions and salaries of more than 440 staff were revealed in its report to Congress despite Joe Biden previously calling attention to pay disparities among other employers.
The median man on the president’s staff earns $105,000 (£82,352), while the median woman earns just $84,000 (£65,882). Mr Biden earns $400,000 a year.
The conclusion from Mark Perry, a scholar at the American Enterprise Institute, was that women on the White House payroll earn 80 cents for every dollar paid to male staff.
Mr Perry, who has been examining White House salaries for years, has previously found that the pay gap was 37 per cent under Donald Trump in 2017 and almost 11 per cent under Barack Obama in 2016.
In its own analysis, The Wall Street Journal noted that the reason behind the pay gap in the Biden White House was a “composition effect”.
While there are more women employed by the White House than men, 269 to 179, there are more women in lower-paid roles, the newspaper said.
Some women are among the highest paid in the president’s team. Karine Jean-Pierre, Mr Biden’s press secretary, and eight other women are listed with salaries of $180,000 (£141,176).
‘More structurally sexist’
The figures stand in contrast to Mr Biden’s pronouncements on pay parity.
The president marked “national equal pay day” at the White House in March by saying he was “working to change” pay disparities.
“I call upon all Americans to recognise the full value of women’s skills and their significant contributions to the labour force, acknowledge the injustice of wage inequality and join efforts to achieve equal pay,” he said at the time.
In an editorial, The Wall Street Journal wryly noted that the figures were slightly higher than the national average for the workforce in 2022, according to the White House’s own analysis.
The White House Council of Economic Advisers estimated that among all full time workers, a woman made just 83 cents for every dollar paid to a man.
“If Mr Biden pays only 80 cents on the dollar, does that mean his White House is three percentage points more structurally sexist than the labour market writ large?” The Wall Street Journal editorial asked.
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Workforce / Labor
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People struggling with living costs were "more resourceful" in previous decades, the Tory deputy chairman has said.
Lee Anderson told the BBC there was a "different culture" in his youth, and people were more likely to take on extra work.
The MP - who grew up in a mining town - has faced criticism for previously questioning the need for food banks.
Recalling his childhood, he said "our garden was our foodbank".
He said his parents had "made do" in the 1970s, despite growing up in an environment that people today would see as "very, very, poor".
But speaking to the BBC's Political Thinking with Nick Robinson podcast, he said: "We didn't think we were in poverty.
"Things were more expensive I think back in the Seventies. Food was definitely more expensive, relatively speaking," he told the podcast.
"We had one holiday a year, which was a caravan in Skegness. We had a garden full of vegetables, [with] chickens at the bottom for the eggs.
"Perhaps if some people today could go back in a time machine and see how we lived, they'd think we were very, very, poor. But I didn't see that at the time."
When challenged that people some parts of the country today would not have a garden to grow vegetables in, he replied: "The point I was making was people were more resourceful when I was growing up as a child.
"They were more resourceful. My parents were the children of men that had fought in the war, they'd gone through very, very difficult times.
"So it was a different culture, there was a different outlook on life. And they made do.
"My dad always said to me - if you need more money, go and work a weekend shift, do a bit of overtime. It wasn't 'complain on Facebook or Twitter or go and do a TikTok video or just complain to government'."
Mr Anderson, who grew up in the former mining town of Ashfield in Nottinghamshire and now represents the area as its MP, was appointed deputy Tory chairman by Rishi Sunak last month.
Since then he has found himself at the centre of media storms for his outspoken views on issues such as migrant Channel crossings, his support for the death penalty, and the use of food banks.
Before his appointment, he was branded "out of touch" last year for suggesting people needed to learn how to cook and budget "properly", rather than use food banks.
He later defended his comments, saying he was glad to have started a "debate" on the issue.
In his interview with Nick Robinson, he said anyone earning an annual salary of £35,000 "should not be using a food bank" when asked about a row over whether nurses had used the resource.
He said that whenever he talked about the issue, his inbox was flooded with people making supportive comments "saying 'you know what Lee, thank goodness somebody is speaking out, we actually agree with you'".
Pressed on whether higher housing costs in places like Barking, a London borough, could lead people on this income to use a food bank, he replied: "Where are they?"
"I get pensioners contacting me from southern constituencies who are on peanuts, there's on less than twenty grand a year, they're not using foodbanks."
'Mr Scrooge'
At a parliamentary debate following his interview, Mr Anderson went on to say food banks were "being abused," with some families treating them "like a weekly shop".
He said there was a need for more education, to help families struggling with food costs to cook cheaper meals.
His comments earned him a rebuke from Labour MP Fleur Anderson, who accused him of making "provocative statements completely detached from the facts".
"There's a reason for [the] huge increase in needing to go to foodbanks, and that is because the system is entirely broken, and that is after 13 years of the Conservatives breaking that system," she added.
There was also criticism from the SNP's Patricia Gibson, who said food bank use was increasing because of rising prices, and compared Mr Anderson to "Mr Scrooge without the compassion".
She accused him of trying to "lecture" people who were struggling with living costs, branding it "staggeringly insensitive".
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Inflation
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The boss of pub giant JD Wetherspoon has condemned a “lack of understanding” from MPs over inflation as the chain benefited from bumper bank holiday trade.
Shares in the pub group lifted on Wednesday morning after it predicted record sales for the current year.
Founder and chairman Tim Martin cheered a strong performance but warned of continued pressure on the hospitality sector from higher costs.
“Sales in the last quarter have continued their positive momentum, although inflation, especially in labour, energy and food costs, remains a more intractable issue,” he said.
“In order to bear down on inflation, political parties should encourage free enterprise, rather than a reliance on additional regulations.
“A lack of understanding among some senior politicians about the need to encourage a successful free market economy presents a real threat to the future prosperity of the country.”
It came as the firm, which runs 834 pubs, revealed that like-for-like sales jumped 12.2% over the three months to April 30.
Wetherspoons said sales over the Easter week were the “highest ever” for the company as it looks set to post record total sales for the year to July.
It added that the first bank holiday weekend in May was “exceptionally strong” and included its busiest Saturday performance on record.
However, it said the coronation weekend was “slightly less strong” with a noticeable quiet Saturday as many people chose to celebrate at home.
Mr Martin said the business expects profits for the current financial year to be at the top of market expectations.
Shares in the company were 7.4% higher in early trading on Wednesday.
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Inflation
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Key Points
- NAB data confirms anecdotal reports that retailers are cancelling or scaling back orders.
- There could be $30 billion to $35 billion in stock that is ageing or obsolete nationally.
- Consumers are increasingly taking advantage of sales to stretch the budget.
Retailers are slashing orders for new stock in the lead-up to the festive season to avoid a blowout in inventories as consumers tighten the purse strings.
Forward orders for retailers and wholesalers have been in deeply negative territory for the past two months, according to NAB’s monthly business survey, indicating most retailers expect demand to fall over the next few quarters as cost-of-living pressures escalate.
According to NAB data, retail forward orders were -31 index points in June after being -18 in May, while wholesale forward orders improved in June to +4 index points after dropping to -19 in May.
NAB chief economist Alan Oster says it’s the worst decline in retail forward orders outside the depths of the pandemic and the GFC, and indicates retailers are pessimistic about the months ahead.
Forward orders are a key leading indicator and tend to correlate closely with economic activity and domestic demand. “This is as bad as we’ve ever had it,” Oster tells Window Shopping. “They certainly expect a soft period ahead.”
Business confidence in retail has also fallen in the past few months, to -14 index points in June and -9 in May, worse than the decline in overall business confidence.
“Their confidence is not good,” Oster says. “That’s nowhere near as bad as COVID, which was -50 … but you don’t see -14 very often. It’s the worst outside of COVID and the GFC.”
Christmas plans
The NAB data confirms anecdotal reports that retailers are cancelling or scaling back orders in anticipation of weak pre-Christmas spending.
Australian Retailers Association chief executive Paul Zahra says orders are being reduced by between 5 per cent and 20 per cent, depending on the category.
Traditionally, retailers start ordering Christmas stock sourced from overseas around March and domestically sourced stock around June and July. Stock starts reaching warehouses around August and September. October is usually the cut-off for orders for peak Christmas trade.
“International orders would have been placed by now and a lot of that product would be on its way,” Zahra says.
Melbourne-based eStore Logistics opened five new fulfilment centres during the pandemic to cope with surging demand. The company now has seven fulfilment centres and handles fulfilment and warehousing for pure-play online and omnichannel retailers including Kogan.com, MyDeal, Temple & Webster and Patagonia.
EStore founder and managing director Leigh Williams says order volumes and inventories are falling. While warehouse space remains tight and overall sales orders are flat, because of new, fast-growing clients, “normalised” sales order volumes (after adjusting for new clients) fell 9 per cent year-on-year in the June quarter and storage/inventory levels fell 23 per cent.
Focus on fast-selling products
The weakest categories were health and beauty, where normalised order volumes fell 19 per cent, and department stores, where orders were down more than 30 per cent. This offset 28 per cent growth in fashion and apparel and strong growth in pet products.
“In storage, [retailers] are winding back inventory which they all over-ordered, and are opting to focus on higher-demand seasonal and fast-selling products rather than larger, slower-moving items,” Williams says.
“That strategy seems to be influenced by consumer uncertainty.”
NAB is forecasting flat to slightly negative consumption in real terms (after adjusting for inflation) for the next six to nine months, including the peak pre-Christmas spending period.
Surveys by Australia Post and PayPal also indicate consumers plan to spend less in the lead-up to Christmas and to shop more strategically, taking advantage of discounting and promotions.
According to PayPal research released this week, 66 per cent of Australian consumers are afraid of a potential recession, 52 per cent have reduced discretionary spend, 80 per cent are being financially cautious and 45 per cent have created a budget, scrutinising every dollar and spending more time deliberating on purchases.
Australia Post’s quarterly online shopping report shows consumers are increasingly taking advantage of key sales to stretch their budgets further.
Although more people are shopping online, they’re spending less overall, and online spending fell 3.1 per cent in the June quarter. Online sales rose 5.7 per cent in May, outpacing total retail sales growth of 4.2 per cent, as shoppers took advantage of earlier-than-usual end-of-financial-year clearance sales to snap up bargains.
Michelle Grujin, vice president for consumer products and retail at CapGemini Invent, says the Black Friday and Cyber Monday sales at the end of November will be a lead indicator for Christmas demand.
According to data from Meta, 59 per cent of Australians purchased goods during the Black Friday/Cyber Monday sales last year, up from 48 per cent in 2021, and 43 per cent purchased during the Boxing Day sales (versus 36 per cent in 2021).
Targeted campaigns
“Are consumers going to splurge to save, or will we see spending taper off?” Grujin asks.
“With most stock for the holiday trade already committed ahead of Black Friday ... retailers will be closely monitoring any segment or category shift in buying behaviours leading up to peak trading times to manage their stock accordingly.
“Once inventory is confirmed it will come down to how you trade that stock … and what level of promotion and targeted campaigns are required to convert that into sales during this critical period.”
Retail adviser Brian Walker, the founder of Retail Doctor Group, says retailers are “cautious”, although the mood differs from category to category. Some expect conditions to become even more challenging over the next six months before trading hopefully improves in the first or second quarters of calendar 2024.
Some retailers are still overstocked, after buying up stock to meet booming demand during the pandemic, and will have to discount deeply to reduce overhanging inventory.
Walker estimates there could be $30 billion to $35 billion in stock nationally at retail value that is ageing or obsolete and will need to be marked down in time.
“Those that are carrying relatively high inventory levels are cutting back orders for inventory, and there are others who are focusing on productivity, cost management,” Walker says.
“I think we’ll see very vigorous discounting in September and October, if things don’t start to improve, to clear out inventory and bring cash into the business. If that’s the case, I expect to see final margins to be weaker over this period, compared to prior years, to maintain sales volumes.”
Analysts have recently slashed earnings forecasts for most listed discretionary retailers, saying sales growth will turn from sluggish to negative – particularly at retailers cycling strong same-store growth last year – and margins will come under pressure from rising costs and deeper discounting.
Inventories are generally in better shape than they were late last year, but there have been concerns about stock levels at retailers such as Harvey Norman, City Chic, Adairs and Baby Bunting after their profit warnings.
While Walker is worried about retailers carrying too much aged and obsolete stock, eStore’s Williams believes inventory levels are almost back to normal and fears retailers that are too cautious could face stock shortages, as they did at the height of the pandemic spending boom and supply chain disruption.
“Some retailers may be risk averse going into the peak [Christmas] period and may not order enough inventory, which might cause a lot of sell-through and maybe some stock outs,” Williams says.
Accurately forecasting consumer demand is challenging at the best of times, let alone during a cost-of-living crisis.
Fetching latest articles
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Consumer & Retail
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Monday sees the release of "The Billion Dollar Heist," a documentary about the theft of $81 million from the Bangladesh Bank, considered the biggest cyber-heist of all time. The film's executive producer wrote the book Dark Market: How Hackers Became the New Mafia (and is also a rector at the Institute for Human Sciences).
But he's also written an article for the Financial Times outlining the complicated background of Russian-speaking hacker gangs responsible for malware and ransomware, starting with "one of the most remarkable if little-known events in post-cold war history: the first and, to my knowledge, the last publicly organised conference of avowed criminals" in May, 2002.
The First Worldwide Carders Conference was the brainchild of the administrators of a landmark website, carderplanet.com. Known as "the family", this was a mixed group of young men, both Ukrainians and Russians, who had spent the previous 10 years growing up in a lively atmosphere of gangster capitalism. During the 1990s, conventional law and order in the former Soviet Union had broken down. The collapse of the communist system had left a vacuum in which new forms of economic activity were emerging...
Founded a year before the conference, CarderPlanet revolutionised web-based criminal activity, especially the lucrative trade in stolen or cloned credit card data, by solving the conundrum that until then had faced every bad guy on the web: how can I do business with this person, as I know he's a criminal, so he must be untrustworthy by definition? To obviate the problem, the CarderPlanet administrators created an escrow system for criminals. They would act as guarantor of any criminal sale of credit and debit card data — a disinterested party mediating between the vendor and the purchaser... The escrow system led to an explosion of credit card crime around the world in which many criminal fortunes were made....
Roman Stepanenko Vega, a Russian-speaking Ukrainian national who was one of the founders and administrators of CarderPlanet, explained to me how "two days before the conference's opening, we received a visit from an FSB [Federal Security Service] officer in Moscow. He explained that Moscow had no objections to us cloning credit cards or defrauding banks in Europe and the United States but anywhere within the CIS was off limits." In addition, the FSB officer let CarderPlanet know that if the Russian state ever required assistance from criminal gangs, it would be expected to co-operate...
Members of criminal gangs were later recruited into notorious state-backed hacking teams such as Advanced Persistent Threat 28.
A 2021 ransomware attack on Colonial Pipeline brought warnings of a U.S. counterattack, the article notes, after which "Russian police started arresting and imprisoning cyber criminal groups." Ransomware attacks now seem particularly focused on Europe, and "According to cyber-security experts, the Russian government is giving these criminal groups information on potential targets." But once more the hackers have been careful not to cross what the Americans consider red lines, as advised, presumably, by Russia's security services. Russia is probably confident that disrupting European businesses will be unlikely to provoke a cyber attack. But the U.S. — whether its government, municipalities or police — remains strictly off-limits.
Thanks to long-time Slashdot reader Geoffrey.landis for sharing the article.
But he's also written an article for the Financial Times outlining the complicated background of Russian-speaking hacker gangs responsible for malware and ransomware, starting with "one of the most remarkable if little-known events in post-cold war history: the first and, to my knowledge, the last publicly organised conference of avowed criminals" in May, 2002.
The First Worldwide Carders Conference was the brainchild of the administrators of a landmark website, carderplanet.com. Known as "the family", this was a mixed group of young men, both Ukrainians and Russians, who had spent the previous 10 years growing up in a lively atmosphere of gangster capitalism. During the 1990s, conventional law and order in the former Soviet Union had broken down. The collapse of the communist system had left a vacuum in which new forms of economic activity were emerging...
Founded a year before the conference, CarderPlanet revolutionised web-based criminal activity, especially the lucrative trade in stolen or cloned credit card data, by solving the conundrum that until then had faced every bad guy on the web: how can I do business with this person, as I know he's a criminal, so he must be untrustworthy by definition? To obviate the problem, the CarderPlanet administrators created an escrow system for criminals. They would act as guarantor of any criminal sale of credit and debit card data — a disinterested party mediating between the vendor and the purchaser... The escrow system led to an explosion of credit card crime around the world in which many criminal fortunes were made....
Roman Stepanenko Vega, a Russian-speaking Ukrainian national who was one of the founders and administrators of CarderPlanet, explained to me how "two days before the conference's opening, we received a visit from an FSB [Federal Security Service] officer in Moscow. He explained that Moscow had no objections to us cloning credit cards or defrauding banks in Europe and the United States but anywhere within the CIS was off limits." In addition, the FSB officer let CarderPlanet know that if the Russian state ever required assistance from criminal gangs, it would be expected to co-operate...
Members of criminal gangs were later recruited into notorious state-backed hacking teams such as Advanced Persistent Threat 28.
A 2021 ransomware attack on Colonial Pipeline brought warnings of a U.S. counterattack, the article notes, after which "Russian police started arresting and imprisoning cyber criminal groups." Ransomware attacks now seem particularly focused on Europe, and "According to cyber-security experts, the Russian government is giving these criminal groups information on potential targets." But once more the hackers have been careful not to cross what the Americans consider red lines, as advised, presumably, by Russia's security services. Russia is probably confident that disrupting European businesses will be unlikely to provoke a cyber attack. But the U.S. — whether its government, municipalities or police — remains strictly off-limits.
Thanks to long-time Slashdot reader Geoffrey.landis for sharing the article.
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Banking & Finance
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Ten-Year Treasury Yield Tops 5% For First Time Since 2007, Keeping Traders Wary
The 10-year Treasury yield crossed 5% for the first time in 16 years, propelled by expectations the Federal Reserve will maintain elevated interest rates and that the government will further boost bond sales to cover widening deficits.
(Bloomberg) -- The 10-year Treasury yield crossed 5% for the first time in 16 years, propelled by expectations the Federal Reserve will maintain elevated interest rates and that the government will further boost bond sales to cover widening deficits.
The yield rose nine basis points to 5.01%, the highest since 2007. Fed Chair Jerome Powell suggested last week that central bankers are inclined to hold rates steady at their November meeting, but remain open to hiking again if a resilient economy fans inflation risks.
Also undermining bonds are mounting concerns regarding the sustainability of the government’s burgeoning budget deficits, which will likely force the US Treasury to keep increasing the supply of bills and bonds. Having boosted the size of its quarterly bond sales for the first time in 2 1/2 years in August, Secretary Janet Yellen’s department is now readying its November refunding.
The double-whammy of the Fed and Treasury has crushed the hopes of many that 2023 would prove to be the “year of the bond.” More recently, it’s proved powerful enough to offset haven flows into US debt as the Israel-Hamas conflict reignited geopolitical worries.
“While levels look attractive in the near term, investors are likely to continue waiting for catalysts (such as geopolitical risks or slowing data) rather than catching the falling knife amid technical weakness,” Gennadiy Goldberg and Molly McGown, strategists at TD Securities wrote in a recent note. “This could keep rate volatility extremely high in the near-term.”
Still, 10-year Treasuries above 5% are a buy for Morgan Stanley Investment Management, which sees yields overshooting the firm’s fair value above that level.
Psychological Level
The rise in the global bond benchmark above the psychological level of 5% underscores investors’ assumption that the Fed and fellow central banks are unlikely to cut borrowing costs quickly amid sticky inflation, even in the event that they soon call a halt to rate hikes.
Another emerging threat to Treasuries is the changing composition of the market. The Fed is reducing its bond holdings via quantitative tightening, while the holdings of foreign governments such as China’s are waning. In their place, hedge funds, mutual funds, insurers and pensions have stepped in.
The fact that they are less price-agnostic than their predecessors is leading to the revival of the the so-called term premium for bond pricing. That’s where investors seek higher yields to compensate for the risk of holding longer-dated debt.
The Treasury market remains on course for an unprecedented third year of annual losses.
Higher borrowing costs may ultimately serve as a brake on the US economy, helping the Fed’s inflation fight. The average rate on a 30-year fixed mortgage soared to around 8% in recent weeks, while the cost of servicing credit card bills, student loans and other debts has also climbed as market rates rose.
Powell echoed some of his colleagues by saying a sustained rise in yields could “at the margin” lessen the pressure for tighter monetary policy.
--With assistance from Marcus Wong and James Hirai.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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Barclays Gets More Than $13 Billion Demand for Dollar AT1
Barclays Plc began marketing an additional Tier 1 bond, adding to signs of a revival in a market roiled earlier this year by a historic writedown by Credit Suisse.
(Bloomberg) -- Barclays Plc has attracted strong investor orders for an additional tier 1 sale, in another sign of a revival for the market rocked earlier this year by the historic writedown of Credit Suisse securities.
The London-based bank is selling a benchmark-size — at least $500 million — dollar perpetual AT1 note that’s callable in June 2030, with a revised yield of around 10%, according to a person familiar with the matter, who asked not to be identified discussing a private matter. The lender has seen more than $13 billion of investor demand so far for the deal, which is expected to price later on Wednesday.
Last week UBS Group AG sold additional tier 1 notes, its first such issuance since roughly $17 billion of Credit Suisse’s AT1s were wiped out as part of a UBS takeover brokered by the Swiss government. The Swiss lender pulled in roughly 10 times the bids for the debt on offer.
The new issuance will bolster Barclays’ AT1 capital structure — an important cushion that helps lenders comply with core capital requirements without relying solely on more expensive equity.
Read: Call Them AT1s or CoCos, Here’s Why They Can Blow Up: QuickTake
Barclays’ securities will convert into equity if a capital adequacy trigger has been breached, setting them apart from the Credit Suisse AT1 notes that had a complete loss imposed by the Swiss authorities.
Global contingent convertible bonds from banks have rebounded from their slump in March. Bloomberg’s Global CoCo Banking Statistics Index has rallied 15% since March 20 and the average yield premium has shrunk 240 basis points since then.
--With assistance from Ronan Martin.
(Updates order book details. A previous version of this story was corrected to remove reference to a shareholder vote and revised to clarify that Barclays long has had an equity conversion clause.)
©2023 Bloomberg L.P.
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Banking & Finance
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Our failing banks and the capital con game
Press reports suggest that in the wake of the recent flash-panic, big banks may soon be forced by regulators to have 20 percent more capital.
We have seen this story before.
Feckless government fiscal policies create a tidal wave of easy money that camouflages aggressive risk taking while regulators seem oblivious to the financial risks being embedded in the system. Some banks collapse because they had done imprudent things like ignoring the interest rate risk exposure in fixed-rate Treasuries. Others fail because the economy is under duress and they haven’t been nimble enough to stay ahead of borrowers who can’t repay the loans they took out in better times. At the end, the hero — greater capital requirements — rides into town and everyone is relieved.
But if the fix was that easy, why do we always have to endure the failures before we realize the cure?
We all know it’s not that easy. Stability isn’t about static capital ratios as much as it is about real-time risk management and understanding future economic scenarios. Regulation by ratios just happens to be a lot easier.
When asked about my strategy on bank capital in March of 2017 when I interviewed in the White House to be vice chair of the Federal Reserve Board, I suggested we stop obsessing about it. You can imagine the looks that response received. Big banks were already subject to about two dozen capital ratios and a number of liquidity requirements. Financial ratios had become an all too comfortable but dangerous crutches. I thought that somewhere around 20 capital ratios ago we should have been able to figure out that we were on the wrong path, particularly when it was illiquidity that was the principal cause of many of our largest financial collapses such as Washington Mutual, IndyMac, Lehman Bros. and Bear Stearns.
Nevertheless, we continue to default to increased capital requirements as the elixir of choice after every financial crisis because it seems natural to assume that larger capital cushions will translate into more financial stability. The fact that having to raise more capital also seems to penalize banks and their shareholders is just icing on the cake to some, notwithstanding that the cost of maintaining higher capital requirements is inevitably passed on to consumers in the form of more expensive lending terms and less favorable deposit rates. Offering higher capital requirements alone as the solution is a big con and a dangerous one to the extent that it head fakes people into believing it will do the trick.
Righting this financial ship starts with rebuilding a nearly100-year-old system of financial oversight that is well past its “sell by” date. Constructed after the Great Depression, it relies on too many federal and state agencies overseeing too narrow a slice of what constitutes financial services these days. The fact that state and federal regulators are continually fighting over turf and even suing each other for it underscores the inefficiency of the system. And despite all these agencies, nearly 100 percent of the country’s prudential regulatory resources are focused on little more than a third of the financial services market: banks. A virtual menagerie of other financial companies ranging from fintech lenders to crypto issuers and exchanges evade most prudential regulation. How does that make any sense?
To get on a path toward greater financial stability, we first must restructure and slim down the regulatory apparatus and then arm it with technological resources that allow it to evaluate data and predict alternative economic trends against which decisions can be made. Just imagine if Google regulated banks. The technological firepower that it would bring to bear would capture and analyze every historical financial, economic and demographic fact necessary to evaluate the health of financial companies and the ecosystem in which they operate. It would run endless algorithms on massive supercomputers measuring and navigating the system toward the most stable and prosperous future scenarios. Nothing close to that happens now.
We also need to rethink financial regulation in a technologically enabled economy and expand our regulatory horizons beyond the “cops ‘n robbers” version that is in place today. It works well for some things, but in a world where the velocity and volume of financial transactions threatens to overwhelm regulatory bandwidths, it constantly leaves regulators behind the curve. Supplementing that system with one that makes both the public and private sectors responsible for collecting, sharing and analyzing real time data will more effectively ensure systemic stability.
Financial stability is a complicated business and sadly there is no one-word solution. So, the next time someone says that one word – capital — will do the trick, be very, very skeptical. That is the best evidence that they may not know what they are talking about.
Thomas P. Vartanian is the author of “200 Years of American Panics” and “The Unhackable Internet.” He is a former federal bank regulator and currently executive director of the Financial Technology & Cybersecurity Center.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Banking & Finance
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Miles To Go Before Millets Become Mainstream, Says Tata Soulfull MD
There's been a lot of conversation on making millets mainstream, but it is still a work in progress, said Prashant Parameswaran.
Tata Consumer Soulfull Pvt. has chalked out ambitious plans this year to make millets a popular choice on plates across the country, according to Managing Director Prashant Parameswaran. But bringing the grain back into meals across the social spectrum won't happen overnight, he said.
"A lot of conversations have been around the millets and making them mainstream, but it is still a work in progress," he told BQ Prime.
India's campaign to make millets, touted as nutri-cereals or superfoods, a global brand has helped increase awareness, with the health-conscious generation lapping up everything from millet cookies to masala oats. The campaigns have also started to influence Tata Soulfull's sales beyond the metros, which Parameswaran says is an "encouraging sign".
"There is a large gap between the top 10 cities and the rural areas," Parameswaran said. "What we are currently seeing is that the consumers lapping millets beyond the top 10–18 cities are as strong as what we see in the metros, if not stronger. Precisely, around 35% of our business is coming from outside of the top 18 cities, and that part of the business is growing manifold."
There are two important factors driving growth, according to him. "Firstly, we are bringing millets into a product that is relevant to a consumer, and secondly, these products are available at a price point of Rs 10 — that's extremely affordable. We are further pushing the low-unit packs," he said.
"But we are yet to see the demand uptick that's happening in tier 1 and tier 2 cities, in the rural areas," Parameswaran said, adding that it will be a gamechanger for the company only when the rural demand picks up.
Rural India contributes about 36% to a typical consumer company’s sales and is an important focus area, given its much lower per-capita consumption. More importantly, it makes up roughly two-thirds of the country’s population. Inflationary pressures pushed rural consumers to ration their consumption, hurting volume growth for most packaged food companies.
Rural demand, however, is showcasing signs of improvement on the back of encouraging winter crop sowing, indications of higher farm income, and continued government stimulus, according to industry executives.
"If we need to really make all the changes that millets have to bring, be it food security, nutritional security, climate change, or sustainability concerns, it essentially means consumption needs to jump," said Parameswaran. "We are currently just scratching the surface... So, we are very far from reaching the actual potential that millets have to offer."
Millet consumption, as a percentage of the overall food basket, is still in the single-to-decimal-level digit, according to Parameswaran. Millets as a category, he said, have the potential to account for at least 10% of the packaged food business.
Several packaged goods companies like ITC Ltd., Britannia Industries Ltd., Nestle, Hindustan Unilever Ltd., and Patanjali Ayurved are betting big on value-added millet products.
To make millets like jowar, bajra, and ragi, these consumer goods firms have launched a clutch of products like muesli, granola, upma, poha, chips, biscuits, and noodles. And the product basket is only getting larger.
Tata Consumer Soulful is assessing three to four large categories at the moment and is in the process of launching one to two new categories over the next one or two months, said Parameswaran.
The company, he said, is also in advanced stages of discussion with three parties to expand capacity. Currently, it has a total production capacity of 500 tonne, including its in-house capacity of 300 tonne.
Tata Consumer Soulful is a wholly owned subsidiary of Tata Consumer Products Ltd. It operates in the health and wellness-focused food segment with a portfolio of millet-based products for children and adults. The company is leveraging Tata Consumer Products' distribution network to penetrate deeper into the length and breadth of the country, Parameswaran said.
Tata Consumer Products is building distribution channels in rural and semi-urban markets. The company has increased its direct distribution by 15% to 1.5 million outlets as of March 2023. It aims to expand it further to 4 million. Tata Soulful, the company said, is available in five lakh outlets.
In its latest annual report, Tata Consumer said that innovation will remain a key growth driver for the business, with new product launches every three to four months in the ready-to-eat category. In FY23, Tata Soulfull’s revenue grew 100%, driven by distribution, and the management expects its revenue to sustain its double-digit growth momentum. Within categories, its largest-selling kids' portfolio enjoys a double-digit market share, and Masala Oats is nearing a double-digit market share.
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Agriculture
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CIEL HR Services To File DRHP By End Of February 2024
The Chennai-headquartered company expects to raise Rs 500 crore through its Initial Public Offering by June-July 2024, CIEL Group Executive Chairperson K Pandiarajan said on Monday.
Recruitment and staffing services firm CIEL HR would be filing its draft red-herring prospectus by the end of February 2024.
The Chennai-headquartered company expects to raise Rs 500 crore through its Initial Public Offering by June-July 2024, CIEL Group Executive Chairperson K Pandiarajan said on Monday.
Pandiarajan and senior company officials were here to make a slew of announcements by CIEL Group, which include launch of CIEL Career Accelerator Programme, Building Talent Pool of Chief Human Resource Officers and launch of a Gig-working platform.
The occasion also witnessed the acquisition of an IT Staffing Company RG Staffing Company by CIEL HR through ‘share-swap’ratio, he said.
“Very important press meet for us…RG Staffing is a leading IT Staffing company headquartered in Chennai. It reported revenues of Rs 16 crore. I have known this company from its birth. Its promoters are Badri Seshadri and Ramachandran..” Pandiarajan told reporters.
“We believe that this integration will strengthen CIEL Group. We are delighted to welcome the new member in the CIEL Family,” he said.
Declining to reveal the deal size, he said, “it is a strategic acquisition and based on share-swap ratio.”
On the acquisition by CIEL Group, RG Staffing promoter Badri Seshadri said, “the focus of RG Staffing has been information technology and IT enabled services where we see plenty of opportunities. The relationship with CIEL will actually take us to the next level."
"It (the acquisition) has covered all the aspects of staffing, recruitment areas and they will be part of the CIEL’s growth story,” Seshadri said.
Regarding the IPO plans, Pandiarajan said, ”it is progressing well. We are going to file the Draft Red Herring Prospectus by the end of February and we hope that by June-July 2024 we should be able to hit the market for IPO.”
“In preparations for that we will do few more investments and acquisitions and when we hit the public issue we will truly become an integrated HR service provider from Tamil Nadu,” he noted.
"We are planning to raise Rs 500 crore and we will be the first integrated HR Service provider from south India “ he added.
To a query on whether the board would have representation from CIEL Group, Pandiarajan replied in the affirmative saying, “one more person will join the RG Staffing along with Badri Seshadri and Ramachandran.”
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Stocks Trading & Speculation
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Schools are turning to Airbnb-type tactics to raise much-needed funds, renting out every available space from classrooms to cafes, holding puppy training in their car parks and wrestling competitions in their gyms.
One state school, which asked to remain anonymous, said it raised over £700,000 in letting fees last year. But many others are also raising substantial sums by becoming increasingly innovative in the spaces they rent out.
Wyvil primary school in Vauxhall, south-west London, rents out its “light-filled white corridor” for photoshoots. New Rickstones academy in Witham, Essex, is offering its beauty room to anyone who wants “a high quality hair and beauty salon”. Stroud Green school in east London is offering a “well lit” hall with a “vaulted ceiling” for “music, dance, or theatre rehearsals, or film/photoshoots.”
West Hill primary school in Wandsworth, south-west London, advertises a stationary double decker bus it uses as a fun classroom to people who want to make “quirky films”.
“All schools are looking for unique ways to raise additional revenue and we thought our bus could be an unusual, characterful and fun way to potentially do that, while also getting our school more known in the local community,” said Tahira Khan, the school’s business manager.
Schools typically advertise through a range of dedicated online platforms. One primary school in Brent that uses the Sharesy platform has generated £21,800 so far this year and expects to exceed £25,000 by the end of 2023.
“Schools aren’t naturally commercial but they’re having to think of additional revenue streams and are becoming increasingly innovative with what they’re looking at – even though the obvious options of the playing fields and main halls remain the main money-spinners,” said Felix Atkin, founder and CEO of Sharesy.
“We have special needs schools that have sensory rooms and soft play areas: these are particularly popular to rent out for children’s parties and can generate up to £300 a party,” he said. “We also have schools that rent out their car parks at the weekends for puppy training and food markets.”
Headteachers have said that education is in danger of being reduced to a “barebones, boilerplate model”. Last month in England, budgets were slashed even further after a government blunder cut £370m from money they had been promised in July.
In a small study this year, Sharesy found that 87% of 50 schools not listed on their platform rent out their venues to cover staffing costs. Concerns have been raised, however, that the line between education and commercialism could become too blurred: some communities have protested after their local schools mooted selling advertising space inside and on the sides of their buildings.
Brandon Bennett from School Space, which works with 49 partner schools from 14 different multi-academy trusts in Greater London and the south of England, said schools were hosting an increasingly wide range of after-hours activities.
“School Space and our partner, Tutti Space, target creators – people doing music videos, interviews, film and photo shoots, recordings, performances – to help them find niche spaces,” he said. “The film and TV industry particularly are always looking for interesting spaces that match the script they’re working on. We’ve had requests for science labs, specific-looking corridors – that could double as a hospital, perhaps – and other niche requests. We’ve facilitated weekend markets to wrestling events.”
Average yearly incomes for schools on School Space’s platform is £88,800, with their biggest school earner making £228,199 in lettings booked this year. “We see an average increase in income of 170% in the first six months of handling lettings for schools,” he said.
Some of the biggest secondary schools are making both a saving and an income by installing solar panels on their roofs, with the support of community benefit societies.
“If a school is big enough, it can make money both by replacing its main electricity and through the profits that come through as additional income,” said Ann Flaherty, the director of Solar for Schools. “Schools massively welcome the relief this gives their finances. They tell me they spend the money on stationery and books.”
Renting out school car parks on sites such as YourParkingSpace and JustPark is another popular option: many schools take advantage of their proximity to sporting and entertainment venues to offer space during weekends. Some even undercut local parking charges: one further education college in Oxford charges less than the council and shopping centre for parking at weekends.
Charlie Gothold from SchoolHire said that schools were able to undercut local businesses because “any extra money they can raise is a plus”.
Gothold said that the only limit is schools’ ability to recruit staff to handle the administration and be on site when the bookings take place. “Schools have to have the staff to cope with what is like a business: they need someone doing the admin and someone has to be there to open and close the premises, and make sure the people renting the space are behaving,” he said.
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Nonprofit, Charities, & Fundraising
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Two Kerala Government Entities Eye Up To Rs 2,500 Crore Bond Issuances
Both the entities are mulling the issuances for financing long-term infrastructure projects.
Two state-government associated entities from Kerala are planning to raise up to Rs 2,500 crore from the debt market, according to three people with knowledge of the matter.
Kerala Financial Corporation and Kerala Infrastructure Investment Fund Board, both are considering floating their respective issues as early as first week of December, the above-mentioned people said on the condition of anonymity.
Both the entities are mulling the issuances for financing long-term infrastructure projects.
Kerala Financial Corporation
KFC is planning to raise Rs 1,000 crore from a seven- to 10-year bond issue, according to the first and second person quoted above. The issue is expected to be in two tranches — normal bonds and green bonds, the first and second person of the three people quoted above said.
However, they are still not certain if a green bonds issue would be considered, the second person said.
Since the term-sheet has been finalised, the rating is expected this week, both the people said.
For this, Acuité Ratings and Research and Infomerics Ratings have been given the charge for the final credit ratings process, they said.
Before this, KFC hit the debt market to raise Rs 250 crore through non-SLR bonds. These were worth Rs 100 crore, with a greenshoe option of Rs 150 crore on a private placement basis.
Kerala Infrastructure Investment Fund Board
KIIFB is planning to raise Rs 1,500 crore from a 10-year bond issuance, according to the first and third person from the three people quoted above.
It is expected to hit the market by Dec. 1 as soon as the final credit rating is received, the first person said.
For this, India Ratings & Research has been deputed for the final credit rating process, both the people said.
Before this, in July, KIIFB raised Rs 300 crore via green bonds at 8.49%, with a quarterly coupon. In September, it even announced its plans to raise Rs 1,500 crore by issuing non-convertible debentures for financing core-sector projects.
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Bonds Trading & Speculation
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Warren slams Yellen, bank regulators for learning the ‘wrong lessons’
Bank regulators and the Treasury Department are learning the “wrong lessons” from the most recent spate of bank failures that nearly crashed the economy earlier this year, according to financial firebrand Sen. Elizabeth Warren (D-Mass.).
Warren wrote to Treasury Secretary Janet Yellen and top banking regulators telling them not to go soft on the issue of bank mergers and to keep banks competing against each other in the interest of consumers.
“Allowing additional bank consolidation would be a dereliction of your responsibilities, hurting American consumers and small businesses, betraying President Biden’s commitment to promoting competition in the economy, and threatening the stability of the financial system and the economy,” she wrote in a letter dated Monday.
The letter to Yellen and top officials reveals divisions among Democrats about how best to deal with the banking sector following the interconnected bank failures that started in March and posed a “systemic risk” to the U.S. economy.
Acting Comptroller of the Currency Michael Hsu testified to Congress last month that his office was “committed to being open-minded when considering merger proposals and to acting in a timely manner on applications.”
Yellen delivered similar remarks at a financial meeting of the Group of Seven rich nations in Japan last month, according to a report.
“This might be an environment in which we’re going to see more mergers, and you know, that’s something I think the regulators will be open to, if it occurs,” the Reuters news agency reported Yellen as saying.
Warren’s reprimand to regulators focused on how banks are no longer being forced by the Department of Justice (DOJ) to divest branches as a condition of merging with other banks.
“Why did DOJ feel the need to relinquish its use of divestitures as a potential remedy?” Warren asked Assistant Attorney General Kanter in the letter.
Warren also asked whether regulators intend to publish summaries about how levels of competition would be affected by various mergers.
The U.S. banking business has been growing increasingly concentrated for more than a century.
“Since its all-time high of 30,456 in 1921, the bank population had declined to only 4,377 at the end of 2020, a decline of about 86 percent. Even since 1934, after the 1933 bank holiday closed thousands of banks and the newly established Federal Deposit Insurance Corporation (FDIC) stabilized the banking system, the bank population has declined by 71 percent, or 10,973 institutions,” economist William Emmons wrote in a 2021 study for the St. Louis Fed.
“The slow and steady decline in bank numbers continues. This is because few new banks are being chartered, and banks continue to merge with one another, reducing the number of charters,” he wrote.
The Cleveland Fed has described the effects of the long-term consolidation of the banking industry as “unclear” for consumers.“While the benefits of consolidating are clear for an institution, the benefits (and costs) for the consumer are less clear,” Cleveland Fed economists wrote in a 2021 study.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Banking & Finance
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Andy Murray is among a host of celebrities putting his name to a UNICEF appeal to Rishi Sunak to guarantee basic early-life services to all children in the UK.
The tennis star joined other famous names, including actors Ewan McGregor and Michael Sheen, singer Rita Ora and Oscar winner and UNICEF UK president, Olivia Colman in signing a letter to the prime minister.
In the Baby and Toddler Guarantee, the charity said maternity services, support for mental health, infant feeding and health visiting, early childhood education and care, special education needs and disability provision, should be "accessible, quality, and fully resourced".
The letter to Mr Sunak said instead of "looking forward to the "fun-packed carefree days" of the summer holiday, families "are faced with the worrying reality of not being able to put food on the table as they struggle to make ends meet".
UNICEF cited the government's own data to back its plea, showing UK child poverty increased by 300,000 in a year, to a "staggering" total of 4.2 million.
In the charity's poll last year two-thirds of parents of children up to the age of four said the cost-of-living crisis had negatively impacted them as they struggled to afford food, pay bills and manage increasing childcare costs.
Read more:
Warning NHS facilities are 'at breaking point'
Motorcyclist who died in crash which killed two recently sold car due to cost of living
More than 48,000 people have signed its petition said the charity and other charities NSPCC and Save the Children UK have also supported the letter.
UNICEF UK's chief executive Jon Sparkes said: "Basic services like health visits and mental health care...should be there for every baby and young child during their vital early years."
A government spokesperson said: "We are taking action across the range of public services to support families and boost children's life chances.
"We are rolling out the largest expansion in free childcare in history, worth £6,500 a year for an average working family using 30 hours a week and delivering a cost-of-living support package worth an average of £3,300 per household.
"On top of this, we are providing a holiday and activities food programme which is backed by £200 million per year to 2025, and expanding and transforming mental health services in England so that two million more people will be able to get the mental health support they need."
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Nonprofit, Charities, & Fundraising
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Donald Trump Jr took the stand in the ongoing fraud trial against his father and the family business on Wednesday and tried to distance himself from the financial statements at the center of the case.
Trump’s eldest son, 45, is the first family member to testify in the civil trial brought by the New York attorney general, Letitia James. His younger brother Eric is expected to testify on Thursday, with Trump and his daughter Ivanka expected in court next week.
In court, Trump Jr was polite and courteous after his testimony was delayed as Trump’s lawyers quizzed earlier witnesses. “I should have worn makeup,” he joked as photographers took his picture ahead of his testimony.
When asked to slow down, the fast-talking Trump Jr said: “I apologize, your honor. I moved to Florida but I kept the New York pace.”
Trump Jr was asked a series of questions about the roles he, his father and Trump’s former chief financial officer, Allen Weisselberg, had as trustees of the Donald J Trump Revocable Trust, which holds assets for the “exclusive benefit” of the former president.
When asked whether his father was still a trustee of the trust, Trump Jr said: “I don’t recall.”
He said he did not recall much, including why there was a brief period in 2021 when he had resigned and then been restored to the trust. Trump Jr said there was “autonomy to do what I wanted” but that he consulted with Weisselberg and others. Pressed on his role in creating the financial statements at the heart of the case, Trump Jr said: “The accountants worked on it. That’s why we pay them.”
Trump Jr was much more combative earlier in the week. In an interview with the rightwing cable TV channel Newsmax on Monday, he claimed the “mainstream media, the people in [Washington] DC … want to throw Trump in jail for a thousand years and/or the death penalty. Truly sick stuff, but this is why we fight.”
James has accused Trump, his eldest sons and other Trump executives of fraudulently inflating the former president’s wealth to secure better loans from banks.
In one example, James said Trump claimed his Trump Tower triplex apartment was 30,000 sq ft, rather than its actual square footage of 10,996.
Judge Arthur Engoron has already ruled that the Trumps committed fraud. He is holding the trial to determine the penalty that should be meted out. James has asked for $250m and the cancellation of Trump’s business licenses in New York – a move that would end the Trumps’ ability to run businesses in the state.
Earlier in the day, one of the attorney general’s witnesses testified about the losses he believes banks suffered as a result of Trump’s alleged fraud. Michiel McCarty, the chair and CEO of investment bank MM Dillon & Co, said the inflation of Trump’s wealth allowed the Trump organization to secure better rates for loans. He calculated the banks lost more than $168m in interest payments as a result.
Trump’s lawyers asserted that the banks had not been misled.
“They are not ill-gotten gains if the bank does not testify it would have done it differently,” Trump’s lawyer Christopher Kise said.
“I decided these were ill-gotten,” Engoron replied.
Donald Trump has denied all wrongdoing and the former US president was not in court on Wednesday but once again blasted the trial on social media. “Leave my children alone, Engoron. You are a disgrace to the legal profession!” he wrote on social media on Wednesday morning.
Trump attacked Engoron as a “political hack” in a post that ended with the line: “WITCH HUNT!!! ELECTION INTERFERENCE!!!”
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Banking & Finance
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Democracy is under siege. Our digital fingerprints are being sold. And digital ownership is being crushed by the small group of tech giants who control the internet as we know it.
The internet was one of the most powerful and promising creations in human history. Providing the ability to connect the world, democratize information and enhance the potential of so many aspects of our lives. But with innovation came a shift — now, when accessing information online, the user hands over personal data points in exchange for this information.
As the internet evolved into what we now know as Web 2.0, it also created competing proprietary platforms of user-generated content each presiding over their own “walled garden,” while the advent of social media changed how we connect and interact.
The existing incentive structure of today’s internet has allowed for the creation and growth of a small number of billion-dollar, highly centralized tech companies effectively building a data broker industry. They are ubiquitous in our everyday lives and their only goal is relentless growth achieved by maximizing advertising revenue — at all costs.
It is time for a new technology that will give more power to the consumer, more freedom to developers and more opportunity for innovation.
To achieve this growth, they continuously need more of our data. Every day, from every person, on every possible subject, data is harvested and traded with little regard to the individual’s privacy or well-being. And we have freely given Big Tech access to this data. Conventional social media platforms are run as centralized services by these Big Tech corporations motivated and monetized by advertising revenue.
As a result, they are in control of a user’s experience: the content displayed in users’ feeds, how personal data is exploited for advertising purposes, and the connections users make online. It is estimated that online advertising firms collect about 72 million data points on each of us by the time we reach age 13. We are freely giving away millions of pieces of information about ourselves without even recognizing that we are doing so.
This is no better for developers. The current state of the internet limits developers’ ability for creative control. It has descended into a platform that relies on innovators having to compromise their values in exchange for access. They need to gain permission and seek approval before their applications can have access to the API. Ultimately this means someone else — the centralized entities of Big Tech — is in control of whether or not developers’ applications succeed.
Increasingly, consumer protection agencies, the intelligence community, U.S. Congress, and U.S. federal agencies are showing concern — and so should we all. We now stand at a fork in the road. It is time for a new technology that will give more power to the consumer, more freedom to developers and more opportunity for innovation. It is time for a new web protocol that is user-focused, open source and decentralized.
The next iteration of the web, or web3 as it’s now known, will be a decentralized, user-driven, open network where information can be exchanged and networks will be interoperable. And most importantly, the user will own and control their personal data. The global web3 blockchain market size is expected to reach $2.25 billion in 2023 and is growing at a compound annual growth rate of 47.1%. It is expected to be worth over $30 billion by 2030.
Solutions such as a Decentralized Social Networking Protocol (DSNP) are essential to return power from the centralized authority that controls platforms to the people using the platforms. DSNP is an open, free protocol that enables each user to hold ownership over their data and interactions. Hence, personal data is no longer a corporate asset but is owned and controlled by the user in a community-led public infrastructure.
DSNP also gives developers the capacity to realize the dream of creating impactful technology that benefits users and solves real-world problems, all without being held captive to the interests of Big Tech behemoths.
DSNP provides a way to return to the web as it was envisioned at the outset. A web protocol that is focused on the common good, whereby no one entity can control access, determine pricing or revoke permission. DSNP capitalizes on the best attributes of blockchain but with the ability to scale so that creators can align their desire to innovate and problem-solve in an environment that benefits every individual.
With a free open protocol, and by leveraging blockchain technology, developers can regain control over their applications and develop open source code that is shared publicly, resulting in a collaborative development process.
We are at a pivotal time for the transformation of technology, and developers will have a critical role in building a foundation for a safer, healthier internet that empowers people over platforms. Imagine an internet where creativity, problem-solving and user experience dictate success. On an open and free protocol, developers can avoid navigating the existing rules put forth by Big Tech entities and instead focus on the creative future of what the next-generation internet can be. What are we waiting for?
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Crypto Trading & Speculation
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A Cabinet minister today said that Brits needed help to have more children to bring down the need for foreign workers.
Immigration Minister Robert Jenrick said that the country needed a 'higher birthrate' to deal with the ageing population in Britain.
He made the remarks in a debate on immigration at the Conservative Party Conference in Manchester today, admitting that a shortage of housing was forcing people to delay starting families.
He was responding to comments by academic Professor Matthew Goodwin, who called for a 'mature conversation' about how state policy intervention could be used to trigger a baby boom.
In response to his words as a fringe event organised by the Policy Exchange think tank, Mr Jenrick said: 'I agree strongly with the last point about families. We do need to encourage more families to have children.
There are more older people than ever, with 11.1million now over 65 — one in six — equating to around two million more pensioners compared with 2011. Despite the Covid pandemic, there has also been a huge rise in the number of people aged 90 or over. There are now more than half a million over-90s, up a quarter in a decade. It means there are now more pensioners than children for the first time in recorded history, with 10.4million under- 15s. For comparison, there were 9.2million over-65s and 9.9million under-15s a decade ago
'And that's why the prime minister's intervention earlier in the year on childcare was important - that's why we need to build more homes so that young people can settle down and have a family life.
'And there's a lot of evidence that the lack of housing is one of the reasons people are settling down and having kids later on in life.'
Afterwards he told the Guardian: 'We want to have a higher birthrate as a country. With an ageing society it is critically important.
'There are lots of reasons we're not unique as a country for that. It is across the western world. The things that government can do is improve childcare, and above all housing, because there's a massive link between how late people eventually settle down and the ability to have kids.'
Prof Goodwin had told the event: 'We need to have some immigration … but I do think we need to be able to talk in a more mature fashion about how we might tackle that issue through policy, through changing social norms, through investing in family development, through many of the things that conservatives elsewhere in the world are talking about but we as a country seem incapable of talking about family policy without everybody losing their marbles.
'I’d like to see a mature conversation about how we could encourage families to have more children and how the state could have a role in that.'
Earlier this year, official figures revealed London is now the only region of the country where the average age is under 40.
The UK's population is advancing to middle age across all regions except the capital city, census data showed in May.
The number of people aged 65-74 has risen by 20 per cent over the past decade, while those aged 35-49 has fallen by 16.5 per cent, according to the Office for National Statistics (ONS).
At 54, the average median age in North Norfolk is 14 years higher than the national average. The South West, Scotland and Northern Ireland have an average age of 44, while London has an average median age of just 35 - up two years since the 2011 census.
While on average the nation is on average one year older than it was in 2011, Richmondshire in North Yorkshire has seen the median age rise by six years in that period - from 40 to 46.
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Workforce / Labor
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California is set to outlaw hidden charges on purchases after Gov. Gavin Newsom signed legislation that would ban so-called "junk fees" in the country's largest state.
Newsom has signed Senate Bill 478, proposed by Sen. Bill Dodd, D-Napa, in partnership with Attorney General Rob Bonta and Sen. Nancy Skinner, D-Berkeley, which seeks to outlaw hidden charges on purchases — also known as junk fees — ensuring consumers are not exposed to deceptive business practices that add unfair costs, Dodd's office said in a news release Saturday.
"Now we can put the consumer first and create a level playing field for those businesses that advertise the real price, up front," Sen. Dodd said in a statement. "I appreciate everyone who worked to end these dishonest charges that boost corporate profits at the expense of those who can least afford it."
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In his State of the Union address in February, President Joe Biden called out junk fees applied to an array of transactions involving banks, ticket vendors, airlines and online sellers. According to one estimate cited by Dodd's office, some 85 percent of Americans have paid hidden fees totaling $28 billion per year.
California, which has the fifth largest economy in the world and the nation's largest population, pays an outsized share of those hidden fees, Dodd's office said.
The president proposed federal action by numerous federal agencies to address issues within their subject matter and regulatory authority. At the state level, Sens. Dodd and Skinner, along with Attorney General Bonta, introduced SB 478, which would expand on the White House proposal by expressly prohibiting the practice of advertising a certain price and then adding on mandatory charges that are controlled by the business.
Companies, regardless of industry sector, that fail to comply with the new rules could be subject to steep financial penalties, Dodd's office said.
SB 478 received broad support from consumer groups and legislators before being signed by the governor, the office added.
"(Junk fees) hit families who are just trying to make ends meet the hardest. And, because a growing list of websites, apps, and brick-and-mortar businesses are using them, they penalize companies that are upfront and transparent with their prices," Attorney General Rob Bonta said in a statement.
"With the signing of SB 478, California now has the most effective piece of legislation in the nation to tackle this problem. The price Californians see will be the price they pay," Bonta added.
"California sent a clear message today: The days of bait-and-switch pricing practices are over," said Sen. Skinner in a statement. "With Gov. Newsom's signing of SB 478, Californians will know up front how much they're being asked to pay, and no longer be surprised by hidden junk fees when buying a concert or sports ticket or booking hotel rooms for their family vacation."
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Consumer & Retail
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Someone has to win one of these days ... right?
After Wednesday night's drawing came and went without a winner, the Powerball jackpot has ballooned to a staggering $1.73 billion (yes, billion with a b.) The next drawing is Wednesday, Oct. 11, and according to the Multi-State Lottery Association, it's the second largest jackpot in Powerball history.
The last Powerball winning ticket was sold in California on July 19. Since then, there have been 35 consecutive drawings without a jackpot winner.
While the odds of becoming a Powerball winner are slim (1 in 292.2 million to be exact), it’s hard to resist daydreaming about what you’d do with all that money. But how much of the lottery prize would you take home after taxes? We’ll break it down – and suggest five ways to safely invest your windfall.
How are lottery winnings taxed?
No matter how lucky you are, Uncle Sam will still come knocking. The IRS taxes lottery prizes differently depending on how the winner chooses to get paid. You have two choices: lump sum payout or annual payments spread over 30 years. In truth, most lottery winners opt for the cash lump sum upfront, even though it ultimately means fewer dollars in their pocket — but still a whole lot.
What do federal taxes look like on a lump sum payment? The federal tax rate on any prize over $5,000 is 24%, which gets immediately deducted from your winnings. And for a large prize like the Powerball, that lump sum will also catapult you into the highest income tax bracket, so you’ll pay the top federal tax rate of 37% the following year.
The annuity option gives you the whole $1.73 billion pot over a longer time span, but you’ll still see that 24% taken off the top of every payment. And for gigantic lottery prizes like the Powerball, you’ll also be in the highest federal income bracket and have to pay federal taxes you owe beyond that withholding.
There’s also the state tax bill
Just when you thought your windfall was safe, here come state taxes. How much you’ll pay in state income taxes depends on where you live. New Yorkers pay the highest state tax rate at 13%, but the applicable state tax rate across the country varies from 2.9% to 8.82%.
Of course if your luck holds, you might find yourself in one of these states that doesn’t charge state tax on income:
Alaska
Florida
New Hampshire
Nevada
South Dakota
Tennessee
Texas
Wyoming
Washington
What would you pocket after paying Powerball taxes?
Counting your chickens before they hatch might be bad luck, but let’s say you win that billion-dollar-plus jackpot. If you choose the lump sum payout, you’ll be paid $756.6 million up front.
However, because your winnings are also subject to a 24% tax withholding, that cash value means you’ll walk away with "only" $575 million to put in the bank. Depending on your filing status the following year, that sum is also subject to a tax rate as high as 37%, which means that money dwindles down significantly before you even file your state tax return. (You'd still be a millionaire many times over, don't forget.)
If you’re willing to wait for three decades, the annual payments start at $26 million the first year and increase by 5% every year, topping $107 million by year 30. That's before federal taxes.
If you want to run the numbers and see the fine print, you can use the Powerball Taxes Calculator to learn more.
5 investments that make lottery winnings pay off
Enough with the tax talk. Let’s say you hit the jackpot (literally) and have joined the billionaires club. Here’s what experts say lottery winners should do to maximize the winnings and secure a less stressful financial future.
1. Hire a financial adviser
Before you even roll up to claim the check, it makes sense to hire a financial adviser and a tax attorney or accountant who can help you manage your tax liabilities and invest money wisely.
2. Diversify your banking strategy
You might think you're being responsible for stashing money in the bank, but remember banks are only insured for deposits up to $250,000. So be intentional about where you’re putting your money and how you’re splitting it up.
3. Pay off outstanding debts
It’s going to be a big relief to live debt-free, potentially for the first time. Paying off outstanding loans like mortgages or credit card debt is generally a smart idea as it prevents interest from accumulating. However, keep an eye on your credit scores before leaning into living off cash on hand.
4. Invest wisely
Having extra income might tempt you to try new investment strategies, but be careful about jumping feet first into financial products you don’t understand. Stick with low-risk investments like bonds and safer stocks or equities for the first few months before branching out – and get educated about the power of compound interest.
5. Consider establishing a charitable foundation
While you might choose to keep the fact that you won the lottery quiet, family and friends will inevitably find out. It’s helpful to have a charitable foundation set up to deal with requests or gifting strategies that won’t incur an additional tax burden.
If you do win the Powerball, put your winnings to work living the dream without worrying about your bank account balance.
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Consumer & Retail
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The Federal Reserve launched its FedNow instant payments service Thursday, following several years of developing a system officials say will allow the faster flow of cash for businesses and individuals.
Whether it's providing instant access to paychecks, allowing for last-minute bill payments or sending government payments out to individuals, the system is expected to improve the flow of money through the U.S. economy.
"The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient," Fed Chair Jerome Powell said. "Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid."
There are another 16 institutions providing services for banks and credit unions.
The American Bankers Association said it welcomes the FedNow developments, noting that the central bank joins the Clearing House, which put its payments service online in 2017, as two major providers in the space.
"We will continue to educate our members on the two systems and the benefits they offer consumers and businesses," ABA president and CEO Rob Nichols said.
There are still some outstanding questions about FedNow, such as whether banks will charge for the service.
The Fed expects that as the system is developed further, it will be integrated into the apps and websites of banks and credit unions.
As FedNow goes online, central bank officials are studying the implementation of a central bank digital currency. Some Fed officials have said they think FedNow could mitigate the need for a CBDC.
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Banking & Finance
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Tax Filing: Documents Salaried Employees Need
Everything salaried employees need to know to get their taxes filed.
It's tax filing season—a crucial time for the taxpayer, when the taxes paid during the year are reconciled with the actual tax to be paid. At the end of this process, the taxpayer will have to either shell out more tax or make a claim for a refund.
It's often a stressful activity, especially for those that leave things till the deadline. For the salaried taxpayer, it is important to be ready with the required details before starting the tax filing process so that it is easy to complete.
This preparatory work would also go a long way in ensuring that the correct details are given in the tax return.
Here are a few of the boxes to tick:
Form 16
The first thing that every salaried individual has to gather is their Form 16 from their employers or ex-employers if they have changed jobs. This is the basis for the entire details that they will enter into their tax return so it becomes one of the most important documents.
The Form 16 will give all the details of the income that the individual has earned from their employer along with the various deductions that they can claim for which they would have supplied proof to their employer. This form also gives details of all the Tax Deduction at Source that has been done for their salary and other income that has been disclosed to the employer. It acts as proof of the amount that has been paid as tax.
The employee has to check the details that have been mentioned on the Form 16 and whether this actually tallies with the amount earned.
Housing Loan Certificate
Currently, most taxpayers have stuck to the old tax regime with very few having moved to the new tax regime. For the financial year for which the filing is being done—that is the year ending March 31—it is likely that they will file their returns under the old tax regime, as the new rates and slabs (under the new tax regime) are effective only for the current financial year.
Those who have a housing loan and are going to claim the benefit under this should ensure that they get the housing loan interest and capital repayment certificate from their bank or financial institution. This is the proof of the amount that you can claim as a deduction and will give an idea about the exact figure that has to be used in the tax workings too.
Interest Certificate And Form 16A
A lot of people have deposits and other investments with their banks where some income has been earned. This has to be reflected in the Income Tax return and the best way to get the details is to get an interest certificate from the bank.
This will make the job easier because it will have the break-up of the savings bank interest as well as the other interest on deposits that has been earned. There is a deduction up to Rs 10,000 per year for interest earned on savings bank account and this should be claimed. The Form 16A, which will reflect the TDS on these deposits, will ensure that the correct amount is also reflected in the tax credits that are claimed.
Other Income Details
There can be other income that is earned by the individual during the year. This can include earnings like dividends from investments that have been made in either a mutual fund or in equity shares.
Intimation from the company or mutual fund would be required to get the gross amount and TDS on this income. It can also include some small bit of income earned through part-time work. Even capital gains earned on the sale of investments and assets should be present. The details of such gains need to be obtained from an individual's broker or the mutual fund.
Annual Information Statement
It is important to tally all the details collected with the AIS that is available from the Income Tax department. There should not be a mismatch between the details shown in the tax return with the AIS, or else there will be a notice sent to the taxpayer asking to explain this. It is better to check all the entries in the AIS and then ensure that they match with what is collected. This will ensure that the return is also processed quickly. In case of discrepancy, this needs to be brought to the attention of the tax department and corrected.
Arnav Pandya is founder of Moneyeduschool.
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Personal Finance & Financial Education
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Strangers joke that Jacquelyn Rendall should stick a label on to Adam Rendall’s head. “Husband,” it would read, in the curved typeface Rendall designed based on her own handwriting, the Pretty Perfect Font. If Adam had a label on his head – some of the 400,000 people who follow Jacquelyn on TikTok say – then he would match everything else in the couple’s home in Rochford, Essex.
It starts at the front door, where the words “Thank you postie” are stuck on the silver letterbox, followed by a cartoon heart. There’s nothing too unusual about this, nor the drawers in the corridor that hold separated bits and bobs labelled “cables”, “batteries” and “tools”. It is Rendall’s six-doored pantry that has the power to inspire a thousand envious and incredulous comments online. Starting at the top left, there are nine transparent containers full of white, brown, pink and yellow powders, each marked by its identity: “sugar”, “hot chocolate”, “banana milkshake”. Below that are miniature acrylic drawers of stock cubes and tiered rows of spices. The word “cereal” adorns six canisters in the next cupboard; “tagliatelle”, “spaghetti”, “conchiglie” and “penne” are also spelled out on clear containers (use-by dates are written in chalk pen on the back).
Behind the next set of doors are dishwasher salt, stain remover and softener decanted into corked glass bottles. In the fridge, an open-topped container of apples reads “apples”. The words “ties and cufflinks” adorn a drawer in Adam’s office. The couple’s young daughter, Sienna, knows where to put her things, thanks to baskets marked “dress up”, “sports” and “dolls”. Everything has its (labelled) place.
One thing that is hard to label is the period of history in which we are living. Will our descendants call us Caroleans? Is this the plastic age? I think you could compellingly argue that we are actually living in the decanting era. Never before have things been removed from packages and put into other packages at such a pace. More than 6.7 million people have watched a YouTube video in which Khloé Kardashian stacks Oreos around the edges of a glass jar so that they look aesthetically pleasing. Meanwhile, professional declutterer Marie Kondo sells packs of 90 labels, including ones for bread crumbs, chia seeds and, alarmingly, food colouring, the least decantable substance sold in supermarkets.
In their bestselling 2019 book The Home Edit: A Guide to Organizing and Realizing Your House Goals, professional organisers Clea Shearer and Joanna Teplin jokingly label their own (inexplicably joint) gravestone, speculating that it will read: “Pantry perfectionists who were canister enthusiasts, turntable advocates, and women entirely committed to labelling all things.”
Although excessive organisation began as a hobby of the ultra-wealthy (Shearer and Teplin once sorted Reese Witherspoon’s closet, and charge more than £200 an hour for their services), storage-stuffed homes are increasingly commonplace. A spokesperson for bargain homeware chain B&M says home organisation sales have seen “substantial growth for the last few years” and “show no signs of stopping”. Clear storage containers are particularly popular, as well as nestable boxes that allow customers to maximise space.
It’s easy to dismiss this as a fad, but look closer at 10 glass jars lined neatly on a shelf and you’ll see a reflection of yourself. The rise of the highly organised home reveals something deeper about the way many live today – and it can’t be separated from modern capitalism, the pressures of domestic labour, social media and ever-increasing anxiety rates.
“All I felt I was doing was working, then coming home, cleaning up, making dinner and going to sleep, and that was literally my life,” says 32-year-old Rendall, who worked as a PE teacher until April 2022. To gain control, she started waking up at 4.40am in 2021 – she exercises, tidies, does laundry and showers before her daughter and husband wake up.
“Everything I do – everything – is centred around time and saving it and maximising it,” Rendall says, sitting in her kitchen in an oversized white jumper, black leggings and pink fluffy slippers. Rendall’s food is organised so she can bulk buy and cook once a month – meals are kept in fridge-freezer drawers marked with the days of the week. It’s faster to write shopping lists now she can see with a quick glance what she’s running low on, and Rendall says she never has to clean spilled flour, thanks to her containers. Snacks are categorised to save time packing Sienna’s lunchbox, while her clothing is laid out in seven separate drawers every Sunday, making it easier to dress her each morning.
Of course, Rendall admits decanting and organising “does take a bit of time initially” and some critics are adamant she should “get a job” and stop “wasting time”. “People don’t see the long-term benefit,” she says – yes, it might take her an hour to unpack her monthly shop and six hours to bulk cook on a Saturday, “but then in the evening, other people have to think, go to the shops, cook, tidy away. Times that by seven.”
The “turning point” for Rendall was when her father passed away in her arms after having gall bladder cancer. She was just 19. “I realised that actually, I don’t want to waste time, I want to maximise it … I don’t want Sienna to just work and be bathed, I want time with her.”
To stay organised, Rendall designed her own planner – it’s pink, gold and thicker than most bibles. She sells it for £48.99 on her website Pretty Perfect Products, where she also sells labels. Booming sales in the pandemic enabled Rendall to quit her teaching job; her products have caught the attention of TV personalities Dani Dyer and Alison Hammond (Rendall even visited the latter’s home to help organise her cupboards).
Still, not everyone loves Rendall’s lifestyle. “I don’t understand why it gets people so mad – like, SO mad,” she says. Rendall sees it as her job to educate hateful commenters about the benefits of home organisation, but she knows they’re right about one thing: the squash. In a cupboard that holds cups and mugs, Rendall has three corked glass bottles filled with red and yellow liquids; on the side of each is a swirly white word, “squash”. “This one is my only thing that is for aesthetic,” Rendall says, conceding that moving juice from a plastic to a glass bottle is not time-saving. “It gets people really mad. I do get that.”
It is hard to imagine that anyone would ever decant their squash in a world without social media. While people’s pantries used to be private spaces, they’re now shared across the internet. (Singer Stacey Solomon went viral in 2020 for sharing a video of crisps hanging on a curtain pole inside her cupboard. She now has her own decluttering show on the BBC.) As well as busy parents, children and teens enjoy home organisation content that provokes a satisfying autonomous sensory meridian response (better known as ASMR): when Coco Pops cascade into a plastic tub or lids are clicked on to containers, the sound gives some people pleasant tingles. “Satisfying” is a word that recurs under Rendall’s videos.
Design researcher Lisa O’Neil says that this is all part of something called “metaconsumption”. Metaconsumers, O’Neil explains, “consume content about consumption” – there are almost 4m posts tagged #organization on Instagram, while Rendall makes 10 TikToks a week. Home Edit authors Shearer and Teplin got a Netflix series in 2020, while Kondo showcases her “KonMari” tidying method in two shows of her own. “Idealistic real estate shows make people feel like they need to aspire to these perfect homes,” O’Neil says.
There is another aspect of metaconsumption, which O’Neil describes as “consuming objects that act in service of other objects” or buying things for your things. In Kondo’s bestselling 2010 decluttering book The Life-Changing Magic of Tidying Up, she told readers to store possessions in shoeboxes – today, she peddles £30 bamboo storage bins on her site (while also admitting this week that tidying is less of a priority, personally, now she has three children).
The solution to overconsumption has become yet another form of consumption: if you have too many clothes and devices, simply buy somewhere to store them. Decluttering, perversely, now involves acquiring more stuff – an abundance of bins, boxes, labels. Rachel Burditt, a 42-year-old Leicestershire-based professional organiser known as the Declutter Darling, believes demand for her services has increased because of Amazon. “There’s a lot more accessibility for buying things,” she says. “I’ve been in people’s kitchens with Amazon boxes all over the place. Quick shopping has made people fill their homes.”
O’Neil, whose master’s thesis was titled Declutter or Die: How the Home Organization Industry Designs the Metaconsumer, has researched which brands benefit. In the US, storage chain the Container Store saw sales increase 27% between 2019 and 2022. John Lewis now has the Home Edit range – a single cereal canister will set you back £20. When Burditt started organising in 2015, she could find storage boxes only in her local hardware store, “whereas nowadays, every store has something”.
So, where did it all start? Netherlands brand Curver launched its first big plastic box in the 80s – its cream, latticed storage boxes are now available in most UK homeware stores. Japanese brand Muji arrived here in 1991, bringing a range of acrylic storage units that inspired coverage in Time Out and teen magazine J-17. In 2016, Ikea’s chief sustainability officer said the world had reached “peak stuff” – yet in 2022 the company released Snurrad, a £29 clear plastic refrigerator turntable that swivels around to allow easier access to those back-of-the-fridge condiments. It exploded across the internet, with one TikTok alone earning 2.8m views.
“You’ve got to be honest with people, it does cost money,” Rendall says – she tells viewers to buy organisation products gradually from Home Bargains and B&M. Still, the highly organised believe they’re not just investing in their homes – they’re investing in their mental health. For many, organisation is a way to find control in an increasingly out of control world.
Ellie Killah started organising after experiencing postnatal depression following the birth of her first child. “I never had any mental health problems before children,” says the 32-year-old mother of two from Somerset, who posts organisation content on her YouTube channel Ellie Polly. “I can be up and down with my mood, but if I’ve done a full restock and clean, I feel so calm and in control – it is a control thing.”
Like many organising influencers, Killah stocks snacks like a shop, lining them up in neat rows in her pantry. Organising makes her feel “euphoric” – she compares it to the endorphins experienced by gym-goers. Before seeking therapy and medication, she suffered from anxious thoughts about her children: “Morbid thoughts about them dying and constantly worrying about them.” She considers staying on top of her home another type of treatment: “Mental health-wise, it just saves me. It is my therapy, I think.”
Kate Bartlett concurs. The 27-year-old marketing specialist from Bath says organisation has been a “coping mechanism” and “creative release” since her student years, but more recently it has helped her prepare for motherhood. “When I found out I was pregnant, I really struggled at the beginning with having that lack of control,” Bartlett says – organising her baby’s clothes by colour helped, as did stocking a hospital bag with labelled pouches. “I find that looking at the things I can control really helps me mentally.”
Hsin-Hsuan Meg Lee is a marketing professor at ESCP Business School in London who has researched the relationship between Marie Kondo-style decluttering and happiness. Lee says many people see decluttering their spaces as akin to decluttering their minds. “There’s a concept called symbolic pollution,” she says. “In the context of household organisation, this term refers to items that are out of place and violate the rules we set for our surroundings … For some, the process of removing this pollution and putting things in order causes them to feel they are in control.”
Yet organisation is not always beneficial for mental health. While it’s a myth that obsessive-compulsive disorder (OCD) is only about cleaning, some OCD sufferers do have compulsions around cleanliness and order. Psychologist Tara Quinn-Cirillo, who runs her own practice in Sussex, advises looking out for intrusive thoughts such as excessive worry about germs. Warning signs include missing out on valued activities because you prioritise organising routines, limiting activities in your house because you’re afraid it will get messy and a preoccupation with rituals (for example, vacuuming in a set pattern from the same corner of the room).
There is also the risk that watching organisation content could damage viewers’ mental health – being bombarded with polished perfection could make some feel inferior, anxious or out of control. In 2009, psychologists at the University of California asked working parents to give guided tours of their homes and monitored the “stressful” words they used, before measuring the levels of the stress hormone cortisol in their saliva. Wives who described their homes as more stressful had flatter slopes of cortisol throughout the day – a phenomenon linked to chronic stress, psychological distress and higher mortality. Husbands with stressful homes were mostly fine. The study’s authors noted that women may feel greater “responsibility” and “guilt” about clutter – idealistic organisation content could entrench such feelings.
By now you may have noticed a word conspicuously absent from this article: “he”. In 2019, researchers from UCL found that women still do more housework than their male partners, even when the woman earns more money. Between 2014 and 2019, the number of women earning the majority of their household’s income increased by 30% – but 45% of female breadwinners still did most of the household chores, as opposed to 12% of male breadwinners. Juggling teaching, mothering, cooking, cleaning and managing her planner business ramped up Jacquelyn Rendall’s organisation habits, and her customers are “mainly women, mainly mothers”.
When her husband did a food shop, TikTok commenters praised him: “Everyone said he was amazing. He’s doing the shop I do every week! I don’t get a ‘Well done’,” Rendall says. Might she consider resetting the balance and challenging society’s expectations by creating organisation planners for men? “No,” Rendall says, “because I am my target audience … I just feel like I need to help women because we have more pressure.”
It’s not up to organisation influencers to fix gender inequality, but could their content entrench it? After all, when excessive organisation stops feeling remarkable – when it stops being something worthy of writing an article about – won’t it just be another expectation placed on women? Rendall says she shows “the dodgy side” and isn’t afraid to be honest about mess. In 2023, she also wants to start visiting mothers in need and organising their homes for free.
For now, home organisation booms unabated. APDO, the Association of Professional Declutterers and Organisers, has more than 400 experts across the UK – professional organiser Caroline Rogers says that when she first joined nine years ago, there were only 100 members. Back then, clients used to be ashamed about employing her. If she met someone in a client’s life, “I’d have to say, ‘Oh, I’m her friend.’ Now people say, ‘This is Caroline, she’s my professional organiser.’”
When I speak to Rendall, she’s in the process of reorganising her office – pink Post-its adorn 12 white drawers, marking the future homes of her possessions, which lay jumbled in baskets and boxes around the room. “This makes me feel a little bit on edge,” Rendall says, looking around. “But I know that once it’s done, I’ll sleep easy.”
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Consumer & Retail
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Ryan Breslow, co-founder of the e-commerce software outfit Bolt, was subpoenaed along with the company last year by the U.S Securities and Exchange Commission. The Information reported the news first on Friday.
A letter authored in April by a lawyer representing Bolt investors said the SEC was investigating whether federal securities laws were violated in connection with statements made when Bolt was raising money in 2021.The letter was sent to Bolt’s general counsel as part of a fact-finding mission.
Per the letter referenced by The Information, two of Bolt’s investors, Brian Reinken of WestCap Management and Arjun Sethi of Tribe Capital Management, sued Breslow and Bolt’s board, alleging that Breslow “misled” them while fundraising for the company’s $355 million Series E round, valuing the company at $11 billion.
The attorney representing WestCap and Tribe Capital wrote that Breslow “made material misrepresentations about the Company’s financial condition and product pipeline that resulted in the Series E investors buying into the Company at a grossly inflated valuation.”
Shortly after that Series E financing was announced in January 2022, Breslow made headlines in both positive and negative ways related to comments he made about competitors and investors, and ended up stepping down as Bolt’s CEO. Soon after, he launched a wellness marketplace called Love that, according to his LinkedIn profile, he founded in January 2022.
Asked about the subpoena and lawsuit, an SEC spokesperson tells TechCrunch that the agency “does not comment on the existence or nonexistence of a possible investigation.”
In a separate lawsuit filed this week against Breslow by former board member Activant Ventures’ Steve Sarracino, Sarracino alleges that Breslow removed him and two other board members when they declined to help Breslow repay a $30 million loan. Sarracino’s suit also alleges that CEO Maju Kuruvilla and three board members appointed afterward did not force Breslow to make loan repayments.
When reached for comment, Breslow did not respond personally, but brought in a Bolt spokesperson who acknowledged the lawsuit regarding the loan, writing via email that, “Bolt is not the direct target of this litigation, and we continue to seek resolution of the outstanding amount. We remain well-capitalized and the existence of this outstanding obligation to the company does not and will not affect our day-to-day operations or prospects.”
At the time that Bolt announced its Series E funding, the company was a hot commodity.
Speaking about taking in $355 million, Breslow told TechCrunch at the time, “It may seem like a lot of money raised, but actually no, this is capital for us to be competitive. We don’t just want to be on par with competitors, but be better. The capital will enable us to bring in the best talent, make strategic acquisitions and expand into Europe, which is important to us.”
Though Bolt was having no trouble at that moment bringing in large amounts of capital, Breslow has been public about his struggles to attract Silicon Valley investors early-on. It was right after the Series E that he began publishing those thoughts on Twitter.
It wasn’t long after that he stepped down as CEO, insisting that his resignation was not tied to the attention his tweets attracted.
Soon after, it seemed like things continued to be like riding a rollercoaster for Bolt. The company was sued by one of its biggest customers in May 2022 (the case was settled months later). The next day, TechCrunch reported about a blog post CEO Maju Kuruvilla wrote that revealed a 131% year-over-year increase in shopper accounts, and a 192% YoY increase in total active merchant accounts.
Then just a few weeks later, Bolt laid off over 100 people in a restructuring move that Kuruvilla, again via blog post, attributed to shifting market conditions, writing, “It’s no secret that the market conditions across our industry and the tech sector are changing, and against the macro challenges, we’ve been taking measures to adapt our business. In an effort to ensure Bolt owns its own destiny, the leadership team and I have made the decision to secure our financial position, extend our runway, and reach profitability with the money we have already raised.”
Following the Series E, The New York Times reported that Bolt’s leadership began another round of talks with investors to go after additional capital at a higher valuation of $14 billion; however, that has not yet materialized.
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Banking & Finance
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ITV News' Investigations Correspondent Dan Hewitt has the latest on the children trapped for months in unsuitable accommodation, as detailed in a new report
Aurora is just 11 months old, and she has been homeless for half of her life.
Cramped, over-crowded budget hotel rooms are almost all this little girl has ever known.
She has learned to crawl, to play and now almost walk in the smallest of spaces, surrounded by bags and boxes of belongings, and her two older brothers, all bereft of home.
When Aurora was carried into the Enfield Travelodge in north London in February by her mum Michaela, the family were only meant to be staying a few days, at worst a few weeks, while they found somewhere permanent to live.
They had just become homeless, no longer able to live at the property they were renting privately. Michaela had been forced to go to their local council for emergency accommodation for Aurora, eight-year-old Callis and her teenage son.
'I was literally up all night with anxiety'
"I thought: ‘I’m on the street with a baby'," Michaela tells me. "I just remember sitting in the car and crying. I literally had a breakdown in my car."
With a part-time job working for a pharmaceutical company, and in receipt of housing benefit, Michaela was confident they would find somewhere else, having rented privately for the past 13 years.
Yet almost six months on, and three different hotels later, they are still without a home. Michaela cannot find anywhere affordable to rent, and the council have no properties to place them in.
"There’s nothing that is affordable. Nothing.
"Even if I didn’t have any bills to pay, if I didn't eat any food, I still wouldn’t be able to afford the prices they (private landlords) are charging."
'I thought we were going to be there for a month and a half'
Michaela isn’t the only one in the hotel, placed here by the council. The place is packed full of families who have been evicted or had to move out of their private rented property, and it is just one of numerous hotels hosting homeless families.
Down the road in another Travelodge, I meet Ben Thompson. A full-time locksmith and father of three children, he was handed a Section 21, no-fault eviction notice in April for the maisonnette they had been renting for five years, because the landlord wanted the property back.
He and his wife have looked for other homes to rent but also cannot find anywhere affordable even with Ben’s full-time salary. Fierce competition means private landlords can now make big financial demands.
If you are facing eviction, are stuck in temporary accommodation or experiencing homelessness and would like to share your story with Daniel and our housing investigations team, please get in touch: housingstories@itv.com
"We just can’t rent anywhere," says Ben. "You have to earn over £50,000 (per year) or have a guarantor who earns over £50,000. If you aren’t earning that, you can’t rent it.
"I’m frustrated because no matter how hard I work I know I can't earn that. My wife cant work at the moment because she is a stay-at-home mum, so we are literally just stuck.
"We were thinking it would be a couple of weeks and then into temporary accommodation, a house or flat. At least that we way we could cook and clean and do basic things, but we have been stuck here ever since."
'No matter how hard I work, I know I'm not going to be able to earn that'
Ben, his wife and three children have been moving between hotels for almost five months.
What is happening in Enfield is being repeated across the country.
A new national homelessness study by charity Crisis and Heriot-Watt University shared exclusively with ITV News shows nearly a quarter of a million households (242,000) in England are experiencing the worst forms of homelessness, including sleeping on the streets, staying on friends and families' sofas or stuck in unsuitable temporary accommodation like nightly paid B&Bs and hotels.
That's up 10% in the last two years.
The 2023 Homelessness Monitor finds 85% of councils across England are facing an increase in people experiencing homelessness, the highest number in any year since the survey began in 2012.
88% of councils report an increase in requests for support from those evicted from the private rented sector, while 93% anticipate a further increase over the coming year.
As ITV News has previously reported, local authorities are increasingly turning to the private rented sector to try and house low-income households, but the Homelessness Monitor finds record-high rental prices and fierce competition for properties is making it near impossible to house people experiencing homelessness in some areas of the country. 97% of local authorities say they have struggled to source private rentals over the past year.
With the more than 100,000 households currently stuck in temporary accommodation in England, the study shows councils are even struggling to source temporary places with a large number stating that they are "running out of temporary accommodation" and "struggling to procure more".
"The homelessness system is at breaking point," says Matt Downie, Chief Executive at Crisis.
'The alarm bells are flashing red': Matt Downie warns the situation is dire
"Temporary accommodation should be a short-term emergency measure, yet, as the report shows, it is increasingly becoming the default solution for many councils. This is leaving thousands of people living out their lives in a permanent state of limbo, enduring cramped, unsuitable conditions – with a fifth of households in temporary accommodation stuck there for more than five years.
"It comes as no surprise that councils are reporting that they are running out of temporary accommodation. For too long the emphasis has been on managing homelessness, not building the social homes we need to provide security to low-income households.
"The alarm bells are ringing loud and clear. The government must address the chronic lack of social housing and increase housing benefit, so it covers the true cost of rents. We cannot allow this situation to escalate further and consign more lives to the misery of homelessness."
Back in Enfield, Council Leader Nesil Caliskan tells me the number of families presenting to them as homeless has doubled in the past year, with the number of private rented properties available in the borough halving.
The result has been an extra £20 million spent on temporary accommodation this year to pay for accommodation for residents like Michaela and Ben with nowhere else to go.
"The consequence of the housing crisis, the cost of living crisis and the economy crashing last year means we have far too many people in hotel accommodation," says Councillor Caliskan.
"It comes at a huge cost financially to the local authority, but of course it also comes at a cost to the individual families having to find themselves living in hotel accommodation which is absolutely not appropriate.
“We will never leave an individual family, often families with young children, without a roof over their head for the night… which is why we’re having to place them in hotel accommodation. We are having to keep them in those spaces for far longer than we want to.
“I am unwilling to leave children in hotels because it is hindering their life chances.”
The crisis has reached breaking point, and with nowhere permanent to place families in the borough, the council has begun informing those living in hotels via email that they will be offered two private rental properties “outside of South of East England and far from Enfield”.
Back at the hotel, Michaela tells me she didn’t sleep a wink the night she received the message.
"I was up all night with anxiety at the thought that I am going to be moved far, up north, with no support network for me or my children. My kids would have to be pulled from their schools, and I work."
Ben also received the email.
"They have said they can move us nationwide which we have explained that isn’t possible.
"Our eldest son is being diagnosed with ADHD and doesn’t deal with change well and all three kids are in school - we would have to move schools.
"But if you turn it down, they choose not to help you anymore which means you are homeless."
One worry for families being sent potentially hundreds of miles away from their home town is what happens if, in two years’ time, the private landlord decides to evict them. Will Enfield Council support them then when they have been discharged from their care?
Councillor Caliskan said the council does offer a package of support when a family is initially relocated, including helping to register children with new schools and GP pratices, but she admitted if a family becomes homeless after the council has moved them then it would be down to the local authority in the area they have moved to to handle their case.
It is a rational fear for Enfield families. The lack of secure tenancy and the rise in evictions is happening across England, including in towns where London councils like Enfield are sending their residents to live.
In Stoke-on-Trent, Ian and Teresa have been living in a tent in a family member’s back garden for almost two months.
'Not getting much sleep in a tent and then going to a 12-hour shift, I'm constantly tired'
The family of four were served a Section 21, no-fault eviction earlier in April as their landlord wanted to sell the property.
Despite both working – Ian as a truck driver and Tersa as a care assistant – they struggled to find anywhere they could afford, with some landlords asking for six months rent upfront as a deposit.
They turned to their local council for help, but were told they didn’t qualify for emergency accommodation as they both work, and so would have to pay themselves. The price of two hotel rooms for two adults and two children (8 and 16) is £160 per night – over £1,000 a week.
The tent was their only option.
"I am not getting much sleep in the tent and then getting up and down a 12-hour shift, I am constantly tired," says Teresa.
"But it’s just what I’ve to do isn’t it?"
Ian has struggled considerably with what has happened over the past few months.
"I feel like I’ve failed, I tell myself I haven’t and I have done nothing wrong, but feel like I could’ve prevented this. I’ve begged for help. It’s took a toll on me, I’ve been suicidal.
"I don’t see the point in working, my work ethic has gone, I have got nothing left to give.
"I've done everything right, for what? I just don’t see the point."
Since we filmed with Ian and Teresa, they have now been offered a property by Newcastle Borough Council, which they have accepted.
A spokesman for Newcastle-under-Lyme Borough Council said: “We sympathise with the family’s situation and have offered the couple help and advice from the outset.
“There is high demand for three-bedroom homes in the area which makes it impossible to react immediately.
“Last year the council spent £850,000 on temporary and supported accommodation. If families are in employment and do have an income, then we do ask that they pay for their own emergency accommodation.”
Ian and Teresa, remarkably, are among the lucky ones.
For hundreds of thousands of families with children, the search for security seems never-ending, never quite knowing where they will end up at the end of each week.
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Real Estate & Housing
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While a decision from the Securities and Exchange Commission on the future of spot bitcoin ETFs could come as soon as this weekend, Bitwise Asset Management CIO Matt Hougan warns that crypto investors might have to wait a while longer.
Following ARK's application for the spot iteration of the fund, a June 15 filing in the Federal Register named Aug. 13 as the deadline for the SEC to give a thumbs up or thumbs down on the exchange-traded fund.
But the SEC also has the option to stretch the deadline, with a final response not coming until as late as January 2024 for the Ark, Hougan explained.
"These are complex applications with a lot of data," he said. "I think they're likely to extend this until the final review."
Hougan noted there have been a series of positive indicators for the fund's approval, such as surveillance-sharing agreements between exchanges and custodians, a more regulated and robust bitcoin futures market, and a better understanding of crypto custody and broker transfer.
"The totality of circumstances is what the SEC is looking at," Hougan said. "I don't think there's any silver bullet."
While classification of cryptocurrencies and the funds that track them have been a point of deliberation among investors and institutions alike, the SEC has firmly labeled the bitcoin as a commodity, something that Hougan agrees with.
"It's so decentralized, we don't know who created it," he explained of the flagship coin. "There's no single person in charge of it, it's globally distributed. There are no insiders, all the information is public. And that's what makes it clearly a commodity."
But as you go from bitcoin to Ethereum and other assets, Hougan said, the degree of centralized control increases and the question will eventually get more complex, an obstacle he believes legislation will solve.
"You have the two largest regulators disagreeing on whether most crypto assets are securities or commodities," Hougan added, referring to past classification efforts between the SEC and the Commodity Futures Trading Commission.
"The right solution there is for legislators to come through and make that clear so that U.S. innovators can win in the market."
Besides Ark, eight other organizations including Hougan's firm, Bitwise, have filed applications for a spot bitcoin ETF. Grayscale has also filed to convert its Grayscale Bitcoin Trust into a spot fund.
Should the SEC move forward with the approval process, he said the best outcome for investors would be the approval of multiple products.
"I think there should be a fair playing field that allows us to have multiple spot Bitcoin ETFs that compete in the market," Hougan said. "It will allow prices to be the lowest, it will allow competition to be the highest, [and] it will allow service to be the highest."
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Crypto Trading & Speculation
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The shelves should be chock-a-block with baked beans, soup and tuna but it looks as if someone has played Supermarket Sweep and Angela Gardiner admits she has never seen supplies at the food bank so depleted.
“I have never seen it like this,” Gardiner says, pointing to yawning gaps on the blue racks filling the unit at the Canterbury food bank, where she is operations director. “This is normally full of beans, but we are short of tinned stuff.”
After the Christmas rush, January is usually a quiet month for the charity, with demand dropping by about 40%. However, this year has been different. It delivered a record 1,460 parcels in December and the tally for January is not far off that, at 1,300. After that bumper December, donations are down sharply as its supporters rein in spending after Christmas.
When the Guardian first visited a year ago, the charity had gone from spending virtually nothing on food to spending about £3,000 a month to cover the shortfall in donations as the Covid crisis segued into a cost of living crisis, forcing it to rapidly expand its service. At the time that figure seemed shocking, but in January the charity’s food bill totalled nearly £7,000.
Not only is demand greater, each pound is not going as far, as the price of everyday foods – from baked beans, biscuits, pasta, instant coffee and long-life milk – rises.
In February 2022, the cost of the items in a standard parcel (enough to feed one person for three days) came to £24.78. Today an equivalent food parcel costs £34.11, an increase of £9.33 or nearly 38%. A children’s food parcel is up by £8.24 to £25.75, a jump of 47%.
A year ago inflation was “just” 5.5%, but the Ukraine war has changed all that. Official figures to be published on Wednesday are expected to show the annual rate dipped to 10.3% in January.
While the headline rate has begun to fall back from its peak, the crisis is not over in the grocery aisles, with food price inflation hitting a record 16.7% in the four weeks to 22 January, according to Kantar.
Demand has risen in grim lockstep with a deepening cost of living crisis. In 2021, the food bank gave out 7,376 parcels but last year that figure was 11,539 – an increase of more than 50% and enough food to make more than 100,000 meals. The 1,266 parcels it gave out in January is nearly double that of the same month a year ago.
Peter Taylor-Gooby, professor of social policy at the University of Kent, and one of the charity’s trustees, says rising poverty in the area is due to low wages in the retail, hospitality and social care sectors that are big local employers.
For the low-paid, there has been government help with energy bills but “no corresponding help with food”, Taylor-Gooby says. Prices for staple foods such as bread and cereal as well as supermarket value ranges have risen the most, meaning poorer families are experiencing a higher rate of food price inflation.
Distributing food at this scale means the donations gathered in 100 bins dotted in local supermarkets just do not cut it any more. In her small upstairs office, Sue Roberts, finance manager, says the charity initially struggled to get the local cash and carry store to take it on as a client (it feared orders would be too small). The food bank now has a regular delivery slot.
“There is such a weight of goods to move, our volunteers can’t do it in the van,” says Roberts. “It can be over a tonne of stuff by the time you have put in 280 cans of this and 300 cans of that.”
Food banks are supposed to be a short-term fix. The charity’s code (although not strictly adhered to) is to deliver a run of five parcels, giving an individual time to sort themselves out when they have suffered a financial shock, such as redundancy, and are waiting for their benefit application to be processed.
Single mum Emma Gatfield, who lives in nearby Herne Bay, is grateful to the charity after it came to her aid during the pandemic. She has fibromyalgia and is now in a better position after starting to receive disability benefits.
But she is still terrified about the future. The monthly rent on her semi-detached bungalow will rise to an unaffordable £1,000 later this year. When she and her son moved in five years ago, it was £795.
“Energy bills have crippled me,” she says. “I’m down to basics. I’ve got rid of Sky, the wifi is probably going to have to go at some point. I am only doing washing once a week.”
While Gatfield still manages to sound positive, James and Valerie*, who live nearby, have hit rock bottom. “It feels like every day is doomsday,” says Valerie. “The fridge is empty, the freezer is empty.”
The couple, who have three children, are behind on the rent on their council house. Arrears are being deducted from their monthly universal credit payments so they have even less to money to get by on.
They have health problems and have been accessing the food bank on and off since 2020 when James was made redundant. The house feels cold, with Valerie swaddled in the fluffy hooded blanket she says she never takes off.
Back at the charity, Taylor-Gooby says finances are in good health for what promises to be a busy 2023. “Food donations are flat, but cash donations have increased and some of our supporters have been extremely generous, so we are solvent,” he says.
“Who knows the future?” he says. “When food banks were first established in the UK after the 2008-09 financial crisis, most people thought they would outlive their value in two or three years. They are now essential to make life possible for the most vulnerable people in our society.”
* Not their real names
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Nonprofit, Charities, & Fundraising
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Some of the UK’s biggest construction companies, property developers and estate agencies have written to Rishi Sunak to warn that his weakening and postponement of green policies will harm investment in housing and cause hardship for many people.
More than 100 companies, including some of the UK’s biggest construction specialists, have urged the prime minister to reinstate the net zero policies, or find alternatives that “make upgrading Britain’s homes affordable”.
The Guardian revealed earlier this week that housebuilders and property developers have benefited by billions of pounds from delays to low-carbon building regulations in the past eight years of Conservative government, while the sector became one of the biggest sources of donations to the Tory party – almost £40m since 2010, according to a Guardian analysis.
In the last fortnight alone, Sunak has dismayed businesses and investors by rolling back several key low-carbon measures, including scrapping the proposed requirements for landlords to insulate and upgrade their properties to be more energy-efficient. He also announced a delay to the ban on sales of new petrol and diesel cars, from 2030 to 2035, softened measures to phase out gas boilers, and is pressing ahead with plans to scrap rules on sewage from new housing.
These delays are only the latest example of a number of low-carbon measures that have been held up or ditched over years of Conservative government, with the result that homeowners and taxpayers will have to pay tens of billions of pounds to bring newly built homes up to low-carbon standards.
The delays have resulted in years of unnecessarily high greenhouse gas emissions, and higher energy bills for residents.
There is some division on the subject within the construction and development sector; while some developers may welcome any delay to low-carbon measures, others are looking more to the future.
The letter to Sunak, seen by the Guardian, notes that many construction and property companies were planning to make substantial investments in net zero, which are now in doubt. The 114 signatories include Arup, Laing O’Rourke Construction, BNP Paribas Real Estate, Landsec, BAM, Buro Happold, Grosvenor, Avison Young, Great Portland Estates, Knight Frank, AECOM, Clarion Housing Group, and CBRE Group.
“Our industry has been working hard to gear up for that acceleration [of effort needed to meet net zero], but your announcement signalled less not more action needed,” the letter says. “In order to bring forward big financial investments, to recruit and train hundreds of thousands of people and to bring the public along with us in this journey we need confidence in long-term active policy support from government. Your announcement has set that back.”
The signatories also take issue with Sunak’s insistence that his delays would save money for households. “The longer we delay and the more we see stop-start piecemeal policy-making, the harder and more expensive the task becomes,” they say.
The signatories urge Sunak to “bring forward a comprehensive national strategy to retrofit our homes and buildings including much higher sustained government investment and market drivers to stimulate private investment as well as regulation. This would pay dividends to the treasury in tax returns.”
They also call for a new “future homes and building standard”. This was supposed to be in consultation by now, but a government spokesperson told the Guardian the aim was now to publish a consultation by the end of this year.
Simon McWhirter, the deputy chief executive at the UK Green Building Council, which organised the letter, said: “It’s beyond disappointing and simply reckless to see this false narrative from government that delaying climate action would reduce costs to households.
“Decisions now – whether around retrofit or the quality of our new buildings – will dictate the quality and legacy of what we’re able to achieve for generations. Delaying policies just means they’ll have to be implemented much faster, later, pushing up the cost for everyone – householders and businesses alike.”
Tor Burrows, the group sustainability director at the property company Grosvenor, said: “Diluting the UK’s commitment to net zero is not the way to build our economy, create jobs or address climate change. Businesses desperately need clarity and stability to help them plan how they will invest in green practices, tech and skills. Without this we risk losing out on crucial investment which will ease the cost of living and increase the country’s global reputation and competitiveness.”
Jonathan Gibson, the principal and global director for environmental, social and corporate governance at Avison Young estate agents, said: “While we understand the challenges posed by the cost of living crisis and approaching elections, we must not compromise our long-term sustainability goals for short-term political gains. I urge the incoming government, especially in the context of the forthcoming general elections, to reconsider this regressive stance on net zero policies and demonstrate a genuine commitment to tackling climate change.”
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Real Estate & Housing
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Transport secretary Mark Harper has criticised the London mayor for expanding the controversial Ultra Low Emission Zone (ULEZ) to the outer boroughs of the capital, saying it will have “appreciable impact on air quality”
The zone, that charges motorists £12.50 a day if their car does not comply with emissions standards, will now cover every London borough and not just the city centre.
The expansion comes despite the London mayor facing opposition from both the Conservatives and within the Labour Party, after it was blamed for the party’s defeat in the Uxbridge and South Ruislip by-election last month.
A group of five Conservative-led councils even launched a High Court challenge against the plans, however their case was not successful, meaning the expansion to outer London goes ahead today as planned.
Speaking to Sky News, Mr Harper said that the ULEZ expansion is a “decision for the mayor of London, backed by the Labour leader”.
He said said the policy is not about air quality in the capital, as Mayor Sadiq Khan insists, but “raising money” by charging more Londoners.
While he acknowledged the policy has helped reduce air pollution in central London, he said that the London Mayor’s office’s own impact assessment shows it will be “negligible” in the outer boroughs.
He added: “It’s a scheme to charge hard-pressed motorists more money for making essential journeys and it will have almost no appreciable impact on air quality”.
It came after Sadiq Khan has fiercely defended the expansion as he told Sky News that air pollution causes health issues in children and adults, and also causes 4,000 premature deaths in London per year.
Challenged on research showing an average reduction of less than 3 per cent in nitrogen dioxide levels and minimal impacts on other toxins, Mr Khan cited other research from the “vast majority of other scientists” showing reductions of up to 50 per cent in central and inner London.
“What they don’t want is politicians for short-term political gain playing politics with public health and the climate emergency,” he said.
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Energy & Natural Resources
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Thousands of babies and toddlers are being admitted to hospital in England each year with lung conditions probably linked to damp and mould-ridden homes, a senior doctor has warned.
Dr Andy Knox, an associate medical director for the NHS, said squalid housing was having a “profoundly negative impact on the nation’s health” and worsening the crisis in the NHS.
“It is becoming a really major health issue for us as a nation, and we need legislation that is going to properly deal with this,” he said.
The Royal College of Paediatrics and Child Health said the state of Britain’s housing was “now a crucial issue for child health” and called on ministers to launch a clear way for parents to report poor air quality in rented and social housing.
The stark warnings come as the Guardian launches a series focusing on Britain’s growing private rental sector. One in five UK households now live in private rented homes, with costs for tenants rising despite worsening conditions and squalor. Damp is five times more common in private rentals than in owner-occupied homes.
Government figures suggest that more than 520,000 rented properties in England have hazards that pose “a serious and immediate risk to a person’s health and safety” – a large proportion of these being cold, damp and mould.
However, industry experts say the true scale of the problem is likely to be far greater due to systemic problems with the housing system and chronic under-reporting by tenants who fear eviction.
Nearly 31,000 children aged four and under are admitted to hospitals in England each year with conditions linked to the respiratory syncytial virus (RSV), which is known to be caused or exacerbated by damp and mould. NHS figures show that nearly 80% of these – or 24,485 babies and toddlers – develop acute bronchiolitis needing hospital treatment. Some studies suggest between 20-40% of children who have bronchiolitis in their early years go on to develop asthma.
Knox, who leads on population health for the NHS in Lancashire and South Cumbria, said the impact of damp and mould had been an issue for years but was “definitely getting worse”.
He said: “Poor quality housing is having a profound effect on children’s health and leading to significantly raised admission sources for longer periods.” He added that it was costing the economy millions of pounds a year in time taken off work, and contributing to strain on the NHS.
“Around 31,000 children are admitted to hospital each year with RSV related conditions. Evidence from other countries with comparable housing conditions to the UK would suggest that around 20% of these are likely directly linked to damp or mould-ridden homes.
“This is a substantial number and is putting extra strain on the NHS every winter. It particularly affects areas like ours where the housing available in our most disadvantaged areas has been poorly [kept] by landlords, leaving children at risk.”
Experts have warned that children living in damp homes are up to three times more likely to have breathing problems.
A study published in the British Medical Journal in 2019 concluded that 19% of acute respiratory admissions for children under two in New Zealand would be prevented if all housing was free from damp and mould.
The link between poor quality housing and ill health has become more prominent since the Covid pandemic and the inquest last year into the death of two-year-old Awaab Ishak, who died as a direct result of black mould in the flat he lived in.
However, the scale of the challenge is not well understood due to a lack of nationwide data.
Tenants living in private rented properties are known to under-report problems because they fear receiving a no-fault eviction – a practice due to be made illegal – or having their rent raised, which can have the same effect as an eviction.
Local authorities, which are responsible for overseeing the private rented sector, say their environmental health and housing teams are chronically under-resourced so the majority of complaints do not result in any formal action.
Senior doctors have suggested that the NHS should start routinely asking about patients’ living conditions when they present with a respiratory condition, in the same way people are asked to give their smoking history or ethnicity.
Dr Camilla Kingdon, president of the Royal College of Paediatrics and Child Health, said the body was encouraging paediatricians to ask about housing when reviewing children with lung issues, but she called on the government to do more to improve standards.
“The UK has some of the very worst housing stock in Europe and evidence shows a rising number of families are living in poor quality accommodation, with detrimental impacts on children’s health. Cold and damp housing conditions lead to increased risk of asthma, respiratory infections, slower cognitive development, and mental health problems in children. We must remember that our housing crisis is also a health crisis.”
She added: “We call on the UK government to establish a process for people in rented and social housing to report indoor air quality problems and to help with necessary improvements. It is essential that all children and young people have a base standard of living that promotes health and wellbeing.”
A spokesperson for the housing department said: “Everyone deserves to live in a safe and decent home. That’s why the government is determined to crack down on rogue landlords who cause misery to their tenants and put their health and safety at risk.
“We are delivering a fairer private rented sector for tenants and landlords through the Renters Reform Bill, which includes creating a new ombudsman to resolve issues quicker and empower tenants to challenge poor practice.”
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Real Estate & Housing
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Shadow Chancellor, Rachel Reeves, argued that many low-income families can’t easily get to larger supermarkets, where cheaper products are usually stocked.
A recent study by consumer group Which? found that fewer than 1 per cent of smaller stores run by chain supermarkets stocked budget essentials, while 87 per cent of larger stores did.
Labour is calling on the Government to work with the Competition and Markets Authority (CMA) to urge supermarkets to provide live information on where their lowest-price products are stocked.
The regulator published a report last week which claimed that, while prices were being kept lower by strong competition between supermarkets, many low-income groups were missing out.
“Not everyone is able to benefit fully from strong competition, particularly those who cannot travel to large stores or shop online, and therefore may rely on higher-priced convenience stores,” the CMA said.
Labour said the Government “has the power to work with the CMA and supermarkets to drive these changes” and pressure supermarkets to improve their practices “but has so far failed to act”.
Ms Reeves said: “Many of us see adverts for low-price products, but when you go to the shops they’re not always there.
“And unless you have a car or can get working public transport, it’s not easy for lots of people to go to a big supermarket regularly.
She continued: “That’s why it is vital Government take action, and work with the regulator and supermarkets to make sure smaller stores are selling budget lines.
“While the Government looks the other way, Labour will always stand with working people through this Tory cost of living crisis.”
She made the comments ahead of a visit to Scarborough, where she will meet those hardest hit by the cost of living crisis.
Last week, the CMA also told retailers to make product prices clearer so it is easier for shoppers to find the best deals amid the cost of living crisis.
Under current rules, most products should be priced per unit either by kilogram or by litre, but the CMA found examples of “unhelpful inconsistencies”, with supermarkets using grams or millilitres.
While overall inflation has hit record levels over the past year, food inflation has been much higher and hit 18.3 per cent in the most recent data.
The high prices have largely been caused by the war in Ukraine, which has reduced grain supply, and poor harvests in Europe and North Africa, which have meant wholesale prices have shot up.
Rising fuel and energy prices have also played a part by making imports and food production more expensive.
A recent survey by the Office for National Statistics found that 96 per cent of adults had reported that high food costs had driven up their costs of living between February and May this year.
Separate figures from the same period also revealed that almost a million families had reported that they were running out of food and couldn’t afford to replace it.
This included 28 per cent of single-parent households with at least one child and 7 per cent of multi-parent families.
The Government called in supermarket chiefs last month to discuss food prices and Chancellor Jeremy Hunt has threatened new rules to ensure prices are displayed more clearly.
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Consumer & Retail
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Brookfield Set For $12.8 Billion Snub As Origin Investors Vote
AustralianSuper, Origin’s largest investor and the country’s largest pension fund, has rejected the offer as too low.
(Bloomberg) -- A Brookfield Asset Management Ltd..-led A$19.1 billion ($12.8 billion) takeover approach for Origin Energy Ltd. was poised to be rejected Monday at a shareholder vote, after the fund’s more than year-long pursuit of the utility.
Origin’s largest investor AustralianSuper, which holds about 17% of the company, will oppose the proposal at a meeting scheduled for 2 p.m. in Sydney, likely to be sufficient to ensure the transaction doesn’t secure a required three-quarters of ballots cast.
Brookfield and EIG Global Energy Partners, which made a first offer in November last year, revised a A$9.43 per share proposal last month, and the deal is supported by Origin’s board.
AustralianSuper, the country’s largest pension fund, has rejected the offer as too low, and argues that taking the firm private would deny local investors a key opportunity to gain exposure to the energy transition.
Origin’s shares fell as much as 3.1% to A$7.93 in early Monday trading, before paring losses.
A rejection of the transaction threatens to slow Australia’s attempts to accelerate the addition of solar and wind farms as aging coal-fired plants are shuttered. Brookfield had pledged to invest as much as A$30 billion over 10 years in Origin and to more than triple the utility’s planned clean energy generation capacity.
Origin last week said it would not support a suggested alternative transaction if the deal vote fails, under which Brookfield would pay A$12.3 billion for the target’s energy generation and retailing business.
Read more: Origin Rejects Brookfield’s Plan B as Takeover Bid Teeters
Brookfield, which was snubbed in an earlier attempt to acquire rival utility AGL Energy Ltd., won’t make any immediate new proposal, executives said last week.
The fund intends to study the impact of new Australian government policies aimed at accelerating the addition of clean energy generation capacity to replace the country’s coal-power fleet.
©2023 Bloomberg L.P.
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Energy & Natural Resources
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The fiscal scale of Bidenomics is larger than Roosevelt’s New Deal in the 1930s by a wide margin. It is larger than Johnson’s guns and butter in the 1960s, or Reagan’s military rearmament in the 1980s. We are witnessing an extraordinary experiment in US economic policy.
The US budget deficit surpassed $1.6 trillion (£1.28 trillion) over the first 10 months of this fiscal year, far higher than forecast earlier this spring. It is running near 8pc of GDP on a quarterly basis.
The Biden administration is financing this with a high-risk expansion of federal borrowing at the top of the economic cycle, when unemployment is hovering near half-century lows at 3.8pc and the economy is operating near full capacity.
Bumper tax revenues ought to be flattering the fiscal profile at this late stage of the cycle. The latest figures are evidence of a frighteningly high structural deficit. It is fair to assume that borrowing will go through the roof in the next US recession.
This unfunded blitz in the West’s anchor economy is certainly unorthodox – almost Chinese in its state-capitalist character – but is it making the US a stronger or a weaker country? The jury is out.
Let us not forget that Ronald Reagan’s twin deficits and supply-side ideology were deemed reckless adventurism by most of the economic establishment on both sides of the Atlantic.
We can see in hindsight that his exorbitant spending on Star Wars missile defence and 14 aircraft carrier battle groups was a geopolitical masterstroke: it fed an arms race that bankrupted the Soviet Union – with the help of an oil price slump – long before it came close to bankrupting the US.
America won the Cold War without a shot being fired and on terms overwhelmingly favourable to the Western worldview. It was cheap at the price. Reagan’s debts were buried and forgotten beneath the peace dividend of the 1990s.
Bidenomics has met similar disdain from Harvard economists: “The least responsible macroeconomic policy we’ve had in the last 40 years,” said Larry Summers, the New Keynesian high priest.
He predicted that Bidenomics would lead to stubborn 1970s inflation and that it would take a harsh recession to bring prices back under control. That has not happened. Pandemic inflation has fallen as fast as it rose, and without a spike in unemployment.
It has been a textbook supply-side response, just as the Biden White House always argued. But unlike Reagan’s variant of tax cuts and deregulation, Biden is conjuring supply by drawing people into the labour market. He is scattering state largesse to “derisk” investments in order to pull in private capital and revive the US manufacturing base. There is nothing left-wing about it. Profits are privatised: losses are socialised.
Joe Biden is fighting two wars, a big one against Xi Jinping’s wolf warrior Leninism and a smaller one against Putin, and he is going beyond Donald Trump’s erratic trade wars by pulling all the levers of economic nationalism.
He is mobilising $280bn on semiconductors, nanotechnology, and quantum computing under his CHIPS and Science Act, aiming to reestablish secure supply chains in critical technology. He is spending $42bn on fast-broadband, under Buy America rules. He is building a “battery belt” – at breakneck speed, and mostly in Republican districts – to head off China’s bid to control the world’s EV lithium market.
His Inflation Reduction Act is a Manhattan Project to stop China running away with the energy revolution and achieving clean-tech supremacy. To the extent that this cuts CO2 emissions, all the better. It is billed at $370bn. The open-ended tax credits could push the figure closer to $1.2 trillion.
This is the “good” side of Bidenomics. The bad side is that nothing serious is being done to rein in runaway appropriations on almost everything. Medicare costs have risen by 17pc over the last year. “Reckless spending is the culprit,” says the House Budget Committee.
Publicly funded middle class welfare remains untouchable. Over the last three decades ring-fenced entitlements have risen under both parties from 50pc to 75pc of all US federal spending, double the level in the welfare paradise of Sweden.
The debt accumulation over the last fifteen years alone has been comparable to the cost of two world wars and the Great Depression combined. The International Monetary Fund says gross debt-to-GDP ratio was 62pc in 2007. It will be 122pc this year, and 138pc by 2028, with deficits near 7pc as far as the eye can see.
Fitch Rating says the ratio of debt interest to tax revenue will reach 10pc by 2025, the level where it starts to create a snowball effect. That is a key reason why it has downgraded the US to AA+.
Ballooning debt issuance is already crowding out the US bond market. Yields on 10-year Treasuries have punched to levels unseen since mid-2007 over recent weeks, even as inflation plummets. Investors are finally starting to choke on US fiscal incontinence.
Torsten Slok from Apollo Global says the US government must refinance $7.6 trillion of debt over the next year, amounting to 31pc of total outstanding issuance.
The Global South holds three-quarters of the world’s $12 trillion of foreign exchange reserves (59pc held in dollars). Stephen Jen from Eurizon SLJ Capital says these countries were stunned by the US decision to freeze Russia’s dollar reserves and have taken the lesson to heart.
“The reaction was a mix of shock and fury. They couldn’t believe that it could happen to the official reserves of a major country,” he said.
The Global South still has to buy and hold dollar assets because there are few other places to park serious money. But it does not have to buy so much US government debt. China has cut its (declared) holdings by $103bn over the last year. It is probably rotating into stocks and private equity.
Mr Jen thinks the US Federal Reserve will be forced to abandon quantitative tightening and relaunch QE in order to soak up the debt and hold down borrowing costs. “I don’t see how the market is going to absorb the sheer volume of supply without the Fed,” he said.
America’s trump card is that the rest of the world is in equally bad shape or worse. China’s credit-driven development model broke down a decade ago and the delayed consequences are becoming clear, though I suspect that Western commentary has lurched too far from China worship to China doomism.
Europe is stumbling from one lost decade to another. The European Central Bank has long been acting as a fiscal agent for Club Med governments, and the eurozone still has no joint fiscal and tax-raising institution to sustain its currency. Anybody who thinks the eurozone debt can viably replace US Treasuries as the world’s ultimate safe asset needs their head examined.
Joe Biden will probably get away with his Rooseveltian adventure, and perhaps it is a necessary reindustrialisation of America after 30 years of globalist insouciance. Britain emerged from the Napoleonic Wars with sovereign debt near 200pc. It remained the leading economic power of the early 19th Century nevertheless because it excelled in technology.
Yet America is undoubtedly pushing its luck. Even a global hegemon can go bust.
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Inflation
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BERLIN, Aug 28 (Reuters) - Germany's governing coalition has agreed on a new basic child benefit allowance at an initial cost of around 2.4 billion euros ($2.6 billion) from 2025.
Chancellor Olaf Scholz of the centre-left SPD, family minister Lisa Paus of the Greens and Finance Minister Christian Lindner of the liberal FDP reached an agreement after a meeting late on Sunday, ending a dispute that has blocked other government initiatives.
The allowance will bundle together different benefits that already exist, while improving access to the payments through digitalisation and automation, Paus and Lindner said at a press conference in Berlin on Monday.
Child payments are currently fixed at 250 euros per month per child regardless of parental income with additional benefits for lower-income families. The government said it could not yet say how much payments would amount to in 2025.
Paus expects the cost of the new allowance to reach around 6 billion euros in 2028, depending on take up, three times the two billion euros per year earmarked in the government's medium-term financial plan.
That higher than expected cost adds to bottlenecks in the budget, Lindner said.
"With a view to the next few years, the basic child allowance will be the last major social reform that still fits into the federal government's budgetary framework," he added.
Earlier this month, the German cabinet failed to pass the Growth Opportunities Act, a programme of corporate tax relief worth billions of euros championed by Lindner, as wrangling in Scholz's three-way coalition continued.
The talks stumbled on Paus' demands to raise spending on child support in tandem with the corporate tax benefits and the compromise clears the way for Lindner's programme ahead of a cabinet retreat in Meseberg, Brandenburg, that begins on Tuesday.
"Our concern is to maintain work incentives," Lindner said, adding that employment would be a prerequisite to access some allowances as parental unemployment, often linked to a lack of integration or language skills, was a key driver of childhood poverty.
"The best way to overcome poverty is to work," Lindner said.
The draft law for the basic child allowance will be submitted to the states and municipalities for consultation, potentially allowing the draft law to be approved by the cabinet on Sept. 13, Paus said, before it is submitted to the Bundestag.
($1 = 0.9255 euros)
Reporting by Holger Hansen, Andreas Rinke, Christian Kraemer and Maria Martinez, Editing by Friederike Heine, Kirsten Donovan
Our Standards: The Thomson Reuters Trust Principles.
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Consumer & Retail
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- House Republican Conference Chair Rep. Elise Stefanik has filed a complaint calling for the removal of the judge presiding over the $250 million business fraud trial of former President Donald Trump.
- Stefanik claimed that Manhattan Supreme Court Judge Arthur Engoron has shown "clear judicial bias" against Trump.
- Engoron is presiding over New York Attorney General Letitia James' case accusing Trump, his two adult sons and others of fraudulently inflating their asset values for various financial benefits.
House Republican Conference Chair Rep. Elise Stefanik on Friday filed an ethics complaint calling for the removal of a judge presiding over the $250 million business fraud trial of former Republican President Donald Trump.
The No. 3 House Republican and one Trump's most loyal allies in the House, Stefanik claimed in her complaint that Manhattan Supreme Court Judge Arthur Engoron had shown "clear judicial bias" against the former president and displayed "bizarre behavior" during his high-profile civil trial.
Stefanik, whose congressional district covers northeast New York, urged the state's Commission on Judicial Conduct to "take corrective action to restore a just process and protect our constitutional rights."
Stefanik also wrote that Engoron "must recuse from this case," although the commission does not have the authority to remove specific judges.
The complaint is a remarkable step by Trump's political allies in Washington to join his aggressive efforts to undermine Engoron, whose rulings in the case could strike a major blow to the ex-president and his business empire.
It comes after a week of testimony in the trial by members of the Trump family that some legal experts say did little to help their case.
The case will settle claims brought by New York Attorney General Letitia James, who accuses Trump, his two adult sons, his company and some of its top executives of fraudulently inflating the values of Trump's assets to boost his net worth and rake in financial benefits.
Engoron will deliver verdicts in the no-jury trial, because neither side requested a jury trial ahead of time.
Engoron has already found the defendants liable for fraud. The trial itself will determine how much the defendants will be ordered to pay in damages or other penalties. The judge will also evaluate six other claims in James' lawsuit that have yet to be resolved.
In addition to seeking around $250 million in damages, James wants to permanently bar Trump Sr., Donald Trump Jr. and Eric Trump from running a New York business.
Please check back for updates.
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Banking & Finance
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China’s regional banks facing US$300 billion shortfall, local government debt ‘pain could be too much to bear’
- Regional banks could suffer a capital shortfall of 2.2 trillion yuan (US$301 billion) from China’s local government debt crisis, according to S&P Global Ratings
- Amid concerns over default risks from local government financing vehicles (LGFVs), regional banks had about 12 trillion yuan of exposure as of the end of 2022
China’s regional banks could suffer a capital shortfall of 2.2 trillion yuan (US$301 billion) from a deepening local government debt crisis, according to S&P Global Ratings, highlighting the fallout from the turmoil in the property sector on the country’s financial system.
Local government revenues from land sales in September have yet to be released, but between January and August, they fell by 19.6 per cent year on year, far below the annual government growth target of 0.4 per cent.
S&P Global Ratings estimated that Chinese regional banks had about 12 trillion yuan of exposure to the LGFVs as of the end of last year.
In a downside scenario involving substantial LGFV debt restructuring, 20 per cent of the 80 regional banks sampled by S&P could fall below the minimum regulatory capital adequacy ratio of 8 per cent, the ratings agency said on Wednesday.
This means the banks would need a fresh injection of capital, which would likely come from local governments.
“Regional banks with concentrated exposure in resource-constrained regions, most of them in lower-tier cities, will likely feel the most pain. And for some of these banks, the pain could be too much to bear by themselves,” the report said.
Bank of Hangzhou, Bank of Chongqing and Bank of Chengdu have the highest exposure to LGFVs among regional peers, according to S&P data.
S&P believes the central government would step in if local governments ran out of resources because maintaining financial stability is a priority for Beijing.
“However, such support would be aimed at containing systemic risks, and would not likely be entity-focused. Select credit events remain possible and could be painful,” S&P said.
But since September, 17 provincial governments have issued special refinancing bonds totalling over 700 billion yuan (US$95.7 billion) for repaying LGFV debt, Moody’s Investors Service estimated.
China’s local government debt level has been piling up after years of rapid economic growth largely fuelled by heavy borrowing.
Japanese investment bank Nomura estimated, as of the end of September, local governments had outstanding explicit debt of 38.9 trillion yuan (US$5.3 trillion).
LGFVs, meanwhile, had outstanding bonds amounting to 13.4 trillion yuan, while other types of LGFV debt could be in the range of 35 trillion yuan to 50 trillion yuan, they added.
The outlook for local government finances is weak, increasing the likelihood of more fiscal transfer from the central government to local authorities, according to Nomura.
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Banking & Finance
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Labour has announced its intention to initiate a parliamentary debate on energy bills and energy independence. The move comes amidst increasing tension over PM Rishi Sunak’s abandonment of his Net Zero pledges.
As Labour forces the energy debate, Sunak’s government is expanding offshore oil drilling. The government introduced the Offshore Petroleum Licensing Bill in Parliament on Wednesday, arguing that it would have a positive impact on the UK’s economy and environment.
The bill was introduced a few days after Sunak issued 27 new oil permits in the North Sea.
While energy bills have decreased since last winter’s peak, they still remain high compared to historical levels. 68 percent of Brits say that the government needs to take more action to cut energy bills.
Business Green reports that Labour will use the debate to present its strategy for reducing the UK’s dependency on fossil fuels.
The problems with boosting oil production
Experts have noted that increasing domestic production has limited impact on energy security, as the North Sea’s fossil fuel resources are sold by private companies in international markets. The UK produces less than 1 percent of the world’s oil.
Even Energy Secretary Claire Coutinho has conceded that her government’s expansion of the oil sector would not necessarily result in lower energy bills.
The UK government states that domestic oil and gas production can reduce reliance on high-emissions imports. New licensing rounds for oil and gas projects will only proceed if the UK imports more than it exports and if domestic gas production has a lower carbon footprint compared to imported liquified natural gas (LNG).
However, critics argue that this approach fails to consider the relatively high carbon emissions associated with UK oil production. In addition, Norway (the primary gas supplier to the UK) produces gas with significantly lower emissions than UK projects.
Why renewables are the solution
Labour is pushing the government to become much more aggressive in its embrace of renewable energy. Energy experts are increasingly convinced that this is the right approach. Solar energy in particular offers a solution to the energy crisis.
A new report from Germany estimates that 75 percent of Europe’s single-family homes could be energy self-sufficient by 2050 through the use of solar panels.
In addition, the UK offers tremendous solar generating capacity in spite of its cool and cloudy climate. The UK receives the same amount of solar radiation as Germany, one of the world’s top solar energy producers.
Lastly, solar energy reduces Britain’s dependence on Russian oil and gas. This dependency was the primary reason why UK energy bills skyrocketed in 2022.
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Energy & Natural Resources
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Downing Street has denied an accusation from arch-Brexiteer Nigel Farage that leaving the EU "has failed".
Speaking to BBC's Newsnight on Monday, the former UKIP leader admitted that the country had "not actually benefited from Brexit economically" and blamed this on "useless" Tory politicians "mismanaging" the departure from the bloc.
Responding, Number 10 pointed to freedoms being enjoyed in the British farming sector as an example of how the divorce from the EU was allowing the UK to take a more tailored approach to policies.
The row comes as the UK economy continues to stagnate, with gross domestic product (GDP) shown to have increased by just 0.1% between January and March.
'We have mismanaged this totally'
Newsnight presenter Victoria Derbyshire said to Mr Farage: "A poll from last month showed that 53% of people say it was wrong to Brexit - around one in five Leave voters regret it.
"The OBR [Office for Budget Responsibility] forecast a 4% hit to the economy over the medium-to-long-term - that's £40bn in tax revenues.
"Economically, the UK would have been better off staying in, wouldn't it?"
Mr Farage said he "doesn't think that for a moment" - and blamed the "failure" on the Conservative government's handling of Brexit.
He said: "We haven't benefited from Brexit economically when we could have done.
"What Brexit has proved, I'm afraid, is that our politicians are about as useless as the commissioners in Brussels were.
"We have mismanaged this totally."
He said the decision to increase corporation tax from 19% to 25% in April was "driving business away from our country" and that the UK government was "arguably... regulating our own businesses even more than they were as EU members".
Read More:
UK government scraps plan to replace all EU laws by the end of 2023
Brexit stopped Ukraine invasion from succeeding, Jacob Rees-Mogg says
Asked whether he would consider a return to frontline politics, Mr Farage said: "I wouldn't rule it out but it is not at the top of my bucket list.
"But frankly, we have not delivered on borders, we have not delivered on Brexit, the Tories have let us down very badly."
Mr Farage previously said he would leave the country if Brexit turned out to be a "disaster".
Asked whether Rishi Sunak - who campaigned to leave the EU - agreed with Mr Farage's sentiments, the prime minister's official spokesman said: "No."
"I think the prime minister has talked about the benefits of Brexit on a number of occasions," he added.
"Just thinking about farming alone, we're talking about some of the benefits of moving away from a bureaucratic cap which skewed money towards the largest landowners, with 50% going to the largest 10%.
"We have a fairer system tailored to British farmers post-Brexit."
The spokesman was speaking after Downing Street held a UK Farm To Fork summit with representatives from across the food supply chain on Tuesday.
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United Kingdom Business & Economics
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The court will hear cases this fall pertaining to gun rights, federal agency power, and whether "Trump too small" can be trademarked, but the most consequential case for Biden may be Moore v. United States. That case has to do with whether Biden can levy a wealth tax, something he's prominently and repeatedly called for.
"Reward work, not just wealth. Pass my proposal for a billionaire minimum tax," Biden said during the State of the Union address. "Because no billionaire should pay a lower tax rate than a school teacher or a firefighter."
Biden later proposed a 25% annual tax on all gains to wealth in excess of $100 million in a given year, including unrealized capital gains which aren't currently taxable. The White House says that the tax would only apply to the top 0.01% of the highest earners.
While the proposal faces long odds with a Republican-controlled House of Representatives, it could be nixed permanently if the high court rules such a tax is unconstitutional.
The specifics of the Moore case don't involve huge amounts of money, but center around the same issues of taxation and the definition of the word "income."
Charles and Kathleen Moore, a Washington state-based couple, made a nearly $40,000 investment into an Indian company in 2005, and never received any money or other payments from the company even though it made a profit every year.
Under the 2017 tax reform law, they learned that they were subjected to a mandatory repatriation tax of $14,729. They paid that amount and then filed suit seeing a refund and claiming that the tax violates the constitution's apportionment clause.
The Sixteenth Amendment authorizes Congress to "lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states." That means that the federal government cannot tax stock gains, which are the source of wealth for many billionaires, unless those stocks are sold.
Progressive leaders have for years railed against this state of affairs, with Sens. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Finance Committee Chairman Ron Wyden (D-OR) supporting a tax on wealth itself rather than direct income.
An appeals court ruled that the Moores could be taxed this way, saying "there is no constitutional prohibition against Congress attributing a corporation's income pro-rata to its shareholder." But the Supreme Court could reverse that ruling, rendering the repatriation tax and future wealth-based taxes off-limits at the federal level.
"The Sixteenth Amendment allows the federal government to impose income taxes without apportioning them among the states," said Cato Institute research fellow Thomas Berry. "But courts have always limited those taxes to that word, 'income,' and said that word is meaningful. It doesn't just mean whatever the government wants it to mean."
The Cato Institute is one of several organizations to file amicus briefs on the Moores' behalf, along with the Chamber of Commerce and Americans for Tax Reform. Hearings are likely to begin in October.
Whether unrealized capital gains can be considered income has long been a subject of debate among scholars. Berry suggests that Biden and other Democrats could instead try to raise taxes on traditional income, which he is also seeking to do, as well as through measures such as tariffs on foreign goods.
Biden mentions the billionaire tax idea frequently in speeches and has claimed that billionaires pay as low as 3% in taxes on average, claiming the super-rich pay a lower percentage of their income than middle-class workers.
Yet that idea may be ruled out well ahead of any implementation depending on what the court decides.
"You can never predict for certain," Berry said, " but I think the justices will be concerned about setting a new precedent here and opening the door to a lot of taxes that we've never seen before at the federal level."
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Inflation
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Alan Jinich for NPR
toggle caption
Guadalupe Zarate harvests trees for Kitchen's Orchard in Hedgesville, West Virginia. He can pick a bushel, more than forty apples, per minute.
Alan Jinich for NPR
Guadalupe Zarate harvests trees for Kitchen's Orchard in Hedgesville, West Virginia. He can pick a bushel, more than forty apples, per minute.
Alan Jinich for NPR
It's getting late in the harvest season in Berkeley County, West Virginia and Carla Kitchen's team is in the process of hand-picking nearly half a million pounds of apples. In a normal year, Kitchen would sell to processors like Andros that make applesauce, concentrate, and other products. But this year they turned her away.
"Imagine 80% of your income is sitting on the trees and the processor tells you they don't want them," Kitchen says. "You've got your employees to worry about. You've got fruit on the trees that need somewhere to go. What do you do?"
For the first time in 36 years, Kitchen had nowhere to sell the bulk of her harvest. It could have been the end of her business. And she wasn't the only one. Across the country, growers were left without a market. Due to an oversupply carried over from last year's harvest, growers were faced with a game-time economic decision: Should they pay the labor to harvest, crossing their fingers for a buyer to come along, or simply leave the apples to rot?
Alan Jinich for NPR
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Workers prepping apples for donation at Taylor Farms in Inwood, West Virginia.
Alan Jinich for NPR
Bumper crops, export declines and the weather have contributed to the apple crisis
Christopher Gerlach, director of industry analytics at USApple, says the surplus this year was caused by several compounding factors. Bumper crops have kept domestic supply high. Exports have declined 21% over the past decade, a symptom of retaliatory tariffs from India that only ended this fall.
Weather also played a role this year as hail left a significant share of apples cosmetically unsuitable for the fresh market. Growers would normally recoup some value by selling to processors, but that wasn't an option for many either – processors still had leftovers from last year sitting in climate-controlled storage.
"Last year's season was so good that the price went down on processors and they said, 'let's buy while the buyings good,' " Gerlach says. "These processors basically filled up their storage warehouses. It's just the market."
While many growers in neighboring states like Maryland and Virginia left their apples to drop. Sen. Joe Manchin of West Virginia was able to convince the United States Department of Agriculture (USDA) to pay for the apples produced by growers in his state, which only makes up 1% of the national market.
A relief program in West Virginia donated its surplus apples to hunger-fighting charities
This apple relief program, covered under Section 32 of the Agricultural Adjustment Act of 1935, purchased $10 million worth of apples from a dozen West Virginia growers. Those apples were then donated to hunger-fighting charities across the country from South Carolina and Michigan all the way out to The Navajo Nation.
A nonprofit called The Farmlink Project took care of more than half the state's surplus – 10 million pounds of apples filling nearly 300 trucks.
Alan Jinich for NPR
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Mike Meyer, Head of Advocacy at The Farmlink Project, poses in front of bins the non-profit donated for transportation.
Alan Jinich for NPR
Mike Meyer, Head of Advocacy at The Farmlink Project, poses in front of bins the non-profit donated for transportation.
Alan Jinich for NPR
Mike Meyer, head of advocacy at The Farmlink Project, says it's the largest food rescue they've ever done and they hope it can serve as a model for their future missions.
"There's over 100 billion pounds of produce waste in this country every year; we only need seven billion to drive food insecurity to zero," Meyer says. "We're very happy to have this opportunity. We get to support farmers, we get to fight hunger with an apple. It's one of the most nutritional items we can get into the hands of the food insecure."
At Timber Ridge Fruit Farm in Virginia, owners Cordell and Kim Watt watch a truck from The Farmlink Project load up on their apples before driving out to a food pantry in Bethesda, Md. Despite being headquartered in Virginia, Timber Ridge was able to participate in the apple rescue since they own orchards in West Virginia as well. Cordell is a third-generation grower here and he says they've never had to deal with a surplus this large.
"This was unprecedented territory," Watt says. "The first time I can remember in my lifetime that they [processors] put everybody on a quota. I know several growers that just let them fall on the ground. ... The program with Farmlink has really taken care of the fruit in West Virginia, but in a lot of other states there's a lot of fruit going to waste. We just gotta hope that there's funding there to keep this thing going."
Alan Jinich for NPR
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Cordell Watt, co-owner of Timber Ridge Fruit Farm in Gore, Va., poses in front of his crates.
Alan Jinich for NPR
At the So What Else food pantry in Bethesda, Md., apple pallets from Timber Ridge fill the warehouse up to the ceiling. Emanuel Ibanez and other volunteers are picking through the crates, bagging fresh apples into family-sized loads.
"I'm just bewildered," Ibanez says. "We have a warehouse full of apples and I can barely walk through it."
"People in need got nutritious food out of this program. And that's the most important thing"
Executive director Megan Joe says this is the largest shipment of produce they've ever distributed – 10 truckloads over the span of three weeks. The food pantry typically serves 6,000 families, but this shipment has reached a much wider circle.
"My coworkers are like, 'Megan, do we really need this many?' And I'm like, yes!" Joe says. "The growing prices in the grocery stores are really tough for a lot of families. And it's honestly gotten worse since COVID."
Back in West Virginia, apple growers, government officials, and Farmlink Project members come together in a roundtable meeting. Despite the existential struggles looming ahead, spirits were high and even some who were skeptical of government purchases applauded the program for coming together so efficiently.
Alan Jinich for NPR
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Workers at Timber Ridge Fruit Farm sort fresh apples for donation.
Alan Jinich for NPR
Workers at Timber Ridge Fruit Farm sort fresh apples for donation.
Alan Jinich for NPR
"It's the first time we've done this type of program, but we believe it can set the stage for the region," Kent Leonhardt, West Virginia's commissioner of agriculture says. "People in need got nutritious food out of this program. And that's the most important thing."
Following West Virginia's rescue program, the USDA announced an additional $100 million purchase to relieve the apple surplus in other states around the country. This is the largest government buy of apples and apple products to date. But with the harvest window coming to an end, many growers have already left their apples to drop and rot.
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Nonprofit, Charities, & Fundraising
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- Americans are steadily falling deeper into credit card debt.
- Of those carrying card balances, 60% have now been in debt for a year or more, according to a recent report.
- There are some tried and true payoff strategies that can help, experts say.
- Here are the best ways to jump start debt repayment.
Credit cards are one of the most expensive ways to borrow money from month to month and yet, many Americans continue to take on ever-increasing amounts of this debt.
Now, 47% of borrowers carry over card balances each month, the report found. And of those who are carrying a balance, 60%, or roughly 54 million people, have been in debt for at least a year.
"The situation is noticeably worse than it was a few years ago," said Ted Rossman, senior industry analyst at Bankrate. "More people are carrying more debt and at very high interest rates."
1. Snag a 0% balance transfer credit card
"My top tip is to sign up for a 0% balance transfer card," Rossman said. "These allow you to avoid interest for up to 21 months, and that's a tremendous tailwind that can power your debt payoff journey."
Cards offering 12, 15 or even 21 months with no interest on transferred balances are one of the best weapons Americans have in the battle against credit card debt, added Matt Schulz, LendingTree's chief credit analyst.
To make the most of a balance transfer, aggressively pay down the balance during the introductory period. Otherwise, the remaining balance will have a new annual percentage rate applied to it, which is about 24%, on average, in line with the rates for new credit, according to Schulz.
Further, there can be limits on how much you can transfer and fees attached. Most cards have a one-time balance transfer fee, which is usually around 3% of the tab, but there can be an annual fee for the card, as well.
2. Pick a repayment strategy
There are two ways you could approach repayment: prioritize the highest-interest debt or pay off your debt from smallest to largest balance. Those strategies are known as the avalanche or snowball method, respectively. Using either can help consumers pay off debt as much as 100 months sooner, according to a separate analysis by LendingTree.
The avalanche method lists your debts from highest to lowest by interest rate. That way, you pay off the debts that rack up the most in interest first. The snowball method prioritizes your smallest debts first, regardless of interest rate, to help gain momentum as the debts are paid off.
With either strategy, you'll make the minimum payments each month on all your debts and put any extra cash toward accelerating repayment on one debt of your choice.
"People may tell you there's an absolute right answer as to which method is best," Schulz said. "They're wrong. There's not. It's heavily dependent on each individual's financial circumstances and even their own personal styles. And, ultimately, if you start with one method and don't like it, nothing says you can't switch strategies."
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Banking & Finance
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PayPal has launched a U.S. dollar stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers. Reuters reports: PayPal's announcement, which lifted its shares 2.66% on Monday, reflects a show of confidence in the troubled cryptocurrency industry that has over the last 12 months grappled with regulatory headwinds that were exacerbated by a string of high-profile collapses. "PayPal isn't quite as polarizing as Facebook, but it's a high-profile name that will surely get attention on Capitol Hill, and from the [Federal Reserve] and [Securities and Exchange Commission]," said Ian Katz, managing director of Capital Alpha Partners, in a note.
PayPal's stablecoin, dubbed PayPal USD, is backed by U.S. dollar deposits and short-term U.S Treasuries, and will be issued by Paxos Trust Co. It will gradually be available to PayPal customers in the United States. The token can be redeemed for U.S. dollars at any time, and can also be used to buy and sell the other cryptocurrencies PayPal offers on its platform, including bitcoin. "PYUSD is the first of its kind, representing the next phase of U.S. dollars on the blockchain," Paxos posted on messaging platform X, formerly known as Twitter. "This is not just a milestone moment for Paxos & PayPal, but for the entire financial industry."
PayPal's stablecoin, dubbed PayPal USD, is backed by U.S. dollar deposits and short-term U.S Treasuries, and will be issued by Paxos Trust Co. It will gradually be available to PayPal customers in the United States. The token can be redeemed for U.S. dollars at any time, and can also be used to buy and sell the other cryptocurrencies PayPal offers on its platform, including bitcoin. "PYUSD is the first of its kind, representing the next phase of U.S. dollars on the blockchain," Paxos posted on messaging platform X, formerly known as Twitter. "This is not just a milestone moment for Paxos & PayPal, but for the entire financial industry."
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Crypto Trading & Speculation
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- The world's largest economy is once again facing the prospect of a government shutdown unless lawmakers in Washington can pass a spending bill before an Oct. 1 deadline.
- S&P downgraded the long-term credit rating from the AAA representing a "risk free" rating to AA+ as early as 2011, citing political polarization after another debt ceiling squabble in Washington.
The U.S. is in a weaker position now than when S&P downgraded its sovereign credit rating in 2011, according to the former chairman of the agency's Sovereign Rating Committee.
House Speaker Kevin McCarthy cannot afford to lose more than four votes among fellow Republicans in the House of Representatives, but faces resistance from hard-right members within his caucus, who are demanding deeper domestic spending cuts.
Moody's earlier this week warned that a government shutdown would harm the country's credit, after Fitch downgraded the long-term U.S. sovereign credit rating by one notch in August on the back of the latest political standoff over raising the debt ceiling.
S&P controversially downgraded the long-term credit rating from the AAA representing a "risk free" rating to AA+ as early as 2011, citing political polarization after another debt ceiling squabble in Washington.
John Chambers, former chairman of the Sovereign Rating Committee at S&P Global Ratings at the time of that 2011 downgrade, told CNBC's "Capital Connection" on Tuesday that a government shutdown is likely and that the whole episode was a "sign of weak governance."
This was a factor that led to S&P's downgrade of 2011, and Chambers said the U.S. fiscal position is now even weaker than it was back then.
"Right now the deficit of the general government — which is the federal and the local governments combined — is over 7% of GDP and the government debt is 120% of GDP. At the time, we forecasted that it might get to 100% of GDP, and the government ridiculed us for being too scaremongering," he said.
"The external position is about the same, but I think the governance has weakened and the fractiousness of the political settings is much worse, and that has led to government shutdowns, it's led to fears that the government might default on its debt because of the debt ceiling, and it's led to a failed coup d'état on the 6th [of] January, 2021."
House Speaker McCarthy needs almost all of his Republican colleagues on the side, but the Freedom Caucus, which had 49 members in January, has stalled budget negotiations by demanding harsher domestic spending cuts.
McCarthy may seek help from Democrats to shore up the necessary votes to avoid a shutdown, but hardline Republicans have discussed ousting him as Speaker if such a compromise is agreed.
In May of this year, another standoff between the White House and opposition Republicans over raising the U.S. debt limit once again pushed the world's largest economy to the brink of defaulting on its bills, before President Joe Biden and House Speaker Kevin McCarthy struck a last-minute deal.
In its August downgrade, Fitch cited "expected fiscal deterioration over the next three years" and an erosion of governance in light of "repeated debt-limit political standoffs and last-minute resolutions."
However, the downgrade was dismissed by many big-name bank bosses and economists as largely immaterial.
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Interest Rates
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LIZ TRUSS will warn today (Monday) that a lack of supply side reform under Rishi Sunak will lengthen a 25-year-long ‘economic consensus’ that has seen growth effectively flatline across the west.
In a speech this morning the former Prime Minister will say that free-marketeers and the Conservative party became complacent after the Cold War, allowing “the debate to be framed and led by the left.”
Truss attempted to push through an aggressive tax reforms package as Prime Minister, which backfired after a sharp rise in the cost of UK debt almost sent a host of so-called LDI funds into meltdown.
Truss will say that the market reaction to her tax cut programme was in fact due to “markets that were already destabilised by the Bank of England’s slowness to hike interest rates and the failure to regulate LDIs.
“I was effectively forced into a policy reversal under the threat of a UK meltdown,” she will say.
Truss is believed to harbour hopes of a political resurrection despite her 44-day stay at Downing Street ending in ignominious circumstances.
Her speech at the Institute for Government today is her first major intervention on the economy since she resigned and will be seen as a sign of growing frustration from some free-market Tories at PM Rishi Sunak.
She will warn that the current administration has delivered precious little of the supply side reforms she believes necessary to reinvigorate the UK economy.
“Since last year no major supply side reforms or tax cuts have been allowed to happen – whether it is financial services, childcare, planning or on the environment.
In fact, 150 Conservative MPs have written to the Prime Minister saying there should be no change to Net Zero legislation,” she will add.
The Lib Dems said that Truss warning on the economy was like an “arsonist giving a fire safety talk.”
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Interest Rates
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Brexit and Burberry: Impact of VAT Changes on the UK Retail Sector
Updated: 2 minutes ago
The Economic Landscape and Brexit
The economic landscape in which Burberry operates has been significantly influenced by Brexit. The UK's departure from the European Union has resulted in several changes, including the abolition of the VAT retail export scheme. This scheme allowed non-EU tourists to reclaim the VAT paid on goods purchased but not consumed in the UK. The decision to scrap this scheme has been met with criticism from several quarters, including Burberry, which believes it puts the UK at a competitive disadvantage.
Brexit's Impact on the UK Retail Industry
Brexit has had a profound impact on the UK retail industry. Supply chain disruptions due to new customs regulations and border checks have resulted in delays and increased costs for retailers importing goods from the EU. These disruptions have been particularly severe for fresh food and other perishable goods. The new trade barriers have also led to increased costs for retailers. These costs are often passed on to consumers, leading to higher prices.
The Impact on Burberry
For Burberry, these changes have had a noticeable impact. Despite a 10% rise in sales to £3.1bn in the year to 1 April 2023, with underlying sales growth rising to 16% in the final quarter of the year from 7% across the year as a whole, the company has expressed concern about the VAT changes. The company's CEO, Jonathan Akeroyd, has stated that the UK is at a "competitive disadvantage for global shoppers" and that this has held back sales in its home market.
In the three months to April 2023, sales to tourists in London rose by 19%, but they tripled in Paris and were up 43% in Milan. Despite total sales in the UK rising by 28% for the year, driven by locals and visitors from Europe, the US, Asia, and the Middle East, Akeroyd noted a significant surge in UK tourists spending in Europe, which he described as "quite telling".
The Broader Implications
Akeroyd's comments echo sentiments expressed by other companies, including British Airways, Mulberry, and Fortnum & Mason, which have also criticized the decision and called on the chancellor, Jeremy Hunt, to reverse it. The chair of Burberry, Gerry Murphy, described Brexit as a "drag on growth" and said it had left Britain nursing the "weakest" Covid recovery among its big markets. He told the prime minister, Rishi Sunak, that the decision to remove VAT refunds in 2020 had hurt the economy and was a "spectacular own goal".
Burberry's Performance Amidst Challenges
Despite these challenges, Burberry has shown resilience. The company reported a 10% rise in sales to £3.1bn in the year to 1 April 2023, with underlying sales growth rising to 16% in the final quarter of the year from 7% across the year as a whole. This was largely due to a resurgence in China after pandemic restrictions were eased in January. Annual pre-tax profits rose 24% to £634m.
The Future of Burberry and the UK Retail Industry
Looking ahead, the future of Burberry and the UK retail industry as a whole remains uncertain. The company's shares are down 5.3% from a week ago, and the broader retail industry continues to grapple with the challenges posed by Brexit. However, Burberry's ability to achieve growth despite these challenges suggests that it is well-positioned to navigate this uncertain landscape.
Conclusion
In conclusion, the case of Burberry highlights the potential challenges that Brexit and associated policy changes can pose for UK businesses, particularly those in the retail sector. While the company has managed to achieve growth despite these challenges, the concerns raised by its CEO underscore the need for careful consideration of policy decisions and their potential impact on the UK's competitive position in the global market.
The abolition of the VAT retail export scheme has been a significant point of contention, with Burberry and other companies arguing that it puts the UK at a competitive disadvantage. The impact of this policy change on Burberry's sales, particularly in comparison to sales in other European cities, illustrates the potential implications of such decisions.
However, despite these challenges, Burberry has demonstrated resilience. The company's ability to achieve growth in a difficult economic landscape is a testament to its strategic planning and adaptability. Looking ahead, the future of Burberry and the UK retail industry as a whole remains uncertain, but Burberry's performance suggests that it is well-positioned to navigate this uncertainty.
Ultimately, the case of Burberry underscores the complex interplay between political decisions and economic outcomes. It serves as a reminder of the importance of strategic planning and adaptability in navigating an ever-changing economic landscape.
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Consumer & Retail
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