India in talks with EU for trade deal, open to pact with UK By Reuters


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© Reuters. 2020 World Economic Forum in Davos

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By Aftab Ahmed

NEW DELHI (Reuters) – India has started trade talks with the European Union (EU) and is open to dialogue with the United Kingdom for a free trade agreement, the trade minister said on Saturday, as Asia’s third largest economy looks for new markets for its products.

Piyush Goyal said that India is open to engage with the UK for a preferential trade agreement with the ultimate goal of a free trade agreement.

He is also in dialogue with the European Union’s trade commissioner for a deal that could start with a preferential trade agreement. He added that the ultimate goal here too would be to have a free trade agreement.

“We’re talking to the EU and I am in dialogue with the EU trade commissioner. I am looking for an early harvest deal. Open to discussions on a variety of subjects. It’s up to the UK and EU whoever picks up the gauntlet first,” Goyal said.

Negotiations for a comprehensive free trade agreement between the EU and India were suspended in 2013 after six years of talks.

India pulled out of the Regional Comprehensive Economic Partnership last year due to fears over China’s access to its markets and is looking for new ways to boost its exports.

The country has also been raising trade barriers to block cheap imports from China and replace them with locally made goods for domestic consumption and exports.

“Apart from pharmaceuticals, we have textiles, handicrafts, leather, furniture, industrial machinery, toys are areas where India can engage with UK & EU at competitive prices,” Goyal said.

India’s economic growth has largely been driven by local consumption and successive governments have struggled to expand exports.

In the last six years Prime Minister Narendra Modi’s government has been trying to push exports through various programmes like “Make in India” but with limited success.

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UK expected to order removal of Huawei 5G equipment by 2025: Telegraph By Reuters



© Reuters. FILE PHOTO: Logo of Huawei is seen at VivaTech fair in Paris

LONDON (Reuters) – The British government is expected to set a deadline of 2025 for removing equipment made by China’s Huawei from the country’s 5G telecoms networks, the Telegraph newspaper said on Friday.

The Telegraph reported that British culture minister Oliver Dowden will make a statement in Parliament on Tuesday about Huawei, and that ministers wanted Huawei’s removal within five years.

Adding to strains in ties between London and Beijing, Britain in January capped Huawei’s role in its 5G networks at 35% and barred it from the most sensitive parts of the system.

The government said recently that U.S. sanctions could damage Huawei’s ability to supply crucial networking equipment.

China’s ambassador to London, Liu Xiaoming, warned last week that getting rid of Huawei would send a “very bad message” to Chinese business.

Operators Vodafone (NASDAQ:) and BT said on Thursday that they needed a minimum of five years and ideally seven to avoid major disruption to Britain’s emerging superfast networks.

Conservative lawmakers have pressed Prime Minister Boris Johnson to speed up the process to 2023, the Telegraph said.

A spokeswoman for Britain’s Department for Digital, Culture, Media & Sport was unable to comment immediately on the report.

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Historic slump among UK companies levels off in June: PMI By Reuters



© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19), in London

LONDON (Reuters) – The historic slump across British businesses levelled off last month as some of the economy reopened following an easing of the coronavirus lockdown, a business survey showed on Friday.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) rose to 47.1 from 29.0 in May, slightly higher than a preliminary reading of 47.0 but still below the 50 threshold for growth.

“Encouragingly, more than one-in-four service providers reported an expansion of new business during June, which was commonly attributed to pent-up demand and the phased restart of the UK economy,” said Tim Moore, economics director at IHS Markit, which compiles the survey.

“However, lockdown measures continued to hold back travel and leisure, while companies across all main categories of service activity commented on subdued underlying business and consumer spending in the wake of the COVID-19 pandemic.”

The survey showed 33% of services businesses, which account for the vast bulk of Britain’s economy, reported a drop in activity, down from 54% in May, while 28% reported a rise.

The composite PMI, which combines the services and manufacturing sector, rose to 47.7 in June, up from 30.0 in May and again slightly higher than a preliminary reading of 47.6.

In June, the Bank of England said Britain’s economy looked on course to have shrunk by around 20% in the first six months of 2020 – a smaller decline than it had first feared, but still one of the biggest annual drops in 300 years.

British finance minister Rishi Sunak is due to announce his next steps for steering the economy back towards recovery on July 8.

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UK government recognises Guaido as Venezuela’s president in gold dispute, judge rules By Reuters


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© Reuters. FILE PHOTO: Venezuelan opposition leader Juan Guaido speaks during a news conference after Venezuela’s pro-government supreme court replaced the leaders of two key opposition parties, months ahead of legislative elections in Caracas

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LONDON (Reuters) – A London court ruled on Thursday that the British government recognizes Juan Guaido as Venezuela’s president, instead of Nicolas Maduro, in a case to decide which leader controls $2 billion worth of Venezuelan central bank gold stored in the Bank of England.

The British government “has unequivocally recognised Mr. Guaido as President of Venezuela. It necessarily follows that (it) no longer recognises Mr. Maduro as President of Venezuela,” the judge wrote in his ruling following a trial last week.

In a statement, lawyers for Maduro’s central bank said they would appeal the judgement.

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Pound Sinks to Fresh 1-Month Low on U.K. Spending Plans By Investing.com



© Reuters.

By Yasin Ebrahim

Investing.com – The pound fell against the dollar to fresh one-month lows on Monday, amid concerns about the U.K.’s post-Brexit spending plans at a time when many are worried that the latest round of U.K-EU trade talks are unlikely to yield progress.

fell 0.32%, to $1.2293

Prime Minister Boris Johnson is expected to unveil a plan to fast-track infrastructure projects on Tuesday, stoking investor worries about the country’s bulging debt load.

U.K. public debt has exceeded GDP for the first time since 1963, after the government borrowed a record £55bn in May to fund its fiscal stimulus programs to cushion the economic blow from the pandemic, government data showed earlier this month.   

Fears are also running high that the U.K is preparing for a no-deal Brexit after a government spokesperson reportedly confirmed Johnson would “be ready to leave the transition period on Australia terms if an agreement (with the EU) could not be reached.”

The U.K and EU resumed post-Brexit talks on Monday, but hopes of a resolution on key issues such as fishing policy and the commitment to a “level playing field” in competition are fading.

The U.K. has made it clear it wants to take control over access to its waters and fish when the Brexit transition period ends, rather stick with the EU’s Common Fisheries Policy, which set fishing quotas among EU member states.  

While the EU has suggested it is willing to compromise on some issues, the economic bloc has reiterated it would not agree to any measures that threaten the four freedoms – goods, people, capital, services –  of the single market.

EU Chief Brexit negotiator Michel Barnier met with his U.K. counterpart David Frost on Monday to kick off back-to-back trade negotiations.

“Barnier signalled on Wednesday his willingness to find a compromise on the level playing field and fishing issues,” Morgan Stanley said.

But Frost “rejected the possible compromise floated in the media – that the U.K. would have the right to deviate from the EU’s level playing field if it chooses to but the EU could impose tariffs if this happens,” it added.

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No need to have all-encompassing trade deal with UK initially, U.S. housing secretary says By Reuters



© Reuters. U.S. HUD Secretary Carson appears before Senate Banking hearing on Capitol Hill in Washington

LONDON (Reuters) – U.S. Housing and Urban Development Secretary Ben Carson said on Sunday the United States and Britain could agree a trade deal that did not cover all sectors straight away, instead leaving the more difficult issues for a later date.

Asked by the BBC whether, in his opinion, a UK-U.S. trade deal would have to cover every single sector all at once, Carson told the Andrew Marr Show: “I don’t see any reason that it does. There are areas where President (Donald) Trump and Prime Minister (Boris) Johnson have a lot of agreement and there are some areas where there needs to be further discussion.

“I don’t see why you can’t work on the areas where you have agreement, get that done, with an eye to solving the other problems subsequently,” he said, adding he was not in charge of the trade negotiations.

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UK retailers gloomy before lockdown eased in June: CBI By Reuters



© Reuters. Outbreak of the coronavirus disease (COVID-19) in London

LONDON (Reuters) – British retailers remained gloomy in the run-up to non-essential stores being allowed to reopen to the public on June 15, a survey from the Confederation of British Industry showed on Thursday.

The CBI said 62% of the retail chains it surveyed between May 27 and June 12 feared that weak consumer demand would hamper recovery from the slump in sales that occurred for most items other than food and drink after the lockdown began in late March.

The CBI’s headline retail sales barometer rose to -37 in June from -50 in May, slightly short of economists’ average expectation in a Reuters poll and far below its level at the start of the year.

“Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year,” CBI chief economist Rain Newton-Smith said.

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UK factories suffer worst quarter on record, CBI says By Reuters



© Reuters.

LONDON (Reuters) – British industrial output recorded its biggest quarterly fall on record during the three months to June as COVID-19 heavily disrupted operations, and a further decline is likely in the months to come, a survey showed on Monday.

The Confederation of British Industry’s headline industrial orders measure inched up to -58 in June from May’s 38-year low of -62, but remained far below its pre-COVID level, while export orders fell by the most since records began in 1977 at -79.

The CBI’s measure of industrial output over the past three months fell to its lowest since that measure started in July 1975, sinking to -57 from -54.

“The COVID-19 crisis has been hugely challenging for the manufacturing sector, and these figures reflect the tough circumstances faced by firms across the country,” said Tom Crotty, group director of chemicals producer INEOS and chair of the CBI’s manufacturing council.

Official data for April showed a historic 28.5% year-on-year fall in factory output.

Manufacturers are somewhat less pessimistic about the next three months, with output expectations rising to -30 from -49, despite the weaker demand from overseas, though this is well below the series’ long-run average of +8.

The CBI said the steepest falls in production came in the automotive, mechanical engineering and metals sectors.

 

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U.K. Government Debt Hits Level Not Seen in 57 Years By Bloomberg



© Reuters. U.K. Government Debt Hits Level Not Seen in 57 Years

(Bloomberg) — Britain’s budget deficit swelled further in May, taking government debt above 100% of gross domestic product for the first time since the financial year ending 1963.

Borrowing stood at 55.2 billion pounds ($69 billion) last month as spending surged and tax revenue plunged, the Office for National Statistics said Friday. It brings the total since the start of the fiscal year in April to 103.7 billion pounds, the biggest two-month total on record.

The increase reflects the cost of Chancellor Rishi Sunak’s unprecedented interventions to help prop up the economy, and the deficit is likely to swell further this year. The government is currently paying the wages for almost 12 million jobs and more stimulus including tax breaks and infrastructure projects potentially in the pipeline.

May’s number was the highest single month for borrowing on record, after April’s record figures was revised down to 48.5 billion.

The figures show central government spending surged almost 50% in the month and revenue plunged by over 28%. Net debt including Bank of England programs jumped to 100.9% of GDP.

The budget deficit in the current fiscal year, forecast to be around 55 billion pounds when Sunak took over, is now on course to top 270 billion pounds, according to the latest survey of private-sector economists compiled by the Treasury. That’s equal to about 14% of GDP, more than at any time since World War II.

The pain may last beyond this year, with a separate report from the Institute for Fiscal Studies Friday warning that persistent economic weakness could mean that U.K. borrowing levels remain elevated well into the future.

A slow recovery could mean borrowing could be as much as 70 billion pounds more in the 2024-25 fiscal year then was predicted in March, the IFS said, while even a faster rebound may mean the figure is 40 billion pounds higher.

For now though, the precise cost of the pandemic is so unpredictable that the Debt Management Office has only announced its issuance plans through the end of July. The total for the first four months of the fiscal year stood at 225 billion pounds, and the DMO will release an updated outlook on June 29.

The saving grace for Sunak is that support from the Bank of England is keeping borrowing costs manageable. The central bank increased its bond buying plan by 100 billion pound on Thursday, leaving them on track to buy almost 300 billion pounds of gilts by the end of the year.

Both numbers are still well above any figure before the virus hit, with monthly borrowing never exceeding 22 billion pounds even in the depths of the financial crisis.

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UK might need to tweak pensions promise for COVID effects: lawmaker By Reuters




LONDON (Reuters) – Britain’s government might need to temporarily suspend the way that growth in wages are included in the country’s “triple lock” system for calculating increases in the state pension, the head of parliament’s Treasury Committee said on Friday.

Pensions stand to go up very sharply because of an expected leap in wage growth next year, reflecting the end of the government’s coronavirus job retention scheme – under which many workers are currently getting 80% of their salary – this year.

“A way forward might be to temporarily suspend the wages element of the lock,” Mel Stride, chair of the Treasury Committee, said.

“This might not entirely conform to the Conservative Party manifesto, but I think most people would recognise that a potential double-digit percentage increase is unrealistic.”

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