UK Economy to Experience Faster Growth, Says Government Forecaster
The UK economy is projected to grow slightly faster than previously expected this year and next, according to the Office for Budget Responsibility (OBR). In her presentation of the Budget, Chancellor Rachel Reeves announced that the OBR now forecasts a 1.1% growth in 2024, up from an earlier estimate of 0.8%. The outlook for 2025 has also improved, with growth anticipated at 2%, an increase from the March forecast of 1.9%.
Despite the positive short-term outlook, the OBR predicts that growth will slow towards the end of the current parliamentary term. For 2027 and 2028, growth is projected at 1.5%, down from the earlier estimates of 1.8% and 1.7%, respectively. Overall, the economy is expected to expand by nearly 8.2% by 2028, slightly lower than the previous forecast of 8.5%.
Chancellor Reeves emphasized that the Budget signifies “an end to short-termism,” as the OBR will now provide a 10-year growth forecast alongside its analysis. “Every Budget I deliver will be focused on our mission to grow the economy,” she stated.
While the OBR’s forecast indicates stronger growth initially, the subsequent dip raises concerns about the cumulative impact on the economy by the end of the parliamentary term. Paul Johnson, director of the Institute for Fiscal Studies, described the updated growth forecast as “pretty disappointing,” noting that economic growth is a critical factor influencing the government’s financial capabilities.
Strong economic growth typically leads to increased tax revenues, allowing for greater investment in public services and reduced taxes. Conversely, weak growth may force the government to scale back its spending plans. Despite these challenges, Reeves assured that there would be no return to austerity but acknowledged that “there will still be hard decisions to come.”
The Chancellor asserted that the OBR believes Labour’s proposed policies would positively influence the “supply capacity of the economy,” enhancing its growth potential. However, the government remains aware that economic forecasting is inherently uncertain and can be influenced by various factors, including geopolitical risks, global energy prices, and developments in other major economies.
In her address, Reeves highlighted plans to “catalyse £70 billion of investment” through the establishment of a new National Wealth Fund. She also outlined intentions to reform planning rules to encourage construction across the UK and pledged to collaborate with devolved governments in Wales, Scotland, and Northern Ireland, as well as regional mayors, to enhance local and regional growth initiatives.
As the UK navigates a complex economic landscape, the government’s commitment to fostering growth will be closely monitored amid evolving global circumstances.
Business
Trump Names Brooke Rollins as Agriculture Secretary, Finalizing Cabinet Roster
Former President Donald Trump announced Brooke Rollins as his nominee for Secretary of Agriculture, marking the completion of his cabinet lineup. The nomination, revealed late Saturday, sees Rollins, a longtime Trump ally and head of the America First Policy Institute, poised to lead the department responsible for U.S. farm policy.
“As our next Secretary of Agriculture, Brooke will spearhead the effort to protect American farmers, who are truly the backbone of our Country,” Trump said in a statement.
Who Is Brooke Rollins?
Rollins, a prominent figure in Trump’s political orbit, co-founded and leads the America First Policy Institute, a think tank aligned with Trump’s “Make America Great Again” agenda. She previously served as director of the White House Office of American Innovation and acting director of the Domestic Policy Council during Trump’s first administration.
Her roots in agriculture trace back to her upbringing on a farm, where she participated in programs like Future Farmers of America and 4-H. A graduate of Texas A&M University with a degree in agricultural development, Rollins also has a background in law.
If confirmed by the Senate, Rollins would oversee farm subsidies, nutrition programs, meat inspections, and forestry policies. She would also play a pivotal role in trade negotiations, including the U.S.-Mexico-Canada Agreement, potentially implementing Trump’s proposed tariffs.
Completing the Cabinet
Rollins’ nomination concludes Trump’s series of cabinet picks, a process that has drawn significant attention for its mix of loyalists and controversial figures. The 15-member cabinet comprises leaders of executive departments, all requiring Senate confirmation.
Some of Trump’s choices have sparked debates, including Robert Kennedy Jr., nominated to head the Department of Health and Human Services. Kennedy, a former environmental lawyer and vaccine skeptic, previously ran against Trump as an independent before endorsing him.
Other selections faced turbulence, such as former Florida congressman Matt Gaetz, nominated for attorney general. Gaetz withdrew his nomination amid allegations of sexual misconduct and drug use, which he denies. Senators reportedly expressed concerns about his confirmability. Trump swiftly replaced Gaetz with Pam Bondi, a former Florida attorney general.
Pete Hegseth, Trump’s pick for another cabinet role, also faced scrutiny over allegations of sexual assault from 2017, which he denies. Education Secretary nominee Linda McMahon, a former WWE executive, has been criticized for her lack of experience in education.
With Rollins’ nomination, Trump has solidified his cabinet team, though the confirmation process promises to be a contentious battle in the Senate.
Business
Bitcoin Nears $100,000 as Record-Breaking Rally Continues
Bitcoin surged to unprecedented levels, crossing $99,000 overnight, marking a dramatic rally that has seen the cryptocurrency rise over 40% in just two weeks. Trading at $98,882 early Friday, according to CoinDesk, the digital asset is on the cusp of breaching the symbolic $100,000 threshold, a stark recovery from its $17,000 low after the collapse of FTX two years ago.
Drivers of the Rally
The rally comes as the cryptocurrency industry anticipates a more favorable regulatory environment under President-elect Donald Trump. A vocal supporter of cryptocurrency in recent months, Trump has pledged to make the United States the “crypto capital of the planet,” with plans for a bitcoin “strategic reserve.” His campaign’s acceptance of cryptocurrency donations and his appearance at a bitcoin conference have further boosted sentiment in the market.
Additionally, the approval of spot bitcoin exchange-traded funds (ETFs) earlier this year has attracted significant institutional and retail investment. These ETFs recorded $6 billion in trade volume during election week, according to data from Kaiko, further propelling bitcoin’s rise.
Regulatory Shifts and Economic Context
Market players are hopeful for regulatory clarity as Gary Gensler, the SEC chair who led a crackdown on crypto companies under President Joe Biden, is set to step down on January 20. Many in the industry view Gensler’s departure as an opportunity for a policy shift from enforcement-focused measures to more comprehensive legislative frameworks.
However, the bullish sentiment comes amid lingering concerns about the long-term stability of the market. Citi macro strategist David Glass noted that while current momentum is promising, the impact of regulatory changes will take time to materialize.
Risks and Volatility
Cryptocurrency remains inherently volatile, with past performance showcasing dramatic price fluctuations. For instance, bitcoin fell from nearly $69,000 in November 2021 to below $17,000 by late 2022 during the Federal Reserve’s aggressive rate hikes and the fallout from FTX’s collapse.
Experts caution that while bitcoin’s rally has been extraordinary, risks of corrections persist. “There’s no magic eight ball,” said Adam Morgan McCarthy, a research analyst at Kaiko. He advised investors to remain cautious, especially those with smaller portfolios, emphasizing the importance of managing risk responsibly.
Environmental Concerns
Bitcoin mining’s environmental impact continues to draw scrutiny. A recent study by the United Nations University found that the carbon footprint of global bitcoin mining in 2020-2021 was equivalent to the emissions from burning 84 billion pounds of coal. Despite increased use of cleaner energy, critics argue that bitcoin’s reliance on pollutive sources like coal remains significant.
As bitcoin approaches the $100,000 milestone, the cryptocurrency market faces a mix of optimism and caution. Investors and industry players alike are watching closely to see whether the rally can sustain its momentum in the coming weeks.
Business
EU New Car Registrations Rise in October, But Electric Vehicle Sales Struggle
New car registrations across the European Union rose slightly in October, driven by strong performances in Germany and Spain, according to the latest data from the European Automobile Manufacturers’ Association (ACEA). The EU saw a 1.1% increase in new car registrations for the month, with notable growth in two major markets.
Germany’s car registrations rebounded by 6%, reversing three months of declines, while Spain experienced a robust 7.2% increase. However, not all countries saw growth. Italy’s new car registrations fell by 9.1%, and France also experienced a decline, with a 11.1% drop in registrations.
Looking at the year so far, new car registrations in the EU have risen by 0.7% from January to October, reaching approximately 8.9 million units. Italy saw a modest increase of 0.9%, while Spain posted a 4.9% rise. However, both Germany and France have faced declines in new car registrations, with Germany down by 0.4% and France experiencing a 2.7% drop over the same period.
Sigrid de Vries, ACEA’s director general, commented on the trend, highlighting the challenges faced by the electric vehicle (EV) market. “The latest year-to-date figures on market volume for battery electric (-4.9%) and plug-in hybrid cars (-7.9%) underline the urgent need to increase efforts to support the transition to zero-emissions vehicles,” de Vries said. She stressed the need for greater incentives and an expanded network of charging stations to encourage consumer adoption.
Battery-electric vehicles (BEVs) have seen a decline in sales, with a 4.9% drop in registrations in the first 10 months of 2024 compared to the same period last year. This decrease was primarily driven by a significant 26.6% drop in registrations in Germany. However, BEV registrations in October saw a slight uptick, increasing by 2.4% to 124,907 units.
Similarly, plug-in hybrid vehicle registrations also faced challenges. These vehicles dropped by 7.9% year-to-date, with disappointing performances in Italy and France. In October, plug-in hybrid car registrations fell 7.2%, reducing their market share to 7.7%, down from 8.4% in October 2023.
The slump in EV sales can be attributed to a combination of factors, including rising energy prices, insufficient incentives, and a lack of charging infrastructure. Additionally, higher tariffs on Chinese electric vehicles, following concerns over government subsidies, have made these cars significantly more expensive in Europe. This price increase, along with ongoing economic uncertainty and rising interest rates, has led to a dampened consumer appetite for electric vehicles.
With global economic pressures and geopolitical uncertainty also weighing on consumer sentiment, the EU faces significant hurdles in meeting its ambitious targets for the transition to zero-emissions vehicles.
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