The IMF has cautioned the UK against implementing additional tax cuts in its latest evaluation of the global economy. The organization emphasized the need for higher spending to preserve public services and investment, suggesting that the government's current plans underestimate the required expenditure. Chancellor Jeremy Hunt, however, argued that tax cuts could significantly contribute to economic growth.
Nationwide reports a more positive outlook for the UK housing market, noting the strongest improvement in prices in a year. In January, the average house price increased by 0.7%, marking a notable turnaround from December when prices experienced a 1.8% decline.
A prominent business figure, Jürgen Maier, former UK head of Siemens, stated that Labour's proposed annual investment of £28bn in the low-carbon economy is a bare minimum. He emphasized the necessity of massive investment to rebuild the UK economy, focusing on low-carbon energy, transport, and industry to avoid a decline due to crumbling infrastructure.
The UK's Labour party aims to position the country as a hub for securities tokenization, promote a digital pound, and vigorously support the financial services industry if it assumes power after the upcoming election. Tokenization, defined as the digital representation of financial assets using distributed ledger technology, is seen as a significant opportunity for the UK, according to UK Finance.
The US Federal Reserve decided to maintain interest rates for another month, considering the fading US inflation rate. Despite earlier signals of potential rate cuts in 2024, policymakers opted to keep rates steady after their first two-day meeting of the year. Fed Chair Jerome Powell dismissed the notion of rate reduction as early as March.
Concerns over China's high debt levels, an aging population, and an ongoing property crisis cast doubt on its ability to surpass the US and become the world's largest economy. Nathan Sheets, global chief economist at Citi, stated that it is no longer considered inevitable after China lost significant ground over the past two years.
Official figures reveal that the eurozone narrowly avoided a recession as its economy stagnated at the end of 2023. With zero growth in the last quarter, the region managed to avert a recession, defined as two consecutive quarters of contraction. Germany contracted by 0.3%, and France posted no growth for a second consecutive quarter, according to Eurostat, the EU's statistical agency. Economists had anticipated a 0.1% contraction in the fourth quarter.
The pound has been trading pretty steady over 1.27 against the dollar over the past week, but lost some ground as the US Fed held interest rates. The Euro lost ground across the board after narrowly missing recession. GBPUSD trades at 1.2650, GBPEUR is at 1.1730 whilst EURUSD is down at 1.0780.
