UK incomes set at a record low

Britons are about to see a record drop in disposable income as Chancellor of the Exchequer Jeremy Hunt raises taxes and cuts spending to clean up an economy already in recession.

The UK program represents the biggest cut in government spending since the austerity budgets introduced after the global financial crisis. The measures come as the country’s inflation rate reached a 41-year high of 11.1% in October, more than five times the central bank’s target.

In the United States, retail sales rose by the most in eight months, indicating that the economy is off to a good start in the fourth quarter. Meanwhile, activity in China weakened last month, and the Chilean economy has contracted on a quarterly basis since the start of the pandemic.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Hunt has targeted the wealthy and energy companies in a package of 55 billion pounds ($65 billion) in tax hikes and spending cuts aimed at clearing up the havoc left by unprecedented shocks to the economy. The actions identified by the advisor will contribute to a 7% drop in disposable income for consumers over the next two years, the biggest squeeze ever, and will wipe out eight years of gains.

Energy bills pushed UK inflation to a 41-year high more than expected in October, piling pressure on the government and the Bank of England to take action. The consumer price index rose 11.1% from a year ago, more than five times the central bank’s target.

Producer price growth in the US fell more than expected in October in the latest sign that inflationary pressures are beginning to ease. The data comes on the heels of a smaller-than-expected monthly increase in the consumer price index for October, which was hailed as a sign that the fastest price increases in decades are finally beginning to abate.

US retail sales posted their biggest increase in eight months in October, indicating that demand for goods is broadly holding up despite high inflation in decades and a dampening economic outlook. The data suggests the economy got off to a good start in the fourth quarter, and may complicate the argument made by many Fed officials who are pushing for a slower pace of rate hikes in the coming months.

The port of New York and New Jersey retained its crown as the busiest in the United States despite a slight drop in freight traffic as major maritime hubs in California continue to clear backlogs and deal with uncertainty over dockers’ talks.

Banks will return 296.3 billion euros ($308 billion) in cheap loans to the European Central Bank after tightening their terms to help battle against record inflation. The repayment represents just under 15% of the total outstanding for the so-called TLTRO loans, which have been used during the pandemic to keep credit flowing to households and businesses.

Economies in the eastern European Union slowed in the third quarter as higher energy costs stemming from Russia’s war in neighboring Ukraine and higher interest rates hit consumers. With the eurozone close to recession, double-digit inflation has particularly plagued Eastern Europe, forcing central banks to embark on a rapid series of interest rate increases since last year.

emerging and frontier markets

Uzbekistan has ended decades of economic isolation at a time when ultra-low interest rates made it an attractive destination for foreign capital — while still relying heavily on remittances from its workers in Russia. To maintain the momentum of an economy already expected to be among the fastest growing among post-Soviet countries, Uzbekistan will look to sell land and aims to raise around $1 billion next year by divesting state assets, Deputy Prime Minister Jamshid Kochkarov who also serves as Minister of Economic Development, he said in an interview.

Chile’s economy contracted by the most on a quarterly basis since the start of the pandemic, bringing the nation to the brink of recession after annual inflation and interest rates hit multi-decade highs.

Economic activity in China weakened in October, pressuring Beijing to increase subsidies after it took big steps last week to reduce the burden on consumers from Covid Zero policies and the housing slump. Retail sales fell and industrial output growth weakened.

It has been a miserable year for the global economy. But things can always go wrong. A hard landing scenario could wipe out about $5 trillion from global output, compared to the most optimistic forecasts at the beginning of this year, according to Bloomberg Economics.

Rwanda’s central bank raised interest rates for the third time this year, the highest since 2016, after massive inflation prompted it to revise expectations. Policymakers in Uruguay, Indonesia and the Philippines also raised rates.

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