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UK unemployment dips but wages hit by inflation

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At 3.7 percent, Britain's unemployment rate has fallen to its lowest level since 1974
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Britain’s unemployment rate has fallen further to a near five-decade low, official data showed Tuesday, but the value of wages continues to erode as inflation soars.

The unemployment rate eased to 3.7 percent in the three months to the end of March, the Office for National Statistics (ONS) said in a statement, sending the pound rising against the dollar on expectations of another interest rate hike.

That was the lowest level in more than 47 years and compared with a rate of 3.8 percent in the quarter to the end of February.

Bank of England (BoE) governor Andrew Bailey on Monday warned that fallout from surging prices driven by the Ukraine war would cause unemployment to increase.

He described as “apocalyptic” the situation surrounding soaring food costs — which he said were fuelled by major wheat and cooking oil producer Ukraine finding itself unable to export its goods.

Addressing British MPs, Bailey spoke also of a “very real income shock” coming from surging energy and food prices.

While average wages are rising in the UK, the ONS on Tuesday said they continued to sink in real terms as Britain, like other countries, faces runaway inflation.

The pound on Tuesday rallied 1.3 percent to $1.2480 as traders bet that soaring inflation, lifted in part by UK wage rises, would force the BoE to raise interest rates further, despite growing fears of recession.

“There continued to be a mixed picture for the labour market,” said Darren Morgan, ONS director of economic statistics.

Total employment remained below its pre-pandemic level, with job vacancies at a record-high of almost 1.3 million at the end of April.

“Indeed, with the latest fall in unemployment to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began,” Morgan said.

While companies struggle to fill posts after the pandemic caused people to change careers, Morgan noted that since the outbreak of Covid, about half a million more people in the UK “have completely disengaged from the labour market”.

For those in work, regular earnings excluding bonuses were “falling sharply in real terms”, he added.

– ‘Unemployment to rise’ –

Bailey on Monday said “the main driver of inflation and what brings it down is the very big, real income shock which is coming from outside forces and, particularly, energy prices and global goods prices. 

“That will have an impact on domestic demand and it will dampen activity, and I’m afraid it looks like it will increase unemployment.”

He described inflation fallout from the war in Ukraine as “a major worry” for Britain and the developing world.

“Sorry for being apocalyptic but that is a major concern,” Bailey said.

He spoke after official data last week showed Britain’s economy shrank in March on fallout from soaring inflation, increasing the prospect of the country falling into recession.

Earlier this month, the BoE warned that Britain risks falling into recession with UK inflation expected to top 10 percent, a four-decade high, by the end of the year.

It came as the central bank raised its main interest rate by a quarter-point to one percent to tackle rocketing prices.

That was the fourth straight increase by the BoE, while its key rate now stands at the highest level since the global financial crisis in 2009.

Raised rates have lifted borrowing costs for consumers and businesses, further impacting spending.

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Binance backs Musk stance over free speech on Twitter

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Binance chief Changpeng Zhao, who goes by CZ, said he used Twitter more than he used his own trading platform and was keen to support it
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The boss of cryptocurrency exchange Binance told AFP on Thursday that he had pledged $500 million to fund Elon Musk’s takeover of Twitter to support free speech. 

Changpeng Zhao, who goes by CZ, said he used Twitter more than he used his own trading platform and was keen to support it.

“Twitter is probably the most important free speech platform in the world,” he told AFP at the VivaTech trade show in Paris.

In April, Tesla boss Musk formulated a plan to buy Twitter for $44 billion, saying he wanted to promote free speech on the platform. 

In particular, he said he was ready to reinstate former US president Donald Trump, who was expelled from the network for inciting his supporters before the Capitol riots in Washington on January 6 last year.

At the beginning of May, Musk said he had raised more than $7 billion to finance the deal from investors including Oracle founder Larry Ellison, Sequoia Capital and Binance. 

But Musk has since cast doubt on his ambitions, threatening to withdraw his offer if he does not get reliable data on the number of fake accounts in circulation on Twitter.

Zhao, who has 6.4 million followers on Twitter, said he would stand behind Musk’s decision, whichever way he goes.

“He’s taking the lead, we’re following,” he said.

“If Elon commits to it, we’re committed. If Elon calls it off, then most likely we’re off.”

Musk is due to meet Twitter employees on Thursday for a question and answer session, the first since his takeover bid. 

Sometimes described as the “Elon Musk of cryptocurrencies”, Zhao said the comparison was too flattering. 

“Elon is a much stronger entrepreneur. Also, he is a genius,” said the Binance boss, who said he exchanged with the Tesla boss via the Signal app but has not yet met him in person. 

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Qatar Airways posts record $1.54 bn profit despite pandemic

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Qatar Airways said it managed to achieve record net profits in 2021-2022 despite the "most difficult period" ever in the industry
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Qatar Airways on Thursday posted a record net profit of $1.54 billion for the 2021-2022 financial year, a result it attributed to a “successful strategy” during the coronavirus pandemic.

The state-owned airline said the profit result was “200 percent above its highest annual historical profit” and achieved on the back of $14.4 billion in overall income.

It said that the revenue figure was “a remarkable two percent higher than the full financial year pre-Covid” in 2019-2020.

Gas-rich Qatar is among several governments that stepped in to support their national carriers through the coronavirus shutdown, which pummelled global travel and the aviation industry.

Qatar Airways, the Middle East’s second biggest airline after Emirates, had reported in September last year an overall loss of $4.1 billion in the 2020-2021 financial year.

The flag carrier said at the time that it had received $3 billion in state aid to weather the coronavirus travel downturn and to offset the losses blamed on the cost of grounding aircraft.

Its chief executive, Akbar Al Baker, praised the “strength, resilience, and commitment” of Qatar Airways Group in the past year.

“In the most difficult period ever in the global airline industry, the airline credits its positive results to its agility and successful strategy,” the airline said in a statement.

Qatar Airways said it “continued to focus on customer needs and evolving market opportunities, as well as efficiency and the commitment of its worldwide employees”.

“This profit is not only a record for Qatar Airways Group, but also a record among all other airlines that have published financial results for this financial year worldwide,” the airline said.

– New routes –

The Qatari airline said it carried 18.5 million passengers in 2021-2022, an increase of 218 percent over the previous 12-month period.

It said its cargo division remained the “leading player in the world”, with growth of 25 percent in revenues and an identical figure for cargo capacity.

“Against the backdrop of the pandemic disruption, Qatar Airways Cargo transported more than three million tonnes of air freight and securing eight percent share in the global market,” it said.

The airline said it had also “transported more than 600 million doses of Covid-19 vaccines over the course of the pandemic to date”.

“Despite the challenges of Covid-19, the national carrier of the State of Qatar grew to more than 140 destinations” in 2021-2022, the airline added.

New routes were opened to destinations across Africa, Asia, Europe and the Middle East, including Abidjan in the Ivory Coast, and Almaty, Kazakhstan.

The carrier has maintained “strong performance and growing profitability,” Al Baker said.

“We have pursued every business opportunity and left no stone unturned as we aimed to meet our targets,” he said.

“Whilst our competitors grounded their aircraft and closed their routes, we adapted our entire commercial operation to respond to ever-evolving travel restrictions and never stopped flying, operating a network our passengers and customers could rely on,” he said.

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BoE unveils fifth rate hike in row as inflation soars

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The Bank of England raised its main interest rate to its highest level since 2009
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The Bank of England on Thursday hiked its main interest rate for a fifth straight time, as it forecast British inflation to soar further this year to above 11 percent.

BoE policymakers agreed at a regular meeting to increase the cost of borrowing by a quarter-point to 1.25 percent, the highest level since the global financial crisis in 2009.

The pound slumped one percent against the dollar following the announcement, one day after the Federal Reserve hiked US interest rates far more aggressively to fight runaway consumer prices in the world’s biggest economy.

The BoE’s latest rise was in response to “continuing signs of robust cost and price pressures… and the risk that those pressures become more persistent”, said minutes of the UK meeting.

A minority of BoE policymakers had voted for an increase to 1.5 percent.

The Bank of England is avoiding “shock and awe tactics being employed across the Atlantic”, said Laith Khalaf, head of investment analysis at AJ Bell.

“Despite the UK starting to tighten monetary policy first, interest rates are now higher in the US.”

The US Federal Reserve on Wednesday announced the most aggressive interest rate increase in nearly 30 years — and said it is prepared to do so again next month in an all-out battle to drive down surging consumer prices.

The Fed’s rate hike of 0.75 percentage points comes after US inflation rocketed to 8.6 percent in May, the highest level in more than four decades.

In the UK, inflation stands at nine percent, the highest level in 40 years.

Prices are soaring worldwide as economies reopen from pandemic lockdowns and in the wake of the Ukraine war that is pushing already high energy costs even higher.

– Growth impact –

British economic output declined for a second month in a row in April, weighed down by rocketing prices that are causing a cost-of-living crisis for millions of Britons, while increasing the risk of a UK recession this year.

Data this week also revealed the first rise in the UK unemployment rate since the end of 2020 — although at 3.8 percent it remains at a near 50-year low point amid record-high job vacancies.

At the same time, the value of average UK wages is falling at the fastest pace in more than a decade.

Fearing fallout from surging inflation, the BoE began to raise its key interest rate in December, from a record-low level of 0.1 percent.

Almost two years earlier, as the Covid-19 pandemic began to take hold, the BoE slashed the rate to just above zero and decided to pump massive sums of new cash into the economy.

In the neighbouring eurozone, the European Central Bank is next month set to raise interest rates for the first time in more than a decade.

Switzerland’s central bank hiked its rate Thursday for the first time in 15 years.

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