Every week we bring you the world’s biggest business, currency, and travel stories. This week: UK QE, Delta delays, and growth slows in China and the EU.
Not So Easy
The Bank of England took decisive action earlier in the month to offset the economic consequences of the Brexit by lowering interest rates to a record low of 0.25% and announcing a quantitative easing program (QE) worth £80 billion in government and corporate bonds. Unfortunately for the Bank (and the UK economy) this latest round of QE has already hit a snag. The Bank aimed to buy £1.17 billion worth of bonds with 15+ year maturities, but just two days into the program, the Bank fell £50 million short of its target. It is the first time the Bank has failed to meet its targets since first using QE in 2009.
An issue at Delta Airlines’ technology centre resulted in long delays and over 1000 flight cancellations on Monday, followed by 680 cancellations on Tuesday. Further cancellations continued throughout the week, ultimately bringing the total to over 2,100 flights. The airline offered customers whose flights were cancelled or delayed for more than 3 hours a $200 voucher. Delta says the issue was caused by a small fire in its technology centre.
China’s economic downturn is worsening. According to the IMF China’s GDP will grow by 6.6%, within the official Chinese forecasts had predicted a growth rate of between 6.5%-7%. Retail sales grew 10.2%, down from 10.6% in June and below expectations. Industrial output was up 6%, but also below expectations.
EU Funding Replacement
Newly appointed UK Chancellor Philip Hammond has vowed to replace EU funding for scientists, farmers and other key projects that will be lost as a result of the British referendum. The commitment will likely cost about £6 billion per year, but won’t come into effect until the UL leaves the EU, a two year process which new PM Theresa May has said she will not initiate until 2017.
Eurozone and EU falling growth
Italy’s economy stagnated between April and June. GDP growth was at 0.3% in the first quarter of 2016, but sat at 0% in the 2nd quarter. The results are below the 0.1%-0.3% predicted by experts. Germany’s growth also fell from 0.7% down to 0.4%, beating forecasts of 0.2%. Greece defied expectations to grow by 0.3%, more than the 0.1% that many predicted. Across the eurozone growth fell from 0.3% to 0.6%, and from 0.5% to 0.4% across the EU.
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