Bank of England chief economist says ‘not unreasonable’ to consider summer interest rate cut, as unemployment rises– business live

Bill Browder has also named the oil refineries which are taking Russian oil, refining it, and setting the products to the West.

Browder suggests that such refineries could be sanctioned, or legislation could be passed to block sales from these sites.

He then names them on the record, for the Treasury Committee.

In India, they are the Vadinar Refinery, which is 49% owned by Russia’s state oil company, Rosneft, the Jamnagar Refinery in the Gulf of Kutch, on India’s western coast, and state-owned companies Bharat Petroleum and Hindustan Petroleum.

In Turkey, he names STAR Rafineri which stuck a deal with Russia’s Lukoil.

And in China, he names Sinopec Group and CNOOC (China National Offshore Oil Corporation).

Browder adds:

Those are alll companies who buy Russian oil. When we talk about India, China and Turkey we’re talking about specific companies.

We don’t need to sanction India, China and Turkey, we can just go after the companies that are buying the oil.

He urges MPs to put these names into their report into Russian sanctions, as this would add to the pressure on these companies. If Russia can’t find a market for its oil, then the price will go down, and Moscow will have less money to fund its war with Ukraine.

Bill Browder then urges MPs to copy the US, and pass a law to remove any ambiguity over whether frozen Russian assets can be confiscated, and used to fund Ukraine.

That REPO Act was passed with the $61bn aid package which was approved by Congress last month.

Browder tells the Treasury Committee today:

What I would suggest is done here is some version of the REPO Act, where – to the extent that there’s any legal concern – you legislate away that legal concern so that it can be properly done here.

If the US and the UK both approved such legislation, it would put more pressure on the European Union to “do the right thing in the end”, Browder explains.

The European Union’s proposal of using windfall profits from frozen Russian assets to finance arms supplies to Kyiv, rather than the assets themselves, is “a typical EU bad compromise”, he adds.

Browder argues there’s no difference between taking the profits and simply taking all the money, so the EU’s plan is a “fudge” that will prolong the inevitable.

Western governments should use the seized Russian assets they control to fund the war in Ukraine, as an ‘insurance policy’ in case Donald Trump wins the US presidential election, MPs have been told.

Financier and political activist Bill Browder explained to the Treasury Committee this morning that it would “change the whole nature of the war” if the West were to confiscate $300bn of assets from Russia.

Browder, who set up the Magnitsky Campaign after his lawyer, Sergei Magnitsky, died in custody in Russia in 2009, explains to MPs that the Russia-Ukraine conflict is a “resource war”.

Currently Russia has more resources than Ukraine, and Putin is “banking” on the West having less appetite for the war than him, as it drags on, Browder explains.

Browder cites the delays getting Ukraine funding approved by the US House of Representatives this year, saying:

If this money were to be confiscated, it is five times the $65bn that the US had been dragging their feet on.

It would completely change the situation… in a context where we’re almost two and a half years into this war, and whether we like it or not, some of our allies are going to be less likely to fund this war.

Browder says he is “particularly concerned” about what might happen in the US, where Donald Trump is leading in the swing states. Trump has made it very clear that he would end the war in 24 hours – by stopping funding Ukraine.

Currently, the US provides half the funding for Ukraine, so either Ukraine loses war or “we have to double down”, explains Browder.

This money, this three hundred billion, would solve that problem. It would basically be an insurance policy against that problem.

Britain has been ramping up pressure on western governments to use frozen Russian assets to help rebuild Ukraine’s war-shattered economy.

In January, foreign secretary David Cameron told the World Economic Forum in Davos that there were legal, moral and political justifications for action.

The EU, though, is favouring using only the profits from those assets to help Ukraine.

Browder adds that he doesn’t think confiscating Russian assets would have any impact on the markets, rejecting claims that it would destabilise the markets.

He also suggests it could deter China from attacking Taiwan, telling MPs:

It would sent a message that if you launch an unprovoked war of aggression, you’re likely to have your foreign exchange reserves confiscated.

He adds that the cost of supporting Ukraine will fall on taxpayers, unless politicians take the plunge and use Russian frozen assets instead.

Anti-corruption campaigner and Kremlin critic Bill Browder has told MPs not to be fooled by claims from Moscow that sanctions aren’t working.

Testifying to the Treasury committee this morning, Browder explains that president Putin has claimed several times that sanctions introduced after the invasion of Ukriane aren’t working.

Putin argues that the Russian economy is doing well, so the West should stop hurting themselves with sanctions on trade with Russia.

Browder, though, smells a rat, telling MPs:

Sanctions are crippling Russia.

The numbers that you receive about the ‘success’ of the Russian economy….the Russian state statistics committee produces those numbers. The Russians lie in every other area, I don’t see any reason why we should believe those numbers coming out of Russia.

[Reminder: Rosstat has reported that Russia’s economy contracted by just 1.2% in 2022, the first year of the Ukraine war].

Browder reminds MPs of the measures taken against Ukraine:

• Western governments froze around $300bn of central bank reserves the week after the Ukraine war started

• The UK have sanctioned 57 of the 98 oligarchs who are listed as influencial by the US, meaning their money is effectively imobilised.

• The foreign borrowing of Russian companies and government has been curtailed

• 1,500 Western companies have retreated from Russia

• There’s been an $80bn swing in foreign direct investment, from +$40bn of FDI before war, to -$40bn now.

But the “big, big loophole” is the sale of oil, Browder continues; oil which Russia used to sell to the West is now being sold to India, China and Turkey.

This presents two problems.

First, Russia continues to get a lot of money from that oil – beween half a billion and a billion dollars per day.

Second, the oil is being processed in refineries in India, China and Turkey, and returned to the West as refined oil products.

Browder estimates that $23bn of refined oil products is being sold back to the EU, and the UK bought $2.2bn of that refined product last year.

He tells the Treasury Committee:

As long as Russia can sell the oil, Russia can use that hard currency to buy weapons, and they can use those weapons to kill Ukrainians.

This means the West are funding both sides of the war, Browder explains, meaning something has to give.

What Putin is hoping is going to give, is that we’re going to run out of patience the fund the Ukrainians.

Phillip Inman

China might feel like a victim of heavy-handed US action today, but shouldn’t think the 100% tariffs on its electric cars are anything new, my colleague Phillip Inman explains.

In the 1980s president Ronald Reagan imposed 100% tariffs on billions of pounds (in today’s money) of Japanese imports after years of beligerent protests from an increasingly protectionist Washington administration.

Japanese car makers reacted by relocating factories inside the US, while the Tokyo government bottled up whatever anger it had to preserve good relations with its military protector.

Economic historians have noted that it mainly benefited Korean car makers rather than US car workers. Korean firms like Hyundai began to make headway in the US market under the radar.

China has found a way round existing tariffs by sending goods via Mexico, which has seen a boom in exports to the US. So a clampdown on this new trade route is possible in the near future.

Biden hikes tariffs on Chinese EV cars, chips and solar cells

Larry Elliott

NEWSFLASH: The US president, Joe Biden, has announced a 100% tariff on Chinese-made electric vehicles as part of a package of measures designed to protect US manufacturers from cheap imports.

In a move that is likely to inflame trade tensions between the world’s two biggest economies, the White House said it was imposing more stringent curbs on Chinese goods worth $18bn.

Sources said the move followed a four-year review and was a preventive measure designed to stop cheap subsidised Chinese goods flooding the US market and stifling the growth of the American green technology sector.

As well as a tariff increase from 25% to 100% on EVs, levies will rise from 7.5% to 25% on lithium batteries, from zero to 25% on critical minerals, from 25% to 50% on solar cells, and from 25% to 50% on semiconductors.

Here’s the full story:

There are fears of job cuts at the Woodsmith fertilizer mine in the North York Moors National Park, as owner Anglo American announces details of a plan to break itself up.

Fresh from rejecting a takeover approach from rival BHP Group, Anglo has revealed a series of sweeping changes this morning, which will refocus its on copper and premium iron.

The plan includes

1. Demerging its Anglo American Platinum division – something which BHP pushed for its takeover proposal

2. Selling or demerging its diamond operation, De Beers

3. Selling its Steelmaking Coal operations

4. Slowing the development of the Woodsmith project to support Anglo American’s balance sheet deleveraging.

Anglo is proposing to slash capital expenditure at Woodsmith to zero in 2026, down from $200m in 2025.

Simon Clarke, Conservative MP for Middlesbrough South and East Cleveland, fears the plan will “clearly have significant implications for the dedicated workforce” at Woodsmith.

Full story: UK real pay grows at fastest rate in two years

Larry Elliott

The level of real pay for UK workers is rising at its fastest rate in more than two years despite a cooling of the labour market that has led to rising unemployment and falling job vacancies, the latest official figures show.

Fresh data from the Office for National Statistics showed the mild recession in the second half of 2023 has had an impact on demand for workers but has been slower to affect wages.

The ONS said unemployment rose by 166,000 between the final three months of 2023 and the first three months of 2024, pushing up the jobless rate from 3.8% to 4.3%.

More here.

The Bank of England’s chief economist has said it is “not unreasonable” to think the central bank could consider cutting interest rates over the summer, Reuters reports.

This has knocked the pound, which is down almost half a cent this morning at $1.252.

Huw Pill told an online presentation organised by accountancy body ICAEW that if inflation continues to look less persistent, the Bank could consider lowering Bank Rate.

He says:

“I think it’s not unreasonable to believe that through the summer we will begin to see enough confidence in the decline in persistence that Bank Rate will come into consideration.”

Pill also explained that the UK’s labour market remains tight by historical standards, despite this morning’s rise in unemployment and the gradual slowdown in pay growth.

He said:

“There has been an easing of the labour market but it still remains pretty tight by historical standards.”

Pill also pointed to the slowdown in private sector pay growth in this morning’s data (to 5.9%, see here), saying:

“We actually got some additional data this morning that would be consistent with a small additional decline in the first quarter.”

PIll was one of seven MPC members who voted to keep interest rates on hold last week, while just two policymakers voted to cut.

Following his comments today, the momney markets now indicate there is a 53% chance of a rate cut at the BoE’s next meeting in June, up from around 50% earlier today.