UK borrowing hits a new record

Rishi Sunak
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Updated 21 November 2020

UK borrowing hits a new record

  • The British government is set to borrow close to £400 billion this financial year, the highest borrowing relative to the size of the economy since World War II

LONDON: Britain borrowed a record £215 billion ($285 billion) in the first seven months of the financial year, highlighting the challenge facing Finance Minister Rishi Sunak as he prepares new spending plans.
Borrowing in October alone came in below all economists’ forecasts in a Reuters poll at £22.3 billion, and September’s borrowing was also revised sharply lower. But debt remained only slightly lower than a 60-year high as a share of the economy.
Separate official data published on Friday showed retail sales rose 1.2 percent in October, and were 5.8 percent higher than a year earlier, stronger than all poll forecasts. However, retailers face a grim November with many shops closed due to the latest restrictions to slow the pandemic, which has hit Britain harder than other big economies.
The British government is set to borrow close to £400 billion this financial year, the highest borrowing relative to the size of the economy since World War II. “This is the responsible thing to do, but it’s also clear that over time it’s right we ensure the public finances are put on a sustainable path,” Sunak said.
The government’s Office for Budget Responsibility will publish new forecasts of borrowing on Nov. 25, and Sunak will unveil spending plans for the next financial year too.
The government has already said that it will approve the biggest increase in military spending since the Cold War.
But newspapers reported that Sunak would freeze the pay of teachers and police, and the government has refused to confirm it will keep foreign aid spending at 0.7 percent of GDP.
Public debt has surged and stood at £2.077 trillion or 100.8 percent of annual economic output in October, the Office for National Statistics said.
Stronger growth in the economy in the third quarter meant that as a share of GDP, debt was down slightly from September’s peak of 101.2 percent, the highest level since 1960/61.

US sanctions Chinese and Russian firms over Iran trade

Updated 29 November 2020

US sanctions Chinese and Russian firms over Iran trade

  • Four companies accused of ‘transferring sensitive technology and items’ to missile program

LONDON: The US has slapped economic sanctions on four Chinese and Russian companies that Washington claims helped to support Iran’s missile program.

The four were accused of “transferring sensitive technology and items to Iran’s missile program” and will be subject to restrictions on US government aid and their exports for two years, Secretary of State Mike Pompeo said in a statement.

The sanctions, imposed on Wednesday, were against two Chinese-based companies, Chengdu Best New Materials and Zibo Elim Trade, as well as Russia’s Nilco Group and joint stock company Elecon.

“These measures are part of our response to Iran’s malign activities,” said Pompeo. “These determinations underscore the continuing need for all countries to remain vigilant to efforts by Iran to advance its missile program. We will continue to work to impede Iran’s missile development efforts and use our sanctions authorities to spotlight the foreign suppliers, such as these entities in the PRC and Russia, that provide missile-related materials and technology to Iran.”

The Trump administration has ramped up sanctions on Tehran after withdrawing from the Iran nuclear deal in 2018.

Earlier this week, Pompeo met Kuwaiti Foreign Minister Sheikh Ahmad Nasser Al-Mohammad Al-Sabah, when the campaign of pressure on the Iranian regime was also discussed.

“I want to thank Kuwait for its support of the maximum pressure campaign. Together, we are denying Tehran money, resources, wealth, weapons with which they would be able to commit terror acts all across the region,” he said.

It is not yet clear how the incoming administration of Joe Biden will deal with Tehran and whether it wants to revive the nuclear deal which would be key reviving the country’s battered economy. The Iranian rial has lost about half of its value this year against the dollar, fueling inflation and deepening the damage to the economy.

Iran’s economy would grow as much as 4.4 percent next year if sanctions were lifted, the Institute of International Finance (IIF) said last week. 

The economy is expected to contract by about 6.1 percent in 2020 according to IIF estimates.