The Bank of England has raised its base interest rate by 0.5 percentage points to 2.25 per cent, vowing to “respond forcefully, as necessary” to soaring inflation.
The UK's central bank said it now expects a 0.1 per cent fall in gross domestic product over the current quarter, indicating that the economy is already in a recession.
The BoE’s nine-member Monetary Policy Committee (MPC) voted 5-4 in favour of the rise after coming under pressure to deliver another big increase as inflation in the UK outpaces that in other major economies.
The shift marks the seventh increase in a row and pushes the base rate to the highest level since the financial crisis. In December 2008 the base rate was slashed from 3 per cent to 2 per cent.
The bank had been forecast to increase rates by 0.75 percentage points to 2.5 per cent, but such a rise was backed by only three committee members. One member voted for a rise of just 0.25 percentage points.
Michael Hewson, chief market analyst at CMC Markets, said the result of the vote shows the committee “is in disarray — split across the board”.
“Certainly not a good look when so many questions are being asked about their competence,” he added in a tweet.
The BoE raised its benchmark rate last month by half a per cent to 1.75 per cent, the biggest increase in 27 years.
The latest decision was announced on Thursday, a day after the US Federal Reserve elevated interest rates by another 75 basis points and signalled further squeezes.
The announcement was delayed by a week as the UK was in the midst of a nationwide mourning period following the death of Queen Elizabeth II.
“Should the outlook suggest more persistent inflationary pressures, including from stronger demand, the committee will respond forcefully, as necessary,” the BoE said, using a similar form of words to previous months for its policy intentions.
Inflation in Britain is at red-hot levels, having reached a 40-year high in July when it soared past 10 per cent. In August consumer price inflation fell to 9.9 per cent, its first drop in almost a year.
The BoE now expects inflation to peak at just under 11 per cent in October, below the 13.3 per cent peak it forecast last month, before Liz Truss won the Conservative Party leadership and became Britain's prime minister with a promise to cap energy tariffs and cut taxes.
Inflation would remain above 10 per cent for a few months after October, before falling, the BoE predicted.
The rise was announced by the BoE ahead of Chancellor Kwasi Kwarteng's expected mini-budget on Friday which is tipped to include £30 billion ($33.9bn) in tax cuts.
The MPC also voted unanimously to reduce the BoE's £838 billion of government bond holdings by £100 billion over the coming year, by allowing bonds to mature and through active sales, which will start next month. This is in line with the goal it stated in August.
Other central banks are also acting more aggressively to get prices under control.
Pound rises after slump
Before the BoE’s statement, the pound rose in early trading on Thursday, up 0.5 per cent at $1.13255 against the dollar at 10am UK time. Against the euro, it was flat at 87.24 pence
The rise came after sterling plummeted to below $1.13 for the first time in 37 years following the Fed’s announcement on Wednesday, which pushed the dollar to a two-decade high.
The pound has softened 16 per cent against the dollar this year.
After the bank announced its decision on Thursday, sterling was close to wiping out earlier gains against the dollar, and was trading at around $1.1286.
This summer, rising interest rates in Britain have provided little support to sterling amid a gloomy outlook for the economy and a worsening cost-of-living crisis heading into winter.
“There is little to no confidence that the BoE can pull something out of the bag that will support the pound today,” said Jane Foley, head of FX strategy at Rabobank in London, ahead of the announcement. “Since May it has been clear that BoE rate hikes are not having much of an impact in halting downside pressure on sterling with UK fundamentals undermined by slow growth, a huge current account deficit and recently by concerns over the fiscal outlook.”
Businesses brace for knock-on effects
Mohsin Rashid, co-founder of cashback app ZipZero, said the bank’s latest bid to combat spiralling inflation “will further widen wealth divides across the UK”.
“Those reliant on mortgages, personal loans, credit cards, and other forms of debt will bear the brunt worst,” he said. “The knock-on effects, however, will be felt by businesses experiencing lower sales and demand as a result of greatly diminished consumer spending power.
“We must remember, these issues are interconnected — businesses will suffer from high inflation and interest rates, just as consumers will. Most worryingly, both businesses and consumers considering lending options may now find the cost of borrowing too high. The saving grace is that out of high-pressure environments, innovation often thrives.”
Alice Haine, personal finance analyst at Bestinvest, a DIY investing and coaching service, said the bank’s decision to raise interest rates by 50 basis points “marks the first-time interest rates have risen by 0.5 per cent over two consecutive months since December 1994.”
She said the decision “sends a strong signal that the bank is serious about getting inflation back down to more palatable levels in the medium term, with three members voting for a more aggressive 0.75 per cent hike, as it looks to curb the worst bout of inflation in 40 years and edge closer to its target of 2 per cent.”
Rising inflation across Europe
Switzerland’s central bank on Thursday carried out the biggest increase ever to its key interest rate.
The Swiss National Bank could not rule out that further increases beyond the rise of three-quarters of a percentage point “will be necessary to ensure price stability over the medium term,” said Thomas Jordan, chairman of SNB governing board.
It aims to curb inflation that hit 3.5 per cent in August, a rate much lower than the record 9.1 per cent in the 19 neighbouring EU countries that use the euro.
The Swiss rate increased from minus 0.25 per cent to 0.5 per cent, ending several years of negative interest rates — a testament to its stable growth, low-inflation environment, coupled with Switzerland’s appeal as a safe haven for assets.
BUNDESLIGA FIXTURES
Saturday
Borussia Dortmund v Eintracht Frankfurt (5.30pm kick-off UAE)
Bayer Leverkusen v Schalke (5.30pm)
Wolfsburg v Cologne (5.30pm)
Mainz v Arminia Bielefeld (5.30pm)
Augsburg v Hoffenheim (5.30pm)
RB Leipzig v Bayern Munich (8.30pm)
Borussia Monchengladbach v Freiburg (10.30pm)
Sunday
VfB Stuttgart v Werder Bremen (5.30pm)
Union Berlin v Hertha Berlin (8pm)
The biog
DOB: March 13, 1987
Place of birth: Jeddah, Saudi Arabia but lived in Virginia in the US and raised in Lebanon
School: ACS in Lebanon
University: BSA in Graphic Design at the American University of Beirut
MSA in Design Entrepreneurship at the School of Visual Arts in New York City
Nationality: Lebanese
Status: Single
Favourite thing to do: I really enjoy cycling, I was a participant in Cycling for Gaza for the second time this year
UAE currency: the story behind the money in your pockets
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The biog
Name: Abeer Al Bah
Born: 1972
Husband: Emirati lawyer Salem Bin Sahoo, since 1992
Children: Soud, born 1993, lawyer; Obaid, born 1994, deceased; four other boys and one girl, three months old
Education: BA in Elementary Education, worked for five years in a Dubai school
SPECS
%3Cp%3E%3Cstrong%3EEngine%3C%2Fstrong%3E%3A%202-litre%20direct%20injection%20turbo%20%0D%3Cbr%3E%3Cstrong%3ETransmission%3C%2Fstrong%3E%3A%207-speed%20automatic%20%0D%3Cbr%3E%3Cstrong%3EPower%3C%2Fstrong%3E%3A%20261hp%20%0D%3Cbr%3E%3Cstrong%3ETorque%3C%2Fstrong%3E%3A%20400Nm%20%0D%3Cbr%3E%3Cstrong%3EPrice%3C%2Fstrong%3E%3A%20From%20Dh134%2C999%26nbsp%3B%3C%2Fp%3E%0A
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Getting there
The flights
Flydubai operates up to seven flights a week to Helsinki. Return fares to Helsinki from Dubai start from Dh1,545 in Economy and Dh7,560 in Business Class.
The stay
Golden Crown Igloos in Levi offer stays from Dh1,215 per person per night for a superior igloo; www.leviniglut.net
Panorama Hotel in Levi is conveniently located at the top of Levi fell, a short walk from the gondola. Stays start from Dh292 per night based on two people sharing; www. golevi.fi/en/accommodation/hotel-levi-panorama
Arctic Treehouse Hotel in Rovaniemi offers stays from Dh1,379 per night based on two people sharing; www.arctictreehousehotel.com
The Buckingham Murders
Starring: Kareena Kapoor Khan, Ash Tandon, Prabhleen Sandhu
Director: Hansal Mehta
Rating: 4 / 5
Fund-raising tips for start-ups
Develop an innovative business concept
Have the ability to differentiate yourself from competitors
Put in place a business continuity plan after Covid-19
Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.)
Have enough cash to stay afloat for the next 12 to 18 months
Be creative and innovative to reduce expenses
Be prepared to use Covid-19 as an opportunity for your business
* Tips from Jassim Al Marzooqi and Walid Hanna
Off-roading in the UAE: How to checklist
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
RESULT
Manchester City 5 Swansea City 0
Man City: D Silva (12'), Sterling (16'), De Bruyne (54' ), B Silva (64' minutes), Jesus (88')
BIOSAFETY LABS SECURITY LEVELS
Biosafety Level 1
The lowest safety level. These labs work with viruses that are minimal risk to humans.
Hand washing is required on entry and exit and potentially infectious material decontaminated with bleach before thrown away.
Must have a lock. Access limited. Lab does not need to be isolated from other buildings.
Used as teaching spaces.
Study microorganisms such as Staphylococcus which causes food poisoning.
Biosafety Level 2
These labs deal with pathogens that can be harmful to people and the environment such as Hepatitis, HIV and salmonella.
Working in Level 2 requires special training in handling pathogenic agents.
Extra safety and security precautions are taken in addition to those at Level 1
Biosafety Level 3
These labs contain material that can be lethal if inhaled. This includes SARS coronavirus, MERS, and yellow fever.
Significant extra precautions are taken with staff given specific immunisations when dealing with certain diseases.
Infectious material is examined in a biological safety cabinet.
Personnel must wear protective gowns that must be discarded or decontaminated after use.
Strict safety and handling procedures are in place. There must be double entrances to the building and they must contain self-closing doors to reduce risk of pathogen aerosols escaping.
Windows must be sealed. Air from must be filtered before it can be recirculated.
Biosafety Level 4
The highest level for biosafety precautions. Scientist work with highly dangerous diseases that have no vaccine or cure.
All material must be decontaminated.
Personnel must wear a positive pressure suit for protection. On leaving the lab this must pass through decontamination shower before they have a personal shower.
Entry is severely restricted to trained and authorised personnel. All entries are recorded.
Entrance must be via airlocks.
Zayed Sustainability Prize
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
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Political flags or banners
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Bikes, skateboards or scooters
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
World Sevens Series standing after Dubai
1. South Africa
2. New Zealand
3. England
4. Fiji
5. Australia
6. Samoa
7. Kenya
8. Scotland
9. France
10. Spain
11. Argentina
12. Canada
13. Wales
14. Uganda
15. United States
16. Russia
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Who are the Sacklers?
The Sackler family is a transatlantic dynasty that owns Purdue Pharma, which manufactures and markets OxyContin, one of the drugs at the centre of America's opioids crisis. The family is well known for their generous philanthropy towards the world's top cultural institutions, including Guggenheim Museum, the National Portrait Gallery, Tate in Britain, Yale University and the Serpentine Gallery, to name a few. Two branches of the family control Purdue Pharma.
Isaac Sackler and Sophie Greenberg were Jewish immigrants who arrived in New York before the First World War. They had three sons. The first, Arthur, died before OxyContin was invented. The second, Mortimer, who died aged 93 in 2010, was a former chief executive of Purdue Pharma. The third, Raymond, died aged 97 in 2017 and was also a former chief executive of Purdue Pharma.
It was Arthur, a psychiatrist and pharmaceutical marketeer, who started the family business dynasty. He and his brothers bought a small company called Purdue Frederick; among their first products were laxatives and prescription earwax remover.
Arthur's branch of the family has not been involved in Purdue for many years and his daughter, Elizabeth, has spoken out against it, saying the company's role in America's drugs crisis is "morally abhorrent".
The lawsuits that were brought by the attorneys general of New York and Massachussetts named eight Sacklers. This includes Kathe, Mortimer, Richard, Jonathan and Ilene Sackler Lefcourt, who are all the children of either Mortimer or Raymond. Then there's Theresa Sackler, who is Mortimer senior's widow; Beverly, Raymond's widow; and David Sackler, Raymond's grandson.
Members of the Sackler family are rarely seen in public.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
