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Bank of England cuts interest rates to 4.75%

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The Bank of England has cut interest rates to 4.75 per cent after inflation fell to a three-year low in September, as it signalled that a further move is unlikely before early 2025.

The Monetary Policy Committee’s eight-to-one decision to cut the base rate by 0.25 percentage points was in line with the expectations of economists polled by Reuters.

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The BoE kept rates on hold at its previous meeting in September, following a reduction in August.

“We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much,” said BoE governor Andrew Bailey on Thursday.

“But if the economy evolves as we expect, it’s likely that interest rates will continue to fall gradually from here,” he added.

The pound strengthened after the decision, up 0.5 per cent on the day against the dollar at $1.294. The 10-year gilt yield was steady at 4.55 per cent.

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This week’s decision suggests the BoE is taking a cautious approach to lowering rates as it weighs the impact of chancellor Rachel Reeves’ Budget last week, which loosened fiscal policy.

The outlook has also been affected by Donald Trump’s victory in this week’s US election, particularly because of his support for higher tariffs, which many economists argue could stoke inflation.

The BoE said the Budget would increase consumer price inflation by just under 0.5 percentage points at its peak compared with previous projections, as well as boosting GDP by 0.75 per cent in a year’s time.

The inflation outlook prompted traders to trim their expectations of a further quarter-point cut at the BoE’s next meeting in December from about 30 per cent to about 20 per cent, according to levels implied in swaps markets.

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Hussain Mehdi, a strategist at HSBC Asset Management, said he now expected a “fairly shallow easing cycle” that would put upward pressure on bond yields, in part due to the Budget’s impact on inflation.

Inflation hit 1.7 per cent in September, the first time it has dipped below the BoE’s 2 per cent target since 2021, but the central bank expects it to increase in coming quarters.

Partly as a result of the Budget, the BoE considers that inflation will now take longer than previously expected to return to target, reaching 2.2 per cent in two years’ time before falling to 1.8 per cent by the end of the following year.

In an indication of the Budget’s impact on UK businesses, J Sainsbury warned on Thursday that Reeves’ changes would be “inflationary”, as it complained that they would subject it to an “unexpected” and “significant” £140mn “barrage of costs”.

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BT also described the Budget as a “new inflationary pressure”, as it said it would now be hit by a £100mn increase in costs.

The Budget unveiled a £40bn increase in taxes, most of which will come from national insurance paid by employers. It also boosted government borrowing by an average of £28bn a year over the course of the parliament as Reeves increases.

The BoE predicted that growth will pick up from 1 per cent this year to 1.5 per cent in 2025, before easing back to 1.25 per cent in 2026.

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Best winter sun destinations that are less than six hours from the UK

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We've found the best winter sun that is both affordable, and nearby

SOMETIMES you just want to be somewhere hotter than the UK without having to hop on a long-haul flight.

Thankfully, there are some great destinations that aren’t too far away, and also won’t cost too much even if booking last minute.

We've found the best winter sun that is both affordable, and nearby

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We’ve found the best winter sun that is both affordable, and nearbyCredit: Alamy

Using our many years of holiday experience, the Sun Travel Team has revealed their favourite winter sun destinations that are affordable – and all less than six hours from the UK.

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Cape Verde – 5hr45 flight time

Cape Verde was my first foreign holiday after the dreaded 2021 winter lockdown. As soon as restrictions lifted, my then three-year-old, boyfriend and I jumped on a TUI plane for some much-needed sunshine.

At just under six hours, the flight time was probably the longest I’d
do with a pre-schooler but enough to find guaranteed winter sunshine – and Cape Verde pretty much guarantees sunshine.

Even in bleak midwinter, 25C is the average maximum temperature and the sun is strong, although you never get too hot because it’s also windy.

It’s also just one hour behind the UK, so there was no jet lag to contend with.

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We stayed at the all-inclusive Riu Palace Santa Maria, on the south
west coast of the island of Sal.

The nearby seaside town of Santa Maria had a strip of lively bars and
cafes and a number of seafood restaurants offering the catch of the
day, as well as a great beach bar where you could enjoy excellent
cocktails with your feet in the sand for just £2.50.

Attractions are fairly sparse on Sal, but there was more than enough
to keep us busy for a week.

We paddled with baby sharks, took a catamaran cruise and explored the island on dune buggies, but there were plenty of watersports for the more adventurous too.

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Caroline McGuire, Head of Travel

Cape Verde is perfect for a winter sun island break

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Cape Verde is perfect for a winter sun island break
It's also just one hour behind the UK, so there was no jet lag to contend with

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It’s also just one hour behind the UK, so there was no jet lag to contend withCredit: Alamy
The new winter sun destination 5 hours from UK & 27C in November – that TUI is launching ‘great value’ hols to this week

Marrakech – 3hr35 flight time

A place guaranteed to be warm in winter is Marrakech with temperatures above 20C – and it’s one of the most affordable to.

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A visit to Marrakech comes with beautiful riad hotels, lined with multicoloured tiles and ornate decor and even pools in the middle – and can be found for just £35 a night.

Sure, the Moroccan coastline might temp you away for a winter beach break.

But the bustling city is the best to go pre-Christmas to stock up one some cheap presents.

Go empty suitcased and you’ll find hand blown glass cups, embroidered cushions and leather handbags often spotted on the UK high street in places like Anthropology and Accessorize but for so much less.

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And with £16.49 flights thanks to easyJet, it’s cheaper than a train into London.

Kara Godfrey, Deputy Travel Editor

Marrakech is a great entry into Africa and one of the warmest to visit in winter without a long flight

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Marrakech is a great entry into Africa and one of the warmest to visit in winter without a long flight
It's bustling but cheap with some amazing pre-Christmas shopping

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It’s bustling but cheap with some amazing pre-Christmas shoppingCredit: Alamy

Lanzarote – 4hr flight time

I on my first winter sun holiday earlier this year and even though I’m late to the party, I’m a total convert after falling in love with Lanzarote.

I stepped off the plane in January and was met by a 20C heat – the ideal January pick me up, especially when flights are as little as £16.

And I was even happier when I went for a dip at the heated infinity pool at my hotel, the newly-opened Barcelo Playa Blanca.

The 180m-long main pool was also heated, which meant I could get my lengths in without getting chilly. 

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The temperature was perfect for excursions too with four-hour boat cruises around the island, stopping near Playa de Papagayo, a golden sandy beach before a dip in the dip in the water and fresh paella.

Topped off off with evening drinks on a balcony looking out towards Fuerteventura, I didn’t once have to take out my big winter coat – which was exactly the plan.

Hope Brotherton, Travel Reporter

Lanzarote is still warm enough for a UK escape

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Lanzarote is still warm enough for a UK escapeCredit: Alamy
The best way to catch some sun? An island boat trip

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The best way to catch some sun? An island boat trip

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How Scholz broke character. And the German coalition

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For years, German chancellor Olaf Scholz was blamed for his seeming inability to instil discipline in his warring cabinet, for his gnomic silence in the face of constant ministerial feuding.

This week, the sphinx finally spoke. And in a few words he brought down the government. 

Scholz appeared before reporters on Wednesday evening to announce he had sacked his finance minister Christian Lindner, in effect pulling the plug on his coalition. 

He described Lindner in ways that drew gasps of astonishment from those present: “selfish”, “irresponsible” and caring “only about the short-term survival of his own party”.

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The question on many people’s lips was — what took him so long?

“He should have issued Lindner an ultimatum a long time ago,” said Wolfgang Schroeder, a political scientist at Kassel University. “Either you work with us constructively or we go our separate ways.”

Scholz’s coalition was never a particularly stable construct. It was a political experiment — the first three-way coalition comprised of the chancellor’s Social Democrats (SPD), Lindner’s liberal Free Democrats (FDP) and the Greens — parties that were awkward bedfellows from the very start.

The alliance was unveiled to much fanfare after elections in late 2021 and immediately launched a progressive programme that marked a fresh start after the inertia of the Angela Merkel era.

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But its plans were quickly upended by Russia’s full-scale invasion of Ukraine in February 2022.

Scholz had predicted that Germany’s green transition would bring about a new “economic miracle”, with growth rates not seen since the boom years of the 1950s. Instead he found himself trying to figure out how to get Germany through the winter without Russian gas.

He and his ministers rose to the challenge, largely overcoming the energy crisis. They also reoriented German defence and foreign policy, in what Scholz dubbed a Zeitenwende, or turning point, agreeing massive supplies of weapons to Ukraine and a huge rearmament programme for the Bundeswehr. 

But the outward unity masked deep ideological fissures. The SPD wanted to shore up the welfare state, the Greens wanted action on climate change, and the FDP was obsessed with making sure Germany did not take on too much public debt.

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“Our many political differences were papered over by all the money we had available,” Lindner said on Thursday. “That allowed us to reconcile political ideas that were essentially incompatible.”

Last year, that whole construct came crashing down.

In a bombshell judgment in November 2023, Germany’s constitutional court struck down Scholz’s budget on the grounds that it had violated the “debt brake”, the country’s constitution-enshrined cap on new borrowing. That opened up a massive fiscal hole that the coalition parties have struggled to fill.

Suddenly, the three parties were squabbling publicly over what to do. The SPD and the Greens wanted to suspend the debt rule to allow the state to borrow more money for Ukraine, and invest in infrastructure. Lindner, as head of the FDP, resolutely resisted those demands.

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The tensions only increased as Germany’s economic prospects darkened. The country was grappling with falling output in its auto, chemicals and engineering industries. This autumn ministers downgraded their growth forecasts, admitting that Germany was now stuck in its first two-year recession since the start of the 2000s.

That played havoc with the government’s spending plans, forcing Lindner to lower his estimate for next year’s revenues. A €13.5bn hole opened up in the budget for next year. The bickering over how to bridge that gap became ever more feverish.

Lindner said on Thursday the parties had “always hoped” they could make progress through compromising with each other. But “the way the economy was and the way the public finances were heading, this limbo, this policy of the lowest common denominator, was no longer possible”.

Scholz tried for months to mediate between the feuding parties and steady the ship of state. On Wednesday he admitted how hard it had been to reach compromises. “Sometimes I went hard up against the limits of my political convictions,” he said.

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“It’s hard to bang the table in such a disparate coalition — you end up smashing a lot of porcelain,” said Ursula Münch, director of the Academy for Political Education in Tutzing, Bavaria. “But he could have been a bit clearer about what he wanted to achieve, and communicated it better.”

At a town-hall meeting in Berlin in September Scholz was assailed by a kindergarten teacher who accused ministers of behaving like a “bunch of kids”. With a look of helplessness the chancellor asked him what his remedy was, adding with a smile: “I’m asking for a friend.”

As the economy worsened and the squabbling intensified, the coalition parties’ approval ratings slumped. All three performed disastrously in elections in eastern Germany in September that saw strong gains for populist parties of the right and left. A poll from late last month showed the combined ratings of the SPD, Greens and FDP were now less than that of the opposition Christian Democratic Union — Merkel’s conservative party.

Scholz’s aides routinely defended his style of government. His was a “steady hand on the tiller”, he was imperturbable and level-headed, and flexible enough to find solutions when his cabinet colleagues fell out. 

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On Ukraine he had pursued what he himself called a “prudent” course, navigating between pacifists in his own party who craved a swift end to the war and the more gung-ho pro-Kyiv faction in the Greens and FDP that wanted a big increase in weapons supplies.

He has defended his consensual style. “There are some people, they’re amazing, they always say ‘onwards! Let’s man the barricades! Everyone after me!’” Scholz told a business meeting on Thursday morning, hours after sacking Lindner. “But the world isn’t like that, it’s never just one or two people leading. We all have to get along with each other.”

Robert Habeck, the Green economy minister, said on Thursday that anyone who thought the next coalition would be easier to manage was fooling themselves. “It’s not enough to have a parliamentary majority,” he told reporters. “You don’t have to be a clairvoyant to see that in future, even after the next election, it’s not automatically going to be easier.”

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However, others think Scholz could have done more to ensure cabinet unity. “He was like a moderator on a panel, not a chancellor, and he just let things slide,” said Schroeder. “He was too reactive, mainly focused on keeping the show on the road.”

After his dismissal, Lindner also criticised Scholz’s leadership style. The chancellor lacked “the strength to enable a fresh start for our country”, he said, and his proposals for economic reform were “dull, unambitious”.

Scholz, who will now go down in the annals as one of the shortest-serving chancellors in Germany’s postwar history, once said that “whoever wants leadership from me will get it”: it was a pledge his critics say he never fulfilled.

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SNG secures £100m AIB funding to boost affordable homes pipeline

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SNG secures £100m AIB funding to boost affordable homes pipeline

SNG aims to develop 25,000 affordable homes over the next decade.

The post SNG secures £100m AIB funding to boost affordable homes pipeline appeared first on Property Week.

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More capital is not the answer

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More capital is not the answer

An interview with Yale’s Steven Kelly

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Pair convicted over £1.5m crypto investment fraud

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Pair convicted over £1.5m crypto investment fraud

Two individuals have been convicted for their roles in a £1.5m investment fraud.

Raymondip Bedi, 35, and Patrick Mavanga, 40, pleaded guilty to fraud, money laundering and carrying out regulated activity without authorisation.

Mavanga also pleaded guilty to possession of false identification documents and perverting the course of justice.

The duo was part of a group that defrauded at least 65 investors out of £1,541,799.

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Between February 2017 and June 2019, the group cold-called consumers, directing them to a professional-looking website where they were offered high returns for fake investments in crypto.

The jury at Southwark Crown Court were unable to reach a verdict on a third defendant, and they will face a retrial in September 2025.

A fourth defendant, Rowena Bedi, was acquitted of money laundering. A further individual, Minas Filippidis, is wanted in relation to the same offences.

Bedi and Mavanga will be sentenced at a later date.

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The criminal proceeding was brought by the Financial Conduct Authority after the defendants were arrested last April.

The Financial Conduct Authority’s joint executive director of enforcement and market oversight, Steve Smart, said: “Bedi and Mavanga lured investors with promises of high returns on crypto investments, but their schemes were nothing but a callous scam.

“If you’re contacted out of the blue about an investment opportunity that sounds too good to be true, then it probably is. If you’re in any doubt – don’t invest.”

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Big Tech’s shift on Trump

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Big Tech’s shift on Trump

Outrage over his 2016 election victory has given way to wariness but also anticipation of opportunities

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