Simply sign up to the Chinese economy myFT Digest — delivered directly to your inbox.
China has announced a Rmb10tn ($1.4tn) fiscal package to help shore up its faltering economy, as it braces for increased trade tensions with the US under Donald Trump.
Beijing has authorised China’s heavily indebted local governments to issue Rmb6tn in new bonds over three years and reallocate a further Rmb4tn in previously planned bonds over five years to restructure their finances, officials announced at a press conference on Friday presided over by finance minister Lan Fo’an.
Advertisement
Officials did not announce additional measures to directly stimulate domestic demand, potentially disappointing markets that had been hoping the package would also help consumers. But they added that they were “studying” extra measures to recapitalise big banks, buy unfinished properties and strengthen consumption.
China’s renminbi weakened sharply against the US dollar immediately after the announcement, with the onshore yuan falling as much as 0.4 per cent to less than Rmb7.17 to the dollar.
The country’s central bank on Thursday set its daily fix for the currency at its lowest level since last November, at Rmb7.166, as the dollar surged following Donald Trump’s victory in the US presidential election.
The debt relief measures, which follow the announcement of a large monetary stimulus in September, had been expected even before Trump’s victory, following a campaign in which he threatened to levy a 60 per cent tariff on Chinese goods.
But analysts say China needs to urgently deal with problems dogging its domestic economy, including a prolonged housing slump that has dented household and local government revenues, before Trump’s tariffs hit its external sector.
If fully implemented without Chinese countermeasures, the Trump tariffs could knock several percentage points off China’s GDP at a moment when the economy is highly vulnerable, analysts said.
China’s manufacturing industries and exports have been a rare bright spot for its economy this year, offsetting domestic weakness and helping Beijing come closer to hitting its growth targets.
Beijing is expected to announce additional support for the economy once Trump’s agenda becomes clearer in the coming months, analysts said.
Advertisement
There are signs the government’s monetary stimulus measures in September, which included interest rate cuts and support for the stock and property markets, have started to have an impact on the economy.
The government has also accelerated pre-planned bond issuances for fiscal spending that had stalled during the year.
“There have been some early signs of a pick-up in domestic demand,” Gavekal China economist Wei He wrote in a note, pointing to indicators such as the October purchasing managers’ index.
Advertisement
“Housing sales are improving, the official PMI is rebounding and stock prices have made handsome gains,” Wei added.
Additional reporting by Arjun Neil Alim in Hong Kong
Thousands of drivers working for ride-hailing and food delivery app Bolt have won a legal claim to be classed as workers in the UK rather than self-employed.
The ruling means drivers could be entitled to holiday pay and minimum wage, which lawyers said could lead to compensation worth more than £200m.
Bolt said it was reviewing its options, including grounds for appeal.
It pointed out that the findings of the Employment Tribunal were confined to drivers who were not on multiple ride-hailing apps.
Advertisement
About 10,000 current and former Bolt drivers took legal action against the Estonian-headquartered firm at a London employment tribunal.
They argued they were formally workers under British law.
Bolt said it had “always supported” the “choice” of drivers “to remain self-employed independent contractors”.
But the tribunal found that “overwhelmingly, the power lies with Bolt”.
Advertisement
“There is nothing in the relationship which demands, or even suggests, agency” on the part of the drivers, it said.
The tribunal added that “the supposed contract between the Bolt driver and the passenger is a fiction designed by Bolt – and in particular its lawyers – to defeat the argument that it has an employer/worker relationship with the driver”.
Money Marketing’s Weekly Must-Reads: Top 10 Stories
This week, Tony Wickenden explores tax planning strategies in the wake of the recent Budget, and Mattioli Woods expands with its acquisition of Stockport-based Cullen Wealth. Discover more highlights below:
In his post-Budget analysis, Tony Wickenden discusses recent tax changes affecting pensions relief, capital gains tax (CGT), and inheritance tax (IHT). The government has introduced a new £1m allowance for business and agricultural property, which applies to estate assets and lifetime transfers. This change, aimed at balancing tax revenue and taxpayer behaviour, is less severe than anticipated, suggesting a compromise approach. Wickenden also highlights the role of careful estate planning and professional advice in maximising reliefs and minimising potential IHT liabilities.
Mattioli Woods has acquired Stockport-based Cullen Wealth, enhancing its presence in the Northwest and strengthening its wealth management and employee benefits services. This acquisition aligns with Mattioli Woods’ focus on serving mass affluent clients, business owners, professionals, and corporates. Deputy CEO Michael Wright praised Cullen Wealth’s dedication to client service, seeing the acquisition as a strategic fit for Mattioli Woods’ growth. Founder Richard Cullen expressed confidence that the partnership will drive innovation and expand offerings for their clients.
In the Autumn Budget, Chancellor Rachel Reeves announced an increase in employer National Insurance contributions, raising the rate by 1.2 percentage points to 15% from April 2025. The secondary threshold will be lowered to £5,000, while the Employment Allowance will double to £10,500 to aid small businesses. These changes aim to generate £25 billion annually. Employers are advised to review their benefits and consider salary sacrifice schemes to offset rising NIC costs and better manage expenses.
Close Brothers Asset Management (CBAM) has partnered with SEI to adopt the SEI Wealth Platform and SEI Data Cloud, aiming to strengthen its tech and data capabilities. This move supports CBAM’s strategic growth goals, enhancing services for wealth management professionals and clients. The partnership, chosen after a rigorous selection, also includes adopting Objectway’s Portfolio Management Solution and outsourcing order execution to Winterflood Business Services. SEI, which serves other major firms, welcomed CBAM’s commitment to integrated tech-driven expansion.
The Bank of England has cut the base rate by 0.25%, bringing it to 4.75%, with an 8:1 vote from its Monetary Policy Committee (MPC). Experts express mixed reactions, noting potential impacts on inflation and borrowing costs. Fidelity’s Ed Monk warns that while inflation is now below target, borrowing costs may not drop swiftly due to rising market interest rates. Hymans Robertson’s William Marshall and Hargreaves Lansdown’s Sarah Coles anticipate a cautious pace in future rate cuts due to inflation concerns.
Momodou Musa Touray, senior reporter, examines the need for a dedicated trade body for the platform sector in the UK with the newly launched Platforms Association. This group aims to unify the sector and address issues like regulatory compliance, platform requirements, and operational efficiencies. Despite support from several major platforms, the sector remains divided, with some preferring the UK Platform Group. The Platforms Association’s goal is to provide a unified voice, especially on regulatory matters, to support industry growth and stability.
Chancellor Rachel Reeves announced a rise in the stamp duty surcharge on second homes and investment properties from 3% to 5%, effective from 31 October 2024. The move is part of the Autumn Budget, aiming to raise revenue while supporting first-time homebuyers. Industry responses include concerns from mortgage professionals about the impact on the buy-to-let market, with Zoopla’s Richard Donnell predicting reduced demand. ARLA Propertymark urges the government to support landlords amid the growing shortage of private rented homes.
The 2024 Budget introduces a significant change to pensions, as unused pensions and death benefits will be subject to inheritance tax (IHT) from April 2027. This could shift the trend away from pension drawdown, which has been favoured for passing wealth, towards annuities. Annuities, particularly joint-life ones, offer secure, guaranteed income, and may become more appealing for those seeking to reduce pension fund values and provide peace of mind to surviving partners, helping to solve the “annuity puzzle” of low demand despite their efficiency. William Burrows runs the Annuity Project and is a financial adviser at Eadon & Co.
Lois Vallely reports on the ongoing feud between the Chartered Insurance Institute (CII) and the Personal Finance Society (PFS), which continues to stir controversy. Recently, the CII appointed several of its executives to the PFS board, raising questions about governance and transparency. This move follows a long history of attempts by the CII to exert control over the PFS and its member funds, leading some to call for the PFS to separate or form an independent body.
Chancellor Rachel Reeves has announced a 40% business rates relief for the retail, hospitality, and leisure industries in 2025/26, capped at £110,000 per business. This is a reduction from the current 75% discount, which will expire in April 2025. The British Retail Consortium had called for a 20% cut, highlighting the sector’s disproportionate business tax burden. However, local councils depend heavily on business rates revenue, raising concerns about alternative funding to maintain local services. The relief is seen as a positive but insufficient solution.
K3 Advisory has completed a £2m annuity buy-in transaction with a pension scheme.
The deal, completed in July, secured the benefits of 16 pensioners and three deferred members.
The undisclosed pension scheme is within the mechanical and electrical industry.
Legal & General was the insurer to the scheme. Schroders, a strategic partner to K3, provided investment advisory services and Mills & Reeve acted as the Trustees’ legal advisors.
Advertisement
K3 Advisory, founded in 2018, is a specialist independent bulk annuity and consolidator advisory business.
The business, backed by the Vestey Holdings Group, provides trustees and scheme sponsors with advice and brokering services to secure a smooth and effective transfer of liabilities to an insurer or consolidation vehicle.
K3 Advisory senior actuarial consultant, John Mayer, said: “This transaction is a great example of how swift and efficient these exercises can be if schemes are prepared, and industry relationships and collaborations work well.
“It’s always pleasing to be able to deliver security for members of small schemes and this scheme was a brilliant example of this. A fantastic result all round.”
You must be logged in to post a comment Login