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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.

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.

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.

“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 parents are paying more than they need to for baby milk because of a lack of competition in the market, a government watchdog has warned.

At the moment there are two dominant baby formula companies – Danone and Nestle – who make up 85% of all sales.

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As a result, there is little incentive for these manufacturers to compete to offer the best price, the Competition and Markets Authority (CMA) warned.

The news comes after the boss of Iceland Richard Walker last year hit out at “exploitation” of new parents and called for action to be taken in the industry.

Over the past few years it has become more expensive to manufacture infant formula and these costs have been passed on directly to customers.

Parents often choose baby formula for the first time when they are in vulnerable situations such as in hospital straight after birth.

Often they make the choice when they do not have access to clear, accurate and impartial information, the watchdog warned.

Parents are also often under a lot of pressure to do what is best for their baby.

As a result, they can often choose a more expensive product as they assume that a higher price will mean it is better quality.

This is not true as the NHS advises that “it does not matter what brand you choose, they’ll all meet your baby’s nutritional needs, regardless of price”.

Parents also often listen to advice from friends and family when choosing a formula, which means the brand’s reputation plays a much larger role in the decision making.

Sarah Cardell, chief executive of the CMA, said it is concerned that companies “don’t compete strongly on price”.

She added: “We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations.”

The CMA has set out several potential options which could help to improve the industry and reduce the cost for parents.

It wants to provide new parents with clear, accurate and impartial information, for example in hospitals.

The CMA may also allow companies to publicise their prices and price reductions, which they are currently not allowed to do.

It also wants to strengthen labelling and advertising rules as branding is a large part of the reason that parents choose a certain product.

This could be done by requiring manufacturers to use entirely different branding for their infant and follow-on formula.

The CMA may also implement stricter rules around certain messages on packaging.

In the long term the government may also be forced to take more significant action to bring down costs, such as introducing price caps.

The CMA will publish a final report on baby formula in February 2025.

What help is there for parents?

If you receive certain benefits and are pregnant or have at least one child under the age of four then you can apply for Healthy Start vouchers.

You will get:

• £4.25 each week of your pregnancy
• £8.50 each week for children from birth to one year old
• £4.25 each week for children between one and four years old

The money will stop after your child’s fourth birthday or if you no longer receive benefits.

If you are eligible you will be sent a Healthy Start card with money on it that you can use in some UK shops.

The money will be added onto this card every four weeks.

You can use the card to buy:

• Plain liquid cow’s milk
• Fresh, frozen and tinned fruit and vegetables
• Fresh, dried and tinned pulses
• Infant formula milk based on cow’s milk

To be eligible for the scheme you must be receiving one of the following benefits:

• Income support
• Income-based jobseeker’s allowance
• Child tax credit if your family’s annual income is £16,190 or less, and not getting working tax credit
• Universal credit if your family’s monthly earned income is £408 or less from employment
• Pension credit

You can apply for the scheme on the NHS website.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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Your guide to what the 2024 US election means for Washington and the world

“The US economy is strong.”

“Joe Biden is not getting credit for falling inflation and low unemployment, therefore, partisanship and media bias must be against him.”

“The US is outperforming Europe, so America’s incumbent party will do better at the polls.”

FT Alphaville spent much of this year trying to dispel these misguided and incomplete narratives:

— It’s (still) the economy (and politics) — stupid
— Why isn’t Joe Biden getting credit for America’s sturdy jobs market?
— How the ‘strong’ US economy feels for poorer Americans, in five charts
— America: a healthy or healthcare economy?

If you missed those, here’s a quick summary:

— America is continental. US GDP, unemployment and inflation data are particularly poor reflections on the economic experiences of households and businesses in different states and counties. For that, one must dig down for local and income-level statistics.
— A high-growth, high-spending economy is not necessarily a sign of a healthy economy. Many Americans are spending a high proportion of their money on rent, healthcare, and food, not discretionary items — and fuelled by debt.
— “Inflation falling, unemployment low=good” is too simplistic when people feel price-levels (cumulative inflation) and job security (opportunities and real wage growth) more palpably.

Frankly, none of this is new. Political fealty, culture wars, and disinformation may all play a part. But, for all those still unconvinced that people’s lived experience of the economy mattered as much as the exit polls and voxpops suggest, here are ten charts we’ve been monitoring all year.

1) A 17-22 per cent rise in the price level across swing states since January 2021 has not gone unnoticed:

2) The cheapest US products have seen the fastest increase in price level; implying lower-income households have faced even higher inflation (aka cheapflation):

3) The change in price level exceeds the change in wage level across most swing states too:

4) Debt delinquencies are also rising faster than the US average in key states:

5) A reminder of how Americans spend their money on services. The bulk of household spending is going towards non-discretionary items such as rent and healthcare:

6) Some workers have had more luck in the post-pandemic labour market than others. The visible relative performance can impact how individuals feel about whether the economy is working for them:

7) Unemployment may still be low, but those on the lowest incomes have grown most worried about losing their job since the start of the year:

8) Americans of all income levels seem to be hearing downbeat news concerning government economic policies. Outsiders may see US exceptionalism on their screens, but the realities on the ground are different, and the wealthier can shoulder it better:

9) All income groups feel worse off than they did when Biden started his term, although it is more stark for the bottom and middle thirds of earners:

10) And finally. The stock market is not the real economy. America’s asset-poor see minimal upside to soaring equity and house prices:

Still don’t trust those exit polls?

Good morning and welcome to your Morning Briefing for Friday 8 November 2024. To get this in your inbox every morning click here.

Firms in the dark on commercial pensions dashboards delivery date

Firms seeking to operate commercial pensions dashboards services (PDS) have no timescale when this will happen despite the Financial Conduct Authority publishing rules they must follow when designing and operating them.

FCA set out rules for pensions dashboards service firms in a policy statement published yesterday (7 Nov.)

Rachel Vahey, head of public policy at AJ Bell, said the lack of timescale is a “huge let down for customers”.

Closing the advice gap

How do we close the advice gap?

That’s the million-dollar question I’ve heard debated time and again since I joined Money Marketing.

The consensus is that artificial intelligence and the introduction of new technology will free up advisers’ time and enable them to take on and serve more clients.

But could it be the banks that hold the key to closing the gap?

Quote Of The Day

There are some more bullish voices out there, including Goldman Sachs who have forecast UK base rate to fall to just 2.75% by next Autumn. The fact the decision to cut rates was almost unanimous will put some powder in this argument.

-Laith Khalaf, head of investment analysis at AJ Bell, comments on latest interest rate decision from the Bank of England.

In Other News

The Pension Protection Fund (PPF) has published its fifth Responsible Investment report, which reinforces its commitment to promoting sustainability in the pensions industry and demonstrates the power industry engagement and collaboration across its asset managers, portfolio companies, industry bodies and peers has had over the last 12 months.

The annual report summarises the stewardship and governance activities carried out by the PPF that have not only driven greater participation and engagement industry wide, but also have improved reporting, risk analysis, transparency and driving positive change.

Barry Kenneth, chief investment officer at the PPF said: “The last 12 months has been a period of evolution and engagement, and this report outlines our continued commitment to align with the Stewardship Code, showcasing the steps we have taken and measures we have advanced to protect and drive value across our portfolio.

Isio, a provider of pensions and employee benefits consultancy, has announced the launch of its new individual service designed to streamline support for NHS employees affected by the McCloud pensions tax roll-back.

The McCloud remedy addresses age discrimination in the 2015 public service pension reforms. It involves rolling back the 2015 scheme benefits into the previous final salary schemes for affected public sector members.

But many senior NHS staff will have to also revisit up to seven years of self-assessment tax forms by 31 January 2025 (or 3 months after being notified if later).

The new service will help these NHS Pension Scheme members, who will receive a Remediable Pension Savings Statement (RPSS), to collect the required data and submit it to HMRC.

Isio’s service manages the entire process, allowing members to easily claim tax refunds where appropriate (and in some cases pay additional tax charges). The service is to be also available for senior police employees affected by the same issue.

Did You See?

Greg Neall, chartered financial planner at Wake Up Your Wealth, chides journalists, experts, and commentators over their “scaremongering” articles in the lead up to the autumn Budget.

He writes: It’s impossible to count the number of headlines written over the last few months declaring the 25% tax-free pension lump sum was in danger of being scrapped in last week’s Budget to boost clicks and comments.

Anyone with a working brain and the slightest bit of political nous could see there was no way the chancellor would do something so politically suicidal, especially after the Winter Fuel Allowance fiasco. Shame on those claiming it was ever likely.

There was also a glut of poorly-researched pieces on how the lump sum allowance might come down to £100,000.

Read the full article here.

Parents have been “paying over the odds” for baby milk because of a lack of competition in the formula market, a government watchdog has said.

It stopped short of recommending price controls, but said they remain a possibility, adding parents have been “shouldering the costs” of price increases in the market for years.

The Competition and Markets Authority’s (CMA) interim report said the baby milk industry needed a shake-up to help parents struggling to afford it.

“We’re concerned many parents opt for more expensive products, equating higher costs with better quality for their baby,” CMA chief executive Sarah Cardell said.

Just two companies – Danone and Nestle – control the majority of the UK market.

A spokesperson for Danone said it “will engage with the CMA as it develops its final findings and recommendations”. Nestle has previously recommended the investigation.

The market is currently regulated so that promotions, such as a loyalty points or discounts, are banned.

This is to encourage breastfeeding, but the CMA raised concerns about “unintended consequences, contributing to consumers paying higher prices”.