BRITAIN'S economy eked out unexpected growth in the second quarter, laying the ground for more interest rate hikes from the Bank of England (BoE), but it remained the only big advanced economy yet to regain its pre-Covid level.
Official data on Friday (11) showed the economy grew 0.2 per cent in the second quarter, against the consensus for a flat reading in a Reuters poll of economists. The figures sent the pound sharply higher against the US dollar and euro.
The performance was helped by monthly growth of 0.5 per cent in June.
The strong showing bolstered bets that the BoE would keep on raising interest rates, given the central bank stressed this month that resilience in the economy was one of the factors that would underpin its judgement.
The central bank itself had pencilled in growth of 0.1% for the second quarter.
"It gives the Bank of England a headache - they may well have been thinking about pausing interest rate increases soon, but this data will make that more difficult," said fund manager Neil Birrell from asset managers Premier Miton.
British government bond yields shot higher after the market opened as investors digested the data.
The Office for National Statistics said businesses had cited an additional national holiday in May as a factor for the increased output in June, compared to May.
Manufacturing had its best quarter since early 2019, excluding the initial rebound from the first Covid-19 lockdown in 2020, with output up 1.6 per cent on the quarter.
Business investment also surged, up 3.4 per cent on the quarter.
"The actions we're taking to fight inflation are starting to take effect, which means we're laying the strong foundations needed to grow the economy," chancellor of exchequer Jeremy Hunt said.
While Britain has so far dodged recession, unlike the euro zone, the figures confirmed its relatively poor performance since the onset of the pandemic.
Britain's economy now stands 0.2 per cent below its level in late 2019 as of the second quarter, compared with 0.2 per cent above for Germany, 1.7 per cent for France, 2.2 per cent for Italy and 6.2 per cent for the United States.
Most economists think tough times are ahead, despite the economy's recent resilience.
"With much of the drag from higher interest rates still to come, we are sticking to our below-consensus forecast that the UK is heading for a mild recession later this year," said economist Ruth Gregory from consultancy Capital Economics.
Funds held in customer accounts by Indian clients rose by 11 per cent in the year to 346 million Swiss francs (£3.14m) and accounted for about one-tenth of overall funds.
INDIAN money in Swiss banks more than trebled in 2024 to 3.5 billion Swiss francs (£3.1bn), attributed to a rise in funds held through local branches and other financial institutions, annual data released by Switzerland's central bank showed on Thursday (19).
However, funds held in customer accounts by Indian clients rose by 11 per cent in the year to 346 million Swiss francs (£3.14m) and accounted for about one-tenth of overall funds, the report showed.
The increase in the overall funds follows a 70 per cent decline in funds by Indian individuals and firms in Swiss banks, including through local branches and other financial institutions, in 2023 to a four-year low of 1.04 billion Swiss francs.
This is the highest since 2021, when the total Indian money in Swiss banks hit a 14-year high of CHF 3.83 billion.
These are official figures reported by banks to the Swiss National Bank (SNB) and do not include money that Indians, non-resident Indians or others might have in Swiss banks in the names of third-country entities.
According to the SNB, its data for 'total liabilities' of Swiss banks towards Indian clients takes into account all types of funds of Indian customers at Swiss banks, including deposits from individuals, banks and enterprises. This includes data for branches of Swiss banks in India, as also non-deposit liabilities.
The total amount of CHF 3,545.54 million, described by the SNB as 'total liabilities' of Swiss banks or 'amounts due to' their Indian clients at the end of 2023, included • CHF 346 million in customer deposits (up from CHF 310 million at 2023-end), • CHF 3.02 billion held via other banks (up from CHF 427 million), • CHF 41 million (up from CHF 10 million) through fiduciaries or trusts, and • CHF 135 million as 'other amounts' due to customers in form of bonds, securities and various other financial instruments (down from CHF 293 million).
The total amount stood at a record high of nearly 6.5 billion Swiss francs in 2006.
However, the 'locational banking statistics' of the Bank for International Settlement (BIS), described in the past by Indian and Swiss authorities as a more reliable measure for deposits by Indian individuals in Swiss banks, showed an increase of nearly six per cent during 2024 in such funds to $74.8m (£55.7m).
An exchange of information in tax matters between Switzerland and India has been in force since 2018. Under this framework, detailed financial information on all Indian residents having accounts with Swiss financial institutions since 2018 was provided for the first time to Indian tax authorities in September 2019 and this is being followed every year.
Swiss authorities have maintained that assets held by Indian residents in Switzerland cannot be considered as 'black money' and they actively support India in its fight against tax fraud and evasion.
The UK topped the charts for money deposited by foreign clients in Swiss banks at CHF 222 billion, followed by the US (CHF 89 billion) and West Indies (CHF 68 billion).
Germany, France, Hong Kong, Luxembourg, Singapore, Guernsey and the UAE completed the top ten countries.
India was in 48th place, up from 67th at the end of 2023, but below 46th place at the end of 2022.
Pakistan also saw a dip to CHF 272 million (from CHF 286 million), while Bangladesh witnessed a sharp increase from CHF 18 million to CHF 589 million.
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In a statement, the central bank pointed to a recent rise in energy prices, citing the 'escalation of the conflict in the Middle East' as a factor.
THE BANK OF ENGLAND (BoE) kept its key interest rate at 4.25 per cent on Thursday, citing persistent inflation and rising risks from US tariffs and the conflict between Israel and Iran.
The decision, which was widely expected, came a day after the US Federal Reserve also left its interest rates unchanged, pointing to continued inflation and slowing growth in the United States.
BoE governor Andrew Bailey said the UK economy remained weak but signalled that rate cuts were possible later this year.
“Interest rates remain on a gradual downward path, although we’ve left them on hold today,” Bailey said. He added, “The world is highly unpredictable.”
Official figures released Wednesday showed that UK annual inflation eased to 3.4 per cent in May, less than expected. It remains well above the BoE’s 2 per cent target.
In a statement, the central bank pointed to a recent rise in energy prices, citing the “escalation of the conflict in the Middle East” as a factor.
Despite holding rates steady, analysts expect the BoE to cut at its next meeting in August.
“The Bank of England opens the door for a cut in August as it keeps one eye on energy prices,” said Yael Selfin, chief economist at KPMG UK.
The Bank of Japan also kept its interest rate unchanged this week.
Earlier on Thursday, Norway’s central bank unexpectedly cut rates, and the Swiss National Bank reduced its rate to zero per cent. Both cited uncertainty in the global economic outlook.
Last month, the Bank of England cut its rate by 0.25 percentage points as early signs emerged that US tariffs were beginning to affect growth.
The UK economy shrank more than expected in April, partly due to a tax rise on domestic businesses.
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FILE PHOTO: Passengers board a Pakistan International Airlines (PIA) flight at the airport in Kabul on September 13, 2021. (Photo by AAMIR QURESHI/AFP via Getty Images)
TWO of Pakistan's leading business groups and a company backed by the powerful military will bid for the country's ailing national carrier, a divestment the government hopes will kickstart the privatisations of state-owned enterprises.
The sale of Pakistan International Airlines will be the first major privatisation for around two decades, with the sale of loss-making state-owned enterprises a condition of last year's $7 billion (£5.5bn) bailout by the International Monetary Fund.
The government tried unsuccessfully to last year offload a stake in PIA, which is a major burden on its budget, but the sale was aborted because of the poor state of the airline and the conditions attached to any purchase.
Expressions of interest are due by Thursday (19) for an up to 100 per cent stake in the airline, with industry insiders expecting more bidders to emerge. They say the deal has been sweetened with a tax incentive and bolstered by signs of a turnaround in PIA's fortunes.
The Ministry of Privatisation did not respond to a request for comment.
Among those planning bids are the Yunus Brothers Group, owners of the Lucky Cement and energy companies; and a consortium led by Arif Habib Limited that includes Fatima Fertiliser, Lake City, and The City School, sources within the companies said.
Fauji Fertilizer Company, which is part-owned by the military, said it will be making an expression of interest, in a notice to the Pakistan Stock Exchange. Fertiliser production is a lucrative sector in Pakistan.
A group of PIA employees has also come forward to bid.
"The employees will use their provident fund and pension, in addition to finding an investor to place a bid. We're doing this to save jobs and turn around the company," said Hidayatullah Khan, president of the airline's Senior Staff Association.
The airline was restructured last year, offloading approximately 80 per cent of its legacy debt to the government to make it more attractive to investors. But bidders remain concerned about overstaffing and the ability to fire employees.
Last year's sale effort failed when the sole bid of $36 million (£28m) fell far short of a $305m (£240m) floor price.
Interested parties walked away before bidding, partly because the government was not willing to give up 100 per cent of the company, with bidders saying they did not want the government to remain involved.
Since then, PIA has posted its first operating profit in 21 years, driven by cost-cutting reforms, after making cumulative losses of $2.5bn (£2bn).
This success of the current process will depend on whether the government is willing to give up a 100 per cent stake, industry insiders said.
They added that a government decision this month to remove the requirement of paying sales tax upfront on the lease of new aircraft, which had been an impediment, will make the deal more attractive.
PIA resumed flights to Europe in January after the European Union lifted a four-year safety ban. The airline has also approached UK authorities for permission to resume services to London and Manchester.
The restoration of international routes is vital to future growth opportunities and successful bidders are likely to bring in foreign airlines as operators.
(Reuters)
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Choksi, accused in a bank fraud case in India, has been arrested in Belgium and plans to appeal for release, citing medical grounds. (Photo: Getty Images)
FUGITIVE jeweller Mehul Choksi accused India of orchestrating his kidnapping to extradite him on fraud allegations, with his lawyers telling London's High Court on Monday (16) that only India had the motivation and resources to do so.
Choksi – who was arrested in Belgium in April – is wanted in India over his alleged involvement in one of India's biggest bank frauds at Punjab National Bank, which in 2018 announced it had discovered alleged fraud worth $1.8 billion (£1.29bn).
Choksi is separately suing the Indian government in London, arguing that the state was responsible for his kidnapping in Antigua in 2021, when he says he was abducted and taken to Dominica in an attempt to extradite him to India.
India's lawyer Harish Salve said in court filings that "there is no evidence of India having anything to do with the alleged events".
Choksi alleges he was beaten in a failed attempt to extort a false confession and implicate India's political opposition, which he says points to state involvement in the incident.
Choksi's lawyer Edward Fitzgerald told the court: "The evidence points inevitably to India being behind this – they had the motivation, they had the resources."
Monday's hearing, the first since Choksi filed his case last year, was held to decide when India's application to throw out Choksi's lawsuit on state immunity should be held.
A NEW study revealed that India has become the top source of foreign-born founders behind America’s most valuable start-ups, highlighting the country's growing influence in the global technology sector.
Research by Stanford University’s Venture Capital Initiative showed that Indian entrepreneurs have founded 90 "unicorn" companies - start-ups valued at over $1 billion - in the US.
According to the report, Indian Institutes of Technology (IITs) dominate the rankings, with IIT Delhi leading the pack by producing 16 unicorn founders, including Jyoti Bansal who created AppDynamics. IIT Bombay follows closely with 14 founders, while IIT Kanpur has contributed 12, including the team behind cloud computing giant Nutanix.
Among the 165 US unicorn founders who studied at Indian universities, 81 per cent pursued either computer science or engineering degrees, the report noted.
“Indian entrepreneurs have become essential to the US’s innovation economy. India has contributed 141 unicorn founders who received their undergraduate education from Indian universities, again leading all countries outside the US. Most impressively, startups founded by Indian entrepreneurs who relocate to the US are 6.5 times more likely to achieve unicorn status than the average,” author of the report, Ilya A. Strebulaev, told Eastern Eye.
This pattern of immigrant entrepreneurship isn't unique to the US. In Britain, foreign-born founders play an equally vital role in the start-up ecosystem, according to data from Financial Times-backed tracker Sifted.
Despite foreign-born residents making up less than 15 per cent of the UK's population, they account for 39 per cent of the country's 100 fastest-growing companies. The USwas the most common country of birth for foreign-born founders in the UK, followed by Italy, France, Canada, India and Germany.
Asian entrepreneurs have been particularly successful, founding major unicorns including Oxford Nanopore Technologies and Hopin. Data shows that 24 per cent of Britain's unicorn companies now have foreign-born founders, with entrepreneurs coming from 28 different countries across five continents.
According to the Stanford report, California's unicorn companies employ approximately six per cent of their workforce in India on average, making the country the largest international talent pool for these billion-dollar firms. This creates valuable professional networks that often serve as launching pads for future entrepreneurs, as employees gain industry experience before starting their own ventures.
“India's technical education system has created a "national asset" in the global knowledge economy. The success of Indian entrepreneurs in the US also strengthens India's own start-up ecosystem through knowledge transfer, investment flows, and mentorship connections. As technology continues to drive worldwide economic growth, India's position as a primary source of high-impact entrepreneurs looks set to become even more significant in the years ahead,”
Strebulaev, who is the David S. Lobel professor of private equity at Stanford Graduate School of Business, pointed out.
Immigrant entrepreneurs are not just contributing to the US’s innovation boom - they are driving it, the report said. It analysed 1,078 founders behind 500 US unicorns and found that 474 founders came from abroad, representing 65 different countries across six continents.
Beyond individual founders relocating, entire companies are moving to the US to access its unique scaling advantages. The research showed that eight per cent of US unicorns - 88 out of 1,108 companies - were initially founded elsewhere before relocating to US soil. The benefits of this move are dramatic: Israeli start-ups that relocated to the US were nine times more likely to achieve unicorn status than those that remained at home, while Indian companies saw a 6.5-fold improvement in their chances.
“Successful examples of this trend include messaging platform Slack from Canada, gaming engine Unity from Denmark, and meditation app Headspace from Britain. These companies discovered that whilst great ideas can emerge anywhere, the American ecosystem offers unparalleled resources for growth,” the report said.
“Location choices within America also matter significantly. While California remains the top destination, international founders are increasingly strategic about where they establish operations. Israeli entrepreneurs often favour New York over California, and 15 per cent of all US unicorns have moved their headquarters at least once between founding and reaching billion-dollar valuations.”
Analysis of 191 California-based unicorns revealed that only 38 per cent of their 375,000 employees actually work in California. Nearly a third are employed elsewhere in the US, while another third work overseas, creating a truly international workforce.
When measuring entrepreneurial productivity per capita, Israel leads dramatically with 43.4 unicorn founders per 100,000 first-generation immigrants, followed by New Zealand at 37.3 and Belgium at 24.4. By comparison, India produces 2.5 unicorn founders per 100,000 immigrants, though it still contributes the highest absolute number.
The innovation ecosystem in the US thrives precisely because of this global talent mix, the research noted. With nearly equal numbers of US-born and immigrant founders, researchers describe this as "powerful complementarity".