We’ve summarised the top stories of the last week into an easily digestible briefing, so that you can stay up to date on what’s happening around the world. You can subscribe to receive the briefing in your inbox each week.
This week: Fallout continues from banking collapses in the USA
Following the collapse of Silicon Valley Bank (SVB), regulators closed Signature Bank on Sunday 12th, as depositors had withdrawn billions amidst growing concern. With extraordinary government backing, all deposits were made available for access the next day. However, the US Treasury Secretary warned that this would not be the case in future.
- 11 US banks on Friday agreed to deposit $30bn into First Republic Bank in an attempt to contain the impact of the collapse of 3 other midsized US banks within the last 10 days.
- UBS, Switzerland’s largest bank, on Sunday acquired the troubled Credit Suisse for $3.25bn as Swiss regulators brokered a deal aimed to avert a global banking crisis and restore confidence to the sector. Over the weekend, both the Bank of England and the US Federal Reserve encouraged efforts to seek a timely solution to avoid crisis. Following this, shares in Asian banks plummeted.
UK Economics and Business
- Chancellor Jeremy Hunt announced the Spring Budget to the House of Commons last Wednesday, suggesting Britain’s economy is doing better than expected. The government says it will shrink by just 0.2% this year, in comparison to the previous forecast of 1.4%. Growth is forecast to return to just under 2% next year. Inflation is also expected to fall from its peak of 10.7% in 2022 to 2.9% in 2023.
- Other announcements included:
- An extension of 30 hours/week of free childcare for working parents to one and two year olds
- A rise in the main rate of corporation tax from 19% to 25%
- A commitment to increased defence spending by £11bn over the next 5 years
- New rules reducing the tax burden on pensions
- An extension of domestic energy bill subsidies
- A rise in alcohol and tobacco duty
- Unions and the Government last week agreed on a pay deal that includes a 5% wage increase for healthcare workers such as ambulance staff and nurses. Most unions are recommending the deal to members, but other NHS staff not covered by Thursday’s offer, including junior doctors, remain in dispute with the government, as well as over 100,000 civil servants. The NHS waiting list after COVID remains at over 7 million patients.
World Economics and Business
- Argentina’s annual inflation last week crossed 100 percent for the first time since 1991, to the great concern of government ahead of elections this October. Polls have repeatedly shown that inflation is the key political concern amongst the Argentinian population, ahead of corruption and poverty.
- On Thursday last week, the ECB voted to raise interest rates by half a percentage point to 3 percent, its highest level since October 2008. This week the US Federal Reserve will announce rate changes on Wednesday, and the Bank of England on Thursday.
- China retail sales grew by 3.5% in first two months of 2023 year on year. Imports also rose at their fastest pace in a year in February, by 4.2% to 197%. The fall in exports also slowed to 1.3% year on year. These are signs of China’s rapid recovery from the impact of its zero-COVID policies.
- The Lebanese Lira dropped to 100,000 against the dollar on 14th March. While it is officially pegged at 15,000 to the dollar, it has lost 99% of its value since the country’s economic crisis began in 2019.
- OpenAI, the creators of ChatGPT, last week released its latest AI model GPT-4, which reportedly exhibits ‘human-level’ performance and managed to pass standard US exams, such as the SAT, the bar exam and advanced placement course tests. It uses more reference information and a wider range of possible inputs to achieve this.
- Tory MPs were told they will get a free vote on any Johnson sanctions ahead of a ‘marathon’ televised hearing to convince MPs that he did not mislead Parliament.
- The US, UK and Australia announced a project to supply nuclear-powered submarines to Australia, following 18 months of talks since the establishment of the trilateral Aukus security pact in September 2021.
- The UK government has banned TikTok from all government devices due to security concerns, after the EU, Canadian and US administrations have recently made similar moves. TikTok faces a complete ban in the US if China’s ByteDance do not sell their stake in the social media company, according to sources close to the US government review of the company.
- On Monday 20th, China’s Xi Jinping travelled to Moscow for talks with Vladimir Putin, calling for a “rational way” to address the war in Ukraine. Conversely, Putin praised China for understanding the “true causes” of the war.
- A Russian aircraft last week struck an unmanned US drone over the Black Sea, with a video of the incident later being released by the Pentagon. White House officials caused the Russian move ‘unsafe’ and ‘unprofessional’, while the Russian ambassador to the US on Wednesday called the incident a provocation.
- On Thursday, the leaders of South Korea and Japan promised to resume ties in a so-called fence-mending summit, the first meeting of its kind in 12 years as the two seek to confront North Korean threats and other concerns over China.
- Putin made a working visit to the occupied Ukrainian city of Mariupol on Sunday, his first visit into a Russian occupied Ukrainian territory since the beginning of the war.
- Israeli and Palestinian officials met in Egypt for talks aimed to calm surging violence that has fuelled fears of further escalation when Ramadan begins towards the end of the week. The meeting stands as a follow-up to a February US-brokered conference that secured pledges from both sides to de-escalate, but which led to no further progress on the ground.
- Former President of Taiwan Ma Ying-Jeou recently announced a visit to China later this month, the first time a former or current Taiwanese leader has visited since the defeated Republic of China government fled to the island in 1949.
Written by Angus McIntyre and Zihan Tian