Labour to propose Bank of England remit to boost productivity

John McDonnell will call for major changes to UK’s financial system based on broad review

The Bank of England could be given a mandate to boost productivity growth under a Labour government as part of opposition plans to overhaul the country’s “economic architecture”.

Revealing the findings from a review of the UK financial system, the shadow chancellor, John McDonnell, will on Wednesday make the case for a fundamental transformation that could include a revamp of the Bank’s remit in order to help drive economic growth.

Related: Government urged to use RBS majority stake to veto branch closures

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A Giant of the Senate

Policy making and Politics has changed. So says former Senate majority leader George Mitchell. Known among his Senate colleagues as an honest leader and skillful legislative strategist, Mitchell was instrumental in negotiating a peace agreement in Northern Ireland. He was awarded the Presidential Medal of Freedom. From Brexit to money in elections to nuclear negotiations on the…

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The post A Giant of the Senate appeared first on The Big Picture.

Multinationals move $16bn from Australia to tax havens each year

Landmark research finds profit-shifting is driving global reduction in headline tax rates, not competition

A landmark study has found multinational corporations are shifting roughly $16bn in profits out of Australia into tax havens every year.

It has also found the steady decline in corporate tax rates globally since the 1980s has not been driven by countries competing harder for productive capital and pushing corporate tax rates down, despite what politicians say.

Non-haven countries steal revenue from each other while letting tax havens flourish

Related: British overseas territories in talks to keep tax haven secrecy

Related: Offshore secrecy: inside the movement to crack it open

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Markets slide as Trump threatens China with $200bn of new tariffs – as it happened

Trade war fears are escalating as president Trump pledges fresh measures against Chinese imports; Beijing calls it ‘blackmail’ and vows to retaliate

The escalation of the potential trade war between the US and China following Donald Trump’s threat of new tariffs on $200bn worth of goods has sent a shudder through the markets.

With Wall Street lower – and the Dow Jones Industrial Average losing all its gains so far this year – European markets have ended the day in downbeat mood. The FTSE 100 was among the better performers, helped ironically by sterling hitting a seven month low. The final scores showed:

More on Navarro’s comments, from Associated Press:

WH trade adviser Peter Navarro on #China: “This is a trade dispute, nothing more, nothing less. President Trump has a great relationship with President Xi.”

Navarro asked if Trump admin has any plans for talks with the Chinese about trade. “Our phone lines are open, they have always been open.”

The White House is not planning any imminent talks with China on the trade dispute, the FT is reporting (£).

Peter Navarro, a senior US trade adviser told reporters on a press call that China had been given a chance to address US complaints over the past year, and no more discussions were planned.

The prospect of US mid-term elections could determine how the trade dispute plays out, with some suggesting Trump will continue to play hardball to prove to the voters that he is still putting “America first.” But this could backfire. Fiona Cincotta, senior market analyst at City Index, said:

The only potential stop for Trump could be the reality of mid term elections. A large percentage of the US population are not going to be happy about paying more for imported goods. This is a long shot and still sufficient time away for damage to the markets to continue, however it could also prevent this trade war from spiralling out of control.

Here are some major US companies with trade links to China:

Percentage of revenue from China:

* Deere: 8%
* Caterpillar: 9%
* Boeing: 11%
* Nike: 12%
* 3M: 13%
* Tiffany: 13%
* Starbucks: 15%
* McDonalds: 15%

(via @TheDomino) @CNBC @SquawkStreet

Here’s our report on the market losses following Trump’s escalation of the trade dispute with China:

US stock markets fell sharply on Tuesday morning, following similar drops across the world, as investors feared that escalating tensions could trigger an international trade war.

Donald Trump threatened to impose an additional $200bn in levies on Chinese goods on Monday evening, days after the US announced $50bn in tariffs aimed at punishing what the US administration sees as unfair trade practices. China has already said it will retaliate for last week’s move and said it would escalate its response if further tariffs were imposed.

Related: US stock markets fall sharply amid fears of global trade war

US markets continue to fall, with the Dow Jones Industrial Average now down more than 400 points or 1.6%. Connor Campbell, financial analyst at Spreadex, said:

There was no let up on Tuesday, the US open extending the disastrous trading that began on Monday.

Plunging 400 points to hit a 2 week nadir, the Dow Jones was the latest index to display its abject terror at the trade war Donald Trump seems intent on provoking. The Dow’s day was made worse by the strength of the dollar; though the greenback struggled against the yen, it stomped all over the euro and the pound, sending the single currency and sterling to 19 day and 7 month lows respectively.

Emerging markets are also under pressure as the fears of a trade war grow.

Emerging Market stocks hit an 8-month low, down 7% YTD and 16% from their January high. $EEM pic.twitter.com/HjIIvHbkdE

A US tech industry group is very unhappy about Trump’s planned tariffs, saying they raise prices for Americans, harm US competitiveness, and will hinder economic growth. Jose Castaneda, spokesman for the Information Technology Industry Council, said:

The Trump Administration’s decision to escalate trade tensions with China is irresponsible and counterproductive. We appreciate President Trump’s efforts to protect the United States’ ‘crown jewels’ but tariffs are simply the wrong way to do it. Tariffs will harm U.S. workers and businesses from Silicon Valley to Silicon Prairie. The White House needs to work with our allies to create lasting change with China – too many jobs and livelihoods are at stake to get this wrong.

A trade war which would benefit no one may not actually happens, says Chris Payne, managing director at GWM Investment Management:

Despite all this tit-for-tat posturing, an all-out trade war is unlikely to ensue because it will not benefit anybody, especially China whose economy is going through a major deleveraging process. It should also be noted that China will soon run out of US goods on which to impose retaliatory tariffs which will move this negotiation to a more sensible and constructive forum.

Fears of an escalation in the trade tensions between the US and China have sent US markets sharply lower at the open.

President Trump’s threat to impose a 10% tariff on $200m of Chinese goods has led to new warnings from Beijing that it would retaliate. So the growing prospect of an all out trade war, and the damage that would cause to the global economy, has sent the Dow Jones Industrial Average down around 1.3% in early trading. This means the Dow has given up all its gains of the year.

Time for a recap, as investors brace for the Wall Street open, in just over 10 minutes.

Stock markets around the globe are suffering losses after Donald Trump took another step towards a trade war.

Related: Trump threatens new tariffs on $200bn in Chinese imports

This practice of extreme pressure and blackmail deviates from the consensus reached by two parties through many negotiations, and it also disappointed the international community.

“If the U.S. side becomes irrational and issues the list, China will have to adopt measures that are comprehensive measures in quantity and quality in order to make strong countermeasures.”

Stocks slide, bonds rally as trade fears build https://t.co/XGlwq06Q3X pic.twitter.com/mawuVGbq4y

Any retaliation by Beijing is likely to fuel the escalating trade war with Washington, which will in turn have a negative impact on equities and increase risk aversion.

“Investors are not the only ones troubled by the current situation. The world’s largest superpowers’ shift towards protectionism has global ramifications. International companies may grow less competitive due to tariffs and the cost of raw materials purchased overseas could rise by 10–20%. It’s highly possible that any further action from the US or China could put an end to the current 10-year bull market run.”

China’s yuan has fallen to its lowest level against the U.S. dollar in more than five months today, as trade tensions escalated between the world’s two largest economies.

The yuan opened onshore trade at 6.4450 per dollar, and weakened to a low of 6.4754 at one point.

It ended at 6.4743 by the official close of domestic trading in the late afternoon, the weakest such close since Jan.11.

We’ve put together a Q&A on the US-China trade dispute:

Related: Why is Donald Trump threatening more tariffs – and what next?

Raymond Ma, portfolio manager at Fidelity International, predicts that the trade battle between the US and China will hurt company profits – which likely leads to weaker wage growth and more job cuts.

Ma warns that the situation could escalate further:

“The latest development suggests the recent détente in US-China trade talks has slipped. Indeed, recent months have seen economic relations between the world’s two largest economies in a dance best characterised as two steps backwards for every step forwards.

“The concern now is how China could retaliate against President Trump’s latest action by increasing its own reciprocal tariffs. Such a move could push up input prices, which may prompt Chinese companies to either pass on the increased costs to consumers or allow them to eat into profits; neither outcome is favourable.

Commodity prices are also sliding today.

The US stock market is expected to fall sharply when trading begins at 9.30am New York time (2.30pm BST).

America’s Dow Jones industrial average is being called down 330 points, or 1.3%, as traders react to the latest twists in the trade spat between the US and China.

With China showing no desire to be bullied into submission, with its Commerce Ministry promising to retaliate to any new tariffs and its Foreign Ministry reaffirming that while it doesn’t want a trade war, it’s not afraid to engage in one, it’s difficult to see how and when this ends. Moreover, it’s difficult to fully grasp just how much damage will be done in the process, particularly with the European Union also drawing up counter-tariffs against the US.

The clear escalation that’s occurred in recent days has shaken investors and appears to brought an end to the good run that US stock markets had been on since the start of May. While Chinese stocks are faring much worse at the moment, US companies are obviously not immune to a trade war and could come under more pressure unless both sides find a solution.

The US dollar has hit its highest level in almost a year, as traders scramble to protect themselves from a trade war.

The US dollar index (which measures the greenback against a basket of other currencies) has gained 0.5% today to levels last seen in July.

#Rupee extends losses against the US dollar, slips to the lowest level since May 24 pic.twitter.com/BUbHBPl0X7

Analyst group Oxford Economics has estimate that economic growth in the US and China would suffer a hit if reciprocal tariffs are imposed:

They say:

Seema Shah, Senior Global Investment Strategist at Principal Global Investors, fears that the global economy will suffer as China and the US march towards a trade war.

“The latest escalation in trade tensions between China and the United States should have investors worried. Recall that the original tariffs on about US $50 billion worth of Chinese imports motivated sharp declines in equity markets, despite not being expected to have a meaningful impact on the global economy. The latest ratcheting up in the trade dispute may trigger even more severe market turmoil.

After all, not only will this latest round of tariffs have a direct negative impact on China’s growth outlook and the rest of the Asia region via the integration of global value chains, but China’s inevitable retaliation will surely hurt the U.S. economy in turn.

Several experts are warning today that the US and China are heading towards a full-blooded trade war.

With Trump threatening a swathe of fresh tariffs, and Beijing vowing to retaliate, the situation is escalating fast.

“The risk of an all-out trade war between the US and China is becoming more and more concrete. Both parties do not want to back down, because they would signal to the other party that they could use the threat of trade war in the future to further their negotiation position. However, in the long run, the US policy position may be weaker, since they are up for mid-term elections soon.

When the effects of tariffs will unfold with higher prices for US consumers and possible disruptions in value chains, due to higher costs for intermediate inputs, the mood towards tariffs in the US might change. China is much less vulnerable to this threat, due to the nature of its political system. On top of this, China may resort to more ‘qualitative’ measures that could make business more difficult for US firms in China. This will put further pressure on US Congress and Administration from large US MNEs [multi-national enterprises].

“The collateral damage from an escalating U.S.-China trade war will be widespread, hitting many Asian countries that are part of China’s manufacturing supply chain in sectors such as electrical and electronic products.

We are starting to see signs of deepening market concern now that we can effectively confirm that a bilateral trade war is under way between the US and China.

There seems little doubt that the prevailing mood in global markets is that investors were a lot happier with US economic policy in 2017 when it was focused on tax cuts than in 2018 when it has switched to trade protectionism.

America’s factory bosses fear that fresh tariffs on Chinese imports will cost jobs.

Kip Eideberg of the Association of Equipment Manufacturers says Trump’s latest threat is “terrible news for equipment manufacturers in the United States”.

This is terrible news for the 1.3 million men and women of the equipment manufacturing industry, America’s farmers and the U.S. economy. https://t.co/TzMmPafSub

All together now:

Tariffs are taxes on Americans
Tariffs are taxes on Americans
Tariffs are taxes on Americans https://t.co/K66zJK3gOq

Trade war fears and Brexit uncertainty have combined to drag the pound down to a seven-month low.

The dollar was one of the few assets benefiting from the Sino-US tensions and rose against a basket of currencies.

The pound, however, was bogged down by domestic problems and declined below $1.32 for the first time since November.

Brexit: Grieve says defeat for May on ‘meaningful vote’ will not bring down government – Politics live https://t.co/karuKmeQ8w

Asian tech firms who supply components to Apple have been hit hard today, due to fears that a trade war would hurt demand.

IPhone-camera maker Cowell Holdings skidded 11.5% in Hong Kong to fresh record lows, while smartphone-lens maker Sunny Optical pulled back a further 5% and acoustics firm AAC Technologies fell 3.3%.

In Taiwan, Sunny peer Largan Precision was off 5.2%. Apple product assembler Hon Hai Precision Industry dropped 2.3%.

American consumers will feel the pain if Trump imposes 10% tariffs on $200bn of Chinese imports, as he threatened last night.

As Kit Juckes of French bank Societe Generale explains, such tariffs would be paid by customers in the US:

$200bn of goods represents over a third of likely 2018 imports from China.

The important point to note about the escalation, which will surely result in a Chinese response, is that while the tariffs imposed may be lower on the expanded range of goods, they will include more consumer goods, and therefore have a more direct impact on US consumers apart from anyone else.

Asian stocks have hit a six-month low today, Bloomberg reports:

Trade dispute between U.S. & China triggers a global sell-off in riskier assets. The MSCI Asia Pacific Index sinks 1.5%, reaching the lowest in more than 6 months. #BQMarketsNow https://t.co/IgjCkPT9vR pic.twitter.com/VzizTqnEPW

China’s stock market has suffered a late rout, as investors in Shanghai shivered at the prospect of fresh US tariffs.

The benchmark Shanghai composite sank by 3.8% percent to close below the 3,000 mark at 2,906.43. That’s its lowest level since late June 2016.

Chinese stocks getting mullered pic.twitter.com/0wWWQkEoZG

The slump risks triggering fresh margin calls in a highly-leveraged stock market, potentially causing a downward spiral that could derail Beijing’s plan to lure the listings of high-tech giants.

“The market is so fragile. You don’t know where the bottom is,” said David Dai, general manager of Shanghai Wisdom Investment Co Ltd. “It’s more rewarding watching the World Cup.”

European stock markets are a sea of red, as trade war fears ripple through the trading floors.

DING DING: Shares are falling sharply in London at the start of trading.

The FTSE 100 index of top shares has shed 1%, or 80 points, to 7551 – the lowest level since the start of May.

Global sentiment is on the back foot amid signs that neither side will back down, potentially taking global commerce a step closer to an unwelcome trade war.

It is impossible for China to retaliate in kind to Trump’s new threat.

That’s because China imported $170bn from America in 2016 — $115bn of goods and $55bn of services.

But China has asymmetric options. It could levy higher tariffs than the 10% that Trump proposes. It could mess with US firms in China, which make most profits in country, not as exports. And it could add security dimensions to the conflict, perhaps testing US resolve on Taiwan.

In short, if Trump takes it to $200bn, this has the potential to get much, much messier. Strictly speaking, it’s true that China and US aren’t in a trade war yet: neither has implemented their big threatened tariffs. But the path to escalation is now frighteningly clear.

Donald Trump’s threat has met with an immediate, chilly response from Beijing, implying that the US is losing the plot.

The Ministry of Commerce in Beijing has vowed to hit back if the US actually imposes $200bn of fresh tariffs.

“If the U.S. loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures and retaliate forcefully.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

“Unfortunately, China has determined that it will raise tariffs on $50 billion worth of United States exports.

“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship.

Related: Trump threatens new tariffs on $200bn in Chinese imports

Things have changed overnight after President Trump upped the ante by threatening another $200bn worth of tariffs at a 10% rate on a whole new raft of Chinese goods and services, if China went ahead with their retaliation measures.

This upping of the ante saw markets in Asia slide and unlike yesterday haven bond markets rallied as US treasury yields slid back, the Japanese yen gained and gold rallied. As such European markets look set to continue their losing streak and open lower.

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Public libraries are life-affirming | Letters

Judith Daniels thanks her council for her wonderful local library, Keith McClellan looks at the role they play in democracy, and Keith Martin argues their closure is breaking the law

I could not agree more with your leader (Editorial, 18 June) and the wonderful, life-affirming institutions that are public libraries. While sitting in my local community library writing this letter, I am surrounded by myriad activities including a well-attended jobs fair, people browsing shelves, and a cafe stocked with delicious food.

It is a sad indictment that our libraries are being decimated because local councils are being starved of the very necessary funds to keep them alive. Every generation from a child in arms to a centenarian can feel at home in a library’s multicultural, inclusive atmosphere. Loneliness is the scourge of our disconnected and alienated world, so libraries help to solve a real mental health problem by opening their doors to everyone. I agree too that helpful, knowledgeable staff and volunteers are the lynchpin that ties it all together. I am very fortunate that in Norfolk we have not lost this educational, vibrant, inclusive mine of information. I could not be more grateful to our far-sighted county council.
Judith Daniels
Norfolk

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Riskified prevents fraud on your favorite e-commerce site

Meet Riskified, an Israel-based startup that has raised $64 million in total to fight online fraud. The company has built a service that helps you reject transactions from stolen credit cards and approve more transactions from legitimate clients.

If you live in the U.S., chances are you know someone who noticed a fraudulent charge for an expensive purchase with their credit card — it’s still unclear why most restaurants and bars in the U.S. take your card away instead of bringing the card reader to you.

Online purchases, also known as card-not-present transactions, represent the primary source of fraudulent transactions. That’s why e-commerce websites need to optimize their payment system to detect fraudulent transactions and approve all the others.

Riskified uses machine learning to recognize good orders and improve your bottom line. In fact, Riskified is so confident that it guarantees that you’ll never have to pay chargebacks. As long as a transaction is approved by the product, the startup offers chargeback protection. If Riskified made the wrong call, the company reimburses fraudulent chargebacks.

On the other side of the equation, many e-commerce websites leave money on the table by rejecting transactions and false declines. It’s hard to quantify this as some customers end up not ordering anything. Riskified should help you on this front too.

The startup targets big customers — Macy’s, Dyson, Prada, Vestiaire Collective and GOAT are all using it. You can integrate Riskified with popular e-commerce payment systems and solutions, such as Shopify, Magento and Stripe. Riskified also has an API for more sophisticated implementations.