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Starmer Sent to NATO Summit

Word of the week Wednesday, Starmer signals spending increase ahead of key Nato summit, benchmark rate unchanged from Reserve Bank of New Zealand, and losses after coins banned in Roman Baths wishing well.

Word of the Week Wednesday
Quixotic: Idealistic, impractical and unrealistic.

Starmer Sent to NATO Summit

Yesterday Sir Keir Starmer made his first Transatlantic flight as prime minister, as he headed over to the NATO summit held in Washington, DC.

During the flight, he reiterated to his media entourage the Labour government’s commitment to spend 2.5% of the UK’s GDP on defence.

With the increase from 2.1% to 2.5% expecting to cost around £9bn a year at current levels of GDP, Starmer previously said that the goal would be achieved “as soon as the public finances allow”. This concerned many at home and abroad, given the lack of clarity, and yesterday’s rhetoric did little to assuage such concerns given that Starmer did not provide a time frame.

Ahead of the election campaign, Starmer also pledged that the increase in spending will come alongside with a complete strategic defence review. Reminding people of this earlier commitment, Starmer yesterday said that the review will “determine the future defence posture” of the country. He also stated that “My message is very, very clear that this NATO summit is an opportunity for allies to stand together to strengthen their resolve”.

Hence, it is hoped that the prime minister’s commitment will send a clear message to the UK’s allies and adversaries, as NATO looks to ensure member states fulfil their commitment to the alliance’s 2% target amid the conflict in Ukraine, instability in the Middle East and growing fragility between the West and China.

RBNZ Hold Rates for a Eighth Consecutive Time

This morning the Reserve Bank of New Zealand kept its benchmark rate unchanged at 5.5%, meeting market expectations. This marked the eighth consecutive hold as inflation continues to remain above the central banks 1-3% target, having come in at 4% over the first quarter of 2024.

That said, the RBNZ cited how easing domestic price pressures, lower levels of inflation on imports, easing pressures in the labour market and tighter government spending have fed into a decline in inflation. The central bank believe that such factors will mean that inflation will fall back in line with their target range by H2 2024.

Commenting on the labour market, the RBNZ said that “recent survey measures of hiring intentions and job vacancies indicate flat employment levels.”

Here, the summary record of the meeting concluded that “The Committee agreed that monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures.”

Well Wishers

In other news, having banned people from throwing coins into its wishing well, The Roman Baths Foundation has reportedly forgone around £90,000 in donations.

The foundation has since been encouraging people to tap donations using contactless payments, however it clearly hasn’t caught people’s imagination in the same way that throwing a coin into a wishing well does.

With donations down as much as 90% since the wishing well was in full operation, the charity’s view that it was “no longer a viable income source” may be worth reconsidering.

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