Return to Insights

Morning Update

Friday feeling, report on UK overseas aid spending, UK economy growth in line with expectations, proposed increase on UK defence spending from Starmer, and Count Binface's manifesto pledges.

Friday Feeling

Check out this week’s playlist here!

Total Eclipse of the Heart – Bonnie Tyler

Staring at the Sun – U2

Black Hole Sun -Soundgarden

Runnin’ (Lose it All) – Naughty Boy

Africa – Toto

Overseas Aid

This week it’s emerged that over a quarter of the UKs overseas aid budget has been spent in the UK. Of the government’s £15.4bn foreign aid budget, as much as £4.3bn was spent on refugees and asylum seekers in the UK, up 16% from a couple of years ago.

Under existing international aid rules, some of the costs associated with supporting refugees and asylum seekers who arrive in a host country can qualify as official development assistance (ODA) for the first year. This is called ‘in-donor refugee costs’.

Speaking on the subject, the Commissioner of the Independent Commission for Aid Impact ICAI said that “We have long raised concerns that the way the government manages the aid spending target, cutting across the normal lines of accountability, can lead to poor value for money for taxpayers. Allowing the Home Office to spend an unlimited amount on hosting asylum seekers and refugees, with the costs falling to FCDO’s budget, sets the wrong incentives.”

When looking at data from 2022, the proportion of OECD countries’ foreign aid budgets spent on ‘in-donor refugee costs’ average 14.5% and hence the UK’s 25% is well above average.

The rise in foreign aid spending being spent at home comes as the country’s spending on humanitarian assistance dropped 10%.

The commitment to spend 0.7% of UK GNI on foreign aid was one of the Conservatives’ flagship policies under the then Prime Minster David Cameron and was written into law in March 2015.

The commitment was then downgraded to 0.5% in 2020 under Rishi Sunak, as No.11 looked for ways to cut spending during the pandemic, where the target has remained ever since.

When looking internationally, Luxembourg represents the country with the largest contribution to foreign aid as a percentage of GNI at 1.05%. This come ahead of Norway and Sweden which both spend around 1% respectively.

 

UK Growth

This morning data from the ONS indicates that the UK economy grew 0.1% over the month of February, in line with expectations. Growth over the course of January was also upwardly revised by 10bps to 0.3% marking the highest monthly growth since June.

Growth over February came as the UK’s services sector saw output grow 0.1% while production rose 1.1%. Meanwhile, construction fell 1.9% with some citing wet weather as a reason for building projects being slowed.

The marginal rise in growth is giving some analysts some room for cautious optimism that the UK economy may be moving out of a recession.

Defence Spending

Sir Keir Starmer has said that he would aim to increase UK defence spending to 2.5%. The news doesn’t sound too significant, but it’s an interesting line to take – particularly as this is also something Jeremy Hunt has spoken about previously and effectively shuts down any opportunity that the conservatives would have to use this as a differentiator come the election.

He’s also set himself even further from his predecessor, Jeremy Corbyn, by saying that he stands totally behind the UK’s nuclear deterrent, Trident.

The increase from 2.1% to 2.5% equates to about £9bn more at current GDP levels, which is no small number. He has pledged that this will come alongside with a complete strategic review and as such you’d hope that means getting some kind of value for money.

One to leave you with as we go into the weekend. Yesterday we got to read Count Binface’s manifesto pledges for the London Mayoral elections 2024.

The link below is well worth a click, as they are hilarious. A couple of highlights for us include: “All government ministers’ pay, including the mayor’s, to be tied to that of nurses for the next 100 years” , “shops that play Christmas music before December to be closed down and turned into public libraries”, and “Claudia Winkleman’s fringe to be Grade 1 listed”.

Read it here: LONDON 2024 Manifesto — Count Binface

Have a great weekend.

Ready to talk FX?

Get in touch with one of our friendly and knowledgeable experts to see how FX strategy can drive commercial impact in your business.

Contact us

Related
Commentary

Find out how we have helped our clients meet their hedging requirements.

UK Retail Sales Slump Despite Rise in Consumer Confidence

Friday feeling, second consecutive contraction for UK retail sales which come in lower-than-expected, potential for energy bills to reach lowest levels in two years, and a look at the seats that will sway the election.

Snap Election Special

Thought for Thursday, 4 July will see snap election in the UK, price action of sterling gives muted response to election announcement, Sunak keeps to assumption of election in second half of 2024, and more MP's than at any time since 1997 not seeking re-election.

UK Inflation Surpasses Expectations

Word of the week Wednesday, expectations surpassed by UK inflation, Rishi announces today's inflation rate release as a "major moment for the economy", and benchmark rate unchanged by Reserve Bank of New Zealand.

Protests in Georgia in Focus

Travel Tuesday, political turmoil in Georgia sees continued protests, application for an arrest warrant for Israeli Prime Minister and his Defence Minister announced by ICC Chief Prosecutor, and softer-than-expected German PPI.

Morning Update

Macro Monday, reports on helicopter crash that killed Iranian president, house prices continue to rise in the UK, new president sworn in for Taiwan, and what's happening this week.

Morning Update

Friday feeling, record highs for copper prices, Dow Jones surpasses 40,000 points for the first time in history, French unemployment holds at 7.5%, and today's focus on Eurozone inflation.

Morning Update

Though for Thursday, Xi visits Moscow to meet with Putin, Washington's tariffs have implications on China, latest inflation data from the US, and yesterday's attempted assassination on Robert Fico.

Inflation, Equities, and Billionaires

Word of the week Wednesday, US producer price index rises unexpectedly, yesterday's equity markets surpass previous peak, and proposed global minimum tax for the world's wealthiest billionaires.

Find out more about our foreign exchange solutions
Contact us