Data released by the Office of National Statistics today revealed that the UK entered a technical recession at the end of 2023. GDP fell by 0.3 per cent in the final quarter of last year compared with the previous three months, which saw a 0.1 per cent drop. The decline is steeper than anticipated, as economists had forecast a year-end contraction of 0.1 per cent.
In a statement responding to the ONS data, UK finance minister Jeremy Hunt said there were “signs the British economy is turning a corner” and “forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low”.
The figures come as Hunt prepares for his March budget. He is considering cutting billions of pounds from public spending plans to fund pre-election tax cuts. The ONS announcement follows yesterday’s UK inflation data, which showed 4 per cent price growth in January, the same rate as December, coming in under the Bank of England’s forecast.
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In a speech at Yale Law School, Gary Gensler, chair of the US Securities and Exchange Commission, cautioned companies against “AI washing” in their claims about the technology.
“We’ve seen time and again that when new technologies come along, they can create buzz from investors as well as false claims,” Gensler told the audience. “If a company is raising money from the public, though, it needs to be truthful about its use of AI and associated risk.”
Gensler noted a significant increase in the number of AI disclosures made by SEC registrants in recent years and said the SEC could target those deploying AI in ways that demonstrate a reckless and knowing disregard for the risks to investors.
He also warned about the potential risks of AI to financial stability: “Regulators and market participants will need to think about the dependencies and interconnectedness of potentially 8316 brokenhearted financial institutions to an AI model or data aggregator.”
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The UK taxpayer-backed bank NatWest is reportedly preparing to appoint interim head Paul Thwaite as its permanent CEO. The bank has been without a permanent leader since former CEO Alison Rose was forced to resign last year.
Rose’s departure followed a public dispute between NatWest and former Brexit Party leader Nigel Farage over the closure of his bank account at NatWest’s private banking arm, Coutts. The dispute resulted in a political backlash after she admitted discussing Farage’s case with a BBC journalist, in an alleged breach of client confidentiality.
UK finance minister Jeremy Hunt had previously announced the government’s intention to sell off some of NatWest’s stock to retail investors before the end of this year. The bank received a $57bn state bail-out during the 2008 financial crisis and remains 35 per cent owned by UK taxpayers. With a permanent CEO in place, the sale could begin as early as June.
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According to the Wall Street Journal, Morgan Stanley is planning to cut “several hundred” jobs within its wealth management division. The cuts come as part of recently appointed CEO Ted Pick’s strategy to reduce costs in the business unit. The division recorded flat revenue compared to the previous year and its medium-term margin forecast fell below the expectations of some analysts.
The bank plans to cut a small number of managing directors, as well as non-customer-facing employees; however, the job losses are expected to impact less than 1 per cent of the division, which has around 40,000 staff in total, according to the WSJ.
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Yesterday, the US government imposed sanctions on Tehran-based Informatics Services Corp, a subsidiary of the Central Bank of Iran, which recently developed a central bank digital currency platform for the bank.
The sanctions package also includes two companies based in the UAE, one in Turkey, and three individuals. The sanctions were applied following allegations of their involvement in transferring technology and items purchased from US companies to Iran’s central bank, violating existing US export restrictions.
The US Treasury’s Office of Foreign Assets Control said that some of the materials transferred to the CBI were classified as information security items and subject to national security and anti-terrorism controls.
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As reported by Bloomberg, Zimbabwe’s central bank has collected 793 kilograms of gold since enacting legislation that requires mining companies to pay a portion of their royalties in the precious metal.
The country’s finance ministry implemented the royalty measure in September 2022 to help boost mineral reserves. Aside from gold, Zimbabwe has the world’s third-largest platinum deposit and also mines diamonds, nickel, chromium, lithium and coal.
Zimbabwe’s authorities are considering using their gold reserves to back the country's currency in an effort to put a stop to ongoing exchange-rate volatility, according to Bloomberg.
