Britain’s economy stalled in the third quarter of the year, according to revised official government data released on Monday.

A preliminary estimate for the third quarter released by the ONS last month indicated that UK GDP grew by 0.1% during the period.

However, final data published on Monday revealed flat GDP growth (0%) compared to the previous quarter.

Earlier this month, the ONS reported an unexpected 0.1% contraction in the UK economy for October, marking the second consecutive monthly decline following a similar 0.1% fall in September.

The revision further lags behind economic forecasts, which had anticipated a 0.2% expansion.

The ONS also downgraded its second-quarter growth reading from 0.5% to 0.4%.

The ONS attributed the downgrade to weaker-than-expected performance in key sectors, including bars and restaurants, legal firms, and advertising.

This revision paints a concerning picture of the UK economy, which now appears to be heading for two consecutive quarters of flatlining activity.

The stagnant performance comes amid a slump in business and consumer confidence, driven in part by gloomy rhetoric from the new Labour government and the introduction of £40 billion in tax increases in its autumn budget.

The slowdown comes as the Labour government presented its maiden budget in October, which included business tax increases and plans for higher state borrowing.

The downgrade reflects broader struggles in key sectors and underscores the difficulty of achieving sustained growth in the current economic climate.

Finance Minister Rachel Reeves acknowledged the challenges, stating, “The challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge. But this is only fuelling our fire to deliver for working people.”

The third-quarter stagnation has been attributed to a combination of factors, including higher interest rates, weaker overseas demand, and concerns over fiscal policies in the budget.

The revised figures highlight the uphill battle faced by the government in reviving the economy and meeting its fiscal objectives.

Inflation, interest rates and recession

Last week, the Bank of England warned that the UK economy would stagnate in the final quarter of the year.

The Bank of England held its core interest rate steady at 4.75%.

Global geopolitical tensions, domestic fiscal measures outlined in the Autumn Budget, and ongoing trade uncertainties have created a more challenging and complex economic outlook.

While this projection falls short of a technical recession—defined as two consecutive quarters of negative growth—the outlook is grim for a government that has prioritized reviving economic momentum.

The revised figures and the prospect of continued stagnation pose a significant challenge to the Labour government’s economic agenda, particularly after its autumn budget policies aimed at stabilizing public finances.

Data released last week showed that UK inflation rose to an eight-month high in November, increasing to 2.6% from 2.3% in October.

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Brazil’s current account deficit increased to $3.1 billion in November, according to a report from the central bank on Monday.

This data shows a growing deficit over the last year, mostly due to a drop in the country’s trade surplus.

Although the monthly deficit is slightly more than the $3.3 billion expected by economists in a Reuters survey, it is still a significant decrease from the $3 million loss recorded in November of the previous year.

Economic growth drives imports

The rise in Brazil’s current account deficit can be linked to the country’s surprisingly strong economic performance, resulting in an increase in imports and a fall in the trade surplus.

Brazil’s Finance Minister, Fernando Haddad, has estimated an optimistic 3.5% GDP growth this year.

This is significantly greater than the 1.6% prediction provided by private economists at the beginning of the year, indicating a shift in national economic dynamics.

This economic trajectory is expected to have an increasing impact on Brazil’s balance of payments.

The increase in economic activity has resulted in higher net spending on services, contributing to a wider deficit in factor payments.

The combination of these variables has resulted in a greater current account shortfall, indicating a critical crossroads for the Brazilian economy.

Trade surplus declines

In November, Brazil reported a trade surplus of $6.3 billion, a 20.9% decrease from the previous year.

This decline in trade performance reflects the underlying economic shift, as domestic demand for imported commodities increases.

Notably, the deficit in services jumped by 24.6% to $4.7 billion, while the deficit in factor payments, which includes money given to foreign investors and banks, rose by 13.8% to $5 billion.

Together, these numbers depict a difficult climate for Brazil as it seeks to balance its foreign transactions.

Foreign direct investment remains strong

Despite concerns about the current account deficit, foreign direct investment (FDI) in Brazil remains strong.

In November, the country attracted $7 billion in FDI, more than the $6.5 billion expected by a Reuters survey.

Over the last twelve months, FDI has accounted for 3.0% of Brazil’s GDP, indicating international investor confidence in the country’s economic prognosis.

This inflow of money is critical because it helps to balance the current account deficit and promotes future growth and infrastructure development.

Future outlook and challenges ahead

The current economic situation in Brazil provides a contradictory narrative: while the economy is displaying signs of resilience and development, the rising current account deficit raises serious concerns about sustainability.

Policymakers will need to handle the complexities of trade balances, notably in regulating import demand and increasing export capacity.

Furthermore, the government’s strategy will be critical in maintaining economic development while retaining foreign investors.

As Brazil’s economy evolves, its ability to manage growing deficits while maintaining investor confidence will be critical to attaining long-term economic stability.

In conclusion, while Brazil’s November current account deficit of $3.1 billion highlights the country’s mounting economic complexity, the government remains confident.

The problems created by the deficit, notably in trade balances and service payments, will necessitate careful management and strategic planning as Brazil strives for long-term growth in an increasingly competitive global environment.

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On Sunday, US President-elect Donald Trump wrote on social media website Truth Social,

“For purposes of National Security and Freedom throughout the World, the United States of America feels that the ownership and control of Greenland is an absolute necessity.”

Trump’s renewed interest in acquiring Greenland underscores the island’s geopolitical and economic significance.

As the world’s largest island, Greenland is rich in resources like gold, silver, copper, uranium, and untapped oil reserves.

Its strategic location near the Arctic provides access to shipping lanes and potential dominance in an increasingly competitive region.

This aligns with Trump’s broader vision of enhancing US national security and energy independence, which he highlighted while announcing his choice of Ken Howery as the new US ambassador to Denmark.

Greenland’s autonomy, while under Denmark’s sovereignty, complicates any purchase attempts.

The island operates with self-rule, managing domestic affairs such as education, healthcare, and resource management, while Denmark oversees defence and foreign relations.

The Arctic’s prominence in global politics has grown as nations vie for control, with Russia already pushing territorial claims close to Greenland.

Trump’s proposed acquisition would assert US influence over these contested waters.

Trump and Greenland: not the first time

Trump’s interest in Greenland is not a new development, as the President-elect had previously expressed a desire to control the territory during his first term from 2017 to 2021.

In 2019, Trump voiced his intention to purchase Greenland, citing the country’s natural resources and strategic geopolitical position as key attractions.

However, his proposal faced strong opposition from Danish leaders, with then Prime Minister Mette Frederiksen asserting that “Greenland was not for sale.”

In retaliation, Trump canceled a scheduled meeting with Frederiksen in Denmark due to her comments regarding the proposed Greenland deal.

US interest in Greenland spans decades

The US has a history of pursuing Greenland. In 1946, President Harry Truman offered Denmark $100 million for the territory.

Interest dates back even further to 1867, illustrating a consistent view of Greenland as a valuable asset.

Historically, the US has made significant land acquisitions, including Alaska from Russia and the Louisiana Territory from France.

These purchases not only expanded US territory but also boosted its strategic and economic standing.

Trump’s ambitions for Greenland mirror these historical deals, but modern complexities—such as climate change, Arctic politics, and Greenlandic autonomy—pose challenges.

The island’s home-rule government has resisted such overtures, backed by Denmark’s firm stance against selling.

Greenland’s Prime Minister Múte Bourup Egede remains committed to the island’s sovereignty, making the prospect of a US purchase highly contentious.

A revived strategy for energy and security dominance

Trump’s focus on Greenland isn’t solely about resources; it’s also about reshaping US influence globally.

Control of Greenland could fortify the US position in the Arctic, enabling better oversight of emerging shipping routes as ice melts due to climate change.

These routes could rival traditional ones like the Panama Canal, where Trump recently demanded lower transit fees for US ships, showcasing his broader agenda of securing US interests in critical regions.

The Arctic’s energy potential is another draw. Greenland’s waters are believed to harbour significant oil reserves, which align with Trump’s “America First” energy strategy.

Ownership of these resources would reduce reliance on foreign oil and bolster domestic energy markets.

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New home sales in the United States experienced a notable rebound in November, recovering from a downturn caused by hurricanes the previous month.

However, this positive development is tempered by concerns about rising mortgage rates, which could potentially dampen sales in the coming year.

The housing market, a key indicator of economic health, is currently navigating a complex landscape, influenced by both natural events and monetary policy adjustments.

November rebound: a surge in new home sales

The Commerce Department’s Census Bureau reported on Monday that new home sales jumped 5.9% to a seasonally adjusted annual rate of 664,000 units last month.

The sales pace for October was also revised upwards to 627,000 units, from the previously reported 610,000 units.

This growth surpassed economists’ forecasts, who predicted a rebound to a rate of 660,000 units, illustrating the market’s resilience.

New home sales, which account for approximately 15% of total US home sales, are recorded at the point of contract signing and tend to be volatile on a month-to-month basis.

Year-on-year sales figures for November showed an increase of 8.7%, highlighting an underlying strength in the market.

Mortgage rate volatility

Despite the positive sales figures, the housing market faces challenges from rising mortgage rates.

Data from Freddie Mac reveals that the average rate on the popular 30-year fixed-rate mortgage rose to 6.72% last week, after dropping to 6.60% in the prior week.

This volatility underscores the sensitivity of the housing market to fluctuations in interest rates.

Fed’s cautious approach

The Federal Reserve’s decision last week to cut its benchmark overnight interest rate by 25 basis points to the 4.25%-4.50% range, while anticipated, came with the projection of only two rate reductions in 2025.

This revised projection contrasts with their earlier outlook in September, which had suggested four quarter-point rate cuts in 2025.

The Fed’s more cautious approach reflects concerns over the economy’s continued resilience and persistent inflation.

This more modest rate cut path for next year also reflects the uncertainty over policies from President-elect Donald Trump’s incoming administration, including proposed tariffs on imported goods, tax cuts, and mass deportations of undocumented immigrants, which economists have warned could fuel inflation.

This uncertainty has also contributed to the yield on the US 10-year Treasury note touching a fresh 6-1/2-month high last week.

As mortgage rates are linked to the 10-year Treasury note, this increase is expected to further impact the housing market.

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President Joe Biden faces a critical decision on Nippon Steel’s $15 billion bid to acquire US Steel, a deal that has raised concerns over national security.

The Committee on Foreign Investment in the United States (CFIUS) referred the matter to the President after failing to reach a consensus, Reuters reported.

President Biden has 15 days to block the transaction, which has faced opposition from both him and former President Donald Trump.

Will the Nippon Steel-US Steel deal go through?

The potential merger has been under intense scrutiny due to its implications for US economic and national security.

If Biden takes no action within the given timeframe, the deal will proceed, offering an unexpected green light to the Japanese steel giant.

However, the President has previously expressed reservations about the tie-up, aligning with Trump’s stance, who also opposed the merger before his term ended.

CFIUS, responsible for assessing foreign investments for national security risks, escalated the review to Biden after thorough deliberation.

“We received the CFIUS evaluation, and the President will review it,” said White House spokeswoman Saloni Sharma.

Both Nippon Steel and US Steel confirmed they were informed of the referral on Tuesday, adding to the uncertainty surrounding the deal’s future.

Nippon Steel has urged Biden to consider the measures it has taken to address security concerns.

“We have made significant commitments to grow US Steel and ensure national security is safeguarded,” the company stated.

US Steel echoed the sentiment, emphasizing that the deal enhances both US economic and national security.

Should the deal collapse, Nippon Steel faces a hefty $565 million penalty to US Steel.

The company has also indicated that it may pursue legal action against the US government if the merger is blocked.

The acquisition is pivotal to Nippon Steel’s expansion strategy, which aims to increase its global steel production capacity from 65 million metric tons to 85 million tons annually.

The company views the merger as a cornerstone to achieving its long-term goal of surpassing 100 million tons of production.

The stakes are high as Biden weighs the potential economic benefits against national security risks.

The outcome will have far-reaching implications for the global steel industry and US-Japan trade relations.

A decision is expected within the next two weeks, keeping markets and stakeholders on edge.

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