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Bank of England Widely Expected to Hold Interest Rates

File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
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Bank of England Widely Expected to Hold Interest Rates

File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)

The Bank of England is widely expected to keep interest rates unchanged on Thursday, a day after official figures showed inflation in the UK holding steady at an annual rate of 2.2% in August, with higher airfares offset by lower fuel costs and restaurant and hotel bills.
The latest reading from the Office of National Statistics on Wednesday was in line with market predictions and means that inflation remains just above the British central bank’s goal of 2% for the second month running, having fallen in June to the target for the first time in nearly three years.
Last month, the central bank reduced its main interest rate by a quarter-point to 5%, the first cut since the onset of the pandemic. It was a close call though with four of the nine members voting for no change.
The economic landscape indicates that the BOE is likely to delay a second rate cut until November.
Inflation, wage growth, and labor market conditions are the three key indicators the bank monitors when adjusting monetary policy.
On Wednesday, data showed that British inflation held steady in August but sped up in the services sector which is closely watched by the Bank of England, adding to bets that the central bank will keep interest rates on hold on Thursday.
Consumer price inflation of 2.2% last month was unchanged from July, the Office for National Statistics said, matching the median forecast in a Reuters poll of economists although it was below the BoE's latest projection of 2.4%.
Also, British house prices rose by an annual 2.2% in July, the fifth monthly rise in a row but the pace of increase cooled and was below a revised 2.7% increase in the 12 months to June, the Office for National Statistics said on Wednesday.
The ONS said house prices in London fell 0.4%.
Other indicators of Britain's property sector have shown a recovery as demand improved after a cut in borrowing costs.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.