UK is 'Broke and Broken,' New Government Says

Rowers train during warm summer weather on the River Thames at Isleworth in London, Britain, July 28, 2024. REUTERS/Toby Melville
Rowers train during warm summer weather on the River Thames at Isleworth in London, Britain, July 28, 2024. REUTERS/Toby Melville
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UK is 'Broke and Broken,' New Government Says

Rowers train during warm summer weather on the River Thames at Isleworth in London, Britain, July 28, 2024. REUTERS/Toby Melville
Rowers train during warm summer weather on the River Thames at Isleworth in London, Britain, July 28, 2024. REUTERS/Toby Melville

Britain’s new left-leaning government said Sunday that the nation is “broke and broken,” blaming the situation on its predecessors ahead of a major speech on the state of the public finances that is widely expected to lay the groundwork for higher taxes.
In a sweeping assessment three weeks after taking power, Prime Minister Keir Starmer’s office professed shock at the situation they inherited after 14 years of Conservative Party rule, while releasing a department-by-department analysis of the perceived failures of the previous government.
The critique comes a day before Treasury chief Rachel Reeves is expected to outline a 20-billion-pound ($26 billion) shortfall in public finances during a speech to the House of Commons.
“We will not shy away from being honest with the public about the reality of what we have inherited,’’ Pat McFadden, a senior member of the new Cabinet, said in a statement. “We are calling time on the false promises that British people have had to put up with and we will do what it takes to fix Britain,” The Associated Press quoted him as saying.
Starmer’s Labour Party won a landslide election victory earlier this month following a campaign in which critics accused both major parties of a “conspiracy of silence” over the scale of the financial challenges facing the next government.
Labour pledged during the campaign that it wouldn’t raise taxes on “working people,” saying its policies would deliver faster economic growth and generate the additional revenue needed by the government. The Conservatives, meanwhile, promised further tax cuts in the autumn if they were returned to office.
As proof that the previous government wasn’t honest about the challenges facing the country, Starmer’s office pointed to recent comments from former Treasury chief Jeremy Hunt confirming that he wouldn’t have been able to cut taxes this year if the Conservatives had been returned to power.
Those comments came in an interview with the BBC in which Hunt also accused Labour of exaggerating the situation to justify raising taxes now that they’ve won the election.
“The reason we’re getting all this spin about this terrible economic inheritance is because Labour wants to raise taxes,” Hunt said on July 21. “If they wanted to raise taxes, all the numbers were crystal clear before the election. ... They should have levelled with the British public.”
The government on Sunday released an overview of the spending assessment Reeves commissioned shortly after taking office. She will deliver the complete report to Parliament on Monday.
Those findings led the new government to accuse the Conservatives of making significant funding commitments for this financial year “without knowing where the money would come from.’’
It argued that the military had been “hollowed out’’ at a time of increasing global threats and the National Health Service was “broken,’’ with some 7.6 million people waiting for care.
And despite billions spent to house migrants and combat the criminal gangs ferrying migrants across the English Channel on dangerous inflatable boats, the number of people making the crossing is still rising, Starmer’s office said. Some 15,832 people have crossed the Channel on small boats already this year, 9% more than during the same period in 2023.
“The assessment will show that Britain is broke and broken — revealing the mess that populist politics has made of the economy and public services,” Downing Street said in a statement.
The quandary the government finds itself in should be no surprise, said Paul Johnson, the director of the Institute for Fiscal Studies, an independent think tank focused on Britain’s economic policies.
At the start of the election campaign, the institute said that the UK was in a “parlous fiscal position” and the new government would have to either raise taxes, cut spending or relax the rules on public borrowing.
“For a party to enter office and then declare that things are ‘worse than expected’ would be fundamentally dishonest,” the IFS said on May 25. “The next government does not need to enter office to ‘open the books.’ Those books are transparently published and available for all to inspect.”



ECB Holds Rates Steady, Offers No Clues on Next Move

The European Central Bank building in Frankfurt (Reuters)
The European Central Bank building in Frankfurt (Reuters)
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ECB Holds Rates Steady, Offers No Clues on Next Move

The European Central Bank building in Frankfurt (Reuters)
The European Central Bank building in Frankfurt (Reuters)

The European Central Bank warned Thursday a stronger euro could push inflation down too far after recent gains in the single currency, but sought to downplay any immediate threat to the eurozone economy.

As expected, the central bank for the 21-nation single-currency area kept its benchmark interest rate on hold at two percent, where it has been since June last year.

ECB President Christine Lagarde stressed the eurozone economy, which has been picking up speed recently, remained "resilient" and officials were confident inflation would settle around the central bank's two-percent target.

But much attention at her press conference focused on the recent gains of the euro, which jumped above the $1.20 threshold last week as the dollar weakened on renewed worries about US economic policy under President Donald Trump.

Combined with news that inflation had dropped below the ECB's target in January, speculation had mounted that the central bank might start mulling if and when to cut rates.

Lagarde made a nod to these concerns, warning that "a stronger euro could bring inflation down beyond current expectations", and noted the issue had been discussed by ECB officials at Thursday's meeting.

A stronger currency makes imports cheaper, which tends to push inflation down -- potentially leading consumers to delay purchases, with negative ripple effects across the economy.

A strong euro can also weigh on the eurozone's crucial exporters, particularly Germany, as it makes the cost of companies' goods pricier overseas.

But despite the gains last week, Lagarde pointed out that the euro had been steadily strengthening against the dollar since shortly after Trump took power last year.

And the current exchange rate was "very much in line with the overall average" since the euro was introduced, she stressed.

According to AFP, she also reiterated that the ECB feels it is in a "good place" -- phrasing which has been taken to mean the central bank is happy with the current level of rates.

The euro was barely changed against the dollar after Thursday's meeting at $1.18.

However, Frederik Ducrozet, an economist at Pictet Wealth Management, said some of the central bank's language appeared to signal "the ECB's growing discomfort with regard to the stronger euro".

Lagarde's comments indicate "that further currency appreciation would bring us closer to a pain threshold", he added.

As usual, the ECB chief gave no signal about the central bank's next move on rates.

But, given the movements in currencies and inflation, some analysts are now raising their bets on rate cuts in the second half of the year.

The Bank of England also left its benchmark interest rate unchanged Thursday, at 3.75 percent, while cutting its forecasts for UK growth this year and next.

Lagarde also said the global environment remained "challenging".

"The outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions," she said.

Trump's volatile trade policies in particular have unnerved Europe.

There was another flare-up last month when Trump threatened to hit eight European countries with new tariffs over their opposition to his desire to annex Greenland, but he later climbed down.

Central bankers around the world have been especially worried by Trump's targeting of US Federal Reserve chair Jerome Powell, whom he has criticized for not cutting rates faster.

On Thursday however Lagarde welcomed Trump's nomination of Kevin Warsh, a former Fed official, to be the next chief of the US central bank, a move that has broadly reassured markets.

"We go back a long way and I very much welcome (the) announcement of his appointment," said Lagarde.


Erdogan’s Saudi Visit to Boost Economic, Investment Ties

Saudi Crown Prince Mohammed bin Salman holding talks with Turkish President Recep Tayyip Erdogan in Riyadh on Feb. 3 (Turkish Presidency)
Saudi Crown Prince Mohammed bin Salman holding talks with Turkish President Recep Tayyip Erdogan in Riyadh on Feb. 3 (Turkish Presidency)
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Erdogan’s Saudi Visit to Boost Economic, Investment Ties

Saudi Crown Prince Mohammed bin Salman holding talks with Turkish President Recep Tayyip Erdogan in Riyadh on Feb. 3 (Turkish Presidency)
Saudi Crown Prince Mohammed bin Salman holding talks with Turkish President Recep Tayyip Erdogan in Riyadh on Feb. 3 (Turkish Presidency)

Türkiye President Recep Tayyip Erdogan’s visit to Saudi Arabia has given fresh momentum to economic ties between the two countries and opened new avenues for cooperation in trade, energy, and joint investments.

A joint statement issued at the end of Erdogan’s visit to Riyadh on Wednesday said the two sides were determined to move ahead with strengthening their political and economic partnership.

The statement said that Erdogan and Saudi Crown Prince Mohammed bin Salman “held a session of official talks during which they reviewed the historical relations between the two brotherly countries and ways to develop them in all fields.”

The statement showed Saudi-Turkish alignment on deepening economic and investment cooperation and on capitalizing on opportunities offered by Saudi Vision 2030 and the Century of Türkiye Vision.

“In the economic, trade, and investment sectors, both sides commended the strength of the economic ties between the two countries and agreed on further strengthening them, particularly in sectors of mutual priority. They also agreed to capitalize on the investment opportunities offered by the (Saudi Vision 2030) and (Century of Türkiye Vision), for the mutual benefit of both economies,” the statement read.

Emphasizing boosting non-oil trade and activating the Saudi-Turkish Business Council, the statement said the leaders “praised the level of trade exchange and stressed the importance of continued joint efforts to develop the non-oil trade volume, intensify mutual visits between officials in the public and private sectors, and hold trade events in both countries through the (Saudi-Turkish Business Council).”

Energy cooperation

Energy featured prominently in the discussions, with both sides stressing the importance of cooperation in oil, petrochemicals, and renewable energy, and exploring electricity interconnection, clean hydrogen, and energy supply chains to enhance energy security and sustainability.

“Both sides agreed to enhance cooperation in the fields of oil, oil derivatives, and petrochemical supply, and to work together to exploit investment opportunities in the petrochemical and agricultural nutrients sectors, as well as to cooperate on innovative uses of hydrocarbons,” the statement read.

“Both sides affirmed their desire to enhance cooperation in the fields of electricity and renewable energy, leveraging both countries’ extensive experience in renewable energy integration and the Kingdom’s large-scale energy investments.”

“They committed to expediting feasibility studies for electrical interconnection between the two countries, exchanging expertise in electricity and renewable energy technologies and grid automation, electrical grid security and resilience, renewable energy projects, grid interconnection, energy storage technologies, and promoting the participation of companies from both sides in implementing these projects,” it affirmed.

“They also emphasized the importance of strengthening cooperation in energy efficiency and conservation, raising awareness of its importance, and exchanging expertise in the energy services sector and capacity building in this field.”

The two sides also underscored cooperation in mining and the production of critical minerals in support of the global energy transition.

“Both sides agreed to strengthen cooperation in the exploration, extraction, and processing of mineral resources. They also emphasized the importance of international cooperation and joint ventures in critical minerals to ensure the security of supply chains essential for the global energy transition.”

Several agreements and memoranda of understanding were signed during a meeting of the Saudi-Turkish Coordination Council on the sidelines of the visit, covering energy, justice, space, and research and development.

Regarding the Saudi-Turkish Coordination Council, the statement said: “Both sides commended the level of coordination and cooperation within the framework of the (Saudi-Turkish Coordination Council), aimed at achieving shared interests and advancing them to new horizons across all sectors.”

“They emphasized the importance of strengthening cooperation and partnership in the following areas: digital economy, artificial intelligence, emerging technologies, and space technologies; transportation, logistics, and civil aviation; law and justice; culture; tourism; sports and youth; scientific and educational cooperation; media; environment, water, agriculture, and food security; customs, defense industries; Health.”

Reflecting the strong desire to deepen strategic energy cooperation, Saudi Energy Minister Prince Abdulaziz bin Salman and Turkish Energy and Natural Resources Minister Alparslan Bayraktar signed an agreement to collaborate on renewable power generation projects totaling about $2 billion in investment.

The agreement aims to enhance cooperation in renewable energy and green technologies and to support the development and implementation of high-quality projects that help diversify the energy mix, strengthen energy security, and accelerate the shift toward a low-carbon economy in line with both countries’ priorities.

It includes the development and implementation of solar power plants in Türkiye with a total installed capacity of up to 5,000 megawatts in two phases.

The first phase includes two solar projects in the Turkish provinces of Sivas and Karaman, with a combined capacity of 2,000 megawatts. In contrast, the second phase covers additional projects under agreed frameworks, adding an extra 3,000 megawatts.

Projects under the first phase will offer electricity prices that are highly competitive with those of other renewable plants in Türkiye. With investments of about $2 billion, the plants will supply electricity to more than two million Turkish households.

A state-owned Turkish company will purchase the electricity generated by the plants for 30 years, while the projects will maximize the use of locally sourced equipment and services during implementation.

Boost to foreign investment

Turkish Treasury and Finance Minister Mehmet Simsek said the agreement would significantly boost foreign direct investment inflows into Türkiye.

Writing on X on Wednesday, Simsek said "the pace of FDI is picking up, underscoring the growing credibility of our economic program."

"An FDI inflow of USD2bn in Türkiye’s renewable energy projects will accelerate the green transition, enhance energy security, and structurally reduce reliance on energy imports," he added.

Simsek also noted that foreign direct investment in Türkiye reached $12.4 billion in the first 11 months of 2025, up 28% from the same period in 2024.

Economic relations between Saudi Arabia and Türkiye have seen substantial growth over the past two years, reflected in rising trade volumes.

Türkiye’s interest in further strengthening ties was evident in Erdogan’s decision to bring a large business delegation of around 200 company heads and representatives to Riyadh, alongside officials from regional offices of Turkish companies.

The private sector plays a central role in the Saudi-Turkish partnership. Participants at the Saudi-Turkish Economic Forum, held on the sidelines of Erdogan’s visit, stressed the need to enter a new phase focused on implementing joint projects.

Trade growth accelerates

Turkish direct investments in Saudi Arabia have exceeded $2 billion, concentrated in manufacturing, real estate, construction, agriculture, and trade.

Nail Olpak, head of Türkiye’s Foreign Economic Relations Board, said trade with Saudi Arabia was growing at a rapid pace, noting that despite a slowdown in overseas activity by Turkish contractors, they continue to carry out major projects in the kingdom.

According to the latest official Saudi data, total trade between the two countries reached about $8 billion in 2025, up 14% from the previous year. By the end of last year, 1,473 investment licenses had been issued to active Turkish companies.

Saudi Arabia exports crude oil and petrochemical products to Türkiye and imports a range of goods, including carpets, processed stone for construction, tobacco products, food, and furniture.

Data from the Turkish Statistical Institute showed bilateral trade of $5.59 billion in 2015, $5.007 billion in 2016, $4.845 billion in 2017, $4.954 billion in 2018, and $5.107 billion in 2019.

After a decline in 2020 and 2021 due to the COVID-19 pandemic, trade rebounded to $6.493 billion in 2022 and $6.825 billion in 2023, exceeding $7 billion in 2024.

Türkiye’s exports to Saudi Arabia rose to $3.1496 billion in 2025, out of the total bilateral trade of about $8 billion.


Riyadh Air and Mastercard Partner to Transform Global Travel Experience

Riyadh Air and Mastercard Partner to Transform Global Travel Experience
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Riyadh Air and Mastercard Partner to Transform Global Travel Experience

Riyadh Air and Mastercard Partner to Transform Global Travel Experience

Riyadh Air and Mastercard today unveiled an alliance that brings together payments, travel, and technology to reshape how people and businesses experience global travel. Riyadh Air is uniquely positioned to jointly build an extensive financial and payment ecosystem.

According to a press release issued by Riyadh Air, the collaboration introduces a powerful suite of innovations spanning consumer payments, premium airport experiences, and next-generation B2B travel payments – positioning Saudi Arabia at the forefront of global travel evolution.

Chief Financial Officer at Riyadh Air Adam Boukadida said: “Our deep collaboration with Mastercard clearly reflects not only our commitment to be a digital native airline but strong confidence in our future trajectory. It allows us to build a travel experience that is seamless, digital and distinctly differentiated."

"We are fortunate to be in a highly unique situation where we can implement many different solutions at the same time, from integrated payments and rewards to premium airport experiences and innovative virtual payment solutions," he added, SPA reported.

President of Mastercard's Eastern Europe, Middle East and Africa Dr. Dimitrios Dosis stated: “Together with Riyadh Air, we are creating an integrated digitally-native ecosystem that delivers value at every touchpoint—for guests, travel agents, airlines, and hospitality partners—while reinforcing Saudi Arabia’s role as a global travel hub.”

The release added that Riyadh Air has also become the first airline globally to introduce an airline-branded virtual card program for travel trade settlements. Through this streamlined payment solution, Riyadh Air will be offering travel intermediaries worldwide improved efficiency, security and reconciliation while unlocking new growth opportunities across the travel value chain.

According to Mastercard’s Travel Trends Report 2025, Riyadh is experiencing a sharp surge in passenger traffic, reflecting Saudi Arabia’s accelerating emergence as a global travel and business hub.