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UK Borrowing Costs Surge to Highest Level Since Financial Crisis Amid Inflation Fears

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Britain’s benchmark borrowing costs have surged to their highest level since the financial crisis, as inflation concerns and investor uncertainty continue to weigh heavily on the economy.

The yield on the UK’s 10-year gilt, a key indicator of public borrowing costs, climbed to 4.82% on Wednesday, surpassing the peaks seen following former Prime Minister Liz Truss’s controversial mini-budget in 2022. Meanwhile, the yield on the 30-year gilt rose to a fresh 27-year high of 5.358% on Tuesday, marking a significant spike in bond yields as prices fall. Bond yields typically rise when investor demand drops, underscoring the ongoing sell-off in government debt.

The increase in yields has also put pressure on the British pound, which weakened by 1% against the dollar, slipping to $1.23. The pound has underperformed many of its global counterparts, signalling continued skepticism in the markets regarding the UK’s fiscal sustainability.

The rise in UK borrowing costs comes as the US dollar remains strong, bolstered by expectations of corporate tax cuts and regulatory changes under the new US administration. The dollar index has risen by nearly 7% over the past year, further exacerbating the strain on the pound.

Several factors have contributed to the UK’s vulnerability to rising gilt yields, including its reliance on energy imports, which has amplified commodity price shocks. In addition, investors are seeking higher returns in private debt markets, forcing the UK government to offer higher yields on its bonds. The government’s increased borrowing in its October budget, combined with the Bank of England’s gradual interest rate cuts, has also weighed on bond prices.

Simon French, chief economist at Panmure Liberum, pointed out that the UK’s long bond yields have become increasingly detached from their US counterparts since the market turmoil following the 2022 mini-budget.

The surge in borrowing costs has significant implications for the UK government’s finances, increasing debt servicing costs and reducing the chancellor’s room for spending. Capital Economics estimates that £8.9 billion of the £9.9 billion fiscal buffer set aside by Chancellor Rachel Reeves has already been depleted. As a result, further tax hikes or public spending cuts are likely.

With rising borrowing costs, the government faces a tough decision: reduce spending or raise taxes. Although Chancellor Reeves has promised no tax increases at her spring statement in March, continued high borrowing costs may force her to reconsider, particularly if the gilt yields remain elevated.

The UK’s bond market has underperformed globally, mirroring concerns in the US and other European markets. With ongoing inflationary pressures, analysts warn that Britain’s fiscal outlook remains uncertain, and political and financial challenges may persist in the months ahead.

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McDonald’s Faces Legal Action Over Allegations of Bullying and Abuse Across UK Outlets

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Hundreds of current and former McDonald’s employees have initiated legal action against the fast-food giant, accusing the company of widespread bullying, sexual abuse, and harassment at more than 450 of its UK outlets.

The complaint, filed through law firm Leigh Day, follows a BBC investigation that uncovered troubling allegations of “unacceptable” conduct within the company, despite McDonald’s pledging last year to address such issues. Among the plaintiffs are workers as young as 19 who claim to have faced mistreatment from both managers and colleagues.

Alistair Macrow, McDonald’s UK chief executive, is set to testify before the business and trade committee of MPs. The committee is expected to question Macrow about the company’s handling of the alleged misconduct. McDonald’s, which employs 168,000 people across more than 1,400 restaurants in the UK, said it had requested more details from the BBC regarding the reported incidents in order to conduct thorough investigations but had not yet received them.

One 19-year-old claimant said he endured homophobic abuse, including being called derogatory slurs, from both managers and fellow staff. Another worker, who has a learning disability and eye condition, alleged bullying by colleagues and managers, including inappropriate touching and racist remarks. Additional claims include a young worker being pressured for sex and offensive comments about staff based on their nationality.

The Equality and Human Rights Commission (EHRC) has reported receiving approximately 300 complaints of harassment at McDonald’s outlets since the BBC investigation first aired. The EHRC has intensified its efforts, working to update its legal agreement with the company following the new allegations.

In response to the accusations, McDonald’s reiterated its commitment to safeguarding employees and outlined measures taken to address workplace misconduct. These include the introduction of a digital whistleblowing platform called Red Flags, the establishment of a dedicated investigations team, and the appointment of the company’s first head of safeguarding. McDonald’s expressed confidence that these actions are significant steps toward eliminating abusive behavior.

However, experts in employment law have raised concerns about the effectiveness of these measures, particularly for workers on zero-hours contracts, who may feel particularly vulnerable. Emma Cocker, Senior Associate in the Employment team at Lawrence Stephens Solicitors, pointed out that such workers might fear retaliation if they file complaints. “It would appear McDonald’s still has a long way to go in providing a safe working environment,” she said, adding that prolonged tolerance of such behavior would likely lead to further legal claims and grievances.

As the legal action unfolds, McDonald’s faces mounting scrutiny over its efforts to create a safer and more respectful workplace for its employees.

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Mark Carney Weighs Bid to Succeed Trudeau as Canadian Prime Minister

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Mark Carney, the former governor of the Bank of England, has confirmed he is considering a run to succeed Justin Trudeau as Canada’s prime minister, following Trudeau’s announcement on Monday that he would step down after nearly a decade in office.

Trudeau’s resignation has set off a scramble within the Liberal Party to find a new leader ahead of an impending general election. Carney, 59, is widely regarded for his leadership in the financial sector, having served as the first non-Briton to head the Bank of England and previously as governor of the Bank of Canada from 2008 to 2013, where he gained recognition for his steady handling of the global financial crisis.

Since stepping down from the Bank of England in 2020, Carney has taken on high-profile roles, including serving as chair of Brookfield Asset Management and as a United Nations special envoy for climate action and finance. In a statement to Bloomberg, Carney expressed he was “encouraged” by the support from Liberal lawmakers and Canadians, who, according to him, are calling for “positive change and a winning economic plan.” He added that he would consult with family members before making a final decision on his candidacy.

Carney’s potential bid comes amid growing frustration with the Liberal government. Trudeau’s approval ratings have dipped, with concerns about high inflation, rising food prices, and voter fatigue. The Conservative Party, led by Pierre Poilievre, has taken aim at Trudeau’s climate policies, particularly carbon pricing, with Poilievre branding Carney as “Carbon Tax Carney” in reference to his climate action stance.

Recent polls suggest the Conservatives have a strong chance of winning the next election, with Carney ranking second behind former deputy prime minister Chrystia Freeland in a survey of potential Liberal leadership candidates. The next federal election is scheduled to take place before October, although a specific date has yet to be confirmed.

Carney’s diverse background could provide him with a unique edge. Holding Canadian, Irish, and British citizenship since 2018, Carney’s international experience could appeal to voters seeking a fresh perspective amid economic uncertainty. His experience in finance, coupled with his advocacy for climate change action, may resonate with Liberals looking for a leader who can navigate the party through difficult electoral challenges.

With the election looming, Carney’s decision to enter the race could prove pivotal in shaping the future of Canadian politics.

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Mark Carney Weighs Bid to Succeed Trudeau as Canadian Prime Minister

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Mark Carney, the former governor of the Bank of England, has confirmed he is considering a run to succeed Justin Trudeau as Canada’s prime minister, following Trudeau’s announcement on Monday that he would step down after nearly a decade in office.

Trudeau’s resignation has set off a scramble within the Liberal Party to find a new leader ahead of an impending general election. Carney, 59, is widely regarded for his leadership in the financial sector, having served as the first non-Briton to head the Bank of England and previously as governor of the Bank of Canada from 2008 to 2013, where he gained recognition for his steady handling of the global financial crisis.

Since stepping down from the Bank of England in 2020, Carney has taken on high-profile roles, including serving as chair of Brookfield Asset Management and as a United Nations special envoy for climate action and finance. In a statement to Bloomberg, Carney expressed he was “encouraged” by the support from Liberal lawmakers and Canadians, who, according to him, are calling for “positive change and a winning economic plan.” He added that he would consult with family members before making a final decision on his candidacy.

Carney’s potential bid comes amid growing frustration with the Liberal government. Trudeau’s approval ratings have dipped, with concerns about high inflation, rising food prices, and voter fatigue. The Conservative Party, led by Pierre Poilievre, has taken aim at Trudeau’s climate policies, particularly carbon pricing, with Poilievre branding Carney as “Carbon Tax Carney” in reference to his climate action stance.

Recent polls suggest the Conservatives have a strong chance of winning the next election, with Carney ranking second behind former deputy prime minister Chrystia Freeland in a survey of potential Liberal leadership candidates. The next federal election is scheduled to take place before October, although a specific date has yet to be confirmed.

Carney’s diverse background could provide him with a unique edge. Holding Canadian, Irish, and British citizenship since 2018, Carney’s international experience could appeal to voters seeking a fresh perspective amid economic uncertainty. His experience in finance, coupled with his advocacy for climate change action, may resonate with Liberals looking for a leader who can navigate the party through difficult electoral challenges.

With the election looming, Carney’s decision to enter the race could prove pivotal in shaping the future of Canadian politics.

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