Investors sold off the Turkish Lira last week as increased concerns over the state of the economy, the country’s reliance on overseas financing and elections over the weekend led to capital flight. An overheating economy last year and rapidly rising interest rates have led to a sharp recession in Turkey. Investors, companies and residents have continued to lose faith in the economy which came to a head last week as figures showed the central bank had been running down its reserves in order to protect the Lira. Furthermore, extreme measures to limit short selling activity by international traders were implemented last week, further spooking markets. While these measures may have limited shorter-term moves, they cannot last indefinitely, and selling pressure is likely to persist as the economy continues to struggle. A rapidly depreciating currency will lead to a vicious cycle of rising inflation and interest rates, further harming the economy and likely leading to added pressure on the currency.
Minimum Wage Increases
Minimum wages in the UK will be increased today. The main rate for those over the age of 25 will rise to £8.21 an hour from £7.83, representing a 4.9% increase. This will be a welcome raise for the approximately 2m minimum wage workers in the UK. Furthermore, such an increase is likely to filter through to those salary grades marginally above this level. Over the coming months, this wage increase will also feed through into an already accelerating rate of total wage growth. This move will positively impact the headline rate in the UK of 3.4%. However, some commentators have warned that increases in the wages of the lowest paid workers will put upward pressure on some prices if it is not met with a corresponding increase in productivity. However, a higher cost of hiring may well encourage companies to invest in labour saving systems, thus improving productivity.
Meaningful Vote Four?
For many, not succeeding on the third attempt would have resulted in a change in direction. However, the Prime Minister appears to now be pushing for a fourth meaningful vote on her deal over the coming days. Currently, with no strategy agreed and approved by parliament, the UK is now scheduled to leave on 12th April. MP’s have been attempting to find a consensus on other pathways, although none have yet achieved. Resultingly, a no deal remains the default option and time is running out. The uniqueness of the situation and the importance of the issue means that anything can still happen at this stage. Furthermore, with Theresa May likely to step down or get pushed out in the not too distant future, a general election does not seem outlandish. Indeed, many are planning to fight campaigns, and the jostling for Conservative party leadership has begun.
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