Argentina’s Macri unveils economic ‘relief’ measures after poll shock

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Image grab from video released by Argentina's presidency shows President Mauricio Macri speaking in Buenos Aires on August 14, 2019
Image copyrightAFP
President Mauricio Macri’s popularity has been damaged by painful austerity measures

Argentine President Mauricio Macri has announced a series of “relief” measures, days after a defeat at the polls triggered economic turmoil.

In a televised speech, he announced income tax cuts and increases in welfare subsidies. Petrol prices will be frozen for 90 days, he added.

Mr Macri said the measures would help 17 million workers.

The move comes after opposition centre-left candidate Alberto Fernández won presidential primaries  at the weekend.

The result dealt a severe blow to Mr Macri’s chances of re-election. On Monday, the Argentine peso and stock markets plunged over concerns that Mr Fernández could take Argentina back to populist economic policies.

The peso fell again on Wednesday following President Macri’s attempts to shore up support.

Mr Macri was elected in 2015 pledging to boost Argentina’s ailing economy with liberal economic reforms.

But a recovery has yet to materialise and more than a third of the population is living in poverty. Tough austerity measures have pushed up prices for public services and dented Mr Macri’s popularity.

Argentina is currently in recession and posted 22% inflation for the first half of the year, one of the highest rates globally.

What did President Macri say?

“The measures I take and that I am going to share with you now are because I listened to you. I heard what you wanted to tell me on Sunday,” he said during his eight-minute nationwide broadcast.

“These are measures that will bring relief to 17 million workers and their families.”

A supermarket employee changes products' price tags due to inflation, in Buenos Aires, Argentina, 14 August 2019
Image copyrightEPA
Argentina’s high inflation rate is hitting prices in the shops

President Macri said tax cuts would see workers in the private sector receiving an extra 2,000 pesos (£28; $33) a month until the end of the year and public sector workers an extra 5,000 pesos. He said the minimum wage would also rise.

Mr Macri said he took responsibility for the election result and recognised that many voters were “tired and angry”. He said he was willing to talk to the opposition, adding that it was “clear that political uncertainty has caused a lot of damage”.

“I understand your anger, your tiredness. I just ask you not to doubt the work we did together because there is so much, and there is too much at stake,” he said.

How did the latest crisis unfold?

The primary election, in which presidential candidates from all parties take part, was won by Mr Fernández by a wide margin. The coalition backing Mr Fernández took 47.7% of the vote while the bloc supporting Mr Macri had 32.1%.

Mr Fernández is now seen as the frontrunner for October’s presidential election. His running mate is former President Cristina Fernández de Kirchner, who presided over an administration remembered for a high degree of protectionism and heavy state intervention in the economy.

Cristina Fernández de Kirchner and Alberto
Image copyrightAFP
Alberto Fernández’s running mate is former President Cristina Fernández de Kirchner

In trading on Monday, the peso initially plunged 30% against the dollar to a record low before rallying to about 15%.

Some of the country’s most traded stocks also lost about half of their value in one day.

At end of trading on Monday, Argentina’s main Merval index closed down 31% as some of the country’s largest companies saw their market values plummet.

On Wednesday, after Mr Macri’s broadcast, the peso fell again, trading at 60.77 to the dollar – a further 4% down from Tuesday’s close

donald trump
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President Donald Trump has confirmed he is considering a new, temporary payroll tax cut to help boost the US economy.

US workers pay payroll taxes on their earnings to finance health insurance, social security, and pensions.

Mr Trump has been talking up the US economy in recent days amid growing unease about a potential recession. “We’re very far from a recession,” he told the reporters.

A strong economy is seen as key to his re-election prospects in 2020, but continuing trade tensions with China have sparked concerns about an imminent slowdown.

Tax cuts when the president took office helped boost the economy and sparked a surge in share prices on Wall Street. But many economists think the impact of those cuts is starting to wane.

The president said: “We’re looking at various other tax reductions – but I’m looking at that all the time anyway. Tax reductions – that’s one of the reasons why we’re in such a strong economic position.”

He also suggested his administration was looking at possible cuts in capital gains tax, but emphasised that nothing has been decided. Such a move would be likely to face challenges from Democrats in Congress.

Interest rates

The president again pressed the Federal Reserve to cut interest rates. “We’re looking for a rate cut, we could be really greatly helped if the Fed would do its job and do a substantial rate cut.” He has previously called for a one percentage point cut.

Mr Trump also spoke about continuing trade tensions with China, hinting that a deal with Beijing could still be some way off.

“China’s [economy] had the worst year they’ve had in 27 years. They want to make a deal with us, but I can tell you I’m not ready to make a deal unless they are going to make the right kind of deal.”

Eddie Stobart chief leaves as shares suspended

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Eddie Stobart lorry
Image copyrightGETTY IMAGES

Eddie Stobart has suspended trading in its shares and announced that its chief executive will stand down with immediate effect, as the firm looks into accounting discrepancies.

The review is being undertaken by chief financial officer, Anoop Kang, who joined in April, alongside external auditors. It found that in 2018 operating profits were overstated by about 4%.

Publication of the firm’s results for the six months to 31 May has also been delayed, They were due to be released on 29 August, but are now expected in early September.

The firm warned that profits for that six-month period were likely to be revised down from recent projections, and that it is “applying a more prudent approach to revenue recognition”. The group’s dividend policy would also be reviewed, it said.

Outgoing chief executive Alex Laffey, who spent four years at Eddie Stobart, will be replaced by Sebastien Desreumaux.

Mr Desreumaux, formerly head of the group’s retail delivery arm iForce, joined the company in July 2018.

The accounting revisions are likely to add to pressure on high-profile investment manager Neil Woodford, who is the largest shareholder in Eddie Stobart, with a 22.9% stake.

In June this year, Mr Woodford suspended trading in his largest fund  after rising numbers of investors asked for their money back.

Eddie Stobart shares, listed on the Alternative Investment Market (AIM), a less regulated alternative to the main FTSE exchanges, have nearly halved over the past year.

Founded by Edward Stobart in 1970, the firm operates 2,700 vehicles and 43 logistical hubs in the UK and Europe, and employs around 6,600 people, according to its website.

Its distinctive lorries are a mainstay on British motorways, while its merchandise spin-off offers a wide range of branded goods including model trucks, teddy bears, watches and wrapping paper.

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