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U.K. economy shrinks in January in fresh setback for Starmer

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The UK economy unexpectedly shrank at the start of 2025, piling fresh pressure on Prime Minister Keir Starmer’s government over the lack of momentum since Labour returned to power last summer.

Gross domestic product fell 0.1% in a storm-hit January, driven by declines in manufacturing and construction, the Office for National Statistics said Friday. Economists had expected a 0.1% increase. It means output is still barely larger than when Labour won a landslide election victory in July.

Chancellor of the Exchequer Rachel Reeves pointed to the global turbulent backdrop for the weakness, warning that “the world has changed and across the globe we are feeling the consequences.”

Reeves is under pressure to start delivering on her promise to boost growth after a dismal run of economic indicators under Labour. She is preparing to announce what’s expected to be a sobering economic update on March 26, when official growth forecasts may be trimmed.

Friday’s figures mean the economy has contracted in four out of the seven months since Labour took office. GDP is only 0.3% higher than it was in June.

The pound extended losses, dropping as much as 0.2% to $1.2924 as traders incrementally added to expectations for more interest-rate cuts. Traders now see 57 basis points of reductions this year.

The weakness in January was partly driven by the UK being hit by the strongest storm for 10 years, suggesting that some sectors could rebound in February.

While economists are predicting a return to steady growth this year, risks to the outlook are mounting with Donald Trump’s escalating trade war sending stocks crashing and triggering fears of a global downturn. The hope is that Britain’s plans for big spending on infrastructure will underpin growth.

“Following the lackluster performance in the second half of 2024, growth remains fragile due to global and domestic uncertainty,” said Hailey Low, economist at the National Institute of Economic and Social Research. “It is crucial that the upcoming Spring Statement provides stability rather than adding to domestic uncertainty.”

What Bloomberg Economics Says…

“The surprise drop in January’s GDP still leaves the UK economy on course for a modest rebound in the first quarter after a sharp slowdown in the second half of 2024. Our view is growth will strengthen a little over the course of 2025. If data continues to disappoint, though, it will be hard for the Bank of England to stick with its gradual approach to policy easing. We still think the risk is for the central bank cutting rates faster than we’re expecting.”

—Read Ana Andrade and Dan Hanson’s REACT on the Terminal

Labour has unveiled a raft of policies to help it meet its promise of boosting growth, including unblocking building projects and green-lighting controversial developments. However, growth was patchy in the second half of last year and sentiment indicators nosedived after a tax-heavy budget in October. 

The ONS said that output fell in eight of the 13 manufacturing sectors in January, with the production of metals and pharmaceuticals experiencing the largest declines. Anecdotal evidence points to construction being hit by storms, rain and snow during the month, it said. Oil and gas production also declined. 

The falls were partly offset by 0.1% growth in services, the largest part of the UK economy. Retailers recorded a strong January thanks to people eating more frequently at home, according to the ONS.

The BOE expects the economy to continue expanding at a tepid pace, predicting a 0.7% expansion in 2025 after last year’s 0.9% rise. Facing an uncertain outlook, BOE rate-setters are expected to leave interest rates on hold next Thursday and warn markets of only gradual cuts.

“We doubt the bad news on GDP will be enough to convince the Bank of England to cut interest rates at its meeting next week,” said Thomas Pugh, economist at RSM UK. “Smooth out the month-to-month volatility and the economy is picking up some momentum, which should allay fears about the UK slipping back into recession.”

Officials are balancing the need to support a stagnant economy against signs of stubborn inflationary pressures and heightened uncertainty. They have flagged the threat of tariffs and the impact of Labour’s increase in employer payroll taxes on the jobs market and prices.

This story was originally featured on Fortune.com



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MIT and Yale are among more than 50 universities the Trump administration is investigating amid anti-DEI campaign

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More than 50 universities are being investigated for alleged racial discrimination as part of President Donald Trump’s campaign to end diversity, equity and inclusion programs that his officials say exclude white and Asian American students.

The Education Department announced the new investigations Friday, one month after issuing a memo warning America’s schools and colleges that they could lose federal money over “race-based preferences” in admissions, scholarships or any aspect of student life.

“Students must be assessed according to merit and accomplishment, not prejudged by the color of their skin,” Education Secretary Linda McMahon said in a statement. “We will not yield on this commitment.”

Most of the new inquiries are focused on colleges’ partnerships with the PhD Project, a nonprofit that helps students from underrepresented groups get degrees in business with the goal of diversifying the business world.

Department officials said that the group limits eligibility based on race and that colleges that partner with it are “engaging in race-exclusionary practices in their graduate programs.”

The group of 45 colleges facing scrutiny over ties to the PhD Project include major public universities such as Arizona State, Ohio State and Rutgers, along with prestigious private schools like Yale, Cornell, Duke and the Massachusetts Institute of Technology.

A message sent to the PhD Project was not immediately returned.

Six other colleges are being investigated for awarding “impermissible race-based scholarships,” the department said, and another is accused of running a program that segregates students on the basis of race.

Those seven are: Grand Valley State University, Ithaca College, the New England College of Optometry, the University of Alabama, the University of Minnesota, the University of South Florida and the University of Tulsa School of Medicine.

The department did not say which of the seven was being investigated for allegations of segregation.

The Feb. 14 memo from Trump’s Republican administration was a sweeping expansion of a 2023 Supreme Court decision that barred colleges from using race as a factor in admissions.

That decision focused on admissions policies at Harvard and the University of North Carolina, but the Education Department said it will interpret the decision to forbid race-based policies in any aspect of education, both in K-12 schools and higher education.

In the memo, Craig Trainor, acting assistant secretary for civil rights, had said schools’ and colleges’ diversity, equity and inclusion efforts have been “smuggling racial stereotypes and explicit race-consciousness into everyday training, programming and discipline.”

The memo is being challenged in federal lawsuits from the nation’s two largest teachers’ unions. The suits say the memo is too vague and violates the free speech rights of educators.More than 50 universities are being investigated for alleged racial discrimination as part of President Donald Trump’s campaign to end diversity, equity and inclusion programs that his officials say exclude white and Asian American students.

This story was originally featured on Fortune.com



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UBS follows Deutsche Bank by banning staff from working remotely on both Friday and Monday

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Swiss banking giant UBS has resisted following remote working hawks like JPMorgan and Goldman Sachs, who’ve mandated a full return to office. It has, however, taken a leaf out of another rival’s approach.

In an internal memo circulated on Thursday, first reported by Finews, UBS told staff they would be required to work from the office at least three days a week. In addition, the bank told its 115,000 employees that they would no longer be able to work from home on a Friday followed by a consecutive Monday.

“Our working approach is office-centric with flexibility, and we ask our employees to be in the office at least three days a week. Spending enough time in the office with colleagues fosters innovation, collaboration, and team productivity,” a UBS spokesperson told Fortune.

The approach is similar to that of Deutsche Bank last year, which, in calling staff back to the office, drew a new line in the sand by banning remote Fridays and Mondays. 

Many workers operating under a hybrid model opt to come into the office between Tuesday and Thursday, working their Mondays and Fridays remotely. Fridays in particular have proved popular among both bosses and employees as the remote day of choice.

The hawkish voices in the remote vs. in-office debate argue this trend has created a habit of lower productivity around the weekend as employees slow down into Saturday or ramp up more slowly to a Tuesday. Manchester United co-owner Jim Ratcliffe ordered his staff back to the office full-time in May last year when he realized email activity plunged on a Friday when most employees were remote.

One problem companies like UBS are more publicly happy to address is space. Many firms vacated office space during COVID-19 in order to cut costs when remote work looked like a permanent solution. 

UBS is no different. In London, the company has consolidated staff at its Broadgate HQ, where it sublet space during the height of remote working, after it also chose not to renew its lease at 1 Golden Lane. During that time, the company also integrated employees from the newly acquired Credit Suisse into its offices, putting a further crunch on space. A move to choose between a Monday and Friday should regulate attendance through the week.

Companies have also been left frustrated by thousands of square meters of office space going unused on the more unpopular Mondays and Fridays.

UBS’s move to balance out office working across the week is understood to be a move to better manage its office space. Deutsche Bank gave the same reasoning last year, with CEO Christian Sewing saying the motivation was to “spread our presence more evenly across the week.”

The latest policy introduced by UBS remains much more liberal than the group’s competitors in the banking sector, most notably JPMorgan. The group mandated a full RTO mandate that began in March. Already, though, staff have complained about inadequate space, poor Wi-Fi, and unwell co-workers.

This story was originally featured on Fortune.com



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Facebook ramps up TikTok battle by letting creators monetize their Stories

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  • Facebook has announced a new monetization program for creators. Facebook Content Monetization is meant to lure creators from TikTok as the company looks to build out its flagship social media property.

With the threat of a TikTok ban fading for now, Facebook is ramping up efforts to get creators to post their work on its platform.

The company has announced a new monetization program that will let creators make money simply by sharing photos and videos on the Facebook site. (Instagram has its own monetization program.)

Applications are being accepted at this website for the program’s beta. And at least one member of that beta program claims to have made $5,000 so far posting videos he would have normally posted without financial incentives.

Facebook has already sent invitations to one million creators to join the beta program, but is looking to expand it. Earnings will be based on engagement, total views, and plays. Public videos, reels, photos, and text posts are eligible to earn money.

Facebook has, for months, been trying to win the attention of creators. While Instagram has a healthy creator community, Meta’s flagship property has had trouble attracting them. In January, the company offered a $5,000 bonus to creators with an existing presence on other social platforms. TikTok remains the most popular destination for creators, but the lingering threat of that platform disappearing has made several of them diversify their outlets.

Over the course of the next year, the new Facebook Content Monetization program will replace Ads on Reels, In-Stream Ads and the Performance bonus programs. As part of the change, the company is streamlining its dashboard for creators to make it easier to see how their monetization efforts are going.

This story was originally featured on Fortune.com



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