LONDON (AP) — The U.K.’s central bank has kept interest rates on hold as inflation moves further above its target rate, even though the British economy is flatlining at best.
The Bank of England’s nine-member Monetary Policy Committee kept its main interest rate unchanged at 4.75% Thursday with new data showing inflation rising to 2.6%, further above the bank's 2% target.
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Christmas shoppers pass a sign in a shop window 'Choose Love' in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
Christmas shoppers in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
Christmas shoppers out wearing seasonal hats in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali, Pool)
Christmas shoppers in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
FILE - The Bank of England is pictured in London, on Aug. 1, 2024. (AP Photo/Alberto Pezzali, File)
In response the rate-setting panel, which last cut its key rate in November, is taking a cautious stance because lower borrowing costs could potentially stoke inflation even further.
That’s a disappointment for many struggling sectors in the U.K. economy that would be helped by cheaper credit in an environment of paltry growth. The British economy has now contracted for two months in a row.
“Persistent price pressures will prevent the Bank of England from responding to flat output and falling employment by cutting interest rates,” said Andrew Wishart, an economist at Berenberg Bank.
Few economists think interest rates will drop dramatically in 2025 either. It's a similar picture in the U.S., where the Federal Reserve reined in expectations Wednesday of reductions next year after its latest rate cut.
Critics argue that the new Labour government’s first budget in October has both elevated inflation pressures while also damping down on growth. A big increase in business taxes may see firms try to offset the additional costs by raising prices or cutting down on hiring. The government argues that it needed to raise taxes to shore up public finances and inject money into cash-starved public services.
Still, inflation in the U.K. and across the world is far lower than it was a couple of years ago, partly because central banks dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues and then because of Russia’s full-scale invasion of Ukraine which pushed up energy costs.
As inflation rates have fallen from multidecade highs, the central banks have started cutting interest rates, though few, if any, economists think that rates will fall back to the super-low levels that persisted in the years after the global financial crisis of 2008-2009.
Christmas shoppers pass a sign in a shop window 'Choose Love' in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
Christmas shoppers in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
Christmas shoppers out wearing seasonal hats in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali, Pool)
Christmas shoppers in central London, Friday, Dec. 13, 2024, Britain's economy unexpectedly shrank by 0.1 percent in October, The Office for National Statistics stated in figures released Friday. (AP Photo/Alberto Pezzali)
FILE - The Bank of England is pictured in London, on Aug. 1, 2024. (AP Photo/Alberto Pezzali, File)
Half of the Premier League is under majority American ownership after Texas-based Friedkin Group completed its 98.8% purchase of Everton on Thursday.
The takeover ended Farhad Moshiri's turbulent eight-year tenure at the storied English club, which joins the Friedkins' wide-ranging portfolio of investments that includes Italian team Roma. The size of the deal was undisclosed but the BBC and other British media valued it in excess of 400 million pounds ($500 million).
Fronted by Dan Friedkin — who has a net worth of $6.4 billion, according to Forbes — and his son Ryan, the group has investments in the automotive industry, entertainment, hospitality and sports. The Friedkins made a fortune distributing Toyotas in Texas.
“I take immense pride in welcoming one of England’s most historic football clubs to our global family,” Dan Friedkin said. “Everton represents a proud legacy, and we are honored to become custodians of this great institution."
Everton is a nine-time English champion which has been an ever-present in the top division since 1954 but is without a major trophy since 1995 and has been battling relegation in recent years.
The Toffees, as they are nicknamed, are 16th in the 20-team league approaching the halfway mark of this season.
The most lucrative and popular domestic league in the world now has 10 teams with U.S. owners.
Arsenal, Aston Villa, Bournemouth, Chelsea, Fulham, Crystal Palace, Ipswich, Liverpool and Manchester United are majority owned by Americans. Manchester City has minority U.S. investors in Silver Lake.
Leeds and Burnley, who both have U.S. owners, were recently relegated from the Premier League but are in a decent position to get promoted from the second-tier Championship this season. Leeds is second and Burnley is third.
Moshiri, a British-Iranian businessman, sold his stake in Arsenal to become Everton's major shareholder in 2016 and, by the end of his reign, had a 94% stake at the club.
His eight years in charge will be remembered for wasting hundreds of millions of pounds (dollars) on players, going through eight permanent managers and plunging Everton into financial uncertainty, which led to the team having two separate points deductions last season because of reckless spending.
The club's finances were particularly hit in March 2022 when Everton announced it halted its major sponsorship with companies belonging to Russian metals tycoon Alisher Usmanov, a business partner of Moshiri, after he was sanctioned by the European Union in the wake of Russia’s invasion of Ukraine.
Moshiri departs with Everton set to leave its long-term home of Goodison Park at the end of this season and move into a new state-of-the-art stadium at Bramley-Moore Dock, on the Mersey waterfront.
The sale was “the best outcome for the club and its future success,” Moshiri said.
“Despite a challenging geopolitical backdrop, a significant amount has been achieved over the last couple of years including the delivery of a new sporting department, the stabilization of our finances and the delivery of our iconic new stadium,” he said. “I now hand over to new owners confident in the outlook for the club and that our incredible fans will see the success on the pitch that they so thoroughly deserve.”
There may be some concern, however, among Everton fans about the Friedkins, who have never spoken publicly in the four years since they purchased Roma and are unpopular with supporters after making contentious management changes — including firing Daniele De Rossi, the club’s beloved former captain, early this season.
The Friedkin Group reached an agreement in principle in June to buy Moshiri's stake, but talks were called off a month later. Everton was then in negotiations with American businessman John Textor, who said he had an exclusivity agreement with the club but needed to first sell his stake in Premier League rival Crystal Palace.
Earlier, a proposed takeover of Everton by 777 Partners collapsed amid worries about the financial stability of the company.
“We understand the club has faced significant challenges on and off the pitch for several years,” said Marc Watts, the new executive chairman. “That’s why our immediate priority is stabilizing the club and improving results on the pitch.”
Watts said the group has provided an undisclosed injection of capital to ensure the completion of the new stadium, converting most of Everton’s debt either to equity “repaid or refinanced on terms more favorable to the stability of the club.”
The new owners said they had six goals, including “strengthening the men’s first-team squad through thoughtful and strategic investment” and “enhancing Everton’s reputation as a unique and historical name in world football.”
There was no mention of Sean Dyche, who has been Everton's manager for nearly two years and whose future may come under scrutiny if the new ownership wants to make a fresh start.
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A man walks outside Goodison Park as the Premier League soccer match between Everton and Liverpool is called off due to storm Darragh at Goodison Park, in Liverpool, England, Saturday Dec 7, 2024. (AP Photo/Rui Vieira)
Everton's goalkeeper Jordan Pickford reacts during the English Premier League soccer match between Arsenal and Everton at Emirates Stadium in London, Saturday, Dec. 14, 2024. (AP Photo/Kin Cheung)
People walk outside Goodison Park as the Premier League soccer match between Everton and Liverpool is called off due to storm Darragh at Goodison Park, in Liverpool, England, Saturday Dec 7, 2024. (AP Photo/Rui Vieira)
