Reuters World News - Palestinian statehood rift, UK election gamble and Milei's spending cuts

Episode Date: May 23, 2024

Spain, Norway and Ireland band together to recognize a Palestinian state. British Prime Minister Rishi Sunak announces an election for July 4, with the Conservative Party hoping a drop in inflation will invigorate voters. And Argentinian president Javier Milei’s spending cuts take a toll. *This episode was corrected. An incorrect reference to the school shooting in Uvalde, Texas was removed. The shooting happened in an elementary school not a high school. Sign up for the Reuters Econ World newsletter here. Listen to the Reuters Econ World podcast here. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today, Spain, Norway and Ireland join forces to recognise a Palestinian state. What does it mean for the peace process? A date for the diary? The UK election is scheduled for the 4th of July, with the Conservative Party hoping a drop in inflation will lure back voters. And the impact of Argentinian President Malé's public spending cuts on construction. It's Thursday, May 23rd. This is Reuters World News, bringing you every.

everything you need to know from the front lines, in 10 minutes, every weekday. I'm Tara Oaks in Liverpool. Mahmoud Majed Majed al-Assad, a Palestinian man living in a makeshift camp in Rafa, thanking Spain, Norway and Ireland. In a choreographed move, the three governments announced their intention to recognize a Palestinian state. To understand what this triple move practically means for the peace process, We're joined by our U.S. foreign policy editor, Don Durfey. Don, how significant is this announcement?

It is significant. I think in practical terms, it doesn't mean a whole lot, right? It doesn't bring a Palestinian state any closer to reality. But what it does signal is that the strong support for Israel among Western democracies is starting to erode. Is the U.S. concerned of a growing schism among European allies over support for Israel? The announcement by Spain, Ireland, and Norway, it's awkward for the administration, particularly right now. The Biden administration is trying to walk this very fine line between showing its solid support for Israel, right, which has been the traditional U.S. position, but also showing sympathy for the Palestinian cause and increasingly putting pressure on Israel to take into account the fate of ordinary Palestinian citizens. And this just calls more attention to sort of disagreements among Western allies and puts President Biden in a difficult spot. How so? I think right now the Biden administration is focused on trying to get a ceasefire.

And I think there's going to be some worry that this is maybe not a helpful step, right? And it could just sort of raise hopes, sort of false hopes among Palestinians. But another really important thing is that for Israelis, it could make them feel more under attack by the international community. French president, Emmanuel Macron, arriving in New Canada. where he said police reinforcements would remain as long as required. He flew by helicopter over areas of the Pacific Islands that have been devastated by deadly riots.

Two police officers are among those who've died in the violence, sparked by controversial electoral reform. China is holding military drills around Taiwan as, quote, punishment for separatist acts. The exercises come just days after President Lai Ching T's inauguration, in Taipei, where he called on China to stop its threats. In Beijing, the foreign ministry urged the United States to stop supporting and encouraging what it called Taiwan independence forces and said that these military exercises were a necessary

and legitimate move. A second case of bird flu in a dairy worker has been confirmed in the US, this time in Michigan. The virus, which has circulated in poultry for years, was first detected in dairy cattle in late March. The CDC says the risk of the general public remains low. The city of Yuvalde has agreed to pay its insurance of $2 million. Attorney Josh Koskoff announcing that the families of Yuvalde victims have reached a settlement. The $2 million payout comes just ahead of a two-year anniversary. of one of the deadliest U.S. school shootings, in which 19 children and two teachers were killed

in Texas. Presidential candidate Jorge Alvarez Mines describing the moment before a stage collapsed at a campaign rally in Mexico. At least nine people are dead and dozens injured after high winds tore apart the concert-like structure in the state of Nuevo Leon. July 4th, there's something significant happening that day, right? Ah yes, the surprise summer UK general election. After months of speculation, Prime Minister Rishi Sunak braved the pouring rain to announce that the vote would go ahead in just over six weeks. The king has granted this request and we will have a general election on the 4th of July. He almost had to shout to be heard over a loud speaker blasting out a pop song associated with the opposition Labour Party. Kamal Crimmons is in Dublin.

Carmel, Sunak will be hoping that the drop in British inflation will help turn around the Conservative Party's dismal polling numbers, right? Yes, so he said yesterday that brighter days were ahead after data showed that inflation had fallen close to 2%. That's the target. But price pressures are still there and the rate of inflation hasn't fallen as fast as the Bank of England had been expecting. So that's dashed hopes of a June rate cut, which would probably have put more wind in Sunak's sales. But he wants to tell voters that the economy has really turned a corner, has it? So he did inherit an economy in crisis. If you remember, markets went into a tailspin after the spending plans of his predecessor Liz Truss. So things have improved since then. Last year's mild recession is over. Unemployment is low. And wages have outpaced inflation in the last few

months. But prices are still way above where they were before the pandemic. And the tax burden is really high. It's actually at its highest level since World War II after public spending soar during the pandemic and to deal with the energy crisis in 2022. Plus, the government is stuck with very high levels of debt so that limits its room for maneuver. Bottom line, a weak economy awaits whoever wins on July 4th. And at the minute is looking like the opposition Labor Party will inherit that economy. They're being consistently ahead in the polls. What are the markets expecting from a Labor government. Yeah, so Labor has vowed not to raise the rates of income tax or corporation tax on company profits. So the city and the business community will like that. But it does plan

to charge value-added tax on private school fees and to tax the overseas income of British residents who claim non-domiciled status. So that might not go down too well in the city. And of course, the UK election campaign wasn't the only thing that was launched yesterday, right, Kamel? That's right. We had our debut episode of Reuters Econ World, which is our new weekly economic focused podcast out every Wednesday with an accompanying newsletter, and you can sign up for both on the description to today's Reuters World News pod. So look forward to that. Did you like it, Tara? I did. I for one loved it. Come for the deep dive into protectionism, stay for the farm animal noises. So sign up now.

Argentine laborer Pablo Vasquez was finishing a shift laying train track near Buenos Aires when the foreman brought the team members together to share some bad news. The workers were all being let go. The project had been put on ice as part of a crackdown on public-funded construction works under new libertarian president Javier Melle. Vasquez's story is not unique in Argentina since Malay came into power,

pledging to, quote, chainsaw through overspending by the state. Lucinda Elliott reported the story from Buenos Aires. Malay wants to slash spending to balance Argentina's accounts so that inflation starts to come down and real salaries are worth more. But in the meantime, people like Vasquez said that he couldn't afford his car insurance or a birthday cake for his son. So why is Malay doing this?

First, that following an extensive audit, many infrastructure projects were already stalled or had financing issues or cost had overrunned, and so they needed to be a reassessed. You can't just throw money at them. Second, that his priority is to lower inflation and stabilise the economy in order to help the economy recover. And the way to do that is not by pouring Argentine pesos back into projects, it's by getting rid of the deficit that Argentina has been running for years.

He then says specifically when it comes to construction that the private sector, not the state, can make up the shortfall and that is the way that infrastructure projects should be funded in these sort of public-private partnerships. The industry body refutes this saying that this is unrealistic. Very few countries in the world manage to see. secure financing for these sort of building works. That's almost all for your Thursday update.

But before we go, another construction tale. We take you to Japan and building work on a pretty low-tech solution to a high-priority issue for those living in the shadow of Mount Fuji. A 20-meter canvas barrier has been erected at a popular spot for photos. It's to obstruct views of the mountain with a lorce and convenience store beneath it. It had become a popular picture for tourists to take, but is right next to a busy road. Littering and traffic issues led authorities to take action. Cyril Marchant, a 45-year-old from France, was there just before the barrier went up.

I found out that it was the last day, so we didn't really plan to come here, but we say, yeah, we have to go there, we will be the last one to see it. And I am sure you could find Cyril's picture somewhere on Insta. We'll be back tomorrow with our daily headline show. To never miss an episode, subscribe on your favourite podcast player or download the Reuters app.