<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-820x461.jpeg" alt="" class="wp-image-515232" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Nurphoto | Nurphoto | Getty Images</figcaption></figure>



The cryptocurrency market plummeted in value on Sunday, as investors continued selling out of risky assets.



Led by a drop of 11% in bitcoin in the past 24 hours and a 21% plunge in ether, the overall value of cryptocurrencies sank by about $270 billion, according to CoinGecko data.



The selloff in the crypto market coincided with a broader slide in equities in Asia-Pacific markets. Japan’s Nikkei 225 dropped as much as 7%, extending losses that began last week, after the Bank of Japan announced it would hike its benchmark interest rate to the highest level in 16 years.



In the U.S. the Nasdaq slid 3.4% last week into correction territory, capping off the tech-heavy index’s worst three-week stretch since September 2022, when the market was in freefall. Amazon and Nvidia contributed to the declines.



Last week’s drop in stocks was tied in part to disappointing earnings, a weaker-than-expected jobs report, higher unemployment and a declining manufacturing sector. The U.S. Federal Reserve opted to hold its benchmark rate steady and didn’t promise a rate cut in September, which many market experts had baked into their forecast. Lower interest rates tend to correlate with better performance for risky assets.



Bitcoin’s price has reached its lowest level since February. The world’s largest cryptocurrency is trading at about $54,000. It’s still up almost 23% this year.



The price of ether, the native token underpinning the ethereum blockchain, fell to around $2,300 and has erased its gains for the year. Binance’s BNB token was down more than 15% and solana is trading 10% lower.



Investors are also looking out for new trade data from China and Taiwan this week, as well as central bank decisions in both India and Australia.



The latest crypto wipeout will be felt by a broader base of investors after the SEC this year approved new spot exchange-traded funds for bitcoin and ether. The ETFs have seen hundreds of millions of dollars flow into the coins. On Friday, CNBC reported that Morgan Stanley would soon allow its 15,000 financial advisors to pitch bitcoin ETFs to its clients, a first for Wall Street.

107212428-1679412407200-gettyimages-1243440706-raa-ethereum220922_npJS5

Crypto selloff wipes out $270 billion in value as bitcoin, ether plunge

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<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="884" height="442" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy.jpg" alt="" class="wp-image-514258" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy.jpg 884w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy-300x150.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy-820x410.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy-160x80.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy-768x384.jpg 768w" sizes="auto, (max-width: 884px) 100vw, 884px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Job growth in the U.S. slowed much more than expected during July and the unemployment rate ticked higher, fueling fears of a broader economic slowdown, the Labor Department reported Friday.



Nonfarm payrolls grew by just 114,000 for the month, down from the downwardly revised 179,000 in June and below the Dow Jones estimate for 185,000. The unemployment rate edged higher to 4.3%, its highest since October 2021.



Average hourly earnings, a closely watched inflation barometer, increased 0.2% for the month and 3.6% from a year ago. Both figures were below respective forecasts for 0.3% and 3.7%.



Stock market futures added to losses following the report while Treasury yields plunged.



The labor market had been a pillar of economic strength but has recently shown some trouble signs, and the July payrolls increase was well below the average of 215,000 over the past 12 months.



“Temperatures might be hot around the country, but there’s no summer heatwave for the job market,” said Becky Frankiewicz, president of the ManpowerGroup employment agency. “With across-the-board cooling, we have lost most of the gains we saw from the first quarter of the year.”



From a sector standpoint, health care again led in job creation, adding 55,000 to payrolls. Other notable gainers included construction (25,000), government (17,000), and transportation and warehousing (14,000). Leisure and hospitality, another leading gainer over the past few years, added 23,000.



The information services sector posted a loss of 20,000.



While the survey of establishments used for the headline payrolls number was discouraging, the household survey was even more so, with growth of just 67,000, while the ranks of the unemployed swelled by 352,000. The participation rate as a share of the working-age population edged higher to 62.7%.



The report adds to mixed signals recently about the economy and with financial markets on edge about how the Federal Reserve will respond.



Though markets on Wednesday cheered indications from the Fed that an interest rate cut could come as soon as September, that quickly turned to trepidation when economic data Thursday showed an unexpected jump in filings for unemployment benefits and a further weakening of the manufacturing sector.



That triggered the worst sell-off of the year on Wall Street and renewed fears that the Fed may be waiting too long to start cutting interest rates.&nbsp;Easing wage gains could help policymakers feel more confident that inflation is progressing back to their 2% goal.



The rise in the unemployment rate brings into play the so-called Sahm Rule, which states that the economy is in recession when the three-month average of the jobless level is half a percentage point higher than the 12-month low. In this case, the unemployment rate was 3.5% in July 2023 before it began its gradual ascent. The three-month unemployment rate average moved up to 4.13%.



“The latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession,” said Jeffrey Roach, chief economist at LPL Financial. “However, early warning signs suggest further weakness.”



Roach pointed out that the ranks of those working part-time for economic reasons jumped to 4.57 million, an increase of 346,000 to the highest level since June 2021.



An alternate measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons surged 0.4 percentage point to 7.8%, the highest since October 2021.



Long-term unemployment also ticked higher. Those reporting being out of work for 27 weeks or more totaled 1.54 million, the most since February 2022.



Wall Street had been bracing for modest gains from the July payrolls report, in part over concerns about growth but also from residual impacts from Hurricane Beryl. The storm badly damaged parts of Texas including the Houston metropolitan area.&nbsp;



Despite some anxiety over the state of economic growth, Fed Chair Jerome Powell on Wednesday expressed confidence about the “solid” economy and said easing inflation data is raising confidence that the central bank can cut soon.&nbsp;



Markets have fully priced in a rate cut of at least a quarter percentage point at each of the three remaining Fed meetings this year. Odds are rising that the Fed even may go beyond traditional quarter point reductions.



“While the labor market has remained remarkably resilient over these past two years of elevated interest rates, it’s important for the Federal Reserve to stay ahead of any further labor market slowing by proceeding with its expected September rate cut,” said Clark Bellin, chief investment officer at Bellwether Wealth.



Correction: The forecast for average hourly earnings was for an increase of 0.3% for the month. An earlier version misstated the percentage.

108015047-1722527876434-108015047-1722527728357-gettyimages-2159383304-jr029159_ghjrzhsy

U.S. jobs growth totals 114,000 in July, much less than expected, as unemployment rate rises to 4.3%

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751-820x462.jpeg" alt="" class="wp-image-514180" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/108013392-1722337017522-gettyimages-2021271708-20090101240221-99-73751.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The lights of Frankfurt am Main’s banking skyline glow in the last light of day. Boris Roessler | Picture Alliance | Getty Images</figcaption></figure>



LONDON — European stocks extended losses on Friday amid a global downturn, as weak U.S. economic data sparked fears of a recession.



The regional Stoxx 600 index was down 1.43% at 9:34 a.m. Technology stocks dropped 3.6%, as U.S. giant Intel fell more than 21% in premarket trade after reporting a big earnings miss.



Global markets have been pulled lower by a flurry of central bank action — with the Bank of England cutting interest rates for the first time since 2020, the U.S. Federal Reserve holding rates and the Bank of Japan raising them this week — along with shaky corporate earnings and data releases.



The Stoxx 600 on Thursday suffered its worst session since the middle of June, weighed down by financials as French bank Societe Generale downgraded its outlook, and the BOE voted to reduce rates. Financial services were down another 3.1% Friday.



The Thursday decision took the British central bank’s key interest rate from 5.25% to 5%, following a narrow 5-4 vote among policymakers. Markets had not been fully convinced that the BOE would take the step.



BOE Governor Andrew Bailey told CNBC that the direction for interest rates was “pretty clear,” but he would not comment on the extent or timing of further cuts and said services inflation and wage data would be watched closely. Market pricing suggests expectations for a rate hold in September, followed by another rate trim in November.



U.S. stock markets tumbled on Thursday, as jitters grew around the state of the economy. Weekly initial jobless claims came in higher than expected, while manufacturing data slowed.



More information will be added to the U.S. economic picture on Friday, as the U.S. Bureau of Labor Statistics releases the nonfarm payrolls report, while Europe is quiet on the data front.



Asia-Pacific markets logged steep losses Friday, with Japan’s benchmark indexes tanking as much as 5%.



Cedric Chehab, global head of country risk at BMI, told CNBC’s “Street Signs Asia” that a U.S.-led sell-off started a week and a half ago but escalated in the middle of this week. That was due to factors including the hawkish Bank of Japan imploding the popular yen carry trade in the short term, weak U.S. data and volatility in earnings.



“But one thing people aren’t remembering is that usually between the period of July and October there is a seasonal rise in volatility for equity markets, so this isn’t completely unexpected,” Chehab said.



“Especially after the fact that there was such a large rally in U.S. stocks and global stocks, the fact that earnings came in a bit mixed and valuations are high, but also monetary policy remains very tight in real terms,” he added.

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European markets lower amid global sell-off; technology, financial stocks tumble

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-820x547.jpeg" alt="" class="wp-image-513752" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Blurred buses pass the Bank of England in the City of London on 7th February 2024 in London, United Kingdom.  Mike Kemp | In Pictures | Getty Images</figcaption></figure>



LONDON — Several analysts expect the Bank of England to announce an interest rate cut on Thursday, but a lack of clear signaling from the central bank has shrouded the decision in uncertainty.



Markets were pricing in a 61% probability of a 25-basis-point reduction of its key rate at the August meeting as of 8:15 a.m. in London, despite U.K. inflation hitting the BOE’s 2% target for two straight months.



The Bank Rate has been held at a 16-year high of 5.25% since August 2023.



The BOE typically provides less forward guidance than some other central banks, but the Thursday decision is viewed as an especially close call, given the recent six-week period in which its communications were restricted because of the U.K. general election.



While recent breakdowns have seen two votes for a rate cut and seven for a hold, some of the BOE’s more hawkish policymakers have been vocal about their concerns over wage growth and sticky services inflation.



The decision will be announced at midday U.K. time and will be followed by a press conference. Thursday will also see the release of the quarterly Monetary Policy Report, which will contain economic growth and inflation projections.



This is a developing story&#8230;

107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010

Bank of England to make knife-edge call on interest rates as markets favor cut

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-820x547.jpg" alt="" class="wp-image-513690" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/08/GettyImages-2163954491-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">PARAGUAY &#8211; 2024/07/30: In this photo illustration, the Artificial intelligence (AI) text logo seen in the background with a silhouette hand holding a smartphone. (Photo Illustration by Jaque Silva/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



The European Union’s landmark artificial intelligence law officially enters into force Thursday — and it means tough changes for American technology giants.



The AI Act, a landmark rule that aims to govern the way companies develop, use and apply AI, was given final approval by EU member states, lawmakers, and the European Commission — the executive body of the EU — in May.



CNBC has run through all you need to know about the AI Act — and how it will affect the biggest global technology companies.



<h2 class="wp-block-heading" id="h-what-is-the-ai-act"><a></a>What is the AI Act?</h2>



The AI Act is a piece of EU legislation governing artificial intelligence. First proposed by the European Commission in 2020, the law aims to address the negative impacts of AI.



It will primarily target large U.S. technology companies, which are currently the primary builders and developers of the most advanced AI systems.



However, plenty other businesses will come under the scope of the rules — even non-tech firms.



The regulation sets out a comprehensive and harmonized regulatory framework for AI across the EU, applying a risk-based approach to regulating the technology.



Tanguy Van Overstraeten, head of law firm Linklaters’ technology, media and technology practice in Brussels, said the EU AI Act is “the first of its kind in the world.”



“It is likely to impact many businesses, especially those developing AI systems but also those deploying or merely using them in certain circumstances.”



The legislation applies a risk-based approach to regulating AI which means that different applications of the technology are regulated differently depending on the level of risk they pose to society.



For AI applications deemed to be “high-risk,” for example, strict obligations will be introduced under the AI Act. Such obligations include adequate risk assessment and mitigation systems, high-quality training datasets to minimize the risk of bias, routine logging of activity, and mandatory sharing of detailed documentation on models with authorities to assess compliance.



Examples of high-risk AI systems include autonomous vehicles, medical devices, loan decisioning systems, educational scoring, and remote biometric identification systems.



The law also imposes a blanket ban on any applications of AI deemed “unacceptable” in terms of their risk level.



Unacceptable-risk AI applications include “social scoring” systems that rank citizens based on aggregation and analysis of their data, predictive policing, and the use of emotional recognition technology in the workplace or schools.



<h2 class="wp-block-heading"><a></a>What does it mean for U.S. tech firms?</h2>



U.S. giants like Microsoft, Google, Amazon, Apple, and Meta have been aggressively partnering with and investing billions of dollars into companies they think can lead in artificial intelligence amid a global frenzy around the technology.



Cloud platforms such as Microsoft Azure, Amazon Web Services and Google Cloud are also key to supporting AI development, given the huge computing infrastructure needed to train and run AI models.



In this respect, Big Tech firms will undoubtedly be among the most heavily-targeted names under the new rules.



“The AI Act has implications that go far beyond the EU. It applies to any organisation with any operation or impact in the EU, which means the AI Act will likely apply to you no matter where you’re located,” Charlie Thompson, senior vice president of EMEA and LATAM for enterprise software firm Appian, told CNBC via email.



“This will bring much more scrutiny on tech giants when it comes to their operations in the EU market and their use of EU citizen data,” Thompson added



Meta has already restricted the availability of its AI model in Europe due to regulatory concerns — although this move wasn’t necessarily the due to the EU AI Act.



The Facebook owner earlier this month said it would not make its LLaMa models available in the EU, citing uncertainty over whether it complies with the EU’s General Data Protection Regulation, or GDPR.



The company was previously ordered to stop training its models on posts from Facebook and Instagram in the EU due to concerns it may violate GDPR.



<h2 class="wp-block-heading"><a></a>How is generative AI treated?</h2>



Generative AI is labelled in the EU AI Act as an example of “general-purpose” artificial intelligence.



This label refers to tools that are meant to be able to accomplish a broad range of tasks on a similar level — if not better than — a human.



General-purpose AI models include, but aren’t limited to, OpenAI’s GPT, Google’s Gemini, and Anthropic’s Claude.



For these systems, the AI Act imposes strict requirements such as respecting EU copyright law, issuing transparency disclosures on how the models are trained, and carrying out routine testing and adequate cybersecurity protections.



Not all AI models are treated equally, though. AI developers have said the EU needs to ensure open-source models — which are free to the public and can be used to build tailored AI applications — aren’t too strictly regulated.



Examples of open-source models include Meta’s LLaMa, Stability AI’s Stable Diffusion, and Mistral’s 7B.



The EU does set out some exceptions for open-source generative AI models.



But to qualify for exemption from the rules, open-source providers must make their parameters, including weights, model architecture and model usage, publicly available, and enable “access, usage, modification and distribution of the model.”



Open-source models that pose “systemic” risks will not count for exemption, according to the AI Act.



It’s “necessary to carefully assess when the rules trigger and the role of the stakeholders involved,” he [who said this?] said.



<h2 class="wp-block-heading"><a></a>What happens if a company breaches the rules?</h2>



Companies that breach the EU AI Act could be fined between 35 million euros ($41 million) or 7% of their global annual revenues — whichever amount is higher — to 7.5 million or 1.5% of global annual revenues.



The size of the penalties will depend on the infringement and size of the company fined.



That’s higher than the fines possible under the GDPR, Europe’s strict digital privacy law. Companies faces fines of up to 20 million euros or 4% of annual global turnover for GDPR breaches.



Oversight of all AI models that fall under the scope of the Act — including general-purpose AI systems — will fall under the European AI Office, a regulatory body established by the Commission in February 2024.



Jamil Jiva, global head of asset management at&nbsp;fintech firm Linedata, told CNBC the EU “understands that they need to hit offending companies with significant fines if they want regulations to have an impact.”



Similar to how GDPR demonstrated the way the EU could “flex their regulatory influence to mandate data privacy best practices” on a global level, with the AI Act, the bloc is again trying to replicate this, but for AI, Jiva added.



Still, it’s worth noting that even though the AI Act has finally entered into force, most of the provisions under the law won’t actually come into effect until at least 2026.



Restrictions on general-purpose systems won’t begin until 12 months after the AI Act’s entry into force.



Generative AI systems that are currently commercially available — like OpenAI’s ChatGPT and Google’s Gemini — are also granted a “transition period” of 36 months to get their systems into compliance.

In this photo illustration, the Artificial intelligence (AI

World’s first major AI law enters into force — here’s what it means for U.S. tech giants

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<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="929" height="523" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi.jpeg" alt="" class="wp-image-512927" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi.jpeg 929w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107430690-1718744144150-gettyimages-1661425000-101_0193_gi-768x432.jpeg 768w" sizes="auto, (max-width: 929px) 100vw, 929px" /><figcaption class="wp-element-caption">Aerial view of cityscape and skyscraper at sunset in Dubai Marina. Lu Shaoji | Moment | Getty Images</figcaption></figure>



The United Arab Emirates is on track to be the world’s top wealth magnet for the third year running, according to the Henley Private Wealth Migration Report.



At the same time, the U.K. – already the source of many of the UAE’s expatriates – is projected to see its millionaire population drop by 17% by 2028, according to Swiss bank UBS.



High-net worth individuals are in many cases voting with their feet, seeking greener pastures – or in the case of tax-free expat hubs like Dubai, sandier beaches – as costs and taxes rise in their home country. The trend is likely to accelerate in the wake of the landslide election victory for the U.K.’s Labour Party in June, according to some financiers.



“There are push and pull factors for this trend of millionaires opting to relocate to Dubai,” Karim Jetha, a longtime regional investor who relocated to the UAE from the U.K. during the pandemic, told CNBC.



“Push factors include the prospect of higher taxes under a new Labour government. For example, one of Labour’s campaign pledges was to levy VAT on private school tuition, which would raise the cost by 20%,” he said. “Pull factors include Dubai’s perception of being extremely safe and visa reforms that encourage migration.”



The UAE is set to see a record net inflow of 6,700 millionaires from around the world by the end of 2024, according to the Henley report, which was released in June. That’s nearly double the second-ranked country on the list, the U.S., which is expected to welcome a net inflow of 3,800 millionaires in the same time frame.&nbsp;



“With its zero income tax, golden visas, luxury lifestyle, and strategic location, the UAE has entrenched itself as the world’s number one destination for migrating millionaires,” the report said. The UAE’s golden visa is a long-term residence visa that allows foreign residents to live, work or study in the UAE.



While the millionaires migrating to the UAE most commonly come from India, the wider Middle East, Russia, and Africa, a larger number of Brits and Europeans are expected to move to the glitzy desert emirate as well, it added.&nbsp;



Development and reforms in the UAE’s “wealth management ecosystem” are to thank for much of this, said Sunita Singh-Dalal, partner at the Hourani Private Wealth &amp; Family Offices in Dubai.&nbsp;



“In less than five years, the UAE has introduced a robust regulatory framework that provides the wealthy with a range of innovative solutions to protect, preserve and enhance their wealth,” she said.&nbsp;



Factors such as modern infrastructure and a robust international school system, geographical connectivity, low crime, no income tax, the remote worker visa and a number of investment incentives also help attract the wealthy to Dubai.&nbsp;&nbsp;



Britain, by contrast, is set to see its millionaire population drop from 3,061,553 last year to 2,542,464 by 2028, the UBS Global Wealth Report, which came out in June, forecast. But it’s important to note that the U.K.’s large millionaire population – the third-highest in the world – includes many foreign residents from places like Russia, the Middle East and elsewhere.



Now that the U.K. government is phasing out its “non-dom” status – which allowed wealthy and often foreign residents not to pay British taxes on overseas income – much of that population will be looking to drop their U.K. residencies.



“The outflow already generated by the economic and political turmoil in Britain risks being accelerated by further unwelcome policy decisions,” Hannah White, director of the independent think tank the Institute for Government in London, commented in the Henley report.&nbsp;



She pointed to the 40% duty already in effect on estates above a threshold of £325,000 ($417,755), as well as the ending of the UK’s non-dom tax regime starting in 2025.&nbsp;



The current Labour government has also pledged to drop the exemption for a 20% VAT charge on Britain’s private school tuition fees, which would make education significantly more expensive for those sending their children to the elite institutions.&nbsp;



“Labour’s commitment to remove their exemption from 20% VAT is a further unwelcome development,” White said.&nbsp;

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Dubai set to welcome even more millionaires as wealthy individuals abandon the UK

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<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107427541-1718145095655-gettyimages-2157186260-img_9260_rfb2tx0a.jpeg" alt="" class="wp-image-512447" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107427541-1718145095655-gettyimages-2157186260-img_9260_rfb2tx0a.jpeg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107427541-1718145095655-gettyimages-2157186260-img_9260_rfb2tx0a-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107427541-1718145095655-gettyimages-2157186260-img_9260_rfb2tx0a-160x90.jpeg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



An important gauge for the Federal Reserve showed inflation eased slightly from a year ago in June, helping to open the way for a widely anticipated September interest rate cut.



The personal consumption expenditures price index increased 0.1% on the month and was up 2.5% from a year ago, in line with Dow Jones estimates, the Commerce Department reported Friday. The year-over-year gain in May was 2.6%, while the monthly measure was unchanged.



Fed officials use the PCE measure as their main baseline to gauge inflation, which continues to run above the central bank’s 2% long-range target.



Core inflation, which excludes food and energy, showed a monthly increase of 0.2% and 2.6% on the year, both also in line with expectations. Policymakers focus even more on core as a better gauge of longer-run trends as gas and groceries costs tend to fluctuate more than other items.



Stock market futures indicated a positive open on Wall Street following the release while Treasury yields moved lower. Futures markets price in a more aggressive path for Fed interest rate cuts.



“A two-word summary of the report is, ‘good enough,’” said Robert Frick, corporate economist with Navy Federal Credit Union. “Spending is good enough to maintain the expansion, and income is good enough to maintain spending, and the level of PCE inflation is good enough to make the decision to cut rates easy for the Fed.”



Goods prices fell 0.2% on the month while services increased 0.2%. Housing-related prices in June rose 0.3%, a slight deceleration from the 0.4% increase in each of the last three months and the smallest monthly gain going back at least to January 2023.



The report also indicated that personal income rose just 0.2%, below the 0.4% estimate. Spending increased 0.3%, meeting the forecast.



As spending held relatively strong, the savings rate decreased to 3.4%, hitting its lowest level since November 2022.



The report comes with markets paying close attention to which way the Fed is headed on monetary policy.



There’s little expectation that the rate-setting Federal Open Market Committee will make any moves at its policy meeting next Tuesday and Wednesday. However, market pricing is pointing strongly to a rate cut at the September meeting, which would be the first reduction since the early days of the Covid pandemic.



“Overall, it’s been a good week for the Fed. The economy appears to be on solid ground, and PCE inflation essentially remained steady,” said Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley. “But a rate cut next week remains a longshot. And while there’s plenty of time for the economic picture to change before the September FOMC meeting, the numbers have been trending in the Fed’s direction.”



As inflation rose to its highest level in more than 40 years in mid-2022, the Fed embarked on a series of aggressive hikes that took its benchmark borrowing rate to its highest level in some 23 years. However, the Fed has been on pause for the past year as it evaluates fluctuating data that earlier this year showed a resurgence in inflation but lately has displayed a gradual cooling that has many policymakers discussing the likelihood of at least one cut this year.



Futures markets have priced in about a 90% chance of a September reduction followed by cuts at both the November and December FOMC meetings, according to the CME Group’s FedWatch measure.



Fed officials, though, have been cautious in their remarks and have stressed that there is no set policy path, with data guiding the way.

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