Our editors give us a breakdown of this week’s biggest news stories
United Kingdom: Ross Alexander Hutton
Even with a third consecutive month of economic growth, the U.K. has only made up half of GDP lost since the start of the coronavirus crisis – foreshadowing a prolonged recovery. The return of Brexit to the national agenda, coupled with the alarming developments in the U.K.’s coronavirus pandemic, has cast doubt on a full recovery any time soon.
For weeks, the warning lights have been flashing brighter and brighter as the U.K. relaxed restrictions on social life but this week marks a significant milestone in Britain’s pandemic. Coronavirus infections have begun surging across the country as the latest R-number estimation is between 1 and 1.2, confirming fears of exponential growth restarting. Hence, a WHO special envoy cautioned of a ‘second wave coming’ and the deputy CMO warned that “people have relaxed too much”. In response, the U.K. Government announced a clearer, more simplified message of a ‘rule of six’ which limits gatherings to 5 people (apart from a few exceptions) in a bid to slam the brakes on to prevent another national lockdown coming into force.
Brexit is back. And back with a (diplomatic) bang. After weeks of stalemate, the British Government provocatively published its Internal Market Bill which would overrule parts of the Withdrawal Agreement signed by the Johnson Administration last year. Although the Bill is effectively the ‘nuclear option’ as it would break international law as well as receiving a furious response from Brussels threatening legal action and offering an ultimatum to the U.K. to back down or risk no deal, the trade talks are still continuing. It may seem that the chances of a deal are imperilled but it has been done before.
The first major post-Brexit trade agreement struck between the U.K. and Japan may well be both symbolic and historic as it covers 99% of U.K. exports but officials confirmed the deal is likely to boost the economy by a mere 0.07%.
Europe: Peter Hourston
EU Finance Ministers met in Berlin this week where they delayed any decision on when to (re)impose or reform the Union’s fiscal rules. Limits on national budget deficits were suspended by the European Commission earlier this year due to the increases in public spending which came with Covid-19 national lockdowns across the continent. It was the first such in-person meeting since the onset of the crisis and also came as the EU finalised the legislation behind its €750bn recovery plan. Also on the agenda were attempts to reinvigorate the Banking Union and Capital Markets Union proposals to strengthen Eurozone financial resilience and EU taxation. The issue of tax has become divisive as the Commission looks to pay off the hundreds of billions of euros in debt it will amass via the recovery fund.
The European Central Bank decided to keep its main deposit rate at minus 0.5 per cent and confirmed its multibillion-euro bond purchases would continue “as long as necessary to reinforce the accommodative impact of its policy rates”. ECB President Christine Lagarde also added that the Bank would closely monitor developments in the exchange rate with “regard to its implications for the medium-term inflation outlook” with the Euro rising ten per cent against the dollar since the start of March. Lagarde also surprised analysts by announcing that the ECB had raised its forecast for inflation next year as well as its growth forecast for this year to one per cent and five per cent respectively. The Chief Economist at G+ Economics suggested that “Having signalled that the strength of the euro does not justify further intervention, the ECB has opened the door to a further rise in the euro towards $1.20”. However, this is still significantly below the Euro’s all time high of $1.55 and the single currency is not so strong against a wider basket of currencies.
The hospital in Berlin where Alexei Navalny is being treated following a confirmed poisoning with the nerve agent Novichok has said that the Russian opposition activist has been “removed from his medically-induced coma and was being weaned off mechanical ventilation”. International pressure mounted on Russian President Vladimir Putin this week on Moscow’s knowledge or participation in the attack. German Foreign Minister Heiko Maas warned that if the Russians continued to refuse to cooperate with international inquiries then Germany would contemplate imposing coordinated sanctions with allies. Moreover, in a departure from traditional German policy Berlin also suggested that the NordStream2 gas pipeline from Russia to Germany under the Baltic Sea may also be in doubt over the atrocity. Chancellor Angela Merkel had previously suggested that the two issues should be “decoupled”.
Asia Pacific: Satyajit Mohanan
The UK and Japan struck Britain’s first ever post- Brexit ‘historic’ trade deal. This trade deal is expected to increase trade by 15 billion pounds a year. The Japanese foreign minister Toshimitsu Motegi and UK trade secretary Liz Truss confirmed the agreement in principle via a teleconference on Friday. The deal was reached after Japan allowed access towards export quotas for cheese and other products that have not been used by the EU to the UK. Though the new deal replicated most of the existing agreements between Japan and the EU, it now paves way for British financial services companies and Japanese game makers such as Sony to operate from offshore servers. The trade deal is seen as an important bridge to the UK joining the Trans-Pacific Partnership (TPP), which includes countries such as Japan, Vietnam, Singapore ,Canada etc. This historic deal comes at a time when Brussels threatens legal action over the UK’s internal market bill and parallel trade talks with the Trump administration in the US have been stalled.
India and China have agreed to “quickly disengage” its troops on the Himalayan border to reduce the risk of further conflict. India’s foreign minister S. Jaishankar and his Chinese counterpart Wang Yi reached the agreement in Moscow. This comes days after the two countries accused each other of firing shots along the Himalayan frontier, a first in 45 years. While this appeared to be the first step towards de-escalation, a proportionate number of Chinese and Indian troops armed with heavy weaponry remain in their disputed border zone.
Afghanistan calls for a ceasefire , as the first ever peace talks between the Taliban and the Afghan government began in Qatar on Saturday. The Taliban did not mention a truce and insisted that Afghanistan should be under Islamic law. These are the first ever talks between the Taliban and the Afghan government. The United States reached its own peace deal with the Taliban in February. The Afghan government and its people are hopeful that these talks would reduce the violence which has approximately killed 12,000 civilians and 45,000 security forces and bring peace to their homeland.
Africa & Middle East: Camille Capelle
Bahrain has followed in the footsteps of the UAE by officially normalising relations with Israel. The move received a loud response from Palestinians, who took to the streets in protest and burnt pictures of those leaders which they felt have betrayed them. While the diplomatic action was primarily motivated by shared fears over Iran, it also represents a fracture in “Arab solidarity”, on which Palestinians could previously rely for support.
Statistics show that South Africa’s economy suffered a huge loss in the second quarter of this year. As a result of further lockdown measures and the subsequent slowing of economic production, the South African economy contracted by 51% between April and June. While South Africa may be the most industrialised country on the continent, it is no stranger to economic recession and struggle: before this quarter, unemployment has already reached 30.1%.
In Sudan, record flooding is devastating the country. The heavy rainfall which causes the Nile to flood has already killed 100 people and destroyed the homes of half a million people. Adding to the country’s problems are issues of displacement and homelessness. While flooding is not a new problem in Sudan, climate change is causing it to reach more extreme levels and cause more devastation than before. A three-month state of emergency has been declared by the government as foreign aid arrives to help the country deal with this natural disaster.
North America: Amelia Brown
California, Washington, and Oregon are battling historic wildfires again this week, enduring devastating land loss, at least17 fatalities, and hazardous air. One man has been charged with arson in relation to a part of one of the Oregon fires, while a gender reveal party is responsible for sparking one of the California ones. Smoke from the fires have turned the sky dark and orange, and have travelled over the border to southern British Columbia, resulting in Vancouver being ranked the worst air quality in the world only behind Portland. The glowing sky provides a fitting background though for the growing distress of the country, as covid cases saw a sharp rise as colleges went back in session. Over 1,100 colleges across the country contributed over 88,000 cases, and more and more in-person teaching has been moved on line, or campuses shut all together.
The Mexican government’s economic forecast from their 2021 finance package seems out of step with their central bank’s latest finding: The 2021 budget assumes an 8 percent economic shrink this year, and a 4.6 percent growth next year, while the central bank has seen a 9.9 percent fall this year, and predicts a 2.95 percent growth next year. The country has been one of the most ravaged by corona, after the president continually cut spending to the emergency and refuses to borrow money to fund public health measures still.
Canadian provinces again have seen major differences in their recent luck. Ontario has had two consecutive days of over 200 new cases reported, while as of yesterday Nova Scotia has had no new cases this week, and only one active case in the community still.
South America: Annie Smith
Colombia has seen protests across the country this week, after the death of a Colombian man who was repeatedly shocked with a stun gun by police when he was restrained. The riots and protests have led to at least seven deaths and more than 150 wounded, according to the country’s defence minister. The man, Javier Humberto Ordóñez, was a 46-year-old lawyer and father of two, who became involved in a police altercation after allegedly violating coronavirus social distancing rules. In a video posted by his friends on social media, he can be heard shouting, “please, no more, I’m suffocating,” as he was restained by two police officers with their knees on his back, repeatedly tasing him. Protestors destroyed the police station of the officers on Wednesday afternoon in Bogota, leading Mayor of Bogota Claudia Lopez to call the police brutality “unacceptable” while condemning the deadly violence in the city that has resulted from riots and protests.
Peru’s Congress has began impeachment proceedings for President Martin Vizcarra for “moral incapacity”, after allegations that he tried to obstruct an investigation into nearly $50,000 in government contracts being given to an underground singer. The motion on Friday was approved by 65 votes, with 36 against and 24 abstentions, though 87 votes will be needed to remove him from office. President Vizcarra has been in power since 2018, lacking a party, and has said he would not resign. He previously faced down an attempt to impeach him for incapacity last September when he dissolved Congress.
Toots Hibbert, frontman of the well-known Jamacian reggae band, Toots and the Maytals, has died at the age of 77. His family said in a statement on Friday, “It is with the heaviest of hearts to announce that Frederick Nathaniel ‘Toots’ Hibbert passed away peacefully tonight, surrounded by his family at the University Hospital of the West Indies in Kingston, Jamaica.” The cause of death was not disclosed, but Hibbert was hospitalised last month after showing coronavirus symptoms, leading him to be placed in a medically-induced coma. Hibbert helped bring the term “reggae” to international spotlight with his popular song, “Do the Reggay”.
Business: Tom Woods
The US budget deficit has soared to a record high of over $3 trillion amidst mass government spending to tackle issues related to the ongoing pandemic. While the federal government has only taken $3 trillion in taxes, it has also already spent over $6 trillion in the first 11 months of the financial year. The Congressional Budget Office has now predicted that the deficit for the full year will be around $3.3 trillion, taking total US debt up to an enormous $26 trillion, greater than the country’s GDP has ever been. This ongoing debt crisis has caused rifts in Washington, with conservatives generally backing further bills with minimal public spending and Democrats supporting measures to provide further aid to help the American public wrestle with the impact of the coronavirus pandemic. This conflict was epitomised by two recent contrasting aid bills proposed by either faction, with the Republican bill arguing for $300 billion in spending and the Democratic one $3 trillion.
The Welsh government has announced its ambition for around 30% of the workforce to continue working from home once lockdown eases. This is in opposition to the Westminster government’s position, which is currently advocating for people to return to work when possible. The Welsh government has supported its position by arguing that the move would be supported by the general population, reduce pollution and congestion, and enhance people’s work-life balance. Remote working has emerged as popular in numerous studies, with some suggesting that people felt more productive under such a system and another indicating that 90% of the population would like to continue it in some form.
Theory: Cassi Ainsworth-Grace
A new paper by Obie Porteous, Middlebury Assistant Professor of Economics, has found that despite an increasing number of peer-reviewed publications on the 54 countries of Africa, the spread of research is significantly uneven. Out of the 27,000 economics journal articles on Africa, about 45% of published articles are about the economies of five African countries: Kenya, South Africa, Ghana, Uganda and Malawi. These countries collectively account for only 16% of the population on the continent. A comparison account of seven countries primarily in Central Africa, Sudan, the Democratic Republic of the Congo, Angola, Somalia, Guinea, Chad and South Sudan, likewise with a combined population of 16% accounted for only 3.5% of all articles.
The 21st century has been predicted to be the ‘African Century’ . These first two decades of this century has indeed seen an incredible increase in the number of economic publications about the African continent. The number of peer-reviewed articles in economics journals in the 2010s was five times that of the 1990s. However, it is clear that there is still very much a need for discussion of a broader sweep of the economies of Africa.