Our editors give us a breakdown of this week’s biggest news stories
United Kingdom: Ross Alexander Hutton
In his highly-anticipated spending review speech to the Commons, the Chancellor acknowledged that Britain’s “economic emergency has only just begun”. From the dispatch box, Sunak revealed staggering economic forecasts generated by the Office of Budget Responsibility, which confirmed widespread fears of profound damage to the health of the U.K.’s pandemic-stricken economy. Not only is the U.K. economy set to contract by 11.3% this year – the worst contraction in 300 years – but an economic recovery to its pre-Covid size is expected to take until the end of 2022. Further to this, the OBR also predicts that if the U.K. were to revert to trading on WTO rules, then the introduction of new tariffs will likely lead to a 5% drop in the value of the pound and 1.5% rise in consumer prices – thus, the pressure on the trade negotiations to reach an agreement could not be greater.
In response to this unprecedented economic catastrophe, U.K. government borrowing is set to soar to £394bn this financial year to help pay for economic relief measures. Although the Chancellor admitted that “this situation is clearly unsustainable over the medium term”, those looking for decisions addressing the public finances will have been sorely disappointed. While future tax rises seem inevitable, as the Prime Minister has often rejected any possibility for the kind of government spending squeeze seen during the Cameron-Osborne era, the Treasury’s focus is squarely on the immediate term. Those fiscal decisions will have to wait but, for now, the extent of the consequences of the pandemic have become alarmingly clear.
Europe: Peter Hourston
French President Emmanuel Macron said he felt “shame” at footage of a black music producer being beaten by three police officers on the streets of Paris and that such violence was “unacceptable”. The victim, Michel Zecler, was repeatedly punched by police using trucheneons in the 17th arrondissement of the French capital city. According to the officers concerned, who have since been suspended by French Interior Minister Gérald Darmanin, Zecler drew himself to police attention for not wearing a mask. Zecler, however, alleges that he was called the N word by police. The incident has led to mass protests across France, in demonstrations which replicate this summer’s Black Lives Matter movement in the United States, with police firing tear gas at protestors. The street protests have come at an unfortunate timing for Macron’s government which is introducing a new security bill in parliament which would make it harder to film police activity. Prime Minister Jean Castex announced on Friday that the French Parliament would have the final say on the text of the law, after objections from the Heads of the Senate and National Assembly.
Belarussian President Alexander Lukashenko has suggested he would be willing to stand-down after a 26-year long rule for the first time following major allegations of voter fraud in August’s Elections. The outcome of the elections was strongly disputed by opposition parties and has led to months of street protests. The repressive state crackdown led to Western sanctions. The authoritarian leader was reported as saying “with a new constitution, I will no longer work with you as president.” However, Lukashenko has made vague comments like this before without any change in leadership.
The Chief Economist of the European Central Bank, Philip Lane, warned at the possibility of “adverse real-financial feedback loop” as pandemic-induced trauma in financial markets would still lead to negative consequences in the real economy (and vice versa) into 2021. In particular, Lune said he was concerned at recent evidence which suggests that banks are tightening their credit standards in response to fears at the creditworthiness of borrowers. There are already indications that a reduction of investment projects by firms in the Eurozone is negatively impacting credit demand. Calling for action from European governments, Lune suggested that a powerful fiscal response was the best way to deal with the crisis.
Asia Pacific: Satyajit Mohanan
Chinese President Xi Jinping has congratulated US President-elect Joe Biden for his election victory earlier this month and expressed hope for “win-win cooperation”. Relations between China and the US are at their worst in decades with disputes ranging from technology and trade to Hong Kong and the coronavirus pandemic. The Trump administration has unleashed a host of sanctions against Beijing.
India’s economy contracted 7.5 per cent year-on-year in the quarter ending September, taking it into a technical recession as strict lockdown measures to deal with the coronavirus pandemic continued to weigh on output. A recession is defined as two consecutive quarters of negative growth. India’s output contracted by a record 24 per cent year-on-year in the April to June quarter.
Chinese venture capital investors are shifting their focus to Indonesia after India closed its doors to them, helping to create a 55 per cent surge in tech investment in south-east Asia’s biggest economy in the first half of 2020. Shunwei Capital, launched by the founders of mobile phone maker Xiaomi, and BAce Capital, which is backed by the fintech giant Ant Group, both said they were pivoting from India to Indonesia.
Africa & Middle East: Camille Capelle
The assassination of the Iranian nuclear scientist, Mohsen Fakhrizadeh, this Friday sent new waves of tension and hostility through the region. Although no one has claimed responsibility for the killing, nations were quick to point fingers as Iran accuses Israel. While Israel has denied any knowledge of the killing or who was behind it, Iranian retaliation is sure to be fast and harsh for what they perceive to be an act of terrorism. Countries like Qatar and Turkey have already spoken out to condemn the strategic assassination, while the West encourages restraint and a calm resolution of the issue. It is possible that the event will have jeopardized any improvement in US-Iranian relations that people had hoped for under Joe Biden.
After weeks of fighting, the Ethiopian government declared a military victory in Tigray against the local People’s Liberation Front (TPLF). Nevertheless, rockets continue to be fired from the region, also targeting cities in Eritrea. The group justifies this with accusations of Eritrean military support for the Ethiopian government, which both sides deny. The general ethnic tensions with Eritreans in the region are bound to fuel the attacks and as increasing evidence surfaces for the murder of civilians despite the communications block.
North America: Amelia Brown
The Pennsylvania Supreme Court dismissed one of the Republican lawsuits filed in the state that was seeking to overturn Joe Biden’s victory of the 20 electoral votes. This lawsuit, which was unanimously overturned, wanted to invalidate the almost 7 million mail-in ballots cast in the state. The lawsuit loss comes after another case in Pennsylvania to hold off the certification of Biden as the state’s winner was shut down last week. Pennsylvania now joins other contested states Michigan and Nevada as having certified Joe Biden as the winner of their electoral votes.
In the US Supreme Court though a closer ruling was called. In a 5-4 decision, the court sided with two religious institutions in New York City who claimed the restrictions put in place by Governor Cuomo to prevent the spread of covid-19 were too strict. All the lower courts had sided with Cuomo, who said that the Supreme Court’s ruling was “making a statement that it’s a different court,” referring to the addition of Trump’s third nominee Amy Coney Barrett, who took Ruth Bader Ginsburg’s spot.
Canadians are feeling left behind, as the US, UK, and some other European allies have announced dates and plans for the coronavirus vaccine distribution, while the Canadian government has been vague. While the government says the optimistic number of people vaccinated is 3 million in the first quarter of 2021, the deputy chief public health minister warned that there will be logistical issues. Prime Minister Justin Trudeau pointed to the country’s lack of domestic vaccine manufacturing capabilities as one major issue. The country has deals for 358 million doses from 7 different companies, but only one or two of those vaccines have so far been successful in phase 3 trials and would be ready to be approved in the coming months.
South America: Annie Smith
Argentina’s President, Alberto Fernandez declared three days of national mourning on Wednesday, following the death of legendary football player Diego Maradona. Remembered as a football legend, Maradona died on Wednesday at 60 years old, after suffering a heart attack. He is known for leading Argentina to World Cup victory in 1986, and in 2001 he was named by FIFA to be one of the two greatest players in football history, alongside Pele.
Brazilian President Jair Bolsonaro has said this week he would not take a coronavirus vaccine, and further noted that Congress was unlikely to require Brazilians to take a vaccine. Brazil has the second-highest number of coronavirus deaths in the world, and Bolsonaro himself was diagnosed with COVID-19 in July. He has continually expressed scepticism about the effectiveness of mask-wearing and promoted anti-malaria drug hydroxychloroquine as a treatment for the virus, despite the World Health Organization saying the drug did not reduce death rates in people being treated for COVID-19.
Science & Technology: Paula Plechschmidt
Big Tech has been involved in finance for a long time. Functions such as apple pay have become incredibly commonplace and a vital part of modern living. Google is an example where this never fully took off, with Google Pay is only being used in approximately 4% of all android devices. In order to change this, they have announced a new style of mobile bank account. Starting in 2020 users will be able to open bank accounts directly through Google Pay, starting with banks such as Citi and moving to a range of other banks and credit unions in the US as well. One challenge Google might be facing in this initiative is the general distrust of Big Tech, with people wondering whether they have sufficient trust in this company to allow them to manage their finances.
India has been on a streak of banning Chinese apps in India. Only this week another 43 Chinese apps were banned. This “digital strike” stems from the June border clash between the two that left 21 Indian soldiers dead. So far, the action has been successful with India hitting Chinese tech giants such as Alibaba, Tencent and ByteDance. However, smaller apps have also been targeted, putting many in danger of bankruptcy.
Business: Tom Woods
The Arcadia retail empire has found itself in hot water once again as it struggles for survival. Owned by disgraced business tycoon Philip Green, the conglomerate includes renowned firms such as Topshop, Burton and Dorothy Perkins. The most likely fate for the firm seems to be it fracturing and selling off its component parts. According to Lord Rose, former CEO, the firm has been “caught out” both by the changing retail scene and COVID-19 pandemic, with some of its firms doing better than others. The result could be that certain parts of the conglomerate are quickly snapped up by eager buyers while others remain untouched. For instance, while Topshop is generally deemed a valuable brand with a potentially bright future, buyers are less eager on others such as Wallis Evans or Burton. Another controversial magnate, Mike Ashley, has been tipped as a potential buyer of many of the firms and is rumoured to have already offered Arcadia a £50 million loan. If action is not quickly taken, administrators could be appointed on Monday, putting up to 13,000 jobs at risk.
Bitcoin has endured an interesting week, having suddenly dropped by around 15% before quickly rebounding. As we reported last week, bitcoin has recently enjoyed a rally, increasing by almost 400% from March to November this year. However, on Thursday this looked as though it could suddenly end. The price of a single bitcoin dropped from around £14,000 to around £12,000 in around 20 hours, leaving doubters delighted. However, unlike the infamous 2017 bubble, the dip did not last, and since then the currency has regained most of the ground it lost, currently sitting at around £13,600. Commentators are predictably split over what will happen next, but what this instance has demonstrated once again is the risk involved in trading cryptocurrencies, given the regularity of such steep drops.
Theory: Cassi Ainsworth-Grace
Misinformation about the Covid-19 pandemic has led to a revival of the ‘Great Reset’ conspiracy theory. This theory essentially claims that our world’s leaders have planned this pandemic in order to take control of the global economy, and to implement ‘damaging’ left-wing socialist and environmental policies. The Great Rese’ conspiracy finds its start with a real-life plan created by the World Economic Forum titled ‘The Great Reset’, which simply details how the world’s economies can recover from the damages wrought by Covid-19 this year. However, this has been misinterpreted as malevolent by conspiracy groups who inhabit social media and other fringe internet sites. Fuelling the flame has been the trending video of Canadian Prime Minister Justin Trudeau speaking of an opportunity to “reset” following the pandemic. The BBC has written an article debunking this theory, and a number of others. Fear and chaos are rife, and people are latching on to unfounded conspiracies to try and make sense of it all.