Economy

Bank of England unveils another big stimulus for UK economy – CP24 Toronto's Breaking News

Published

4 years ago

June 18, 2020

LONDON — The Bank of England has unveiled another big stimulus for the U.K. economy as it tries to limit the scale of the coronavirus recession, which has already resulted in 18 years of growth wiped out in a matter of just two months.

In a statement Thursday, the bank’s policy making panel said it was increasing its government bond-buying program by a further 100 billion pounds ($125 billion) despite signs that the second-quarter fall in economic output will be less severe than it had thought last month. The bank warned then that the U.K. economy could shrink by 25% between April and June, from the previous three-month period.

There are two motivations behind the bank’s purchase of government bonds from investors, such as pension funds and other investors — to keep a lid on interest rates for such things as home mortgages and loans, and to keep money flowing through the financial system in a time of acute stress.

The bank’s monetary policy committee opted against cutting its main interest rate, even into negative territory — its main interest rate was left at 0.1%, the lowest in the bank’s 326-year history.

The meeting took place in the wake of figures showing that the U.K. economy shrank by 20.4% in April alone, the first full month that the country was in lockdown. In March, as the coronavirus restrictions rolled out, it contracted a further 5.8%.

The committee said “evidence from more timely indicators suggests that GDP started to recover thereafter,” particularly in consumer-facing sectors as well as the housing market.

However, it also warned that unemployment is likely to rise sharply in the coming months as a government scheme to protect jobs comes to an end.

It also said that the unprecedented situation means that the outlook for the U.K. and global economies is “unusually uncertain” and will depend “critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors.”

Although some of Britain’s lockdown restrictions are easing, including Monday’s reopening of shops selling nonessential items such as books, sneakers and toys, the U.K. economy is set for one of its deepest recessions ever and a consequent big spike in unemployment.

In addition to the bank’s support measures, the British government is also readying a big fiscal package for this summer to help the economy, potentially involving a sales tax cut and funding big transport and green projects.

It has already implemented an array of hugely expensive support programs to deal with the initial economic fallout of the coronavirus. The Job Retention Scheme, for example, is widely credited with limiting the number of people losing their jobs. But it is set to end this autumn, and there are worries that firms will start cutting jobs at an accelerating rate through the summer.

Britain has the worst coronavirus death toll in Europe, at over 42,000, and the Conservative government has been sharply criticized for what many see as its slow, muddled response to fighting the pandemic.

Britain also faces economic risks from its historic decision to leave the European Union, which it did in January. It is in a transition period now with the 27-nation bloc until the end of the year, when it could face trade challenges.

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

2 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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