(Bloomberg) — Boris Johnson has launched the biggest gamble of his premiership, announcing that July will see a dramatic lifting of the lockdown measures imposed in England in March. The goal is to save the economy. The risk is that it causes a second spike in coronavirus infections.
At a news conference on Tuesday evening — the final such daily event, Johnson said, in a signal that he wants Britons to stop feeling that they’re living through a crisis — the prime minister was clear that he took full responsibility for the decision. The scientists flanking him were were clear about the dangers, and warned that the virus will be with the U.K. into 2021.
The problem faced by Johnson is balancing the potential harm of increased virus spread with the damage being done to Britain’s economy every day of the lockdown. Earlier Tuesday, government figures showed that the two main work-support programs had so far cost more than 30 billion pounds ($38 billion). Ministers worry about how many of the 9.2 million jobs being supported will disappear once the programs end.
Johnson’s message to the public was clear: Get out of your homes and get spending. “It’s great to see people out shopping again,” he said. “I can’t wait to go to a pub or a restaurant. People need to enjoy themselves.”
Johnson Re-Opens England’s Pubs But Scientists Warn of Long Haul
At the end of his answer, he inserted a crucial caveat: “I also want to see everybody being careful and following the guidance.” And he repeated that if the virus began to spread again, he would reimpose restrictions.
But his emphasis was clear. Pubs, restaurants and hotels can reopen from July 4. To give their businesses a chance of working, the advice to people to keep a 2 meter distance from others has been changed: The distance is now 1 meter, so long as other mitigating measures are in place.
Scotland, Wales and Northern Ireland will make their own decisions about how and when to ease the lockdown.
This means that for all Johnson’s drive to get life back to normal, it will still feel very different in July. Pubs will have to introduce table service and ordered queues, to replace the usual crowd at the bar trying to catch the landlord’s eye. Churches can open, but without singing. Weddings can go ahead, but with a maximum of 30 guests.
In early March, the scientists advising the government warned that to lock down too early would risk a frustrated public starting to simply ignore it. Now the fear is in the opposite direction, that consumers will be too nervous to come out and spend.
A poll from YouGov in mid-June found only 26% of people saying they’d be comfortable visiting a pub — though twice that said they’d be happy to sit in the garden of one. In an effort to boost confidence, ministers spent Tuesday tweeting about their enthusiasm to get into a pub again — even Chancellor of the Exchequer Rishi Sunak, who doesn’t drink.
But if the politicians were sending one signal, the scientists were sending a quite different one. Chief Medical Officer Chris Whitty, standing alongside Johnson, warned: “If people hear a distorted version of what’s been said that says ‘this is all fine now, it’s gone away’ and start to behave in ways that they normally would have before the virus, then we will get an uptick, for sure.”
Johnson’s calculation is that the U.K. is better-placed than it was in March to face such a rise. Its testing capacity is greatly expanded, it has many more ventilators, and the treatment of Covid-19 is better understood.
But despite Johnson’s attempt to argue that the country was proceeding on the course to ease the lockdown that he set out in May, things have not been going entirely to plan. In the last seven days, an average 121 people died from the disease a day, and the average number of infections detected was 1,147. The mobile phone app that was supposed to sit at the heart of the contact-tracing program is nowhere in sight.
And also on Tuesday, the Office for National Statistics reported that between Jan. 1 and June 12, there were 54,402 more deaths in England and Wales than average, another sign that the U.K. has been the hardest-hit country in Europe.
While Johnson was trying to get the country to move on from the virus, there was a reminder that elsewhere too, politics can be difficult. Despite having a parliamentary majority of 80, the prime minister suffered his first defeat, on a vote about disciplinary procedures for members of the House of Commons, after 45 Conservatives voted against the party whip, including his predecessor Theresa May and Treasury Minister Penny Mordaunt. And on Wednesday, the opposition Labour Party is calling a debate on Housing Secretary Robert Jenrick’s handling of a planning application made by a Tory donor.
©2020 Bloomberg L.P.
Ontario Introduces Legislation to Protect Public Health as Economy Reopens – Government of Ontario News
Proposed Bill Would Provide Flexibility to Address the Ongoing Threat of COVID-19
TORONTO — Today, the Ontario government introduced proposed legislation that, if passed, would give the province the necessary flexibility to address the ongoing risks and effects of the COVID-19 outbreak. The proposed legislation is part of the government’s plan for the continued safe and gradual reopening of the province once the declaration of emergency ends.
Details about the proposed legislation were provided today by Premier Doug Ford, Christine Elliott, Deputy Premier and Minister of Health, and Solicitor General Sylvia Jones.
“If passed, the proposed legislation would allow us to chart a responsible path to economic reopening and recovery without putting all the progress we’ve made in fighting this virus at risk,” said Premier Ford. “Even as we continue certain emergency orders under the proposed legislation to protect public health, we will always be a government accountable to the people of Ontario. That’s why I will ensure ongoing updates are provided and that a report is tabled within four months of the anniversary of this proposed Act coming into force.”
“While the declaration of emergency may come to an end shortly, the risk posed by COVID-19 is likely to be with us for some time to come,” said Solicitor General Sylvia Jones. “This new legislation would provide the government with the necessary flexibility to ensure select tools remain in place to protect vulnerable populations, such as seniors, and respond to this deadly virus.”
The Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 would, if passed, ensure important measures remain in place to address the threat of COVID-19 once the provincial declaration of emergency has ended. Specifically, the legislation would:
- Continue emergency orders in effect under the Emergency Management and Civil Protection Act (EMCPA) under the new legislation for an initial 30 days.
- Allow the Lieutenant Governor in Council to further extend these orders for up to 30 days at a time, as required to keep Ontarians safe.
- Allow the Lieutenant Governor in Council to amend certain emergency orders continued under the EMCPA if the amendment relates to:
- labour redeployment or workplace and management rules;
- closure of places and spaces or regulation of how businesses and establishments can be open to provide goods or services in a safe manner;
- compliance with public health advice; or
- rules related to gatherings and organized public events.
- Not allow new emergency orders to be created.
- Allow emergency orders to be rescinded when it is safe to do so.
The ability to extend and amend orders under the new legislation would be limited to one year, unless extended by the Ontario legislature. Appropriate oversight and transparency would be ensured through regular, mandated reporting that provides the rationale for the extension of any emergency order. The legislation would include the same types of provisions on offences and penalties as set out under the EMCPA to address non-compliance with orders.
- The termination of the provincial emergency declaration under the EMCPA, or the passage of the proposed Act, would not preclude a head of council of a municipality from declaring under the EMCPA that an emergency exists in any part of the municipality or from continuing such a declaration.
- The termination of the provincial emergency declaration under the EMCPA, or the passage of the proposed Act, would not preclude the exercise of the powers under the Health Protection and Promotion Act by Ontario’s Chief Medical Officer of Health or local medical officers of health.
- The Government of Ontario declared a provincial declaration of emergency under s.7.0.1 of the EMCPA on March 17, 2020. The declaration has been extended under s.7.0.7 of the EMCPA and is in place until July 15, 2020, allowing the province to continue to make new emergency orders or amend existing orders under the EMCPA until that date.
- On June 26, 2020, emergency orders then in effect that were made under section 7.0.2 of the EMCPA were extended to July 10.
- A full list of current emergency orders in effect under the EMCPA can be found on the e-Laws website under the EMCPA and at Ontario.ca/alert.
William Watson: My hunch is the economy will bounce back quickly when this ‘Great Compression’ ends – Financial Post
George Santayana meet Milan Kundera. Santayana (1863-1952) was the Spanish-born American philosopher most famous for saying: those who cannot remember the past are condemned to repeat it. Kundera (1929-) is a Czech-born French writer whose best-known work, “The Unbearable Lightness of Being,” holds that individual experience is “light” because it is not repeated. So its capacity to teach is limited. Which thinker, I wonder, is the best guide to the COVID economy?
The economists Robert Hall of Stanford University and Marianna Kudlyak of the San Francisco Federal Reserve Bank have recently discovered a remarkable regularity about the 11 postwar U.S. recessions: however high the unemployment rate rises it pretty much always declines at the rate of 0.85 percentage points per year.
In 2020, that is terrible news. As they write, with the unemployment rate about “nine percentage points above normal … it would take 11 years (nine divided by 0.85) to work off the pandemic’s bulge of unemployment as it currently stands.” (Granted, that was before the rate fell 2.2 points from May to June alone.)
The saving grace is that the current recession is like no other in American — or Canadian — history
We only just completed a long labour market recovery from the crash of 2008 (though we did complete it, with unemployment rates hitting long-term lows). No one wants another 10-year slog back to full employment. As three economists from the C.D. Howe Institute show elsewhere on this page, if the recovery does turn out to be slow, then in terms of accumulated lost output the current downturn will at least rival and may even “blow past” the other big recessions of recent memory (1982 and 1990).
The saving grace is that the current recession is like no other in American — or Canadian — history. (Take that, Santayana!) In fact it’s not so much a recession, with economic activity ebbing for reasons that often seem mysterious, as it is a compression. The Great Compression, you might call it. For reasons everyone understands though not everyone agrees with, the government hammered the economy shut for a couple of months by either literally outlawing many normal economic interactions or at least strongly discouraging them.
Will the recovery from such an unprecedented shutdown follow the pattern of previous recoveries (i.e., slow but inevitable) or will it go more quickly? My hunch is that when the compression does end the economy will bounce back relatively quickly. Hall and Kudlyak at least hold out that possibility, pointing to data showing that the overwhelming majority of today’s unemployed “anticipate being recalled to jobs from which they have been temporarily laid off, within the coming six months.” In the best-case scenario, these workers “return to their existing jobs rapidly without sacrificing their job-specific human capital” or going through the normal try-it-and-quit, try-it-and-quit search for a job that finally fits.
The last few data points from the U.S. are encouraging in this regard, with unemployment claims falling and employment and growth expectations rising faster than forecast.
What could go wrong? A second wave of the virus, obviously — though future lockdowns will be more targeted and therefore less costly economically.
Beyond that, there are three main problems.
First, the lucky among us have been working and earning as usual but spending less, either because things we like to spend on simply haven’t been available or because we fear our jobs are at risk, too. That creates a classic Keynesian problem of underconsumption. But figuring ways to encourage consumption shouldn’t be a problem for our tax policy people. Over the years they’ve devised all sorts of gimmicks to encourage this or that. Egging on ordinary consumption would be a novel challenge for them but one they can overcome. And it doesn’t require building new transportation systems or massive new solar arrays.
Second, we’ve got a structural problem: no one wants to fly, stay at hotels, ride the subway, dine out or go to movies or shows until doing so is safe again. There’s no Keynesian solution for that. The people in the affected industries either have to figure out ways to make it safe or find something else to do, whether for a time or for good. Travel agents, good with phones, could become contact-tracers. Pilots could operate heavy equipment. Chefs, projectionists, actors, salespeople and countless others? Jobs building infrastructure likely won’t help.
Our third big problem is government getting in the way. Relief money phases out too slowly. Infrastructure programs — probably the wrong answer anyway — take too long to come on line (they always do!). “Stimulus packages” get devoured by rent-seekers and the government’s pet projects.
With a leadership vacuum at the top the U.S. seems likely to have a ramshackle, unplanned recovery. But its first shoots are bright green and very promising. My bet is we in Canada take a much more scientific, planned and deliberate approach and, as a result, recovery takes a lot longer — especially if, looking down our noses at southern-state infection rates, we keep the border closed into the fall.
Stocks slide from one-month high on economy jitters – BNN
European stocks dropped from a one-month high as officials warned the economy will take longer to recover and Germany reported weaker-than-expected industrial data. U.S. futures slid and the dollar advanced.
All but one of the 19 industry groups in the Stoxx Europe 600 Index fell, with real estate and technology shares bearing the brunt of the selling. Bayer AG lost 5.5 per cent after its plan for handling future Roundup cancer claims hit a snag. Treasuries edged higher alongside most European bonds.
In Asia, Chinese stocks powered ahead for a sixth day, although at a slower pace. Iron ore futures jumped and the offshore yuan briefly strengthened through the 7 per dollar level for the first time since March.
Investors are catching their breath after a ferocious rally that pushed the Nasdaq Composite to a record high. While recent reports show that global economy could be past the worst of the slump, it’s a long road back to pre-crisis levels.
The European Commission gave its starkest warning yet about the impact of the pandemic, with the divergences between richer and poorer countries opening up even further than projected two months ago. Officials now forecast a contraction of 8.7 per cent in the euro area this year, a full percentage point deeper than previously predicted.
Here are some key events coming up:
- The EIA crude oil inventory report comes Wednesday.
- All eyes will be on the U.S. weekly jobless claims report on Thursday.
- Singapore holds its general election on Friday.
- Rate decisions in Australia and Malaysia Tuesday.
These are the main moves in markets:
- Futures on the S&P 500 Index declined one per cent as of 10:45 a.m. London time.
- The Stoxx Europe 600 Index sank 1.1 per cent.
- The MSCI Asia Pacific Index declined 0.7 per cent.
- The MSCI Emerging Market Index sank 0.7 per cent.
- The Bloomberg Dollar Spot Index jumped 0.5 per cent.
- The euro decreased 0.4 per cent to US$1.1266.
- The British pound fell 0.2 per cent to US$1.2469.
- The onshore yuan weakened 0.1 per cent to 7.025 per dollar.
- The Japanese yen weakened 0.4 per cent to 107.73 per dollar.
- The yield on 10-year Treasuries declined one basis point to 0.67 per cent.
- The yield on two-year Treasuries climbed less than one basis point to 0.16 per cent.
- Germany’s 10-year yield declined one basis point to -0.44 per cent.
- Britain’s 10-year yield fell one basis point to 0.192 per cent.
- Japan’s 10-year yield increased one basis point to 0.046 per cent.
- West Texas Intermediate crude sank 1.5 per cent to US$40.04 a barrel.
- Brent crude fell 1.2 per cent to US$42.60 a barrel.
- Gold weakened 0.5 per cent to US$1,776.29 an ounce.
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