Economy

Budget 2020: The economy must be vaccinated – BBC News

Published

5 years ago

March 10, 2020

Whether it’s “catching a cold” or “contagion”, chancellors have long used virology as an analogy to describe the impact of external events on our economy.

This time, at this moment, the virus and its impact is very real. In his first Budget, Rishi Sunak must swap his famous red Budget box for a medical kit of parts to vaccinate the economy from coronavirus.

There was no Budget in 2019 and it is difficult to convey just how extraordinary this first Budget of 2020 will be.

Even a fortnight ago, the plan was a Budget to launch a parliament of post-Brexit renewal. A significant shift in economic policy and primarily in tax-and-spend – fiscal policy – in order to provide a detailed long-term plan for infrastructure investment across the nation.

Now the focus is firmly on the short-term economic and health challenge of coronavirus.

Impact assessment

Firstly, the numbers in the Office for Budget Responsibility’s fiscal report are already out-of-date before the document is even published.

This is no fault of the authorities. Rarely can growth, borrowing, oil price, stock market and government borrowing cost forecasts have changed so rapidly and so close to a Budget event.

Coronavirus economics will be dealt with in a separate box, but the substance of the forecast is the world as it was a fortnight ago, rather than the one the chancellor faces on Wednesday. The numbers in the OBR book will represent a measure of normality, an aim, perhaps even a best-case scenario.

There will be an assessment of the potential impact on the economy. The OECD says there will be a 0.2% hit just from the global growth slowdown. As that gets higher, so will the justification for considerable firepower to keep the economy turning through a virus containment pause.

The response will need to be calibrated to the degree of disruption, but I expect the chancellor to outline the thinking behind the economic support: that however bad the virus gets here, and however much the economic cost of dealing with it, it will be temporary, and viable businesses should be given a bridge to the other side that helps them keep their employees, helps their cash flow, and enables them to thrive when things return to normal.

The plan needs to be comprehensive: hope for the best, but prepare for the worst.

Fiscal events

So expect significant funding for the health system, help for companies dealing with prolonged sickness absence, and joint guarantees with the Bank of England for banks to keep lending and extend overdrafts to people and to business.

The Treasury always ponders some forms of cut to VAT at times like this, because it’s “timely, temporary and targeted” – the quickest way to inject cash into people’s wallets. But the answer may equally come in the way in which retailers pay their VAT. Either way, public spending will be higher and tax receipts lower.

The Treasury does not want to lose sight of the medium and long term, however. It had already been decided that this Budget should be seen as part of a trilogy of “fiscal events” to deliver the government’s “levelling up” agenda: this Budget, the Autumn Budget and a Comprehensive Spending Review of departmental spending.

In fact, make that a four-parter. As I reported last week, the detailed plan on capital spending, the National Infrastructure Review, will be delayed for a month or two, to provide the chancellor a chance to review it, particularly as regards net zero commitments.

That is a difference that has emerged because of the change of chancellor. Sajid Javid was ready to publish this week. What we will get instead is the start of a process on infrastructure.

There will be some early allocations of capital investment. There will be the start of a review of the investment appraisal methodology, the Green Book, which many feel overly favours investment in London.

But we will also get an overall envelope on capital investment, showing the highest sustained capital investment since the 1970s, and above the long-run post-war investment average of 2.7% of GDP.

It will also be above not just the average, but peak net investment under New Labour. This is a huge amount of money.

‘Levelling up’

The signal from government borrowing markets is that they want governments with space to spend, to do so. But it was clear that under Sajid Javid’s fiscal rules, the 3% number was seen as a limit on investment, a maximum, rather than a target. If confirmed, that does appear to be more spending than planned by his predecessor.

It will be couched in terms of short-term stimulus and medium and long-term “levelling up”. On the latter, however, it is the start of a process that will last a few months more yet and might also be complicated by the coronavirus.

The main political point here will be to deliver, line by line, on the winning Conservative manifesto, especially for the “borrowed votes” in the Red Wall.

Indeed, I’m told that immediately after being appointed to Number 11, the new chancellor was advised to delay the Budget, but spent the weekend looking at what was required and decided to push ahead.

It will be a personal challenge. Any inhabitant of Number 11 needs to assert control of the public finances, to convince markets of their credibility.

The coronavirus means that departing from fiscal rules outlined by his predecessor just four months ago is less controversial than it was.

The election ended the need for austerity long-term. Coronavirus means the opposite of austerity short-term too.

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Business

A timeline of events in the bread price-fixing scandal

Published

8 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

8 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

23 hours ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

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