The Confederation of British Industry (CBI) has outlined three areas for chancellor Rishi Sunak to focus on in next week’s Budget to help businesses out of lockdown.
It comes after prime minister Boris Johnson announced a step-by-step roadmap out of lockdown, which could see England return to “normal” by 21 June.
The CBI has called on Sunak to focus on jobs, confidence and investment to give firms the “boost they need to bring the UK back to growth.”
CBI, which represents 190,000 businesses of all sizes and sectors across the UK, is urging the chancellor to hone in on “policies that will catalyse business investment” in key areas like jobs, skills and innovation.
It said that business is also looking to Sunak to incentivise green investment to set them on track to net zero.
The group warned that firms that are still in “emergency mode” are “sounding alarm bells” that any significant tax rises in the short-term will “stifle their ability to invest, hamper UK competitiveness and hold back our recovery.”
Rain Newton-Smith, CBI Chief Economist, said that “this Budget is like no other, with many businesses still on their knees” after the impact of the coronavirus pandemic.
“The prime minister’s roadmap for easing restrictions and the chancellor’s forthcoming Budget represents two parts of the same story — bookending the immediate COVID-19 crisis by relieving firms under pressure and setting the economy on a path to recovery,” he added.
The three key areas that the CBI has identified are:
Protecting jobs, firms and livelihoods in the immediate term by extending furlough, providing further VAT deferrals and giving firms (including in vital supply chains) a further business rates holiday.
Get businesses investing, by using incentives to spur investment in skills, jobs and innovation. This includes vouchers to get SMEs investing in digital technologies; unlocking investment in training by reforming the Apprenticeship Levy; and setting up the new National Infrastructure Bank to crowd-in investment.
Provide the vision for a long-term plan for economic growth. From green investment incentives to laying the groundwork for a fundamental reform of the unfair and uncompetitive business rates system, businesses want a signal of intent about the future of the economy.
Newton-Smith continued: “But this can’t just be about the here and now. We need to match the urgent need to protect jobs and firms with giving everyone a glimpse of an ambitious vision for the future of the economy. That means giving firms the confidence they need to invest by committing to the kind of pro-business environment that would help them to compete with the world’s best.
“Consumption and government spending alone can’t set us on the path to recovery. We need a dynamic and competitive business community powering us forward. That means avoiding any moves in the short-term that would hold business back from doing what it does best: innovating, creating jobs and delivering greater prosperity for all.”
CBI’s calls follow a slew of plans the Treasury announced ahead of the chancellor’s second Budget on 3 March to help get the country back on track post-Brexit and the coronavirus pandemic.
“Now we’ve left the EU and taken back control of our borders, we want to make sure our immigration system helps businesses attract the best talent from around the world,” Sunak said.
On Friday evening, it announced a £126m investment to bolster traineeships and create 40,000 new posts to help people back into the jobs market.
The Treasury also unveiled a mortgage scheme to help first-time buyers with low deposits buy a home. Under the plans, buyers will pay just 5% deposits to buy homes worth up to £600,000 and will offer lenders the guarantee to provide mortgages covering the remaining 95%.
Additionally, it has also revealed plans to create a task force to crack down on fraudsters exploiting the UK government COVID-19 support schemes. Sunak will unveil at the Budget on Wednesday a £100m investment to launch the task force.
WATCH: What UK government COVID-19 support is available?
IMF warns of growing poverty, unrest and geopolitical tensions – Al Jazeera English
The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies thanks to vaccine inequity and a lack of fiscal support, the International Monetary Fund (IMF) warned on Tuesday
While the latest update to the IMF’s World Economic Outlook sees the global economy still growing 6 percent this year – unchanged from its April estimate – Chief Economist Gita Gopinath noted that the composition of the recovery continues to change.
“The recovery is not assured until the pandemic is beaten back globally,” Gopinath told reporters during a virtual press conference as she presented the latest outlook titled Fault Lines Widen in the Global Economy.
The IMF sees global growth decelerating to 4.9 percent next year. Advanced economies are expected to achieve 4.4 percent growth in 2022 – down from 5.6 percent in 2021 – while growth in emerging and developing economies is seen slowing to 5.2 percent in 2022 from an expected rebound 6.3 percent in 2021.
Rich, emerging and developing nations all took an economic beating last year when the coronavirus pandemic forced governments to close borders, shut businesses and idle manufacturing hubs worldwide.
As countries rolled back COVID restrictions this year, growth forecasts jumped as people emerged from lockdowns and unleashed pent-up demand for products and services. That demand surge though is expected to moderate next year.
Developed economies armed and shielded with a healthy supply of COVID-19 vaccines and fiscal firepower have managed to open up businesses and resume operations. But the emergence of new COVID variants and infection spikes laces uncertainty into the recovery path.
Growth in the US, the world’s largest economy, is seen slowing to 4.9 percent in 2022 after a bounce back of 7.0 percent expected this year. Europe is also expected to slow to 4.3 percent in 2022 from 4.6 in 2021.
Growth in the Middle East and Central Asia is expected to decelerate to 3.7 percent next year from 4.0 in 2021, while emerging and developing Asian economies are expected to dip more than a point from 7.5 in 2021 to 6.4 in 2022.
Latin America and the Caribbean are forecast to experience the sharpest fall from 5.8 percent in 2021 to 3.2 in 2022 after plummeting 7.0 in 2020.
Sub-Saharan Africa is the only region that is expected to see growth climb – from 3.4 in 2021 to 4.1 percent in 2022.
Vaccines & trillions in fiscal support
Vaccine inequality is seen as a chief driver of the widening gulf between recoveries in developed and less developed economies.
Close to 40 percent of people in advanced economies have been fully vaccinated compared with only 11 percent in emerging market economies and a tiny fraction in low-income developing countries.
Fresh waves of COVID-19 cases this year, notably in India are a major source of the deepening inequality between rich and poor nations.
“The emergence of highly infectious virus variants could derail the recovery and wipe out four and a half trillion dollars cumulatively from global GDP by 2025,” Gopinath warned.
To make matters worse, poor countries and even emerging markets lack access to the funds necessary to jolt economies back to health. Advanced economies, on the other hand, passed $4.6 trillion in fiscal support for 2021 and beyond. In developing economies, most measures expired last year.
And some emerging markets like Brazil, Hungary, Mexico, Russia and Turkey have also started raising interest rates to contain soaring inflation triggered by supply chain bottlenecks as economies reopen. Higher interest rates cool economic growth.
“A worsening pandemic and tightening financial conditions would inflict a double blow to emerging markets and developing economies and severely set back their recoveries,” Gopinath warned.
Inflation & action
A significant portion of the “abnormally high inflation” readings is transitory, resulting from the pandemic’s hit to vital parts of the economy such as travel and hospitality, and from a comparison with last year’s abnormally low readings, Gopinath said.
The IMF forecasts inflation to remain elevated next year. In emerging markets and developing economies food price pressures and currency depreciation will continue to create yet another worrying disparity in economic recovery.
Major central banks must clearly communicate their outlook for monetary policy and ensure that inflation fears do not trigger rapid tightening of financial conditions, the IMF stressed.
The Fund’s proposal to end the pandemic, endorsed by the World Health Organization, the World Bank, and the World Trade Organization, sets a goal of vaccinating at least 40 percent of all people in every country by the end of 2021 and 60 percent by the middle of 2022.
The IMF urges at least 1 billion vaccine doses to be shared in 2021 by countries with more than enough of them and calls on manufacturers to prioritise deliveries to low and lower-middle-income countries.
The fund said its allocation of some $650bn worth of its reserve currency, known as Special Drawing Rights, should be completed quickly to help countries in need fund their spending needs. Greater action is also needed to ensure the G-20 successfully delivers on debt restructuring for countries where debt has ballooned and become unsustainable, said the IMF.
Gopinath further urged countries to focus more on reducing carbon emissions and slowing the rise in global temperatures to avoid yet another human and financial catastrophe. As it stands now, only 18 percent of recovery spending has been on low carbon activities.
“Concerted policy actions…can make the difference between a future where all economies experience durable recoveries or one where divergences intensify, the poor get poorer and social unrest and geopolitical tensions grow,” she said.
UPS CEO says U.S. deliveries slowed down last quarter as economy reopened – CNBC
United Parcel Service CEO Carol Tome on Tuesday defended her company’s long-term strategy after shares tumbled, despite beating estimates in its report from the second quarter.
UPS stock dropped nearly 7% after the company showed there was a slowdown in domestic deliveries in the three-month period, leading it to miss U.S. revenue forecasts.
Tome said on CNBC that it was no surprise to the shipping company that the average daily domestic volume in the U.S. was down slightly from a year ago.
“There’s been a permanent shift in how consumers are shopping and e-commerce sales are booming, but the rate of growth is not the same as it was last year when everyone was sheltering in place,” she told Jim Cramer in a “Mad Money” interview. “We realized that when the economy started to open and stores reopened, consumers would go back into their stores and we saw it happen.”
U.S. deliveries in the second quarter declined by 3% and ground packaged volume fell 4% from a year ago. Revenue per package, however, rose by 13% on U.S. deliveries and was even higher overall. UPS saw strength in foreign markets.
Tome, who began leading the $170 billion company in June 2020, said UPS predicted a slowdown in U.S. shipments after SurePost, its residential ground service, drove 53% of total U.S. volume last year.
While Tome expects the company’s operating margins to ease in the second half of 2021, she told Cramer that this is a seasonal trend for UPS. Operating margin is the percentage of revenue left over after considering costs of goods sold and other expenses.
By 2023, the company expects to reach $102 billion in revenues — up 20% from 2020 — and an operating margin of 12% in the U.S., she said.
“We’re projecting volume will increase in the back half of the year, not as much as what we saw in the first half because of the year over year comparisons, but volume’s going to grow,” Tome said.
“But this isn’t about a second-half performance, this is about where we’re taking the company long term.”
Shares of UPS closed Tuesday’s session at $195.19, up nearly 16% on the year.
Egypt's economy to grow 5% in 2021-22 as rebound continues: Reuters survey – Reuters
- reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=EGGDPAP GDP poll data
- reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=EGCPIAP CPI poll data
CAIRO, July 26 (Reuters) – (In July 26 poll, corrects to current account deficit not trade deficit in paragraph 5; removes word foreign in final paragraph to show all investors, not just foreign ones)
Egypt’s economy will grow 5.0% in the fiscal year that ends in June next year, a Reuters survey predicted on Monday, unchanged from analysts’ expectations in a similar poll three months ago and slightly below the government’s target of 5.4%.
Gross domestic product (GDP) of the Arab world’s most populous country was seen growing 5.5% in the fiscal year ending on June 30, 2023, the July 5-26 poll showed.
The government has said it expected the economy grew 2.8% in the 2020/2021 fiscal year despite the huge disruption across the global economy, retaining its place as one of the few emerging markets to achieve GDP growth despite the COVID-19 pandemic.
The pandemic caused tourism to collapse in March 2020 and other parts of the economy to slow, as Egypt maintained a large trade deficit, which rose 9% to $30.6 billion in July 2020-March 2021 compared to the year prior.
Allen Sandeep of Naeem Brokerage said Egypt’s high current account deficit was partly a result of lower tourism revenues.
“The hope is that non-oil foreign direct investment picks up, local industry, local manufacturing takes over, and then you have substitution for imports,” he said.
Inflation was forecast at 6.0% in the fiscal year that ends in June, down slightly from an expectation of 6.4% three months ago. The headline price index is seen at 6.8% in the 2022/2023 fiscal year, revised up from an April projection of 6.2%.
Inflation has slowed as inventories have piled up after the market was throttled by supply chain disruptions last year due to the pandemic. Lower household consumption has also led to lower inflation.
“Now, if we see this COVID dragging on and tourism being quite weak … there will be a time when we cannot go on borrowing,” Sandeep said, adding that Egypt already pays debt investors a large premium over its central bank rates.
Reporting by Yousef Saba and Malaika Tapper
Editing by Paul Simao
Our Standards: The Thomson Reuters Trust Principles.
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