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China's fiscal revenue up 3.2% in June as economy rebounds – TheChronicleHerald.ca

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BEIJING (Reuters) – China’s fiscal revenues rose 3.2% in June from a year earlier, reversing a 10% drop in May and returning to expansion for the first time this year, the finance ministry said on Friday, in line with a recovery in the economy.

Fiscal revenues have been gradually recovering in the second quarter after a deep decline in the first three months, ministry official Liu Jinyun told a briefing.

China’s economy returned to growth in the second quarter after a deep slump at the beginning of the year, but weak demand underscored the need for more policy support for the recovery after the shock of the novel coronavirus crisis.

For the first half, fiscal revenues fell 10.8% from a year earlier to 9.6176 trillion yuan, while fiscal spending fell 5.8% to 11.6411 trillion yuan, the ministry said.

Tax revenues fell 11.3% in the first half, while non-tax revenues were down 8%, it said.

China has issued 720 billion yuan ($102.89 billion) in special treasury bonds as of July 16, accounting for 72% of the planned issuance that could be completed by the end of July, Liu said.

In May, the government said it would issue 1 trillion yuan in special treasury bonds to support employment, expand consumption and investment.

The government will also let local governments issue 3.75 trillion yuan worth of special bonds to fund investment projects.

The cabinet said this week that local governments had issued 2.24 trillion yuan in special bonds by mid-July, of which 1.9 trillion yuan had been spent.

Funds raised from local government special bonds must be used for projects with certain returns and cannot be used to pay wages or pensions, finance ministry official Wang Kebing told the briefing.

The ministry had issued a fourth batch of a local government special bond quota of 1.26 trillion yuan, on top of previous tranches totalling 2.29 trillion yuan, Wang said.

The government will prevent risks from local government debt and will not relax controls due to the coronavirus, Wang said.

($1 = 6.9976 yuan renminbi)

(Reporting by Kevin Yao; Writing by Se Young Lee; Editing by Tom Hogue)

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German economy grew by 8.5% in third quarter, but recession fears grow – The Guardian

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BERLIN (Reuters) – Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.

The stronger-than expected rebound was mainly driven by higher household spending and soaring exports, the office said.

“This enabled the German economy to make up for a large part of the massive decline in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” it added.

The reading marked an upward revision to an earlier flash estimate of 8.2% growth, and followed a 9.8% plunge in the second quarter.

The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since Nov. 2, but shops and schools remain open.

Chancellor Angela Merkel and regional state premiers are planning to extend the “lockdown-light” on Wednesday until Dec. 20, according to a draft prepared for their meeting.

A contraction in the service sector is expected to weigh heavily on gross domestic product in the fourth quarter, while lockdown measures in other countries are likely to hit export-oriented manufacturers as well.

DIW economist Claus Michelsen said a decline in economic output was therefore on the cards, with initial estimates indicating a GDP drop of around 1% in the final quarter.

“Germany and many important trading partners are likely to slide back into recession,” Michelsen said.

(Reporting by Michael Nienaber and Rene Wagner; Editing by Riham Alkousaa and EKevin Liffey)

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No-deal Brexit would be worse for the UK economy than Covid-19, says Bank of England governor – CNN

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“I think the long-term effects … would be larger than the long-term effects of Covid,” Bailey said Monday in response to a question from a lawmaker on what would happen if the UK government does not complete a deal before the December 31 deadline.
“It takes a much longer period of time for what I call the real side of the economy to adjust to the change in openness and to the change in profile in trade,” Bailey added in testimony before parliament’s Treasury committee.
The United Kingdom left the European Union in January. But the £670 billion ($895 billion) trade relationship has been largely unaffected so far because of a transition period that expires at the end of this year. Negotiators have been trying to hammer out a deal that will allow for tariff-free trade to continue. But progress has been slow, and chief EU negotiator Michel Barnier warned on Monday that “fundamental differences” still need to be resolved.
UK business groups are pushing Prime Minister Boris Johnson to secure a deal, saying that many companies have been stretched to the breaking point by the coronavirus and another round of lockdowns. Without an EU deal, UK-based firms face hefty tariffs, quotas and other barriers to doing business with the country’s biggest export market starting on January 1.
The Bank of England forecast earlier this month that the UK economy will shrink by 11% in 2020. Economists are worried about “scarring” caused by coronavirus, but Bailey said on Monday that he was optimistic about the economy’s ability to recover relatively quickly from the pandemic.
A change in the terms of trade with the European Union would produce more lasting upheaval, he suggested, comparing that outcome with modeling the central bank did decades ago showing it would have taken the UK economy between 30 and 40 years to adjust if policymakers had decided to drop the British pound and switch to the euro.
The UK government and the Bank of England have unleashed hundreds of billions of pounds worth of stimulus to help cushion the blow to business and workers from the pandemic.
Earlier this month, the central bank said it would increase its purchases of UK government bonds by £150 billion ($195 billion) to £875 billion ($1.1 trillion), and finance minister Rishi Sunak extended a furlough program through March 2021. The government will pay 80% of the wages of employees of businesses forced to close, capped at £2,500 ($3,270) per month.
Sunak said on Sunday that the economic situation in the country presents “a very difficult picture.”
“The economy is experiencing significant stress,” he told the BBC. “We’ve seen that particularly in the labor market, with people’s jobs. We know that three quarters of a million people have tragically already lost their jobs with forecasts of more to come. Borrowing … is at record peacetime levels and more stress to come.”
Sunak will deliver an update on the economic situation on Wednesday and sketch out his plans for borrowing and spending after the pandemic.

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German economy grew by 8.5% in third quarter – TheChronicleHerald.ca

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BERLIN (Reuters) – Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.

The stronger-than expected rebound was mainly driven by higher household spending and soaring exports, the office said.

“This enabled the German economy to make up for a large part of the massive decline in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” it added.

The reading marked an upward revision to an earlier flash estimate of 8.2% growth, and followed a 9.8% plunge in the second quarter.

The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since Nov. 2, but shops and schools remain open.

Chancellor Angela Merkel and regional state premiers are planning to extend the “lockdown-light” on Wednesday until Dec. 20, according to a draft prepared for their meeting.

A contraction in the service sector is expected to weigh heavily on gross domestic product in the fourth quarter, while lockdown measures in other countries are likely to hit export-oriented manufacturers as well.

DIW economist Claus Michelsen said a decline in economic output was therefore on the cards, with initial estimates indicating a GDP drop of around 1% in the final quarter.

“Germany and many important trading partners are likely to slide back into recession,” Michelsen said.

(Reporting by Michael Nienaber and Rene Wagner; Editing by Riham Alkousaa and EKevin Liffey)

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