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Coronavirus: Public need 'home truths' on economy – Hammond – BBC News

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Former Chancellor Lord Hammond has said the government must risk unpopularity and tell “some difficult home truths” about the state of the economy.

He told the BBC that dealing with the pandemic had been the financial equivalent of “fighting a war”.

But giving money away was easier than collecting it for “a populist government”, he added.

A Treasury spokesman said Chancellor Rishi Sunak “will be honest with the British people” about what is needed.

Next week’s Budget comes amid rising unemployment and follows the biggest UK annual economic shrinkage on record.

In an interview with BBC political editor Laura Kuenssberg, Lord Hammond – who resigned as chancellor when Boris Johnson became prime minister in 2019 – said the economy had taken a “huge hit” from Covid-19, but should “bounce back”.

There had been “long-term scarring”, with sectors like aviation and hospitality suffering “permanent damage”, and transport and retail “changed forever”, he added.

Official figures show the UK economy contracted by 9.9% in 2020 – more than twice as much as in any previous year on record.

On Tuesday, it was revealed unemployment had risen to 5.1% in the three months to December – the worst rate since 2015.

And the national debt – worsened by furlough, other pandemic help schemes and falling tax takes – stands at more than £2 trillion.

Lord Hammond said it was unlikely in the “foreseeable future” that ministers would be able to “do anything that will actually see the debt starting to fall”.

“But what matters is not the absolute size of the debt, but the size of the debt relative to our economy,” he said.

“If we can grow the British economy over the coming years, then just as we did after the Second World War, we can make the debt fade in significance, because, although it stays the same in absolute terms, it becomes a much smaller percentage of our national economy.”

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Analysis box by Laura Kuenssberg, political editor

Philip Hammond has never been Boris Johnson’s number one fan, to put it mildly.

They clashed on Brexit, with the former chancellor being booted out of Parliamentary Conservative Party during the wild political autumn of 2019.

But even though he is back in the party fold, and with the ermine of a Tory member of the House of Lords no less, the former occupant of No 11 isn’t mincing his words.

While he sticks to the broad consensus backing the government’s massive emergency economic support during the pandemic, Lord Hammond looks very pointedly to the challenges that will come next, questioning whether Downing Street will have the right priorities.

His not very subtle implication: Downing Street would rather be popular than do the right thing.

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Lord Hammond said the challenge facing the government was “how to move out of this crisis period”.

He praised Mr Sunak for getting the economic response right so far and said he was “very confident” his instincts were “the right ones”.

But he said his fear was “that as a populist government, giving money away is always easier than collecting it in”, and warned that ministers had “made very extravagant commitments to the British electorate in good faith before the coronavirus crisis”.

“Not all of those commitments can now sensibly be delivered on and that’s going to be a big challenge for a government that regards its short-term popularity as very, very important,” Lord Hammond added.

He said he was “not sure” the current “top leadership” had the “appetite for being unpopular, in order to do the right thing”.

The prime minister has said the chancellor will set out the government’s plans to “build back better” in next Wednesday’s Budget.

Mr Sunak has promised to lay out the “support we’ll provide through the remainder of the pandemic and our recovery”, adding: “I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy.”

Responding to Lord Hammond’s comments, a Treasury spokesman said: “The chancellor has always put protecting jobs and livelihoods at the heart of everything he has done and that will not change.”This Budget will give people the reassurance they need in the immediate term, and he will be honest with the British people about how we are going to recover beyond this crisis.”

Labour leader Sir Keir Starmer said it was “not the time” for tax increases for individuals or businesses, given the ongoing impact of the pandemic.

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‘We need some help now’

James Green

James Green, who runs the Whitstable Oyster Company in Kent, says the impact of the pandemic has been “tough”.

“Obviously there’s Covid-19 at the beginning of the year, which affected us, the restaurant side of the business and the oyster sales. We were open over the summer. We were busy, like most coastal places, and then we shut again in November.”

But Mr Green adds: “For the oyster side of the business the impact of Brexit is probably had more of an effect than Covid-19, I would say.”

As a result of Britain leaving the single market, he says he has tons of oysters sitting on his farm that he cannot sell either to France or domestically.

Mr Green says the chancellor should give the shellfish industry “some help to get us through now – otherwise there won’t be one”.

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Britain is ‘bouncing back’ into the same old economy – The Guardian

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Britain is ‘bouncing back’ into the same old economy  The Guardian



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CANADA STOCKS – TSX ends flat at 19,228.03

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* The Toronto Stock Exchange’s TSX falls 0.00 percent to 19,228.03

* Leading the index were Corus Entertainment Inc <CJRb.TO​>, up 7.0%, Methanex Corp​, up 6.4%, and Canaccord Genuity Group Inc​, higher by 5.5%.

* Lagging shares were Denison Mines Corp​​, down 7.0%, Trillium Therapeutics Inc​, down 7.0%, and Nexgen Energy Ltd​, lower by 5.7%.

* On the TSX 93 issues rose and 128 fell as a 0.7-to-1 ratio favored decliners. There were 26 new highs and no new lows, with total volume of 183.7 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Nutrien Ltd and Organigram Holdings Inc.

* The TSX’s energy group fell 1.61 points, or 1.4%, while the financials sector climbed 0.67 points, or 0.2%.

* West Texas Intermediate crude futures fell 0.44%, or $0.26, to $59.34 a barrel. Brent crude  fell 0.24%, or $0.15, to $63.05 [O/R]

* The TSX is up 10.3% for the year.

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Canadian dollar outshines G10 peers, boosted by jobs surge

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar advanced against its broadly stronger U.S. counterpart on Friday as data showing the economy added far more jobs than expected in March offset lower oil prices, with the loonie also gaining for the week.

Canada added 303,100 jobs in March, triple analyst expectations, driven by the recovery across sectors hit by shutdowns in December and January to curb the new coronavirus.

“The Canadian economy keeps beating expectations,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “It seems like the economy is adapting to these closures and restrictions.”

Stronger-than-expected economic growth could pull forward the timing of the first interest rate hike by the Bank of Canada, Goshko said.

The central bank has signaled that its benchmark rate will stay at a record low of 0.25% until 2023. It is due to update its economic forecasts on April 21, when some analysts expect it to cut bond purchases.

The Canadian dollar was trading 0.3% higher at 1.2530 to the greenback, or 79.81 U.S. cents, the biggest gain among G10 currencies. For the week, it was also up 0.3%.

Still, speculators have cut their bullish bets on the Canadian dollar to the lowest since December, data from the U.S. Commodity Futures Trading Commission showed. As of April 6, net long positions had fallen to 2,690 contracts from 6,518 in the prior week.

The price of oil, one of Canada‘s major exports, was pressured by rising supplies from major producers. U.S. crude prices settled 0.5% lower at $59.32 a barrel, while the U.S. dollar gained ground against a basket of major currencies, supported by higher U.S. Treasury yields.

Canadian government bond yields also climbed and the curve steepened, with the 10-year up 4.1 basis points at 1.502%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci)

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