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The second Elizabethan era ends with UK economy in turmoil – CNN

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London
CNN Business
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The death of Queen Elizabeth has come at a bad time for the United Kingdom. Against a backdrop of soaring inflation, a slumping currency and the worst cost-of-living crisis in decades, the country has lost one of its few markers of continuity and stability.

The government of Prime Minister Liz Truss, who on Thursday unveiled a huge gamble to rescue the economy just two days into the job and a few hours before the Queen died, has declared a period of national mourning that will last until the day of the state funeral.

Some shops and sporting venues were closed as a mark of respect, but for much of the country, business continued as usual.

London’s financial markets opened on Friday, with stocks gaining ground in line with other markets in Europe and Asia. The London Stock Exchange said it expected trading to continue during the period of mourning. It will close only for the funeral, the date of which has not yet been announced but is likely to be a public holiday.

One of the oldest department stores, Selfridges, closed its outlets in London, Manchester and Birmingham, but said they would reopen on Saturday.

Meanwhile, labor unions offered some respite from a recent wave of industrial action. The Communication Workers Union called off a strike involving 115,000 Royal Mail postal workers planned for Friday. Transport unions also canceled stoppages organized for next week and later this month on the railways.

And while the British Academy of Film and Television Arts canceled its annual pre-Emmy event scheduled for this weekend, London’s West End theaters were open.

Holger Schmieding, chief economist at Berenberg, a private bank, told CNN Business that he expects the economic impact of the Queen’s death to be “minor.”

“Calling off the disruptive rail strikes for now should partly offset the impact from the days of mourning. Additional tourist revenues will probably contribute to that,” he said.

Economic rescue disrupted?

News of the monarch’s death came just hours after Truss announced plans to cap Britons’ energy bills from October, providing relief to millions of households and thousands of businesses struggling to cope with soaring prices.

But the rescue package could cost as much as £150 billion ($172 billion), according to analysts at Berenberg, and be largely funded by government borrowing. Finance minister Kwasi Kwarteng is due to confirm the plan’s price tag later this month.

Yet much of the government’s attention could now turn to the events of the next few days as it prepares for the Queen’s funeral and the coronation of her successor, King Charles. Normal business in parliament has also been suspended for the next several days.

“It’s likely the impending emergency budget will be delayed,” Danni Hewson, an analyst at investment firm AJ Bell, told CNN Business.

How the Bank of England responds to the enormous increase in government borrowing is also crucial. Investors are already nervous about the state of UK government finances, and the bank had been scheduled to meet Thursday, where it was expected to jack up interest rates again.

But on Friday, the Bank of England announced it would postpone its interest rate decision by one week “in light of the period of national mourning.” It will now meet on September 22.

The UK Treasury did not immediately respond to CNN Business for comment. Truss’ official spokesperson told reporters that the energy price cap would be in place as planned on October 1 despite the period of mourning.

The pound traded higher on Friday at $1.16, recovering from 37-year lows hit earlier in the week, but the longer term decline in its value seen since the global financial crisis was likely to continue “until there’s a seismic change in the direction of the economy and economic policy,” Kit Juckes, macro strategist at Société Générale, said in a Friday note.

“There’s a strong chance that King Charles III will be the first British monarch to pay more than a pound for a dollar, or more than a pound for a euro, or both,” he added, saying it was unlikely the pound would drop below parity with the dollar this year.

As for UK banknotes, which feature the portrait of the Queen, they “continue to be legal tender,” the Bank of England said, adding it would announce plans to print new cash with a portrait of King Charles after the period of mourning ends.

Rob North, Sandra Gonzalez, Max Foster, David Wilkinson, Luke McGee and Morgan Povey contributed reporting.

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StatCan latest wealth survey shows stark disparity between homeowners, renters

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TORONTO – Statistics Canada‘s latest financial security survey shows a stark disparity between the wealth of homeowners and renters, even as it fails to capture the true scale what’s owned by Canada’s richest families.

The survey, conducted only every few years, shows home-owning families whose main earner was 55 to 64, and who had an employer-sponsored pension, had a median net worth of $1.4 million in 2023. Renters without a pension plan in the age group had a median net worth of $11,900.

Home ownership was the main factor in the difference, as those who owned their home but didn’t have a pension had a median net worth of $914,000, while those with a pension but did not own had a median net worth of $359,000.

The data released Tuesday also shows Canadians of all income brackets are trying to get into real estate, said Dan Skilleter, director of policy at economic inclusion non-profit Social Capital Partners.

“The most striking numbers they have in here are about just the growth of real estate as an asset class,” he said.

“So it’s clear everyone’s been getting signals about how important that is, and I think that is dysfunctional, and has been leading to an unsustainable situation where real estate has become an essential stepping-stone to really have any financial security in Canada.”

The picture in the report was similar for families whose main earner was under 35, as the median net worth of those who own their principal residence was $457,100, compared with $44,000 for those who don’t.

The gap for young families is even larger than at first glance though, as Statistics Canada notes that of that $44,000 net worth, an increasing amount is due to renters owning real estate that is not their principal residence.

It noted that of renters without pensions, 15 per cent had a net worth above $150,000 in 2023, compared with five per cent in 2019, as more buy into real estate.

Overall, the survey found the median net worth of Canadian households was $519,700, up 57 per cent from 2019 when it was last conducted.

The median wealth of households under 35 was $159,100, up from $56,400 in 2019, while the 55 to 64 category was the richest at $873,400, up from $797,000 four years earlier.

The survey involved a 45-minute questionnaire sent to a sampling of almost 40,000 homes to provide a detailed view of what families own and what debts they have.

“It’s really the only survey we have where the government gets to peer into the full financial story of families,” Skilleter said.

The survey, however, has a significant blind spot for Canada’s wealthiest. Statistics Canada divides the survey in tiers to make sure various household categories are represented, but the highest tier is the wealthiest five per cent in Canada, meaning anyone above about $2.4 million for the 2019 survey.

The broad top category means the top one per cent, and 0.1 per cent, are hardly captured, Skilleter said.

“What’s not part of the survey is to take a broader look at the Canadian economy and see: is wealth concentration in general getting worse or getting better,” he said.

“And much to my dismay, they can’t even take a stab at answering that question, because they don’t set up their survey to even have a good chance of getting a single billionaire or 100 millionaire to take the survey.”

The richest family in the 2012 version of the survey had a net worth of $23.7 million, and $27.3 million in the 2016 report, while Credit Suisse estimates there are more than 5,500 Canadians with a net worth of more than $50 million, including 120 with a net worth of more than $500 million, Skilleter noted in an April report.

Statistics Canada said the share of wealth held by the top one per cent will be understated in this data source. Skilleter notes that the U.S. specifically carves out a tier for billionaires to make sure they’re represented in the results of its wealth survey, which helps to show the economic inequality in that country.

Canada has looked more equal based on the data from the survey, but it can be misleading.

Data from the 2019 survey was used to estimate Canada’s top one per cent held about 13.7 per cent of wealth, and the 0.1 per cent held 2.8 per cent. But combining the survey with outside data like the Forbes rich list, the Parliamentary Budget Officer estimated that the top one per cent held 24.8 per cent, and the top 0.1 per cent held 11.2 per cent of overall wealth.

“We’re not even being made aware of the ways in which ownership of capital is dramatically increasing the fortunes of some,” Skilleter said.

“That would give rise to a more frank conversation about the different ways that public policy…could intervene and make people’s lives better.”

This report by The Canadian Press was first published Oct. 29, 2024.

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Statistics Canada reports August retail sales up 0.4% at $66.6 billion

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OTTAWA – Statistics Canada says retail sales rose 0.4 per cent to $66.6 billion in August, helped by higher new car sales.

The agency says sales were up in four of nine subsectors as sales at motor vehicle and parts dealers rose 3.5 per cent, boosted by a 4.3 per cent increase at new car dealers and a 2.1 per cent gain at used car dealers.

Core retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — fell 0.4 per cent in August.

Sales at food and beverage retailers dropped 1.5 per cent, while furniture, home furnishings, electronics and appliances retailers fell 1.4 per cent.

In volume terms, retail sales increased 0.7 per cent in August.

Looking ahead, Statistics Canada says its advance estimate of retail sales for September points to a gain of 0.4 per cent for the month, though it cautioned the figure would be revised.

This report by The Canadian Press was first published Oct. 25, 2024.

The Canadian Press. All rights reserved.

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Minimum wage to hire higher-paid temporary foreign workers set to increase

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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

The Canadian Press. All rights reserved.

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