The death of Queen Elizabeth has come at a badtime 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.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
