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The U.K. economy could stare down long-term irrelevance without immigration – Fortune

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The U.K. economy is running out of places to look for a good news story as its economy continues to deal with inflation while its neighbors in Europe leave rising prices in the rearview. Now it’s likely to impact the country’s growth prospects. 

The Organisation for Economic Co-operation and Development (OECD) released its latest forecast for developed nations Thursday, and it didn’t make pleasant reading for the U.K. 

The country was one of only a few nations to have its outlook downgraded by the organization, now expected to grow at 0.4% instead of 0.7% previously.

While its economy is still expected to grow faster than Germany, which is forecast to expand at just 0.2% this year, the U.K. is losing more ground to the Eurozone, which collectively is forecast for 0.7% growth in 2024.

It’s the latest troubling data point for the U.K., which is struggling to shake off high inflation and is still feeling the effects of a reputational hit from 2022’s budget crisis.

According to Jens Eisenschmidt, Morgan Stanley’s chief economist for Europe, it has at least led analysts to find an easy way to sum up the embattled nation.

“Think about Europe, but everything a little worse,” is how Eisenschmidt describes the U.K.’s current economic status.

It’s a sentiment that bore out in the OECD’s latest outlook, and one that has policymakers in the country on the ropes.

The U.K.’s central bank, the Bank of England, is expected to be slower out of the block than the European Central Bank (ECB) in introducing interest rate cuts to stimulate growth, Eisenschmidt says. 

The U.K. is suffering from stickier inflation than its European peers. Prices rose by 2.4% in the Eurozone in April, while in March the U.K.’s CPI rate measured 3.4%, putting the former on a faster track to interest rate cuts.

Eisenschmidt said the source of this stickier inflation was up for debate. However, the blame could be pinned on a mounting worklessness crisis in the U.K.

Economic inactivity has been soaring in the country, accelerated by a growing long-term sickness trend and youth unemployment.

The country hasn’t been able to benefit from migration flows to offset a tight labor market, unlike in the European Union’s common market. 

As a small open economy, the U.K. has also been more vulnerable than the EU to a flight of capital following market shocks, as summed up by the currency hammering budget of September 2022. 

Eisenschmidt said these pressures left the U.K. “more exposed to the need for household discipline” in the short run. 

The outcome of this year’s U.K. General Election, the date of which is pending, is another major short-term variable impacting the fortunes of the economy.

Aging populations

A trend of labor market flows having an outsized impact on economic performance is one the U.K. should get used to.  

Eisenschmidt said developed European nations share a common threat of aging populations. As demographics shift older, developed economies are expected to struggle with labor shortages, compounded by the need for labor to care for older citizens.

Increasingly, as Eisenschmidt points out, countries will become more reliant on immigration from younger countries to fill in gaps in the labor market.

The U.K., however, has developed a reputation for being inward-looking in recent years. The country voted to leave the European Union in 2016 in a debate that focused heavily on immigration levels from elsewhere in the EU. 

Domestically, a melting pot issue in recent months has been the government’s contentious plan to deport asylum seekers to Rwanda. 

Despite this, total immigration to the U.K. has risen consistently since the U.K.’s Brexit vote. Net migration, however, has dipped as more people left the country following the vote.

A silver lining for the country, however, is despite its own attitude towards immigration, Eisenschmidt says the U.K. still looks like one of the best places for foreign residents.

“One key measure of long term success or less relative decline is your ability to attract migrants, and to incorporate them into the labor force.

“I would say here, from my perspective, the UK doesn’t score too badly, simply because of the language and the great educational institutions that have a great brand value outside.”

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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