The third quarter growth did not make up for the record 19.8% slump of the second quarter, when much of the economy was shuttered to fight the coronavirus, and the 2.5% fall in the first three months of the year when the virus started to affect everyday life. Despite the third-quarter improvement, the statistics agency said the economy was still 9.7% below where it was at the end of 2019.
The worry is that the economy will shrink again over the winter months after the resurgence of the virus led to fresh curbs on everyday life across the U.K. and amid uncertainty around whether a post-Brexit trade deal with the European Union will be reached.
The new restrictions come at a particularly inopportune time for many retailers, with Christmas just around the corner.
Under the terms of the current lockdown in England, nonessential places such as pubs, restaurants, hairdressers, golf courses, gyms, swimming pools, entertainment venues and stores selling items like books, clothing and sneakers, must remain closed until at least Dec. 2. Unlike the spring lockdown, schools and universities in England are remaining open this time, as are construction sites and factories.
The government has responded to the new curbs announcing that its generous salary support scheme, which sees it paying 80% of the salaries of workers retained by firms rather than fired, will be extended through March.
Treasury chief Rishi Sunak acknowledged that the health measures taken in the past few weeks “mean growth has likely slowed further since then.”
“There are still hard times ahead, but we will continue to support people through this and ensure nobody is left without hope or opportunity,” he said.
In addition to virus developments, the British economy remains hobbled by uncertainty over the future trade relationship between the U.K. and the EU. Discussions between the two sides are continuing Thursday.
Though the U.K. left the EU on Jan. 31, it remains within the bloc’s tariff-free single market and customs union until the end of the year. For a deal to pass the necessary legislative hurdles, an agreement has to be secured soon, potentially over the next few days.
A trade deal would ensure there are no tariffs and quotas on trade in goods between the two sides but there would still be technical costs, partly associated with customs checks and non-tariff barriers on services.
The government’s current thinking on Brexit is unclear and appears to have been complicated by bitter infighting within Prime Minister Boris Johnson’s 10 Downing Street operation.
Late Wednesday, Lee Cain announced he was quitting as director of communications, a move that has sparked speculation that Dominic Cummings, Johnson’s top adviser, could soon leave, further weakening the pro-Brexit camp. Both Cain and Cummings worked together on the 2016 Brexit referendum campaign that was largely fronted by Johnson.
Best scenario for economy is still bleak | News | ekathimerini.com – www.ekathimerini.com
The government faces the daunting task of trying to prop up the economy in December. Given the likelihood of the lockdown being extended beyond the end of November, the effort will focus on the second half of the last month of the year.
Success will mean that the economy will shrink “just” 10.5% in 2020, bringing Greece’s gross domestic product back to 2002 levels. However, to achieve even this bleak result, December earnings cannot afford to drop far below the 2019 level of 30 billion euros. It has already been accepted that this year’s figure will be €6-8 billion lower, resulting in a total drop in earnings of between €50-52 billion for the year.
Authorities are focusing on commerce, both wholesale and retail. Last year, this sector had €11 billion in earnings, plus an estimated €2-3 billion that were not documented in receipts. A decline of 20% in earnings will mean a nominal drop of €2.5 billion, or 1.5% of GDP.
There is little hope for hotels, which are already reeling from a disastrous summer, on the heels of the spring lockdown. In any case, December was never a month they were counting on to increase their earnings substantially.
The outlook is also poor for restaurants, cafes, bars and nightclub, as well as the whole entertainment and arts industry. Even without a lockdown, it is certain that the operation of these businesses will be limited by strict rules as to the number of customers allowed and authorities will be on the lookout for any infractions.
Manufacturing and telecoms are two other important sectors for earnings, but there is less certainty about their late-year performance.
The government is doing what it can to inject liquidity into the economy, but consumers, so far, are preferring to hoard money rather than spend it – bank account balances are swelling – and it is unlikely this trend will be reversed before a coronavirus vaccine is widely available.
UAE's first national rail network 'has the potential to transform the economy' – CNN
(CNN) — In the Hajar Mountains between Dubai and Fujairah, engineers are blasting out a new frontier for the United Arab Emirates. Ton by ton, rock is making way for 16 kilometers of tunnel, which will one day see trains barreling through it on a journey from coast to coast, and potentially further afield.
A nation known for its love of cars, as well as its strategic ports and airports, the UAE is betting big on its first national rail network. The 1,200-kilometer (746-mile) artery will connect the Gulf of Oman to the Persian Gulf, down through the emirates, into Abu Dhabi’s interior and to Ghuweifat on the border of Saudi Arabia, a key step in a long-mooted rail network crossing the Arabian peninsula.
“The top line implication … is that it has the potential to transform the UAE economy — and not just the UAE, but potentially the GCC [Gulf Cooperation Council],” says Richard Thompson, editorial director of the Middle East Economic Digest.
The diesel rail line could save 2.2 million metric tons of greenhouse gas emissions annually through its freight capacity alone, says the developer — the equivalent, it says, of taking 375,000 vehicles off the road. It has the potential to electrify in the future, which would further cut emissions if it uses renewable energy.
“I think rail has a huge role to play in helping the UAE reduce its carbon footprint,” says Thompson. “Rail can provide a much more efficient mode of transport for goods and people movement around cities; it can help your cities function better.”
Construction workers creating one of 15 tunnels that will run between the Port of Fujairah and the Dubai border of Sharjah.
courtesy Etihad Rail
“You have a more efficient mode of transport, linking ports with each other and removing congestion on the roads and contributing to decarbonization,” he explains.
Ahmed Al Musawa, executive director of commercial at Etihad Rail, anticipates 60 million metric tons of freight will move from road and sea to the rail network annually.
A photograph of a train running along stage one of the network, connecting gas fields to the port of Ruwais in Abu Dhabi.
courtesy Etihad Rail
As well as consolidating the UAE’s position as an international transport hub, there are benefits at a national level too, Al Musawa argues. Stage one of the network in Abu Dhabi — 264 kilometers (164 miles) of line connecting gas fields in Shah and Habshan and the port of Ruwais — has transported 33 million metric tons of sulfur since 2016, he says, and turned the UAE into the world’s largest exporter of the element, used in the manufacture of everything from fertilizer to paper.
Stage two, which stretches 605 kilometers (376 miles) and began construction earlier this year, could have wider benefits.
Kevin Smith, editor in chief of the International Railway Journal, identifies the railway as a “key strategy … to diversify (the UAE’s) economy slightly away from oil and gas.”
“I think the steel industry, oil and gas industry, then the mining and quarrying industry, should be the main beneficiaries,” says Thompson. “(The network) has the potential to integrate the northern emirate economies much closer into the national economy and accelerate growth and investment in those places.”
Can a nation of auto lovers switch lanes?
How the network will touch the daily lives of the UAE’s population remains to be seen. Passenger trains running at 200 kilometers per hour (124 miles per hour) are touted by Etihad Rail, but a date for passenger capacity is yet to be announced. If the network follows through, it could change commuting forever.
A section of the Sheikh Zayed Road, a key commuter route in Dubai, photographed July 2020.
KARIM SAHIB/AFP/AFP via Getty Images
“When you have direct, fast access, naturally that does change the way we perceive (distance), or we select where we live or work or study,” Al Musawa says. “The access to materials, services and markets can evolve around such a network.”
So will this new network convince Emiratis to swap their cars for trains? There are some obstacles, says Thompson, including the “last mile problem” — getting people from their homes to train stations.
Walking in the summer heat isn’t an attractive option, but Al Musawa says ride sharing and “other micro mobility solutions” may be the answer, adding Etihad Rail is learning from other countries’ experiences.
“I think there’ll be great demand,” Smith argues. “Their whole cities are built around the car, but I think the popularity of the metro (in Dubai) has shown that people will use it if it’s there.”
UK economy shrinks as new lockdown shuts services firms: PMI – TheChronicleHerald.ca
LONDON (Reuters) – British business activity has contracted in November as a new wave of coronavirus restrictions hammered the huge services industry, but news of possible vaccines have boosted hopes for 2021, a survey showed on Monday.
An early “flash” reading of the IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI), a gauge of private sector growth, tumbled to a five-month low of 47.4 in November from 52.1 in October.
It is the first time the index has gone below the 50.0 growth threshold level since June.
A Reuters poll of economists had pointed to an even bigger decline to 42.5.
Britain’s economy is widely expected to contract in the fourth quarter – albeit by less than it did around the time of the first coronavirus lockdown – after Prime Minister Boris Johnson ordered a four-week lockdown for England.
Other parts of the United Kingdom have also imposed restrictions on businesses, including in hospitality and other face-to-face activities.
Those closures helped to push the services PMI to 45.8 from 51.4 in October.
But manufacturing, which was largely unaffected by the latest lockdown, accelerated with its PMI rising to 55.2, the joint-highest level since 2018.
The approach of a possible trade shock at the end of next month, when Britain’s post-Brexit transition deal with the European Union will expire, prompted clients of British factories to increase their orders to build up stocks.
That in turn lead to a sharp lengthening of supplier delivery times because of severe delays at British ports.
Looking ahead, the survey found managers were their most optimistic since March 2015, boosted by news of progress in developing vaccines for COVID-19.
Job losses across the private sector accelerated, although some of the reduction in employment was due to companies taking advantage of the government’s extended jobs protection scheme.
(Writing by William Schomberg; Editing by Hugh Lawson)
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