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UK economy ended 2020 better than previously thought – 570 News

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LONDON — Official figures show that the British economy ended 2020 on a stronger footing than previously thought but that it suffered a bigger than anticipated fall in output in the immediate aftermath of the first coronavirus lockdown.

In its latest revisions for 2020 data, the Office for National Statistics said Wednesday that the British economy contracted by 19.5% during the second quarter, the first full quarter of lockdown. That was worse that the 19% initial estimate. However, it said, the economy rebounded by 16.9% and 1.3% in the third and fourth quarters, better than the previous estimates of 16.1% and 1%.

Overall, the agency said, the British economy ended 2020 9.8% smaller, slightly better than the previous estimate of 9.9%. Despite the modest revision, the contraction last year was the deepest in over 300 years.

The British economy has suffered one of the deepest coronavirus recessions among leading developed nations, with many blaming the Conservative government’s repeated failures to back lockdown restrictions sooner, including the latest one, which came into force in early January. The U.K. as a whole has had Europe’s deadliest coronavirus outbreak, with over 126,000 people having died after testing positive for COVID-19.

Still, the combination of falling coronavirus infections — new cases are running at around 5,000 a day against a peak of nearly 70,000 a day in early January — and the rapid rollout of vaccines has spurred hopes about a pick-up in economic activity in the spring as lockdown restrictions are lifted.

The British government, which is responsible for the lockdown in England, has laid out a path for easing restrictions over the coming weeks but insists that it will be guided by “data, not dates.” The other nations of the U.K. — Scotland, Wales and Northern Ireland — are following similar lockdown-easing timetables.

By mid-April, the British government hopes that retailers in England selling nonessential items, such as footwear and books, will be able to reopen. Pubs are also set to reopen outdoors from that date, with indoor serving following on May 17.

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Follow AP’s pandemic coverage at:

https://apnews.com/hub/coronavirus-pandemic

https://apnews.com/hub/coronavirus-vaccine

https://apnews.com/UnderstandingtheOutbreak

Pan Pylas, The Associated Press

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Economy

The Toronto Stock Exchange falls 0.58% to 19,031.64

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* The Toronto Stock Exchange’s TSX falls 0.58 percent to 19,031.64

* Leading the index were Laurentian Bank of Canada <LB.TO​>, up 5.6%, goeasy Ltd​, up 4.5%, and Air Canada​, higher by 4.4%.

* Lagging shares were Turquoise Hill Resources Ltd​​, down 7.0%, Silvercrest Metals Inc​, down 5.5%, and New Gold Inc​, lower by 4.8%.

* On the TSX 73 issues rose and 154 fell as a 0.5-to-1 ratio favored decliners. There were 13 new highs and no new lows, with total volume of 171.6 million shares.

* The most heavily traded shares by volume were Enbridge Inc, Suncor Energy Inc and Air Canada.

* The TSX’s energy group fell 1.21 points, or 1.1%, while the financials sector climbed 0.02 points, or 0.0%.

* West Texas Intermediate crude futures rose 0.51%, or $0.31, to $61.66 a barrel. Brent crude  rose 0.43%, or $0.28, to $65.6

* The TSX is up 9.2% for the year.

This summary was machine generated April 22 at 21:03 GMT.

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Economy

Canadian dollars hold on to Wednesday’s rally

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Canadian dollars

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar was little changed against its U.S. counterpart on Thursday as a decline in risk appetite was offset by the Bank of Canada‘s more hawkish stance, with the currency holding on to its gains from the prior day.

The loonie was trading nearly unchanged at 1.2500 to the greenback, or 80.00 U.S. cents, having traded in a range of 1.2472 to 1.2534.

It was one of only three G10 currencies to keep pace with the U.S. dollar as U.S. stocks dived on reports that President Joe Biden planned to propose nearly doubling the capital gains tax.

The others were the Swiss franc and the Japanese yen, which are both renowned safe-haven currencies.

“The BoC’s relatively hawkish move yesterday may have moved USD-CAD’s trading band down a notch,” said Ronald Simpson, managing director, global currency analysis at Action Economics, adding that the shift in yield spreads has supported the loonie.

The gap between Canada‘s 10-year yield and its U.S. equivalent has declined to just 3 basis points in favor of the U.S. bond from 19 basis points at the start of the month.

On Wednesday, the Canadian dollar touched its strongest intraday level in one month at 1.2455 after the Bank of Canada signaled it could start hiking interest rates in late 2022. The central bank sharply boosted its outlook for the Canadian economy and cut the pace of bond purchases to C$3 billion a week from C$4 billion.

“I would advise penciling in a further taper (of bond buying) at the July MPR meeting,” Derek Holt, vice president of capital markets economics at Scotiabank, said in a note, referring to the bank’s monetary policy report.

The price of oil, one of Canada‘s major exports, settled 0.1% higher at $61.43 a barrel.

Canada‘s 10-year yield was little changed at 1.522%.

(Reporting by Fergal Smith; Editing by William Maclean and Peter Cooney)

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Canadian annual inflation rate doubles

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By Steve Scherer

OTTAWA (Reuters) – Canada‘s annual inflation rate doubled to 2.2% in March, Statistics Canada said on Wednesday, as the central bank signaled economic slack would likely be absorbed earlier than it had previously forecast.

Previously, the Bank of Canada had said it would be 2023 before inflation returned sustainably to its 2% target. On Tuesday, the central bank said it would happen in the second half of next year. In the meantime, inflation would temporarily breach its target, the bank said.

Part of the March price bounce is due to a statistical effect caused by a sharp deceleration last year during the coronavirus pandemic, Statscan said.

The bank also held its key overnight interest rate at a record low 0.25% as expected.

Analysts polled by Reuters had expected the annual rate to rise to 2.3% in March, up from 1.1% in February. Energy prices gained 19.1% on a year-on-year basis, while inflation excluding gasoline and food rose 0.9% versus a year ago.

“The headline spike, as expected, is largely an energy story, but there are some signs that underlying pressures are starting to show up,” said Nathan Janzen, senior economist at the Royal Bank of Canada.

“The Bank of Canada‘s core measures also moved higher on the month, with two of them very slightly above the Bank of Canada‘s midpoint 2% inflation target,” Janzen said.

CPI common, which the central bank calls the best gauge of the economy’s underperformance, was 1.5%, slightly higher than the 1.4% forecast by analysts.

CPI median rose to 2.1% from 2.0% in February, and CPI trim was 2.2% in March, up from a revised 2.0% in the previous month.

But Derek Holt, vice president of capital markets economics at Scotiabank, said the annual rate is not being driven solely by a statistical effect.

“This isn’t just base effect-driven, it’s pretty remarkable resilience in terms of underlying inflation pressures,” he said.

The bank now expects Canada‘s economy will grow 6.5% in 2021, up from its January forecast of 4.0%, with real GDP growth of 3.7% in 2022, down from a previous forecast of 4.8%.

After the Bank of Canada announcement, the Canadian dollar strengthened 0.9% to 1.2499 to the greenback, or 80.01 U.S. cents, its biggest gain since last June.

 

(Reporting by Steve Scherer; Editing by Paul Simao and Alistair Bell)

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