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UK economy suffers record 9.9% slump in 2020 – The Journal Pioneer

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By David Milliken and William Schomberg

LONDON (Reuters) – Britain’s coronavirus-ravaged economy suffered its biggest crash in output in more than 300 years in 2020 when it slumped by 9.9%, but it avoided heading back towards recession at the end of the year and looks on course for a recovery in 2021.

Official figures showed gross domestic product (GDP) grew 1.0% from October through December, the top of a range of economists’ forecasts in a Reuters poll.

This makes it likely that Britain will escape two straight quarters of contraction – the standard definition of recession in Europe – even though the economy is set to shrink in early 2021 due to the effects of a third COVID lockdown.

“As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth Management.

Britain’s economy grew 1.2% in December alone, after a 2.3% fall in output in November when there was a partial lockdown, pointing to greater resilience to COVID restrictions than at the start of the pandemic.

That left output 6.3% lower than in February before the start of the pandemic, the Office for National Statistics said.

However, the Bank of England forecasts the economy will shrink by 4% in the first three months of 2021 because of the new lockdown and Brexit disruption.

It thinks it will take until early 2022 before GDP regains its pre-COVID size, assuming vaccination continues at the current rapid pace, which outstrips the rest of Europe’s. Many economists think recovery will take longer.

“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” finance minister Rishi Sunak said.

Sunak, facing the heaviest borrowing since World War Two, said he would continue to focus on protecting jobs when he sets out a new annual budget on March 3.

Unemployment has risen much less than feared at the start of the crisis, largely due to subsidies to keep people in work, though sectors such as hospitality and high-street retail remain hard hit.

HARDER HIT THAN MOST

Last year’s fall in output was the biggest since modern official records began after World War Two. Longer-running historical data hosted by the Bank of England suggest it was the biggest drop since 1709, when Britain suffered a “Great Frost”.

Britain has reported Europe’s highest death toll from COVID-19 and is among the world’s highest in terms of deaths per head.

The GDP fall is steeper than almost any other big economy’s, though Spain – also hard-hit by the virus – suffered an 11% decline.

Some of the damage reflects how Britain’s economy relies more on face-to-face consumer services than other countries, as well as disruption to schooling and routine healthcare, which few other countries factored in to GDP.

Sunak, in an interview with Sky News, said Britain’s economic performance could be seen as being marginally above that of some of its peers last year.

GDP is almost always compared on a “real” or inflation-adjusted basis, which shows Britain was the worst performer in the Group of Seven large advanced economies. But Sunak said Britain did better on a “nominal” basis, which ignores inflation.

Taking this approach, Britain’s economy is closer to its pre-crisis size than Germany, France or Italy’s, according to figures provided by the ONS, which said it “may be useful” to look at nominal as well as real measures of GDP.

But most international differences on inflation adjustment centre on government spending, and looking at household spending alone, Britain remains a laggard. Household spending in the fourth quarter was 8.4% below pre-crisis levels, compared with a 2.6% shortfall in the United States and 6.8% in France.

“The UK’s underperformance can’t simply be attributed to the different way the ONS measures government expenditure to most other countries,” said Samuel Tombs of Pantheon Macroeconomics.

(Writing by David Milliken; editing by Willian Schomberg, Guy Faulconbridge, Raissa Kasolowsky, Larry King)

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Spinning waste into gold: Victoria, Nanaimo councillors call for 'circular economy' strategy – Times Colonist

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When people talk about a circular economy in which materials get reused and less waste ends up in landfills, they’re really ­talking about entrepreneurs such as ­Meaghan McDonald.

The 31-year-old Victoria woman has launched a new venture that aims to make money and protect the environment at the same time.

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Her brand, Salt Legacy, plans to give new life to discarded or “dead” sails from sailboats by using the durable, water- and sun-resistant materials to make backpacks, surfboard bags and other outdoor gear rather than burying all that nylon and polyester underground.

“I’ve always been really eco-conscious and always wanted to create something that would kind of help within the circular economy,” McDonald said.

She has a background in biology rather than business, so she got help from an eight-month incubator program run by Victoria’s Project Zero — a partnership between the non-profit Synergy Foundation and Vancity that assists start-up businesses looking to operate in a circular economy.

Project Zero envisions a Vancouver Island where, by 2040, “our waste will be our greatest resource” and hundreds of people will be working for small independent businesses that, like McDonald, will be “upcycling” materials into new products.

Municipal politicians are getting on board.

Victoria Coun. Jeremy Loveday describes the circular economy as an immense opportunity “to create good green jobs and live on this planet in a way that will actually be sustainable.”

That’s why he got Victoria council to endorse a resolution to the Union of B.C. Municipalities, calling on the provincial government to develop a circular-economy strategy.

Loveday said such a strategy would allow the province to encourage and mandate that governments, businesses and residents adopt circular-economy practices.

“And, I think, local governments are at the heart of it because cities are where the population, carbon emissions, waste and innovation are all occurring.”

His motion, which emerged from the Climate Caucus, a non-partisan network of more than 300 elected officials across Canada, received final approval from Victoria council on Thursday.

In a related move, council also backed Loveday’s resolution to the UBCM asking the province to adopt right-to-repair legislation, which would ensure citizens have access to the parts and information they need to fix items, rather than being discouraged by ­companies that claim ownership over the ­intellectual property of their ­products.

“The idea, essentially, is that it’s time for the era of planned ­obsolescence to be over, and that consumers should have the right to receive information about their products, have access to spare parts, and that we should be able to repair the things that we purchase, rather than having a product that is designed to have an end of life,” Loveday said.

Nanaimo Coun. Ben Geselbracht won approval from his council for similar motions last week, as well as a third resolution calling for a provincial strategy to deal with demolition and construction waste.

Geselbracht said that the more municipal councils sign on to the resolutions, the stronger the case for them receiving serious ­consideration at the next UBCM ­convention.

“Then, hopefully, when it gets passed to the minister, there’s a pretty clear mandate that this is an important issue and we really demand action on it.”

As for McDonald, she’s forging ahead with her business plans and collecting old sails from marinas and sailing clubs that are only too happy to donate materials destined for the landfill.

She has the prototype for her backpack complete, work is underway on a fanny pack and a surfboard bag is in the design stage.

McDonald is also gathering the history of each discarded sail, so that she can attach stories of adventure and world travel to her new products.

“Then the new consumer can kind of have a bit of that history and that connection piece to the backpack they just bought,” she said.

In that way, her products will keep stories circulating as well as the economy.

lkines@timescolonist.com

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The Economy, Oil Demand And Prices – Forbes

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Given data lags and uncertainty, it is often said that the Fed guidance of the economy is like someone driving through a tunnel with the windshield painted black, relying on the rearview mirrors and bouncing off the walls. Given current divergent views amongst the political tribes, I would add as a corollary that there’s a child in the backseat hitting the driver with a pillow, screaming slow down they’re scared, while another child does the same, except screaming they need a bathroom and the car should speed up.

Current debt levels now prevailing in most of the world’s governments are outside of historical experience, so far as I know, and could have a significant impact on future growth and interest rates. Continued stimuli to promote economic recovery could mean low interest rates and rapid growth, which would certainly fuel stronger oil demand. Or it could result in inflation and thus high interest rates, leading to a new recession. Similarly, attempting to pay down the debt could slow economic growth and depress oil prices.

Aside from growth levels, interest rates have an impact on energy investment and could influence future fuel mixes. For example, low interest rates theoretically favor capital-intensive types of energy, including nuclear and renewables, along with long-term projects like deepwater oil and gas fields. (High interest rates favor shale oil and gas, because of their shorter payoff period.) It is possible that the recent surge in solar and wind power investment reflects recent low interest rates, although mandates and subsidies are probably more influential.

The heavy debt levels could, on the other hand, reduce subsidies for renewables including electric vehicles. Although it has become a cliché to claim that solar and wind are cheaper even than coal power, this is very misleading: at the least, new investment would be required to replace fossil fuels with renewables. The International Energy Agency, in its latest World Energy Outlook, projects investment needed in its scenarios, and the difference between the Stated Policies Scenario and the Sustainable Development Scenario would be $340 billion a year in the 2020s and reaches $1 trillion per year in the 2030s. (I’ve railed against the injustice of giving well-to-do citizens large grants to buy electric vehicles, which are one of the most expensive ways of reducing GHG that is given serios consideration.)

And where some talk about a new commodity supercycle, I worry that there is a good chance that instead there will be a collapse in asset values, with markets possibly entering bubble territory. One famous, possibly apocryphal story, is that Joe Kennedy (patriarch of the political dynasty) sold off his stock holdings just before the crash of 1929 after hearing a shoeshine boy give a stock tip: that convinced him the market was overbought. Similarly, it would seem that the roaring bull market for certain stocks such as Gamestop

GME
and Tesla

TSLA
might not be the result of fundamentals but rather the current expansionist monetary policy, which cannot last forever.

And the growing use of SPACs and the surging value of Bitcoin also reminds me of the late Charles Kindleberger’s book, Manias, Panics and Crashes which describes how the invention of new forms of credit led to an expansion of the monetary supply, which caused asset bubbles followed by crashes. This could lead to a reversion to value stocks, such as oil and gas producers as well as utilities, ESG notwithstanding.

To be honest, though, I feel kind of like I’m in the passenger seat of the Fed’s car shouting, “Go left! No, Right! No, Stop!” Perhaps the next killer app will be a GPS for monetary policy.

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UK's Sunak says vaccine passport idea might help the economy – TheChronicleHerald.ca

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LONDON (Reuters) – British finance minister Rishi Sunak said the idea of giving people vaccine passports or certificates to allow them to enter venues or events might be a way to help the country and its economy recover from the coronavirus pandemic.

“Obviously it is a complicated but potentially very relevant question for helping us reopen those parts of our country like mass events,” Sunak told BBC television on Sunday.

Prime Minister Boris Johnson said last week that the government would hold a review to consider the scientific, moral, philosophical and ethical questions about using vaccine certificates for people who have received a coronavirus shot, which could help entertainment and hospitality venues reopen.

(Reporting by William Schomberg and David Milliken; Editing by David Clarke)

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