LONDON (Reuters) – Britain’s economy is unlikely to have a quick bounce back as it recovers from its coronavirus shutdown which could have wiped more than 30% off output last month, the head of the country’s budget forecasting office said on Sunday.
Robert Chote, chairman of the Office for Budget Responsibility (OBR), said April was probably the bottom of the crash as the government is now moving to gradually ease its lockdown restrictions.
“We know that the economy, probably at its worst last month, may have been a third or so smaller than it normally would have been, in terms of output of goods and services and people’s spending,” he told BBC television.
“But that should be the worst of it.”
Britain, like many other countries, has shut down much of its economy to slow the spread of COVID-19.
Last month, the OBR said Britain’s gross domestic product could plummet by 13% in 2020, its biggest collapse in more than 300 years.
Chote said a quick, V-shaped recovery included in that report was only meant to be an illustrative scenario to show the hit to the public finances.
“In practice I think you are likely not to see the economy bouncing back to where we would have expected it otherwise to be by the end of the year, on that assumption, but instead a rather slower recovery,” Chote said.
As well as the pace of the lifting of the lockdown, the speed of the recovery would depend on how cautious consumers remained and how companies adjust to changes in the economy such as more demand for online retailing and less for restaurants.
Chote said Britain would not necessarily have to return to severe public spending cuts to cope with the debt surge that will come from its response to the coronavirus crisis.
Key factors include how much permanent damage the economy suffers, the level of interest rates on public debt – which are currently rock-bottom – and how much the country wants to spend on health and other services.
“But a post financial crisis-style, extended period of austerity is not a done deal,” Chote said, adding tax increases were another option.
Prime Minister Boris Johnson has said he will not lead Britain into a new period of austerity after previous Conservative-led governments sought to fix the public finances by cutting spending in many areas of public services.
(Writing by William Schomberg; editing by Michael Holden and Jason Neely)
People more important than the economy, pope says about Covid crisis – TheChronicleHerald.ca
By Philip Pullella
“We people are temples of the Holy Spirit, the economy is not,” he said.
Francis led the crowd in silent prayer for medical workers who lost their lives by helping others.
He said he hoped the world would come out of the crisis more united, rather than divided.
(Reporting by Philip Pullella; Editing by Susan Fenton)
COVID-19 is hastening the green economy, and we are far behind – CBC.ca
This week Premier Dwight Ball, Minister of Natural Resources Siobhan Coady, new Memorial University president Vianne Timmons and two industry associations held a news conference. They called on the federal government to provide subsidies for oil companies in the Newfoundland and Labrador offshore.
Their message demonstrated a fundamental misunderstanding of what has to happen to meet Paris Accord emission reduction targets for 2030. It also ignored the research on where the global economy is going, as other nations prepare green economic stimulus packages.
In May 2018, the International Labour Organization released a report which estimated that 24-million new jobs would be created in the move to a green economy, by 2030.
It also predicted a loss of six million jobs in the oil sector. However, that represents a net gain of 18-million jobs that will be created by this fundamental shift. Green energy is simply more job intensive than the fossil fuel energy sector and a far better bet for the economic future of this province.
What this means for Newfoundland and Labrador is that we need to take steps immediately to ensure we take full advantage of the green economic recovery. We also need to increase training opportunities.
Like any revolution, those who get there first will seize the high ground and become the new centres of excellence. Green energy services are a product that we will be able to export globally, and they will be in high demand for decades to come.
This is an opportunity for us to fully enter the global service economy for the first time in our history.
The writing is on the wall
For some years now, financial analysts such as former Bank of Canada governor Mark Carney and the International Monetary Fund (IMF) have warned of the dangers of ignoring climate change in financial planning.
The COVID-19 pandemic has hastened the move to a green economy. This is likely the best opportunity we will ever have, as a planet, to get on track to meet greenhouse gas emission reduction targets, as outlined by the 2015 Paris Accord.
Even before the pandemic, the IMF was warning against subsidizing the oil industry. A 2019 paper maintained that we must factor in the cost of external factors like natural disasters and health care to calculate the true cost of fossil fuel subsidies.
Furthermore, the IMF found that there was a net economic gain to ending oil subsidies.
Indeed, wildfires in Australia this year are expected to cost $100 billion. There is a very real price tag to failing to deal with climate change. Other costs include drought, starvation, war, pollution and all manner of natural disasters.
Experts have been pressing for jurisdictions that are heavily dependent on oil to diversify. That includes scholars and analysts in this province.
In the absence of an economic update from the provincial government so far this year, best estimates are that Newfoundland and Labrador will run a deficit of $2-3 billion.
In Newfoundland and Labrador, we immediately need both jobs and training for workers who want to transition out of oil. We must insist that the federal and provincial governments prioritize workers over oil companies and their major global contractors.
Prof. Jeff Colgan of the Watson Institute at Brown University has argued that high-priced oil jurisdictions such as Canada will be wiped out of the global industry as part of the post-coronavirus oil shock. Colgan, who is Canadian, also predicted a high level of bankruptcies and mergers in the sector.
While the oil industry has long depended on subsidies, some experts are now urging nations to invest in green energy, rather than recover jobs that will have to be replaced in a few years to meet 2030 climate goals.
One of the findings of the IMF 2019 study was that Canada invests $60 billion annually in oil subsidies. Notably, most of this money goes to oil operators and tier one contractors that are headquartered outside of this country.
Oil subsidies largely do not go to supply and service companies that are home-grown and based in Newfoundland and Labrador. These are also companies that could easily transition into supplying lower carbon energy sectors, with fairly minimal supports.
Frankly, our provincial trade associations should be doing a better job of advocating for transitional funding for local companies, rather than championing the cause of major multinationals.
The fact that the oil sector is in such desperate need of subsidies to survive demonstrates that it is not nearly as lucrative as it claims it to be. The data that proponents present on the economic benefits of oil never factors in the total costs of oil subsidies.
The year the world woke up to climate change
Oxford Dictionaries chose “climate emergency” as its word of the year for 2019. We can expect massive shifts in energy sectors globally during the coming decade.
In 2019, 11,000 scientists across the globe signed off on an article in Bioscience, based on climate data from the last 40 years. They recommended the following:
Replacing fossil fuels with low-carbon renewables and cleaner sources of energy. For them this meant that existing fossil fuels should be left in the ground;
- Promptly reducing emissions;
- Quickly curtailing habitat and biodiversity loss;
- Eating mostly a plant-based diet, while reducing global consumption of animal products;
- Shifting governance goals from GDP growth to human wellbeing; and
- Stabilizing the world’s population. They said family planning services should be available to all people. We must remove barriers to full gender equity and achieve primary and secondary education, as a global norm.
It has become increasingly clear since the Paris Accord was negotiated in 2015 that keeping an increase in global warming to 2 C is not enough.
We also now know that we must keep global warming to 1.5 C above pre-industrial levels in order to prevent irreparable damage to the natural environment. Last year ended with a global average temperature of 1.1 C above pre-industrial levels.
UN Secretary-General António Guterres has warned that we are currently way off track in meeting either the 1.5 C or 2 C targets that the Paris agreement called for.
Time is quickly running out for us to avert the worst impacts of climate disruption.
Canada, notably, is a signatory to the Paris Accord and has ratified it at home.
The future is now
Increasingly, there have been calls for green energy stimulus spending since the economic downturn caused by COVID-19.
The Oxford Review of Economic Policy has accepted astudy which surveyed 231 financial experts across central banks, finance ministries, and economics experts throughout the G20.
These experts identified five areas of economic stimulus which could displace the fossil fuel intensive economy, rather than entrench it. These include:
- Building efficiency retrofits;
- Investment in education and training;
- Natural capital investment;
- Clean research and development (this is NOT oil R&D).
Notably, our government is cutting post-secondary education, in both the university and college systems, at a time when we need to be re-training people for the green economy.
The study also found that without a green recovery, it will be nearly impossible to meet the goals of the Paris Accord. However, if the world comes together on green stimulus, this will be nearly sufficient to mitigate the most disastrous impacts of climate change that are predicted within the next 10 years.
The European Union is now poised to announce the world’s greenest economic recovery package. Proposals include:
- Up to 80-billion euros to boost electric vehicle (EV) sales;
- Doubling investment in charging networks; an option to exempt EVs from value-added taxes;
- 91-billion euros a year to seal up drafty buildings;
- Plans to offer homebuyers green mortgages (for energy efficient homes);
- An annual 10-billion euros to support renewal energy and hydro infrastructure.
We are already behind on retraining
Governments and oil companies should have been retraining and transitioning oil employees for some years now.
In their stimulus response, they must also prioritize the green economy over the oil economy, as many nations are already doing. If we do this right, we can become a green energy centre of excellence in the global environment.
However, for that to happen, we must act on building the green economy right now.
Cuthand: First Nations must be included in the new economy – Saskatoon StarPhoenix
Article content continued
On the surface, it was ridiculous and condemned by Indigenous and environmental groups, but on the other hand, her comment reflects the misguided belief of the Kenney government and, to a lesser extent, Premier Scott Moe in Saskatchewan that things will just continue as before.
The world economy is in a state of flux. China will continue to retaliate against Canada for the arrest and possible deportation of Huawei executive Meng Wanzhou. Oil prices will remain low for the foreseeable future and Canada, like most western nations, has taken on record amounts of debt.
The oil industry is evolving due to environmental concerns, competition from OPEC and an economy that may take years to recover. For example, air travel, a major consumer of fuel, will be drastically changed. Smaller airliners, reduced fleets and fears of contagion will affect the usage of fuel. The petroleum industry will remain an important source of energy in the future, but the worldwide glut will continue to keep prices low.
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