By William Schomberg
LONDON (Reuters) – The election triumph of Prime Minister Boris Johnson has cleared up Britain’s political outlook, but the Bank of England won’t be rushing to respond to the end of the deadlock.
The BoE will keep interest rates on hold this week, according to all 69 economists polled by Reuters.
Where there are differences, however, is over whether the British central bank’s next move will be to cut rates, following recent moves to ease policy by the European Central Bank and the U.S. Federal Reserve, or to raise them in 2020.
Britain’s economy flat-lined before the high-stakes election on Dec. 12, which added to the longstanding uncertainty about Brexit and the drag from a slowing global economy.
Little wonder, then, that in November two of the BoE’s nine interest rate-setters cast the first votes for a cut in borrowing costs since shortly after the 2016 Brexit referendum.
But since then, Johnson’s new majority in parliament has eliminated doubts about whether Brexit will happen on Jan. 31, and buried the prospect of a sharp leftward shift in politics under a Labour Party-led government.
There are also signs that the U.S.-China trade war is easing, raising the prospect of a more benign economy for whoever takes over as BoE governor from Mark Carney, who is due to stand down at the end of next month.
Samuel Tombs, an economist with Pantheon Macroeconomics, thinks Britain’s quarterly economic growth rate will double to 0.4% in the first half of 2020 as companies and consumers catch up with spending they had been putting off.
Britain’s government also plans to increase its spending.
That would create a brief window for the BoE to raise its benchmark rate from its current level of 0.75%, close to its lows for most of the 10 years since the global financial crisis, Tombs said.
“The MPC will be keen to act quickly before Brexit risks emerge again to hike and to build scope to ease again whenever the next downturn hits,” he said in a note to clients.
Johnson promised voters that he would not extend the Brexit transition period that is due to end on Dec. 31, 2020.
But many trade experts question whether a free trade deal with the European Union can be struck by then, raising the prospect of trade barriers in just over a year’s time.
While sterling and British shares soared after Thursday’s election, the prospect of renewed Brexit tensions has remained in focus for investors in British government bonds, with gilt prices implying a 40% chance of a rate cut by the end of 2020.
Ruth Gregory, an economist at Capital Economics, said the message from this week’s BoE meeting might sound similarly cautious, with Britain’s inflation rate below the BoE’s target and the jobs market faltering.
She said MPC members Michael Saunders and Jonathan Haskel could well vote for a rate cut again “and the latest data may have been sufficiently weak for at least one more dovish MPC member — possibly Gertjan Vlieghe — to join them.”
(Reporting by William Schomberg; Editing by Catherine Evans)
Boris Johnson hails Biden as ‘a big breath of fresh air’
British Prime Minister Boris Johnson hailed U.S. President Joe Biden on Thursday as “a big breath of fresh air”, and praised his determination to work with allies on important global issues ranging from climate change and COVID-19 to security.
Johnson did not draw an explicit parallel between Biden and his predecessor Donald Trump after talks with the Democratic president in the English seaside resort of Carbis Bay on the eve of a summit of the Group of Seven (G7) advanced economies.
But his comments made clear Biden had taken a much more multilateral approach to talks than Trump, whose vision of the world at times shocked, angered and bewildered many of Washington’s European allies.
“It’s a big breath of fresh air,” Johnson said of a meeting that lasted about an hour and 20 minutes.
“It was a long, long, good session. We covered a huge range of subjects,” he said. “It’s new, it’s interesting and we’re working very hard together.”
The two leaders appeared relaxed as they admired the view across the Atlantic alongside their wives, with Jill Biden wearing a jacket embroidered with the word “LOVE”.
“It’s a beautiful beginning,” she said.
Though Johnson said the talks were “great”, Biden brought grave concerns about a row between Britain and the European Union which he said could threaten peace in the British region of Northern Ireland, which following Britain’s departure from the EU is on the United Kingdom’s frontier with the bloc as it borders EU member state Ireland.
The two leaders did not have a joint briefing after the meeting: Johnson spoke to British media while Biden made a speech about a U.S. plan to donate half a billion vaccines to poorer countries.
Biden, who is proud of his Irish heritage, was keen to prevent difficult negotiations between Brussels and London undermining a 1998 U.S.-brokered peace deal known as the Good Friday Agreement that ended three decades of bloodshed in Northern Ireland.
White House national security adviser Jake Sullivan told reporters aboard Air Force One on the way to Britain that Biden had a “rock-solid belief” in the peace deal and that any steps that imperilled the accord would not be welcomed.
Yael Lempert, the top U.S. diplomat in Britain, issued London with a demarche – a formal diplomatic reprimand – for “inflaming” tensions, the Times newspaper reported.
Johnson sought to play down the differences with Washington.
“There’s complete harmony on the need to keep going, find solutions, and make sure we uphold the Belfast Good Friday Agreement,” said Johnson, one of the leaders of the 2016 campaign to leave the EU.
Asked if Biden had made his alarm about the situation in Northern Ireland very clear, he said: “No he didn’t.
“America, the United States, Washington, the UK, plus the European Union have one thing we absolutely all want to do,” Johnson said. “And that is to uphold the Belfast Good Friday Agreement, and make sure we keep the balance of the peace process going. That is absolutely common ground.”
The 1998 peace deal largely brought an end to the “Troubles” – three decades of conflict between Irish Catholic nationalist militants and pro-British Protestant “loyalist” paramilitaries in which 3,600 people were killed.
Britain’s exit from the EU has strained the peace in Northern Ireland. The 27-nation bloc wants to protect its markets but a border in the Irish Sea cuts off the British province from the rest of the United Kingdom.
Although Britain formally left the EU in 2020, the two sides are still trading threats over the Brexit deal after London unilaterally delayed the implementation of the Northern Irish clauses of the deal.
Johnson’s Downing Street office said he and Biden agreed that both Britain and the EU “had a responsibility to work together and to find pragmatic solutions to allow unencumbered trade” between Northern Ireland, Britain and Ireland.”
(Reporting by Steve Holland, Andrea Shalal, Padraic Halpin, John Chalmers; Writing by Guy Faulconbridge; Editing by Giles Elgood, Emelia Sithole-Matarise, Mark Potter and Timothy Heritage)
U.S. senator slams Apple, Amazon, Nike, for enabling forced labor in China
A U.S. senator on Thursday slammed American companies, including Amazon.com Inc, Apple Inc and Nike Inc, for turning a blind eye to allegations of forced labor in China, arguing they were making American consumers complicit in Beijing’s repressive policies.
Speaking at a Senate Foreign Relations Committee hearing on China’s crackdown on Uyghurs and other Muslim minorities in its western Xinjiang region, Republican Senator Marco Rubio said many U.S. companies had not woken up to the fact that they were “profiting” from the Chinese government’s abuses.
“For far too long companies like Nike and Apple and Amazon and Coca-Cola were using forced labor. They were benefiting from forced labor or sourcing from suppliers that were suspected of using forced labor,” Rubio said. “These companies, sadly, were making all of us complicit in these crimes.”
Senator Ed Markey, who led the hearing with fellow Democrat Tim Kaine, said a number of U.S. technology companies had profited from the Chinese government’s “authoritarian surveillance industry,” and that many of their products “are being used in Xinjiang right now.”
Thermo Fisher Scientific said in 2019 it would stop selling genetic sequencing equipment into Xinjiang after rights groups and media documented how authorities there were building a DNA database for Uyghurs. But critics say the move didn’t go far enough.
“All evidence is that they continue to provide these products which enabled these human rights abuses,” Rubio said of Thermo Fisher, noting that he had written the Massachusetts-based company repeatedly about the matter.
“Whenever we receive proof of forced labor, we take action and suspend privileges to sell,” an Amazon spokesperson said.
Coca-Cola declined to comment. The other companies mentioned did not respond immediately to Reuters’ questions.
U.S. lawmakers are seeking to pass legislation that would ban imports of goods made in Xinjiang over concerns about forced labor.
Rights groups, researchers, former residents and some western lawmakers say Xinjiang authorities have facilitated forced labor by arbitrarily detaining around a million Uyghurs and other primarily Muslim minorities in a network of camps since 2016.
The United States government and parliaments in countries, including Britain and Canada, have described China’s policies toward Uyghurs as genocide. China denies abuses, saying the camps are for vocational training and to counter religious extremism.
Sophie Richardson, China director for Human Rights Watch, told the Senate panel that Beijing’s “extreme repression and surveillance” made human rights due diligence for companies impossible.
“Inspectors cannot visit facilities unannounced or speak to workers without fear of reprisal. Some companies seem unwilling or unable to ascertain precise information about their own supply chains,” she said.
(Reporting by Michael Martina, Richa Naidu, Aishwarya Venugopal and Jeffrey Dastin; editing by Jonathan Oatis)
Biden’s vaccine pledge ups pressure on rich countries to give more
The United States on Thursday raised the pressure on other Group of Seven leaders to share their vaccine hoards to bring an end to the pandemic by pledging to donate 500 million doses of the Pfizer coronavirus vaccine to the world’s poorest countries.
The largest ever vaccine donation by a single country will cost the United States $3.5 billion but Washington expects no quid pro quo or favours for the gift, a senior Biden administration official told reporters.
U.S. President Joe Biden‘s move, on the eve of a summit of the world’s richest democracies, is likely to prompt other leaders to stump up more vaccines, though even vast numbers of vaccines would still not be enough to inoculate all of the world’s poor.
G7 leaders want to vaccinate the world by the end of 2022 to try to halt the COVID-19 pandemic that has killed more than 3.9 million people and devastated the global economy.
A senior Biden administration official described the gesture as a “major step forward that will supercharge the global effort” with the aim of “bringing hope to every corner of the world.” “We really want to underscore that this is fundamentally about a singular objective of saving lives,” the official said, adding that Washington was not seeking favours in exchange for the doses.
Vaccination efforts so far are heavily correlated with wealth: the United States, Europe, Israel and Bahrain are far ahead of other countries. A total of 2.2 billion people have been vaccinated so far out of a world population of nearly 8 billion, based on Johns Hopkins University data.
U.S. drugmaker Pfizer and its German partner BioNTech have agreed to supply the U.S. with the vaccines, delivering 200 million doses in 2021 and 300 million doses in the first half of 2022.
The shots, which will be produced at Pfizer’s U.S. sites, will be supplied at a not-for-profit price.
“Our partnership with the U.S. government will help bring hundreds of millions of doses of our vaccine to the poorest countries around the world as quickly as possible,” said Pfizer Chief Executive Albert Bourla.
‘DROP IN THE BUCKET’
Anti-poverty campaign group Oxfam called for more to be done to increase global production of vaccines.
“Surely, these 500 million vaccine doses are welcome as they will help more than 250 million people, but that’s still a drop in the bucket compared to the need across the world,” said Niko Lusiani, Oxfam America’s vaccine lead.
“We need a transformation toward more distributed vaccine manufacturing so that qualified producers worldwide can produce billions more low-cost doses on their own terms, without intellectual property constraints,” he said in a statement.
Another issue, especially in some poor countries, is the infrastructure for transporting the vaccines which often have to be stored at very cold temperatures.
Biden has also backed calls for a waiver of some vaccine intellectual property rights but there is no international consensus yet on how to proceed.
The new vaccine donations come on top of 80 million doses Washington has already pledged to donate by the end of June. There is also $2 billion in funding earmarked for the COVAX programme led by the World Health Organization (WHO) and the Global Alliance for Vaccines and Immunization (GAVI), the White House said.
GAVI and the WHO welcomed the initiative.
Washington is also taking steps to support local production of COVID-19 vaccines in other countries, including through its Quad initiative with Japan, India and Australia.
(Reporting by Steve Holland in St. Ives, England, Andrea Shalal in Washington and Caroline Copley in Berlin; Writing by Guy Faulconbridge and Keith Weir;Editing by Leslie Adler, David Evans, Emelia Sithole-Matarise, Giles Elgood and Jane Merriman)
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