The Brexit effect comes into play
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As the UK approaches the sixth anniversary of the vote to leave the EU, observers are starting to get a clearer picture of what the Brexit effect has done to the economy. And it’s not pretty.
The challenge so far has been to disentangle the many forces weighing on the UK’s performance. The Office for Budget Responsibility argues that Brexit will slash productivity and gross domestic product by 4% – and just over half of that damage has yet to happen. The UK lags behind the rest of the G7 in terms of post-pandemic trade recovery and, according to the OECD, will have the weakest growth in the G20 (barring sanctioned Russia).
Downing Street insisted it was “too early to pass judgement” on Brexit’s negative impact on the economy, which could be heading into a recession. “The opportunities provided by Brexit will be a boon to the UK economy in the long term,” a spokesperson said. But economists have not yet been able to find significant positive impacts of these policies.
Bureaucracy and tighter border controls introduced in January 2021 have caused a “sharp drop” in the number of business dealings, according to a study by the Center for Economic Performance at the London School of Economics. The number of buyer-seller relationships has fallen by almost a third. It also found that Brexit “raised average food prices by around 6% in 2020 and 2021”.
With the latest UK trade figures due out today, the Big Read explores the debate as evidence of Brexit-induced economic self-harm begins to mount.
For last minute updates, visit our live blog
Need to know: the economy
Eurogroup President Paschal Donohoe downplayed the likelihood of a eurozone crisis resembling the sovereign debt sell-off that took place in the early 2010s. Donohoe, who is also Ireland’s finance minister, said the bloc now has a stronger foundation that will allow it to weather recent market volatility and that its economy will grow this year and next. “We are all confident in our ability to navigate through the changes that are happening,” he said.
Latest for UK and Europe
Britain is preparing for its biggest railway strike in 30 years, as final talks to avoid a walkout collapsed today. Around 40,000 Network Rail workers from 13 train operators will step down over pay and redundancy disputes tomorrow, Thursday and Saturday. Meanwhile, Business Secretary Kwasi Kwarteng is set to remove the legal ban on using temporary workers to replace striking staff.
In yet another travel disruption, the low-cost airline easyJet announced that it would reduce its summer schedule as staff shortages continue to plague the sector. He said he would now fly around 87% of 2019 levels in the three months to the end of June, up from 90% forecast in May. In the following quarter, this figure would increase to 90%, compared to a previous forecast of 97%. EasyJet faced major disruptions at London Gatwick and Amsterdam, which both introduced flight caps to try to bring the disruption under control after weeks of last-minute cancellations.
The UK’s financial regulator has decided to tighten the rules around so-called buy now pay later loan, a form of short-term credit. Under the new rules, providers will be required to carry out consumer checks and receive approval from the Financial Conduct Authority. Misleading advertisements will also come under greater scrutiny. The aim of the changes is to ensure that consumers understand that they are going into debt and that suppliers check people’s ability to pay for the products they buy.
Sales in Scotland’s independent top 20 whiskey distilleries were hit hard in fiscal year 2020-21, due to the 25% tariff imposed by the Trump administration in 2019 and Covid travel restrictions. The trade war contributed to an almost 10% decline in revenue, which totaled £1.35bn in 2020-21 from £1.5bn in the previous period. Although the outlook for next year is brighter, other headwinds for whiskey producers include a shortage of shipping container space and the cost of living crisis.
President Emmanuel Macron lost its majority in the French National Assembly after a strong presence of a left-green opposition alliance and a late push from the far right. Macron will have to strike deals with other parties in the Assembly to pass legislation, but far-left and far-right MPs say they will block his attempts to legislate and reform the EU pension system. State. Elisabeth Borne, Macron’s prime minister, said the situation was “unprecedented” and posed “a risk to the country”.
A former urban guerrilla who spent time in prison for his political beliefs secured victory yesterday in Colombia presidential election. Gustavo Petro won 50.5% of the vote against 47.3% for his main rival Rodolfo Hernández. The new president is expected to inaugurate the most left-wing government in Colombia’s history. The result, writes Gideon Long in Bogotá, represents a “radical change for the South American nation”.
The price of bitcoins fell below $20,000 over the weekend for the first time since November 2020. The drop in the most actively traded digital currency has raised concerns about forced liquidations of large leveraged bets in the markets of crypto, which could spur further selling and intensify a credit crunch that has already sparked an uproar among crypto lenders like Celsius.
European stock markets today enjoyed some respite from last week’s sharp declines, but investors are warned not to expect this to last long. Rising rates and falling economic growth created what Sean Darby, strategist at Jefferies, described as a “perfect macro storm.” The regional Stoxx 600 stock index added 0.7% in choppy trading. The index has fallen almost 17% since the start of the year.
Need to know: company
Decision makers of European companies operating in China are feeling the effects of Beijing’s zero-Covid politics, as lockdowns and border closures isolate operations and undermine the confidence of business leaders in the world’s largest consumer market. “Operations in China are increasingly isolated due to the inability of China-based personnel, both foreign and Chinese, to travel to European headquarters for information exchange, networking, training and sharing. expertise,” warned the EU Chamber of Commerce in China.
Primark, one of the UK’s largest clothing retailers, will pilot a click-and-collect service later this year in its first foray into online sales. The retailer was one of the very few major chains to hold back from e-commerce as Covid restrictions shuttered stores and consumers moved online. The trial will allow customers to order children’s clothing online and collect the items from one of 25 stores in the North West of England.
Nelson Peltzthe activist investor known for campaigning against the management of companies such as consumer goods group Unilever and asset manager Janus Henderson, has found himself the target of investors demanding changes to his Trian fund. Investors 1. The group seeks to shake up the board of directors of the London-listed fund “to improve governance and restore confidence”.
Pfizer, the American pharmaceutical group, will pay 90.5 million euros for a stake in the vaccine manufacturer Valneva in an agreement that will strengthen the French company’s program to fight Lyme disease. The transaction will give Pfizer 8.1% of the business and will be seen as a vote of confidence in Valneva, which has weathered the turmoil with its Covid-19 vaccine candidate.
The world of work
How can businesses fill the gap? skills gap? Andrew Hill offers six perspectives, including the combination of traditional skills with “higher speed training in rapidly emerging tools and techniques”.
An FT report in development also explores this topic and argues that, in addition to new skills, gaps in more basic capabilities must also be addressed so as not to erode business efficiency.
half of engineering Companies surveyed by the Institution of Engineering and Technology said they struggled with a lack of skills, both within their existing workforce and in the wider job market. To help close this gap, the government has directed colleges to take into account the findings of its local skills improvement plans, developed by regional trades groups, so that courses better match the needs of local industry.
Covid cases and vaccinations
Total number of global cases: 534mn
Total doses administered: 11.99 billion
Get the latest global picture with our vaccine tracker
Can a boss be funny? And should they be? Emma Jacobs suggests that a little levity can help leaders inject closeness and trust into working relationships.
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