Money "Permanent damage": British economy down by a quarter

17:50  31 july  2020
17:50  31 july  2020 Source:   tagesspiegel.de

The German economy shows a contraction of 10.1% in the second quarter

 The German economy shows a contraction of 10.1% in the second quarter GERMANY-ECONOMY-GDP: The German economy shows a contraction of 10.1% in the second quarter © Reuters / Kai Pfaffenbach THE GERMAN ECONOMY ACCUSES 10.1% CONTRACTION IN SECOND QUARTER BERLIN (Reuters) - Germany's economy contracted 10.1% in the second quarter, its biggest drop since 1970, on slump in household spending , business investment and exports in the context of the crisis caused by the coronavirus pandemic, shows Thursday the first official estimate of the gross domestic product (GDP).

The losses from the first two months of the pandemic correspond to the economic growth of the past 18 years. Now there are further restrictions.

Nach Meinung der Ökonomen wird Großbritannien den Konjunktureinbruch erst bis 2024 wieder wettmachen können. © Photo: dpa According to economists, Great Britain will only be able to make up for the economic downturn by 2024.

Bad news from the labor market and from the manufacturing industry, persistent uncertainty about the travel options for sun-hungry Britons, the impending cancellation of government aid for companies - August does not bring any summer recovery for the British economy. In the opinion of many economists, Great Britain will not have made up for the severe economic downturn this year until 2024. In addition to the many red numbers that determine the picture worldwide, the island is accompanied by ongoing uncertainty about the structure of Brexit.

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estimates speak of 65,000 corona victims; according to the official Ministry of Health census, it is 45,999. In terms of population size, there were more deaths than anywhere else in the world except Belgium. On average, 63 people die of Covid-19 every day to date, and England in particular has hundreds of new infections every day. Prime Minister Boris Johnson's conservative government hastily imposed new restrictions on the Greater Manchester area with millions of people on Thursday evening .

In the first two pandemic months of April and May alone, the economy of the kingdom shrank by a quarter. Finance Minister Rishi Sunak has calculated that this is as much as the growth of the past 18 years. In May, the immensely important real estate market saw only half of the normal sales. The auto industry produced as few vehicles in the first half of 2020 as it did in 1954, and 11,000 jobs were lost. The travel company TUI announced the closure of 166 branches on Thursday.

Hulkenberg surprised by third in F1 70th Anniversary GP qualifying

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Consistent forecasts indicate that the decline in GDP this year will be double-digit. The Institut Niesr is talking about ten this week, the consulting firm EY forecast 11.5 percent and thus corresponded to the OECD forecast one month ago. Niesr director Professor Jagjit Chadha analyzes what the world is currently experiencing, “shrinking processes that did not exist in our lifetime”.

Especially catering and tourism affected

This not least affects the tourism and catering industry , which has so far employed more than two million people, including many low-income earners, women and members of ethnic minorities. At the weekend, the government issued a 14-day quarantine for travelers from Spain, ruining the plans of millions of British travelers who love to travel. On Thursday, 47 companies pleaded with the head of government to differentiate the measure, for example by region, and to increase testing capacity at the airports. Otherwise the industry could face “permanent damage”.

The equipment manufacturer Continental expects a significant net loss in 2020

 The equipment manufacturer Continental expects a significant net loss in 2020 © OLE SPATA / AFP / Illustration The logo of the Continental company at the headquarters in Hanover, Germany on March 5, 2015. Like many companies around the world, Continental on Wednesday published a report specifying that it had a net loss of 741 million euros for the second quarter.

[Keep an overview: Every morning from 6 a.m., editor-in-chief Lorenz Maroldt and his team report in the Tagesspiegel newsletter Checkpoint on the latest developments related to the corona virus. Register now for free: checkpoint.tagesspiegel.de . ]

Sunak brags about £ 160 billion in aid to businesses and the self-employed. As a result, public debt will rise to more than 100 percent of gross domestic product (GDP) in 2021. With inflation recently at 0.6 percent and Britain considered a reliable borrower, the Bank of England was able to sell government bonds at record low interest rates.

Brexit negotiations continue to cause uncertainty

The Niesr scientists believe that Sunak's withdrawal from the aid program by the end of October cannot be justified in terms of fiscal policy or labor market policy. The short-time working allowance will be cut in half and will disappear entirely at the end of January.

The corona shock is accompanied by uncertainty in view of the stagnating Brexit negotiations . While Prime Minister Johnson had steamed up six weeks ago and announced that negotiations would be completed by the end of July, EU negotiator Michel Barnier recently spoke on October 31 as the final date. Opinions differ on the cause of the lack of progress. The UK only seriously looked into the problems in the second half of this month, criticizes Irish EU Trade Commissioner Phil Hogan. Downing Street complains that the EU uses unusual negotiating tactics.

Behind the hand, both sides show cautious optimism; this refers to an agreement on goods, but not services. In any case, economies on both sides of the channel are facing an additional shock.

Coronavirus: worried about unemployment, Spain tries to reassure foreign tourists .
© DESIREE MARTIN / AFP Tourists take advantage of the Playa de Las Americas in Tenerife, in the Canary Islands, July 28, 2020. Chase the doubts of Europeans on the resurgence of the pandemic is crucial for Spain, which relies on foreign tourists to revive its economy. Especially since the unemployment rate could sharply increase in September. The head of government Pedro Sanchez wants to reverse the trend.

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