The World This Week

Our editors give us a breakdown of this week’s biggest news stories

United Kingdom: Ross Alexander Hutton 

Despite the number of coronavirus deaths and new cases per day continuing to decline for the UK as a whole, a new outbreak in Leicester forced the city into a local lockdown – serving as a warning of the dangers posed by easing restrictions such as the opening of pubs, restaurants and hair salons. Furthermore, the Deputy Chief Medical Officer’s admission that “a second wave is quite a possibility” raises the prospect of further local lockdowns in the weeks ahead.

In a bid to breathe new life into his programme for government and to address the economic crisis, the Prime Minister vowed his £5bn economic recovery package would be a ‘Rooseveltian-style new deal’. However, Johnson’s plans lack the scope and scale to be in the league of FDR’s new deal, instead merely bringing forward already existing capital investment pledges. With more than 12,000 retail jobs losses announced this week, all eyes will be on the Chancellor’s economic update next week for the finer details of the fiscal stimulus.

According to Bank of England economist Andy Haldane, the UK economy remains on a V-shaped recovery trajectory but concerns remain over unemployment of currently furloughed workers when the furlough scheme is phased-out in August.

Europe: Peter Hourston

The French government under Prime Minister Edouard Phillipe tendered their resignation which was accepted by President Emmanuel Macron. Macron appointed the centre-right senior bureaucrat Jean Castex as his new Prime Minister. Castex was known as “Mr Deconfinement” from his role in coordinating France’s easing of lockdown. The government reshuffle was widely expected following the poor results of Macron’s La République En Marche in recent local elections.

European Commission Brexit negotiator Michel Barnier suggested that “serious divergences remain” between the UK and EU after the latest round of trade talks ended early. 

Russian President Vladimir Putin declared himself the winner of a referendum on constitutional reform which will allow him – already in office for twenty years either as President or Prime Minister – to stay in office until 2036.

Asia Pacific: Satyajit Mohanan

China has appointed Zheng Yanxiong, a ‘hard-line figure’ as the head of its new security agency in Hong Kong. The development comes at a time when Beijing is all set to enforce a draconian security law with punishments of up to life in prison, close-door trials and wire-tapping of suspects. This is seen as a bid to crush the ongoing pro-democracy movement and prevent any future similar protests in Hong Kong. 

The Indian Government has banned 59 Chinese made apps which include TikTok and WeChat. This is seen by many as an initial move in India’s economic boycott against China. This followed after an escalation in the India-China border clash that left at least 20 Indian troops dead in the disputed Galwan valley area. 

An attack on the Pakistan Stock Exchange in Karachi left several dead. At least five including a policeman were killed in Tuesday’s attack. The Balochistan Liberation Army, an ethic separatist group claimed responsibility for the attack. While Pakistan Prime Minister Imran Khan blamed India for the attack, its neighbour India described this as “absurd” and reiterated that it condemns terrorism anywhere in the world.

Africa & Middle East: Camille Capelle 

Lebanon’s ongoing financial crisis has prompted the director of their finance ministry to step down. Seen as an incredible blow just 10 days after the resignation of Lebanon’s IMF negotiation team, the government’s ability to solve the crisis is being questioned more than ever. Most notably, bread prices have increased for the first time in 10 years, as a result of the weakened currency in a country largely dependent on imports.

Saudi Arabia’s Crown Prince has decided to go ahead with their $20 billion tourism and culture project in the face of economic crisis and the global effects of the current pandemic. The project is part of the Prince’s wider development initiative: “Vision 2030.” Other parts of the initiative are being pushed to go ahead while the Saudi economy is faced with a significant budget deficit as the international energy market remains unstable. The price of an oil barrel fell to less than $43, which is concerning for the sector’s future projections.

Despite widespread economic hardship on the continent, three African countries have risen in their income classifications determined by the World Bank. Tanzania and Benin have been classified as Middle Income Countries, and Mauritius was promoted to a High Income country. Meeting this target ahead of schedule has been largely attributed to the reorganization of national accounts. Unfortunately, Algeria and Sudan have moved down in their World Bank income classifications, largely on account of exchange rate revisions.

North America: Amelia Brown 

As 4th of July weekend passes, the amount of COVID-19 cases in the U.S. continues to rise to almost 3 million. The sharp rise in cases after easing lockdown restrictions in many states has forced them to impose restrictions once again, which includes closing previously open bars, restaurants, and beaches, plus requiring face coverings when outside.  

A movement, “Occupy City Hall,” has been ongoing in New York City, where protesters outside City Hall demanded the 2021 budget defund the police department. The City Council did slash the NYPD budget by $1 billion last Tuesday, but some protesters see the cuts as merely tricks, such as shifting school officers from the police budget to the Department of Education budget. 

The Supreme Court ruled on two big cases this week. One struck down a Louisiana law that required doctors who performed abortions to hold admitting privileges at a nearby hospital, which through precedent set in a similar Texas case was deemed an undue burden and therefore unconstitutional. The other case struck down a Montana law that prohibited scholarship funds from being used for religious schools, saying it violated the Free Exercise clause. 

South America: Annie Smith 

Due to President Jair Bolsonaro’s dismissal of the pandemic as well as a lack of testing, Brazil has become the COVID-19 hot spot: as of Friday 3 July, Brazil had 1,543,351 total cases and 63,254 deaths, numbers only topped by the United States. Yet even these figures have been doubted as President Bolsonaro has ordered that case numbers should no longer be reported and that data be erased from the official government website. Despite Argentina’s early lockdown and relatively low number of deaths (1,437 as of 3 July), both Brazil and Argentina are expected to see a significant contraction of their economies for 2020, 5.2 percent and 6.5 percent respectively.

In terms of the climate, fires in Brazil’s Amazon rainforests rose by nearly 20 per cent in June, a 13-year high for the month, and due to this increase at the start of its dry season, experts have warned that 2020 could see a record high for fires in the area. Satellites recorded 2,248 fires in June 2020 as opposed to 1,880 in June 2019, yet burning usually increases throughout July, August, and September. The problem partially stems from the president’s slashing of the Ministry of the Environment’s funding and reducing fines for environmental violations.

On 2 July, Mexico’s death toll exceeded that of Spain, a country which became a COVID-19 hot spot as the pandemic hit Europe. Mexico has the sixth-highest number of deaths at 29,189, while the number in Spain currently stand at 28,385. Though Spain has seen more total cases, it has also conducted fewer tests than other countries. Meanwhile, President Andrés Manuel López Obrador began to ease restrictions last month, citing that the country’s priority should be protecting the economy and working classes.

Science & Technology: Paula Plechschmidt 

More than 750 advertisers have boycotted Facebook, pledging to pull their ads from the social network for a period up to six months due to its negligence in regulating misinformation and hateful content. Some of the world’s biggest brands including Coca-Cola, Hershey and Adidas have joined the campaign. This has had serious impacts causing Facebook’s share price to fall 9 per cent since the start of the boycott.

In efforts to fight Covid-19, Singapore has launched the “TraceTogether” Tokens. The wearable devices enable health officials to more accurately trace the movement of the pandemic. However, there has been public backlash regarding privacy concerns, with people worrying about Singapore quickly approaching the point of a surveillance state.

The EU has stepped up their examination of Google’s planned acquisition of the fitness company Fitbit. This arose amid concerns over disadvantaging other fitness tracking apps sold through the Google Play Store and worries about how Google might exploit user’s sensitive data such as heart rates, fitness and sleep patterns. EU regulators have set the 20th of July as the deadline to make a decision regarding the deal.

Jeff Bezos (Amazon), Tim Cook (Apple), Sundar Pichai (Alphabet) and Mark Zuckerberg (Facebook) are to appear in court in the coming weeks to take part in an investigation focused on antitrust. The appearance of the four most powerful men in tech promises to attract a large audience watching to see how lawmakers will deal with the first major investigation into tech antitrust in 50 years.

Business: Tom Woods 

Big Four accounting firm EY’s reputation took significant damage after their it emerged that its auditors failed to spot a $2 billion “hole” in the accounts of German fintech Wirecard. Critics have indicated that strict budgets and timetabling have harmed auditors’ ability to undertake their job properly, especially in Europe. Audit fees in the USA stand at around 0.39% of company turnover compared to 0.13% in Europe, and notably just 0.09% in Germany.

In the UK, a 48-hour period saw the loss of 12,000 jobs from firms in sectors such as aviation and retail. Upper Crust owner SSP Group notably announced that is slashing up to 5,000 jobs. The firm has particularly struggled in the post-COVID climate as its operations run mainly in airports and train stations. It saw global sales in April and May drop 95% below their levels last year.

Rosier news for UK businesses came with the long-awaited arrival of “super Saturday”. Pubs, restaurants, barbers, and cinemas yesterday opened their doors for the first time in three months to the delight of revellers. Those establishments that survived the lockdown thus appear to be entering a promising phase of rejuvenation, as evidenced by rising share prices in pub chains such as Wetherspoons.

Theory: Cassi Ainsworth-Grace 

The economics discipline has come under fire following the increased attention on the Black Lives Matter movement. There has been significant demand in the US and across the world for more diversification in the field.

This is not a new phenomenon. A group of black economists in 1970 wrote to the American Economic Association (AEA) questioning its negligence in regards to issues of discrimination and racial inequality within the discipline. The problem has not disappeared today. Only 3% of Ph.Ds. in economics were awarded to Black people in 2016, according to a report from AEA.

The AEA has begun to look into its own race problem, releasing a statement that recognises “that we have only begun to understand racism and its impact on our profession and our discipline”. This statement has been published alongside the American Federal Reserve’s decision to halt its association with an economics professor over comments about the Black Lives Matter movement. We have much more to do in improving the diversity in economics, but in the meantime, we can read the works of modern Black economists like Ebonya Washington, Peter Q. Blair and William Darity Jr.

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