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

United Kingdom: Ross Alexander Hutton 

Of all the G7 countries, the UK economy suffered the sharpest hit in the second quarter. Although this grim confirmation was unsurprising, it serves as a stern indication of the “hard times” Britain finds itself in. The susceptibility of the UK’s ‘service economy’ to lockdown measures contributed to the record-breaking decline in gross domestic product which now leaves policy-makers “grappling with something unprecedented”.

Despite more than 10.5 million meals covered at least in part by the Chancellor’s hospitality-boosting ‘eat out to help out’ scheme, high street footfall is still far below last year’s level. The fact that the number of employer payrolls dropped significantly more in July than in the previous two months proves that some of the unemployment cracks – held together by the Treasury’s support packages – are beginning to destabilise.

It is worth recalling the Chancellor’s intention to address the UK’s disorderly public finances in an autumn Budget. Yet, in the coronavirus world, intentions are far from guaranteed to reach fruition. Hence, Rishi Sunak is deliberating whether to delay the highly-anticipated Budget to spring 2021, inserting a mini-spending review in its place if Britain is hit by a second wave of coronavirus and if fears over a surge in unemployment become a reality.

Europe: Peter Hourston

Large protests across Belarus broke out following last Sunday’s Presidential election, in which incumbent Alexander Lukashenko claimed victory with 80.2 per cent of the vote. His nearest rival, Svetlana Tikhanovskaya, who drew large crowds to her pre-election rallies, received only 9.9 per cent and fled the country, according to a video she posted on YouTube. Almost 7,000 protestors are thought to have been detained in a brutal crackdown by riot police and state authorities, although many of them were subsequently released at the end of the week. The European Union has agreed to work on countermeasures and economic sanctions against the Lukashenko regime, who has been in power for 26 years. The situation raises questions about the EU’s neighbourhood and enlargement policy and its difficult relationship with Russia. The Belarusian state news agency, Belta, claimed that Lukashenko and President Putin had a phone conversation on Saturday where the Russian leader promised “comprehensive security assistance” to Minsk.

Second quarter GDP and unemployment figures released by Eurostat reveal that a record number of workers lost their jobs in the EU, with the number employed falling by 5.5 million. Output also fell by 11.7% across the EU. The figures reveal the economic cost of COVID-19 restrictions and come as the European Commission has confirmed that the rules on deficit and debt for national budgets will remain suspended until at least 2022. 

US Secretary of State Mike Pompeo has been touring central European capitals this week with visits to Prague, Ljubljana, Vienna and Warsaw, where he signed a new defence deal with the Polish government to relocate American troops to Poland from Germany. The number of American military personnel in Poland will be over 5,500, with the possibility of an extra 15,000, if needed, according to Polish Defence Minister Mariusz Blaszczak.

Asia Pacific: Satyajit Mohanan 

The Chinese economy, the first to succumb to the virus, is now proving to be the fastest growing among the other affected economies. Economists surveyed by Bloomberg estimate that China’s economic growth to be around 2.0%. The reasons for this recovery being strict virus control measures and an industry powered rebound. Industrial output has risen to 4.8% this month.  Experts argue that apart from the state’s fiscal support, increased investment played a critical role in putting China’s recovery back on track.

Malaysia’s economy shrank by 17.1% in the second quarter, making this its biggest slump since the 1998 Asian Financial crisis. The main factors are falling exports and low consumer spending. Exports declined by 21.7% and consumer spending plunged by 18.5% in this period. However, the trade-reliant economy’s central bank governor remains optimistic and argues that there is room for more stimulus measures in order to combat this economic slowdown.

Hong Kong media tycoon Jimmy Lai was arrested under the controversial security law along with other pro-democracy media figures.  Hong Kong officials justify the arrest and allege that Lai’s Apple Daily newspaper colluded with foreign forces. This has raised fears of a large crackdown by China on pro-democracy voices in Hong Kong.

Africa & Middle East: Camille Capelle 

Marking a historic new advance in the Middle East peace process, the UAE formalised its normalisation of relations with Israel under the “Abraham Agreement.” Although loose ties had already been re-established for commercial purposes, the UAE has become the third Arab nation to finalise a peace deal with Israel. Despite President Trump’s claims to the contrary, the Israeli Prime Minister has assured that annexation plans are still in place regardless of the agreed-upon delay. The deal has been welcomed by many European countries, but has been received by Palestinians as a severe betrayal. 

Fighting in Mozambique continues as rebels capture critical parts of the country’s economy. The northern town of Mocimboa da Praia, home to a port and the 60-billion-dollar natural gas project, was secured by ISIL-related rebels. Local sources claim they continue to launch attacks on surrounding villages and towns, while government military counteroffensives fail to achieve lost-lasting victories. The conflict, which started in 2017, has already claimed over 1300 lives in the northern region of Mozambique. 

As part of the latest development in the US-Iran crisis, the United States encountered a setback when it failed to achieve United Nations support for a continuation of the arms embargo being imposed on Iran. The discontinuation of the arms embargo, which has been in place for 13 years, will most likely lead to the re-imposition of sanctions by the United States on Iran. The resolution had gained only one vote of support in the UN Security Council, while being vetoed by both China and Russia which argued a lack of any legal basis for the bill. 

North America: Amelia Brown 

The US Postal Service has come into the spotlight this week as President Trump vowed to block the proposed $25 billion in funding to USPS to help with expected mail-in voting delays. Besides the fear over their ability to deliver votes in time to be counted, the USPS is facing broader levels of uncertainty over it’s survival, with $160 billion in debt. American’s are being told to send in ballots at least 15 days in advance of the November date. Some efforts have been made to boost the USPS revenue, like buying sheets of stamps or sending letters to state and federal officials urging them to work to fund the essential service. 

Presidential nominee Joe Biden announced at the Democratic convention Tuesday that Kamala Harris would be his running mate. Harris’ history as a cop and attorney general has raised controversy in the wake of nationwide clashes between Black Lives Matter protesters and law enforcement. If Biden is elected in November, Harris would be the first female vice president in America’s history, and is already the first Black and Indian major party candidate.

Canadian Prime Minister Justin Trudeau announced on Friday that two Canadians died in the Bierut explosion earlier this month. Alexandra Najjar, a three-year old victim who became a symbol for the protesters against government corruption, is said to be one of them.

South America: Annie Smith 

Mexico and Peru, the two hardest-hit countries in Latin America after Brazil, surpassed 500,000 cases of COVID-19 this week as the virus continues to take its toll on the region. As of today, Peru has over 525,000 cases and 26,000 deaths, while Mexico has seen 517,000 cases and 56,000 deaths. The epicentre of the virus in South America, Brazil has also surpassed 100,000 deaths this week, seeing the highest death toll in the world behind the United States.

Venezuelans have seen their satellite TV service resume this week after nearly three months without coverage, following American giant DirecTV’s decision to stop service in the country. AT&T’s DirecTV, based in Dallas, Texas, abruptly stopped its satellite TV service in Venezuela on May 19, citing US sanctions which banned it from broadcasting channels required by President Nicolas Maduro’s administration. The American sanctions were aimed at driving President Maduro out of office. On Friday, investment firm Scale Capital said it reached a deal with DirecTV Latin America to take over the service, which will allow them to provide programming to two million customers across Venezuela, more than 40 percent of its market.

Science & Technology: Paula Plechschmidt 

On Thursday last week Epic Games, the makers of Fortnite announced a new in-app payment mechanism that would allow customers to purchase credits from Epic Games directly. This seems to be done deliberately to bypass Apple’s and Google’s App Store rules which usually requires apps to give the firms 30% of their revenue. This is in line with the many antitrust allegations that both Apple and Google are facing within the big tech trial currently being held, accusing such companies to have too much power over other firms and individual users.

Knowing the Fortnite is massively popular, Epic Games CEO Tim Sweeny decided to provoke big tech along this channel, testing the waters to see how far they will go. This Wednesday Sweeny received his response, with Apple deciding to kick Fortnite off the App Store.

As a response Fortnite launched a two-pronged attack on Apple. On the legal end they introduced an antitrust lawsuit in order to establish Apple’s App Store as monopolistic and illegal. On the social end, they released a protest video mocking the iconic “1984” Apple ad, calling upon gaming fans to #FreeFortnite and to boycott the App Store.

This combination puts Apple in a very tricky situation, leaving them with very few winning moves. Either Apple bends its payment rules for Fortnite, opening the gates for other developers to challenge the payment system, or if it holds firm, it loses Fortnite players to Android and gives high-profile fodder to antitrust investigatiors. Either way, Apple comes out looking like the bad guy.

The appointment of Kamala Harris as Joe Biden’s running mate has been welcomed enthusiastically by Silicon Valley. By many in the industry she is seen as the best possible outcome as unlike Elizabeth Warren and Bernie Sanders who supported breaking up Big Tech firms, she seems willing to go along the more moderate line of simply strengthening antitrust enforcement. She is also approaching these issues within the context of building her political career championing privacy issues against the backdrop of the tech world. This indicates that as VP she is likely to continue this fight, all while ultimately still seeing the societal and consumer level benefits Big Tech provides.

Business: Tom Woods 

The activewear company Gymshark officially became a £1 billion-valued “unicorn” after securing a £200 million investment from US-based fund manager General Atlantic. The UK-based start-up was founded by Ben Francis when he was just 19 and struggled to find any sportswear that he liked. Much of its success has lay behind an innovative marketing strategy that shuns traditional advertising and has instead pioneered using social media influencers to promote products. The firm has experienced significant growth in recent years and even saw its largest revenue growth in Q1 of 2020, which Francis puts down to the growth in exercising from home during the pandemic. With this latest investment, Gymshark intends to further expand the business in North America and Asia.

The UK has officially entered recession for the first time since 2009. Recession is defined by economists as a fall in GDP for two consecutive quarters. Largely as a result of the COVID-19-induced lockdowns, the economy shrunk by 2.2% in Q1 and then a mammoth 20.4% in Q2. Although the fall scale of the economic slump brought about by the pandemic will not be clear until the end of the year, the Bank of England expects an annual fall of 9.5% in GDP. This would make it more severe than the 2008 financial crisis or even the 1929 Great Depression, with the 1921 post-First World War slump the most recent event that led to a harsher decline. In an interview with the BBC, Rishi Sunak said that the government had dealt with the crisis well given they are entering “unprecedented” waters. Criticising such rhetoric, shadow chancellor Anneliese Dodds slammed “Johnson’s jobs crisis” and said that the Conservative government had to do more.

Theory: Cassi Ainsworth-Grace 

Traditional financial market forecasting models lack the capacity to account for events that are external to the usual ebbs and flows of the economic business cycle. Covid-19 has shaken the foundations of financial stress testing and forecasting that do not account for non-financial, non-political global events. Firms of all sizes, but particularly smaller and medium sized enterprises now must consider implementing a crisis-management plan that accounts for situations when the depth and length of downturn is simply unknowable.

For now, global economic outlook is dependent on a vaccine for Covid-19. Whilst 150 vaccines are being developed worldwide, with six in the final stages of clinical trials, it is incredibly difficult for forecasters to pin exactly when a vaccine will become widely available.  Manufacturing and distribution involve an incredibly complex negotiation of an already disrupted and weakened global supply chain. The average forecast, particularly in the US, has pinned June 2021 as the first stage of the inoculation of the population. However, even if this round inoculates close to 25 million people in the US, that is still only 8% of the country’s population. Large sectors of the global economy will remain depressed until enough doses have been administered for herd immunity to take effect. Indeed, whilst economies across the world are beginning to open up, recovery seems a distant dream, as lockdowns are reinstated in previously ‘green lit’ countries like New Zealand and parts of Australia.