Our editors give us a breakdown of this week’s biggest news stories
United Kingdom: Ross Alexander Hutton
Due to widespread office closures hindering the recovery of thousands of local businesses, the head of the CBI warned the government that “some of our busiest city centres resemble ghost towns, missing the usual bustle of passing trade”. With no return to the office in sight for 50 major U.K. employers, the very nature of the U.K.’s service economy is under threat. Hence, the government is to embark on an advertising campaign to encourage employers and employees alike to return to the workplace, in a bid to prevent the unravelling of the commuter economy. However, there are concerns held by business leaders and the official opposition over the safety of returning to offices and whether refusal to do so would lead to job losses.
Among all major economies, the U.K. was the hardest hit by the coronavirus crisis with its 20.4% reduction of GDP, the Organisation for Economic Co-operation and Development said. This has led to the view that the Bank of England – like other central banks around the world – has struggled to support the economy with interest rates at an all-time low. Governor Andrew Bailey intervened this week to counter this narrative by reassuring attendees at the virtual Jackson Hole central banking conference that the Bank is “not out of firepower by any means”.
Europe: Peter Hourston
Russian opposition leader Alexei Navalny remains in a coma in Berlin following a suspected state-sponsored poisoning. Medical experts have found that Nvalny was poisoned with a cholinesterase inhibitor, whose uses range from pesticides to nerve agents. The circumstances surrounding the attack – Navalny was in Siberia campaigning against President Vladimir Putin – raises parallels with the attempted assassination of former Russian double agent Sergei Skripal and his daughter Yulia in England in 2018. While the Russians have announced that an investigation into the incident will take place, Putin warned that the “hasty and unfounded accusations” the Kremlin was behind it were “unacceptable”. The poisoning follows a number of attacks on opposition leaders with suspected Kremlin involvement.
Phil Hogan resigned as EU Trade Commissioner following the “golfgate” scandal in Ireland. Hogan had attended a dinner of over 80 people at a hotel in County Galway which breached Ireland’s coronavirus restrictions. The Irishman had also failed to quarantine after arriving from Brussels. Hogan – known as “Big Phil” – had all but lost the confidence of the Irish government with Taoiseach Micheál Martin and deputy Leo Varadkar suggesting that he ‘consider his position’. Commission President Ursula von der Leyen will need to pick a replacement for the top job in the short term and Dublin will also need to nominate a new Commissioner. Simon Coveney, the foreign minister is rumoured to be a contender.
Asia Pacific: Satyajit Mohanan
Japan’s longest- serving Prime Minister Shinzo Abe announced his resignation due to his ill-health. Mr. Abe is set to step down after eight years in office with an impressive legacy mixed with economic and security successes. This sudden move is set to trigger a leadership race in the ruling Liberal Democratic party just as the country struggles to deal with the pandemic and a severe economic downturn. His resignation will take effect as soon as the party chooses a successor. Tokyo’s markets were abuzz with this development and its impact on the country’s economy. Investors lamented the departure of Abenomics and predicted a period of uncertainty for Japan’s economic policy. The Topix index fell by more than 1.5% and the yet began a surge against the dollar. However, political economy analysts believe that there will be no immediate change to Mr. Abe’s economic policies and denied a take-off from Abenomics.
The China-Pakistan Economic Corridor (CPEC) has paved way for another event of military interference over civilian matters in Pakistan. Amid the ever confusing legacy of Civil-Military relations in Pakistan, the CPEC Authority Bill proposes for a creation of a new position to be held by a military officer in order to “accelerate the pace” of construction. This development reflects the growing influence of the military over Prime Minister Imran Khans government and the administrations most pressing issues including that of the coronavirus pandemic. Critics of the government like opposition MP Ahsan Iqbal told the Financial Times that “The incompetence of the government is destroying our civil administration and putting an addition burden on the military”. The proposed legislation was enacted following the approval of Islamabad’s most expensive CPEC project, a railway upgrade worth $6.8bn which is largely financed by China.
Taiwan in a move to push for a bilateral trade deal with the United States has eased restrictions on US pork and beef imports. In trade, agriculture is one of the most protected sectors in the world. In the case of Taiwan, strict food and safety regulations have been a huge barrier towards trade talks with the US. President Tsai Ing- wen while announcing her decision to ease import restrictions said Taiwan would allow the import of US pork containing the feed additive ractopamine and beef older than 30 months and emphasized that this marked an important step in US-Taiwan relations.
Africa & Middle East: Camille Capelle
In Mauritius, thousands of protesters took to the streets in outrage over an oil spill near a wildlife sanctuary. The spill arrived in combination with the discovery of 39 dead dolphins on the coast, making the environmental catastrophe even more shocking to the citizens of Mauritius. The spill is also hugely problematic to the country’s very substantial tourism sector which was already suffering due to the pandemic.
Fathi Bashagha, the Libyan minister of interior, has been suspended from his responsibilities while he is under investigation for the handling of anti-government protests which ended in a violent act of repression. Current protests are the result of popular discontent over corruption and deteriorating living conditions, while tensions between armed groups in the capital and other cities make the situation even more volatile.
Netanyahu is under continuous pressure as anti-government protests continue for the 11th weekend in a row. Israel’s widespread discontent and ongoing demands for Netanyahu’s resignation almost caused the government to collapse over the budget vote, which was eventually delayed but would have prompted the 4th round of elections in just 2 years.
North America: Amelia Brown
The shooting of yet another Black American by police has cast a pall over the country once again. Jacob Blake was shot seven times in the back, in front of his three young children, by police in Kenosha, Wisconsin last Sunday, and is in hospital paralyzed, but alive. Riots and protests have swept through Kenosha and other cities in the country at the prevailing systematic racism and police brutality. The federal government is again using unmarked cars to ‘arrest’ protesters, and the city has stated a 7pm curfew. Tuesday night, a 17-year-old white male shot three protesters, killing two with an AR-15 weapon, then proceeded to walk by police officers without being stopped, all the way into Illinois where he was eventually apprehended.
The dual standards of policing that kills unarmed Black Americans and allows heavily armed white citizens to pass freely has inspired yet another round of national support for the Black Lives Matter Movement. The Milwaukee NBA team began the walk-offs, refusing to play their Wednesday Playoff game. Games in the NBA, WNBA, NHL, MLB, MLS, plus practices in other sports, were postponed in solidarity. The new wave of the movement has also reached Canada. Protests were held across the country on Saturday, calling for defunding of police and reform in their own country, which also has seen police violence against Black and Indigenous citizens.
Mexico continues to be hit hard by the health and economic crisis, reporting a devastating death toll of 60,254, which experts believe is likely lower than the actual toll. On top of the health crisis, the country reported Wednesday a likely 13% contraction in the economy, plunging it into a Great Depression era slump.
South America: Annie Smith
Thirteen people were killed in a stampede at a nightclub in Lima, Peru’s capital city, after police raided a club which broke coronavirus restrictions. About 120 people tried to escape the club shortly after police arrived, and at least six others were injured, including three police officers. Peru initially began lifting quarantine restrictions on 30 June to boost its economy, but after the daily reported number of infections doubled in recent weeks, new restrictions have been put in place, including a ban on family gatherings and a Sunday curfew.
The Buenos Aires city council has passed a new law which authorises relatives to attend bedside vigils for patients dying of COVID-19. Argentina’s capital city has seen the majority of the country’s coronavirus deaths, which stand at over 8,200. City Congressman Facundo Del Gaiso said to Al Jazeera, “In much of the world, the coronavirus has been defined as the disease of loneliness. There are many cases where people said their loved ones died because they felt alone.” The bill was approved unanimously by the council and allows one family member between the ages of 18 and 60 to keep vigil, excluding pregnant women and people with underlying health conditions.
Science & Technology: Paula Plechschmidt
Hurricane Laura has killed at least seven people as it passed through the Dominican Republic and Haiti last Sunday. Haiti was the first country to report a casualty from the storm, where a 10-year-old girl was killed after a tree fell on her home in the town of Anse-a-Pitres. In the Dominican Republic, at least three of the reported deaths resulted from walls collapsing, and the storm has seen over a million people in the country without electricity.
Both Apple and Tesla have announced their plans for stock splits. Apple is planning on splitting by four and Tesla will be doing a five-for-one split. This idea of splitting shares had fallen out of fashion in recent years, likely due to the fact that psychologically high value shares could induce an image of a successful company in the general public, even though it is a completely arbitrary value that is wholly determined by the number of shares a company decides to issue. Interestingly, following this announcement Apple’s shares have climbed 32 percent and Tesla’s have jumped by 57%. While it is impossible to tell whether this is in direct consequence of the decision to reintroduce share splits, it has certainly brought the idea to the minds of many other companies.
Tim Sweeny’s fight against the 30% commission Apple and Google take on all App Store/Google Play purchases continues. However, it seems that it may be a lot harder than Sweeny expected. This week a judge rejected Sweeny’s bid to force Apple to reinstate the app on the App Store. While it is clear Sweeny will not back down, tweeting: “The maker of a smartphone does not have the right to dictate the terms of our lives and our businesses”, this has been a major setback and it will be interesting to see what his next move will be to push back at Apple.
Business: Tom Woods
The US stock market is set for its best August since 1986 after its post-March recovery grew even stronger. The S&P Index has gone up by 6.8% for the month and at its current rate of growth will outperform the 7.1% advance it achieved 34 years ago. This ascent has been spearheaded by technology companies, with Apple notably achieving a $2 trillion valuation having experienced massive growth over the past year. President Trump has repeatedly cited the thriving stock market as evidence that his policies have been a success and this latest news could provide him with some much-needed hope for November’s election. Indeed, the S&P Index’s performance leading up to election day has accurately predicted the result every time since 1984, according to LPL Financial. On the other hand, Democrats such as VP candidate Kamala Harris have claimed that Trump pays too much attention to the stock market and has been unwilling to address more deep-rooted economic and social issues.
Tensions over TikTok continue to rumble after Trump gave its Beijing-based owner ByteDance until mid-November to sell its US operations to an American firm or face a countrywide ban earlier this month. This week, news leaked that Walmart and Microsoft have teamed up to prepare a bid for the app. Their chances of securing a deal seem high given their credentials as all-American companies and Apple’s expertise. However, Walmart’s involvement has puzzled some commentators, given that the firm primarily works in retail across the USA. When quizzed, the firm said that it planned to help TikTok with its advertising and third-party marketplace, areas the Arkansas-based company has decades of experience in.
Theory: Cassi Ainsworth-Grace
On Thursday the 27th of August, the Reserve Bank of Kansas City held its annual economic symposium online. Major participants of this event include 40 prominent central bank members, alongside finance ministers, leaders in financial markets and top academics. The agenda of this year’s event has of course been dictated by the current pandemic, as central bankers present their rationale for the nature of monetary policy now and in the near future, guided by the overarching theme, “Navigating the decade ahead”.
A dominant concern that defined much of the discussions was the notion, as presented by Laura Veldkamp, Coloumbia University, that the aftermath of the pandemic will look like the 2009 global recession, with a ‘tail event’ transforming the conduct of consumer, business and financial relations much later into the future. Singapore’s monetary authority, Tharman Shanmugaratnam, likewise reiterates this concern, “We are not going back to the same world”.