The World This Week

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

United Kingdom: Ross Alexander Hutton 

As the R-number falls to the lowest level since reporting of the measure began in May last year, the Prime Minister’s road map to lift lockdown restrictions is in the spotlight. Johnson is set to announce plans for a phased reopening which prioritises the re-opening of schools and is constrained by close examination of the impact of each phase of ‘loosening’ of the rules. Caution is the word of the month in Downing Street briefings. But, behind the scenes, the economic pressures of a gradual re-opening are on top of the Chancellor’s mind. Sunak’s problems begin rather close to home: the Treasury’s public finances problem. Every month the government continues to keep the economy on a life-line is another month of sky-rocketing borrowing, as confirmed by the January record for government borrowing. Further afield, beyond Whitehall, the post-Covid economy is taking shape as retail sales fell sharply last month whilst online sales hit record highs, reigniting a debate on the U.K. ‘s business rates system which have become a burden on retail sectors struggling to survive. However, notwithstanding the short-term struggles, it is clear that a careful ‘unlocking’ is the only way to safely exit lockdown for the last time. 

Meanwhile, a long-running legal battle concerning Uber’s business model reached a conclusion as the U.K. supreme court ruled that Uber drivers are workers not self-employed and are entitled to employment rights such as the minimum wage. Supreme Court Justice Lord George Leggatt emphasised that “drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill”. From this statement – let alone the landmark ruling – signifies profound implications for the so-called ‘gig economy’ which is characterised by such control over gig workers.  In normal times, this would be a top story in the U.K. and beyond. 

Europe: Peter Hourston

The European Central Bank released the minutes of its most recent Governing Council monetary policy meeting this week. During the January discussions policymakers noted that, “recent data and forecasts indicated an overall more optimistic outlook for global activity than previously expected” despite Covid lockdowns, owing to stronger growth in the US, China and the EU-UK trade deal. Moreover, recent restrictions had affected economies less than in the spring, suggesting greater economic resilience in this phase of the pandemic. While the ECB agreed to “reconfirm its existing monetary policy measures”, there were grounds for “for cautious optimism about the prospect of a recovery in the course of 2021” as vaccination programmes picked up the pace. Analysts commented that the bank is unlikely to change course for 2021, Carsten Brzeski, global head of macro at ING, said: “if there is going to have to be any change then….it will be more loosening rather than a tightening of policy.”

A reshuffle of Turkey’s fiscal and monetary policy leaders in November has reaped rewards, with lira being the best performing emerging market currency as it rallied 6.5 per cent against the US dollar. The choice of President Recep Tayyip Erdogan to choose a central bank governor, Naci Agbal, with a commitment to conservative anti-inflationary policies has regained the confidence of investors. Although inflation in January was 10 percentage points above the official 5 per cent target, the official bank agreed this week to hold the country’s main policy rate at 17 per cent. Enver Erkan, an economist at Tera Securities in Istanbul, commented that the Agbal had “rebuilt the bank’s credibility, making the lira more attractive to foreign investors.” However, monetary reform would only go so far to alleviate Turkey’s economic problems according to Piotr Matys, a strategist at Rabobank. “I think investors may start paying more attention [to] whether there is genuine progress on economic reforms” Matys said, suggesting that the Erdogan government needed to do more.French President Emmanuel Macron has urged Western nations with more advanced Covid immunisation programmes to start donating vaccines to the developing world, as Russia and China step up what has become known as “vaccine diplomacy.” In an interview with the FT, Macron argued that this was essential for fairness adding that “it’s not about vaccine diplomacy, it’s not a power game — it’s a matter of public health.” The French President admitted that the EU’s vaccine rollout was slower than in other countries such as the US, but added that it was still important to donate up to 5% of supplies to poorer nations.

Africa & Middle East: Camille Capelle 

NATO has issued a statement saying that it is still undecided as to whether they will withdraw their forces from Afghanistan by 1st May. In February of 2020, the United States made a ceasefire deal with the Taliban which included a full withdrawal of foreign troops by 1st May 2021. With the Biden administration, this policy has come under review and a clear decision has not yet been reached, although the US has promised to fully cooperate and coordinate with Afghan leaders. While reaffirming their commitment to the peace process in Afghanistan, the increasing violence has diminished confidence that a full withdrawal of troops would leave the country in safe and peaceful conditions. 

After the unprecedented lows and unpredictability of the last year, oil prices are back on the rise and OPEC+ members are in disagreement over how to move forward. Despite rising prices and predicted shortages later this year, Saudi Arabia is urging caution before all else, as it recalls the slumps and instability of 2020. In contrast, Russia is increasing pressure to increase production to meet the anticipated trends. While policy disagreements within OPEC+ are far from uncommon, Saudi Arabia’s voluntary cuts (amounting to 7% of global supply) have given the country a new and powerful bargaining chip within the organization. 

North America: Amelia Brown 

Texas was frozen over this week  in an unprecedented winter storm for the state. Snow and freezing rain wreaked havoc on Monday, leaving millions without power and water for the week. By Friday President Biden called a major disaster declaration, just as the warmer temperatures started to allow for mobilizing help. However, the hardships are not over for some, as the electricity market exploded with soaring wholesale prices. Households whose power was not blacked out for the 5 days are facing bills of over $16,000, while some who had power restored just a few days earlier in the week are also facing bills in the thousands. Power companies too are feeling the sting of the freezing temperatures, with fossil, renewable, and nuclear generation having been severely reduced. Senator Ted Cruz is also in the hot seat, having outraged many of his constituents by leaving for Cancun, Mexico to escape the freezing temperatures with his family on Tuesday, only to return Thursday after the severe backlash. 

Under a special provision, almost 40% of federal employees in Canada were granted paid time off after being told to work from home in April of the pandemic. The Treasury Board released a document on Friday estimating the total cost of the ‘699’ provision, ‘other leave with pay,’ to be about $819 million. Latest figures from November show just 3,000 employees still approved for that type of leave. Public Service Alliance of Canada (PSAC), the union for most federal employees, is challenging the clarification from November which gave stricter guidelines for approving the leave, claiming many who needed it were parents left with full time caretaking responsibilities when schools were closed that made their remote work impossible. 

Business: Tom Woods 

Google has fired the head of its AI ethics group Margaret Mitchell over “multiple violations of our code of conduct”, sparking allegations of a racist and sexist company culture. Google stated that it fired Mitchell after she moved electronic files outside the company. This comes just two months after the company fired Timnit Gebru, a woman of colour who co-led the ethics team, over her co-authoring of a paper looking into potential bias in language AI systems used by firms such as Google. Both Gebru and Mitchell had been firm advocates for bolstering gender and BAME representation at Google. In a statement after her firing. Gebru said that it “seems to have been fuelled by the same underpinnings of racism and sexism that our AI systems, when in the wrong hands, soak up”. Some figures within Google appear to regret the decision with Jeff Dean, head of AI at the firm, writing in an internal email “I heard and acknowledge what Dr. Gebru’s exit signified to female technologists, to those in the Black community and other underrepresented groups who are pursuing careers in tech, and to many who care deeply about Google’s responsible use of AI. It led some to question their place here, which I regret”.

A fiery clash has erupted between Australia’s government and Facebook, prompting the latter to remove all news from their site in the country. The conflict stems from a law proposed by Australia that would force social media sites such as Facebook to pay news organisations a share of the ad revenue they receive from their content. Australia has accused sites such as Facebook of becoming rich off the backs of such organisations, reaping in advertising money while they receive little. In an aggressive response, Facebook pulled all news from its Australian site, attempting to force a U-turn. The policy caused uproar in the country, appearing rushed and indiscriminate in its censorship of content. Facebook pages ranging from Australia’s own weather agency to news sites such as the Washington Post to domestic violence charities all saw their pages disappear overnight. The government is holding firm in opposition to the company, suggesting this stand-off may continue a while longer. In reaction to Australia’s proposed law, Facebook said that it “ignores the realities” of its relationships with new organisations, who appreciate the publicity that the site provides.

Science & Technology: Paula Plechschmidt 

The UK’s top court has just ruled on a landmark battle with Uber, resulting in Uber’s drivers now being seen as workers. This entitles them to minimum wage, holiday pay and a workplace pension scheme. This loss is one of the most significant Uber has faced and sets a precedent for the way flexible work will be treated from now on in the gig economy. As Paul Jennings, partner at law firm Bates Wells states: “The judgement goes to the very heart of their business model” and it is expected that this will lead to a significant increase in claims.

The battle between big tech and Australia continues to escalate with Facebook banning news on its platform for Australian users. Under the new rules, Australian users are blocked from viewing and sharing local and international news. In addition, Australian publishers cannot share or post links on their Facebook pages. Australian Prime minister Scott Morrison has stated that Facebook’s actions were as “arrogant as they were disappointing”. This blatant show of power by Facebook has been described as Facebook ‘behaving like a North Korean dictator’ and reemphasizes the contentious point of Big Tech companies such as Facebook potentially having too much power over the functions of daily life.

Theory: Cassi Ainsworth-Grace 

The impact of the Covid-19 pandemic has been far from equal. New research co-authored by University of California, Berkeley’s Edward Miguel has found that nine surveyed countries in Africa, Asia and Latin America have seen declines in employment and income in all settings since March 2020. The research has found that household coping strategies and government assistance were insufficient to sustain a pre crisis living standards. By April 2020, 50% or more of those surveyed in several countries were forced to reduce meal size, or skip meals altogether. This reached 87% in rural households in Sierra Leone.

In the US, a study by Indiana University found that women, younger individuals, those with low levels of formal education, and people of colour were those hit the hardest as a result of the pandemic. The study found that Black adults were three times as likely as white individuals to report food insecurity, being laid off or being unemployed during the crisis. The US Bureau of Labor Statistics found that four times more women than men dropped out of the labour force in September 2020. In the UK, a House of Commons, Women and Equalities Committee report found that government economic support policies “overlooked” the “caring inequalities faced by women”. The report also states that as women are more likely to be employed on insecure contracts, the government’s policy responses meant women were 10 percentage points less likely than men to receive a discretionary top-up to their furloughed earnings.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s