Showing posts with label News | Business. Show all posts
Showing posts with label News | Business. Show all posts

Mar 17, 2021

News | Business | Labor Force Exploitation: Some British Firms Complicit Over Forced Labor in China.

 bbc.com

Uighur abuse: MPs criticise companies over China forced labour

BBC News

Uighur women grab a riot policemen as they protest in Urumqi in China's far west Xinjiang province on July 7, 2009image copyrightAFP

image captionChina has been accused of gross misconduct over its treatment of the Uighurs.

Some British firms could be complicit in the use of forced labour in China's Xinjiang region, an MPs' report says.

The Business, Energy and Industrial Strategy Committee said there was a lack of transparency in firms' supply chains and failures in government.

Xinjiang is home to many Chinese ethnic minorities, including Uighur Muslims.

The MPs said firms in fashion, retail, media and technology could all be implicated, and it was time to fine and blacklist those that failed to change.

The BEIS committee said it was appalled companies still cannot guarantee that their supply chains are free from forced labour. Those that cannot prove they don't have links with Xinjiang should face sanctions, the MPs said.

The report recommends the government accelerates proposals to amend and strengthen the Modern Slavery Act 2015.

It also recommends the government develops a policy framework for creating a whitelist and blacklist of companies which do and do not meet their obligations to uphold human rights throughout their supply chains.

The findings come as some senior Conservative MPs attacked Boris Johnson for failing to adopt a tougher stance on Beijing in his Integrated review of security, defence, development and foreign policy published on Tuesday.

For the inquiry, the BEIS committee heard from a variety of witnesses including Boohoo, H&M, TikTok, The North Face and Nike.

Protestsimage copyrightEPA

image captionProtests against China's alleged abuse of the Muslim Uighur community

The report found it "clearly unacceptable" that Boohoo had only minimal data about the different tiers in its supply chain.

A Boohoo spokeswoman said the company "has made extensive improvements to its supply chain practices", and that the "group looks forward to publishing the details of its UK supply chain next week".

While the report had widespread concerns about retailers and suppliers using cotton from Xinjiang, other companies were also in the committee's sights.

MPs were particularly critical of Disney which, they said, had refused to appear before it to give oral evidence on the making of the film Mulan - parts of which were shot in China's Xinjiang province.

"The Walt Disney Company has a responsibility to demonstrate that none of their actions supported oppression or undermined human rights during the production of Mulan," it said.

"The Walt Disney Company still has many questions to answer, particularly in relation to concerns about whether it completed adequate risk assessments and put in place sufficient safeguarding measures during the production of Mulan in Xinjiang, and why it refused to answer questions before our committee."

'Deeply concerning'

A Disney spokeswoman responded: "We respect the role and views of the select committee and when approached by the committee we provided relevant background and robust written testimony to them."

Nusrat Ghani, Conservative MP and lead BEIS Committee member looking at forced labour in UK, said: "It is deeply concerning that companies selling to millions of British customers cannot guarantee that their supply chains are free from forced labour.

media caption"China's leaders are responsible for a Uighur genocide"

"Modern slavery legislation and BEIS Department policy are not fit for purpose in tackling this grave situation. Amid compelling evidence of abuses, there has been a sorry absence of significant new Government measures to prohibit UK businesses from profiting from the forced labour of Uighurs in Xinjiang and other parts of China."

But a government spokesperson said: "Forced labour is one of the world's most despicable practices and the government will not stand for it, whether this exploitation takes place in the UK or abroad.

"The UK is the first country in the world to require businesses to report on how they are tackling modern slavery and forced labour in their operations and supply chains, and we are taking forward plans to extend that to certain public bodies and introduce financial penalties for organisations that don't comply."

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Analysis box by Dharshini David, global trade correspondent

As evidence of Uighur Muslims being abused and compelled to work in fields and factories in Xinjiang has mounted, so too has unease about the hidden cost of some clothes.

A fifth of the world's cotton comes from the region, and a lack of transparency in supply chains may mean some British firms are unwittingly complicit in the abuse.

The government says financial penalties will be introduced for firms found to be breaching an updated version of the Modern Slavery Act - but has yet to reveal full details or a timescale.

The industry too is keen to be seen to be acting. The Better Cotton Initiative, which focuses on sustainable production and supplies some big high street names, has ceased sourcing from Xinjiang.

Retailers know any reputational stain may be hard for customers to wear. But with so many steps in the production process, it isn't always easy to know the provenance of the shirt on your back.

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Oct 20, 2020

News | Business | Banks: UBS reports its best third quarter for a decade, with a 99% hike in net profit

 

Silvia Amaro


LONDON — The world’s largest wealth manager, UBS, reported a jump in net income to $2.1 billion for the third quarter on Tuesday, easily beating analyst expectations. It marks a 99% jump from the same period a year earlier.

“It is very difficult not to be happy with this set of numbers because they are coming from a great contribution from all business units,” CEO Sergio Ermotti told CNBC’s Geoff Cutmore Tuesday.

Analysts had expected the Swiss bank and asset manager to report $1.5 billion of net income for the third quarter, according to data from Refinitiv Eikon. It comes after an 11% drop in profit for the second quarter, as the global banking industry felt the full effect of the coronavirus pandemic.

“We speak a lot about stimulus and Covid-related matters, but the geopolitical uncertainties in Europe, and also in the Sino-U.S. relationship, (are) still there and they’re there to stay so we shouldn’t underestimate that,” Ermotti added.

UBS said pre-tax profit for the third quarter rose 92% to $2.6 billion, in what it described as its best third-quarter result in a decade.

The Swiss lender’s results are the first of Europe’s banks. Analysts are expecting a better quarter for the sector following a tough first half off the back of the coronavirus outbreak and economic crisis.

UBS said loan loss provisions for the period came in at $89 million, significantly lower than the amounts booked in the first and second quarters. It also said it planned to pay its delayed dividend from 2019 in November of this year, and had set aside $1.5 billion for share repurchases which it expects to start next year.

Here are other highlights of the third quarter:

  • Operating profit hit $8.9 billion, versus $7.08 billion a year ago
  • CET 1 capital ratio reached 13.9%, versus 13.1% a year ago

Pre-tax profit in UBS’ investment bank rose 268%, on the back of market volatility in the wake of the coronavirus crisis. While its wealth management division posted an 18% rise in profit before tax, and total invested assets hit an all-time high of $2.75 billion.

The bank attributed its results to ongoing strong client activity and the “benefits of a well-diversified business model with broad regional mix.”

Speaking to CNBC, Ermotti said: “The amount of visibility is very limited, but this has not really changed in the last few years and months. I think what we are doing is staying very agile and staying very focused on our plan.”

From a geographical standpoint, Ermotti also said that the U.S. and Asia “offer bigger and greater growth opportunities” than Europe, adding that the latter needed to implement more structural reforms and regain competitiveness.

Tuesday’s results are UBS’ last under the leadership of Ermotti, who is due to leave the bank this month. Ralph Hamers will become the new head on Nov. 1.

“UBS has all the options open to write another successful chapter of its history under Ralph’s leadership,” Ermotti said in a statement accompanying the results.

Oct 1, 2020

News | Business | Companies | China: Alibaba needs to look for growth beyond China and Southeast Asia in a 'bipolar world for technology'

 

Saheli Roy Choudhury


Attendees pass by an Alibaba.com display at CES 2019 in Las Vegas.

Attendees pass by an Alibaba.com display at CES 2019 in Las Vegas.

David Becker | Getty Images

SINGAPORE — Chinese tech giant Alibaba needs to look beyond China and Southeast Asia in order to sustain current levels of growth, an analyst said Thursday. 

With more than 750 million active users in China, Alibaba is at a point where it is beginning to hit saturation, according to Gil Luria, director of research at D.A. Davidson. The company is already talking about lower-tier Chinese cities as potential growth avenues but Luria said the markets there are not as fertile as the top-tier cities and there is already stiff competition in those places. 

“Their growth is going to have to come from outside of China,” he said on CNBC’s “Squawk Box Asia” on Thursday. “For them to sustain the levels of growth they have right now, with China approaching saturation, Southeast Asia is only going to carry them for so long before they have to get into some of those other markets in order to sustain this growth.” 

Some of those potential growth markets include Latin America and Africa where e-commerce penetration still has room for growth and China has some influence. Alibaba has a presence in Southeast Asia through e-commerce platform Lazada, in which it owns a majority stake.

The tech giant currently makes most of its revenue from its China retail marketplaces that include shopping platforms like Taobao and Tmall, as well as its online-to-offline grocery chain. But its cloud computing business is said to be a critical component of future growth where Alibaba faces stiff competition from the likes of Amazon, Microsoft and Google. The company said this week it expects the cloud business to become profitable in the current fiscal year for the first time. 

Howard Yu, a professor of management and innovation at IMD Business School, said earlier this week on CNBC’s “Capital Connection” that Alibaba may find it “almost impossible” to meaningfully penetrate markets in Western Europe and the United States due to policy and perception toward data.

U.S.-China tensions

The U.S. and China are locked in a battle for technology dominance. As a result, Washington has stepped up its efforts to limit the presence of Chinese tech companies in the U.S. market, often citing national security concerns — in some cases, the U.S. has alleged that American user data collected by Chinese companies could be access by the Chinese government. 

Tencent, which owns the massive social messaging platform WeChat, faces a potential ban in the United States. ByteDance, the owner of the popular short-video sharing app TikTok, has been forced to make a deal with Oracle and Walmart for the app’s U.S. operations to continue. Telecommunications giant Huawei, semiconductor firm SMIC and others are facing export restrictions in buying vital equipment from suppliers due to U.S. sanctions. 

“Decoupling is happening,” D.A. Davidson’s Luria said about the two superpowers and their seemingly divergent paths. “There is no doubt that it’s happening. We will have a bipolar world for technology.”

While Alibaba so far has not been explicitly targeted by the U.S. government, Luria said the company’s payments arm has “already been a victim of decoupling.” He was referring to Ant Financial’s failed attempt to buy U.S. money transfer company, MoneyGram, after Committee on Foreign Investment in the United States (CFIUS) rejected a proposal over national security concerns. 

“That really slowed down their ability to grow into the U.S. and the West in a variety of businesses,” Luria said, adding that the ongoing decoupling efforts will further limit Ant Financial’s efforts as well as Alibaba’s to a smaller extent. 

Still, Luria said he expects Ant Financial’s upcoming dual listing in Shanghai and Hong Kong to be well received by investors. 

Sep 17, 2020

News | Business | UK: Furlough must be replaced, says business body

 

Brian Meechan 


Media captionPub and restaurant owner Cerys Furlong says the industry is expecting more problems

The furlough jobs scheme needs to be replaced when it ends to support the hardest-hit businesses, an industry body has said.

Tourism, hospitality, leisure and aviation are some of the sectors still looking to recover from the pandemic.

CBI Wales director Ian Price said some firms may face paying a "larger chunk".

The Treasury said: "We've not hesitated to act in creative and effective ways to support jobs and we will continue to do so as we recover from this crisis."

Mr Price anticipated workers might be hit in the pocket under any new scheme compared with furlough, which had paid 80% of salaries at one point.

He said the new scheme was only likely to apply to the worst-hit sectors.

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What is the furlough scheme?

Since March, almost 10 million people have been placed on the furlough scheme, which pays the wages of those who cannot work because of coronavirus.

Businesses now have to contribute towards the salaries of their furloughed staff and the scheme is due to end on 31 October.

Chancellor Rishi Sunak has repeatedly ruled out extending the scheme, which is officially called the Coronavirus Job Retention Scheme.

Instead, the UK government intends to offer firms:

  • £1,000 for every furloughed employee kept on until at least the end of January
  • £1,500 for every out-of-work 16-24 year-old given a ''high quality'' six-month work placement
  • £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over 25s
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'Some businesses may not survive until Christmas'

Cerys Furlong owns two pubs and a restaurant in Cardiff, which employ 40 people.

Most of her furloughed workers returned by the start of August when restrictions on customers being inside were lifted, but she is now expecting more problems.

She said rising Covid-19 cases and local lockdowns have damaged customer confidence.

Businesses need more financial support from UK government, she said, but did not think firms and employees should shoulder more costs if there was a new scheme.


"We have to remember that our employees have already taken an enormous financial hit, if they've been on furlough and receiving only 80% of their salary for months on end," she said.

"And also small businesses' cash reserves, we don't have any more cash to be able to plug those gaps, so I think it's unrealistic to expect businesses to do it.

"It might be something that works for bigger businesses but the reality for many small independently-owned and run businesses, without additional government support over the coming months, they won't survive until Christmas."

Ms Furlong said extending the full furlough scheme to the worst hit sectors would help, as well as support with issues such as tax bills.

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Mr Price added: "Quite clearly we need some targeted support once the Job Retention Scheme runs out.

"There needs to be an announcement, potentially from UK government, fairly quickly to suggest there will be something there for some of the sectors that need it most."

He said people were facing tough decisions over redundancies this week to allow the process to be completed when the furlough scheme ends in October.

Furniture manufacturing is one area of concern, with the British Furniture Confederation fearing nearly half of all jobs in the sector could be lost.

Its manufacturers forecast sales will be down by about 25% to 30% this year.

Mr Price said any replacement support would be more targeted and aimed at helping those businesses that have "really been hit hard".

Mr Sunak said looking for new ways to protect jobs was his "number one priority", after the UK unemployment rate hit its highest level in two years.

The Treasury said the furlough scheme, which has helped 378,400 workers in Wales, has done what it was designed to do - save jobs and help people back into employment.

"And many of our unprecedented interventions - including the Job Retention Bonus, business rates holidays, VAT cuts and the Kickstart Scheme - will ensure this support continues into next year," said a spokesman.

Sep 10, 2020

News | Business | Vaccine Delivery: World vaccine delivery 'will need 8,000 jumbo jets'

3-4 minutes - Source: BBC



Shipping a coronavirus vaccine around the world will be the "largest transport challenge ever" Image copyright Getty Images
Shipping a coronavirus vaccine around the world will be the "largest transport challenge ever" according to the airline industry.
The equivalent of 8,000 Boeing 747s will be needed, the International Air Transport Association (IATA) has said.
There is no Covid-19 vaccine yet, but IATA is already working with airlines, airports, global health bodies and drug firms on a global airlift plan.
The distribution programme assumes only one dose per person is needed.
"Safely delivering Covid-19 vaccines will be the mission of the century for the global air cargo industry. But it won't happen without careful advance planning. And the time for that is now," said IATA's chief executive Alexandre de Juniac.
While airlines have been shifting their focus onto delivering cargo during the severe downturn in passenger flights, shipping vaccines is far more complex.
Not all planes are suitable for delivering vaccines as they need a typical temperature range of between 2 and 8C for transporting drugs. Some vaccines may require frozen temperatures which would exclude more aircraft.
"We know the procedures well. What we need to do is scale them up to the magnitude that will be required," added Glyn Hughes, the industry body's head of cargo.
Flights to certain parts of the world, including some areas of South East Asia, will be critical as they lack vaccine-production capabilities, he added.

Military precision

Distributing a vaccine across Africa would be "impossible" right now IATA says given the lack of cargo capacity, size of the region and the complexities of border crossings.
Transportation will need "almost military precision" and will require cool facilities across a network of locations where the vaccine will be stored.
About 140 vaccines are in early development, and around two dozen are now being tested on people in clinical trials.
One is being developed by the University of Oxford that is already in an advanced stage of testing.
IATA has urged governments to begin careful planning now to ensure they are fully prepared once vaccines are approved and available for distribution.
Along with making sure they are handled and transported at controlled temperatures, security is another issue.
"Vaccines will be highly valuable commodities. Arrangements must be in place to keep ensure that shipments remain secure from tampering and theft," added IATA.

Sep 1, 2020

News | Business | Tech | Companies: Start-up factory Rocket Internet to delist, six years after going public

Ryan Browne




Oliver Samwer, CEO and founder Rocket Internet, on the floor of the Frankfurt Stock Exchange in October 2014.
Oliver Samwer, CEO and founder Rocket Internet, on the floor of the Frankfurt Stock Exchange in October 2014.
Arne Dedert | picture alliance via Getty Images

German tech investment firm Rocket Internet is set to delist, the company announced Tuesday, around six years after it went public on the Frankfurt Stock Exchange.
The Berlin-based firm — which is often referred to as a start-up factory — said in a statement that it was offering investors 18.57 euros ($22.23) for each of their shares, lower than Monday’s closing price of 18.95 euros. Rocket Internet shares initially rose on the news Tuesday morning, before falling around 1.3%.
Founded in 2007, Rocket Internet became controversial for building start-ups that cloned the business models of U.S. internet giants such as Amazon, Uber and Airbnb. For its part, Rocket Internet says it merely adapts proven models for untapped local markets. Some of its most notable bets include German e-commerce firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh.
Rocket Internet has seen its share price steadily decline in the years since it went public, falling from a market value of 6.7 billion euros ($8 billion) on the day of its IPO to just 2.6 billion euros as of Tuesday. The stock is down almost 15% year-to-date.
Explaining the reason behind its decision to delist, Rocket Internet said it was “better positioned as a company not listed on a stock exchange” as this would allow it to focus on long-term bets.
“The use of public capital markets as a financing source as essential parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange,” the company said in a statement.
“Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”
Rocket Internet said that its investment division, Global Founders Capital, and CEO Oliver Samwer, would retain their stakes of 45.11% and 4.53% respectively. The group’s bets have made billionaires out of Samwer and his brothers and co-founders Alexander and Marc. Each has a net worth of $1.2 billion, according to Forbes.
Rocket Internet will hold a virtual shareholder meeting on Sept. 24 with the aim of getting approval for its plan to delist. The company said it had also launched a separate buyback program to secure 8.84% of its shares from the stock market. It aims to complete this buyback by the end of Sept. 15.

Aug 27, 2020

News | Business | Orkney Harbours: £230m plan to develop Orkney harbours unveiled

Daniel Bennett 



Orkney Harbours Masterplan image / Scapa Deep Water Quay Image copyright Orkney Harbours Masterplan
Image caption A deep water quay at Scapa is a major focus of the plans
A £230m plan to redevelop and modernise Orkney's harbours and attract new jobs to the area has been launched.
The Harbours Masterplan aims to improve key sites over the next 20 years, including creating a £116m deep water quay at Scapa.
Scapa Flow is the largest natural deep-water harbour in the northern hemisphere.
It is hoped the scheme could be funded from the Islands Growth Deal as well as from private businesses.
Those behind the plans say up to 100 jobs could be created as well as marine industry jobs at sea and onshore.
Initial investment would see £115.7m spent on the Scapa project, £52.8m spent at Hatston Pier, £39.9m spent at Kirkwall Pier, £15.2m for Scapa Pier and £800,000 spent at Stromness.
The Scapa Deep Water Quay would be a completely new development and would support the energy sector, such as maintenance of vessels and dealing with wind farm components.
The plans also include marina and waterfront development, while others would have fuel facilities.
The Stromness site would be devoted to capitalising on the increasing popularity of the cruise ship industry in Orkney, with further scope to develop other harbours on the island.
"We've done an outline business case, which conservatively suggests another 115 new jobs for the county," said harbour master Jim Buck. "Those are good, long-term jobs."
He said that offered "generational change".
Mr Buck added: "We've got the education system, and the ability to train people up to do these jobs".
The development of sites will be split into two phases.
It is hoped phase one will have construction completed on projects within five years.
Council leader James Stockan said: "This is a business proposition - it's not pouring government money in or pouring Orkney money in. It's only going to be used if the business justifies the spend.
"We know that harbour jobs have huge spin off for everybody else on the islands, and that's the way we can make the money circulate."
He added: "We had two world wars, we've had an oil industry that's been with us for 40 years, and we have a pristine environment.
"It's really important that we look after the environment of Scapa Flow so that it's left in very good condition for future generations."

Aug 18, 2020

News i Business | US Politics: Trump dangles cash for US firms moving from China

3minutes - Source: BBC



US President Donald Trump gestures in front of supporters at Basler Flight Service in Oshkosh, Wisconsin, US. Image copyright Reuters
US President Donald Trump wants to offer tax credits to entice US firms to move factories out of China.
He has also threatened to strip government contracts from firms that continue to outsource work to China.
In a speech on Monday, Mr Trump vowed to create 10 million jobs in 10 months saying “we will end our reliance on China.”
It marks his latest attack on China, after moves that have involved tech companies TikTok, WeChat and Huawei.
The announcement came as tensions between Washington and Beijing have been escalating rapidly in recent months.
The Trump administration is now casting its net beyond the Chinese technology companies it has accused of threatening US national security.
“We will create tax credits for companies that bring jobs from China back to America,” Mr Trump said. “We built the greatest economy in the history of the world and now I have to do it again.”
Chinese communications giant Huawei has repeatedly come under attack by the US government and on Monday further restrictions were placed on the company to limit the electrical components it can buy.
The Trump administration has also threatened to include more Chinese technology firms on its blacklist of companies which face bans in the US, alongside TikTok and WeChat,
As November's US presidential election approaches, Mr Trump has upped the ante in targeting China, accusing its companies of stealing American jobs and intellectual property.
In Monday's speech, Mr Trump added that “we will make our critical drugs and supplies right here in the United States.”

American icons

Many well-known US products are made overseas for American consumers, a business strategy known as outsourcing.
America’s most valuable public company, Apple, uses a Taiwanese firm called Foxconn to make the majority of its best-selling iPhones. Foxconn has factories in both China and Taiwan.
Other iconic American brands, including Nike, also have large manufacturing plants in China as well as other parts of Asia.
Global brands have been reviewing their Chinese operations amid the coronavirus pandemic after temporary factories closures caused major supply chain disruptions.
China is often referred to as the “world’s factory” but its share of global exports has been hit by the trade dispute with the US and the coronavirus pandemic.

Aug 12, 2020

News | Business | Economy | UK: UK economic slump worst in Europe in second quarter

Delphine Strauss



The UK economy suffered a bigger slump than any other major European economy in the second quarter, shrinking by a fifth and falling into its deepest recession on record.
Official data released on Wednesday showed that gross domestic product fell 20.4 per cent quarter on quarter, with widespread contractions across all sectors.
The figures confirm that the pandemic has hit the UK harder than other developed economies. After the second-quarter contraction, the decline in UK GDP since the end of 2019 is double that in the US and second only to Spain among European peers.
A recovery from the depths of the lockdown gained momentum in June, with output growing 8.7 per cent month on month — faster than most economists had expected, although broadly in line with the Bank of England’s latest predictions.
This means GDP has grown 11.3 per cent since its April low, but remains 17.2 per cent beneath its level in February, before the coronavirus crisis hit.

Column chart of UK real GDP, % change compared with previous quarter showing Government restrictions severely curtailed economic activity in the second quarter
“The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record,” said Jonathan Athow, ONS deputy national statistician.
“Overall, productivity saw its largest fall in the second quarter since the three-day week,” he added, referring to a measure introduced in 1973.
Sterling was little changed at about $1.30 following the release of the data. The FTSE 100 stock index, however, outperformed its European peers early on Wednesday morning, rising 0.6 per cent.
Rishi Sunak, the chancellor, said in response to the data: “Today’s figures confirm that hard times are here . . . But while there are difficult choices to be made ahead, we will get through this.”
The figures led to renewed calls from business groups for the government to extend wage support through the furlough scheme and step up other forms of support for the economy.

Column chart of Change in GDP in Q2 2020 vs Q1 2020 (%) showing The fall in UK GDP in the second quarter was the worst among its peers
Tej Parikh, economist at the Institute of Directors lobby group, called for cuts in employers’ national insurance contributions to support hiring, and for the Treasury to explore options for restructuring business loans.
Fhaheen Khan, economist at Make UK, the manufacturers organisation, said the government should be “flexible in extending job support schemes in the same way as our competitors”.
Alpesh Paleja, economist at the CBI employers group, said the dual threat of a second wave of infection and slow progress over Brexit talks underlined the need for “maximum agility” from government.

Line chart of UK monthly GDP (2016 = 100) showing Some recovery was evident in June
James Smith, research director at the Resolution Foundation, a think-tank, added: “Although today’s data tells us that the economy is recovering as lockdown restrictions ease, it still has a long way to go. And that challenge will be bigger for the UK than for most other rich countries.”
Analysts said the UK’s underperformance was partly due to the length of its lockdown, and partly because the consumer-facing services sector that was hardest hit by social distancing has a bigger weight in GDP, accounting for 80 per cent of the economy.
The services sector fell 19.9 per cent quarter on quarter, accounting for three-quarters of the fall in GDP. With much of the hospitality and leisure sectors still closed in June, its recovery has been slower than that of other sectors, with services output up 7.7 per cent month on month, largely due to a strong recovery in car sales. This compared with an 11 per cent rebound in manufacturing.
Construction was hardest hit over the quarter as a whole, but has also bounced back faster, with a month on month jump of 23.5 per cent in June.
The ONS set out record quarter-on-quarter falls in household spending, driven by the slump in expenditure on tourism, hospitality and transport, and in government spending. The latter was due to school closures and the postponement of non-urgent healthcare.
It also highlighted the risk of a prolonged slump in business investment, which has fallen by a record 31.4 per cent since the first quarter, with Bank of England surveys suggesting that most businesses have cancelled or postponed non-essential spending, especially in consumer-facing sectors.
Dean Turner, economist at UBS Wealth Management, said that although the quarterly numbers were bleak, the upbeat June figures suggested there was a “strong bounce in activity as the economy emerged from lockdown”.
“We expect pent-up consumer demand to drive a strong recovery in the third quarter, although this momentum will gradually fade as the outlook for the labour market deteriorates,” he said.
Additional reporting by Adam Samson

Jul 28, 2020

News | Business | Gold: Gold stalls near record high as dollar decline pauses

Naomi Rovnick  and Hudson Lockett 



The price of gold on Tuesday came within striking distance of hitting $2,000 for the first time, but the yellow metal’s rally lost momentum as the US dollar firmed following a heavy sell-off.
The spot gold price increased as much as 2 per cent to hit an all-time high of $1,980.57 a troy ounce on Tuesday morning in Asia, before falling back in the London session to $1,929. Silver also rose as much as 6.4 per cent to $26.19 an ounce during the Asian session, before tumbling to $23.93.
The volatility in precious metals reflected conflicting views about the US economy and monetary policy decisions ahead of the US Federal Reserve meeting on Wednesday.
While traders generally doubt the Fed will turn to negative interest rates, some believe it could adopt more unconventional measures such as yield curve control or setting upper limits on Treasury yields.

Chart showing the price of gold
Negative returns for US and other government bonds, after accounting for inflation, has boosted the allure of gold, which is considered to be a store of value and a hedge against future inflation.
On Tuesday, analysts at Citi raised their price target for gold to $2,100.
Monica Defend, global head of research at Amundi, said the case for higher gold prices remained strong as the Fed was likely to signal at the July meeting that it would continue with its dovish monetary policy stance, despite being unlikely to make any big changes until at least September.
“Gold is highly sensitive to balance sheet expansion by the Fed,” Ms Defend said. “It is a good hedge against geopolitical risk and it looks to be an asset class to recommend at a time when interest rates are ultra low.”
But while the gold price has risen by about 12 per cent since early May, its rally paused on Tuesday as the dollar began recovering from a rout.
Traders have dumped the US currency in recent days because of a surge in coronavirus cases in sunbelt states and a stalemate between the White House and Congress on approving new stimulus for the struggling US economy.
The sell-off eased on Tuesday, however, as investors awaited the Fed’s latest policy decision and also digested a move in the dollar that Nadège Dufossé, head of cross-asset strategy at Candriam, described as “very rapid”, which she ascribed to lower liquidity and thin summer trading volumes.
The index tracking the dollar against a basket of trading partners’ currencies hit a two-year low of 93.492 in the Asian trading session before creeping up to 93.8 by late morning in London.
The euro fell from a two-year high reached on Monday, down 0.3 per cent at $1.1713. Emerging market currencies were also under pressure. The Russian rouble dropped 0.8 per cent to Rbs72.8 against the dollar and the South African rand fell 0.5 per cent to R16.5.
Ms Dufossé said the investment case for the dollar remained “bearish, on a one or two-year view”, particularly if the pandemic recedes in Europe and economies within the bloc continue to find a stable footing.
A survey earlier this week showed morale among German business executives had reached its highest level since coronavirus began earlier this year, exceeding economists’ expectations.
Investors turned cautious on equities on Tuesday afternoon. France’s CAC 40 index dropped 0.9 per cent and Germany’s DAX fell 0.5 per cent.
Futures tipped Wall Street’s S&P 500 to open 0.5 per cent lower when trading begins later, having earlier pointed towards weaker declines.

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