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Economy
Letter: John Weeks obituary

While he was at Sussex University John Weeks did much to bring the concept of the informal sector to world attention. At the time, it was limited to a single study – of illegal brewing in Ghana – by Keith Hart. In the ILO Kenya Report on Employment, Incomes and Equality (1972), Weeks contrasted the popular view of informal sector activities as “primarily those of petty traders, street hawkers, shoeshine boys and other groups underemployed” on the streets of the big towns with the evidence he had found. The bulk of employment in the informal sector was economically efficient and profit-making, though small in scale and limited by simple technologies. Carpenters, masons, tailors and other tradesmen, along with cooks and taxi drivers, provided goods and services for a large though often poor section of the population.“From the vantage point of central Nairobi, with its gleaming skyscrapers, the dwellings and commercial structures of the informal sector look indeed like hovels,” he wrote. “For observers surrounded by imported steel, glass and concrete, it requires a leap of the imagination and considerable openness of mind to perceive the informal sector as a sector of thriving activity and a source of Kenya’s future wealth.”

Economy
Brexit fishing gamble suggests No 10 forgot its economics homework

An island nation can be forgiven for a preoccupation with fish. But with less than a month until the UK’s trade with the EU moves to new rules – whether under a deal or no-deal scenario – it is possible that continuing attempts to gain a win for British fishing industry could scupper much larger parts of the UK economy. Fishing is a politically charged issue on both sides of the Channel. Boris Johnson has talked of the UK becoming “an independent coastal state” and exploiting the “recapture of our spectacular natural marine wealth”, while Michel Barnier, the EU’s chief negotiator, has warned the UK against using fish as a “bargaining chip” (apparently not a pun on Britain’s national dish). Meanwhile, far bigger industries in the UK economy are left waiting. chart The UK’s entire automotive industry was worth £49bn in 2019, of which £16bn was manufacturing, according to the Office for National Statistics. In the same year, fishing and aquaculture was worth £446m, less than 3% of the size of the under-threat car manufacturing sector alone. Even if No 10 succeeds in its ambition of taking 60% of catches in British waters

Economy
Joe Biden warning dashes UK hopes of early US trade deal

Britain’s hopes of securing an early trade deal with the US have been dashed by a warning from Joe Biden, the president-elect, that America will not sign a trade deal with anyone until the US has sorted out its competitiveness.Britain had been closing in on a trade deal with the administration of Donald Trump, a fierce opponent of the European Union, but Biden has said in a New York Times interview that his priorities will be to improve investment in US manufacturing and the protection of American workers.“I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers and in education,” he said.Some supporters of Brexit had touted a US trade deal as one of the early benefits of leaving the EU and its customs union, although the economic value of such a deal had been questioned.Biden told the New York Times: “I want to make sure we’re going to fight like hell by investing in America first.” He named energy, biotech, advanced materials and artificial intelligence as areas ripe for large-scale government investment in research.The remarks underline the extent to which leading Democrats have retreated from

Economy
An effective response to Europe’s fiscal paralysis | George Soros

I have written a lot in the past about the desirability of the EU issuing perpetual bonds. But today I am proposing that individual member states should do so.Right now, it would be impossible for the EU to issue perpetual bonds, because the member states are too divided. Poland and Hungary have vetoed the next EU budget and the Covid-19 recovery fund, and the so-called Frugal Five (Austria, Denmark, Finland, the Netherlands and Sweden) are more interested in saving money than in contributing to the common good. Investors will buy perpetual bonds only from an entity that they believe will continue to exist for the foreseeable future. That was true of Britain in the 18th century (when it issued consols) and of the US in the 19th century (when it consolidated individual states’ debt). Sadly, it is not true of the EU today.The EU finds itself in a very difficult situation. It is experiencing a second wave of Covid-19 that threatens to be even more devastating than the first. Member states used up most of their financial resources fighting the first wave. Providing healthcare and resuscitating the economy will require much more than the €1.8tn (£1.6tn) in the new budget

Economy
Don't cut government spending to boost Covid rebound – OECD

The UK and other countries should steer clear of cutting government spending to ensure a stronger economic recovery from the coronavirus pandemic, the Organisation for Economic Cooperation and Development has said. In its latest economic outlook report, the leading global thinktank said it expected the UK economy to contract by 11.2% this year, compared with the 10.1% fall in GDP it was forecasting in September. The Paris-based organisation also sharply downgraded its forecasts for UK growth next year, to 4.2% from 7.6% three months ago. The OECD said governments were at risk of failing to learn the lessons from the 2008 financial crisis when the UK and other wealthy nations cut back spending in response to record levels of national debt, choking off the economic recovery. In a clear warning to nations contemplating spending cuts or tax rises, including the UK, the OECD said public spending would be vital to support the rebound in growth expected next year as Covid-19 vaccines enable a gradual return to normality. It comes after the UK chancellor, Rishi Sunak, used his spending review to impose a pay freeze on public sector workers outside the NHS and slashed

Economy
Asian manufacturing boom offers hope for swifter global recovery from Covid

Hopes that the world will bounce back from the ravages of coronavirus in the new year have been buoyed by strong growth in output from Asia’s huge manufacturing centres, led by an accelerating post-pandemic boom in China.China’s factory activity expanded at the fastest pace in a decade in November, a closely watched survey showed on Tuesday, in the latest sign that the world’s second-largest economy is recovering to pre-pandemic levels.China’s Caixin/Markit manufacturing purchasing managers’ Index (PMI) rose to 54.9 from October’s 53.6, marking the highest level since November 2010. The gauge stayed well above the 50-level – which separates growth from contraction – for the seventh consecutive month.A steady recovery in global demand also helped Japan’s factory activity move a notch closer to stabilisation in November, while in South Korea the same metric grew at the fastest pace in nearly a decade.The final au Jibun Bank Japan Manufacturing PMI hit 49.0 in November, up from the previous month’s 48.7, and South Korea’s IHS Markit PMI rose to 52.9 in November.Factory activity also grew in Taiwan and Indonesia, a sign the pick-up in Chinese demand was underpinning the region’s economy.The strong showing of the region’s factories, allied to widespread optimism about

Economy
The Guardian view on a national infrastructure bank: proving Keynes right again | Editorial

Richard Nixon, a Republican president, apparently declared in 1971 that “we are all Keynesians now”. Mr Nixon seemed to admit that a serious shift in thought on the right of politics had occurred. But the decades of Thatcherism and Reaganism proved it to be a rhetorical move, not an ideological one. Rishi Sunak, the Conservative chancellor, attempted the same sleight of hand in last week’s budget.Mr Sunak unveiled a national infrastructure bank and a strategy to tilt spending towards the north. He also repeated his March promise of £100bn in public investment. While the money, reorientation and the institution are welcome, they are less substantial and radical in scope than that prescribed by mainstream economics. This will lead to predictably poor outcomes for employment and GDP in the UK.This is ideological. Mr Sunak will not invest on the scale that Britain desperately needs because it will risk his self-imposed borrowing limits. The Conservative manifesto in 2019 said that while the Treasury could borrow to invest, this could not exceed 3% of GDP on average. Mr Sunak’s splurge will come in under this rule. Given its historic levels of underinvestment, it is astonishing that the UK will invest less than the

Economy
Has political consensus become a pipe dream? | Letters

Perhaps the liberal democratic managed capitalism desired by Martin Kettle did exist in the 1950s, including the new welfare state in the UK (The toxic polarisation of our politics can be reversed, but it will take humility, 26 November). It didn’t prove robust – the Conservatives moved to the right and embraced free-market capitalism; regulation exists but is weak and largely captured by “experts” from the relevant market sectors.It is difficult to see how the idealised consensus can be created today, especially within one state. Multinational companies moving activities to poorly regulated locations and tax havens means that regulation must be multinational. The EU is attempting to regulate and tax tech and online firms, cooperation with which the UK has abandoned. The replacement of Donald Trump by Joe Biden doesn’t mean that economic nationalism will go out of fashion.Kettle is right that respect for the truth is indispensable. The problem is that honest conservatism has gone and, internationally, the right has adopted untruth as a weapon. This approach will continue as it has proved successful. Trump has lost the election, but the size of his vote and support for his untruths demonstrate just how successful.Talking – and listening – to

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