Browsing: Economy

Economy
With Bond, you know the ending from the outset. That does not apply at Cineworld | Nils Pratley

Choose your villain in the depressing no-action cinema thriller. The top nomination goes to the distributors of the James Bond franchise who have killed the Christmas season for the cinema industry by shunting the release of No Time To Die into next spring.Then there’s Andrew Cuomo, the mayor of New York, who has helped to frighten Hollywood studios by closing the city’s screens. Cineworld itself, now planning to shut all its US and UK cinemas for an indefinite period, is hardly blameless. It is carrying $8.2bn (£6.3bn) of net debt, including lease commitments and its over-leveraged position existed before Covid-19 hit takings.While rivals experiment with reduced hours (a better choice for UK employees whose wages can be partially supported via Rishi Sunak’s new scheme for part-timers), Cineworld has opted for corporate hibernation and pushing its zero-hours workers out into the cold. One aim, one assumes, is to show landlords it really can’t afford to pay rent.That does not, though, remove Cineworld’s urgent need for fresh funds. Even before the Bond news, the company was set to breach banking covenants at the end of this year. “All liquidity raising options are being considered,” said the company on Monday, but none look

Economy
The Guardian view on Rishi Sunak: back to the future | Editorial

Rishi Sunak is the Conservatives’ most modern politician in terms of style. But he is traditionalist in substance. In his conference speech, the chancellor extolled the virtues of good housekeeping to sell the idea that he would balance the nation’s books. The household analogy is a powerful one in politics because it seems to correspond to everyday observations about thrift. But it makes no sense to compare personal experience with the economics of a nation. The late Roy Jenkins, two decades after serving as a Labour chancellor, rightly said Margaret Thatcher was trading in lousy economics when she sold herself as a prudent housewife able to save Britain from Labour overspending.“I think it is nonsense,” he told the BBC, “because there is an essential difference between the position of a family budget and the national budget, and that is that on the whole a family cannot increase its income by increasing its spending, whereas a nation, a government, by increasing its spending [can] substantially increase the total of the national income”. It speaks volumes about how much of the debate around political economy has been conceded to the right that the current Labour shadow chancellor could not match the unapologetic

Economy
New jobs coaches will help people back to work, says Rishi Sunak

Thousands of work coaches will be hired under a new government employment programme to help those who have lost their jobs during the pandemic, amid fresh warnings of an unemployment crisis as the furlough scheme ends.The £238m job entry targeted support (Jets) scheme will help jobseekers who have been out of work for at least three months. It will be available to people receiving the “all work related requirements” universal credit payment, or the new style jobseeker’s allowance.The Department for Work and Pensions says Jets will “ramp up support” to help people back to employment, with specialist advice on how to move into growing sectors, as well as CV and interview coaching. It is recruiting an additional 13,500 coaches to help deliver the programme.The move comes as economists forecast a sharp increase in unemployment this winter, with employers such as Rolls-Royce, Marks & Spencer, Debenhams, Boots and John Lewis all announcing layoffs since the pandemic began. More than a third of businesses plan to cut jobs before the end of the year, a survey last week found.The chancellor, Rishi Sunak, who will give a speech to the Conservative party conference on Monday, said: “Our unprecedented support has protected millions of

Economy
The Guardian view on Boris Johnson's two nations: employers and employees | Editorial

Boris Johnson claims he is a “one nation Conservative”, bringing together the wealthy “classes” with the “masses”. Leaks from Downing Street signal a leftwing approach on economics and rightwing one on culture. Mr Johnson presents himself as the first Tory post-Thatcherite prime minister. His Brexit sales pitch was that he was prepared to sacrifice business profitability to regain “sovereignty”. Yet the Covid pandemic has shown Mr Johnson is unable to resolve the tension between his party’s free-market orthodoxy and a desire to cater to new working-class voters.Pre-crisis the British economy was characterised by low levels of business investment, a poor skills base, stagnating wages and the zombification of UK companies, which had taken on £1.2tn of corporate rated debt. Covid presented a chance to reset the economic model that has seen the share of wages fall as a share of the country’s gross domestic product. As providers of capital, investors might think that having a bigger share of economic output is a good thing. But companies also need customers who can afford to buy their goods and services.The question for Mr Johnson is whether demand in the economy should be profit-led or wage-led. His rhetoric suggests the latter while his

Economy
Rolls-Royce's rights issue is emergency button it should have pressed sooner | Nil Pratley

The process was slow and spluttering, but the Rolls-Royce got there in the end: there will be a fully underwritten rights issue to raise £2bn, plus a new £3bn debt package. If the civil aviation market comes out of hibernation by 2022, it should be enough.The UK’s premier engineering company didn’t even have to trot off to Singapore for sovereign wealth money. It appears that current shareholders said that, if new shares are to be printed at desperation prices, they’ll take them.And the UK government, via the export finance scheme, will play its part by slapping a 80% guarantee on £1bn of Rolls debt for five years provided shareholders cough up their bit; that’s on top of the £2bn that already carries a state-backed label.One could call the package a homegrown solution – and it’s better for it. Chancellor Rishi Sunak has held his line that companies must try self-help measures first, but the Treasury has oiled the wheels by playing nicely on the debt side. That’s a pragmatic fudge.One can’t say definitively that Rolls is saved because that’s an impossible punt on infection rates, travel restrictions and vaccine development. But, on what Rolls calls its “base case”, the engine-maker

Economy
Without clarity and leadership, there's plenty to fear for the UK economy | Larry Elliott

It was the sort of speech Boris Johnson used to make. Britain is on course for the most spectacular quarter of growth in its history. Consumers are spending freely on houses and cars. Good news about the economy is being crowded out by the doomsters and gloomsters in the media. As Franklin Delano Roosevelt once said: “The only thing we have to fear is fear itself.”This, though, was not the prime minister, because since the start of the coronavirus crisis Johnson has turned from Tigger into Eeyore. Instead it was left to the chief economist at the Bank of England, Andy Haldane, to make the sort of rallying cry that was once the PM’s trademark, hitting out at those determined to wallow in pessimism. The Threadneedle Street official called it the economics of Chicken Licken, after the fictional fowl who, having been hit on the head by an acorn, felt the sky was about to fall in.Haldane’s speech might have been better timed. This, after all, was the week when the death toll from Covid-19 passed the million mark, the number of new cases in the UK reached a record daily level, and one-third of employers surveyed said they were

Economy
Rishi Sunak’s plans for winter amount to creative destruction of Britain’s workforce | Carys Roberts

Though the early days of the pandemic were terrible, they offered a fleeting glimmer of hope. Social scientists have debated for years whether it could be possible to transform the economies of the UK or US, where market forces have been unleashed on society, to more closely resemble the coordinated economies seen in Germany, France and Sweden, where workers are given a seat at the table and typically enjoy greater social protections. During the spring, with the Trades Union Congress (TUC) included in talks to design a previously unimaginable wage replacement scheme, the possibility of change looked tantalisingly close.Indeed, in the hours preceding the plan from the chancellor, Rishi Sunak, for the winter economy last week, many talked of a new “German-style” scheme to replace the furlough programme. The leaders of the TUC and the Confederation of British Industry (CBI) stood alongside Sunak as he prepared to make his speech, a show of unity that would have been surprising less than a year ago. The Kurzarbeit, the German policy of topping up pay for workers on reduced hours, which meant Germany was the only G7 country where employment did not fall following the financial crisis, was widely cited.Picking through the

Economy
Britain's economic outlook: the reasons to be cheerful, and fearful

The Bank of England’s chief economist, Andy Haldane, believes the media has focused on the risks to the economy and downplayed the strength of the UK’s recovery. In a speech to business executives in Cheshire, he called it “Chicken Licken” economics after the children’s story character who feared the sky would fall on its head after it was hit by an acorn.So what is the good news that Haldane thinks we should be focused on – and the bad news he would rather we didn’t dwell on too much?Reasons to be cheerful:The Bank of England expects GDP to increase by 20% in the third quarter, or by about 1.5% a week. The fast recovery will leave the economy about 3-4% below its pre-Covid level by the end of the third quarter – not the 18% the BoE forecast in May. UK consumers have adapted and have been spending most of their money, albeit on different things, such as food and households goods. Consumption has been rising by about 2% a week since May. Online spending has increased from 20% to almost 27% of overall spending during the course of this year, creating a more resilient retail environment when another lockdown

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