UK economy posts record slump on coronavirus; EU calls for reopened borders

CORONAVIRUS ALERT 6/12/2020

The Atlantic Council’s Coronavirus Alert is a regular summary of policy, economic, and business events around the emergency. To stay updated, sign up to the Coronavirus Alert here.

In top stories today:

  • The UK economy posted a record decline in April, the first full month of its coronavirus lockdown. The European Union (EU) urged its members to reopen common borders starting next week, saying previous restrictions did little to halt the spread of the virus.
  • Almost two decades of growth wiped out in one month. The UK economy contracted by a record 20.4 percent in April, the first full month of lockdown, The Associated Press reported. The country is set to be the hardest-hit developed economy this year, according to the Paris-based Organization for Economic Cooperation and Development (OECD), the news service added. Non-essential shops reopen on June 15, subject to social distancing restrictions.
  • Exhausted, demoralized, and beginning to despair: that’s how Bloomberg describes senior officials inside the government of UK Prime Minister Boris Johnson. With more than 41,000 coronavirus deaths, Johnson has presided over the worst record worldwide outside the United States, the newswire said. The UK faces the deepest recession in three hundred years, and officials are concerned a disillusioned public will ignore a lockdown if a second wave of the virus happens in the winter, Bloomberg reported.
  • Crowds at concerts, fans in stadiums, and students from abroad will all be back in Australia next month as most parts of the country have all but eliminated the virus, The Washington Post reported. Fewer than forty infections have been reported in the past week, said Brendan Murphy, the country’s top medical officer, The Washington Post added, citing a Reuters report.
  • UK workers at Airbus face “more permanent” job cuts than their colleagues in France and Germany, where wage subsidy programs are planned for as long as two years to help cope with the impact of coronavirus, the Financial Times reported, citing an interview with Chief Executive Guillaume Faury.
  • QUOTE: “It’s time for the UK to do what France and Germany have done,” Faury said, the Financial Times reported. “One year from now, those projects will be launched and then it will be too late.”
  • The EU urged its twenty-seven member states to begin lifting restrictions on their common borders starting from June 15, as previous closures do little to limit the spread of coronavirus, The Associated Press said. Citizens from certain countries outside the bloc should be allowed to arrive from July 1, the European Commission, the EU’s executive arm, also said, The Wall Street Journal reported.

SECOND WAVE?

  • Global stock markets fell on June 11 on concerns that an uptick in coronavirus infections could cause further economic damage and the US Federal Reserve warned of a long recovery for the US economy, the BBC said. The main US stock indexes had their worst day in weeks, with the Dow Jones Industrial Average falling almost 7 percent, the BBC added. The United States had more than two million coronavirus cases as of June 12, far higher than the tally in any other country, The Washington Post reported.
  • Officials in Houston, the fourth-largest US city, are “getting close” to restarting shelter-in-place orders and are ready to reopen a field hospital that hasn’t been used so far after the state of Texas posted its highest daily tally of coronavirus cases, Bloomberg reported.
  • QUOTE: “The US is now on the verge of leaving the battlefield before the war is over. To be sure, tens of millions of Americans will continue to follow guidelines,” Edward Luce wrote in the Financial Times. “But a country is only as strong as its collective will to break the infection chain. The result will be a ‘patchwork pandemic.’”
  • Beijing had two new cases of coronavirus on June 12, a day after the city’s government recorded its first case in almost two months, Reuters reported. The cases were in a different part of the city than the previous day, and authorities prepared to delay plans for some students’ return to school, Reuters added.
  • The Financial Times publishes an article in response to readers’ questions about the recovery of the global jobs market.
  • A theory floated by the White House suggests that travel from Mexico may be contributing to a new wave of infections, as opposed to states’ reopening of economies. The theory was discussed in some detail on June 11 during a meeting of the coronavirus task force, The Associated Press reported, citing two unidentified officials with knowledge of the matter. The Washington Post picks up on The Associated Press report.

BORDERS U-TURN

  • The UK government made a U-turn on EU border checks, with plans for a temporary light-touch customs regime at ports including Dover for incoming EU goods, whether or not there’s a Brexit deal, the Financial Times said. Scrapping a previous policy on full border checks followed pressure from business not to add to the existing challenges caused by coronavirus, the newspaper added.
  • Solar installations by US householders and businesses are forecast to decline by a third this year, putting 72,000 jobs at risk, the Financial Times reported, citing a joint report by Wood Mackenzie and the Solar Energy Industries Association. The coronavirus pandemic has dented consumer demand, while the virus has also caused work stoppages and delays to permits, the newspaper added.
  • Spain’s six trillion dollar housing market may be heading for another crash, according to economists studying the impact of the strictest coronavirus lockdown in Europe, Bloomberg reported. The hit to the Spanish market could range between 6.5 percent and 15 percent in a country where nearly 80 percent of people own homes and property is households’ main savings nest-egg, the newswire added.

FACEMASKS

  • Facemasks can cut the growth of coronavirus infections by 40 percent, according to a study by the Institute of Labor Economics in Bonn, Bloomberg reported. Researchers studied the experience of the city of Jena and other places in Germany that promoted their use, the newswire added.
  • Europe must become more self-reliant on supplies of facemasks and certain medicines as it contends with the coronavirus crisis, German Health Minister Jens Spahn said on June 12, Reuters reported.
  • QUOTE: “It’s not about calling globalization into question—it’s about finding the right degree of globalization,” Spahn told reporters, Reuters said.
  • The EU plans to spend a “large majority” of a 2.7 billion-euro emergency fund on advance-purchase deals with drug makers on potential coronavirus vaccines, the Financial Times reported, citing a draft strategy by the European Commission, the EU’s executive arm. EU health ministers are due to discuss the document, which says the bloc is also committed to fair global access to remedies to the pandemic, on June 12, the newspaper added.
  • From a “cuddle buddy” to “support bubble,” governments have broached the issue of intimacy and combined households for single people during the coronavirus outbreak, The Washington Post reported. Starting June 13 UK single-adult households including single parents and the elderly can form a “support bubble” with one other household, Prime Minister Boris Johnson said on June 10, the Post said. The article cites other examples from Canada, Denmark, Holland, Sweden, and the United States.
  • “Halt in ecotourism threatens conservation efforts worldwide” runs a Washington Post headline.
  • EVENT: Mele Kyari, Group Managing Director of the Nigerian National Petroleum Corporation, discusses trends in Nigeria’s oil markets in the wake of COVID-19 and efforts to weather volatility during periods of low oil prices. Details of the Atlantic Council event on Friday June 12 at 11:00 am ET are here.
  • QUOTE: “Famines are not about food availability; they are about physical and economic access to food. The pandemic has worsened both, placing commercial transport under severe pressure and reducing purchasing power,” Arif Husain, chief economist at the United Nations World Food Program, wrote in The New York Times. “We can stop the coming global hunger crisis from getting worse through global collective action to save lives and protect livelihoods.”
  • “Venezuelan migrants make long trek back home” reads the headline to an Associated Press photo story. Thousands of Venezuelans who fled their crisis-torn homeland are now trying to return after they lost jobs and livelihoods abroad because of the coronavirus outbreak, The Associated Press said.
  • India posted more than ten thousand new cases in a day for the first time, while the country’s daily death toll rose by a record 396, The Wall Street Journal reported. “Indian capital’s crematoriums overwhelmed with virus dead” reads an Associated Press headline, while the Financial Times covers allegations that the number of deaths is being under-reported in the New Delhi region.
  • Just weeks after easing restrictions, officials in some places in the Middle East have had to enforce new lockdown measures after a surge in cases in Saudi Arabia and elsewhere, The Wall Street Journal reported. Cases have also increased in Egypt, Iran, Iraq, and Israel, the newspaper added.
  • The statistic say… Iran recorded an average of three thousand new infections a day in the first week of June, a 50 percent increase on the previous week, the BBC reported.
  • Coronavirus cases topped 100,000 in Saudi Arabia, which is mulling the cancelation of the Hajj in late July for the first time since the kingdom was founded in 1932, the Financial Times reported, citing a senior official in the Hajj and Umrah pilgrimages ministry. Annual pilgrimages were expected to bring in twelve billion dollars to Saudi Arabia before the coronavirus pandemic struck, the newspaper added.
  • Amid a deepening economic crisis accelerated by a coronavirus lockdown, anti-government protests hit Lebanon on June 11 after the Lebanese pound sunk to a fresh low against the dollar, wiping out most Lebanese people’s purchasing power, The New York Times reported.
  • Organizers have canceled Formula One events in Azerbaijan, Singapore, and Japan because of the coronavirus outbreak, The Associated Press reported. Japan’s Grand Prix in October was scrapped because of travel restrictions, the news service said.
  • EVENT: The response to COVID-19 in the Caucasus has varied, but Georgia was by far the most successful in combating the virus. Azerbaijan and Armenia, meanwhile, are still struggling. What can they learn from Georgia? Details of the Atlantic Council event on Monday June 15 at 12:30 pm ET are here.

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