Rishi Sunak will come up with a £ 4.3 billion plan on Wednesday to counter the threat of mass unemployment as Chancellor prepares Britain for the brutal economic aftermath of the coronavirus crisis.
The Chancellor is expected to say that now is not the time to start fiscal consolidation, even as he publishes what government officials have admitted as “scary” new forecasts.
The UK fiscal watchdog will warn that after the decline in Covid-19 production this year, with huge government spending and weak tax revenues, public finances will continue to be under pressure by the time of the next general election in 2024 in August, topping £ 2tn.
Prime Minister Boris Johnson has ruled out a return to “austerity” in public spending. But Mr Sunak will take humble first steps to contain spending and put in place plans to save an estimated £ 4 billion a year from the foreign aid budget, along with a public sector wage freeze that could save £ 4 billion after three years. NHS employees are exempted.
However, according to a report from Parliament’s spending watchdog, the government would have saved £ 10 billion in personal protective equipment for health workers during Covid-19 if it had been purchased in 2019. (FT)
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In the news
Biden transition spurs stock rally The Dow topped 30,000 for the first time on optimism for a smooth transition in power and likely measures to strengthen the world’s largest economy. Janet Yellen, Joe Biden’s reported election for Treasury Secretary, would take the helm as the economic recovery showed signs of slowing amid waning fiscal support from Congress. (FT)
Janet Yellen is known nationally and internationally for having headed the US Federal Reserve for four years between 2014 and 2018. © REUTERS
Battles in the EU White House European capitals are ready for tough talks with Joe Biden’s proposed foreign policy team on privacy, trade and the power of big tech. The president-elect said Tuesday the US was “back, ready to lead the world”. However, Janan Ganesh argues that Mr. Biden should stay away from missionary idealism. (FT)
Exclusive: Bertelsmann drives around Simon & Schuster The German owner of Penguin Random House was the highest bidder on the purchase of Simon & Schuster before Rupert Murdoch’s News Corp. The purchase would establish Bertelsmann as the world’s largest book publisher. (FT)
Tesla S&P debut set to electrify Wall Street Tesla’s market value rose to $ 500 billion in the final leg of a rally sparked by a buying spurt ahead of the electric car maker’s upcoming debut in the blue-chip S&P 500 stock index. (FT)
“Tesla stocks were one of the remarkable stories of 2020” – David Kostin, chief US equities strategist at Goldman Sachs
In a first statement, the Pope says that China’s Uyghurs have been “persecuted” In his new book “Let Us Dream: The Way To A Better Future”, Pope Francis described the Uyghur people as “persecuted people” for the first time, something human rights activists have been asking him to do for years. Beijing dismissed the statements as “without a factual basis”. (Reuters, Guardian)
Tigrayans accused of massacre in Ethiopia Ethiopia’s state-appointed watchdog accused a Tigrayan youth group on Tuesday of killing hundreds of civilians in a three-week war. For the first time in modern history, war and insecurity ravage a continuous line of African states from Mauritania’s Atlantic coast to the Red Sea. (Reuters, viewer)
Since the fighting began in the mountainous north of Ethiopia, hundreds have been killed, tens of thousands have fled to Sudan and people have been uprooted from their homes. © AFP via Getty Images
The British know little about the economy, finds report The British “have no basic understanding” of economic statistics like unemployment or government deficits and distrust official data, according to a report funded by the Bureau of National Statistics. (FT)
The City of London is making a late rush to contain the Brexit disruption Businesses and city regulators are taking last-minute precautions to avoid disruption when the UK leaves the EU’s single market next month. Paris gains a new trading hub for Goldman Sachs and a double listing for FTSE 100-Segro. (FT)
What questions do you have ahead of the Brexit date when the UK leaves the EU? Let us know at [email protected] or in the comments and our Brexit editor can weigh up.
The day ahead
Economic forecasts for Great Britain The Budgetary Responsibility Office is due to release a full update of the economic and tax outlook on Wednesday, while the Debt Management Office is expected to release a contract announcement. (FT)
Fed protocols The US Federal Reserve will release the minutes of this month’s monetary policy meeting, giving investors a glimpse of how seriously the US Federal Reserve is considering further stimulus after the rise in coronavirus cases. (FT)
What else are we reading?
The plight of British university students Despite Covid-19, students were encouraged to begin their courses at UK universities with the promise of an undergraduate experience. But many said they were abandoned with little financial or psychological support, locked up with strangers when the virus pierced the property, and forced to pay tuition fees. (FT)
What the world can learn from the pandemic There are already lessons on how we can better cope with the effects of such diseases, writes Martin Wolf. Covid-19 has shown a social and economic vulnerability far greater than what experts believe. (FT)
Japan’s tuition for public spending Last month, the IMF urged advanced economies to spend large and swift spending on simple capital projects to stimulate demand and employment. But the lessons they should learn from Japan’s public works are nuanced. Read the latest from our lessons from Japan. (FT)
London lockdown tips from readers Last week, FT workers shared their discoveries in London that helped them break through the lockdown on the capital. This week readers picked their favorite places to eat, exercise, and entertain. (FT)
Cloudy with migraines Japan’s weather pain forecast is designed to show how atmospheric conditions cause headaches and joint pain. To be more useful, the weather forecast should try to factor the likelihood of physical pain into the daily outlook, as it already does with pollen counts for allergies. (FT)
Bitcoin finds a reason in doomsday scenarios For those who believe that the world is slipping towards authoritarianism and civil liberties cannot be taken for granted, Bitcoin’s anonymous security acts as a hedge, writes Izabella Kaminska. Even the queen has expressed interest, notes Jemima Kelly. What does the future hold for coins when more people go cashless? (FT, NYT)
Illustration of the day
Banx: The greenhouse gas values are still high despite the Covid lock
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