The Covid-19 threat level was reduced from four to three this week. The virus remains "in circulation" but a "gradual relaxation of restrictions" will be enabled.
Pubs and restaurants will be allowed to open in July. Gyms and health clubs will follow suit. The two metre social distancing rule will be relaxed. The travel industry will benefit from quarantine free, "Air Bridges" with Spain, Portugal and Greece.
No hanging about at the bar in the pub; no cutlery on the table in the restaurant. A round of drinks will be purchased on a phone app. Food menus will be disposable, orders taken by waiters and waitresses "encouraged to wash their hands" each time they serve a different table.
The government is washing it's hand of lock down. The cost to the Treasury is just too great. 9,000 new cases were reported in the last seven days. Just over 1,000 deaths were revealed, as a result of the epidemic.
There have been 42,000 deaths in total, from 300,000 cases, a fatality rate of 14%. At peak the death toll was 8,000 in a week. The peak is well passed but the virus does remain in circulation. The next move down to level two, may just take a little more time.
This week, the ONS released the latest government borrowing figures. Borrowing in May was £55 billion. In the first two months of the year, the total was almost £105 billion. Total debt at almost £2 trillion exceeded the value of GDP for the first time since 1963.
Total revenues were down by 20%. VAT revenues have fallen by 34%. The costs of the furlough scheme and other Covid measures, increased expenditure by 50%. For the year as a whole, borrowing is now expected to rise by over £300 billion, pushing the total debt level to over £2.3 trillion. The DMO will issue almost £500 billion of debt this year, to fund additional borrowing and roll over existing debt.
The Bank of England stands ready as the buyer of last resort. This week the MPC announced an additional £100 billion of UK government bond purchases, taking the total to £745 billion. The Dire Sraits Policy of "Money for Nothing, Gilts for Free" continues. The Old Lady of Threadneedle Street, no longer wears a QE face mask. "Just buying the gilts directly, from the Debt Management Office", the reality, as we have long explained.
Ten year gilt yields closed up four basis points at 0.27. Sterling closed down $1.2353 in the week from $1.2561 at start. Against the Euro, the Pound closed lower, testing the 1.10 level.
Lots of other news this week on inflation, jobs, vacancies and earnings. Retail sales fell by 14% in May compared to 22% in April. Clothing and footwear sales were down by 60%, DIY sales were up by 5%. Online sales increased by 20% accounting for 33% of all retail transactions.
The jobs market remains in stasis at the moment as the furlough scheme underwrites the employment position. Vacancies fell to 476,000 in May, from over 800,000 at the start of the year. An ominous reminder of what could happen to unemployment levels. An urgent reminder of the need to get the economy moving again ...
Bolton Puts The Boot In ...
Former National Security Adviser, John Bolton put the boot into Trump this week. Extracts from his long awaited memoirs on life in the White House were released to the press. The White House is campaigning to ban the book entirely.
The President is not fit for office. Putin played him like a fiddle. Trump pleaded with President Xi to help his re-election prospects by buying more Soy beans.
The President was unaware the UK had nuclear weapons, asked if Finland was part of Russia and generally had no guiding principle, other than "what's good for the re-election campaign.
The Trump administration is considering charges against Bolton for releasing classified information. The President claims the book is a "compilation of lies and made up stories".
Trump said this week, "Bolton's book, is a compilation of lies and made up stories, all intended to make me look bad. Many (but not all?) of the ridiculous statements he attributes to me, were never made, pure fiction."
The Department of Justice claims, the book contains material, that could "reasonably be expected to cause damage, serious damage of exceptionally grave damage to the United States".
Mike Pompeo, rallied to the President's defence, calling Bolton a "traitor" adding "to our friends around the world: You know that President Trump's America is a force for good in the world".
Good to know that in view of the threat to resume Nuclear Testing, abandon the World Health Organisation and withdraw troops from NATO. The offer to negotiate between India and China reveals a sense of purpose and direction the world requires from President Trump's America.
Tomorrow the Trump campaign is back on the road in Tulsa. Despite warnings from health officials, the masks are off and the rally returns. Over 150,000 cases were reported in the US last week and over 5,000 deaths recorded. The President is promising a "Wild Evening". In America, the case load is rising, the rally may well accelerate the process ...
The Saturday Economist
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