"Eat Out to Help Out" the message from the Chancellor this weekend. The pubs are open, the restaurants ready for action. Britain needs to start spending again. If not, a generation of young people will become "out of work" victims, of the economic crisis. "We must learn what it is like to go out again. It is the nation's duty to get out there and spend, to save jobs at risk", says Rishi Sunak
The hospitality industry is worth £130 billion per annum. It generates almost £40 billion in tax revenues for the exchequer. It is the third largest private sector employer accounting for ten per cent of total employment and five percent of GDP.
The Treasury are anxious to get the economy back to work. In the first two months of the financial year, Tax Revenues fell by 20%, the VAT take fell by over 30%. Government borrowing was £110 million. The Debt Management Office will issue over £300 billion of new gilts in the first six months of the financial year, to fund the crisis.
The Prime Minister said he would drink a pint of beer. Jacob Rees-Mogg recommended a yard of ale to facilitate social distancing. Chris Whitty the chief medical officer warned of alcohol abuse, from extensive consumption by the yard.
"Pubs could become super-spreading environments, if social distancing measures are ignored", said Chris Whitty. Cricket will be allowed later this month. Good news for cricket lovers dashed. The Chief Medical Officer warned, of players hugging bowlers, when they take a wicket!
The opening will come too late for some. This week, Bella Italia, Cafe Rouge and Las Iguanas went into administration. Carluccio's and Frankie and Benny's have already made the trip.
The Prime Minister launched his "New Deal" with a commitment to build, build, build. More hospitals, more schools, more police. The largesse will be limited. Both the Prime Minister and the Chancellor warned this week, the furlough scheme cannot go on forever.
Hopefully it may not have to. Andy Haldane Chief Economist at the Bank of England suggested the economy would be rapid and V shaped. The latest data from the IHS Markit PMI surveys on manufacturing and services, suggested a recovery in June, from the output lows of April and May.
Don't get too excited. In the service sector, new orders are still falling but at a much lower rate ...
China Recovery on track ...
The latest data from the Caixin China Composite Index suggest the recovery continues in China. The service sector expanded at the fastest rate for over ten years in June.
In the service sector, business confidence increased to a three year high. Both activity and new orders increased. The headline index increased to 58.4 in June, compared to 55.0 in May. The upturn was attributed to the easing of virus related restrictions and stronger demand conditions both at home and in export markets.
The broader composite index increased to 55.7 from 54.5 in May, indicating a sharp and accelerating increase in overall activity. Businesses are highly confident about the economic outlook, the epidemic is under control, restrictions have been lifted and the economy is recovering at a faster rate.
In the USA, the jobs data for June provided some relief. Almost 5 million jobs returned, as bars, restaurants and other businesses reopened. The leisure and hospitality sector increased payrolls by 2.1 million. Other jobs were added in retail (740,000) and manufacturing (356.000). The unemployment rate fell from 13.3% to 11.1%. The country has recovered about a fifth of the 22 million jobs lost to the shut down.The Congressional Budget Office suggests the unemployment rate is likely to remain in double figures through until the end of the year. The economy is expected to shrink by 5.9%.
Covid cases are rising rapidly in Arizona, Florida and Texas. The daily case load is increasing nationally. Almost 350,000 cases were recorded last week. 2.7 million cases have now been registered overall. The death toll has risen to 128,000.
The President was in sombre mood this week. Just four months to go to the election. The President is behind in the polls. In a "dark" speech at Mount Rushmore President Trump focused on the "left wing cultural revolution" that aims to rewrite U.S. history and wipe out U.S. heritage. Trump is in a battle against a new far-left fascism.
"Angry mobs are trying to tear down our statues, deface our most sacred memorials and unleash a wave of violent crime in our cities." "Four more years", the crowd chanted, four more months the hope for many ...
That's all for this week! Have a great, safe, week-end, eat out, help out ...
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
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