House of Commons
No business scheduled
Written by Li-Ann Chin, associate
Edited by Harriet Moll, creative director
17 September 2020
Last month, Shinzo Abe, Japan’s longest-serving leader, announced a rather abrupt end to his career, citing chronic illness as the reason for his resignation. Notorious for his signature brand of Abenomics, Abe’s time in office has been scrutinised by sceptics and believers alike, as he embarked on a series of rather controversial policies to ‘take back Japan’ and lift the economy out of the downward spiral that has gripped it over recent years.
The ‘Japanese economic miracle’, began after World War Two to the end of the Cold War and was a period of skyrocketing economic growth that propelled Japan to becoming the world’s second largest economy, after the United States. Buoyed by the formation of keiretsu, organised alliances between manufacturers, suppliers and banks; shuntō, powerful labour unions and shūshin koyō, the promise of lifetime employment – for 40 years or so, it seemed as if Japan could do no wrong.
Fast forward 10 years and the Japanese economy is a shell of its former self. Elbowed aside by China, Japan is grappling with low wage growth, an ageing workforce and huge debt – challenges that plague all the developed economies of today. Globally, it remains a stark lesson of an economy stuck with long-standing deflation and a deflationary mindset.
So what’s the verdict on Abe’s rule? The world remains divided. Critics label him a deluded nationalist, decrying that Abe failed in bringing in the growth he promised and that his policies have had mixed-results at best. Others credit him for Japan’s marked shift away from protectionism and the country’s recent success in international trade.
After all the fanfare surrounding the Tokyo Olympics 2020, it is unfortunate that Abe left office amid a pandemic and not in the afterglow of what might have been his biggest triumph. And yet, with Yosihide Suga, Abe’s loyalist confirmed as his successor and half of the previous cabinet retained, perhaps Abenomics is here to stay.
Households in north-east England have been banned from meeting other households, following a concerning rise in infection cases. The rules affect Newcastle, Gateshead, Sunderland, Northumberland, South Tyneside, North Tyneside and the County Durham council area. Tighter national rules are reportedly being considered by the government, with a ‘circuit-breaker’ of a couple of weeks potentially being announced next week.
The demand for coronavirus testing is ‘significantly outstripping the capacity we have’, head of NHS Test and Trace program Baroness Harding has told MPs. According to data shown, only 14 percent of test results in England came back in 24 hours last week, a sharp fall from 32 percent the week before.
China conducts military exercises near the Taiwan Strait as US undersecretary of economic affairs Keith Krach visits Taiwan to attend a memorial service for late president Lee Teng-hui. Keith Krach is the highest-level official from the US State Department to visit the island in decades. Ren Guoqiang, China’s defence minister has accused the US of ‘using Taiwan to control China’.
Business and economy
The Bank of England has announced that nine monetary policymakers voted unanimously to keep their main stimulus programmes on hold and that the UK’s economy is recovering faster than previously anticipated. The BoE has also confirmed that the Monetary Policy Committee will be exploring how negative interest rates can be implemented effectively.
Ursula von der Leyen has expressed optimism about a potential UK/EU trade deal, stating on Thursday that she remains convinced a trade deal is still possible, despite Boris Johnson’s previous move to violate the Brexit withdrawal treaty. She has also said that EU-UK talks should continue but with the dispute kept at arm’s length from future relationship negotiations. (£)
UK retail sales extended their recovery in August as millions of Britons took advantage of government-subsidised meals under the Eat Out to Help Out scheme. The Office for National Statistics has confirmed that the volume of goods sold in stores and online rose 0.8 per cent from July, marking a fourth month of growth following an unprecedented slump in April. (£)
Far more British businesses are planning to cut recruitment or freeze hiring entirely over the next 12 months, in comparison to figures last year. The annual report from the Confederation of British Industry and the Pertemps Network Group recruitment consultancy has showed that 51% of companies planned to maintain or increase recruitment next year, while 46% anticipate a reduction or a complete stop.
Columns of note
In The Guardian, Imogen West-Knights argues the UK government’s mixed signals on what is permissible during COVID-19 is slowly sapping the public’s trust. This potentially belies fatal consequences. Once the trust is lost, people will simply start to ignore the advice given, she cautions.
During the early days of the pandemic, the European approach of focused public support on jobs made for an effective, short-term emergency response. The longer this crisis drags on, however, the more important it is to find a different solution. Rather than continuously handing out job subsidies, Chris Giles argues in the Financial Times that governments need to start supporting workers in finding new forms of employment.
What’s happened yesterday?
The S&P 500 fell 1 per cent to 3,352.09 as of 11:53 a.m. New York time, the largest fall in a week, with technology shares being the biggest decliners. The FTSE 100 continued trading in the red after Bank of England policy makers confirmed it would keep monetary policy on hold. Following the Federal Reserve’s policy decision on Wednesday, there was a surge in demand for long-term Treasuries and a brief spike higher in yields.
Sterling found itself on a rollercoaster, ending the London session basically flat, after being knocked by the Bank of England’s hint at negative rates and boosted by Ursula von der Leyen’s optimism on a potential UK/EU trade deal. The Japanese yen, however, appreciated 0.2 per cent to 104.76 per dollar, the strongest in seven weeks.
In terms of commodities, West Texas Intermediate crude rose 1.8 percent to $40.87 a barrel, while gold weakened 0.7 percent to $1,994.97 an ounce.
In company news:
Ryanair has suffered a shareholder rebellion, with more than a third of investors voting against executive pay at the airline’s annual meeting. The protest was reportedly against chief executive Michael O’Leary’s bonus of £416,000 despite the crisis in the airline industry.
Moderna has signalled a slower timeline for its Covid-19 vaccine – with the possibility of waiting until December to analyse data from its trial – despite Trump administration’s heavy-handed push for pre-election approval.
The Telegraph Media Group (TMG), which publishes the Daily Telegraph, Sunday Telegraph and Telegraph website, has reported a sharp rise in profit for the year, after its ongoing shift to a subscription model helped drive subscriber numbers to a record high.
ByteDance has proposed a TikTok initial public offering on a US stock exchange after its proposed partnership deal with Oracle, in a bid to appease the Trump administration’s national security concerns.
What’s happening today?
UK economic announcements
(07:00) Retail sales
Int. economic announcements
(07:00) Producer Price Index (GER)
(09:00) Current Account (EU)
(13:30) Current Account (US)
(15:00) U. of Michigan Confidence (Prelim) (US)
The Japanese have such a low birth rate that there are more adult diapers sold than baby diapers.
House of Commons
No business scheduled
House of Lords
Orders and regulations
Health protection – Restrictions on holding of gatherings, Lord Bethell
Health protection – Wearing of face coverings in relevant place, Lord Bethell
Health protection – Wearing of face coverings in relevant place, Baroness Thornton
International relations and defence committee – The UK and Afghanistan
No business scheduled
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