Chance of meeting economic growth plans only one-in-five
GDP in the UK is expected to grow by about 1.5% in 2020 and 2021 – unchanged from 2019, the National Institute of Economic and Social Research has said.
There’s only a one-in-five chance that the chancellor’s aim of raising UK economic growth to around 2.75% a year is likely to be attained in the current global economic context, it added.
Instead, in the short term, economic conditions are set to continue roughly as they have been, with slow growth and output close to capacity. Investment and productivity growth are forecast to pick up only gradually.
Economic uncertainty is likely to persist until the details of the UK’s future trade relationship with the EU are settled, the NIESR warned.
It also said that:
- Nominal wage growth has been robust and is expected to stabilise at an annual rate of 3%-4% this year
- Average consumer price inflation will remain a little below the Bank of England’s 2% target in 2020
- Additional public investment of up to £20bn per year is unlikely to have more than a modest impact on productivity, and is not expected to offset the negative effect of Brexit.
Global cost of virus outbreak set to soar
Coronavirus is expected to cost the global economy up to $360bn.
A report from the Overseas Development Institute has warned that the outbreak will have significant effects on the poorest economies, even if they do not have confirmed cases.
For example, if Chinese demand falls by 1% as a result of coronavirus, low- and middle-income countries would lose $4bn of goods exports and $0.6bn of tourism receipts.
The ODI has also developed a Vulnerability Index to highlight which low- and middle-income countries are most at risk in economic terms. At the top are Sri Lanka, Vietnam and the Philippines, followed by Kazakhstan, Kenya, Cambodia and Nepal.
Sub-Saharan Africa also could lose up to $0.5bn worth of exports and tourism services, the report said.
In 2003, the SARS virus reduced the world’s output by around 0.1%, or $50bn.
Council tax rise likely for most of England
Almost all local authorities in England – 97% – plan to increase council tax in the next financial year, according to a survey released by the Local Government Information Unit.
Of the 152 councils that responded, 93% plan to increase council tax by more than 1.5%. The survey results also showed:
One in 10 councils (12%) said they are in danger of being unable to fulfil statutory duties this year.
Two-thirds (66%) think that councils will become more reliant on income from commercial investments in the future.
Almost one in five councils (19%) said residents have seen a decline in the level of frontline services they can access.
Nearly all councils (98%) said they are planning to tackle climate change, using external investment (25%) or loans (22%).
97% of councils plan to increase fees and charges in 2020-21, with 14% being forced to raise them ‘by the maximum possible amount’
Air pollution deaths exceed road fatalities in the South
More than one in 19 deaths in large UK cities and towns are linked to air pollution, even though the UK meets legal limits, according to research.
A Centre for Cities report found that people living in southern cities are more likely to die from toxic air, and air pollution deaths are 25 times higher than the national rate of traffic accident deaths.
London and Slough have the highest percentage of deaths linked to the deadly toxin PM2.5. An estimated one in 16 people die from exposure in these areas. Cities in Scotland and northern England see the smallest proportion of PM2.5-related deaths.
Some 62% of roads in UK cities also exceed WHO guidelines for PM2.5. The report urged action to reduce pollution. It said the most polluted cities should introduce ultra-low emission zones to charge car and van drivers in city centres and ban the use of wood-burning stoves and coalfires where pollution exceeds guidelines.
Ageing population will mean Japanese labour market reform, says IMF
Public finances in Japan will be hit hard by a demographic shift that will see almost one elderly person for each working-age person by 2060, the International Monetary Fund has warned.
At the same time, Japan’s current population of 127 million will shrink by over a quarter, meaning the pool of workers will be smaller and older.
Although economic growth in 2020 is expected to remain stable at 0.7%, the IMF has estimated that, over the next 40 years, growth will shrink by an average of 0.8 percentage points each year owing to demographics alone.
Labour market reforms, such as increasing training and career opportunities for workers that aren’t benefiting from Japan’s lifetime employment system, will be key to raising labour productivity and wages, it warned.
LGPS pooling sees savings mount
The pooling of investment funds in the Local Government Pension Scheme has saved £155m between November 2015, when the method was introduced, and March 2019, estimates suggest. Lord James Younger, parliamentary under-secretary for housing, communities & local government, said further savings are expected in future.
Purpose-built coronavirus hospital opens
China has opened a specialist hospital to treat coronavirus patients, which was built in just 10 days. The hospital, Huoshenshan, located in Wuhan, the epicentre of the outbreak, has a capacity of 1,000 beds. The first group of 50 patients was admitted on 3 February.
Majority of councils exceed budgets to help homeless
Last year, nearly 70% of councils in England spent more than planned on homelessness support, owing to shortages of affordable housing and insufficient housing benefit, according to research from the Local Government Association. Rising levels of homelessness and the cost of using bed-and-breakfast accommodation contributed to this.
