Our editors give us a breakdown of this week’s biggest news stories
United Kingdom: Ross Alexander Hutton
After weeks of speculation about the budget, this week finally provided some answers. Sunak unveiled his plans to lead the U.K. along the tightrope between fiscal stimulus and consolidation in what is now dubbed the ‘spend now, tax later budget’. At the dispatch box, the Chancellor argued that “just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked”. On the spending side, the budget includes an extension of the furlough scheme to September, a minimum wage increase and £1.65bn to support the U.K.’s vaccination rollout. Notably the budget includes a two-year “super-deduction” tax break to both relieve businesses tax burden and to encourage investment in the coronavirus-stricken economy. However, there are always two sides to the same coin. Indeed, the Chancellor acknowledged the elephant in the commons: the public finances. In the medium-run, the government plans to raise the corporation tax rate from 19% to 23% in 2023 as a means of repairing the country’s fiscal position. Although unusual for a conservative chancellor, Sunak defended his decision to be the first Chancellor since 1974 to increase the corporation tax rate by seeking to reassure the public – and investors – that the U.K. will still offer an “internationally competitive rate”.
Yet, the budget seemed to ignore the government’s commitments to achieving climate goals, not only infuriating environmental groups but an influential U.K. parliamentary committee. The committee criticised the government for lacking a “coordinated plan” to achieve its goal of net-zero greenhouse gas emissions by 2050. This comes as the U.K. prepares to host the international climate summit in Glasgow later this year. But there was one encouraging budget development regarding the climate crisis: ‘green’ bonds. In response, the Bank of England confirmed it would “account for the climate impact of the issuers of the bonds we hold”. So where does this leave the U.K. on the road to COP26 in Glasgow? Even though the budget focused more on the most acute crisis facing the U.K., there are still many unanswered questions about the U.K.’s strategy for a ‘green recovery’. In a year when Britain is supposed to be leading the climate fight, as things stand now, the budget doesn’t bode well for November.
Europe: Peter Hourston
In a first such move since the European Union introduced rules on the export of Covid-19 vaccines, Italy blocked a shipment of 250,000 doses of the Oxford/AstraZeneca vaccine that had been ordered by Australia. Under the scheme, which started in January, the European Commission has the power to veto such a decision by a member state, but in this case, Brussels supported the Italian Government. The swift action has come early in the tenure of Italy’s new prime minister Mario Draghi, who had criticised the slow rollout of vaccines across the continent at a virtual summit of EU leaders last week. Draghi made clear “the priority goal of a more rapid European health response to Covid-19, especially on vaccines” in a phone call with Commission President Ursula von der Leyen. It is perhaps notable that the first use of a procedure that critics suggest amounts to “vaccine nationalism” on the part of the EU came from Draghi, a former European Central Bank chief and committed internationalist. The reaction of other countries was mixed. France’s health minister, Olivier Véran, made clear that, “we could do the same”, whereas German’s Jens Spahn struck a more cautious note, “we have to be careful that it doesn’t cause us problems in the medium-term by disrupting the supply chains for vaccines.” In Australia, prime minister Scott Morrison expressed sympathy with the Italians adding, “In Italy people are dying at the rate of 300 a day…so I can certainly understand the high level of anxiety that would exist. That is not the situation in Australia.”
Vice-president of the European Central Bank, Luis de Guindos, said that growth in the first half of 2021 would be, “weaker than expected” but could be revised upwards in summer “if the vaccination programme goes as we hope.” The comments illustrate the importance of mass vaccinations, if any sense of economic normality is to return this year. There was a flurry of gloomy economic indicators across the Eurozone this week. Spanish unemployment hit a five year high at over four million and German retail sales fell by 4.5 per cent compared to the previous month.
Former French President Nicholas Sarkozy was sentenced to three years in prison (two suspended) after a Paris court found him guilty of “corruption and influence peddling”. The charges centre around a conversation in 2014 when Sarkozy offered former judge Gilbert Azibert a job in Monaco in exchange for information related to an investigation into alleged illegal funds from Liliane Bettencourt, the L’Oréal heiress, for his2007 presidential election campaign. The former president has strenuously denied the charges and has made clear his attention to appeal. Sarkozy also received support from Christian Jacob, the current leader of his Les Républicains party who tweeted, “The severity of the sentence imposed is completely disproportionate and demonstrates judicial harassment.”
Asia Pacific: Satyajit Mohanan
President Joe Biden is expected to hold the first ever quadrilateral US summit with the leaders of Japan, Australia and India in an effort to counter China’s growing influence in the Indo-Pacific Region. India moving away from its policy of non-alignment, has recently shown willingness to become more active in the Quad owing to its rising border tensions with China. India in October last year invited Australia to join the Malabar exercise, a military exercise between the US, India and Japan.
Australia has appealed to the European Commission to review the EU’s recent decision to block the supply of the AstraZeneca vaccines to the country. A shipment of a quarter of a million AstraZeneca vaccines was blocked from leaving the European Union in the bloc’s first use of an export control system designed to ensure big pharma companies would respect their contracts. Italy’s order blocking the dispatch of 250,000 doses was accepted by the European Commission. The pharma company is accused by the EU of slowing the rollout of its vaccine drive and the shortfall of promised vaccine deliveries. The EU has been specifically angry with AstraZeneca because it is delivering far fewer doses to the region than it had promised. Of the initial 80 million doses the EU ordered for the first quarter, the company will be struggling to deliver just half that quantity.
Pakistan’s Prime Minister Imran Khan on Saturday survived a vote of confidence after the shocking defeat of his finance minister. Imran Khan took 178 of the 172 votes needed to win after he was forced to seek a vote to prove his majority. A coalition of opposition parties have intensified its campaign for Khan’s removal. Prime Minister Khan has faced heavy criticism for failing to uplift the economy which is now under a $6bn IMF loan program. Opposition leaders argue that food inflation has increasingly risen under his watch and that the poor have been hit the hardest.
North America: Amelia Brown
The Senate passed a $1.9 trillion Covid relief package on Saturday which included a $1,400 stimulus check for individuals, $300 weekly unemployment, and vaccine funding, among much else. The bill though will have amendments made in the Senate, and in the House, that then will have to be reconciled together before it’s put on Biden’s desk later this week. Noticeably, the budget is missing a $15 federal minimum wage which was a core issue for many Democrat voters, so although Democrats control the legislative and executive branch, more moderate Democrats and Republicans were not letting the budget through with the higher wage.
The Johnson & Johnson vaccine began distribution on Monday, providing a renewed sense of optimism for squelching the virus as the single shot is faster and easier to distribute. Many states have already begun using the shot for teachers, essential workers, and even homebound older residents, with New York City running clinics through the middle of the night. This ramped up distribution, along with the continued production and distribution of the two other approved vaccines, gave President Biden the confidence to say that, “We’re now on track to have enough vaccine supply for every adult in America by the end of May.” Some states have really taken this optimism to heart, including Texas and Mississippi who have decided that the pandemic is close enough to being over that they can completely reopen next week–Texas governor Greg Abbott tweeted Tuesday after a TV announcement: “I just announced Texas is OPEN 100%. EVERYTHING. I also ended the statewide mask mandate.” The governor of Mississippi retweeted and pointed to the low hospitalizations and case numbers. CDC guidelines still recommend social distancing and mask wearing as the primary way that states achieve and maintain low transmission and therefore low hospitalizations while the vaccine continues to be distributed.
In Canada, the vaccine rollout is taking a different turn. The National Advisory Committee on Immunization has recommended that the two dose shots from Pfizer and Moderna be spread apart by four months, compared to the three to found weeks tested in the lab trials. Most provinces have accepted the advice. The epidemiological lead of the British Columbia CDC believes the data from Pfizer trials show one shot being 92% effective, though it was reported as being only 52% effective before the second shot three weeks later. The United Kingdom is doing a similar time frame to stretch their supply and get as many people their first shots as they can, but Canada is planning to wait a whole month longer than the UK before giving the second shot. The larger gap between doses will allow Canada to be on track to have all adults over 16 with at least one shot by July. However, the chief science advisor, Mona Nemer warned about straying from the data, calling the move a “population level experiment.”
Latin America: Leo Le Borgne
Protests have emerged in Paraguay’s capital Asunción over the government’s management of the COVID-19 crisis. Protesters can be seen throwing objects as police forces have used tear gas and fired rubber bullets. Health minister Julio Mazzoleni has announced his resignation after receiving criticism from other health authorities and politicians on Friday. Protesters have also demanded for the resignation of Mario Abdo Benitez. On Saturday, Benitez has asked all his cabinet ministers to resign with the hope to quench the current public anger against his government. The current political crisis is accompanying Paraguay’s rising number in COVD-19 cases, which now stand at almost 165,00.
Science & Technology: Paula Plechschmidt
The EU’s antitrust attacks on Big Tech continue, with Brussels formally charging Apple with antitrust abuse for the first time. This is based on the long-standing complaint many companies, in this case Spotify, have made regarding the 30% portion of profits Apple takes for apps on the App Store. This has recently been in the news due to Fortnite’s attempt to tackle this issue, resulting in it being thrown off the App Store after trying to use its own line of payment. Digital services are Apple’s second largest source of revenue, so a charge like the one made by the EU could cause Apple to face serious repercussions. “Complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice — potentially causing customers to lose out when buying and using apps — warrant careful scrutiny,” said CMA chief executive Andrea Coscelli.
Deliveroo is going public in London and has a target valuation of $10bn. This Amazon-backed company has been profiting off the coronavirus pandemic, with the demand for food delivery during lockdown skyrocketing. The decision to stay in London was a significant one as well. Especially post-Brexit many European tech companies look towards New York as US investors have shown a record of rewarding higher valuations to new tech listings, so conducting their highly anticipated IPO in London has handed the City a big win. Rishi Sunak’s endorsement of an overhaul of listing rules allowing founders to retain more control after going public played a factor in this, as it allows Deliveroo to use a dual-class share structure so CEO Will Shu will be able to maintain control of the company.
Business: Tom Woods
The Biden administration has sent a clear message of defiance to big tech by hiring Tim Wu, a prominent critic of Silicon Valley. Wu, a published author and law professor at Columbia, has criticised the likes of Facebook and Amazon for hoarding wealth and ushering in a “new gilded age” dominated by “robber barons”. He is known for his seminal books such as The Curse of Bigness and The Master Switch and the phrase “when an online service is free, you’re not the customer. You’re the product.” With his appointment, it is expected that the Whitehouse will push for the breakup of tech giants, possibly seeking to undo Facebook’s acquisition of Instagram and WhatsApp. President Biden has in the past rallied against big tech, for instance pushing for the revocation of section 230, a component of US law that protects social media companies from being sued over third-party content on their sites.
John McAfee, the creator of McAfee anti-virus software, has been charged over a cryptocurrency fraud he organised with his bodyguard, Jimmy Gale Watson Jr. The fraud involved buying up cryptocurrency before sending tweets that sought to inflate its price. Once the prices rose, the pair sold off the assets. They are also accused of receiving a total of $11 million from cryptocurrency start-ups for promoting their assets on Twitter without informing investors of this. McAfee is currently being detained in Spain on unrelated criminal charges involving failing to file any tax returns and using other people’s names to conceal his ownership of assets. The current charges were filed in a Manhattan federal court and are being prosecuted by Audrey Strauss.