Poorer UK households take biggest hit to income while rich cut spending most
Poorer UK households experienced the largest drop in income during the pandemic while the richest reduced spending the most, according to official statistics that confirm the inequality hit of the Covid-19 restrictions.
Poorer workers were more likely to report a decline in income in the year to March compared with the previous financial year, with 42 per cent of those on the lowest income reporting a decrease, data from the Office for National Statistics showed on Monday.
This is a much higher proportion than the 31 per cent for those on the highest incomes.
The largest drop in income for poorer workers reflects the fact that workers on lower incomes were more likely to be furloughed and less likely to be able to work from home than those on higher incomes, the ONS stated. In contrast, people on higher incomes were more likely to be paid in full if they were unable to work.
However, it was the richest households that reduced their spending the most, with an annual reduction of more than 20 per cent during the fiscal year ending in March. This compares with 12 per cent for the poorest households.
Poorest households increased their spending on food more than other groups and they end up devoting 18 per cent of total expenditures to food, 6 percentage points higher than for the highest incomes.
Falling demand for transport, on the other hand, contributed more to drops in spending among the richest households, with that on international flights and personal vehicles falling the most.
The findings provide the most comprehensive evidence of the unequal hit of the restrictions and confirm the results of a Bank of England survey that showed most of the household savings accumulated during the pandemic was in the hands of richer people.
This uneven hit fuelled concerns among many economists that the boost from spending the “excess savings” accumulated during the pandemic would be somehow limited as richer households tend to use extra savings for pension, investment and housing, rather than clothes and food.
London Heathrow becomes Europe’s tenth busiest airport from its pre-Covid top slot
London Heathrow has slid to become the tenth busiest airport in Europe, with the company blaming “ever-changing restrictions, expensive and unnecessary testing requirements and lack of a common approach across borders” for delaying the UK’s recovery.
Numbers going through the UK’s top airport, which in 2019 was Europe’s busiest, last month remained 71 per cent down on the same month in 2019.
Rivals, such as Amsterdam’s Schiphol, Paris and Frankfurt, meanwhile are recovering at a much quicker pace and have overtaken Heathrow. These EU rival airports regained their pre-pandemic cargo volumes at the end of 2020, while cargo at Heathrow has languished at 14 per cent of August 2019 levels.
In a statement on Monday, Heathrow said that the UK’s traffic-light travel system, which divides destinations into red, amber and green lists according to their Covid-19 situation, is an “outlier and is delaying the government’s global Britain ambitions, handing rivals a competitive advantage while the UK loses market share”.
Boris Johnson is due to announce an overhaul of the system in coming days. Even fully vaccinated travellers at the moment need at least one PCR test from a private provider, which can drive up the cost of a family holiday by hundreds of pounds, to enter the UK.
“The government has the tools to protect the UK’s international competitiveness,” said Heathrow chief executive John Holland-Kaye. “If ministers fail to take this opportunity to streamline the travel rules then the UK will fall further behind as trade and tourists will increasingly bypass the UK.”
Heathrow called for ministers to simplify the system. Its proposals include scrapping the amber list in favour of a two-tier system.
Profits to beat expectations at Primark owner Associated British Foods
Profits at Primark owner Associated British Foods are set to beat expectations in the fourth quarter of its financial year, after trading improved at its retail and food businesses.
Margins improved at Primark as the cost of operating its stores fell even as the spread of the Delta variant and the “pingdemic” in the UK - which forced people to self-isolate after being “pinged” by the NHS app - hit Primark’s sales in the three months to September 18, the company said in a trading update on Monday.
Full-year operating profits at Primark, before the repayment of furlough money, are now expected to be ahead of the previous year.
“Operating profit margin will continue to benefit from lower store labour and operating costs,” the statement said. “Our forecast is for the effect on margin of supply chain and raw material inflation to be broadly mitigated by the transaction currency gain arising from the weaker US dollar.”
The group’s food businesses have also improved in its fiscal fourth quarter, with strong demand and higher prices for sugar and growth at its Ovaltine and Twinings brands.
Japan’s vaccine minister pulls ahead in leadership race
Japan’s minister in charge of Covid-19 vaccines, Taro Kono, is emerging as the people’s favourite to succeed Prime Minister Yoshihide Suga as leader of the country’s ruling party, according to polls conducted by Japanese media over the weekend.
Kono came top in two separate surveys asking who would be best suited to be the next leader of the Liberal Democratic Party. Roughly a third of respondents in a poll conducted by the Asahi Shimbun said Kono was the most suitable candidate, while 27 per cent of respondents polled by the Nikkei newspaper and TV Tokyo said Kono should be party chief.
With the LDP being Japan’s ruling party, the election for its leader will effectively choose who will be the next prime minister. The election is scheduled for September 29.
Kono, a former foreign minister and defence minister, has been in charge of Japan’s vaccine rollout since January.
Argentina’s midterm primaries shows swing to opposition as pandemic bites
Argentina’s opposition had its biggest ever win over the government in the midterm primaries, often seen as an early indication of November’s election, in response to the ruling coalition’s handling of the pandemic.
The Juntos opposition coalition, created in 2015, took 41 per cent of the nationwide vote against 30 per cent for the centre-left Peronist coalition of Alberto Fernández and Cristina Fernández de Kirchner. It won in most key districts including the Buenos Aires Province, a historic Peronist stronghold that is home to a third of Argentina’s population.
Fernández’s term in office has been blighted by the pandemic as Argentina has struggled to control the spread of Covid-19 and has suffered more than 100,000 coronavirus-related deaths. Its post-lockdown recovery has been among the weakest in the region, the Institute of International Finance has shown.
“Evidently there’s something we didn’t do right, and that’s why people didn’t back us,” President Fernández said in his concession speech. “There are clearly voter demands that we didn’t adequately satisfy.”
Fernández was flanked by vice-president Fernández de Kirchner, whom many see as the real leader of the government.
The overall tone of his words suggested changes to his administration could be expected, after two years of rising poverty, high inflation and more than 100,000 Covid-related deaths.
UK cancels €1.4bn vaccine deal with France’s Valneva
The UK has terminated an agreement with France-based biotech company Valneva for the supply of at least 100m doses of Covid-19 vaccine, saying the company is in breach of its obligations under the deal.
The company “strenuously” denied this was the case in a statement on Monday. The deal was worth up to €1.4bn, with manufacturing due to take place in Scotland and deliveries due to start in 2022.
The vaccine candidate uses a whole inactivated virus to elicit an immune response against the coronavirus, a technique which can prolong the manufacturing process but also provide greater coverage against all variants. Most other shots are designed to target the spike protein of the virus.
The company had previously warned that exporting vaccines between the EU and the UK would be a “substantial risk” to its plans, because of its supply chain. Shots are put into vials in Sweden.
It was not immediately clear what had pushed the UK government to serve notice of termination.
The vaccine is still in late-stage trials, with results and UK approval expected in the fourth quarter and late next year, respectively, Valneva said.
The drug maker said in its statement that it had worked “tirelessly, and to its best efforts” on its collaboration with the UK, adding it would increase its efforts to ensure its vaccine can be used against the pandemic by other potential customers.
Auckland kept under lockdown, with Delta cases up
New Zealand Prime Minister Jacinda Ardern said on Monday afternoon that Auckland would remain under the country’s strictest level of lockdown until at least midnight on September 21.
With a population of close to 1.7m, the country’s largest city is the centre of an outbreak of the highly infectious Delta variant of Covid-19.
New Zealand reported 33 new daily cases on Monday — all in Auckland, and up from the 23 and 20 cases reported over the weekend — bringing the total in the outbreak to 955.
Of those cases, 928 have been epidemiologically linked. The remaining 17 are currently considered “mystery cases”.
Auckland has already been under lockdown for close to four weeks.
Food price inflation heaps pressure on poorer countries
Global food prices have been climbing for a little over a year, heaping pressure on emerging markets where the poorest tend to spend a larger proportion of their income on staples.
Prices have risen 40 per cent over the past 15 months, according to the latest data from the UN’s Food and Agriculture Organization, the biggest gain since surging food prices spurred the unrest of the Arab Spring in 2010-11.
Rising commodity prices do not always feed through to consumers. But this time round, economists at JPMorgan have argued that growing costs are “a signal, not noise” that will drag on growth. The result would be “a purchasing power squeeze on households” that had probably already contributed to a dip in global consumer confidence this summer, the bank said. The impact, it warned, was “far larger” in emerging markets and could last into next year.
Food prices, like energy prices, are often unstable. Factors such as weather and local disruptions can often crank up the price of basic staples. For this reason, they are typically excluded from core inflation — the measure most closely watched by central bank policymakers.
This year, however, both food prices and core inflation are beholden to the same forces: bottlenecks in supply chains, soaring transport costs and other disruptions caused by coronavirus. That means central banks are more likely to nudge up interest rates in response. This was especially likely, JPMorgan said, in countries where inflation was high and consumers were worried that policymakers would not bring it back under control — for example in Brazil, Russia, Mexico, Colombia and Peru.
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Sydney airport reopens to bidders, as investors see long-term value in travel
The board of Sydney airport said on Monday it planned to recommend that shareholders accept a revised bid for the company, as investors eye value in the potential recovery of international travel.
The board said on Monday it had received an improved offer of A$8.75 ($6.43) per share, giving the airport an equity value of A$23.6bn. The board said it would allow a consortium led by Melbourne-based infrastructure specialist IFM Investors to conduct due diligence, which it expected to take four weeks.
The board intends to unanimously recommend that shareholders vote in favour of the proposal.
The offer valued shares 4.5 per cent higher than their market value, even after they jumped to A$8.37 on Monday, with investors betting on a recovery in international travel by the end of this year.
The offer followed two lower offers made in July and August, and came despite much of Australia being in lockdown, with the country’s borders being all but closed since March last year.
Under the government’s roadmap to reopening the country, international travel will resume gradually once 80 per cent of the population has been fully vaccinated. In August, Qantas chief executive Alan Joyce said his company was preparing to resume some international flights by December, with others to return early next year.
As of Friday, 41.1 per cent of Australians had received two vaccine doses, according to government figures.
Supply chain crisis will leave permanent scar, UPS warns
The supply chain crisis unleashed by the pandemic will inflict lasting damage on the globalisation driven by multinationals, according to a top executive at UPS, one of the world’s largest delivery companies.
Sharp swings in consumer demand, a battered airline industry and disruptions to global shipping have created the severest crisis in years for the supply chains that global companies have built their operations around.
As a result, multinational retailers and manufacturers were making a “big push” towards regionalising their supply chains, said Scott Price, president of UPS International.
“A lot of companies are coming to us saying, ‘Where is the best place to put manufacturing and assembly?’” he said. “There’s an understanding that reliance on stretched supply chains puts you at risk.”
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Return to work: the new lessons for managers
As he steps up measures to encourage his 22,000 staff to return to offices across the UK this month, Kevin Ellis, senior partner and chair at PwC, the Big Four accountancy firm, acknowledges that this is a situation for which “there is no playbook”.
The PwC leadership in the UK is facing the same issues as other managers globally, and many forward-looking companies are taking cues from the experiences of leaders in organisations where the staff have not been able to work from home during the pandemic. Last month, UK official data suggested two-thirds of the workforce is “mainly working in the same place as before the pandemic”.
“This isn’t the beginning of a return to work,” says Dr Richard Heron, vice-president and chief medical officer at BP, the energy group, where its staff are used to collaborating remotely and globally. “In many of our settings people have been working throughout the pandemic, operating critical infrastructure for heat, light and power and in retail. Many have learnt that work they assumed needed to be done in a particular place doesn’t always need to be”.
He says the company is encouraging one-on-one meetings with managers to talk about what works for them and for the business and develop individual agreements. “People get used to things, so coming back into workplaces is a change,” Heron says. The company, he adds, has tried to help people manage uncertainty and anxiety. “When you demonstrate you genuinely care, you see your outcomes moving in a positive direction.”
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India vaccinates 7.2m people a day for two weeks
Indian authorities said the country vaccinated an average of 7.2m people a day last week, with jabs increasingly accessible to a public made receptive to vaccination after the devastating Covid-19 wave earlier this year.
It was the second consecutive week that India rolled out vaccines at such a high rate, bringing the total number of Covid-19 jabs administered across the country to more than 733m, or about 53 doses for every 100 residents.
The seven-day moving average of newly detected Covid-19 cases also fell by 17 per cent last week, down to just under 35,000 from 42,000 the previous week.
According to government figures, 40 per cent of the population has now had one Covid jab, while 12 per cent are fully vaccinated. However, about 40 per cent of India’s 1.4bn people are under the age of 18, and not yet eligible to be vaccinated.
Victoria outbreak gathers pace, New South Wales cases show signs of peaking
New cases of Covid-19 in the Australian state of Victoria reached a new high on Monday, after cases continued to rise over the weekend.
Victoria reported 473 new cases on Monday — following 450 and 392 on Saturday and Sunday, respectively — the highest since the state’s current outbreak began in August.
Meanwhile, new cases in New South Wales fell slightly after hitting a record over the weekend. The state reported 1,257 cases on Monday, down from a peak of 1,599 on Saturday. There were also seven new Covid-related deaths in the state.
Gladys Berejiklian, New South Wales premier, said the state had seen a “stabilisation in cases”, but reiterated a need to maintain social distancing restrictions as parts of the state begin to reopen this week.
“It’s way too early for any of us to get complacent” she said. “And so while people start enjoying some things they couldn’t enjoy last week, I urge the community, do not . . . let your guard down.”
Queensland reported two new local cases on Monday, while the Australian Capital Territory lodged 13 new infections.
China imposes restrictions in southeast as new Delta outbreak takes root
Local authorities in China have reimposed restrictions in the country’s southeast to battle an imported outbreak of the highly infectious Delta variant of the virus.
Putian, a city of about 3m in Fujian province, issued an order on Sunday calling for restrictions on the number of people allowed to gather and enter into indoor public spaces, closing bars, theatres and other leisure facilities, and banning residents from leaving the city without a valid negative Covid test and an essential reason to do so.
The city reported 64 total cases of Covid-19 on Sunday, half of them asymptomatic, Xinhua reported. Whilst the numbers remain low, they represent a significant increase for China, where just 20 new locally acquired symptomatic cases were reported in the country of 1.4bn people on Saturday.
China is currently pursuing one of the strictest Covid-elimination policies in the world. Last month, it used a series of snap lockdowns to contain an outbreak of the Delta variant — the most significant flare-up in the country since its original outbreak early last year.
The lockdowns achieved the country’s goal of reducing local symptomatic cases to zero, but led to most indicators for its economic recovery stalling for the month of August.
The Putian outbreak was believed to have started via an imported case from a Chinese national returning from Singapore in early August, authorities said.
Iraq receives more than 100,000 vaccine doses donated by Italy
An Italian donation of more than 100,000 Oxford/AstraZeneca vaccine doses has arrived in Iraq via the UN-supported Covax vaccine distribution scheme.
A statement from the UN children’s agency, Unicef, on Sunday said that “100,800 [doses] of the AstraZeneca vaccine have arrived to Iraq, as the first delivery from a pledge of 15 million doses to be donated to Covax by Italy”.
It was the third vaccine delivery to Iraq under the Covax initiative.
“Italy stands by Iraq and supports its efforts in tackling the Covid-19 pandemic,” Bruno Pasquino, Italy’s ambassador to the country, said while attending delivery of the vaccines to Baghdad International Airport. “This donation is a tangible sign of the solidarity and friendship ties between Italy and Iraq, with a view to contributing to economic, social and sanitary recovery.”
Meanwhile, Italy’s health ministry reported 4,664 new daily Covid-19 infections on Sunday, with 34 Covid-related deaths.
South Africa to shorten nightly curfew as third wave relents
South Africa’s president on Sunday announced the easing of Covid-19 restrictions following a significant fall in new infections in the country.
Speaking in a televised address, Cyril Ramaphosa said the nightly nationwide curfew would be shortened by one hour, while the permitted hours for alcohol sales would be extended. The restrictions had been introduced in June with a third wave of Delta-driven cases in South Africa.
The curfew will now start one hour later, at 11pm, but still continue until 4am. Shops will be allowed to sell alcohol from Monday to Friday.
“While the third wave is not yet over, we have seen a sustained decline in infections across the country over the last few weeks,” Ramaphosa said. “With the decline of infections across all provinces, the Ministerial Advisory Committee on Covid-19 has recommended an easing of restrictions.”
The changes to the curfew and restrictions will be reviewed after two weeks, Ramaphosa said.
South Africa reported 3,961 new Covid-19 cases on Sunday — a substantial reduction on the peak of more than 26,000 cases a day in early July.
New Zealand secures 500,000 BioNTech/Pfizer jabs from Denmark
New Zealand’s Covid-19 vaccine rollout is set to receive a boost in coming days with the arrival of 500,000 doses of the BioNTech/Pfizer Covid-19 vaccine from Denmark, the prime minister said on Sunday.
The vaccines were secured through a second agreement that the government recently made to meet the significantly increased demand in the country.
“These doses, along with the 275,000 doses purchased from Spain last week, provide an additional 775,000 to New Zealand’s vaccine supplies,” Jacinda Ardern said.
“There is now more than enough vaccine in the country to vaccinate at the world-leading rates we were hitting earlier in the month, and I strongly encourage every New Zealander not yet vaccinated to do so as soon as possible.”
Ardern said that 76 per cent of New Zealanders aged 12 and older had either received their first vaccine dose or were booked to do so, and on Sunday afternoon she called for more people to be vaccinated.
Asked about a rumour being spread online that a teenager’s recent death in New Zealand had been linked to the BioNTech/Pfizer vaccine, Ardern said she had been advised there was no such link.
SNP conference urges independence vote as soon as ‘health crisis’ eases
The Scottish National party’s autumn conference has called for a second referendum on independence from the UK to be held as soon as health data show that a “full, normal, and energetic” campaign would be safe.
While effectively endorsing the insistence of SNP leader Nicola Sturgeon that a vote must be held only after the coronavirus crisis has passed, the resolution — passed overwhelmingly by delegates to the online meeting — will add to pressure on the Scottish first minister to set out how she will decide when to proceed.
“This decision should be determined by data-driven criteria about the clear end to the public health crisis, which would allow a full, normal and energetic referendum campaign,” the resolution read.
Many independence supporters are impatient for a rerun of Scotland’s 2014 referendum, in which voters backed staying in the UK by 55-45 per cent. Some SNP members believe Sturgeon’s plan is too cautious and that she has no credible strategy for overcoming UK government refusal to approve such a vote.
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Opinion: Why smoking may be a sackable offence
Now that our kitchens and bedrooms are also our workspaces, employers have the chance to get tough.
When historians look back at the nature of work in the second half of 2021, they will find some odd developments.
A US president has ordered large companies to insist their staff get vaccinated against a virus or submit to weekly testing. Wall Street banks have barred people from their US premises who have not had the vaccine. Amazon has offered UK workers a £50 weekly bonus if they manage to turn up to work on time.
Yet the move that surprised me most came in Japan, where the Nomura brokerage firm has just said staff will be banned from smoking on the job, even when, as a Daily Mail headline put it, they are “working from HOME”.
I share the Mail’s dismay. Smoking is a noxious habit, but it is also an addiction. For a boss to say people cannot smoke inside their own homes, where they do lots of other unwise but legal things, crosses quite a threshold.
Other companies in Japan have taken bold steps to stop their staff from smoking but I did not imagine it would be easy, or legal, for a British company to prohibit it at home. The mass move to working from home may have changed this.
We cannot know for sure if such a ban is legal because it has not yet been tested in court, says Jo Mackie, head of employment in London at the Slater and Gordon law firm. “However I think it’s going to be possible,” she told me last week.
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Students head back to business school
Hannah Schmidt-Wolf was given a rude awakening when she arrived at Insead’s French campus last September: a late-night assignment to rapidly trace her contacts from the past seven days.
“They did it as a wake-up call,” says the 24-year-old German of the mock drill. She did contract coronavirus in November but experienced mild symptoms and made a full recovery.
Insead’s ability to bring students to its campuses in Fontainebleau, near Paris, and Singapore was an important reason Schmidt-Wolf applied to its master in management (MiM) programme, despite the health risk. “The pandemic influenced which business school I applied to,” she says. “A big part of the degree is the network and friends you make. I was just not up for doing a year of online study.”
While many schools were forced to adapt to remote teaching to help reduce infection levels, about two-thirds of Insead’s MiM course was delivered face-to-face last year. This was made possible by frequent Covid testing along with isolating infected students and tracing their contacts. There is also reduced student mixing and, at the time of writing, face coverings are still required.
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