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Andrew Bailey, governor of the Bank England, issued a stark warning earlier this week that even without an increase in Covid-19 cases, “the harder yards are ahead of us” for our economic recovery.

While July and August saw record economic growth following a record decline of 20.4% of GDP in the previous quarter, around 13 million people in the UK are already living under some level of local restrictions, and there is a worry among business that the new measures announced by the UK and devolved governments yesterday could spell further trouble for their economic recovery.

While consumer spending is up 4.8% on this time last year, pubs, cinemas and retail parks and shopping centres have all seen a decline in footfall in September, with numbers expected to fall further as concerns about a resurgence of the virus grows.

Rishi Sunak’s announcement on what support he will be offering through this next stage is therefore eagerly anticipated.

Top of the agenda is the question of what will replace the scheduled winding down of the Job Retention Scheme. There have been calls from industry and the opposition for an extension of the furlough scheme for the sectors hit hardest – arts and culture, sports, hospitality, aviation and tourism – but these have been repeatedly rebuffed by government.

The most recent official data on furloughing is from 31 July, where it was estimated that around 5.3 million jobs were still furloughed, representing 12% of employees, compared to the peak of 8.9 million in May. Then, the sector with the highest proportion of its workforce furloughed was arts, entertainment and recreation at 45% followed by the accommodation and food services sectors at 43%. 

Looking forward however, it is hard to predict what the outcome for employment will be, with the OBR and Bank of England modelling very different levels at 12% and 7.5% unemployment in Q4 respectively. In August, 1.35 million people were unemployed, or 3.9%. 

“It’s so hard to tell right now what the outlook is for unemployment, it’s a really mixed picture. Some businesses have already had to make the unfortunate decision to make people redundant across sectors. Hospitality is clearly one that’s been significantly impacted, but these conversations are going on across the economy. Others are waiting to see what the path of the virus is, what the path of demand is, whether there is any further support,” explains Annie Gasgoyne, the CBI’s director of economic policy. 

For the Resolution Foundation, one of the questions is where the Treasury’s energy (and cash) should be directed – although they believe that the increasing rates of Covid in the community strengthen the argument for maintaining a level of wage subsidy for impacted sectors.

 “The chancellor will obviously have to weigh up, does he try and keep people matched or linked to their previous job, or does he try and come up with some with another approach that basically recognises where jobs are likely not to exist in future and try and support a reallocation of people to jobs that have more of a future?” asks James Smith, research director. 

What are some of the options being considered?

The Institute for Economic Affairs, the free market think tank with close links to the Conservative party, believes that the circumstances call for government support to be highly targeted towards specific sectors (such as hospitality and the arts), age groups (particularly younger people) and locked-down areas where the challenges are due to reasons beyond the businesses’ control – and that this is the direction the government will take. 

“We have much better understanding what aspects of coronavirus from the disease itself, but also where the economic impact is… so it’s much easier to do something that is better targeted,” Julian Jessop, economics fellow at the IEA explains. 

He continues: “We don’t have a national lockdown, and most of the economy can operate as normal. We also have a bit more certainty about how long this is going to last. The Prime Minister was talking yesterday about the prospect of six months of additional restrictions, and that’s obviously bad, but at least gives businesses a sense of how long it is that they will need to need to survive or not. We’re not in quite the same position as we were in March or April, when large parts of the economy were shuttered for an uncertain period of time. I think that certainly the case for some of these big national schemes is now very weak, because the circumstances are different.” 

“The way I characterise this is, there is sort of a race going on between the recovery in the economy and the unwinding of the furlough scheme, and actually, the economy does seem to be winning,” Jessops says. 

The chancellor’s plans to protect the economy are promised to be “ambitious and creative”, and one option that is reportedly being considered is something similar to Kurzarbeit (or ‘short work’). In the German scheme, employers reduce their worker’s hours across the company and the government provides an income “replacement rate” (varying depending on length of time on the scheme and family situation) for up to 21 months. Used previously in the 2008/9 financial crisis, it is widely credited with being the reason Germany was the only G7 country not to experience a fall in employment in 2009. 

However, a scheme designed for Germany’s highly unionised job market with standardised working patterns would most likely be unsuitable for the UK hospitality sector’s more flexible approach to shifts and hours.

An alternative to Kurzarbeit proposed separately by the CBI and Resolution Foundation is to continue some sort of wage subsidy scheme for especially impacted sectors. 

Annie Gasgoyne, the CBI’s director of economic policy says: “We would like to see a scheme that provides businesses with support for the wage costs of workers where they are working at least 50% of their normal hours. The full cost of the time they’re working would be borne by the business, but the time they’re not working would be split between government and businesses, and potentially the employees themselves, although there would need to be protection for people on low income so that their incomes aren’t eroded.”

The CBI also propose a potential “clawback mechanism at the end so if the company didn’t keep that job on, say within six months after receiving the grant money, they would have to repay some of that”. This, they say, would ensure that only jobs that are viable in the medium term would be supported by the Government, managing the criticism of the existing job retention scheme that it falsely props up employment.

The Resolution Foundation have proposed the government should pick up a proportion of the wage bill for businesses in hard hit sectors like non-food retail and hospitality. “A more flexible system, tailored to the working patterns in the hardest hit sectors, can work as well as the German system,” says Smith.

This could be in the form of a wage subsidy for business, at a percentage of the total wage bill (the Resolution Foundation have called for around 10% of the wage bill to be paid, but say that this could be flexible). 

There are also four government-backed loan schemes for businesses that the chancellor was expected to extend prior to the new restrictions being announced. The CBI have called for the repayment of these loans to be streamlined and paid to the same terms and deadlines – something they deem a “no regrets” policy as it will increase the likelihood of repayment.

The Resolution Foundation, on the other hand, has proposed that the repayments should work more like student loans, with repayments being paid as a proportion of overall turnover. For businesses that cannot repay them over the loan period, it would be seen as a capital injection into the economy.

In terms of the inevitable job losses that will come, there is disagreement about what sort of training and support should be given to get people back into employment. While most attention on training so far has been focused on younger people, older workers will also be made redundant and will likely have to re-skill. There is also the question of what employment will exist in six months or a year’s, time – while people may be going back to restaurants and pubs, will the way we shop or work be so changed that the jobs do not come back?

While some universities are preparing for an uptick in sign-ups from older workers for courses starting in January, whether there is a broader re-training support scheme announced tomorrow, or at all, is yet to be seen. 

While Jessops accepts that the government could subsidise training for young people who would not otherwise be able to afford it, he warns against the government falsely creating mass training opportunities and apprenticeships where jobs will not be available in the long run. “If at the end of the day, the only reason why people are getting training is that the government is having to provide enormous amounts of money for them to do so, it rather begs the question of whether there’s a real job at the end of it? Why is someone not willing to pay for it themselves?

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Nagorno-Karabakh: The boy who swapped his piano for a gun


The conflict between Armenia and Azerbaijan is over, but some families are still waiting for news of their missing relatives.

Bodies are still being counted and identified, and there is no clear information on what has happened to the missing.

Twenty-two-year-old Soghomon was fighting on the Armenian frontline against Azerbaijan. The last time his family heard from him was 1 October.

He was a soldier, but also an artist and a talented piano player.

His father and sister say they can’t give up hope that he will return.

Video by: Sofia Bettiza, Gabriel Chaim and Aren Melikyan

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Afghan car bomb kills at least 40 soldiers

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An attacker detonated an explosive packed vehicle in front of a security base in the Deh Yak district of the province.

According to a statement from the Afghan Ministry of Defense, the attacker was confronted by security forces as he tried to enter the base. No group has claimed responsibility yet.

The blast targeted a compound of the public protection force, a wing of the Afghan security forces, local officials told Reuters. It damaged civilian residences around the compound, and there could be more casualties from there, they said.

Interior ministry spokesman Tariq Arian confirmed that there had been a car bomb blast but did not provide further information on the target or possible casualties.

Taliban spokesman Zabihullah Mujahid, when contacted by Reuters, did not confirm or deny responsibility.

Afghanistan has seen a spate of car bombings over the last few months, despite peace talks being under way between negotiation teams of the insurgent Taliban and the government in the Qatari capital of Doha.

Violence in the country, at war for two decades, remains unacceptably high, foreign governments and institutions say, calling for an immediate ceasefire between the Afghan government and Taliban.
Afghan President orders resumption of offensive operations against the Taliban in blow to Trump's deal

Another bombing on Sunday, in the eastern province of Zabul, targeting a top provincial official, killed at least one person and injured 23, said Gul Islam Syaal, the spokesman for the province’s governor.

Haji Ata Jan Haqbayan, head of the provincial council of Zabul, suffered minor injuries in the attack on his convoy.

No one has claimed responsibility for the attack on Haqbayan, an outspoken critic of the Taliban.

The Trump administration’s peace deal with the Taliban was dealt a blow in May as the Afghan government announced it was resuming offensive operations against the insurgent group following a spate of deadly terrorist attacks.

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Incoming GOP congresswoman to take aim at AOC with conservative ‘squad’

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Malliotakis, who frequently attacked Ocasio-Cortez during her campaign against Democratic Rep. Max Rose, took aim again at her New York counterpart when asked about the future of the Republican Party.

“I think one of the reasons why we were so motivated to run is seeing the Democratic women being elected in 2018 that don’t necessarily reflect our values, particularly those who are self-described socialists,” Malliotakis said. “I think there’s just a stark contrast between what we’re offering and what people like Alexandria Ocasio-Cortez are offering. And that’s something that needs to be debated in Washington.”

House Republicans more than doubled the number of women in their conference in November, bringing the number to at least 28 from 13. Democrats, who added a record number of women to their ranks during the 2018 election, have at least 89.

A number of House races still remain uncalled, including New York Republican Claudia Tenney’s challenge against Rep. Anthony Brindisi; Tenney’s lead has narrowed significantly to just 13 votes as of Friday.

Malliotakis, who will be the only Republican to represent New York City in Congress, credited House Minority Leader Kevin McCarthy and Rep. Liz Cheney for their efforts in recruiting “qualified women who have something to share with the American people” for the gains.

“What we stand for are freedom, liberty. We love this nation. We want to see it prevail. We want to see it remain the land of opportunity, what has, in essence, attracted millions of immigrants from around the world, to pursue that American dream,” Malliontakis said. “Somebody like me, daughter of a Cuban refuge, I want to be there to be a part of the discussion, debate and provide a counterview.”

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