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Disorderly Brexit could damage UK’s economic recovery from Covid, says OECD

Disorderly Brexit could damage UK’s economic recovery from Covid, says OECD

Britain’s economy faces a double risk to recovery from a disorderly Brexit as the coronavirus pandemic drags down growth, the Organisation for Economic Co-operation and Development has warned.



a car parked on a sidewalk: The UK car industry and food and textiles producers could be hit hardest by a disorderly Brexit, suffering a fall in exports of more than 30%.


© The Guardian
The UK car industry and food and textiles producers could be hit hardest by a disorderly Brexit, suffering a fall in exports of more than 30%.

On the eve of a critical EU leaders’ summit in Brussels, the influential Paris-based thinktank said the Covid crisis would further complicate a disorderly Brexit as companies were less prepared for the end of the transition period, having diverted attention away from leaving the EU.

It warned that failure to secure a free trade agreement before the UK leaves the Brexit transition period at the end of December would leave the economy 6.5% lower in the next few years than would have been the case if existing arrangements with the EU had been maintained.

In a development with potential to cause severe disruption for cross-border trade, it said a disorderly Brexit would have the most significant impacts for manufacturing, with the UK car industry, food and textiles producers hardest hit, suffering a fall in exports of more than 30%.

Álvaro Pereira, the director of the country studies branch at the OECD, said: “We know Covid has been the largest economic shock and social shock in the last few decades all across the world. Brexit obviously compounds the issue.

“The most important thing in the next few days and months is to focus on a deal, so the closest possible relationship is established between the UK and EU. Both parties lose if there is no deal.”

Publishing its first major economic survey of the UK since 2017, the OECD said a disorderly Brexit had potential to compound the risks to the British economy from

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IMF upgrades economic forecast but warns of long-term coronavirus damage

IMF upgrades economic forecast but warns of long-term coronavirus damage

The global economy may take a smaller hit from the coronavirus recession in 2020 than was once expected but faces significant long-term challenges that will likely widen inequality, the International Monetary Fund (IMF) said Tuesday.

In a set of new projections, the IMF slightly upgraded its outlook on the 2020 economic decline while warning that a lack of further fiscal and monetary support could cause deeper damage to the global economy.

The IMF now expects global growth in 2020 to fall to -4.4 percent, 0.5 percentage points better than its June projection of -4.9 percent. The international lender expects growth to rebound to 5.2 percent in 2021, down 0.2 percentage points from a June a projection of 5.4 percent.

“As a result of eased lockdowns and the rapid deployment of policy support at an unprecedented scale by central banks and governments around the world, the global economy is coming back from the depths of its collapse in the first half of this year,” wrote IMF chief economist Gita Gopinath in a Tuesday article

“This crisis is however far from over,” she continued. “The ascent out of this calamity is likely to be long, uneven, and highly uncertain.”

The global economy has gradually rebounded from the onset of the coronavirus pandemic earlier this year, which caused the steepest economic decline since the Great Depression.

Employment and global economic activity has begun to recover as countries adapt to life amid COVID-19, which has claimed more than 1 million lives globally and more than 215,000 in the U.S.

Gopinath wrote that “signs of a stronger recovery” in the third quarter warranted the IMF’s slight upgrade to its forecast. But she warned that the total economic blow of the pandemic would linger for years and restrain the recovery for long after 2020.

“This

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Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next year.

(Reporting by Bart Meijer, editing by Larry King)

Copyright 2020 Thomson Reuters.

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Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.



a man wearing a suit and tie: ECB board member Knot appears at a Dutch parliamentary hearing in The Hague


© Reuters/EVA PLEVIER
ECB board member Knot appears at a Dutch parliamentary hearing in The Hague

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

Gallery: Why the US Economy Isn’t Ready for a Second Wave of Coronavirus (GOBankingRates)

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

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Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next

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WHO warns against COVID-19 lockdowns due to economic damage

WHO warns against COVID-19 lockdowns due to economic damage

The World Health Organization has warned leaders against relying on COVID-19 lockdowns to tackle outbreaks — after previously saying countries should be careful how quickly they reopen.

WHO envoy Dr. David Nabarro said such restrictive measures should only be treated as a last resort, the British magazine the Spectator reported in a video interview.

“We in the World Health Organization do not advocate lockdowns as the primary means of control of this virus,” Nabarro said.

“The only time we believe a lockdown is justified is to buy you time to reorganize, regroup, rebalance your resources, protect your health workers who are exhausted, but by and large, we’d rather not do it.”

Nabarro said tight restrictions cause significant harm, particularly on the global economy.

“Lockdowns just have one consequence that you must never, ever belittle, and that is making poor people an awful lot poorer,” he said.

He added that lockdowns have severely impacted countries that rely on tourism.

“Just look at what’s happened to the tourism industry in the Caribbean, for example, or in the Pacific because people aren’t taking their holidays,” Nabarro told the outlet.

VARNEY: WHY THE LOCKDOWN WARNING MATTERS FOR THE PRESIDENTIAL RACE

“Look what’s happened to smallholder farmers all over the world. Look what’s happening to poverty levels. It seems that we may well have a doubling of world poverty by next year. We may well have at least a doubling of child malnutrition.”

The UN agency previously warned countries against lifting lockdowns too soon during the first wave of the virus.

“The last thing any country needs is to open schools and businesses, only to be forced to close them again because of a resurgence,” said Director-General Tedros Adhanom Ghebreyesus.

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But Tedros had urged countries to bolster

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