Saudi Arabia shocked the markets by raising pricing for oil customers after cutting supply by 1 million barrels a day in February and March.
Even more fiscal stimulus
Japan announced a new ¥73.6tn ($708bn) stimulus package to further support the recovery. The new stimulus package will include subsidies for green investment and spending to accelerate digitalisation.
More fiscal stimulus
The European Central Bank (ECB) has bolstered its pandemic emergency purchase programme (PEPP) by €500bn – taking it to €1.85tn. It also announced it was extending the PEPP by nine months, until at least March 2022.
The Fed changes policy
The US Federal Reserve (Fed) announced a new policy of a flexible average inflation target, meaning it will allow inflation to run “moderately” above the 2% target after periods when it has been persistently below-target. This would potentially allow the bank to keep US interest rates low for longer.
UK is in recession
It is not surprising but we are officially in a recession as the ONS has calculated that Covid had caused GDP to fall by 20.4% in Q2.
EU finally signs off on a €750 bn recovery package
The package is made up of €390bn programme of grants and the rest in loans.
Chancellor’s summer economic update – details
Chancellor, Rishi Sunak, has announced a range of measures to try and kick-start the economy.
The big story is a cut in VAT for the hospitality sector from 20% to 5% and this will apply to eat-in or hot takeaway food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos.
He also announced a temporary stamp duty holiday until January 2021 to stimulate the property market. This would exempt the first £500,000 of all property sales from the tax.
The government will pay businesses a £1,000 bonus for every staff member that is kept on for three months when the furlough scheme ends in October. To qualify, the employee must be paid at least £520 on average, in each month from November to the end of January.
New schemes were announced to boost employment and training opportunities for 16 – 24 year olds. This includes a ‘Kick Start’ scheme to assist those at risk of long term unemployment by funding six-month work placements to those on universal credit. Further support will be provided to young people in England: funding of £1,000 for each new work experience place; for apprenticeships – funding of £2,000 for each new apprentice aged under 25, and £1,500 for each new apprentice aged 25 and over, from 1st August 2020 to 31st January 2021. The apprenticeship payments will be in addition to the existing £1,000 funding that is provided for young apprentices.
There was also a scheme announced that will be launched in August to give 50% off to people dining out. The scheme will mean 50% off meals eaten at any registered business between Monday to Wednesday in August, up to a maximum discount of £10 per head (including children).
Chancellor splashes another £30b
UK Chancellor of the Exchequer Rishi Sunak pledged an additional GBP 30 billion to support employment, on top of the GBP 133 billion in coronavirus measures he has already unveiled. The money includes over GBP 5 billion in accelerated infrastructure spending, about GBP 9 billion for employers to retain workers through the end of January, funds for home insulation, and help for homebuyers and for hospitality firms.
BoE increases QE
The Bank of England increased quantitative easing by £100bn and kept base rates at 0.1%. That takes the total to £745 bn. The program was started with an initial £200 bn back in 2009.
UK government being paid to borrow money!
The government has sold a gilt with a negative yield for the first time. An auction by the Debt Management Office of a gilt maturing in July 2023 sold at an average yield of -0.003 per cent.
A negative yield means that the government is effectively being rewarded to borrow as investors agree to be repaid slightly less than they lent.