The UK economy grew by 2.1% in August, marking the fourth consecutive month of economic expansion following its record slump of 20.4% in April.
However, this growth was slower than the expansion of 8.7% seen in June and 6.6% in July, according to new figures released on Friday by the Office for National Statistics (ONS). Economists had forecasted a monthly growth of 4.6%.
The slowdown comes in spite of a boost for the hospitality sector through the government’s Eat Out to Help Out scheme, which helped to lift output in the food and accommodation industry by a staggering 71.4% in August. Discounts for over 100 million meals were claimed through the scheme.
“The combined impact of easing lockdown restrictions, Eat Out to Help Out Scheme and “stay-cations” boosted consumer demand,” the ONS noted.
More than half of the UK’s economic growth during August stemmed from the food and accommodation industry. Meanwhile, the manufacturing sector grew by 0.7% and the construction sector grew by 3%, respectively 8.5% and 10.8% lower than February figures.
The economy as a whole remains 9.2% smaller than pre-pandemic levels. The latest release from ONS is likely to put an end to hopes of a V-shaped recovery for the UK’s economic output.
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Analysts have warned that the UK’s economic recovery is likely to peter out further as new COVID-19 restrictions come into place, the furlough scheme ends by November, and concerns of a no-deal Brexit grow more pressing.
“Although the UK remains on course to exit recession in the third quarter, the looming triple threat of surging unemployment, further restrictions Wand a disorderly end to the transition period means the recent rally in economic output is likely to be short-lived,” said Suren Thiru, head of economics at the British Chamber of Commerce. “The government must stand ready to help firms navigate a difficult winter, beyond the Chancellor’s recent interventions.”
Cineworld Group, the world’s second-largest cinema chain, announced that it will temporarily close all of its US and UK theatres from this week, putting as many as 45,000 employees out of work.
“Cineworld's main priorities remain the safety of customers and employees, cash preservation and cost reduction,” the company said in a statement on Monday, adding that it is “assessing several sources of additional liquidity and all liquidity raising options are being considered.”
Cineworld will reportedly ask staff to accept redundancy, with potential incentives to rejoin the company once theatres have reopened, which is likely to happen in 2021.
Mooky Greidinger, CEO of Cineworld, said: “This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets”.
The global cinema company intends to pen a letter to prime minister Boris Johnson and culture secretary Oliver Dowden to explain that the industry is currently “unviable”, according to a Sunday Times report.
Early trading in London saw Cineworld shares plunge 56% as investors reacted to news of the upcoming closures.
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The announcement of Cineworld’s closure followed news that the upcoming James Bond movie, “No Time to Die”, had been delayed for a second time, with its release pushed back to 2021. Film industry executives had hoped that the major release – which had been due to release on 12 November – would re-energise cinema-goers and prompt a revival of the sector.
Cineworld Action Group, a body run by and representing Cineworld employees, said in a tweet on Sunday: "The front page of tomorrow’s Times is announcing that Cineworld is planning to close all of its cinemas across the country as soon as this week putting all of our jobs at immediate risk. There has been no consultation with staff whatsoever.”
A new report from the Labor Department – the last that will be issued before the presidential election in November – showed that US employers added 661,000 new workers in September, far below the Dow Jones’ projected addition of 800,000.
Unemployment saw a notable decline, falling to 7.9% from 8.4% at the end of August. Unemployment among African Americans fell from 13% to 12.1%, while the Asian American rate fell from 10.7% to 8.9%.
The addition of 661,000 non-farm payrolls cements September as the fifth consecutive month of net job gains. Leisure and hospitality employers were responsible for the largest share, as 318,000 jobs were brought back. Two thirds of these returning jobs are reported to have come from reopening bars and restaurants.
Retail also added back 142,000 jobs, a significant step down from the 261,000 the sector added in August despite making up a considerable portion of September’s gains.
Government jobs were the only sector to post net losses during the month, with over 216,000 education jobs cut as schools remain closed. A number of temporary census workers hired in August were also let go in September.
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The report reflects surveys conducted three weeks prior to publication, and notes that 26 million people in the US were collecting some form of unemployment benefit as of the middle of September. Last week, 1.4 million people applied for unemployment benefits.
Overall, just over half of the 22 million US jobs that were lost in March and April have now been recovered.
A new wave of layoffs is likely imminent as government stimulus measures are phased out. United Airlines and American airlines have announced that around 35,000 staff will be placed on indefinite furlough or cut altogether as federal aid runs dry, and The Walt Disney Company has stated that 28,000 jobs will be cut at its California and Florida theme parks.
Financial services firms operating in the UK have shifted more than $1.6 trillion worth of assets and around 7,500 employees to the European Union ahead of Brexit, with more likely to follow in the weeks ahead, according to a report from Big Four accountancy firm Earnest and Yong (EY).
Tracking 222 of the largest financial firms maintaining significant operations in the UK, the EY report notes that around 400 relocations were announced in September alone amid uncertainty about the City of London’s continued access to the bloc in 2021.
EY also noted that there was very little movement in the first half of 2020, owing to the emergence of the COVID-19 pandemic and its impact on the banks. Businesses are now accelerating plans to relocate staff and operations from the UK ahead of its exit from the EU on 31 December and a possible second wave of COVID-19 lockdown measures forcing borders to reclose.
Since the UK’s vote to leave the EU in 2016, 44 financial services firms in London have created 2,850 new positions in EU nations. The biggest business gains have been seen in Dublin, Frankfurt and Luxembourg.
“As we fast approach the end of the transition period, we are seeing some firms act on the final phases of their Brexit planning, including relocations,” said Omar Ali, UK financial services managing partner at EY.
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“The time has now passed for firms to rely on short-term equivalence assessments that would align to EU rules, and the sector’s attention is increasingly focused on the longer-term outlook,” Ali added.
Major US banks with operations in the UK have begun to transfer their assets to the EU, such as JPMorgan, which has moved about $230 billion to a subsidiary in Frankfurt. Goldman Sachs has also planned to relocate over 100 London staff.
Treasury Secretary Steven Mnuchin said in a statement to the Senate Banking Committee on Thursday that the Trump administration and Democratic leaders are set to revive negotiations on a coronavirus relief bill.
“I've probably spoken to Speaker Pelosi 15 or 20 times in the last few days on the CR, and we've agreed to continue to have discussions about the CARES Act,” Mnuchin said.
The CARES Act, signed by President Trump at the end of March, was drafted as a $2.2 trillion relief bill containing, among other measures, a $600 weekly enhancement to unemployment benefits. This lapsed in July, to be replaced by a £300 weekly enhancement issued via a presidential memorandum in August. This, too, will expire before the end of the month unless further measures are instated.
Negotiations regarding potential follow-up stimulus halted in late August as House Speaker Nancy Pelosi refused to go lower than her party’s proposed $2.2 trillion stimulus package, while Republicans have refused to consider a bill greater than $1.1 trillion.
Pelosi confirmed Mnuchin’s suggestion of further negotiations, telling reporters on Thursday, “We’ll be hopefully soon to the table with them.”
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The need for further stimulus has grown more urgent during September, with economic recovery slowing and more than 870,000 new unemployment claims being filed in the US during the past week.
Both Mnuchin and Federal Reserve Chairman Jerome Powell have stated that the government’s main priority should be to give further support to the millions of Americans who are currently unemployed, both to bolster the economy and prevent the continued spread of coronavirus cases.
Powell noted: "If people start to run through it what resources they have, they're at risk of losing their homes or having to move out of the place they're renting, maybe move back in with family, and those things are not necessarily good for controlling the spread of the virus.”
On Wednesday, Chancellor Rishi Sunak announced a raft of new emergency measures to curb unemployment during the ongoing COVID-19 pandemic.
As part of the new measures, which Sunak described as part of a wider “winter economy plan”, the UK government will introduce a Jobs Support Scheme beginning 1 November to replace the existing furlough scheme. It is set to run for six months.
Under the Jobs Support Scheme, the government will subsidise the salaries of employees who have been forced to work part-time due to the pandemic. 30% of these employees’ salaries will be covered by the government, capped at £697.92 per month, with another 30% to be covered by firms.
Employees will need to be working for at least a third of their normal hours in order to qualify for the scheme, which aims to ensure that employees receive at least 77% of their normal salaries each month. A similar scheme for the self-employed will also be detailed, Sunak said.
Also announced was a continuation of the government’s emergency business loan schemes, and the extension of a VAT cut for hospitality and tourism companies enacted in July.
“Small businesses will breathe a sigh of relief today,” said Simon Cureton, CEO of Funding Options. “Ongoing access to business loan support, such as the CBIL and CLBIL schemes, until the end of the year and far greater flexibility on repaying those loans, is a shot in the arm for the economy and a wholly positive step as we head towards Christmas. We of course look forward to hearing more detail on the successor loan scheme due to launch in January.”
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The Economist’s Paul Johnson expressed scepticism over the new scheme in a tweet: “This is a v big change from furlough. Less generous. Only open to those who are working a third of normal hours. Understandable given need to adapt as economy changes. Can't pay all wages forever. But a lot on furlough now likely to lose their job,” he wrote.
According to official statistics, nearly three million workers – representing around 12% of the UK’s total workforce – are currently on partial or full furlough leave.
International Airlines Group (IAG) began to issue billions of heavily discounted new stocks on Thursday in an effort to mitigate the cost of its anti-COVID-19 measures.
The airline holding company announced that it will issue 2.97 billion new shares at €0.92, having applied a 36% discount to its Wednesday closing price.
The rights issue coincided with IAG’s confirmation that over 8,200 British Airways employees had been laid off by the end of August. The layoffs come as part of a company restructuring process brought about by the COVID-19 pandemic, which aims to reduce overall headcount by as much as 13,000. Most of the 8,236 employees who departed did so via a voluntary redundancy process.
IAG also stated that its capacity will be lower than previously anticipated, but that it remained optimistic about breaking even in the fourth quarter.
“This is as a result of mitigating actions taken to reduce operating expenses further and enhance working capital,” an IAG spokesperson said.
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The COVID-19 pandemic has drastically impacted international travel, with lockdown measures and consumer fears creating an unprecedented lack of consumer demand for air travel. Airlines have been compelled to furlough or lay off thousands of employees in order to mitigate losses, while others have shuttered altogether.
Virgin Atlantic announced last week that it would cut a further 1,150 jobs on top of its 3,500 summer layoffs, and Ryanair drastically cut its annual passenger target on Wednesday amid resurgent COVID-19 infections internationally.
]A survey of 600 financial services professionals commissioned by KPMG and the Financial Services Skills Commission, and carried out by Savanta, showed that 44% of respondents were considering a career change.
31% of those surveyed said that they planned to hunt for a new job within the coming 12 months in spite of the dire impact that the COVID-19 pandemic has had on the UK job market. A further 13% were looking to quit the sector altogether – a figure that rose to 16% for 18- to 30-year-olds.
The respondents’ stated reasons for wanting to change career paths included excessive regulation in the sector, in addition to overly long hours and commuting times.
Karim Haji, head of financial services at KPMG remarked in a statement that it “made sense” for workers in the financial sector to be reconsidering their roles as they spend more time at home, away from their colleagues and offices.
“With so many considering a career change, financial services must take this time to promote itself positively and wipe the slate clean when it comes to the associations people make with it, if it is to be genuinely competitive for talent,” he said.
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Haji also emphasised the importance of dispelling myths around the financial services sector, including its supposed “conservative employee policies”. Much of this work, he said, has been accelerated by the COVID-19 pandemic.
Savanta’s findings in the financial services sector were largely consistent with the wider economy. The firm polled more than 1,500 people across various industries and found that around 46% were contemplating new careers.
Qantas Airways, the largest airline in Australia by fleet size, has posted an annual loss of $2 billion – the company’s greatest loss in its 100-year history.
CEO Alan Joyce admitted that Qantas’s recovery "will take time and it will be choppy," warning of a "significant underlying loss" to come in the next financial year.
Joyce added that he expects the airline to have resumed around 50% of its international operations by the middle of 2022. “International, we think, will take a bit of time to recover. In financial year 2022, we are only expecting to get 50% of our international operation back and we’re thinking it will take three years before we can get our A380s back in the air,” he said.
“When we do, we’ll start getting back to pre-COVID-19 levels.”
Like other multinational airlines, Qantas has greatly scaled back its global operations, in addition to announcing plans to lay off 6,000 employees in June. 4,000 of these planned layoffs are expected to be finalised by the end of August.
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Australia has been particularly affected by state and national travel border closures in response to the COVID-19 pandemic, which were a partial cause of the collapse of Virgin Australia in April.
In a sign of the continuing impact of the pandemic on the air travel industry, flight booking site Webjet reported losses of $143.5 million on Wednesday, and recently released traffic figures showed that only 317,000 passengers passed through Australia’s busiest airport, Sydney, in June – a decrease of 92% annually.
Do you have an equal passion for both justice and crunching numbers? You undoubtedly know what economics is and you’ve likely heard of forensics, but do you have any idea what forensic economics is? Who knows, maybe this is the career path you were meant to take. Let’s find out.
What You Need to Know About Forensic Economics
According to the National Association of Forensic Economics (NAFE), forensic economics is classified as the application of economic theories and methods to legal matters. It’s a scientific discipline and those who work in the field are almost always master’s degree or PhD holders.
Someone who works in forensic economics is called a forensic economist. Economics and accounting are completely different as are forensic economists and forensic accountants. Though the roles are similar in nature, there are a number of factors that differentiate one from the other. Two of the biggest differences are the scope of work and the salaries associated with each.
What do Forensic Economists Do?
While of course it can differ from industry to industry, a forensic economist is generally tasked with conducting research, preparing reports and formulating plans that are aimed at specifically addressing economic problems relating to monetary or fiscal policies.
Forensic economists are well versed in services such as economic damage calculation and litigation consultation. They are often called upon to act as expert witnesses in a court of law. Their common areas of practice include:
- Toxic tort
- Accident claims
- Employment
- Medical claims
- Business
- Real estate
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How Much do Forensic Economists Earn?
Now, onto the good stuff. How much do forensic economists earn? Considering the scope of their work and the academic credentials behind their names, it should come as no surprise that forensic economists earn a pretty penny. The average salary of a forensic economist in the US is around $124,430, which is approximately $60 per hour, with an average bonus of $4,405 per year.
The entry-level salary for those with one to three years of experience is $86,457 while those with eight years of experience or more behind their name can earn up to $154, 814. Again, much like the scope of work, the salary of a forensic economist largely depends on the industry in which they work and the company or organisation that employs them.
A forensic economist can work anywhere from smaller organisations or cottage businesses to one of the Big Four firms. This is also one job that accommodates remote working—unless your presence is required in court of course—so it’s a career path that caters to working mothers and those that prefer working solo.
Final Thoughts
Forensic economists are remarkable people who can take numbers on a piece of paper and paint a picture of a hard-done-by single parent who struggles to make ends meet. They’re people who can review pre-incident records and come up with accurate figures that represent a business’s loss of earnings. They fight for the little guy and big guys alike, so whoever hires them benefits from their expertise and they leave a positive legacy.
The International Monetary Fund’s June update to the World Economic Outlook paints a bleak picture for all nations in the short term. Examining the current economic trajectories of developed nations, the report estimates a contraction of 8% in the United States’ real GDP for 2020 – which, if true, would eclipse the 4.3% lost in the Great Recession of 2007-9. However, the full report specifies that the world’s GDP downturn “could be less severe than forecast if economic normalization proceeds faster than currently expected in areas that have reopened”, citing China’s revived service industry and investor enthusiasm as an example of an ideal rebound.
On paper, then, it would appear that the surest route to recovering the economy would be a fast yet vigilant return from lockdown, with businesses enabled to reopen once they have deployed adequate safety measures. This is the stated aim of the US government. The Congressional Budget Office have estimated that the COVID-19 crisis will cause upwards of $8 trillion worth of damage to the US economy, and a rough $6 trillion has already been issued to combat the economic and social ramifications of the pandemic. Given that the US’s national debt surpassed $23 trillion by the end of 2019, it is no surprise that the US’ political leadership intends to soften the blow by encouraging the swiftest economic recovery possible.
However, while China was reportedly able to gain control over the spread of COVID-19, the methods it used – which have included the restriction of free movement, militant policing of suburbs and the enforced wearing of masks even in citizens’ own homes – would be untenable in the United States, especially now that authority over lockdown measures has been largely delegated to the states rather than overseen directly by the federal government.
The Congressional Budget Office have estimated that the COVID-19 crisis will cause upwards of $8 trillion worth of damage to the US economy.
With well over a million active cases within the country and as-yet insufficient track-and-trace mechanisms in place to interrupt chains of infection, the efforts of individual states to return Americans to work are all but guaranteed to cost lives. The true variable is what kind of balance state leaders are willing to strike.
Walking It Back
The rush to reopen is further complicated by the ease with which it can go wrong, causing a greater surge in infections than leaders predicted. The only real recourse in these cases is to reverse the reopening process, thus causing minimal increases in business activity and further prolonging the need for strict lockdown measures to remain in effect.
This is what we are currently witnessing in Texas, a state that was at the forefronts of efforts to reopen for business as soon as feasibly possible. Governor Greg Abbott’s “Open Texas” programme was an attempt to open non-essential businesses in measured “phases” while meeting the minimum recommended health protocols of the Texas Department of State Health Services.
Each of these phases saw an uptick in recorded cases, which then came to a head in June as confirmed COVID-19 cases doubled in the span of three weeks and a record 5,100 COVID-19 hospitalisations were reported statewide. Rather than risk the health of staff or customers, companies like Apple voluntarily reclosed their stores across the state, and Abbott issued an order for all bars in the state to shutter once again.
A similar situation has unfolded in Florida, where a record daily rise pushed Miami beaches (a cornerstone of the state’s $88 billion tourism industry) to reclose, and across a number of other states whose reopening efforts have been comparatively less forceful. The worst of all worlds – an extended business-stifling lockdown and a spike in COVID-19 cases – could be on the horizon.
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The Human Cost
Ultimately, the weighing of lives against renewed economic activity might itself be useless. Speaking with Reuters, UCLA professor Andy Atkeson has theorised that a unilateral end to lockdown would simply mean that “Americans will lock themselves down” for fear of the resultant waves of deaths, meaning no significant increase in consumer spending. Also to be accounted for would be the overall loss of productivity from the many employees whose personal lives would be impacted by the resurgence. Mass death is simply not good for the economy.
This is not to say that the US must forsake all economic activity until a coronavirus vaccine has been produced. For another way, we can look to the example of South Korea, whose aggressive track-and-trace programme stamped out the initial wave of COVID-19 and has continued to isolate and contain smaller outbreaks in the months since. South Korean restaurants, bars and clubs remain open, and – crucially – deaths from COVID-19 have been kept low (the count stands at 282 as of publication). As a result, South Korea’s GDP is expected to fall by a mere 0.2% this year.
Whether there is time for the US to adopt similar policies remains to be seen. Whatever the case, every advance towards normalcy must be made with greater care than we have seen thus far, or else the costs will quickly eclipse any benefits reaped.
On Friday, the UK government announced the release of £400 million in government and industry funding for seven major research and innovation projects across the country.
Each of the funded programmes aims to drive long-term growth in the UK economy, with a focus on job creation, education and skills training, and the founding of future-proof industries that will assist in the country’s economic growth in the aftermath of the COVID-19 pandemic.
“Today’s announcement will ensure some of our country’s most promising R&D projects get the investment they need to take off and thrive,” said Business Secretary Alok Sharma in a statement.
Included among the listed recipients of the new funds are Cardiff University, which is researching emergent technologies such as 5G telecommunications and medical devices, and Artemis Technologies Ltd, which aims to introduce wind-electric hybrids for maritime vessels and a zero-emissions water taxi scheme.
Most notably for the financial sector, £55 million has been granted to a consortium led by the University of Edinburgh, which is undertaking research into better understanding financial behaviours. £22.5 million has been earmarked to support the development of the Global Open Finance Centre of Excellence in Edinburgh and Central Scotland, the aim of which is to draw on expert knowledge from across Scotland to encourage and train emerging talent, create ethical standards and form new partnerships in the sector.
The news has been well received in financial circuits. Colin Hewitt, founder and CEO of Edinburgh fintech Float, commented that the funding “will do great things” for Edinburgh’s fintech scene.
“We have a well-established financial sector and a thriving start-up culture, with plenty of cross-over between the two,” he said. “The UK government has been extremely supportive of this community, and [its] continued financial support makes a real difference.”
