THE US/UK DEAL
January 14, 2021
A trade deal between the US and the UK is seen as less likely with Biden than it was with Trump.
Biden faces serious economic problems with the Pandemic still ravaging the country and with the economy expected to grow slowly this year, his priority is to get higher growth at home.
The plunge in nonfarm payrolls, reported by the Labor Department on Friday, was concentrated in the leisure and hospitality sector, with closures of bars and restaurants accounting for three quarters of the job losses.
But with other industries including retail, manufacturing and construction performing better, the economy is unlikely to fall back into recession. Nearly $900 billion in additional pandemic relief approved by the government in late December will probably provide a backstop.
More fiscal stimulus is expected now that Democrats have gained effective control of the US Senate, boosting the prospects for President-elect Joe Biden’s legislative agenda. There is also optimism the rollout of coronavirus vaccines will be better coordinated under the incoming Biden administration.
On Thursday, Congress formally certified Biden’s victory in the November 3 election, hours after hundreds of President Donald Trump’s supporters stormed the US Capitol. The employment report is one of the final scorecards delivered during Trump’s presidency and stands as a reminder of the tumultuous economic crisis that marked his last months in office.
About 15.8 million people reported they were unable to work because of business closures or failures related to the pandemic - up from 14.8 million in November.
Payrolls decreased by 140,000 jobs last month, the first decline since April, after increasing by 336,000 in November. The economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic. Economists, polled by Reuters, had forecast 77,000 jobs would be added in December.
COVID-19 cases in the United States have jumped to more than 21 million, with the death toll exceeding 357,000 since the pandemic began, according to a Reuters analysis.
The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000. There were also decreases in private education jobs and government employment.
On this side of the Atlantic within a week, implications of the Brexit trade deal with the European Union are being felt by businesses up and down the country as food deliveries are delayed for not having the right customs paperwork, logistics companies halt the shipment of goods, and retailers discover their supply chains might be obsolete.
After decades inside the European Union’s customs union and single market, Britain’s businesses have unearthed new challenges and changes every day.
Last Friday, DFDS, a large Danish logistics company that runs ferries from the English port of Dover to France, said a “high volume” of trucks were being refused or delayed for not having the correct paperwork.
Goldman Sachs now expects the UK economy to enter another recession in the first quarter of 2021, after a new lockdown to stop the spread of a new variant of COVID-19 curbs activity, although growth should pick up strongly in the spring.
The US investment bank joins a growing number of voices that expect Britain to enter a "double-dip recession" - where the economy contracts and recovers, only to shrink again - in light of its latest lockdown.
In comparison with the spring 2020 lockdown, the restrictions at the start of this year will not be quite such a huge wrecking ball. As the whole of the UK ground to a halt in the first wave of infections, GDP collapsed by 20%, an unprecedented sudden stop.
In this regard, Rishi Sunak, the Chancellor, has deployed an additional £4.6bn of funding for business grants, on top of the £280bn in emergency spending for the public sector, businesses, workers and households throughout the crisis so far.
But there were huge gaps in the system, even before a double-dip recession was looming, for struggling families and companies. With a 4% contraction expected in the first three months of the year – the sharpest plunge in history, save for last spring, and an even bigger economic collapse than the winter of discontent in 1978-79 – more may need to be done.