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Japan needs another extra budget to help ailing economy: Reuters poll By Reuters

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© Reuters. A general view shows the outdoor pool at Museum of Maritime Science with Tokyo’s skyline in the background

By Kaori Kaneko

TOKYO (Reuters) – Japan’s government needs to compile a third extra budget for the current fiscal year ending March to shore up an economy hammered by the COVID-19 pandemic, economists said in a Reuters poll.

Nearly three quarters of economists polled said the government should spend up to 10 trillion yen ($94.95 billion) under the extra budget to help the world’s third-largest economy recover after record contraction in the second quarter.

The rest said the government should spend even more.

“Companies are suffering from the heavy burden of social distancing policies to prevent the spread of the virus, which have hit their profit,” said Harumi Taguchi, principal economist at IHS Markit.

“There’s a chance the government will consider another budget as money to fund current subsidies and other relief measures may run out.”

A median estimate of 39 economists showed Japan’s economy expanded at an annualised 15.1% in July-September after contracting 28.1% in the preceding three-month period.

Those polled expect the economy to contract by a record 6.0% in the current fiscal year, and rebound 3.4% the following year. The projections were unchanged from a previous poll in September.

About 76% of respondents to the Oct. 7-15 poll said the government should launch a third extra budget to cushion the blow from COVID-19.

Among those respondents, 11 said the size of the extra budget should be 5 trillion to 10 trillion yen, seven said under 5 trillion yen, and the remainder said over 10 trillion yen.

Japan has already announced $2.2 trillion across two stimulus packages, including cash payments to households and small business loans.

Ruling-party lawmakers have likewise called for another stimulus package funded by a third extra budget.

Local media have reported Prime Minister Yoshihide Suga plans to order his government to compile extra stimulus measures as early as November, a move that would highlight his resolve to return growth to levels seen before the health crisis.

The poll also showed 90% of economists agreed with Suga that more regional banks must consolidate to survive the impact of a dwindling population as well as narrowing profit margins brought about by ultra-low interest rates.

A firm majority of economists said small and mid-sized firms should also consolidate more to boost productivity.

“There are so many regional banks in Japan including those that won’t be able to withstand such severe competition alone,” said Hiroaki Mutou, assistant general manager at Sumitomo Life Insurance Co’s investment planning division.

Economists expect core consumer prices, which exclude volatile fresh food but include energy costs, to fall 0.4% this fiscal year before rising 0.2% the following year, the poll showed.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Economy

UK’s Sunak stumps up more help for COVID-hit businesses By Reuters

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© Reuters. FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak is seen at Downing Street in London

By David Milliken and William James

LONDON (Reuters) – British finance minister Rishi Sunak was forced to offer more financial help on Thursday to businesses grappling with a resurgence of the COVID-19 pandemic, which looks increasingly likely to derail the economic recovery.

Sunak told parliament that the government would shoulder more of the burden for paying employees’ wages for businesses that are still open but experiencing difficulties, and offer more money to hospitality companies.

The move — Sunak’s third major announcement in the space of a month — marks a further turnaround after he resisted calls to expand the generosity of government support schemes.

Opponents have said it was obvious that more help would be needed and that it should have come sooner.

Britain – the worst-hit European nation during the COVID-19 pandemic with more than 44,000 related deaths – is now seeing a second wave of the virus, recording 26,688 new cases and 191 deaths on Wednesday.

“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs,” Sunak said.

He told lawmakers the economy was under “enormous strain” and that more jobs would still be lost.

Sunak did not give the cost of the new measures. Government borrowing in the first half of the financial year is already more than six times higher than before the COVID pandemic.

Some sectors are now in dire straits. An official survey published earlier on Thursday showed more than a third of hospitality companies say they are at risk of going bust.

Sunak said he would offer a new grant to hospitality businesses worth up to 2,100 pounds ($2,750) per month that can be claimed retrospectively to August.

He also tweaked the Job Support Scheme designed to dissuade businesses from making people redundant and instead keep workers on reduced hours.

Businesses will now have to pay 5% of the cost of wages for unworked hours, compared with 33% previously, and only need to employ staff for one day a week — 20% of normal hours, rather than a third before.

Following criticism that the government had done too little to help self-employed people, Sunak said he would double the next grants for the self-employed from 20% to 40% of their previous incomes.

His Labour Party opposition counterpart Anneliese Dodds said Sunak had failed to get ahead of the crisis.

“This is becoming like a long-running television show — ‘The Winter Economy Plan: Series 3’. But you know the twist is, it didn’t last the winter, it didn’t do enough to help the economy, and it wasn’t a plan,” she said.

The head of the Resolution Foundation think-tank, Torsten Bell, said Sunak had done the right thing by expanding help for companies.

“Doing it earlier, given the obvious flaws, would have saved more jobs, but at least we’ve got to the right place 10 days ahead of the Job Support Scheme coming into effect,” Bell said.





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Chinese U.S. homebuying sinks By Reuters

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© Reuters.

By Ankit Ajmera and Sanjana Shivdas

(Reuters) – U.S. home sales to Chinese buyers may plunge as much as 60% this year, according to a U.S. real estate industry body, as the travel curbs imposed to thwart the coronavirus counter the impact of a surge in the yuan against the dollar.

Rich Chinese buyers seeking to put away years of export-earned dollars have become the biggest foreign contributor to the U.S. housing market over the past decade.

Deal numbers, however, dropped sank a total of 62% over the last two years to $11.5 billion in the year to last March, as President Trump’s trade war and nerves over whether buyers and their families would be guaranteed visas in future weighed.

The National Association of Realtors now estimates that number could fall further, to between $5 billion and $7 billion in the current year, depending on whether existing travel restrictions on arrivals from China are lifted earlier.

“Chinese investment in U.S. homes is likely to continue to decline,” says Gay Cororaton, NAR director of housing and commercial research.

“There is still a U.S. travel ban on foreign nationals entering the U.S. from China, and Chinese nationals may also be hesitant to travel to the United States with coronavirus cases still on the rise.”

While agents say the Trump administration’s tussles with Beijing has cooled appetite over the past four years, U.S. mortgage rates are at rock bottom and, crucially, the dollar has sunk over 7% against the yuan since May.

Enquiries about U.S. properties with Chinese international property firm Juwai IQI are up 12% this year.

“There is still a great deal of pent-up demand,” Executive Chairman Georg Chmiel says. “Chinese buyers have money and they still value American real estate and the American lifestyle.”

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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BoE’s Haldane says UK spending ‘remarkably resilient’ By Reuters

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© Reuters. FILE PHOTO: The Chief Economist of the Bank of England, Andy Haldane, listens from the audience at an event at the Bank of England in the City of London

By David Milliken

LONDON (Reuters) – British household spending has been “remarkably resilient” through the coronavirus pandemic, Bank of England Chief Economist Andy Haldane said on Thursday.

Haldane noted that U.S. household spending had suffered relatively little from a second wave of cases there over the summer, which might also prove the case in Britain.

Haldane, who has taken a more upbeat view of Britain’s recovery than many of his colleagues at the BoE, was speaking at a conference on economics hosted by the National Institute of Economic and Social Research.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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