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UK economy officially in recession

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The UK economy has shrunk by 20.4% between April and June, when the coronavirus lockdown was at its most severe. Experts say the downturn brought on by the pandemic led to the biggest fall in quarterly GDP on record.

The UK on Wednesday officially fell into recession for the first time in 11 years. The economy collapsed by a record 20.4% in the second quarter, compared to the first quarter, as a result of coronavirus lockdown measures imposed to contain the outbreak, agency reports said.

Between April and June, household spending plunged as businesses were ordered to shut down, while industries such as construction rolled back on output and production.

“The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record,” Jonathan Athow of the Office for National Statistics (ONS) said.

Data from the ONS showed that the UK economy had a 2.2%  quarterly contraction in the first three months of the year.

The technical definition of a recession is two straight quarters of economic decline.

The economic decline was concentrated in April —  the peak of lockdown.

The ONS said the economy bounced back in June as the government started to relax coronavirus restrictions.

Non-essential retailers in England, including clothes shops and bookshops, reopened their doors on June 15.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and house-building continuing to recover,” Athow said. But “Despite this, gross domestic product (GDP) in June still remains a sixth below its level in February, before the virus struck,” he added.

The UK’s service sector, which makes up four fifths of the economy, suffered the biggest quarterly decline on record. Car manufacturing, meanwhile, faced its slowest production rate since 1955.

Chancellor of the Exchequer Rishi Sunak warned that the economic slump would lead to further job losses in the coming months.

“Today’s figures confirm that hard times are here,” Sunak said. “Hundreds of thousands of people have already lost their jobs, and sadly, in the coming months many more will.”

Some 1.2 million employers have taken advantage of the government’s Coronavirus Job Retention Scheme to furlough 9.6 million people at a cost to the government of 33.8 billion pounds ($44 billion, €38 billion).

Sunak said he is ending the program in October because it gives “false hope” to furloughed workers and hinders them from getting new jobs as their skills decline.

The UK’s recession is deeper than those recorded by comparable countries such as the US and other European economies, notably Germany and France.

Germany’s governing coalition in June agreed on a €130 billion stimulus package to help pull the country’s economy out of recession. The government hoped the package would ease Germans’ financial strain and boost consumer spending.

In comparison to other European countries, Germany’s almost one month of lockdown was relatively short. But the German economy still went into recession in the first quarter of 2020.

Unemployment in May rose from 5.8% to 6.3%, figures which could have been higher if it were not for Germany’s “kurzarbeit”  program, a wage subsidy scheme that allows struggling companies to decrease employees’ working hours instead of making them redundant.

 



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Navy seize 03 Indian fishing boats poaching in Sri Lankan waters north of Mannar

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The Sri Lanka Navy and Coast Guard seized 03 Indian fishing boats and apprehend 33 Indian fishermen while they were poaching in Sri Lankan waters, during special operations conducted in the sea area north of Mannar on 25 and 26 Jan 25.

The seized boats (03) together with Indian fishermen (33) were brought to the island of Iranativu and they will be handed over to the Assistant Directorate of Fisheries, Kilinochchi for onward legal proceedings.

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Election campaign finance laws must be tightened, says PAFFREL

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Rohana Hettiarachchi

By Rathindra Kuruwita

The election campaign finance laws should be amended to allow the automatic disqualification of candidates who fail to submit expense reports on time, without requiring separate legal action, Executive Director of the People’s Action for Free and Fair Election (PAFFREL), Rohana Hettiarachchi proposed.

Currently, the Election Commission must pursue legal action against non-compliant candidates through the Police and the Attorney General’s Department, a process Hettiarachchi described as cumbersome and inefficient.

“This is a major issue concerning the campaign finance laws. During the 2024 presidential election 13 candidates, along with their party secretaries or nominators failed to submit their expense reports. Similarly, over 100 candidates at the Elpitiya Local Council poll and more than 1,200 who contested the November 2024 general election did not submit their reports,” he said.

Hettiarachchi explained that under current laws, legal proceedings must be initiated to penalise such individuals. “The Election Commission lodges complaints with the Police, and the Police, after consulting the Attorney General’s Department, take legal action against those who fail to submit their expense reports on time. This is a lengthy and unnecessary process as there is no investigation required. It is a straightforward case of failing to comply,” he said.

He warned of the administrative challenges this could pose at the upcoming Local Council elections. “If, for example, 10,000 candidates fail to submit their expense reports, the Election Commission, Police, and Attorney General’s Department will be overwhelmed. They would have no capacity to focus on anything other than filing cases. Similarly, the courts will be burdened with hearing these cases, leaving little room for other judicial work.”

Hettiarachchi highlighted the current penalties under campaign finance laws: a person found guilty of failing to submit expense reports loses their civic rights for three years and is required to pay a fine of Rs. 100,000.

He called for stricter reforms, proposing an extension of the civic rights suspension period from three to seven years and the immediate loss of civic rights for individuals who fail to submit their reports on time. “These measures will not only simplify enforcement but also ensure greater accountability from candidates,” he said.

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Switzerland will help SL to recover stolen assets

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Dr Siri Walt

Ambassador of Switzerland to Sri Lanka and Ambassador-designate to the Maldives, Dr Siri Walt, on Friday pledged Switzerland’s support in recovering assets that have been moved out of Sri Lanka, the President’s Media Division said.

Dr Walt gave this undertaking during a meeting held on Friday at the Presidential Secretariat with the Secretary to the President, Dr Nandika Sanath Kumanayake.

During discussions, Ambassador Walt outlined the international measures required to reclaim such assets and expressed Switzerland’s willingness to provide essential resources and assistance whenever necessary.

The discussion also focused on leveraging Switzerland’s expertise and technical knowledge to support Sri Lanka’s ongoing anti-corruption efforts.

The Swiss government reaffirmed its commitment to offering technical and financial assistance for Sri Lanka’s priority initiatives, including the “Clean Sri Lanka” programme.

The Ambassador further reiterated Switzerland’s dedication to aiding Sri Lanka in addressing social challenges, promoting national reconciliation, and supporting the development of the Northern region through targeted aid and resources.

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