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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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SJB alleges Prez under SLPP pressure to give up power to dissolve Parliament

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By Shamindra Ferdinando

Samagi Jana Balavegaya (SJB) lawmaker Nalin Bandara Jayamaha yesterday alleged that President Ranil Wickremesinghe was under tremendous pressure from the Sri Lanka Podujana Peramuna (SLPP) to give up power to dissolve Parliament, two and a half years after the parliamentary election.

Kurunegala District MP Jayamaha said that the SLPP wanted the provision, pertaining to dissolution of Parliament in the 19A, included in the 22nd Amendment, at the committee stage.

In terms of the 19th Amendment enacted in 2015, the President couldn’t dissolve Parliament until the completion of four and a half years of the term of a government. The last parliamentary poll was conducted in August 2020.

Having overwhelmingly voted for UNP leader Wickremesinghe at the Presidential contest on July 20 to complete the remainder of President Gotabaya Rajapaksa’s term, the SLPP was now seeking full control, lawmaker Bandara asserted.

The SJB official, however, acknowledged that their party, too, had been divided on the issue, with those who backed Dullas Alahapperuma, at the Presidential contest, opposing the move.

Wickremesinghe received 133 votes. Of the 145 SLPP votes, except for its rebel group, the rest voted for Wickremesinghe.

Responding to another question, the former UNPer said that some interested parties thwarted SLPP founder Basil Rajapaksa from leaving the country, soon after President Gotabaya Rajapaksa abandoned the President’s House. That appeared to have backfired, MP Bandara said, alleging Basil Rajapaksa seemed to be running the show.

Asked whether more members of the SJB would soon switch their allegiance to President Wickremesinghe, MP Bandara said that he couldn’t predict what the individual members were likely to do. However, the SJB, the second largest group in Parliament wouldn’t join the government, MP Bandara said.

Of the 54 elected and appointed SJB members, so far two – Manusha Nanayakkara and Harin Fernando – have accepted ministerial portfolios. SJB National List MP Diana Gamage, earlier pledged her support to the SLPP.

Lawmaker Bandara said that the SLPP seemed to be quite confident of regaining full political authority, regardless of the recent setbacks suffered. The former Law and Order Deputy Minister said that the SLPP was bent on pursuing its strategy, though the President, elected by the party, fled the country.

The SJB MP said that the move to create an environment, conducive for crossovers for the personal benefit of lawmakers, should be condemned. The provisions, pertaining to the appointment of the Cabinet-of-Ministers, under the proposed 22 Amendment, in case the party with the largest block of seats reached a consensus with other parties, were meant to appoint a jumbo sized Cabinet, the MP said. The SJB official questioned the rationale in giving Parliament the authority to decide on the number of Cabinet ministers and non-Cabinet members, in case of a National Government.

Lawmaker Bandara said that President Wickremesinghe and the SLPP were yet to come up with tangible action plan to address political or economic issues. The MP warned, what he called the Wickremesinghe-Rajapaksa government, that the public here, and the international community, couldn’t be deceived by calling itself a National Government.

The SJB spokesperson said that they wouldn’t contribute, or facilitate, the Wickremesinghe-Rajapaksa ploy by accepting ministerial portfolios. “We won’t legitimize the government project. How can the SLPP still be acceptable, after the public rejected Gotabaya Rajapaksa, elected by them,” MP Bandara said, adding the SLPP seemed to have conveniently forgotten that the public rejected the ministers, along with their highly overrated President.

The outspoken MP said that it would be a grave mistake, on the SLPP’s part, if its leadership believed the unprecedented crisis, caused by them, could be resolved by getting rid of President Gotabaya Rajapaksa.

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22 A: Karu J, too, makes some suggestions

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Chairman of the National Movement for Social Justice, Karu Jayasuriya, said that fears expressed by members of Parliament, and others, over the provisions, pertaining to the appointment of Cabinet of Ministers, were not unfounded.

The former Speaker said that he was also concerned about allegations that the proposed 22 A could be abused and exploited to appoint a jumbo Cabinet.

Jayasuriya suggested that political parties, represented in Parliament, and other interested parties should address whatever concerns raised as regards the 22 Amendment.

The yahapalana Speaker said that the success of the whole process would depend on the readiness of all those involved in the new constitution making endeavor to address issues at hand. The accusation that a particular provision (47 [4]) could be used to violate the restriction of cabinet ministers to 30 and no-cabinet members to 40 couldn’t be ignored, Jayasuriya said.

Jayasuriya said that those who represented the parliament should inquire into criticism over the Speaker receiving an opportunity to nominate three civil society members to the 10-member Constitutional Council in consultation with the Prime Minister and the Opposition Leader. The former Gampaha District MP recalled that in terms of the 19 Amendment, the Prime Minister and the Opposition Leader used to nominate the civil society members. Jayasuriya said that whatever knotty issues could be tackled at the committee stage (SF)

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“Govt workers, too, were involved in fuel hoarding”

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It had become obvious that some government workers, too, were involved in hoarding fuel and selling it in the black market, D.V Shantha Silva, joint Secretary the Sri Lanka Petroleum Private Tanker Owners’ Association (SLPPTOA) said yesterday, addressing the media.

He said that the introduction of the national fuel pass system is successful and the majority of fuel stations followed the system.

“Some gas stations still try to manipulate the system but it won’t be easy,” he said.

There is no congestion in gas stations and SLPPTOA members are happy with the process, he said.

“However, there is a drop in orders from gas stations. In the last few months, before the QR system, one tanker load was only enough for a few hours. But now gas stations pump fuel for days with one shipment,” he said.

Silva said that many people tried to blame three-wheeler drivers for hoarding fuel. However, there were other actors involved in the racket, among them were government officials.

“Before the QR system we saw a large number of people at gas stations each morning accessing fuel using various passes. Now that doesn’t happen and there is no congestion,” he said. (RK)

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