NEW: @OECD chief economist @LaurenceEco tells me the Omicron variant is an urgent reminder that rich countries need to do more to help poorer countries get vaccinated.
“As long as the global population is not vaccinated, this type of variant can come in and bring restrictions.”
“We G20 countries have spent about $10tr to support our economies in the pandemic – it costs $50bn to bring vaccines to the entire population,” said @LauBooneEco. “As long as the world stays as is we’re going to see countries which are going to have to shut down their economies.”
Full story here: @OECD warns that the rich world must be prepared for more variant-related shocks if it doesn’t help vaccinate poor countries: news.sky.com/story/help-vac…
The @OECD warning comes alongside their forecasts for global growth.
In brief: global economy still rebounding, inflation still rising. Some countries (esp developing economies w/ lower vax rates) being left behind. But NB this was finalised pre-Omicron. Growth forecasts here👇
As ever, some of the best stuff in today’s @OECD report comes in chart form. Here are a few gems from @LauBooneEco’s presentation.
Look: while the US has certainly outperformed Europe on the GDP rebound what’s less discussed is how much Europe outperformed the US on employment.
A couple of good charts on the energy crisis. The one on the right shows you prices which, as we all know, are VERY high at the mo. On the left you see one of the explanations: gas stockpiles are v low in Europe: look how much lower the green bars are than the blue bars.
And NB low gas storage levels in Europe is a big issue for the UK, which has barely any gas storage capacity and hence is deeply reliant on gas imports from the EU. We might have left the EU but we’re still v much in the “single market” for gas!
A couple of good charts on the supply crisis. One on the right shows you how much this is v much an issue for rich countries. On the right you see the sectors which are most exposed. Cars and electrical equipment: unsurprising (semiconductors). But also: rubber & plastics!
Pretty stark chart showing the rise in wait times for semiconductors. Doesn’t seem to be showing much sign of improvement.
And of course one way these supply shortages are manifesting is higher inflation. Just look at how the inflation forecasts from the @OECD (though one could choose pretty much any forecaster) have ratcheted up in recent months.
Really striking chart from the @OECD on vaccination rates. Note the main divide, between rich & upper middle income countries (blue & green, NB upper middle income includes China)…
…and lower middle income (inc India) & low income countries (much of sub-Saharan Africa).
I’ve been banging on abt the paradox that while govts talk a good game on the energy transition/net zero, look at actual spending and you see they’re investing less and less on green energy.
Here’s a good @OECD chart on that. Not sure many have twigged what a big deal this is…
Here’s a longer-run chart of govt investment in energy.
In short, it’s far, far lower now than it was in the 1980s. And note this also goes for investment in renewable energy.
Quite hard to square this with being serious abt net zero. More here: edmundconway.com/why-arent-our-…
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📽️Is Britain REALLY facing a 1970s-style fiscal crisis?
Why are investors so freaked out about UK debt?
Is this REALLY worse than under Liz Truss?
Who's to blame? Rachel Reeves? The Bank of England?
And would a bit of productivity really solve everything?
📈 Your 6 min primer👇
OK, so let's break it down.
Start with the chart everyone (well, everyone in Whitehall) is talking about.
The 30yr UK government bond yield. Up to the highest level since 1998. And it's still rising.
Does this mean the UK is facing a fiscal crisis? Let's look at the evidence
First let's compare the UK to other G7 countries.
There's two ways to do this.
First, look at absolute levels👇
And it looks pretty awkward for the UK.
Pre-mini Budget we were middle of the pack. That changed post-Truss. And now, under Labour, the UK is even more of an outlier.
👗Billions of pounds of imports...
↗️Rising by more than 50% a year...
🛬Planes stuffed with cheap clothes...
🇨🇳And a loophole saving Chinese companies from £billions of UK taxes.
Behind the scenes of one of the biggest stories in the modern economy: e-commerce
👇
We've spent months investigating this phenomenon.
- We've got the first official estimate of the scale of cheap untaxed imports into the UK.
- We've seen inside the planes carrying these goods here.
- A whole logistics industry is growing around it.
This is a v big deal!
The story begins with a MASSIVE rise in orders from Chinese e-commerce giants like SHEIN and Temu.
Now, most coverage of these brands focuses on labour standards. An important issue.
But there's something else going on here - something deeper.
A shift in how trade works...
🧵Some thoughts re inflation.
Not the data today, but two deep issues we should prob spend more time thinking about. 1. While economists and policymakers may have convinced themselves that the cost of living squeeze is over, for millions of households, it doesn't feel that way.
The key thing to remember here is that when economists talk about inflation what they're really talking about is the ANNUAL RATE at which a basket of goods and services changes price. And certainly, that rate is much lower than the 2022 peaks...
But, as I say, what that number is is simply looking at the difference in the LEVEL of prices over the past year. This chart is that level. (The actual consumer price index!).
And yes, look over the year to May and it's up 3.4%.
🧵Why, barely 24 hours after the Spending Review, is everyone already going on about tax rises?
Are they REALLY coming?
Or is this an "incoherent argument", as one leading minister calls it?
Well here's a thread explaining what's really going on here.
Bear with me...
First things first.
Key thing to remember is that the main job of HMT is to generate enough money, mostly via taxes (left hand bar here), to finance all its spending (right hand bar).
If that left hand bar isn't high enough, we have to borrow to fill the gap.
That's the deficit!
This week's Spending Review was about the right hand column, obvs. But not ALL of the column.
Actually more than half of govt spending is on stuff that WASN'T covered by the spending review - on benefits, debt interest, pensions etc. It's called "annually managed expenditure"
🧵
You may recall a spate of stories a few years ago about appalling working conditions & abysmally low pay in Leicester's clothes factories.
The hope was those stories would shame businesses into improving working conditions.
But here's what ACTUALLY happened next...
👇
Instead of staying in Leicester, most brands abandoned it & shifted production to N Africa & S Asia.
Today Britain's biggest centre of textile & apparel manufacture is battling the threat of extinction.
It's a mostly untold economic story we've spent recent months documenting
Once upon a time Leicester was the beating heart of UK clothes manufacturing.
The city was dotted with factories making clothes for big name brands.
Now, according to one estimate, the number of clothes factories has dropped from 1500 in 2017 to under 100 this year. A 95% fall.
How big a deal is the new trade agreement unveiled between the US and the UK? Here are some initial thoughts.
Start with this: this is total UK exports to the US over the past 5yrs: £273bn. Right now most of this will face a 10% tariff. Some things (eg cars) face 25% extra
Let's break down that total. The biggest chunk is cars. Just under £30bn. That's covered under the agreement. So too are steel/aluminium exports. Much smaller at £2.7bn...
These sectors will benefit from special deals (though much of the detail still remains vague).
Rolls Royce will apparently get tariff free access for its jet engines. That mostly helps Boeing, but also Rolls Royce. Jet engines comprise a surprisingly large chunk of UK exports to the US, about £17.3bn. So let's shade that red too...