BAME Nation is here again, to bring you the top five stories of this week that you should not have missed.
EU’s recovery fund:
On Thursday, the EU moved closer to agreeing to set up a recovery fund to help its ravaged economies. This support is in addition to stimulus programs such as the Pandemic Emergency Purchase Program and other fiscal support that the EU has agreed. While EU leaders failed to agree on the fund’s size and its powers, many believe the fund could be worth about €1- 1.5 trillion.
Prospect of a new fund comes as good news to many of the EU’s struggling communities and businesses. Particularly after a McKinsey report earlier in the week suggested that about 59 million jobs in Europe were under threat as a result of the coronavirus. Although despairing, such statistics are better compared to the scale at which the US has shed jobs with 4.4 million American workers filing for unemployment benefits last week, raising the total number to 26 million people.
Across Europe more countries are beginning to ease their lockdown measures. For example, Denmark this week reopened primary schools and kindergartens while Austria plans to reopen its next week with Germany to follow the week after. Although the UK has no fixed date to lift lockdown measures, Boris Johnson is facing increased pressure from Senior Tories to set one. It is likely that once a date is set, the new pressure will be on to meet it on time.
Even as we now move closer to the return of daily life in the UK, it will be interesting to see how far daily life will be changed by the coronavirus. From Denmark, we already know that teacher to pupil ratios will be reduced and some classes will take place outdoors where possible. In regards to our flying experiences, we know from Emirates that pre-flight coronavirus tests will become the new thing.
An extra $484 billion
The US passed a bill to provide an extra $484 billion in stimulus to the US economy. This brings the total stimulus package to almost $3 trillion. The call for more money was highly expected when the earlier $2 trillion stimulus package was passed. The only question now is whether it came too late as argued by House Republican leader Kevin McCarthy.
The $484billion package aims to increase funding for business and hospitals with $320 billion earmarked for small businesses. While this injection is perhaps increasingly important for the US economy, it will be interesting to see if the earmarked money actually reaches small businesses. This is a valid anxiety following reports that large companies had the largest part of the chunk in the earlier program. Such reports and the resulting criticism led to large companies like Shake Shack who are seen as undeserving to return the money they received.
Whoever knew “Netflix & Chill” could be so profitable? Netflix results just revealed that it more than doubled its 1st quarter target subscribers by adding 8.8 million more subscribers than it expected in the first quarter. In addition to this, Netflix has also enjoyed a very decent share price rise with its stock climbing more than 30% since the start of the year. While these results are good news for the company, Netflix is also aware that these good times are only temporary. In fact, it noted in a letter to shareholders that it expects viewing to decline and membership growth to decelerate as lockdown measures are lifted.
Fortunately for Disney, it has also benefited like Netflix from the recent home confinement. In April, it announced that Disney+ reached 50million subscribers within five months of opening. This is a feat Disney had expected to attain by 2022. Such quick growth does well for Disney and is perfect timing as the company as a whole continues to suffer losses resulting from its famous theme parks being closed and planned movie/movie releases being postponed.
Eurozone creating a bad bank (or not)
The European Central Bank is pushing the EU to create a Eurozone Bad Bank which will buy non-performing loans from Europe’s financial institutions. The goal is to improve the lending capacity of the selling banks by removing bad debt from their balance sheets. The idea has long been muted in the past years especially in 2017 when it was mooted by the European Banking Authority as a solution to the EU’s toxic debt problem.
However, the idea is not favoured by all and it will be interesting to see how this story develops further in light of coronavirus economic effects.
A lot happened over the course of this month on the commercial side of things. Luckily, you can enhance your knowledge by reviewing our commercial awareness pieces on BAME Nation.