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The economic recession unleashed by the coronavirus in the European Union this year will be even worse than previously predicted, the European Commission said in its latest forecasts Tuesday, taking account data from the second quarter during which the vast majority of its economies were under lockdown.
The Commission, the bloc’s administrative branch, said the European Union economy would shrink by 8.3 percent this year, a steep downgrade from predictions released in the spring that saw a 7.4 percent contraction. The smaller euro-area, the subgroup of 19 E.U. nations that share the common currency, will have it even worse, shrinking by 8.7 percent this year.
At stake is the economic health of the richest bloc of nations in the world, a key trading partner to the United States and home to one of the most important currencies in global trading and saving, the euro.
The data is especially grim for nations in the bloc’s southern rim, some of which were particularly pummeled by the virus. Italy, the E.U.’s third-largest economy is seen as worst-affected, set to shrink by 11.2 percent; Spain, the fourth-largest economy, is facing a 10.9 percent recession; France, the second-largest economy after Germany, will shrink by 10.6 percent.
But, forecasters cautiously pointed to a silver lining, noting that a recovery was already afoot in parts of the bloc. “Early data for May and June suggest that the worst may have passed,” it said. “The recovery is expected to gain traction in the second half of the year, albeit remaining incomplete and uneven across Member States.”
European Union leaders are expected to meet in person for the first time in months next week to try and hammer out a compromise on a 750-billion euro fund that will inject money into member states’ economies in a bid to prop up their recoveries. — Matina Stevis-Gridneff
Stock markets stumbled on Tuesday, as new economic data for Europe forecast a grim remainder for the year and cases of Covid-19 continued to spread.
European markets were more than 1 percent lower, following a mostly downbeat trading session in Asia. Futures forecast Wall Street would fall about 1 percent when trading starts.
In other markets, 10-year U.S. Treasury notes rose in price, and Brent crude oil fell — two moves suggesting investors were losing some confidence about the future. Gold, though, was falling.
On Tuesday the European Commission offered a reminder about the economic damage being done by the pandemic. It issued a forecast saying this year’s recession would be worse than previously predicted. The European Union’s economy is now expected to shrink by 8.3 percent this year, a downgrade from the previous forecast of a 7.4 percent. Forecasters did say it appeared the worst of the downturn may be past. “The recovery is expected to gain traction in the second half of the year, albeit remaining incomplete and uneven across Member States,” the commission said.
Coupled with data showing that German industrial output rose less than estimated last month, the European stock indexes were all lower.
The virus is continuing to surge globally. In the United States, where more than 47,000 new cases were reported Monday. In Brazil, President Jair Bolsonaro, who has repeatedly dismissed the danger posed by the coronavirus, said that he had gone to the hospital for a lung scan and would take a new test for the virus.
In Asian markets, Japan’s Nikkei dropped 0.4 percent, South Korea’s Kospi lost 1.1 percent, and Hong Kong’s Hang Seng ended the day 1.4 percent lower. China’s indexes bucked the trend, with the Shanghai Composite gaining 0.4 percent.
Data released by the Treasury Department on Monday provided the latest indication of how the government’s centerpiece effort to shore up mom-and-pop shops set off a race by organizations far afield from Main Street to secure federal money.
The data, which the Trump administration released under pressure from lawmakers and watchdog groups, offered the most detailed look yet at the sectors and businesses that took advantage of a program aimed at keeping workers on the payroll amid virus-induced shutdowns.
Restaurants, medical offices and car dealerships were the top recipients of large loans from the federal government’s $660 billion small business relief program. The administration said that the money allocated through the program so far had helped support more than 50 million jobs.
There was no apparent link between the amount of economic damage suffered by states and how successful the small businesses in them were at getting the loans from the program. The share of overall small business payroll supported per state ranged from 72 percent in Virginia to 96 percent in Florida.
North Dakota, South Dakota, Nebraska and Kansas all saw loan approvals of at least 90 percent of their eligible small-business payroll, even though they rank among the least-affected states in terms of unemployment claims during the crisis. Two of the hardest-hit states for claims, New York and California, saw loan approvals equal to about three-quarters of their eligible payrolls.
The information released on Monday was confined to companies that received loans of more than $150,000 through the Paycheck Protection Program. The administration said that 86.5 percent of the loans were for less than that amount.
But sprinkled among the beneficiaries of the Paycheck Protection Program’s largest loans were businesses that are likely to attract scrutiny. — Jeanna Smialek, Jim Tankersley and Luke Broadwater
After months of fixating on the pandemic, investors have begun to take into account that the not-too-distant future could look very different from the business-friendly thrust of the current administration.
Investors aren’t yet making buying and selling decisions based on the suggestion of a win by former Vice President Joseph R. Biden Jr., so the market’s dips and rallies don’t fully reflect their worries. But there are clues.
On June 24, when the market dropped 2.6 percent during a broad-based rise in coronavirus infections, some Wall Street traders and analysts attributed part of the fall to data from polls — including one produced by The New York Times and Siena College — showing Mr. Biden’s lead over President Trump.
Of course, no one can ever be entirely sure what moves a market. But stocks of some military companies have also underperformed, reflecting a view among some investors that a Biden victory could depress weapons sales.
And Wall Street analysts, who provide market research to hedge funds, asset managers and other big investors, say those clients are increasingly seeking their advice on the impact of a Biden presidency, especially on taxes.
Recently, inquiries from investors about Mr. Biden’s lead in the polls have focused almost exclusively on the issue of taxes, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse. “That’s, right now, kind of the market’s focus,” he said.
“The market is starting to worry that Trump will not be re-elected,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “Trump is consistently viewed as a positive for the stock market.” — Matt Phillips
Britons are in fields across the country doing something they probably would not have imagined a few months ago: working as farm laborers, picking berries.
Fruit picking in Britain is traditionally done by seasonal workers from Eastern Europe. Because of travel restrictions to curb the spread of the coronavirus, many of those workers haven’t made the trip.
Facing a labor shortage, the government started a “Pick for Britain” campaign in April to attract British workers.
The job isn’t glamorous, and the work is hard. A workday starts at 7 a.m., and the income can vary person by person.
“People say you can make a lot of money,” Zak Oyrzynski, a new laborer, said, “but it’s down to the picker.” At Hall Hunter, the company that runs the farm, the average weekly pay in 2019 was £414 (almost $520), according to the company’s website.
“A couple of young people dropped out because the pay was not what they expected,” Mr. Oyrzynski said.
Farmers say they have been pleasantly surprised by the amount of interest in these jobs. They were afraid Britons would stay away from jobs usually performed by overseas workers.
But desk work this is not. Four-fifths of the people who initially expressed interest drop out before moving to the next stage, such as an interview, according to HOPS Labour Solutions, a recruiter for farm work.
“It is a massive, massive challenge,” said Tom Martin, whose family owns a farm in the county of Cambridgeshire. “I hear about people who take on 10 people and at the end of the week they only have three left.”
Productivity needs to be high, and time spent training is less time doing productive work.
“A new worker is 10 to 30 percent more expensive,” said Ali Capper, chairwoman of the Horticulture and Potatoes Board for the National Farmers Union of England and Wales. “It takes about three to four weeks to get into a rhythm.” — Claire Moses and Geneva Abdul
For years, flight schools, airlines and experts encouraged people to become pilots. They promised young recruits a job that was lucrative and secure because thousands of pilots in their late 50s and early 60s would retire in the coming years and demand for travel would continue growing.
The profession is still stacked with older aviators, but the pilots most at risk as airlines make deep cuts in the coming months are those who are just starting out.
To prepare for an uncertain future, the nation’s largest airlines are stockpiling billions of dollars in cash. If ticket sales do not recover soon, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines have said they could resort to job cuts as soon as Oct. 1, the first day when airlines are free to eliminate jobs and reduce hours under a stimulus law that Congress approved in March.
Airlines could lay off, furlough or reduce the hours of tens of thousands of pilots, cuts that would disproportionately fall on those who have less union seniority and training. Major airlines have already stopped hiring pilots after posting hundreds of openings in the first quarter of the year, according to Future & Active Pilot Advisors, a consulting firm.
Several companies are offering buyout packages to avoid deeper cuts later. Southwest has acknowledged in discussions with its pilots union that the airline is most likely overstaffed by more than a thousand pilots. The company is offering several years of partial pay and benefits to those who agree to leave the company temporarily or permanently. Delta warned last week that it could furlough nearly 2,600 pilots and is offering early-retirement packages. — Niraj Chokshi