European Commission Report - Economy: Recovery plan for Europe - the largest ever

The EU’s long-term budget, coupled with the NextGenerationEU initiative, which is a temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. It will be a greener, more digital and more resilient Europe.

The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties.

On 10 November 2020, an agreement was reached between the European Parliament and EU countries in the Council on the next long-term EU budget and NextGenerationEU. This agreement will reinforce specific programmes under the long-term budget for 2021-2027 by a total of €15 billion.

Read more at: Recovery plan for Europe | European Commission

USA Unemployment: US unemployment skyrockets as coronavirus crashes economy

However, the figures were recorded before Congress signed off on a $2 trillion stimulus package that seeks to help businesses and workers as coronavirus ravages the economy.

Yet it is unlikely that even the biggest government stimulus package in history can stop unemployment from soaring to record highs and the US entering a deep recession.

Commerzbank economist Christoph Bolz said: “The lockdown of the economy is likely to cost more jobs in the coming weeks. We fear that the US unemployment rate will reach a post-war record by mid-year.”

Bolz predicted the US unemployment rate could rise from 3.5 per cent to 11.5 per cent, putting roughly 19m Americans out of a job. That would be higher than the previous post-war record of 10.8 per cent at the end of 1982.

Read more at: US unemployment skyrockets as coronavirus crashes economy : CityAM

US Deficit to Double: Coronavirus: US Senate snag holds up $2tn disaster aid bill

A row over jobless benefits holds up the largest government economic stimulus in US history.

Read more at:
https://www.bbc.com/news/world-us-canada-52033863

Britain: BOE cuts its key interest rate to historic low

The Bank of England has announced that it has reduced its benchmark interest rate to as low as 0.25 percent – the lowest level in its history of 322 years.  The rate had been at 0.5 percent since March 2009, the media reported on Thursday.

The Bank has also announced measures to bolster Britain’s economy to address concerns that the country’s decision to leave the European Union could weigh on growth in the coming months.

Two key measures include one to buy £10 billion of high-grade corporate bonds and another - potentially worth up to £100 billion - to ensure banks keep lending even after the cut in interest rates.

A further injection of £60 billion in electronic cash into the economy has also been devised – a measure which is meant to buy government bonds, extending the existing quantitative easing (QE) program to £435bn in total.

These are parts of a four-point plan to mitigate the impact of leaving the EU.

The BoE has also added that it expects little growth in the second half of this year and that economic growth would decline sharply next year compared with its earlier forecast for 2017.

In 2017, the Bank said, there will be a sharp downgrade to growth of just 0.8 percent from a previous estimate of 2.3 percent.  This will be the biggest downgrade in growth from one Inflation Report to the next, exceeding what was seen in the financial crisis, Reuters reported. The growth outlook for 2018 was cut to 1.8 percent. 

Read more: PressTV-BoE cuts its key interest rate to historic low

ECB stimulus surprise sends stock markets sliding

European stock markets have fallen and the euro has soared following the economic stimulus measures announced by the European Central Bank.

After initially rising following the broader than expected package, Frankfurt closed down 2.3%, Paris ended 1.7% lower and the FTSE 100 slid 1.8%.

The euro initially fell 1.6% against the US dollar to $1.0822 before jumping as high as $1.1218.
It was one of the biggest one-day swings in the currency's history.
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Sharp rises for European banks were also largely wiped outThe ECB cut its main interest rate from 0.05% to 0% and cut its bank deposit rate, from minus 0.3% to minus 0.4%.

The bank will also expand its quantitative easing programme from €60bn to €80bn a month.
Stimulus,

Jasper Lawler, of CMC Markets, said: "Stocks came off highs of the day when some of the initial euphoria was nullified by the suggestion by ECB president Mario Draghi that rates would not be cut any further."

Simon Derrick, chief currency strategist at BNY Mellon: "If the intention of the ECB board was to help weaken the euro then their work was entirely undone by Mr Draghi's comments about the future path of rates."

John Hardy, head of currency strategy at Saxo Bank, said: "This was a much bigger bazooka than the market was expecting and shows the ECB trying to get ahead of the confidence curve after learning its lesson in December."

The stimulus measures announced three months ago have largely failed to drive economic growth higher or boost inflation.

Read more: ECB stimulus surprise sends stock markets sliding - BBC News

China - Economy "Mini-Stimulus" Is Maxi Mistake - by Gordon G. Chang

On Wednesday, Premier Li Keqiang made what has been described as China’s first stimulus announcement of 2014.  The “mini-stimulus” plan will extend large tax breaks to small businesses, build social housing to replace shanty villages, and accelerate the building of rail lines.

The announcement followed a major policy address Li made on March 26.  “We have gathered experience from successfully battling the economic downturn last year and we have policies in store to counter economic volatility for this year,” he said then.  “We will launch relevant and forceful measures according to what we have planned in our government work report.”

Analysts, by and large, were not impressed with Li’s words in late March.  As Du Changchun of Northeast Securities in Shanghai said to Reuters at the time, “The market reaction really hasn’t been that great as these comments have been said many times before.”

What Li needed to do last week was to show that he had the right policies to stabilize an economy that is deteriorating quickly.  Observers expect this year’s first quarter to be the weakest in five years.

So how did the markets react to Wednesday’s mini-stimulus?  On Thursday, the Shanghai Composite fell, but it recovered most of its losses Friday.  Li, therefore, largely failed to bolster sentiment.  And that’s what his announcement last week was all about.  As Julian Evans-Pritchard of Capital Economics in Singapore noted, “They want to make it clear they have the ability to step in if necessary.”

At this point, Li and his technocrats look like they do not have that ability.  The principal problem is that they are still struggling with the ill effects of Wen Jiabao’s stimulus plan, announced in November 2008, to spend 4 trillion yuan.  The legacy of that effort, which when combined with bank lending was one of the biggest fiscal spending programs in the last 15 years, is a country choking on debt.  China’s total debt-to-GDP ratio is now somewhere north of 300% when GDP is properly adjusted—deflated—to account for price changes.

The symptoms of China’s debt accumulation are alarming.  There have been, within just the space of a month, the first domestic corporate bond default in the history of the People’s Republic, the first domestic junk bond default, and two bank runs.

 Read more: China "Mini-Stimulus" Is Maxi Mistake - Forbes