- Italy Implements Covid-19 Stimulus Measures Worth €32 Billion
- Turkish Lira Collapses after the Dismissal of the Head of the CB
- British Government Borrowed at Record Level in February
Italy Implements Covid-19 Stimulus Measures Worth €32 Billion
In Italy, the government led by Mario Draghi has announced a new €32 billion ($38.05) billion economic aid package against the negative effects of coronavirus epidemic on the economy.
Prime Minister Mario Draghi, who headed the coalition government with broad participation that was established last month in the country, gave information about the details of the highly anticipated economic aid package at the first press conference he held.
Expressing that they give weight to the businesses that are in a difficult situation due to the epidemic in the new economic package, Draghi said, “This decree is a significant and very coherent response to poverty and to businesses, it is a partial response, but it is the maximum that we have been able to do.” Around €11 billion will be devoted to companies and auto-entrepreneurs in difficulty that lost at least 30% of their revenues in 2020. A total of €8 billion were allocated to the fight against poverty and measures to support employment, said economy minister Daniele Franco.
Describing this package as the “first step” and stating that additional measures will be taken in the coming months, Draghi said, “Our goal is to distribute the money as quickly as possible. Payments will start on April 8 for the applicants. If everything goes as expected, 11 billion Euros will go to the economy in April, “he added.
Saying that they should accompany companies and workers on the way out of the epidemic, Draghi said, “This year, money is not demanded, money is given. It will be time to look at debt, but now is not the time, now is the time to consider stability.”
Prime Minister Draghi also stated that the European Union’s (EU) austerity measures and debt policies were not reasonable during the epidemic crisis.
Draghi also answered questions about AstraZeneca’s vaccine, where the European Medicines Agency expressed its opinion that it was not stuck in its use after its reviews.
Stating that they hope that there will be no new delays in the vaccine supply in the forthcoming period, the Prime Minister said:
“We started from 69 thousand in vaccination per day. We are currently making 160 thousand vaccines a day. We will increase to 500 thousand in April. Our goal is to increase this in May-June. The whole government and all of Italy are excited and active to move the vaccination plan to the maximum possible speed.” It was only one day after we stopped the AstraZeneca vaccine that we went from 150,000 to 100,000. That was then almost compensated. “
Answering the question of whether it was a mistake that they decided to suspend the use of the AstraZeneca vaccine on March 15 on the grounds that it causes blood clotting, Draghi said it was not a political decision. Draghi said, “I should have made a decision at the time. I think I did well,” he said. 73-year-old Prime Minister Draghi stated that he will also get the AstraZeneca vaccine.
Turkish Lira Collapses after the Dismissal of the Head of the CB
Turkey’s lira collapsed more than 17% against the Dollar, Euro and Pound, to near its all-time low after markets opened following President Tayyip Erdogan’s shock weekend decision to change central bank governor and install a like-minded critic of high interest rates.
The appointment of Sahap Kavcioglu, a former banker and ruling party lawmaker, in the early hours on Saturday marked the third time since mid-2019 that Erdogan has abruptly fired a central bank chief.
Turkey’s currency tumbled more than 10% on Monday, putting it on course for its biggest single-day selloff since 2018, after the abrupt replacement of the country’s top central banker late last week.
The Central Bank on March 18 raised the key rate from 17 to 19%. This was followed by a reshuffle, and Sahap Kavtsioglu became the new chairman of the country’s Central Bank. Prior to that, he opposed the rate hike, writes the BBC.
In the last two years, Erdogan has fired the third head of the Central Bank. The Turkish president’s decision surprised investors, who had praised the central bank’s recent monetary policy. The lira was the best emerging market currency in 2021 at one point. The lira has now dropped 14% against the dollar, approaching an all-time low.
The currency tumbled to as weak as 8.4850 versus the dollar, from 7.2185 on Friday, back to levels touched in early November when it reached an intraday record of 8.58. It last changed hands at 8.0749.
“The lira is being smashed by investors fearing that the custodian of its value does not share their hopes for a stable currency underpinned by positive real interest rates,” said Westpac senior currency strategist Sean Callow, adding that the lira may not yet have found a bottom.
In a statement on Sunday, the central bank said it “will continue to use the monetary policy tools effectively in line with its main objective of achieving a permanent fall in inflation”.
The new head of the CB, Shahab Kavcioglu, a professor at the University of Marmara, is a supporter of low rates, who actively criticized the actions of the last team in the Central Bank.
“The optimism for the lira was based on the expectation that the central bank would keep rates high for at least some time, but now it will be difficult to find bulls,” says Henrik Gullberg, head of strategy at Coex Partners.
“Erdogan’s intervention in the Central Bank’s policy has always turned into trouble,” says Ziad Daoud, an economist at Bloomberg Economics.
British Government Borrowed at Record Level in February
The UK Office for National Statistics (ONS) announced February 2021 data on public sector financing. Accordingly, the British government borrowed £19.1 billion ($26.6 billion) in February, the highest debt in February since 1993.
In the ONS statement, it was noted that the borrowing in the country in February 2021 increased by £17.6 billion compared to the same month of the previous year.
It was stated that the public debt of the UK, excluding public banks, reached 278.8 billion pounds from April 2020, the beginning of the tax year, to the end of February this year, and the country’s total public debt increased to $2.13 trillion.
The Chancellor, Rishi Sunak, said: “Coronavirus has caused one of the largest economic shocks this country has ever faced, which is why we responded with our £352bn package of support to protect lives and livelihoods.
“This was the fiscally responsible thing to do and the best way to support the public finances in the medium term.”
“But I have always said that we should look to return the public finances to a more sustainable path once the economy has recovered and at the budget, I set out how we will begin to do just that, providing families and businesses with certainty.”
Sunak signaled that tax rises are likely in the coming years to pay for the emergency support. In his annual budget earlier this month, he announced plans to raise corporate profits tax to 25% by 2023, up from the current 19%.
The government has relied heavily on borrowing as tax receipts have tanked during lockdowns.
The Conservative government of Prime Minister Boris Johnson has spent £352 billion on emergency measures, including its severance scheme, which covers the majority of private sector wages for millions of Britons.
Total state debt currently stands at £2.13 trillion, the equivalent of 97.5% of Britain’s total gross domestic product, according to the ONS. Such a level has not been seen since the early 1960s, it noted.