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    U.K. Braces for a Difficult Holiday Season Due to Shortages

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    Military personnel are driving transport trucks. Pig farmers may start culling their stock. Even the government says shortages will affect Christmas, as Britons brace for a challenging winter.BUNGAY, England — To understand the deep sense of anxiety Britons feel about the supply shortages currently afflicting the nation — and threatening disruptions to the Christmas dinner table — one need only travel to Simon Watchorn’s pig farm, about two hours northeast of London.In 2014, Mr. Watchorn was England’s pig farmer of the year, with a thriving business. But this year, he said, the outlook for the fall is bleak.Slaughterhouses are understaffed and are processing a smaller-than-usual number of pigs. There is a shortage of drivers to move pork to grocery stores and butcher shops. And there are fewer butchers to prepare the meat for consumers.If the problems persist, Mr. Watchorn may have to start culling some of his 7,500 pigs by the end of next month. Pigs grow about 15 pounds each week, and after a certain point, they are too big for slaughterhouses to process.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the late 1990s. “It’s a muddle,” he said. “It’s worse than a muddle, it’s a disaster, and I don’t know when it’s going to finish.”Mr. Watchorn, 66, is one of many producers of food and other goods warning of a daunting winter ahead for Britons. Shortages continued to bedevil the British economy on Monday as gas stations in London and in southeastern England reported trouble getting fuel, and the government began deploying military personnel to help ease the lack of drivers. Supermarket consortiums say pressures from rising transport costs, labor shortages and commodity costs are already pushing prices higher and will likely continue to do so.The chancellor of the Exchequer, Rishi Sunak, acknowledged on BBC Radio on Monday that there will shortages at Christmastime. He said the government was doing “everything we can” to mitigate the supply chain issues but admitted there was no “magic wand.”Mr. Watchorn, whose farm is near the town of Bungay, England, northeast of London, is convinced that Brexit is responsible for the current distress.Andrew Testa for The New York TimesMr. Watchorn, who prides himself on running a farm where all adult stock live outside, is convinced that Brexit is responsible for the current distress, saying the exodus of European workers from Britain had led to damaging labor shortages. The British people voted to break with the European Union to reduce immigration, he believes, without realizing how damaging a cliff-edge exit from the bloc would be for businesses.“They didn’t vote for supermarket shortages,” he said on Sunday as dozens of pigs gathered around him to be fed. “They didn’t understand that was going to be a probable, likely outcome.”Mr. Sunak and other Conservative leaders say supply problems are a global issue largely attributable to the pandemic and not limited to Britain. Indeed, businesses around the world are facing rising energy prices, product shortages and labor shortages.But the challenges in Britain are acute, with many industries facing a shortage of workers — in part because of the pandemic, but also, many business owners say, because of stricter immigration laws that came into effect after Britain’s exit from the European Union on Jan. 1.“We are desperately trying to find workers,” said Jon Hare, a spokesman for the British Meat Processors Association, which estimates that Britain is short of about 25,000 butchers and processing plant workers.He called on the government to issue more short-term visas to foreign workers to help the industry with the transition outside of the European Union. “There are only so many people you can take out of the production system before the system starts breaking down,” he said.A shopper confronted sparse food shelves in a Co-op supermarket in Harpenden, England, in September.Peter Cziborra/ReutersThe specter of disruptions to the holiday season is particularly resonant in Britain, where Christmas isn’t Christmas without traditional foods. And yet British meat producers say the dinner table could be lacking some of the seasonal specialties that people count on every December. That includes pigs in a blanket (bacon-wrapped sausages that are different from the American version), glazed ham and Yorkshire pudding, which require additional labor to prepare, Mr. Hare said.The National Pig Association has warned that about 120,000 pigs are backed up on farms because of a lack of slaughterhouse workers, and the British Poultry Council said it expected to cut Christmas turkey production by 20 percent. On Monday, protesters gathered outside of the Conservative Party conference in Manchester with signs that said “All we want for Christmas is our pigs in a blanket” and “#saveourbacon.”Consumers are already anticipating shortages. One farmer in Leeds said that by last month, customers had already ordered all 3,500 turkeys she was raising for Christmas — a first.A lack of truck drivers has also caused sporadic shortages for staples including eggs, milk and baked goods. One in six people in Britain said that in recent weeks they had not been able to buy certain essential food items because they were unavailable, according to a report by the Office for National Statistics, which surveyed about 3,500 households.Some consumers interviewed in recent days said they had not had any trouble finding what they wanted at grocery stores. But Meriem Mahdhi, 22, who moved from Italy to Colchester in southeast England last month to attend college, said she had struggled to find essential items at her local grocery store, Tesco, Britain’s largest supermarket chain.“All the dried foods like pasta, canned fruit, it’s all gone, every day,” she said. Tesco did not respond to a request for comment.Seeking a quick fix, 200 military personnel in fatigues on Monday arrived at refineries to help deliver fuel to gas stations. About half of them drove civilian vehicles and the others provided logistical support. “As an extra precaution we have put the extra drivers on,” Mr. Sunak said.Over the weekend, the government said it had extended thousands of temporary visas for foreign workers to work in Britain until the first few months of next year. But economists said the temporary visas were unlikely to be enough to make much of a difference, since there are shortages at every link in the supply chain.“There is a lack of workers coming in, and British people are not willing to do the job,” said Robert Elliott, a professor at the University of Birmingham. He said it was difficult to say how much of the supply-chain issues were a result of Brexit versus the pandemic, but regardless, the government has chosen policies that have not made the situation better.The government has underinvested in training workers to drive trucks, he said, and too few young people are pursuing the profession to replace ones who have retired.Even before Brexit, the meat industry had difficulties attracting workers because of the hard work, low pay and remote locations of processing plants. Producers have raised wages for butchers by an average of 10 percent this year, the British Meat Processors Association said, but shortages are still so severe that members of the British Poultry Council reported they had cut weekly chicken production by five to 10 percent.Mr. Watchorn said the situation was “a disaster, and I don’t know when it’s going to finish.”Andrew Testa for The New York TimesJames MacGregor, the general manager at Riverford, an organic food company based in Devon, England, said he was short of about 40 workers, or about 16 percent of the company. Butchers have been particularly hard to find, he said. To cope with the shortages, Riverford will likely offer fewer products for sale around Christmas.“It feels like we’re staring down the barrel of a gun a little bit at the moment,” Mr. MacGregor said. “It’s highly likely if we don’t see movement in terms of fuel and labor, we will ultimately end up passing some of this cost on to the consumer.”Kathy Martyn, the owner of Oakfield Farm in East Sussex, which has about 100 pigs, said she was relieved to find fuel on Friday, just in time to make it to a catering job for a wedding over the weekend. She said that fuel shortages have made planning difficult, and that she may have to cull about 20 of her pigs this year.“We’ll just roll up our sleeves and take a deep breath,” Ms. Martyn said.Mr. Watchorn, the pig farmer, said his farm will be losing money this year. Even culling pigs is costly. If it comes to that, he would have to find someone to slaughter the animals and then take them away. Financial help from the government to do that would help, but he said he was not counting on it. “When pigs fly,” he quipped.Mr. Watchorn said the last time he can remember things being this bad was during an outbreak of mad cow disease in the 1990s.Andrew Testa for The New York TimesAina J. Khan More

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    U.S. and Europe Announce New Trade Cooperation, but Disputes Linger

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    A new trade and technology partnership aims to counter China, but tensions over issues like metal tariffs remain.WASHINGTON — The United States and the European Union took a step this week toward a closer alliance by announcing a new partnership for trade and technology, but tensions over a variety of strategic and economic issues are still simmering in the background.The establishment of the Trade and Technology Council, which aims to establish a united front on trade practices and sophisticated technologies, is a significant test of whether President Biden can fulfill his pledge to mitigate trans-Atlantic tensions that soared under President Donald J. Trump. The Biden administration has long described Europe as a natural partner in a broader economic and political confrontation with China, and it criticized the Trump administration for picking trade fights that alienated European governments.But while officials on both sides say trans-Atlantic relations have been improving, the U.S.-Europe reset has been rockier than anticipated.The inaugural meeting of the Trade and Technology Council in Pittsburgh this week was nearly scuttled after the Biden administration said it would share advanced submarine technology with Australia, a deal that enraged the French government.Europeans say they have been frustrated by a lack of consultation with the Biden administration on a range of issues, including the U.S. withdrawal from Afghanistan. And officials face a difficult negotiation in the coming weeks over metal tariffs that Mr. Trump imposed globally in 2018.Europeans have said they will impose retaliatory tariffs on other U.S. products as of Dec. 1 unless Mr. Biden rolls back a 25 percent tax on European steel and a 10 percent duty on aluminum.“The E.U. initially viewed the Biden administration as a ‘breath of fresh air’ but is now increasingly wondering how much Biden will differ from Trump,” Stephen Olson, a senior research fellow at the Hinrich Foundation and a former U.S. trade negotiator, wrote in a recent analysis. “Prospects for a U.S.-E.U. ‘united front’ have been overblown from the start.”Valdis Dombrovskis, the European commissioner for trade, said in a round table with journalists in Washington on Tuesday that the two sides had been doing intensive work on the issue. They were aiming to reach an agreement by early November to have enough time to avert European countertariffs, he said.The European Union was disappointed with the Biden administration’s handling of the Australian submarine agreement, Mr. Dombrovskis added, but “occasional divergences” should not disrupt their strategic alliance.“Of course, as allies and friends, we do not always agree on everything, and we have seen this in recent weeks,” Mr. Dombrovskis said, adding that there had been more engagement from the Biden administration than the Trump administration.In meetings this week, Secretary of State Antony J. Blinken; Gina Raimondo, the commerce secretary; Katherine Tai, the U.S. trade representative; and their European counterparts pledged to collaborate on a variety of 21st-century issues, such as controlling exports of advanced technology, screening investments for national security threats and offering incentives to manufacture chips in Europe and the United States as a semiconductor shortage continues.Though official documents did not explicitly mention China, the partnership is clearly aimed in part at countering the country’s authoritarian practices. Among other goals, the council promised to combat arbitrary and unlawful technological surveillance and the trade-distorting practices of nonmarket economies.U.S. and European officials in June announced an agreement ending a 17-year dispute over aircraft subsidies given to Airbus and Boeing.But a lingering fight over Mr. Trump’s metal tariffs on imports from Europe and elsewhere could prove harder to resolve. Mr. Biden is under intense pressure to maintain barriers to imports from domestic steel makers and labor unions that supported his campaign.In a virtual round table on Thursday, industry executives and labor leaders said that cheap steel produced in Europe could still damage the U.S. industry.While China is best known for subsidizing its steel industry, European makers have also been major recipients of government subsidies, giving them an unfair advantage over U.S. competitors, said Lourenco Goncalves, the chief executive of Cleveland-Cliffs Inc., an American iron ore mining company.He urged the Biden administration to negotiate from a “position of strength.”“We need the White House, and we need the ones on the front line not to be affected by sweet talk, particularly from the Europeans,” Mr. Goncalves said. “I believe that the friends are a lot worse than the enemies.”U.S. officials made an offer to their European counterparts this summer to transform the current 25 percent tariff on European steel into a so-called tariff-rate quota, an arrangement in which higher levels of imports are met with higher duties, according to a person familiar with the discussions, who spoke on the condition of anonymity to discuss confidential matters.The Europeans have argued for a more flexible arrangement, and discussions are expected to intensify over the next three weeks, the person said.Thomas Kaplan More

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    Inflation's Worldwide Surge May Be a Good Sign

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    Inflation has surged across advanced economies. The shared experience underlines that price gains come from temporary drivers — for now.Price gains are shooting higher across many advanced economies as consumer demand, shortages and other pandemic-related factors combine to fuel a burst of inflation.The spike has become a source of annoyance among consumers and worry among policymakers who are concerned that rapid price gains might last. It is one of the main factors central bankers are looking at as they decide when — and how quickly — to return monetary policy to normal.Most policymakers believe that today’s rapid inflation will fade. That expectation may be reinforced by the fact that many economies are experiencing a price pop in tandem, even though they used vastly different policies to cushion the blow of pandemic lockdowns.The shared inflation experience underscores that mismatches between what consumers want to buy and what companies are able to deliver are helping to drive the price increases. While those may be amplified by worldwide stimulus spending, they are not the simple result of nation-specific policy choices — and they should eventually work themselves out.“There is a lot of stimulus in the system, and it is pushing up demand and that’s driving higher inflation,” said Kristin Forbes, a Massachusetts Institute of Technology economist and former external member of the Bank of England’s Monetary Policy Committee.“Some of these big global moves do tend to pass through and prove temporary,” Ms. Forbes said. “The big question is: How long will these supply chain pressures last?”The United States Federal Reserve’s preferred price index rose 4.2 percent in July from the prior year, more than double the central bank’s 2 percent target, which it seeks to hit on average over time. In the eurozone, inflation recently accelerated to the highest level in about a decade. In Britain, Canada, New Zealand, South Korea and Australia, price gains have jumped well above the level central banks set as their goals.The big increases have come as supply chains have snarled around the world, adding to transportation costs and throwing the delicate balance of corporate globalization badly out of whack. Prices for airline tickets and hotel rooms dipped last year in the depths of the pandemic, and now they’re bouncing back to normal levels, making the numbers look higher than they would if compared with a less depressed base. Neither issue should last indefinitely.There is a danger that the global price surge could last longer — and become more country-specific — if workers in nations experiencing high inflation today bargain for wage increases and are more accepting of steadily higher prices. Bringing entrenched inflation back under control could require painful monetary policy responses, ones that would probably plunge national economies back into recession.Given those high stakes, the mere possibility of lasting inflation is ramping up pressure on central banks around the world to consider dialing back their still-substantial monetary policy support — even though many are not yet fully recovered and the pandemic has not ended.Economies around the world are growing quickly this year, partly as a result of enormous government spending that has pumped some $8.7 trillion into the advanced Group of 20 markets since January 2020 and central bank policies that have made money very cheap to borrow and spend. Central banks have been buying bonds to hold down longer-term interest rates and keeping short-term borrowing costs near or even below zero.It’s not just higher prices that advanced economies have in common. Complaints about labor shortages in some fields are also bubbling up around the world. Job vacancy rates have been climbing in Europe’s construction, leisure and hospitality, and information technology sectors. In Britain, firms widely complain of labor shortages, and a dearth of truck drivers caused partly by the nation’s exit from the European Union has disrupted supply chains and fueled shortages of milkshakes at McDonald’s and peri-peri chicken at Nando’s, a restaurant chain famous for the dish.A restaurant in London in June. Job vacancy rates have been climbing in Europe’s construction, leisure and hospitality, and information technology sectors.Andrew Testa for The New York TimesThose widespread trends highlight the oddities of the current economic moment. Commerce came to a sudden stop and then abruptly restarted when government relief payments padded consumers’ wallets, making people eager to spend even as manufacturers struggled to get back to full production and restaurants scrambled to staff back up.Still, some central bankers are growing nervous about their policies in countries where inflation is higher and labor supply issues are beginning to push up wages. They fret that a cocktail of low interest rates and big government bond buying will add fuel to the temporary-inflation fire, helping asset prices and consumer prices to remain higher. Prominent commentators, both in the media and in financial centers from the City of London to Wall Street, have added to the chorus arguing that central bankers are “behind the curve.”In Britain, Michael Saunders, a policymaker, already voted to end the central bank’s bond-buying program, predicting that some of the inflation spike would not be temporary. A few European central bankers have indicated that they should start debating slowing down their pandemic-era stimulus purchase program, and at least one has even suggested an immediate slowdown. Some U.S. officials, including the president of the Federal Reserve Bank of St. Louis, James Bullard, have said that today’s inflation might not fully fade and that policy ought to be poised to react.The extreme worriers are in the minority. Most policymakers in advanced economies are betting that price increases be temporary, and that inflation might even fade back to uncomfortably low levels over the longer term. From Ottawa to Frankfurt, they have warned against overreacting.“While the underlying global disinflationary factors are likely to evolve over time, there is little reason to think that they have suddenly reversed or abated,” Jerome H. Powell, the Fed chair, said during a recent speech. “It seems more likely that they will continue to weigh on inflation as the pandemic passes into history.”Before the pandemic, advanced economies had spent years trying to coax inflation higher, trying to stop an economically damaging downward spiral that had begun to take hold.Slow price gains may sound like good news to people buying gas, baguettes or hot dogs, but inflation counts into interest rates, so its downward trend in the 21st century has left less room for policymakers to cut rates to rescue the economy during times of trouble. That has helped to weaken recoveries, dragging inflation even lower and fueling a cycle of stagnation.Even amid the reopening, Japan — a notable outlier among advanced economies — continues to fight that long-run war, battling outright price declines. Coronavirus outbreaks have kept shoppers there at home, weighing on prices for Uniqlo attire and snacks alike. Persistent forces like population aging have also put a lid on demand and constrained companies’ ability to charge more.A shopping district in Tokyo last month. Coronavirus outbreaks have kept shoppers there at home.Franck Robichon/EPA, via ShutterstockOther economies are expected to return to their trends of slow growth and weak inflation as the pandemic shock fades and population aging becomes a more dominant force, said Jay Bryson, chief economist at Wells Fargo. “It’s like going up a step,” Mr. Bryson said. “Once you get to the next step, the rate of increase drops off. It’s a one-time price level adjustment because of the pandemic.”If inflation does fade as policymakers expect, the current burst could actually offer benefits: In the United States, it has helped to nudge inflation expectations back out of the dangerously low zone, to levels that are historically consistent with healthy price gains. It has proved harder for central bankers to move prices up than it is for them to cool them off, so that opportunistic inflation could help the Fed to nail its price goals in the longer run.But if it takes too long to go away, the consequences could be more serious.“If I’m wrong and inflation does get out of hand, that would lead to slower economic growth in a longer-run sense,” Mr. Bryson said, explaining that high inflation tends to bounce around a lot, making it tough for companies to plan and invest.But he said that even if higher prices lasted, they might settle in at 2.5 percent or 3 percent — which would not cause meaningful problems. By contrast, inflation in the United States popped to double digits during the Great Inflation of the 1970s.“I don’t think we’re talking about 1970s-style inflation,” agreed Mark Gertler, an economist at New York University. Policymakers around the world have committed to fighting inflation and will not allow it to run out of control. “Central banks can always make inflation transitory by raising interest rates enough.”Eshe Nelson More

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    Europe’s Pandemic Aid Is Winding Down. Is Now the Best Time?

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    Governments want vaccinations and a business rebound to carry the economy now, but cutting aid too quickly could create economic aftershocks.PARIS — After almost 18 months of relying on expensive emergency aid programs to support their economies through the pandemic, governments across Europe are scaling back some of these measures, counting on burgeoning economic growth and the power of vaccines to carry the load from here.But the insurgent spread of the Delta variant of the coronavirus has thrown a new variable into that calculation, prompting concerns about whether this is the time for scheduled rollbacks in financial assistance.The tension can be seen in France, where the number of virus cases has increased more than 200 percent from the average two weeks ago, prompting President Emmanuel Macron to try to push the French into getting vaccinated by threatening to make it harder to shop, dine or work if they don’t.At the same time, some pandemic aid in France — including generous state funding that prevented mass layoffs by subsidizing wages, and relief for some businesses struggling to pay their bills — is being reduced.A government panel recently urged “the greatest caution” about winding down emergency aid even further at the end of the summer.The eurozone economy has finally exited a double-dip recession, data last week showed, reversing the region’s worst downturn since World War II. European Union governments, which have spent nearly 2 trillion euros in pandemic aid and stimulus, have released nearly all businesses from lockdown restrictions, and the bloc is on target to fully vaccinate 70 percent of adults by autumn to help cement the rebound.But the obstacles to a full recovery in Europe remain large, prompting worries about terminating aid that has been extended repeatedly to limit unemployment and bankruptcies.“Governments have provided very generous support through the pandemic with positive results,” said Bert Colijn, senior eurozone economist at ING. “Cutting the aid short too quickly could create an aftershock that would have negative economic effects after they’ve done so much.”In Britain, the government has halted grants for businesses reopening after Covid-19 lockdowns, and will end a special unemployment benefit top-up by October. At least half of the 19 countries that use the euro have already sharply curtailed pandemic aid, and governments from Spain to Sweden plan to phase out billions of euros’ worth of subsidies more aggressively in autumn and through the end of the year.Germany recently allowed the expiration of a rule excusing firms from declaring bankruptcy if they can’t pay their bills. Debt repayment holidays for companies that took cheap government-backed loans will soon wind down in most eurozone economies.And after repeated extensions, state-backed job retention schemes, which have cost European Union countries over €540 billion, are set to end in September in Spain, the Netherlands, Sweden and Ireland, and become less generous in neighboring countries in all but the hard-hit tourism and hospitality sectors.Aid programs that helped cushion income losses for 60 million people at the height of the crisis continue to pay for millions of workers on standby. Businesses and the self-employed have access to billions in low-interest loans, state-funded grants and tax holidays.Meanwhile, employees have begun returning to offices, shops and factory floors. Global automakers are working to adapt to supply-chain issues. Small retailers are offering click-and-collect sales, and cafes are providing takeout service.Governments are betting that the growth momentum will be enough to wean their economies off life support.“We can’t use public money to make up for losses in the private sector forever,” said Guntram Wolff, the director of Bruegel, an economic research institution based in Brussels. “That’s why we need to find a strategy for exiting.”Governments are looking to reallocate more spending toward areas of the economy that promise future growth.“It’s crucial to shift spending towards sectors that will outlast the pandemic,” said Denis Ferrand, the director of Rexecode, a French economic research organization. “We need to accelerate a transformation in digitalization, energy and the environment.”But swaths of workers risk losing their jobs when the income support is withdrawn, especially in the hospitality and travel industries, which continue to operate at up to 70 percent below prepandemic levels. The transition is likely to be painful for many.Diners in London last week. The Bank of England expects about a quarter of a million people to lose their jobs when Britain’s furlough program ends next month.Tolga Akmen/Agence France-Presse — Getty ImagesIn Britain, a furlough program that has saved 12 million jobs since the start of the pandemic today keeps fewer than two million workers on standby support. But after the scheme ends in September, around a quarter of a million people are likely to lose their jobs, the Bank of England has forecast.“A significant fraction of people coming off furlough and not being rehired will find themselves facing very large drops of income,” said Tom Waters, a senior research economist at the Institute for Fiscal Studies in London.Small businesses that wouldn’t have made it through the crisis without government assistance are now calculating how to stay on their feet without it..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Fabien Meaudre, who runs an artisanal soap boutique in central Paris, got over €10,000 in grants and a state-backed loan that allowed him to stay afloat during and after the three national lockdowns imposed in France since the pandemic hit.Now that his store is reopened, business is starting to get back to normal. “But there are no tourists, and it’s very calm,” he said.“We are very grateful for the aid we received,” Mr. Meaudre added. “But we know we will have to pay this money back.”Mr. Macron, who promised to steer Europe’s second-largest economy through Covid “no matter the cost,” is leading other countries in trying to push for a tipping point where the lockdowns that required massive government support become less and less necessary.But the Delta variant is upending even the most carefully calibrated efforts to keep economies open.In the Netherlands, where half the population is fully inoculated, the government recently reinstated some Covid restrictions days after lifting them, after Delta cases spiked.Spain and Portugal have been reeling from hotel cancellations as the variant spread in vacation hot spots that desperately need an economic boost. The Greek party island of Mykonos even banned music temporarily to stop large gatherings, sending tourists fleeing and creating fresh misery for businesses counting on a recovery.Moviegoers in France must present a “health pass” to enter the theater, which an industry group says has reduced the number of moviegoers.Rafael Yaghobzadeh/Associated PressAnd in France, trade organizations representing cinemas and sports venues are worried that Mr. Macron’s new requirement that people carry a so-called health pass — proving vaccination, a negative test or a recent Covid recovery — to get into crowded spaces is already killing a budding recovery.Some big movie halls lost up to 90 percent of customers from one day to the next when the health pass requirement went into effect this week, said Marc-Olivier Sebbag, a representative for the National Federation of French Cinemas. “It’s a catastrophe,” he said.Such precariousness helps explain why some officials are wary of letting the support expire entirely, and economists say governments are likely to have to keep spending, albeit at lower levels, well beyond when they had hoped to wind down.Withdrawing aid is “totally justified if there’s a rapid recovery,” Benoît Coeuré, a former European Central Bank governor and head of the French government panel assessing pandemic spending, told journalists last week.“But there is still uncertainty, and if the rebound doesn’t come or if it’s weaker than expected,” he said, “we’ll need to pace the removal of support.”Jack Ewing More

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    E.U. Delays Digital Levy as Tax Talks Proceed

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    The postponement came as Treasury Secretary Janet Yellen arrived in Brussels to continue pushing for a global minimum tax.BRUSSELS — The United States secured a diplomatic victory in Europe on Monday when European Union officials agreed to postpone their proposal for a digital levy that threatened to derail a global effort to crack down on tax havens.The delay removes another potential obstacle to the broader tax agreement, which gained momentum over the weekend after finance ministers from the Group of 20 countries formally backed a new framework. That deal, which officials hope to make final by October, would usher in a global minimum tax of at least 15 percent and allow countries to tax large, profitable companies based on where their goods and services are sold. If enacted, the changes would entail the biggest overhaul of the international tax system in a century.With those negotiations in their final stretch, the European Union was planning to propose a 0.3 percent tax on the goods and services sold online by all companies operating in the European Union with annual sales of at least 50 million euros. That was intended to help fortify a fiscal recovery fund and had been in development since last year, when the international talks taking place at the Organization for Economic Cooperation and Development appeared to be on life support.But that new levy had been unacceptable to U.S. officials, who viewed it as disproportionately hitting American firms. As Treasury Secretary Janet L. Yellen arrived in Brussels to pressure the European Union to drop or delay the plan, officials announced on Monday that it would be shelved.“I think we will work together to reach this global agreement,” Paolo Gentiloni, European commissioner for economy, told reporters after a meeting with Ms. Yellen. “In this framework I informed Secretary Yellen of our decision to put on hold the proposal of the commission of a digital levy to allow to us to concentrate, working hand in hand to achieve the last mile of this historic agreement.”A European Commission spokesman suggested that the delay would remain in place until October, a time frame that is in line with the deadline set by the O.E.C.D. to complete a global tax agreement.Ahead of a meeting with the Eurogroup, a club of euro-area finance ministers, Ms. Yellen had waved off questions about the significance of the digital levy delay. A Treasury Department spokeswoman said she had no comment.At a news conference in Venice on Sunday, Ms. Yellen made clear that she believed that the new E.U. proposal ran counter to the broader talks over a minimum tax and the elimination of digital services taxes in Europe and other countries.“It’s really up to the European Commission and the members of the European Union to decide how to proceed, but those countries have agreed to avoid putting in place in the future and to dismantle taxes that are discriminatory against U.S. firms,” Ms. Yellen said.Other finance ministers indicated that the delay was another sign of progress.“It’s very, very good that we are now going to the next step, discussing how we will implement this at the European Union and that the European Union is deciding not to go with its own proposal to the public today,” Olaf Scholz, Germany’s finance minister, said as he entered the meeting.The E.U. digital levy proposal faced a difficult path to becoming law in Europe, but the prospect of a new proposal that could be construed as a tax that targets American companies would have been another distraction for the fragile negotiations.The United States has already been angered by other digital taxes that countries like France, Italy and Britain have enacted, which are separate from the new proposal. More than a dozen countries have enacted or announced plans in recent years to move forward with their own digital taxes.The Biden administration has asked countries to immediately drop their digital taxes and has prepared retaliatory tariffs on a wide swath of European goods, including cheese, wine and clothing. As part of the global tax negotiations, countries have said they are willing to do so in exchange for additional tax on the largest and most profitable multinational enterprises, those with profit margins of at least 10 percent, that would be based on where their goods or services were sold, even if they had no physical presence there.France, Europe’s biggest proponent of a digital tax, had no comment Monday. Its finance minister, Bruno Le Maire, had said during the weekend that France would legally commit to withdrawing its digital services tax only after an agreement was in effect, which is unlikely to happen before 2023.In remarks at the meeting on Monday, Ms. Yellen emphasized the importance of a close relationship between the United States and the European Union and underscored the importance of the global tax agreement that she has been helping to broker. She argued that a deal over a global minimum tax would help European nations make important investments in their economies and reduce inequality.“Long-run fiscal sustainability is critically important, which is one of the reasons why we need to continue working collectively to implement a global minimum tax of at least 15 percent, in line with the commitment the G20 made just days ago,” Ms. Yellen said. “We hope all E.U. member states will join the consensus and the European Union will move forward on this issue at E.U. level.”Ms. Yellen made the case that fiscal sustainability should be achieved by taxing multinational companies, adding: “We need sustainable sources of revenue that do not rely on further taxing workers’ wages and exacerbating the economic disparities that we are all committed to reducing.”The meeting also offered Ms. Yellen an opportunity to persuade Ireland to join the global agreement. Ireland, Estonia and Hungary have yet to sign on to the deal, which is now backed by 132 countries. Because support must be unanimous within the European Union, their resistance could scuttle the entire agreement.The United States has been trying to make the case to Ireland that the proposed tax changes in the United States that aim to curb profit shifting would nullify many of the benefits Ireland had gained from having a tax rate of just 12.5 percent. They are also trying to convince Ireland that its status as a corporate hub would be secure even if it raised its tax rate, hoping to alleviate Irish concerns that joining the agreement would upend its economic model.O.E.C.D. officials believe that Ireland is withholding its support for the agreement until the Biden administration demonstrates that it can pass tax legislation in the United States. Ms. Yellen will return to Washington on Tuesday and work with members of Congress to win support for the deal.After a meeting with Ms. Yellen, Paschal Donohoe, Ireland’s finance minister and president of the Eurogroup, offered an optimistic tone but made no commitments. He said that he had a “very good engagement” with the Treasury secretary and that there was “further work ahead.”“I affirmed to Secretary Yellen that Ireland remains very committed to the process,” Mr. Donohoe said, promising that he would remain “constructively engaged.”Liz Alderman More

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    Global Tax Overhaul Gains Steam as G20 Backs New Levies

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    The approach marks a reversal of years of economic policies that embraced low taxes as a way for countries to attract investment and fuel growth.VENICE — Global leaders on Saturday agreed to move ahead with what would be the most significant overhaul of the international tax system in decades, with finance ministers from the world’s 20 largest economies backing a proposal that would crack down on tax havens and impose new levies on large, profitable multinational companies.If enacted, the plan could reshape the global economy, altering where corporations choose to operate, who gets to tax them and the incentives that nations offer to lure investment. But major details remain to be worked out ahead of an October deadline to finalize the agreement and resistance is mounting from businesses, which could soon face higher tax bills, as well as from small, but pivotal, low-tax countries such as Ireland, which would see their economic models turned upside down.After spending the weekend huddled in the halls of an ancient Venetian naval shipyard, the top economic officials from the Group of 20 nations agreed to forge ahead. They formally threw their support behind a proposal for a global minimum tax of at least 15 percent that each country would adopt and new rules that would require large global businesses, including technology giants like Amazon and Facebook, to pay taxes in countries where their goods or services are sold, even if they have no physical presence there.“After many years of discussions and building on the progress made last year, we have achieved a historic agreement on a more stable and fairer international tax architecture,” the finance ministers said in a joint statement, or communiqué, at the conclusion of the meetings.The approach marks a reversal of years of economic policies that embraced low taxes as a way for countries to attract investment and fuel growth. Instead, countries are coalescing around the view that they must fund infrastructure, public goods and prepare for future pandemics with more fiscal firepower at their disposal, prompting a global hunt for revenue.“I see this deal as being something that’s good for all of us, because as everyone knows, for decades now, the world community, including the United States, we’ve been participating in this self-defeating international tax competition,” Treasury Secretary Janet L. Yellen said on the sidelines of the G20 summit. “I’m really hopeful that with the growing consensus that we’re on a path to a tax regime that will be fair for all of our citizens.”The agreement followed a joint statement last week that was signed by 130 countries who expressed support for a conceptual framework that has been the subject of negotiations at the Paris-based Organization for Economic Cooperation and Development for the better part of the last decade. The O.E.C.D. estimates that the proposal would raise an additional $150 billion of global tax revenue per year and move taxing rights of over $100 billion in profits to different countries.The backing of the broad framework by the finance ministers on Saturday represented a critical step forward, but officials acknowledged that the hardest part lies ahead as they try to finalize an agreement by the time the leaders of the Group of 20 nations meet in Rome in October.Among the biggest hurdles is an ongoing reluctance by low-tax jurisdictions like Ireland, Hungary and Estonia, which have refused to sign on to the pact, potentially dooming the type of overhaul that Ms. Yellen and others envision. Hungary and Estonia have raised concerns that joining the agreement might violate European Union law and Ireland, which has a tax rate of 12.5 percent, fears that it will upend its economic model, siphoning the foreign investment that has powered its economy.Absent unanimous approval among the members of the European Union, an accord would stall. Establishing a minimum tax would require an E.U. directive, and directives require backing by all 28 countries in the union. Ireland had previously hinted that they would object to or block a directive and Hungary could prove to be an even bigger hurdle given its fraught relationship with the union, which has pressed Hungary on unrelated rule-of-law and corruption issues.Prime Minister Viktor Orban of Hungary has stated that taxes are a sovereign issue and recently called a proposed global minimum corporate tax “absurd.” Hungary’s low corporate rate of 9 percent has helped it lure major European manufacturers, especially German carmakers including Mercedes and Audi.Bruno Le Maire, France’s finance minister, said on Saturday that it was important that all of Europe supports the proposal. G20 countries plan to meet with Ireland, Hungary and Estonia next week to try and address their concerns, he said.“We will discuss the point next week with the three countries that still have some doubts,” he said. “I really think the impetus given by the G20 countries is clearly a decisive one and that this breakthrough should gather all European nations together.”Policymakers also have yet to determine the exact rate that companies will pay, with the United States and France pushing to go above 15 percent, and negotiations are continuing over which firms will be subject to the tax and who will be excluded. The framework currently exempts financial services firms and extractive industries such as oil and gas, a carve-out that tax experts have suggested could open a big loophole as companies try to redefine themselves to meet the requirements for exemptions.Domestic politics could also pose hurdles for the countries that have agreed to join but need to turn that commitment into law, including in the United States, where Republican lawmakers have signaled their disapproval, saying the plan would hurt American firms. Big business interests are also warily eyeing the pact and suggesting they plan to fight anything that puts American companies at a disadvantage.“The most important thing is understanding that if there is going to be an agreement, that there cannot be an agreement that is punitive toward U.S. companies,” said Neil Bradley, the chief policy officer at the U.S. Chamber of Commerce. “And that, of course, is of great concern.”A report this month from the European Network for Economic and Fiscal Policy Research found that only 78 companies are expected to be affected by the overhaul but nearly two-thirds of them are American. The researchers estimated that the new taxes would raise $87 billion in revenue and that Apple, Microsoft, Alphabet, Intel, and Facebook would pay $28 billion of that total.At the heart of the proposal is the idea that, if countries all agree to a minimum tax, it will prevent businesses from seeking out low-tax jurisdictions for their headquarters, depriving their home countries of revenue. Ms. Yellen has criticized what she calls a “race to the bottom” in global taxation.Ms. Yellen said that she would be working in the coming months to address the concerns of countries with reservations but that the deal could still proceed even if some countries did not join. She pointed to an enforcement mechanism that would raise U.S. taxes on corporations that have headquarters in countries that continue to be tax havens but do business in America.Still, changing domestic tax laws will not be quick or easy, including in the United States, whose success in ushering in a new tax regime is being closely watched as a harbinger of whether a global overhaul can come to pass. Senior officials at the G20 meetings said that approval of the agreement within the United States was crucial to its broader acceptance.Republican lawmakers have suggested they will put up a fight.Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee and one of the architects of the 2017 tax cuts, said that the Biden administration’s tax proposals would never pass.“Certainly in Congress there’s a great deal of skepticism,” Mr. Brady said in a telephone interview this week. “My prediction is that at the end of the day, even if an agreement is reached, what the president will bring back to Congress is an agreement that advantages foreign companies and workers over American ones.”Ms. Yellen indicated that Democrats were prepared to pass as many of the tax changes as they can through a budgetary procedure called reconciliation that would alleviate the need for Republican votes. She assured her international counterparts that the Biden administration was ready to deliver its end of the bargain and pushed back against the idea that the new tax system would harm American workers.“For the United States, it’s going to be a fundamental shift in how we choose to compete in the world economy,” Ms. Yellen said. “Not a competition based on rock-bottom tax rates, but rather on the skills of our work force, our ability to innovate and our fundamental talents.”Policymakers continue to grapple with what the global minimum tax rate will be and what exactly will be subject to the tax.A separate proposal calls for an additional tax on the largest and most profitable multinational enterprises, those with profit margins of at least 10 percent. Officials want to apply that tax to at least 20 percent of profit exceeding that 10 percent margin for those companies, but continue to debate how the proceeds would be divided among countries around the world. Developing economies are pushing to ensure that they will get their fair share.Mr. Bradley, of the Chamber, said that the details of a final agreement would determine how punitive it would be for companies. Representatives from Google and Facebook have been in touch with senior Treasury officials as the process has played out.American businesses are also worried about being put at a disadvantage by a 21 percent tax that President Biden has proposed on their overseas profits, if their foreign competitors are only paying 15 percent. The Biden administration also wants to raise the domestic corporate tax rate from 21 percent to 28 percent. Democrats in Congress are moving forward with legislation to make those changes to the tax code this year.“If a U.S. company is trying to compete globally with a significantly higher tax burden because of this significantly higher minimum tax on its operations, that’s a competitive issue for being able to be successful,” said Barbara Angus, a global tax policy leader at Ernst & Young.Washington and Europe also remain at odds over how to tax digital giants like Google and Amazon. At the G20 summit, finance ministers expressed optimism that such obstacles could be overcome. In his closing news conference after the deal was reached, Daniele Franco, Italy’s finance minister, hailed the agreement as historic and called on the countries that had yet to join to reconsider.“To accept global rules is, for each country, difficult. Each country has to be prepared to compromise,” Mr. Franco said. “To have worldwide rules for taxing multinationals, for taxing the profits of big companies is a major change, is a major achievement.”Liz Alderman More

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    Belarus’s forced landing of airliner sends shock waves through industry.

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    Some airlines in Eastern Europe began diverting their planes to avoid Belarus airspace on Monday, a day after that country’s leader sent a fighter jet to force down a Ryanair flight, allowing authorities to seize an opposition journalist on board.The shocking move has unleashed a storm of criticism against Aleksandr G. Lukashenko, the Belarus president who has clung to power despite huge protests last year. The European Union is considering penalties against the country. At least two airlines said that they were diverting flights away from Belarus airspace as a precaution, but most carriers seem to be waiting to be told what to do by the European authorities.In an interview on Monday with an Irish radio broadcaster, Ryanair’s chief executive, Michael O’Leary, condemned the actions of the Belarus authorities, who ordered the plane, flying from Athens to Vilnius, Lithuania, to land in the Belarus capital of Minsk and then arrested a dissident journalist on board, Roman Protasevich, and his companion.“This was a case of state-sponsored hijacking, state-sponsored piracy,” Mr. O’Leary told interviewers on Newstalk.Mr. O’Leary, however, said he was waiting for instructions from European Union authorities in Brussels about whether to steer other flights away from Belarus.“We, like all the European airlines, are looking for guidance today from the European authorities and from NATO,” he said.He added that it would be an easy matter for his flights to avoid Belarus. “We don’t fly over Belarus much,” he said. “It would be a very minor adjustment to fly over” Poland instead, he added. Ryanair, a discount airline based in Ireland, describes itself as Europe’s largest airline group.Other airlines are already making changes.AirBaltic, the Latvian national airline, said that its flights would avoid entering Belarus airspace “until the situation becomes clearer or a decision is issued by the authorities.” The rerouted flights include ones from Riga, the airline’s home base, to Odessa in Ukraine and Tbilisi in Georgia.Another airline that flies in the area, Wizz Air, said that it would alter the path of a flight from Kyiv in Ukraine to Tallinn in Estonia so as to skirt Belarus.“We are continuously monitoring and evaluating the situation,” a spokesman for Wizz Air, which is based in Hungary, said. More

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    U.S. and Europe Will Suspend Tariffs on Alcohol, Food and Airplanes

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyU.S. and Europe Will Suspend Tariffs on Alcohol, Food and AirplanesThe governments agreed to temporarily halt levies on billions of dollars of products as they search for a settlement to a long-running clash over subsidies given to Airbus and Boeing.The dispute over subsidies to Airbus and Boeing started almost two decades ago.Credit…Ulrich Lebeuf for The New York TimesMarch 5, 2021Updated 5:09 p.m. ETThe United States and European Union agreed to temporarily suspend tariffs levied on billions of dollars of each others’ aircraft, wine, food and other products as both sides try to find a negotiated settlement to a long-running dispute over the two leading airplane manufacturers.President Biden and Ursula von der Leyen, the president of the European Commission, agreed in a phone call on Friday to suspend all tariffs imposed in the dispute over subsidies given to Boeing and Airbus for “an initial period of four months,” Ms. von der Leyen said in a statement.“This is excellent news for businesses and industries on both sides of the Atlantic and a very positive signal for our economic cooperation in the years to come,” she said.In a statement, the White House said Mr. Biden had “underscored his support for the European Union and his commitment to repair and revitalize the U.S.-E.U. partnership.”The World Trade Organization had authorized both the United States and Europe to impose tariffs on each other as part of two parallel disputes, which began almost two decades ago, over subsidies the governments have given to Airbus and Boeing. The E.U. had imposed tariffs on roughly $4 billion of American products, while the United States levied tariffs on $7.5 billion of European goods.The aircraft dispute is an early test of the Biden administration’s ability to rebuild America’s relationship with Europe, which U.S. officials see as crucial for accomplishing other trade and foreign policy goals.Former President Donald J. Trump took a more adversarial and aggressive stance toward the bloc. He accused it of cheating the United States on trade and imposed tariffs on European metals, aircraft and other products. He also threatened further tariffs against European automakers.The Biden administration has said it would restore ties with the E.U., formerly a close ally, as it seeks to form coalitions to take on bigger global problems, like China’s unfair trade practices. And it has committed to pressing Europe for a settlement on the aircraft dispute, as well as other continuing trade spats over metals, digital service taxes and other issues.“Finally, we are emerging from the trade war between the United States and Europe, which created only losers,” Bruno Le Maire, the French finance minister, said on Twitter. He added that a burden would be lifted for French winegrowers, whose sales have been pummeled by steep retaliatory tariffs that the Trump administration imposed on imports to the United States.In a joint statement with the European Union, the Office of the United States Trade Representative said the suspension would take effect “as soon as the internal procedures on both sides are completed” and that the agreement signaled “the determination of both sides to embark on a fresh start in the relationship.”The statement said both sides were committed to reaching a comprehensive solution to the disputes, which would include rules on future aircraft subsidies, monitoring and enforcement, and efforts to address “the trade distortive practices of and challenges posed by new entrants to the sector from nonmarket economies, such as China.”The Distilled Spirits Council, a trade group representing the liquor industry, called the decision a “a promising breakthrough in the longstanding trade dispute on civil aircraft subsidies, which has left much destruction to the spirits sector in its wake.”The deal would suspend a 25 percent tariff imposed by Europe on American rum, brandy and vodka, as well as a 25 percent tariff the United States imposed on liqueurs and cordials from Germany, Ireland, Italy and Spain, and Cognacs and other grape brandies from France and Germany. On Thursday, the United States said it would temporarily suspend tariffs levied against the United Kingdom, including on Scotch whisky, as part of the dispute for a period of four months.Monika Pronczuk More