Extreme poverty expected to rise as billionaires see fortunes at a record

Although restrictions are likely to be tightened further in the UK, particularly in the North, the FTSE 100 gained 1.7 per cent. Meanwhile in the US, the S&P 500 added 3.23 per cent after President Donald Trump indicated that he was open to a number of separate fiscal measures, after calling off negotiations with Democrats over a relief package until after the election. According to the World Bank, extreme poverty is expected to rise for the first time in more than two decades, with the coronavirus pandemic pushing up to 115m people into the category. Extreme poverty is defined as living on less than US$1.90 (£1.50) a day. Before the pandemic struck, the extreme poverty rate was expected to fall to 7.9 per cent in 2020. However, it is now likely to affect between 9.1 per cent and 9.4 per cent of the world’s population. With the wealth gap widening, billionaires have seen their fortunes hit record highs, with top executives from the technology industry earning the most. Since 2013, the World Bank has been working towards the target of having no more than 3 per cent of the world’s population living on US$1.90 a day by 2030. However, the target is now beyond reach without any “substantial policy action”. The World Bank also reported that many of the people who are to become extremely poor come from middle-income countries that already suffer from high poverty rates. In order to reverse this “serious setback”, countries need to be prepared for a different economy post-Covid-19, allowing capital, labour and innovation into new businesses and sectors. President Trump announced that he is ending negotiations over a Covid-19 relief bill and will resume talks after the election. The White House announced it would back a bill of US$1.6tn, but Democrats were holding out for a more generous package. Last week, Democrats passed a US$2.2tn stimulus bill. However, this failed to advance in the Republican-controlled Senate, with Senate leader Mitch McConnell indicating that he would not support any legislation of more than US$2tn. As coronavirus cases rise in several parts of the US, lawmakers from both parties were hoping for another round of fiscal stimulus. Analysts have also warned the economic recovery risks stalling, without additional aid. While the US has regained about half the jobs lost in March and April, more than 10m people remain unemployed. The head of the US Federal Reserve, Jerome Powell, warned of “tragic” consequences if policymakers do too little. New data from IHS Markit revealed that Japan’s service sector improved marginally in September, but still remained in contraction levels. Bradford-based supermarket Morrisons is to create over 1,000 new permanent jobs to fulfil orders for its services on Amazon. The new workers will help to pick and pack customer orders from over 50 stores, covering major cities and many towns. As customers look for different ways to access grocery home deliveries, Morrisons on Amazon, and the Morrisons Store on Amazon Prime, now allow members to get free-of-charge same day delivery. With the number of coronavirus infections increasing daily and governments steadily encouraging more people to stay at home when possible, the service is likely to experience a significant increase in demand. Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.