The AUD GBP exchange rate was higher on Thursday despite a higher revision for the UK’s second quarter GDP growth. The UK economy saw annualised numbers improve by over 1% but traders are likely looking to the Australian economy’s potential reopening. An open letter from a host of corporate giants in the country was critical of the government’s continuous lockdowns and “zero-covid” policies.
The AUD to GBP exchange rate is trading below the 0.5350 level with a risk that this could cap recent gains.
Corporate Australia criticises government covid policies
Australia’s government has been accused of making “big mistakes” in failing to reopen to the world, with business leaders saying that policymakers have been putting politics before science ahead of a general election.
Businesses fed up with Covid-19 lockdown policies, and a failure to rollout vaccines that would allow the economy to open up, have spoken out. The leaders of some of Australia’s biggest companies, including BHP, Macquarie and Qantas, have said the nation will have to learn to “live with the virus”, as many other countries have now tried.
The CEO of Flight Centre told the FT:
“The borders should have never been closed. We’re making some very big mistakes here.”
Australia shut its borders quicky in March last year and, at first, was the envy of the world for its “zero-Covid” strategy and economic rebound. Now it being accused of a descent into tyranny in some corners due to its heavy-handed approach.
“It’s time for corporate Australia to turn its disquiet and rumblings into a roar,” said Greg O’Neill, the chief executive of Melbourne fund manager La Trobe Financial. His name was included in the open letter sent by the Business Council of Australia. “It is time for courage and honesty. Not politics,” O’Neill added.
UK sees stronger second quarter economic rebound than forecast
The rebound in the UK economy was faster than original forecasts for the second quarter as consumer spending fired up the economy after the lockdowns were lifted, according to official figures.
The ONS reported that GDP was now 3.3% below its pre-pandemic levels, which was an improvement on the 4.4% previously estimated.
The largest contributor to the upward GDP revision was household spending, where it added four percentage points of the 5.5% increase. The second quarter saw restrictions eased in April and May, before the full reopening in July.
Pent-up demand and high levels of savings were unleashed on the economy as the services sector roared back to life. However, the pound sterling has been under pressure lately as the latest data hints at a slowdown in growth. Figures this month showed economic growth had eased to just 0.1% in July, down from 1.4% in June, and there are fears that the current problems in the supply chain and energy market will further damage the British economy.
Martin Beck, senior economic adviser to the EY Item Club, said: “Headwinds to growth from supply disruption, the negative effects on household spending power, sentiment from rising inflation and energy prices mean the recovery is looking more fragile.”