Recognition…Mary Turner for the New York Times
To understand how severe the economic burden of the pandemic was in Britain, you need to go back three centuries. The economy contracted 9.9 percent in 2020, as the first estimates by the Office for National Statistics showed on Friday. A Bank of England study of historical data shows the recession is the worst since 1709, the year of the so-called Great Freeze, an extraordinarily cold winter in Europe.
Even with nearly £ 300 billion, or about $ 415 billion, as incentives for businesses, jobs and public services, including the National Health Service, restrictions to contain the pandemic shrank the economy back to size in 2013.
The UK’s service sector, which accounts for four-fifths of the country’s economy, fell 8.9 percent. But the pain was uneven: restaurants, hotels, theaters, and other recreational services were particularly beaten, while professional, financial, and health services were not injured as badly. A recent survey found that around half of hotel companies have less than three months of cash on hand.
The economic cost, in some ways, reflects the greater devastation of the pandemic. There have been more than 115,000 Covid-related deaths in the UK, which has the appalling distinction of having the highest number of deaths in Europe.
However, the outlook is improving for both public health and the economy. The country should avoid a double-dip recession that would have resulted from two consecutive quarters of negative growth following the spring 2020 downturn. In the last three months of the year, the statistics office reported, the gross domestic product rose 1 percent compared to the previous quarter, more than most forecasters had expected.
Despite the discovery of a more contagious variant of the coronavirus in the UK, the economy grew late in the year as more businesses adapted to restrictions, schools remained open, and contact tracing and widespread testing added to economic activity. Warehousing and transportation also added to growth as consumers spent more online during the holiday season and businesses had their inventory in stock before the end of the Brexit transition period.
The economy is expected to contract again in the first few months of 2021 as most of the UK is under strict lockdown and trade was disrupted by Brexit. However, the rapid roll-out of vaccines has supported expectations for a positive rebound over the year. The Bank of England expects the economy to return to pre-pandemic size by early 2022 as consumers spend the accumulated savings while services such as restaurants, hairdressers and hotels close.
The IRS will begin accepting tax returns on Friday. Millions of people received stimulus payments and unemployment benefits over the past year – but they are treated differently for tax purposes. In this week’s “Your Money Advisor” column, Ann Carrns explains the implications for both.
The good news is, you don’t have to pay income tax on the stimulus checks, also known as economic impact payments. If you’ve received the expected amount and your family circumstances haven’t changed, the Internal Revenue Service says you don’t need to include information about the payments on your 2020 tax return.
If you were eligible for the payments but for some reason didn’t receive them or didn’t receive the full amount, you can still get the money by applying for rebate reclaim credit on your 2020 tax return. You must submit a return, even if you are not otherwise required to do so, in order to receive credit.
If you had a life change in 2020 – like having a child – or if you are self-supporting and no longer being claimed as dependent on a parent’s tax return, you may be eligible for more cash by drawing the loan on your 2020 return.
In contrast to business stimulus payments, unemployment benefits are taxed by the federal government as ordinary income. (However, you don’t pay Medicare and Social Security taxes on unemployment benefits like you do on paycheck income.)
You should be provided with a Form 1099-G listing your unemployment income and any withheld taxes that you will put on your tax return.
You will also likely owe state income taxes on unemployment benefits, unless you live in one of the nine states that don’t have state income tax or some other states that are tax exempt from unemployment benefits, including California, Montana , New Jersey, Pennsylvania and Virginia. Wisconsin exempts unemployment benefits for citizens but tax breaks for nonresidents, according to the Tax Foundation.
Recognition…Disney Plus via Associated Press
Disney reported a 98 percent drop in quarterly earnings on Thursday, driven by heavy losses at the coronavirus-ravaged theme park division. The company’s fledgling Disney + streaming service now has 100 million subscribers worldwide, convincing investors that Mickey Mouse is well positioned for the future despite the pandemic.
Overall, Disney posted earnings of $ 29 million, or 2 cents per share, compared to $ 2.13 billion for the same period last year. The company’s large theme parks business was the most troubled with operating losses of more than $ 2 billion in the company’s first fiscal quarter that ended Jan. 2. This was the result of key properties that continue to be closed, such as Disneyland, California, and a significant drop in visitor numbers at the flagship Walt Disney World in Florida, which limits daily visits to 35 percent of capacity as a coronavirus safety measure. Other Disney divisions – filmmaking, the ESPN cable network – have mostly had results where the negatives (the cancellation of films) were offset by positives (greatly reduced film marketing costs).
Revenue was $ 16.2 billion, down 22 percent.
Wall Street had expected losses per share of 41 cents and sales of $ 15.93 billion.
From a stock market standpoint, Disney had a year of extremes. In March, when the company closed theme parks for the first time, postponed movies, and temporarily operated its sports cable network without major live sports, shares fell 38 percent. But investors have forgiven remarkably since then, despite the fact that Disney reported quarterly doomsday financial results. Disney stock closed Thursday at $ 190.91 on the New York Stock Exchange, a far nominal high. Even some Disney executives were slackened by the wave – the best time, the worst time.
According to analysts, investors are overlooking short-term losses and focusing on the potential of Disney +, which now has 95 million subscribers worldwide. It only had about 30 million subscribers a year ago (and didn’t exist a year and three months ago). Increasingly, streaming looks like a two-company game, at least at the top between Disney and Netflix, which had a long lead. Disney + has benefited from the pandemic by selling a monthly subscription to local families. But the upstart also found a megawatt hit, “The Mandalorian”, straight out of the gate. A multitude of original television series and films are going to Disney + this year.
Even so, there is a not-so-small asterisk on the heady subscriber numbers: The average monthly revenue per paid Disney + subscriber fell by 28 percent to 4.03 US dollars. That’s because Disney + has signed millions of subscribers in India by offering them a near-giveaway price.