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Britain’s chancellor of the Exchequer, Rishi Sunak, announced a wide range of measures on Wednesday to support the country’s emergence from the pandemic, including an extension of the government’s wage-support program, billions of pounds in business grants and aid for art institutions and sports clubs.
But Mr. Sunak also said corporate taxes would rise beginning in 2023 and he would freeze personal income tax allowances, a measure that will push more people into higher tax brackets.
A year into the job, Mr. Sunak is trying to use this budget to juggle a number of different goals. In the short term, he is aiming to support jobs as the vaccine rollout continues and the economy cautiously reopens. He announced extensions to emergency support programs that will last through the summer.
But he has been under pressure to signal how he will tackle the budget deficit. Borrowing this fiscal year has climbed to 355 billion (about $495 billion), a peacetime record, and a sixfold increase from the previous year. He has also faced questions about how he will meet the government’s commitment to “level up” the economy to reduce regional inequality and revitalize the post-Brexit economy.
“Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks this country has ever faced,” Mr. Sunak said on Wednesday.
Last year, gross domestic product shrank nearly 10 percent, the worst in three centuries. The independent Office for Budget Responsibility forecast the British economy would grow 4 percent this year, less than predicted in November, but then increase 7.3 percent in 2022.
The economy will return to its pre-pandemic size in mid-2022, the watchdog forecast, six months earlier than previously predicted because of the vaccine rollout. The chancellor’s plans are “just about enough to balance the current budget and get debt falling,” Richard Hughes, chairman of Office for Budget Responsibility, said.
The measures announced on Wednesday include:
5 billion pounds ($7 billion) in grants to nearly 700,000 businesses such as shops, restaurants, hairdressers, hotels and gyms;
An extension to September of the furlough program that pays employees 80 percent of their wages for the hours they don’t work (businesses will have to contribute to the program starting in July);
Additional grants for self-employed workers, and increased eligibility for 600,000 more people;
£700 million for arts, culture and sports institutions;
An increase starting in 2023 in the corporate tax rate for companies with profits greater than £50,000, from the current rate of 19 percent, and topping out at 25 percent for companies with profits in excess of £250,000;
A “super deduction” on corporate taxes for business investment for two years, which will allow companies to reduce their tax bill by 130 percent of the amount spent on investment.
Credit…Gabby Jones for The New York Times
Apollo Global Management announced Wednesday that it would acquire the crafts retailer Michaels in a deal that valued the company at $5 billion.
The acquisition is a bet that Michaels can continue to ride the wave of enthusiasm for crafting spurred by Americans stuck at home during the pandemic. The company, which is based in Irving, Texas, has also invested in its digital business, starting curbside pickup and same-day delivery.
The deal values Michaels shares at $22, a 47 percent premium to the stock’s closing price before news of private equity interest in the retailer was first reported. The deal, which is expected to close in the first half of Michaels’ fiscal year, includes a 25-day “go-shop” period, allowing Michaels to weigh potential superior offers.
Shares of the retailer, which has more than 1,200 stores in North America and some 44,000 employees, have risen nearly 300 percent over the past year, giving it a market capitalization of around $2.3 billion.
The company’s “impressive growth transformation” during the pandemic led Apollo to submit “an unsolicited offer to buy the company,” said James A. Quella, chairman of Michaels.
The deal will bring Michaels back into the hands of private equity after seven years as a public company. Two private equity firms, Bain Capital and Blackstone, acquired Michaels in 2006, taking it private in a deal worth more than $6 billion. The company made its way back into the public markets in 2014, at a market value of about $3.5 billion. Bain is still a large shareholder.
Apollo sees “significant opportunity to enhance the Michaels brand, store experience and omnichannel offering to its customers across North America,” said Andrew Jhawar, a senior partner at Apollo and head of the firm’s retail and consumer group. The firm is buying Michaels through funds managed by its affiliates.
As a private company, Michaels will have “financial flexibility” to further expand its retail and online business, said Michael’s chief executive, Ashley Buchanan.
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“Hey, I know this is like a crazy idea. But would you ever buy the Venetian?”
That’s a call that David Sambur, Apollo Global Management’s co-head of private equity, recounted receiving while walking in Central Park this fall.
The answer, ultimately, was yes.
On Wednesday, Las Vegas Sands, the world’s largest casino company, announced that it would sell the Venetian, long seen as one of its prized assets, to Apollo and Vici Properties for $6.25 billion. Apollo will operate the property and Vici will own the real estate.
Executives from Sands, which was founded by the billionaire gambling magnate and Republican megadonor Sheldon Adelson, who died in January, called the deal “bittersweet,” but said they will use the proceeds to invest in the group’s casinos in Macau and Singapore, which form the “backbone” of the company.
“The Venetian changed the face of future casino development and cemented Sheldon Adelson’s legacy as one of the most influential people in the history of the gaming and hospitality industry,” said Robert Goldstein, the chief executive of Sands. “As we announce the sale of The Venetian Resort, we pay tribute to Mr. Adelson’s legacy while starting a new chapter in this company’s history.”
For Apollo, the deal is a bet that leisure and business travel will return to pre-pandemic levels, or close enough to make the purchase pay off. It follows similar investments, like buying a stake in travel booking company Expedia early in the pandemic and extending a loan to Aeromexico in October after the Mexican airline filed for bankruptcy a few months before.
Other casino companies, like Caesars Entertainment, have been saying that leisure travel in Las Vegas is poised to recover quickly. Judging when business conventions will return is harder, Mr. Sambur said. Apollo’s research found that the conference business tends to track the stock market and corporate profits, both of which are strong right now.
“It’s a very audacious bet to make,” he said. “But all of the fundamentals are there if you look hard enough.”
Credit…Samuel Corum for The New York Times
Bridges in disrepair, underfunded drinking water systems, roads riddled with potholes. President Biden’s next ambitious goal is to fix the nation’s infrastructure, and a new report suggests he has his work cut out for him.
The American Society of Civil Engineers on Wednesday gave U.S. airports, roads, waterways and other systems a C–, reflecting its view that the nation’s infrastructure is in poor to mediocre shape and in dire need of an upgrade.
“A C–, as you might imagine, is not something to be particularly proud of,” said Thomas Smith, the executive director of the professional group. “There’s a great need for improvement.”
After pushing a $1.9 trillion pandemic relief measure, the Biden administration is expected to shift its focus to an infrastructure proposal of a similar magnitude. Improving national infrastructure enough to earn a B grade will require an investment of $2.6 trillion over the next decade, the engineering society said.
The group publishes these reports every four years. Despite the dire warnings, the new one bore some good news: The C– is a slight improvement on the D or D+ the group had awarded since 1998. A D reflects a system in poor condition, and a C means mediocre condition. A B is awarded to a system that is “adequate for now,” and an A to infrastructure in exceptional shape and ready for the future.
Since the last report card in 2017, grades improved incrementally in a handful of categories. Increased federal funding helped lift aviation, inland waterways and ports, for example. Drinking water and energy infrastructure also improved as utilities used resources better and became more resilient, though that might seem hard to believe after the dayslong blackouts in Texas recently.
Still, only two of 17 categories were graded better than a C: America’s ports earned a B– and rail a B. Transit scored worst, earning a D–. The nation’s dams, roads, levees and storm water systems got a D.
Mr. Smith said he was optimistic that lawmakers and the public would back major investments in infrastructure, especially as a barrage of costly disasters exacerbated by climate change have laid bare the general state of disrepair.
“There’s just every reason to be doing this, and I feel like we’re learning so many lessons,” he said.
Credit…How Hwee Young/EPA, via Shutterstock
Shady retirement home and investment schemes have cheated China’s rapidly aging population out of hundreds of millions of dollars, spurring more than a thousand criminal cases in recent years.
In a society that traditionally relied on family members to take care of elderly parents, fraudsters have been able to prey on fears that changing social norms and scarce resources will leave older people bereft, report Alexandra Stevenson and Cao Li for The New York Times.
By 2025, more than 300 million people in China will be 60 or older, according to the Chinese government. By 2050, that number is estimated to rise to half a billion.
China’s now-defunct one child policy and mass migration to big cities, though, mean that there are fewer people to care for this large and vulnerable group. The government provides care only to those with no family, no financial support and no ability to work.
In Yiyang, a retired handyman was so distraught after being swindled that he threw himself into a river last month and drowned, according to state media.
“We have a continuously aging population, and government-funded public services are not enough to look after this population,” said Dong Keyong, a professor at the School of Public Administration and Policy at Renmin University of China in Beijing.
The government has been relying on private sector companies to step in, offering subsidies and tax benefits as encouragement. But the cost of building a nursing home is high, and the rewards are often too low because most people cannot afford high-quality care.
The result has been that some builders have skirted laws that forbid them to accept money from residents before the retirement homes are built by creating side investment products that promise high interest rates and future membership benefits.
One company, Shanghai Da Ai Cheng, raised more than $150 million promising returns of up to 25 percent and a retirement home. Three years after the program started, the project collapsed and more than $81 million had disappeared.
Corporate executives around the country are wrestling with how to reopen offices as the pandemic starts to loosen its grip. Businesses — and many employees — are eager to return to some kind of normal work life, going back to the office, grabbing lunch at their favorite restaurant or stopping for drinks after work. But the world has changed, and many managers and workers alike acknowledge that there are advantages to remote work.
More than 55 percent of people surveyed by the consulting firm PricewaterhouseCoopers late last year said they would prefer to work remotely at least three days a week after the pandemic recedes, Julie Creswell, Gillian Friedman and Peter Eavis report for The New York Times. But their bosses appear to have somewhat different preferences — 68 percent of employers said they believed employees needed to be in the office at least three days a week to maintain corporate culture.
Salesforce, the software company based in San Francisco, recently earned praise from some people when it said that most of its employees would be able to come into the office one to three days a week — an approach the company described as “flex” — once the pandemic is no longer a public health threat. The company would not say whether it now needed less office space.
But other companies ultimately want all or nearly all employees back for most of the week — and are telling workers that their careers could suffer if they don’t return.
Rapid7, a cybersecurity company based in Boston, will expect workers to come back to the office at least three days a week when it determines that it is safe to do so.
“We really believe that our in-person workplaces foster our culture and our core values,” said Christina Luconi, the company’s chief people officer.
Employees who choose not to return to the office could face professional repercussions, she said.
The S&P 500 drifted lower on Wednesday as government bond yields climbed.
The yield on the 10-year Treasury note rose to 1.48 percent. Bond yields have jumped sharply this year, reflecting optimism about economic growth but also raising concerns about inflation and that the Federal Reserve might pull back on its efforts to bolster the economy.
Shares of Michaels jumped more than 20 percent after Apollo Global said it would acquire the craft retailer in a $5 billion deal.
Europe and Asia
Trading in Europe was mixed, with the Stoxx Europe 600 down slightly and the FTSE 100 up 0.5 percent.
Automakers were among the big gainers in Europe, with Volkswagen rising 5.2 percent and Renault up 5.9 percent, after analysts gave both companies positive outlooks. Stellantis, the name for the merger of Fiat Chrysler and PSA, said it would aim for a profit margin of 5.5 percent to 7.5 percent, assuming no further significant lockdowns; shares rose 2.3 percent.
Asian markets ended the day higher, with the Shanghai composite in China up 2 percent higher and the Nikkei in Japan gaining 0.5 percent. In Australia, the S&P/ASX 200 gained 0.8 percent after the government announced the economy grew 3.1 percent in the final quarter of 2020 over the previous quarter; for all 2020, the economy shrank 1.1 percent.
Oil prices were higher, with futures of West Texas Intermediate, the U.S. benchmark, up 1.9 percent, to $60.88 barrel, and the global benchmark, Brent crude, also up 1.9 percent to $63.88 a barrel.
The chairman of Rio Tinto, the giant Anglo-Australian mining company, said he would step down after the destruction of two ancient rock shelters in Australia that were sacred to Aboriginal groups. The company blew up the caves in May to get at iron ore underneath them, raising an outcry that caused the chief executive to step down in September.