Trade Talks, U.K. Inflation Surprise, Japan Trade Slump: Eco Day

(Bloomberg) -- Welcome to Wednesday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• The trade deal with China is currently the most stable point in the contentious relationship. That might now be coming under pressure, with President Donald Trump saying he called off last weekend’s trade talks with China and also that he’ll punish American companies that move jobs abroad and reward firms with tax breaks for shifting work from China to the U.S.
• Japanese exports continued to drop steeply in July even as a recovery in shipments to China helped cushion declines to Europe and other key markets where the coronavirus is spreading rapidly
• U.K. inflation unexpectedly accelerated to the fastest in four months, boosted by fuel prices and the absence of usual summer clothing sales
• English local councils need billions of pounds in additional funding or new borrowing powers to cope with the damage inflicted by the coronavirus, a think tank warned
• The Trump administration sees a possibility for Republicans and Democrats to agree on a smaller round of pandemic relief totaling $500 billion that would omit the biggest areas of disagreement
• With virus concerns keeping the school gates closed this fall, as many as 18 million parents could put job seeking on hold, creating a stumbling block for the U.S. labor market recovery, according to Bloomberg Economics.
• Canada’s Justin Trudeau named Chrystia Freeland as the new finance minister, suspended all parliamentary business, and promised to return next month with an “ambitious” new spending plan to help drive the recovery
• Chinese households are putting more of their savings into property but still holding back on discretionary spending, as a slow and fragile economic recovery keeps confidence in check
• China has repeatedly found traces of the coronavirus on packaging and food, deepening the uncertainty over whether the $220 billion cold chain industry could be implicated in the spread of Covid-19
• A North Carolina baby goods company shows how hard it is to diversify from China
• From a hodgepodge of mask rules to inconsistent social distancing, South America’s response to the coronavirus has been scattered. There are clear losers and a few early winners in a region that was already in bad shape

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With assistance from Bloomberg