Tuesday, May 19, 2020
The economic casualties of the virus
It is difficult at this stage to determine who will suffer the most financially as a result of COVID-19. Certainly, the UK Government is going to take a big hit, with debt levels equivalent to those during the Second World War, but how they manage that debt will be crucial for the economy as a whole.
If the government seek to repay loans through austerity measures or taxation, then the likelihood is that we will spiral into a recession. So many businesses are already going under, many more are on their uppers, that once we are anywhere near to normality we are going to need an unprecedented stimulus package to pull us out of it and get some semblance of an economy back again.
After the Second World War, this was accomplished by American-funded rebuilding. That will not be an option next time.
Local government is in trouble as well. Although they have had additional funding to deal with emergency measures such as business grants and rate relief, councils are facing a huge reduction in income from car parks, rents and leisure venues to name but a few. This income can make up a significant proportion of their budget, and there is no prospect at the moment of government making up the shortfall.
And then there is business sector itself. Some well-known high street names have already gone under, more may follow. Social distancing and health and safety precautions which will be imposed in the post-lockdown period, will prevent normal shopping patterns - only so many people in a shop at a time, limited browsing opportunities, the possibility of the virus being passed to other through the handling of clothes, books etc - there is likely to be a continued uptake of online shopping for some time to come.
And what about seasonal businesses, such as the tourist trade. This year has been a write-off, airlines and airports are in crisis, will next year be any better? As the Independent reports, Visit Britain estimates that £22 billion is set to be wiped from the UK's domestic tourism industry due to the coronavirus pandemic and stringent restrictions on public life.
We don't just need a plan to ease us out of lockdown, we need an economic strategy that will keep the country, businesses and public sector bodies on solvent at the same time.
If the government seek to repay loans through austerity measures or taxation, then the likelihood is that we will spiral into a recession. So many businesses are already going under, many more are on their uppers, that once we are anywhere near to normality we are going to need an unprecedented stimulus package to pull us out of it and get some semblance of an economy back again.
After the Second World War, this was accomplished by American-funded rebuilding. That will not be an option next time.
Local government is in trouble as well. Although they have had additional funding to deal with emergency measures such as business grants and rate relief, councils are facing a huge reduction in income from car parks, rents and leisure venues to name but a few. This income can make up a significant proportion of their budget, and there is no prospect at the moment of government making up the shortfall.
And then there is business sector itself. Some well-known high street names have already gone under, more may follow. Social distancing and health and safety precautions which will be imposed in the post-lockdown period, will prevent normal shopping patterns - only so many people in a shop at a time, limited browsing opportunities, the possibility of the virus being passed to other through the handling of clothes, books etc - there is likely to be a continued uptake of online shopping for some time to come.
And what about seasonal businesses, such as the tourist trade. This year has been a write-off, airlines and airports are in crisis, will next year be any better? As the Independent reports, Visit Britain estimates that £22 billion is set to be wiped from the UK's domestic tourism industry due to the coronavirus pandemic and stringent restrictions on public life.
We don't just need a plan to ease us out of lockdown, we need an economic strategy that will keep the country, businesses and public sector bodies on solvent at the same time.
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It might help the economy if there was a bigger drive to support local suppliers and businesses, or those from other parts of UK when a product is not available locally. For instance, I heard that a company in UK were producing PPE masks and exporting them to abroad whilst we were purchasing masks from abroad. Why didn't our government support the UK suppliers? I am aware that money will not be plentiful as we ease out of this pandemic but why not aim to get all of our essential items from local or British sources instead of importing them from other countries (which will help that other nation but do nothing to help manufacturers in our own economy). If there is a gap in a particular market, a struggling business can potentially diversify and reinvent itself by producing a different product which we need. This would cut down on the number of redundancies and keep more people in jobs.
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