[Politics] Economy Shrinks 20% in April

[Machiavelli]

The worst previous period in history 2009, we had a 7% reduction over 13 months, this is over 20% in 1 month so as someone said before about 40 x worse than ever seen before over a month. It is utterly catastrophic and will take many years to recover from, this is the fall out of the prolonged lockdown, 3 months and counting and don't forget it is only a partial opening next monday and many businesses will fail to open anyway as they cannot make a living with a 2 meter social distancing rule let alone 1 so won't bother

Also many businesses will still be shut with no opening date, hospitality, social and leisure so many of those will simply go bust. I would go as far as to say 95% of businesses cannot function with any form of social distancing so the longer that goes on the more devastating it will be

Some of us have been saying for a long, long time that you can't pit healthcare against the economy, and that the UK will be one of the -- if not the -- worst affected economies across the globe. The repercussions of not taking CV19 seriously and locking down early are being keenly felt. As [MENTION=409]Herr Tubthumper[/MENTION] says, Germany suffered half as much, South Korea hasn't even gone into lockdown. Even worse is that, because we were so slow and unprepared, the lockdown is lasting longer here than more or less everywhere else. And to cap it all off, this SHOWER OF SHITE of a 'government' can't get a test, track, trace, isolate policy in place which is what's needed to accelerate the easing of the restrictions. Forgive me if I'm wrong on this but, at one point, you deemed this SHOWER OF SHITE's response as 'superb'.

 

[Machiavelli]

If the entire world is emergency borrowing to get themselves out of this, who is doing all the lending!?

Central Banks will print money. That's one of the (main) things they do. There's an entire misconception that there is an equilibrium between credit and debt. As indicated above, central banks print money, while private banks operate off leverage, and took this to eye-popping levels pre-2008.

 

[Bold Seagull]

Central Banks will print money. That's one of the (main) things they do. There's an entire misconception that there is an equilibrium between credit and debt. As indicated above, central banks print money, while private banks operate off leverage, and took this to eye-popping levels pre-2008.

All central banks can do is print a promise of money can't they? If you don't have some form of equilibrium the whole system falls down. Money is an illusion, but the balance sheet isn't. I honestly don't know enough about it, I struggle with my own accounts let alone the worldwide economy!

 

[Ding Dong !]

John Timpson of the Timpson shop chain said that we controlled that shutdown so for the first time in history, we’ve effectively controlled that drop. He made a bit of sense and said it’s not the April/May figures we need to be alarmed about, it will be recovery figures as restrictions ease that will be key indicators.

Agree entirely and personally think that this is the tip of the Ice burg here. Furlough has been a significant help but papering over the cracks. On top of those who have already lost their jobs, when businesses start to re-open but the revenue they've come to expect based on previous years and months falls off a cliff, staff will of course be laid off.

 

[Stat Brother]

If in 3 years time we find we've 'got away with it', we ought to lockdown once every 5 or 10 years, just to help people reset their values (for want of a better expression)

Despite the lack of a it wasn't the most serious of comments.

I was expecting to a bit of push back, certainly not a handful of

 

[beorhthelm]

Still nowhere near the amount used to prop up banks in 2008 I wouldn’t worry about it.

think additional UK borrowing so far is about the same, certainly will be by end of summer. in EU they have 500bn earmarked.

 

[beorhthelm]

Some of us have been saying for a long, long time that you can't pit healthcare against the economy, and that the UK will be one of the -- if not the -- worst affected economies across the globe. The repercussions of not taking CV19 seriously and locking down early are being keenly felt. As [MENTION=409]Herr Tubthumper[/MENTION] says, Germany suffered half as much, South Korea hasn't even gone into lockdown. Even worse is that, because we were so slow and unprepared, the lockdown is lasting longer here than more or less everywhere else. And to cap it all off, this SHOWER OF SHITE of a 'government' can't get a test, track, trace, isolate policy in place which is what's needed to accelerate the easing of the restrictions. Forgive me if I'm wrong on this but, at one point, you deemed this SHOWER OF SHITE's response as 'superb'.

if we locked down earlier, the economic impact would have begun earlier, i dont know anyone can claim it would be less severe in April. i havent seen Germany equivilent GDP figures yet. the size of economic packages being talked about for europe are far higher than here, suggesting they are worse problems on the continent.

 

[Baker lite]

Jesus. To put this in context I think the German economy shrunk by 10% over the same period. U.K. was twice as much.

Very nervous about sticking My head up here but I’ll ask anyway, what was the German equivalent of the UK furlough scheme?
Just so you know, I’m not trying to start a fight or slanging match, I’m simply asking.


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[Herr Tubthumper]

Very nervous about sticking My head up here but I’ll ask anyway, what was the German equivalent of the UK furlough scheme?
Just so you know, I’m not trying to start a fight or slanging match, I’m simply asking.


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In Berlin they gave a mix of grants and straight cash to affected businesses. I’m not sure how it is for big corporations but freelancers and small businesses could apply and get the money almost instantly. It isn’t furloughing, but it’s money to keep the business ticking over. The cash was/is given out on a cash now, ask questions later basis. I’m registered with the Berlin tax authorities as a freelancer and, had I needed to, could fill out a one page form and have 5k paid into the bank account I have to have registered with the authority almost instantly. As did a friend of mine. I believe freelancers all get the 5k for free. Businesses up to 10 people get more, 15 I think, but have to pay some or all back depending on how much the business was impacted. I have not seen the payback criteria but I understand it’s generous and bars and restaurants I know are not expecting to pay it back.

As I say, no idea how it works for big business.

I doubt if this alone is the difference between the vast difference between the shrinking U.K. and German economies though.

 

[Baker lite]

In Berlin they gave a mix of grants and straight cash to affected businesses. I’m not sure how it is for big corporations but freelancers and small businesses could apply and get the money almost instantly. It isn’t furloughing, but it’s money to keep the business ticking over. The cash was/is given out on a cash now, ask questions later basis. I’m registered with the Berlin tax authorities as a freelancer and, had I needed to, could fill out a one page form and have 5k paid into the bank account I have to have registered with the authority almost instantly. As did a friend of mine. I believe freelancers all get the 5k for free. Businesses up to 10 people get more, 15 I think, but have to pay some or all back depending on how much the business was impacted. I have not seen the payback criteria but I understand it’s generous and bars and restaurants I know are not expecting to pay it back.

As I say, no idea how it works for big business.

I doubt if this alone is the difference between the vast difference between the shrinking U.K. and German economies though.

Thanks.


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[beorhthelm]

I doubt if this alone is the difference between the vast difference between the shrinking U.K. and German economies though.

is there April GDP data for like for like comparison. i could not find, even on the efficent bundesbank.de site (a shed load of data, well laid out)

 

[Machiavelli]

if we locked down earlier, the economic impact would have begun earlier, i dont know anyone can claim it would be less severe in April. i havent seen Germany equivilent GDP figures yet. the size of economic packages being talked about for europe are far higher than here, suggesting they are worse problems on the continent.

Agreed, early lockdown equals earlier economic impact.
Earlier lockdown also equals earlier suppression of the R-rate and spread, and reduced number of deaths, which equals reduced period of lockdown.
The different national figures will come in in dribs and drabs, although the OECD predicts that the UK economy will take the greatest hit. A longer lockdown also suggests as much. Not having a test, track, trace, isolate policy up-and-running, ditto.

 

[Pavilionaire]

what economic infrastructure do you think is missing, needed?

The sort of stuff we used to be able to rely on, i.e. borrowing under control, UK being able to service our debts with AAA credit rating, unemployment low, availability of skilled labour sufficient, access to the EU Single Market guaranteed.

 

[Herr Tubthumper]

Could mean many things. I wouldn’t necessarily say it’s because of worse problems. Germany, for example, has a far healthier balance sheet to play with hence we can pump much more into the economy. I have no idea how much we are putting into the economy but Germany always builds and improves infrastructure at times like this as money an£ resources are cheap.

 

[beorhthelm]

The sort of stuff we used to be able to rely on, i.e. borrowing under control, UK being able to service our debts with AAA credit rating, unemployment low, availability of skilled labour sufficient, access to the EU Single Market guaranteed.

borrowing was being kept down (though far too high imo), and rating has had negligable affect on cost of borrow (negative coupon on some recent auctions), unemployment was low. the EU access will be a big impact going forward, so really only point there.

 

[beorhthelm]

Could mean many things. I wouldn’t necessarily say it’s because of worse problems. Germany, for example, has a far healthier balance sheet to play with hence we can pump much more into the economy. I have no idea how much we are putting into the economy but Germany always builds and improves infrastructure at times like this as money an£ resources are cheap.

while Germany has a more healthy economy, there is not so much health across the rest of the continent. most went into recession in Q1. it will be unfortunate for the Germans and few others who will once again prop up the the rest.

 

[Herr Tubthumper]

while Germany has a more healthy economy, there is not so much health across the rest of the continent. most went into recession in Q1. it will be unfortunate for the Germans and few others who will once again prop up the the rest.

I don’t see it as necessarily unfortunate; a financially strong EU is beneficial for all of us. Well, those inside the EU at least.

 

[Leekbrookgull]

What other cards can he play ? https://www.bbc.co.uk/news/business-53019360

 

[Pavilionaire]

borrowing was being kept down (though far too high imo), and rating has had negligable affect on cost of borrow (negative coupon on some recent auctions), unemployment was low. the EU access will be a big impact going forward, so really only point there.

That's my point. Unemployment was low so we wren't burdened with huge social security cost and could bring in skilled labour from EU at the drop of a hat to help recovery, these people being net contributors to our economy and growing our domestic market for goods and services.. Now unemployment is the highest it's been for ages and will only get higher once furloughing ends and the winter starts. Where are the new jobs going to come from? Who will pay for the training required? Who will pay for the massive social security bill that will drain the life out of our economy?

 

[neilbard]

I don’t see it as necessarily unfortunate; a financially strong EU is beneficial for all of us. Well, those inside the EU at least.

A strong EU and a strong UK is beneficial for all of us?