Coronavirus And The UK Economy

I just published the following op-ed on Russia Television website concerning the Coronavirus and impact on the UK economy.

The full post is also below:

Despite the UK government lobbing billions of pounds at the problem, millions will lose their jobs and thousands of businesses will go bust. And the poor and the young will bear the brunt.

The coronavirus lockdown has had a devastating effect on the economic output of the United Kingdom, with the latest estimate being that it has fallen by over 20% in the month of April and it is likely to have stabilized at around this level in May.

The UK is a heavily trade-dependent nation, and April saw export volumes fall by 17.7% and import volumes decline by 26.5%. To avert an even worse outcome, the UK government has intervened on an unprecedented scale to reduce the adverse effects on the economy, companies and households.

Since the commencement of lockdown on the 23rd of March, the economy has been in freefall with output plunging by 5.8% in March and 20.4% in April. Manufacturing output fell by 24.5% and the service sector by 19.8%, however, due to the speedy emergency measures taken by the government this has not yet been fully reflected in the unemployment figures.

The Job Retention Scheme, the provision of emergency loans and tax deferments for Companies has prevented an even worse outcome. The predictions are dire: a fall in GDP of 11.5% for 2020 and a rise in unemployment from 3.9% in March to in excess of 10% by March 2021.

Some sectors have been decimated by the lockdown and social distancing with April figures showing widespread falls in revenue - accommodation and food services (-88.1%), construction (-40%), arts and entertainment (-39.7%) Education (-33.4%), transportation and storage (-28.8%) wholesale, retail and motor services (-27%). A few other sectors have performed somewhat better, including Information and communication (-13.3%) and Financial and insurance services (-5.3%).

Throwing billions down the drain?

The government response has been swift and significant with the focus being the Furlough scheme which is covering some 9.3 million employees at an estimated net cost of £39 billion, there is a £10 billion support scheme for the self-employed. An additional £16 billion earmarked for essential public services and £15 billion in grants and loans for businesses.

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