Economic impact of Covid-19

[Ardwick Green Blue]

Apart from the human impact of Covid-19 there obviously is going to be an enormous economic impact in the UK & globally. Thousands of pubs, cafes, restaurants & shops will never reopen after even the shortest of shutdowns as they are operating at the edge already. Unemployment will rise sharply and as a society we will be paying off the huge sums being spent on fighting Covid-19 for perhaps decades.

Economic data out for France & Australia this morning shows an incredibly grim picture with huge contractions and we are only at the beginning so it is hard to comprehend how bad it could get and how long any recovery will take.

 

[Ardwick Green Blue]

German figures out now and they indicate an annualised fall of 8% GDP.

 

[Easy]

It will be considerably worse than the 2008 recession, maybe even a depression.

saw a figure that the median amount of cash buffer is 27 days for many businesses that means many are likely to go out of business.

I think many are underestimating the economic impact here. It will be dreadful.

 

[denislawsbackheel]

Depression is inevitable.
The fight will be to stop hyperinflation.

 

[nmc]

Need to keep this in perspective... there will absolutely be a contraction and some sectors will be effectively be closed for a few months. It will take time for this pandemic to pass but with the right stimulus - the right quantitive easing - give money to individuals rather than institutions, low interest rates etc... there can be a long period of steadily growth to claw back any losses in GDP and more. It doesn’t need to be like WWII where it took 10 or 15 years to get the economy going again... we are already a vibrant consumer society - it’s just being paused. The real issue will be kicking the economy up again in a calm and orderly way to avoid an inflationary spike.

 

[MCFC1993]

Some sort of slump is inevitable.

It'll take a lot of cooperation and sensible heads for us to not have an economic disaster though.

Hopefully a lot of countries work together to help solve this crisis because that is what it'll take.

 

[AlgarveBlu]

The full impact of the economic consequences can only be assessed when we see what happens in the U.S. in the coming months - mentioned this in the FTSE thread a few times but this is a more appropriate thread. I started in the finance sector just after Black Monday in 1987 so have seen quite a few recessions in my time, but I knew with the unique dynamics of this situation that this was going to be the big one and make the financial crisis of 2008 something we could only wish for at this stage.

No governments have ever systematically and collectively disrupted demand and supply chains and throw in the one thing that will always undermine a recovery which is uncertainty due to the host of unknown factors surrounding this virus and more importantly what the end game is and when it is makes, this makes it our greatest challenge to date. The capitalist system and mentality in the U.S. is 100% not equipped for dealing with appropriate responses to a disease v economy scenario and this is already being played out by Trumps comments about the 'cure being worse than the disease'.

 

[Chipmeister]

Genuine question. What has the EU done or said in all of this?
Was talking with an mate who’s father and family were from Bergamo and he was telling me about the devastation there but also that the Italians feel alone no support from anybody and the contempt towards EU will linger a long time in Italy.

 

[Ardwick Green Blue]

Genuine question. What has the EU done or said in all of this?
Was talking with an mate who’s father and family were from Bergamo and he was telling me about the devastation there but also that the Italians feel alone no support from anybody and the contempt towards EU will linger a long time in Italy.

I’m a Leaver but I am trying not to make a political point about this. Eurozone budget deficit rules have been relaxed but we will only see what the economically strong EU countries will do for the many weaker ones in the coming months. Merkel has announced a huge package to support German businesses today but longer term Italy, Spain, Portugal, Greece and many more smaller countries are going to need eye watering amounts of aid.

 

[Chipmeister]

Thanks for that reply, we genuinely have no idea what is happening in EU and only get news from UK outlets online and nothing has been mentioned. Not a political question or trying to stir anything up genuinely wonder what is the response as it does seem each country is on their own in terms of plans and reaction to this virus.