As the coronavirus continues to sweep through the world, its economic impacts are becoming more and more visible globally. As per the predictions of few leading global thinkers, the pandemic is going to change the financial and economic order forever.
After several weeks of nationwide lockdown, loss of innumerable lives and the closing down of a substantial part of global economy, this historical moment is still surrounded by a radical uncertainty. Many questions are still unanswered such as- will businesses reopen and jobs come back? Will we be able to travel again? Will the governments and the central banks be able to prevent a lasting recession with their enormous flood of money or is something even worse going to happen?
According to the renowned global thinkers, at least one thing is certain that the pandemic is sure to pave the way to some permanent shifts in economic and political power in certain ways that are going to become apparent only later.
The global economy is leading towards a long and deep recession probably the first one after 1930s immersing both developing and advanced economies. Though a lockdown is of prime importance in dealing with coronavirus, this is also confirmed that the longer the lockdown is sustained, the deeper will be the scars on economy and the slower will be the recovery.
The government’s bailout to support the economy
Gripped in a lockdown, UK’s economy is wobbling near a complete collapse. It can be propped up solely by government funds. Chancellor Rishi Sunak’s bailout is mainly aimed at keeping large businesses and the major employers from suffering from a financial collapse. It was undoubtedly a quick response but unfortunately, it might be a partial victory only as one fourth of the businesses coming up for a government bailout are still planning to make their workers redundant.
Moreover, things are going to get worse in the near future as Chris Whitty, the chief medical officer admitted that lockdown could be imposed in some form until the end of the current year.
According to the data collected by the Enterprise Research Centre, the exit path from this disaster is going to be a precarious one. The data tells that the economy is facing a challenging moment. The higher businesses are nearing closure and there are no new businesses that can take their place. We might witness a net loss of businesses over a long period of time.
According to the data, the private sector is going to be impacted more with a loss of few million jobs over the next few months. Companies that depend on consumer spend will get the hardest hit. Even if we talk about the optimistic situation of the lockdown ending in June, people won’t rush to spend on leisure activities or in shops. And restaurants and pubs might not reopen until the next year as they are not in the government’s priority list. All these factors are going to contribute to a deep and long recession for the country.
It’s not only about the advanced economies like US and UK. In fact, more than eighty emerging economies are now looking for help from the IMF (International Monetary Fund). This is a clear warning of a disappointing and widespread recession.
Amid all the negativity over the coronavirus, trading seems to be getting better in the last few weeks. The FTSE 100 that had its worst quarter in March since the year 1987 and has recently started to show some positive signs of recovery. But it could still take full three years for the UK economy to recover completely from the repercussions of the coronavirus