Last week we all had moments where the reality of what we were about to go through as a species hit homeIn a Southend Oxfam shop last week, I found a decadent 70s paperback of Clark Ashton Smith’s Lost Worlds collection. In the 1932 story The Empire of the Necromancers, the Silver Death plague ravages the land of Zothique, and necromancers make the zombie survivors “labour in the vaults and serve their necrophiliac lust”. Within days, Ashton Smith’s lurid dreams would seem prophetic.Is our prime minister, Boris Piccaninny Watermelon Letterbox Cake Bumboys Vampires Haircut Wall-Spaffer Spunk-Burster Fuck-Business Fuck-the-Families Get-Off-My-Fucking-Laptop Girly-Swot Big-Girl’s-Blouse Chicken-frit Hulk-Smash Noseringed-Crusties Death-Humbug Technology-Lessons Surrender-Bullshit French-Turds Dog-Whistle Get-Stuffed FactcheckUK@CCHQ 88%-lies Get-Brexit-Done Bung-a-Bob-for-Big-Ben’s-Bongs Cocaine-Event Spiritual-Worth Three-Men-and-a-Dog Whatever-It-Takes Johnson, up to the coronavirus crisis? Or will he be to Covid-19 what the swiftly substituted Neville Chamberlain was to the second world war, remembered only for the futile statement: “I have in my hand a piece of toilet paper!”It looked as if liability confusion meant I might have to tour the virus-ravaged country performing to empty theatres Continue reading...

As long ago as 2006, experts were predicting what is happening todayJust a few months ago, no one had heard of coronavirus. Today, it’s profoundly changing how millions of people live. Policymakers have been playing catchup, not least on how to respond to the economic crisis. But experts (the ones Michael Gove said we’d had enough of) had pointed the way to what is now taking place. A World Bank paper on avian flus forecast that a severe outbreak would lead to a near 5% fall in global GDP, and double that in Europe. That work, done in 2006, seems much closer to where we are headed than almost all the forecasts done in 2020.A US congressional budget office paper from that period examines the economic impact of various sizes of pandemic, from a repeat of the 1918-19 Spanish flu to the less lethal Hong Kong flu in the 1960s. It is particularly prescient. Continue reading...

This emergency demands good judgment, not the usual obsession with debt and deficit levelsSeldom has a British government’s budget been rendered so out of date and so irrelevant as Rishi Sunak’s first.One of the best indicators of this was provided in his post-budget evidence to the Treasury select committee last week by Robert Chote, the much-respected chairman of the Office for Budget Responsibility (OBR). The OBR is the independent watchdog on government spending and taxation plans – the setting-up of which was one of the few acts of Chancellor George Osborne of which I approved.Despite the crisis, the Brexiters are hellbent on not seeking an extension to the negotiations with the EU Continue reading...

Government indecision amid the coronavirus crisis has fuelled fears of a long recession – unless there is a huge fiscal responseSuch was the scale of the global market crash last week in the wake of the coronavirus outbreak, the spectre of the 1929 Wall Street rout and the ensuing Great Depression of the 1930s has been raised. Comparisons no longer seem fanciful.The failure of the US and the UK to swing into action with a wide range of mitigation measures – despite the lessons of Italy’s slow response to the spread of Covid-19 – has heightened concerns that a sustained, epochal downturn lies in wait. Continue reading...

European markets rebound but sterling falls back after chancellor announces plan to pay wages in response to Covid-19

Unprecedented measures for coronavirus crisis include paying 80% of wages, new loans, benefits boost, rent help and VAT deferralRishi Sunak said an unprecedented level of state protection will be offered to support businesses and workers through the coming months to prevent the coronavirus outbreak bringing the economy to its knees.The chancellor’s second package of measures since he announced a £30bn rescue operation at the budget earlier this month, has been developed in recent days in response to criticism that previous efforts would fail to prevent thousands of companies going bust.VAT deferral. No businesses will pay VAT until the end of June, a deferral of tax payments for another quarter. At a cost of £30bn, companies will not need to pay what VAT is owed until the end of the year.The coronavirus business interruption loan scheme will be interest-free for 12 months, instead of the initially proposed six. The move will let companies apply for the fund even when the worst of the virus outbreak has died down. It reflects warnings from economists that the ripple effects of the virus could take much of the year to dissipateUniversal credit standard allowance will be increased by £1,000. Tax credit allowance will also be increased. This will benefit 4 million low-income families, Sunak said, and with other measures to boost benefit payments cost £7bn.Measures for the self-employed, previously denied payments if they are off work sick, will be able to access sickness benefit of £94.25 a week.Rent support of £1bn support for renters following an increase in the housing benefit element of universal credit to cover 30% of market rents in local areas. The chancellor said that renters will receive this top-up to match mortgage subsidies announced in his last package.Other measures. Previously, Sunak said cash grants worth £25,000 would be made to retail, leisure and hospitality firms to help them survive the period of turbulence. Businesses with fewer than 100 employees in the country across all sectors of the economy will be able to seek grants worth £10,000. Continue reading...

Latest emergency coronavirus package poses three big questions: is it well targeted, is it enough and is it in time?

Since the 1990s, faith in ‘the market’ has gone unchallenged. Now even public shopping has become a crime against society

Experts warn companies that have gorged on cheap money for the past decade face going out of business

Rolling coverage as the UK central bank takes emergency action for the second time in a week and the ECB and US Federal Reserve announce more stimulus

Leaders across continent announce spending measures to combat coronavirus effects

Quantitative easing stimulus is equivalent to almost 2% off interest rates

Decision comes week after Bank chiefs cut rates to 0.25% to address coronavirus crisis

Big supermarkets such as Tesco and M&S likely to get boost from ‘essential retailer’ statusAs the corporate and economic toll of the coronavirus outbreak mounts, it is clear that some winners will also emerge from the crisis, including supermarkets and others such as Marks & Spencer that are likely to be given “essential retailer” status.If the UK government follows in the footsteps of other countries such as France, where only supermarkets, pharmacies, banks, petrol stations and hairdressers are allowed to stay open, a handful of retailers could eventually benefit.Related: Ocado expected to impose rationing on more products Continue reading...

Bank now realises Europe will sustain grievous economic damage from Covid-19

UK retailers, bus companies, publishers and cinema chains issue warnings as sales take large hit

The Covid-19 outbreak is forcing politicians and central bankers to set aside ideology and orthodoxy to prevent a global collapse

Market collapse could halve production revenues as UK economic crisis bites, says reportThe North Sea oil and gas industry is in a “paper-thin” position as global oil markets plummet towards 18-year lows amid the UK’s economic emergency, according to a report.An industry trade body said investment in the ageing oil basin, which supports about 250,000 jobs in the UK, was expected to slump by almost a third because of the market collapse. Continue reading...

Bills could fall by 20% if system mirrored house price growth over past 30 years, says IFSMore than 10m households would benefit from lower council tax bills if the government reformed the “arbitrary and unfair” annual property charge to reflect the growing divide between London and the south-east and the rest of England.The Institute for Fiscal Studies (IFS) said average bills across most of the Midlands and north would fall by more than 20%, with more modest falls across much of the south-west and parts of east England should ministers introduce a system more aligned with house price growth over the past 30 years. Continue reading...

Fears of a deep downturn are rattling markets despite stimulus packages in US, UK and the eurozone

More than 250m people now in lockdown in EU as Germany and Belgium adopt measures

Pound plunges to 35-year low against US dollar as UK Bank boss warns of economic crisis

Businesses are being caught out, lacking the cover they thought they had. The whole sector needs a rethink• See all our coronavirus coverageThe concept of insurance is marvellous. Individuals or corporations pay to spread risk across a large community, creating a greater degree of financial security and peace of mind, regardless of what challenges might end up materialising.In many cases it’s worked flawlessly for centuries. Businesses burned to the ground can often emerge from the ashes in a matter of months. Disability and sickness mustn’t spell certain bankruptcy. In the 18th century, the wives and children of deceased members of the Amicable Society for a Perpetual Assurance Office were guaranteed cash, thanks to what’s believed to be one of the earliest examples of life insurance as we know it.It wasn’t always like this. In years gone by some insurers were more forgiving when it came to paying out when disease struckRelated: Johnson says this is war. But his response to Covid-19 is laughably inadequate | Aditya Chakrabortty Continue reading...

Without immediate government action, millions of people will be left destitute as the economy grinds to a halt• See all our coronavirus coveragePandemics don’t just affect our health – they rip through our economies, too. For many people affected by the coronavirus, including those who don’t fall sick, economic survival will be a primary concern. When businesses close and workers no longer get paid, the bills for unpaid rents, mortgages and consumer loans quickly accumulate. Cities have already shut down swaths of their transport services, shops, cafes and cinemas. Mass lay-offs are on the horizon. Unemployment insurance will cover some, at least for a time. But self-employed and temporary workers, and households that live pay-cheque to pay-cheque, don’t have such buffers.If you have some savings and only a little debt, the situation is tricky enough. But since the debt-fuelled financial crisis in 2008, household debt has grown. In the UK, total household debt stood at £1.28 trillion for the period from April 2016 to March 2018 according to the Office of National Statistics (ONS).Related: This crisis calls for massive government intervention: here's how to do it | Emmanuel Saez and Gabriel ZucmanRelated: Johnson says this is war. But his response to Covid-19 is laughably inadequate | Aditya Chakrabortty Continue reading...

Congressional intervention will be necessary to recover from the economic fallout from the coronavirus pandemicThe coronavirus pandemic is exposing some ugly truths about the world we live in and, as we head in to what now looks certain to be a global recession, another one is coming in to focus: the Federal Reserve can’t save us.At 2.30pm on Wednesday the Fed chair, Jerome Powell, was due to hold his latest press conference. Like a lot of events, that meeting is now canceled. Powell pre-empted it by announcing an unprecedented second cut to interest rates on Sunday and unveiled plans to pump $700bn into the financial system. Continue reading...

The Guardian’s economics editor, Larry Elliott, says the global economy was already in poor shape when the coronavirus crisis struck. Now governments have stepped in with stimulus packages designed to bail out individuals and small businesses – but will that be enough to stave off a recession?The global shutdown brought about by the coronavirus pandemic has sent the world’s economy into a tailspin as workers and customers stay at home. What began as a crisis in China now spans the world, sending chills through stock markets. Fears of the virus have been matched by anxiety about job losses and business failures.The Guardian’s economics editor, Larry Elliott, lays out how a weakened global governance system and failures of cooperation has hindered the kind of joined-up response that helped dampen the effects of the 2008 financial crisis. But this week, the US government promised close to $1tn of stimulus followed in the UK with a support package worth £300bn for small and large businesses. Continue reading...

Chancellor Rishi Sunak says he will do whatever it takes to protect jobs and incomes and is offering mortgage holidays and business grants. The day’s political developments as they happen

White House prepares to send direct payments to Americans as part of stimulus package

The country has the money to save independent businesses. But Boris Johnson’s measures abandon them to an imploding market

Coronavirus is a grave threat to the economy and the lives of millions – a new benefit payment for all affected workers should be just the start• See all our coronavirus coverageThe coronavirus pandemic has shown us all in just a few days how fragile our way of life really is. Basic certainties about our health, that of our loved ones and our normal way of life can no longer be taken for granted. Our sense of anxiety is real and understandable.In these new circumstances, the most important and hardest thing for government is to not cling to old certainties about the way things should be done, but to tear up the rulebook. That is what we have started to see in the last few days when it comes to public health measures. There is now a desperate urgency that this scale of action is matched by the government’s economic response. We are not there yet – not by a long way.The government should act as a guarantor for a portion of the wages for all those businesses affected. It would be radical, but necessaryRelated: Coronavirus news: Euro 2020 postponed for a year; Australia tells citizens to fly home – live updates Continue reading...

Tax relief and help with borrowing for firms is needed but for workers Germany’s short-time work allowance should be copiedThe fight against Covid-19 is a full-on war. China seems to have won the first battle. Hong Kong, Taiwan, Singapore and Japan have also chalked up visible successes in mitigating the outbreak, no doubt owing to their experiences in dealing with the 2003 Sars epidemic. Europe and the US, on the other hand, are only just awakening from their illusions of invulnerability. As a result, the epidemic is now raging across the west.Related: Fighting coronavirus's economic effects will take more than interest rate cuts | Barry Eichengreen Continue reading...

OBR’s Robert Chote says now is the time to spend without regard for the national debt

All eyes will be on the southern European state to see if the ECB’s measures will prevent a health emergency becoming an economic oneIf there were any doubts as to how seriously European officials are treating the Covid-19 emergency, the Italian prime minister Giuseppe Conte’s reference to this being his country’s “darkest hour” should help dispel them. Italy is the European country currently most affected by the virus, with the highest number of cases and fatalities. It might be the first in the region to be badly hit, but it almost certainly won’t be the last.Whether even more aggressive or creative action may be required in the coming weeks or months, no one knows. The initial reaction to the measures announced by the European Central Bank was mixed. But unlike the sovereign debt crisis – which first affected Greece and then Italy, Spain and Portugal – there is no political or economic divide between the needs of the core and the periphery of Europe in the face of the coronavirus challenge.GDP declines for both Q1 and Q2 could prove to be twice as bad as anything seen during the 2008 financial crisisRelated: How do coronavirus containment measures vary across Europe? Continue reading...

Chancellor expected to announce more help for businesses amid fears of hundreds of thousands of job losses

Sharp losses recorded after US interest rate cut, as Bank of England hints at further support to combat turmoil

Keep it industry-wide, don’t support shareholders, and offer simple non-lending supportBail out the airlines? Clearly, some form of government support may be needed soon, but a bailout is a misleadingly broad term. Ministers should keep a couple of principles in mind as they respond to ill-defined calls for help.First, financial assistance – which could be loan guarantees or secured lines of credit – is best offered on an industry-wide basis on equal terms to everybody. Those terms also have to be extremely favourable to the state. If an airline wants a state loan secured against an aircraft, for example, it cannot expect that aircraft to be valued at pre-coronavirus prices. Continue reading...

Annual changes to list of goods and services reflect consumers’ desire to cut carbon outputReusable bottles and mugs have been included in the UK’s inflation basket for the first time amid evidence of a rise in sales driven by the desire of consumers to reduce their carbon footprint.In its annual update to the list of goods and services included in the calculation of the cost of living, the Office for National Statistics said other new items were crumpets, self-tanning products, gluten-free cereals, vegetable crisps and minced turkey. Continue reading...

Calls for decisive action follow survey showing UK exports slumped to lowest level in three years

What initially seemed localised is worldwide and economic pain will go on for longer than first thoughtTravel bans. Sporting events cancelled. Mass gatherings prohibited. Stock markets in freefall. Deserted shopping malls. Get ready for the Covid-19 global recession.Up until a month ago this seemed far-fetched. It was assumed that the coronavirus outbreak would be a localised problem for China and that any spillover effects to the rest of the world could be comfortably managed by a bit of policy easing by central banks.Related: Coronavirus latest updates: UK over 70s to have to self-isolate 'within weeks'In the coming weeks the Bank of England can be expected to cut interest rates to 0.1% Continue reading...

The incoming governor will have no time to settle in as fears of recession grow and the clamour for rate cuts intensifiesAndrew Bailey will take over as Bank of England governor on Monday as the worst economic crisis since the 2008 financial crash unfolds, amid growing expectations that he will further cut interest rates to protect jobs and growth.The new governor is no stranger to baptisms of fire as he prepares to replace Mark Carney in the hot seat, having started his last job – as boss of the Financial Conduct Authority – a week after the Brexit vote.We’ve not heard the last from the Bank of England. Much will depend on the speed with which the virus progresses Continue reading...

A recession caused by illness might not be as bad as the crash of 2008. But the US is still highly vulnerable

The government’s debts are going to pile even higher if ambitious plans to double investment in R&D don’t pay offOnce more we are fighting a war with borrowed money, only this time it is not to rescue the villainous banking sector from its excesses. Now Britain will sink its few pennies and more into treating victims of the coronavirus, rescuing businesses losing customers and staff in equal measure, while plugging holes in a financial system that panics more often than Dad’s Army’s Corporal Jones.This time is different, says the new chancellor, Rishi Sunak, who last week laid out an expansive and overtly confident sweep of measures to tackle the Covid-19 outbreak and do much else besides. He outlined plans in the government’s first budget to spend £12bn on battling the virus while opening up two new fronts. First of these was an attack on austerity and the UK’s worn-out public services, with a further £18bn of spending; second was a revamp of the nation’s infrastructure, costing £600bn. Continue reading...

The worst pandemic in a century requires eurozone governments to pull together but first they have to agree

I have argued strongly for a decade against the Tories’ fiscal policy. Now, for this shameless chancellor, spending and investment are suddenly common senseBritain’s national debt over the past decade has always been a non-problem. For most of the last 300 years, it has been very much higher as a share of national output. Our public debt has been well-managed by the Bank of England, so that the average duration of government bonds is 15 years: there is close to zero chance of a crisis of refinancing or of confidence in public debt. At current rates of interest the overall cost of debt service is among the lowest in our history.Britain has thus plenty of room to spend and borrow, and there was no need for the draconian Cameron-Osborne austerity squeeze in which cumulative cuts in public spending in many areas of government exceeded 40%. Deficit reduction could have been more measured and the pain mitigated. It was baloney from top to bottom – a cruel hoax that was one of the reasons for the Brexit vote, imposing wanton and needless suffering. I and other Keynesian economists have made these arguments in vain for more than a decade – indeed for most of my working life. So Wednesday’s budget was an extraordinary moment.Yet a rubicon has been crossed. Keynesianism has been restored to its proper place in British public life Continue reading...

Pledges of help from EU, China and Germany plus declaration of US emergency helped the S&P 500 to surge back after a torrid weekThe world’s most powerful central bank, the US Federal Reserve, is preparing a fresh attempt to shore up investor confidence despite a late rally on Wall Street on Friday that ended a torrid week for stock markets on a more positive note.Fresh pledges of help from China, Germany and the European commission combined with Donald Trump’s declaration of a national emergency over coronavirus to reassure investors after an ordeal for equities on both sides of the Atlantic that echoed the depths of the banking crisis.The Federal Reserve must FINALLY lower the Fed Rate to something comparable to their competitor Central Banks. Jay Powell and group are putting us at a decided economic & physiological disadvantage. Should never have been this way. Also, STIMULATE!Related: Trump's bid to calm crisis simply caused more financial chaos Continue reading...

Rolling coverage of the latest economic and financial news

The obsession with economic growth does not take into account the climate crisis or extreme poverty, writes Michael Bassey, while John Airs says the fight for socialism is far from overOnce again the concern is for economic growth (Tories splash the cash, but will it hit the right targets?, 12 March). When will rich countries like ours recognise that growth is damaging the planet and prejudicing the lives of our grandchildren?Rishi Sunak’s budget has allocated £27bn for roadbuilding and a further £4.2bn to eight local authorities for transport projects (Report, 12 March). He hasn’t said (and may not know) how much carbon dioxide these measures, and the resultant traffic, will add to the already overloaded atmosphere and the concomitant heating of the planet. Continue reading...

As I learned in the 2008 crash, a global problem requires governments to work together. Today’s populist nationalism puts us all at riskIt need not be this way but one of the most disastrous weeks in the history of global medicine and global economics has ended with country after country retreating into their national silos. They are fighting their own individual battles against coronavirus and in their own way.Each country has, of course, its own distinctive health systems that it relies on, rightly values its own medical experts and the disease is at a different stage in each. But why is there, as yet, no internationally coordinated medical project – equivalent to the wartime Manhattan Project – mobilising all available global resources to discover a coronavirus vaccine and to fast-track a cure?Related: Trump’s coronavirus ban on travel from the EU is backfiring already | Jonathan FreedlandRelated: Why is the government relying on nudge theory to fight coronavirus? Continue reading...

Comments from central bank’s chief labelled a ‘catastrophic failure’ by eurozone economist

Britain’s FTSE 100 index falls by 10.87% as European Central Bank and Federal Reserve try to stem declines