Number claiming unemployment benefits reaches almost 2.1 million

Resolution Foundation report confirms under-25s hardest hit by the economic fallout

In one of the best performances since the crisis began, global stock markets rise sharply

Biotech firm Moderna reports positive early results from coronavirus vaccine trial, as US central bank insists it can do more to protect economy

Coronavirus policies to help the vulnerable are already being jettisoned. Those who want change need to be up for the battleIt is now certain. We will emerge from lockdown grieving for those lost and yearning for our previous lives, only to crash into a recession. As much as we dream of visiting our favourite cafe or pub, it’s not clear they will remain after the virus has run its course.Already reality heaves into view. The hospitality industry is being battered. One in four restaurants in the US is expected never to reopen. Amazon is finishing off the retail sector. Small businesses, cafes, online retailers and clothes designers are struggling. Loved and carefully nurtured ventures, operating on the thinnest of margins, are dying out. Every few days another one of them posts its goodbyes. We think of the world as how we left it. But that world is gone.The working classes, the cleaners, the construction workers, have become the canaries sent back down the coal mineRelated: We're all keen to show we care, but we've shaped a society that doesn’t care at all | Sam Byers Continue reading...

Survey finds 60% of workers are at most three months away from rent or mortgage default

UK must reabsorb those out of work due to Covid, says Bank of England’s chief economist

Local economies across country have been adversely affected by loss of students and tourists

Conservatives must understand that the country they rule is not exceptional

Some in the Treasury are panicking about a debt pile set to hit 115% of GDP, but the chancellor – and most economists – agree that austerity is not the answerBritain is on course for a £300bn increase in government debt this year as the bills for keeping much of the economy mothballed during the coronavirus outbreak continue to mount.Money to support businesses that have closed down make up the lion’s share, and the rest can be accounted for by increased welfare costs and the loss of billions of pounds to the exchequer in taxes that will never be paid.Even the architects of austerity agree almost-zero borrowing costs and low inflation give the Treasury an opportunity Continue reading...

The pandemic and its economic impact should persuade even this cabinet of the value of a two-year delay to departure‘There are,” said a former top Treasury official last week, “some strange people in this cabinet with strange ideas.” The speaker was Lord Macpherson, the former Treasury permanent secretary, who during his time at the department now run by Chancellor Sunak had the unrivalled experience of serving Ken Clarke, Gordon Brown, Alistair Darling and George Osborne. Both Macpherson and Osborne were on a “webinar” – yes, a word that is new to me too – hosted by the Strand Group of King’s College London to discuss a report co-authored by a former shadow chancellor, Ed Balls.Balls is still actively involved in the economic debate, and it was in his capacity as a visiting fellow at Harvard that he was presenting a report on the prospects for a US/UK trade deal. Well, to put it mildly, the Harvard team found precious little for the UK to gain from such a deal. Even if something can, as it were, be trumped up, it would hardly be worth the cellphone from which it would no doubt be tweeted.Starmer has been saying that Brexit cannot be reversed. I comfort myself with the hope that he is being cautious and playing politics Continue reading...

Free-market bodies support the government’s ramping up of debts to confront the Covid-19 outbreak

The return of viewings is welcome news for estate agents, but many buyers are now much less certain of their positionBritain’s property market has proved to be a cornerstone of economic activity for decades. Without buyers and sellers alike booking removal lorries and moving home, large parts of the economy can lose momentum and drag on growth.The decision to allow property viewings as part of an easing of the lockdown was seen by ministers as a much-needed boost to commercial life. Over the coming months retailers and wholesalers that supply kitchens, carpets and light fittings will join the army of previously furloughed estate agents in getting a boost. Continue reading...

State intervention may be back on the government’s agenda, but its real intention is to return to ‘normal’ as soon as possible

One in three of lowest-paid have either lost their jobs or been furloughed, Resolution Foundation findsAlmost a third of Britain’s lowest-paid workers have lost their job or been furloughed in the past two months as those earning least bore the brunt of Britain’s Covid-19 economic shutdown, a thinktank has said.The Resolution Foundation said 30% of those in the lowest income bracket had been affected by the damage caused to the labour market by the pandemic, compared with only 10% of those in the top fifth of earners.Related: P&O Ferries to cut 1,100 jobs – but owner to pay out £270m in dividends Continue reading...

Rolling live coverage of business, economics and financial markets as data show the economic toll from the pandemic

France and Italy also slide into recession as lockdown measures cut consumer spending and investmentGermany has fallen into recession following the sharpest economic slump since the 2008 financial crisis, as the coronavirus pandemic causes severe damage for growth and jobs across the eurozone.Europe’s largest economy shrank by 2.2% in the three months to the end of March, the country’s second-largest decrease since reunification.One of the two main definitions of recession in the UK is at least two quarters of negative economic growth. Judged by this yardstick, the UK was last in recession in 2008-09, when there were six consecutive quarters of negative growth. Continue reading...

Ministers have learned the wrong lessons from the coronavirus crisis – their ignorance of local needs will doom the economy

The response to the pandemic must not lead to a renewal of austerity. Shrinking the state has contributed to this crisis

Optimism fizzles out following sombre prognosis and soaring US unemployment figures

Shares have fallen across Europe, Asia and the US, as another 2.9m Americans file initial jobless claims

Despite the deficit heading for a peacetime record, today’s Tory party has little appetite to repeat austerity

Bill rises by £20bn in a fortnight as tax revenue dwindles and state spending soars to head off economic meltdownThe mounting cost of government schemes to help Britain through its worst recession in more than three centuries has risen by £20bn in the past two weeks and will result in a budget deficit of nearly £300bn in the current financial year, a report has forecast.Fresh figures from the Office for Budget Responsibility, the independent body responsible for forecasting the public finances, showed that measures such as the Treasury’s furlough scheme will total £123bn, up from £103bn in late April. Continue reading...

ONS survey shows 44% of respondents’ reserves will not last until end of year

The New York governor is replacing elected representatives with private, unaccountable monopolists, and lawmakers across the US are doing the same thing

Economy shrunk by 2% in first quarter as result of coronavirus, but slump is not unprecedented

Fiscal hawks are using the same lines as they did in 2009. But there’s no reason to fear a sovereign debt crisis

Up to 11,000 jobs, including pest and weed control, to be created but critics call for greater emphasis on climate change

Relaxation of government subsidy rules benefiting wealthier EU states, says European Commission presidentUrsula von der Leyen conceded that companies in rich countries including Germany have been given an unfair advantage by the relaxation of the EU’s state aid rules, as she called for agreement on a pan-European rescue package.In a speech to the European parliament in Brussels, the European commission president suggested that the single market was in danger of breaking up as wealthier member states spent their way out of the current crisis. Continue reading...

The pandemic is pushing the UK into a historic slump. The government is now the spender of last resortTo grasp how low are the expectations for the economy, consider this: on Wednesday it was announced that the UK’s national output had just had its biggest drop since the great crash of 2008 – and the immediate response of many analysts was surprise that it hadn’t fallen further. Even so, the statistics make grim reading. Over the first three months of this year, GDP shrank 2% on the previous quarter. The economy was already slowing in February, and then came the UK’s first coronavirus deaths. In March alone, GDP plunged nearly 6% – the greatest contraction since records began in 1997. Amazingly, most of that would have happened over just the last week of the month, the first full week of the government’s lockdown. The impact was drastic: travel agent demand collapsed, car plants shut and exports fell off a cliff. The winners were few and far between: the computer industry got a boost as those having to work from home bought laptops, while the paper industry had an amazing few weeks. All that hoarding of toilet roll proved good for someone.However grim those numbers look, they are just the beginning. The near unanimous view among economists is that the UK is diving into what the chancellor, Rishi Sunak, warns is a “significant recession”. However bad that sounds, it is probably a gross understatement: the Bank of England is forecasting the worst recession in over 300 years. Continue reading...

The second world war did not lead to recession and unemployment, thanks to the Keynesian policies of the Labour government, writes Dennis LeechThe Bank of England forecasts a fall in GDP of 30% due to the pandemic, and says it is the worst recession in 300 years (Business live, 7 May). We need to get this into perspective. There have been at least two other episodes in recent history when there was a massive supply shock of comparable severity: the two world wars necessitated structural changes that dwarf what the Bank is forecasting.The cost of the war effort – men, uniform plus weapons production – was counted as part of GDP although it contributed nothing directly to living standards. This highlights a limitation of GDP: it only measures output, not welfare. Today’s equivalent of fighting the enemy is the lockdown to stop the virus spreading, but this is not counted as production so represents a direct loss from GDP. A meaningful comparison means adjusting wartime output. Continue reading...

Data reveals pandemic has caused severe decline in supply and demand for products

UK GDP has suffered its biggest quarterly fall since 2008, as the coronavirus lockdown hits the economy

Britain’s budget deficit expected to hit £337bn this year after spending surge

As Complicité’s The Encounter goes online, its creator discusses the need to rebuild British culture ‘from the ground up’

Given emerging scale of Covid-19 crisis, talk of rapid bounce back could be wishful thinking

Progressives missed an opportunity after the last crash. To fix our broken economy after Covid-19, we need bold new ideas

UK economy shrank by 2% in first quarter after record monthly plunge, ONS data shows

The scheme has been estimated to cost the Treasury £12bn per month for 7.5m employees

Economy commissioner Paolo Gentiloni says bloc needs a sound plan to avoid divisionsThe risk of an uneven economic recovery from the coronavirus crisis poses an “existential threat” to the European Union, one of its most senior economic policymakers has said.Paolo Gentiloni, a former Italian prime minister and now the EU’s economy commissioner, said the bloc also had a “historic opportunity” as it charts a plan to rescue Europe’s economy. Continue reading...

As the chancellor announces plans to extend the unprecedented scheme to pay the wages of millions of workers, whole sectors of the economy remain shut because of Covid-19, causing a recession unseen in Britain for centuries. Larry Elliott explains what it will mean for the countryThe coronavirus lockdown has resulted in the UK’s biggest economic downturn for 300 years, with shops shuttered, factories closed and millions of workers told to stay at home while the government pays their wages.Now, with restrictions beginning to lift, the Guardian’s economics editor, Larry Elliott, tells Anushka Asthana that the economic damage is becoming apparent. For once thriving businesses, such as the independent bakery Sable d’Or in north London, the future appears bleak. Its owner, Mohamed Ladjassa, tells us how he was forced to cut staff as customer numbers dwindled. Continue reading...

Expansion of quantitative easing ‘quite possible’ and negative interest rates kept under reviewThe severity of Britain’s economic downturn could force the Bank of England to increase its stimulus, according to one of the central bank’s senior officials.Ben Broadbent, deputy governor for monetary policy, said it was “quite possible” officials would vote to expand the quantitative easing (QE) programme to prevent the situation worsening as businesses remained closed and millions of workers were forced to stay at home.Related: 'Get a grip': Mervyn King warns of Covid-19 threat to UK economyRelated: UK unemployment to double and economy to shrink by 14%, warns Bank of England Continue reading...

Rishi Sunak says programme will run for further four months as coronavirus crisis continues

Chancellor says 304,000 firms had benefited in sharp increase in lending during pandemic

The chancellor was right to extend the job retention scheme to the end of October. But the devil will be in the detail as the economy reopensThe job retention scheme unveiled by Rishi Sunak in March is estimated to be costing the government about £14bn a month. Rarely has money been better spent. By covering up to 80% of the wages of 7.5 million employees, the chancellor has ensured that economic catastrophe did not follow hard on the heels of a public health emergency. The unprecedented cost and scale of the scheme was testament to its necessity, after the economy entered into forced hibernation because of Covid-19. Without it, as both supply and demand for goods and services collapsed, the ranks of the unemployed would quickly have swollen to a size not seen since the 1930s. In the US, for example, which has no equivalent to Mr Sunak’s scheme, the number of jobless rose by 20 million in April alone.The government has made serious, lethal mistakes during the pandemic. This was one thing it got right. Yet the murmurs of disquiet in Mr Sunak’s party – not noted for its love of expensive state interventions – had become audible as the policy’s June expiry date approached. Earlier this month, Sir Graham Brady, the chair of the 1922 backbench committee, irresponsibly suggested that the furlough scheme may have left people “a little too willing to stay at home”. A “senior government source” briefed journalists that widespread “addiction” to life on furlough had taken hold. Continue reading...

A German scheme is more generous and allows staff to work part-time while France pays 70% of gross salaryThe chancellor, Rishi Sunak, has announced that the UK’s job retention scheme – under which the state now pays 80% of the gross wages (up to a £2,500 per month maximum) of one in four UK workers – is to be extended until the end of October.Sunak also said that employers would be asked to contribute towards the £14bn a month cost of the scheme, and that it would soon allow part-time work to help businesses reboot their trade. Continue reading...

Economist discusses the effects of pandemic on economies, societies and globalisation

Rolling coverage of the latest economic and financial news, as McDonalds prepares to reopen drive-through sites and Ryanair outlines plans to restart some flights

Government support during lockdown has been a big success – but some workers may still lose their jobs in autumn