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

It is not just the obvious candidates whose shares have fallen – there is now a fear of financial contagionYou’d expect Larry Summers, former US Treasury Secretary under President Bill Clinton and adviser to President Barack Obama, to twist the knife, and he did so stylishly. By destroying “about $500bn in equity market value in course of an 11-minute speech”, President Donald Trump had set “what I believe is a new world record for presidential market value destruction”.Fair point. Trump’s ban on flights from 26 European countries lacked rhyme or reason. It runs counter to the World Health Organization’s advice and virtually guarantees the economic hit to the US will be intensified. More to the point, the president said virtually nothing about how the US will construct its healthcare response to the pandemic.Related: Business Today: sign up for a morning shot of financial news Continue reading...

Christine Lagarde delivered a disappointing set of measures to mitigate the impact of coronavirusFor Christine Lagarde, it was the moment to stamp her authority on the European Central Bank – and she blew it.Back in 2012, Mario Draghi announced his arrival at the ECB with his now famous “whatever it takes speech”: a commitment to use all the weapons at the bank’s disposal to halt a run on Italian and Spanish bonds that was threatening the existence of the eurozone.Related: ECB announces plan to help eurozone banks withstand coronavirus Continue reading...

Thinktank expressed some disapproval but Sunak can count himself relatively luckyIt is part of budget tradition that the chancellor gets a kicking from the Institute for Fiscal Studies 24 hours after presenting his package to parliament. By that token, Rishi Sunak can count himself relatively lucky.The UK’s leading tax and spending thinktank certainly had its criticisms of the budget but, given Sunak’s decision to spend and borrow hundreds of billions of pounds extra over the coming years, it could have been a lot worse.Related: An end to austerity? It’s a nice line – but one budget can’t undo the damage | Simon Wren-Lewis Continue reading...

Yes, George Osborne’s calamitous public spending cuts have been halted by Rishi Sunak. But the chancellor hasn’t reversed themDid Rishi Sunak’s budget mark an end to austerity? It wouldn’t be the first time. During the past three years, successive government budgets have supposedly “ended austerity”. So why is it that the end of austerity never actually arrives?Related: Johnsonism’s first budget is floating on hype and hot air | Aditya ChakraborttyRelated: Rishi Sunak’s big-spending budget throws Labour a huge challenge | Martin Kettle Continue reading...

Thinktank praises Covid-19 response but says ‘splurge’ relies on already announced plansRishi Sunak’s first budget is not as generous as it seems and many Whitehall departments will still be worse off than they were before the spending squeeze began in 2010, according to Britain’s foremost economics thinktank.The Institute for Fiscal Studies said the chancellor made the budget sound more substantial than it was, while relying on previously announced spending plans.Related: An end to austerity? It’s a nice line – but one budget can’t undo the damage | Simon Wren-LewisRelated: Sunak's spending plan will increase net debt by £125bn, says OBR Continue reading...

Politicians have more power over the economy than they like to admit. The chancellor is deploying his to the fullI am used to being astonished by Conservative budgets. Towards the end of my time as a special adviser to Vince Cable under the coalition, I was incredulous at how the then chancellor, George Osborne, was willing to threaten years more of cuts, despite having already slashed spending across the “non-protected” departments. Never mind whether the economy could take it, or the bond markets demanded it – this was no longer cutting fat or even muscle, but bone.Now I stand equally astonished, but this time for the opposite reason. The figures produced by Rishi Sunak in his first outing as chancellor might have come from a Conservative attack document titled “Labour’s secret plans to borrow hundreds of billions”. Glance over the budget measures table and you can find promises to spend an extra £175bn over five years, and raise just £25bn of that in tax. And this not just for cherished projects like the doubling of R&D or an infrastructure revolution – this is a chancellor willing to bandy around phrases like “fiscal stimulus”. The once-heretical idea that public spending might boost the economy is back with a bang.Related: Rishi Sunak’s big-spending budget throws Labour a huge challenge | Martin Kettle Continue reading...

Pessimistic analysts say this week’s crash might be the start of a global ‘bear market’. What have bears got to do with the market?Stock markets crashed this week on the twin shocks of coronavirus projections and an oil-price war between Saudi Arabia and Russia. Pessimistic analysts said this might be the start of a global “bear market”. But what have hairy quadrupeds got to do with it?This is one of those terms for which the internet offers various competing “folk etymologies”, which is the linguist’s polite term for nonsense. Bear markets are named because bears attack by swiping their paws downwards? No. The origin in fact lies in the old proverb warning that you shouldn’t sell a bear’s skin before you have caught the bear. In the 18th century, speculators who did sell borrowed commodities before they had paid for them – in anticipation of profiting from a fall in price – were therefore called “bearskin jobbers”, later shortened to “bears”. Continue reading...

US stock markets have been on an unprecedented streak since 2009, a bull market of gainsWall Street’s record-breaking 11-year “bull market” came to an end on Wednesday as fears about the spreading Covid-19 pandemic hit stock markets again.US stock markets have been on an unprecedented streak since 2009, a bull market of gains. On Wednesday investors sold off shares across all sectors after the World Health Organization declared the outbreak a pandemic for the first time and criticized “alarming levels of inaction” by governments in corralling the virus.AP contributed to this story Continue reading...

Former PM and ex-chancellor lead charge of MPs worried about impact of spending hikeTheresa May, the former prime minister, and Sajid Javid, who was chancellor until last month, sounded warnings over the level of spending in the budget, stressing the continued need for fiscal discipline. May led the charge of backbenchers apprehensive about the long-term impact of the public and capital spending hike.In a debate in the Commons after Rishi Sunak delivered his first statement, she said: “Although spending a lot of money may be popular and may seem the natural thing to do, there is of course that necessity to have a realistic assessment of the longer-term impact of those decisions and of the longer-term consequences.Related: 2020 budget: the Guardian panel’s verdict | Polly Toynbee, Katy Balls, Tom Kibasi and Miatta FahnbullehRelated: Sunak delivers budget bonanza: Politics Weekly podcast Continue reading...

Such good intentions will only be truly tested if the economic fallout becomes severe

Chancellor triples investment in transport and infrastructure spending, freezes fuel and alcohol duties, and removes VAT on digital publications

If it’s possible to secure incomes due to coronavirus, why can’t we help families who can’t access healthy food?This was no ordinary Conservative budget – but these are not ordinary times. In his first budget since taking office a month ago, Rishi Sunak was ebullient as he stated that this government would spend and invest “what it takes” to drive productivity and growth, and “level up” the country. His plan to address the economic impacts of coronavirus was comprehensive, clear in its understanding of the nature of the threat, and included many commendable measures – from making it easier to access statutory sick pay and benefit payments, to helping small businesses cover sick pay costs, though the TUC has called for greater support for low-paid workers. Many of today’s proposals could have come from a Labour chancellor.That said, in a budget proclaiming an intention to “get things done”, there were some major omissions. Coronavirus may be the most immediate crisis facing the UK, but it is far from the only one: we face a climate emergency; our public services – especially those run by cash-strapped councils – are at breaking point; and for too many, the economy is not delivering security or hope. The chancellor’s budget fell short of the mark on these.It was perhaps inevitable that on support for social care services the can was, as ever, kicked down the roadRelated: Road to hell: budget tarmacs over climate ambition Continue reading...

Will you be better off? Find out what effect the tax and spending plans will have on your personal finances Continue reading...

Extra £2.6bn is for capital projects only, with no new funds for maintaining existing defencesExpenditure on flooding will be doubled, the chancellor has announced in the budget, but analysis has revealed that the figure is less generous than it seems. Spending will be increased to £5.2bn for the period from 2015 to 2021, but the extra £2.6bn that includes will be for capital projects only, with no extra funds for maintenance.From the financial year 2015-16 to 2018-19, spending on flood defences was just over £3bn, and a further £815m was allocated for the financial year about to end. That comes to £3.9bn, of which about £1.3bn went on the maintenance of existing flood defences and other routine tasks. Continue reading...

Labour leader says Rishi Sunak’s spending plans will not make up for 10 years of cuts

Rishi Sunak delivered his first budget in extraordinary circumstances. What do the measures he announced mean? Continue reading...

Rishi Sunak provides biggest boost to public investment for several generations

A £30bn package to stimulate the economy was announced by Rishi Sunak as the government and Bank of England sought to protect jobs and livelihoods against the coronavirus crisis. Here are the main measures set out by the chancellor:

Rishi Sunak has delivered his budget – here are the main points, with political analysis