As car sales plunge by almost half lenders offer repayment breaks or waive interest to halt ‘handbacks’Fears are growing of a crisis in the UK’s £75bn car loan market, where 6.5m vehicles have been financed through leasing deals with monthly payments that are already proving unaffordable for some laid-off as a result of the coronavirus.The Finance and Leasing Association (FLA), which represents the credit arms of the car manufacturers as well as the banks, said: “It’s early days in terms of quantifying the impact on arrears, but the number of forbearance requests has grown significantly in recent weeks.â€Related: Sub-prime cars: are car loans driving us towards the next financial crash? Continue reading...
Shares have bounced back but it’s too soon to call the bottom for prices in the Covid-19 pandemicHave we seen the bottom for stock markets? It is tempting to believe so after two days of fast action as investors have responded to the welcome sight of flatter coronavirus curves in Italy, Spain and Germany.Some of the gains in individual stocks – those that had fallen the furthest – have been stunning. Speedy boarders could have made a 27% return in 48 hours by buying shares in easyJet first thing on Monday morning. In the same short period, Rolls-Royce, the engine-maker, gained 24%. Like easyJet, it was able to unveil a self-help strategy involving more borrowing.Related: FTSE shrugs off dire UK data as markets sense easing of Covid-19 crisis Continue reading...
If international community wants to avoid wave of Covid-19 defaults it needs to start rescue planAs it spread from one country to another, the coronavirus paid no attention to national frontiers or “big, beautiful†border walls. Nor were the ensuing economic effects contained. As has been obvious since the outset, the Covid-19 pandemic is a global problem that demands a global solution.In the world’s advanced economies, compassion should be sufficient motivation to support a multilateral response. But global action is also a matter of self-interest. As long as the pandemic is still raging anywhere, it will pose a threat – both epidemiological and economic – everywhere.Related: Now the world faces two pandemics – one medical, one financial | Robert Shiller Continue reading...
Letter calls for $8bn emergency fund to bolster health systems in world’s poorer countriesA group of 165 global leaders has called for immediate and coordinated international action to tackle the twin health and economic emergencies caused by the Covid-19 pandemic.Past and present politicians – including three former UK prime ministers – joined academics and civil society representatives to warn the G20 that the virus will return unless urgent action is taken to bolster health systems in poor countries of Africa and Latin America. Continue reading...
When millions face an uncertain employment future, a federal jobs guarantee program could turn the page on a dark chapter of our nation’s historyLast week, more than six million people applied for unemployment, the largest jump in unemployment claims in our country’s history. The Federal Reserve estimates that the Covid-19 pandemic could lead to 47 million Americans losing their jobs in the weeks to come. With little hope of being re-hired, these workers will struggle to stay healthy, feed their children, and pay rent on the meager, one-time $1,200 check authorized by the most recent federal stimulus package.At the same time, we face the consequences of starving our public infrastructure. Our cities are deficient in resources and underprepared for a pandemic epidemiologists have been warning government officials would be coming. Despite claims that ours is the best healthcare system in the world, our hospitals and nursing homes do not have sufficient masks, gloves, protective gear, flu tests, ventilators, hand sanitizer, or disinfectant wipes to protect either their own staff or their patients. We need workers to produce these essential products.No factory should be standing idle through a healthcare crisis. Failing to use these resources during a deadly pandemic is unacceptableCassandra Robertson, PhD, is a postdoctoral fellow at the Cornell Population Center, where she researches economic mobility and social policy.Holly Wood, PhD, is an independent scholar, writer and activist. Continue reading...
We are told by everyone from the United Nations to Donald Trump that the US is a ‘developed’ economy. The statistics suggest otherwiseWhen Susan Finley developed flu-like symptoms, she didn’t go to the doctor because she was frightened about the cost. Finley’s grandparents later found her dead in her apartment. She was 53.Finley did not die as a result of Covid-19. She died in 2016 as a result of America’s healthcare system – a system that led her to avoid treatment for the common flu in order to avoid debt. It is that same system that is currently creaking under the pressure of a pandemic that experts warned was coming but governments failed to prepare for. It is a system that does not qualify for the term “developedâ€. Continue reading...
Coronavirus has changed Britain’s social and political orthodoxies. But not every crisis results in a revolutionAs a classical scholar, our prime minister will be all too aware of some uncanny parallels between the onset of coronavirus and the plague that beset Athens in 430BC.The immortal historian Thucydides wrote: “At the beginning the doctors were quite incapable of treating the disease because of their ignorance of the right methods … In fact, mortality among the doctors was the highest of all since they came more frequently in contact with the sick.â€The end of capitalism? I doubt it. The Tories suddenly becoming fully paid-up Keynesians? For how long, I wonder Continue reading...
The new ‘Cbils’ scheme is much improved. But many of its shortcomings could have been identified at the startBanks are wicked and Rishi Sunak walks on water. That, at least, was the narrative that prevailed until the end of last week. The dashing new chancellor, the cabinet star of the coronavirus moment, had assembled the Treasury’s armoury to provide lending to British businesses on unprecedented scale. It was only the damn banks that were stopping the cash reaching intended recipients.This storyline now looks wrong. Sunak and the Treasury’s “further actionâ€, announced on Thursday night to support struggling British firms, was not a mere tweak. It was a sweeping redesign of a lending scheme that had glaring flaws.Some banks were asking for guarantees at launch; some weren’t. No wonder borrowers were angry Continue reading...
by Kalyeena Makortoff (earlier) and Jasper Jolly on (#51N86)
Live coverage as American payrolls data shows big rise in unemployment, after composite PMI data shows UK business activity sunk to a record low in March following the Covid-19 lockdown
Blame for the crash | MPs’ votes on pay rises for nurses and themselves | Beards and PPE for doctors | Feast or Famine? | Key worker Steve BellI agree with Larry Elliott (Blaming Labour won’t work this time – the Tories will have to own this crisis, 3 April) that the true villains of the 2008 financial crash were never punished, and that their misdeeds indirectly resulted in our being unprepared for the current pandemic. I suggest we all open our windows this evening and boo for the bankers.
Though it has not been officially declared, we are already in a deep recession that will get deeper before it gets betterThis week the US labor department released data on initial unemployment insurance (UI) claims, showing that UI claims jumped from 211,000 in the week ending 7 March 2020 6.6 million in the week ending 28 March. This is more than a 3,000% increase in three weeks. In fact, every state in the country reported its highest initial claims ever either last week or the week before. Over the last two weeks alone, nearly 10 million workers have filed unemployment insurance claims. And given that health insurance is tied to work for so many, we estimate that 3.5 million workers likely also lost their health insurance in the last two weeks. The grief and suffering behind these numbers is incomprehensible. Though it has not been officially declared, we are certainly already in a deep recession that will get deeper before it gets better.Related: As the numbers of dead and unemployed grow, Trump looks and sounds smaller | Richard WolffeHeidi Shierholz is director of policy at the Economic Policy Institute and served as chief economist at the US Department of Labor Continue reading...
Conservatives laid post-2008 damage at the opposition’s door. This time they will be held accountable for how prepared Britain wasThroughout history, pandemics have often had profound economic effects. The most famous of all, the Black Death of the mid-14th century, wiped out between a third and two-fifths of the population of western Europe. The labour shortages that followed are credited with hastening the end of the feudal system.Covid-19 is nowhere near as deadly as the Black Death, but the shock it has dealt to an already vulnerable global economy has been immense. Perhaps inevitably, there is talk of life never being the same again. Continue reading...
by Graeme Wearden (earlier) and Jasper Jolly (now) on (#51KEH)
Rolling coverage of the latest economic and financial news as oil prices jump by more than 30% and the US jobless report reveals scale of coronavirus damage
by Dominic Rushe and Lauren Aratani in New York on (#51KW1)
US sees second major unemployment rise as millions working in retail, restaurants, and travel lose jobsMore than 6.65 million people filed for unemployment benefits in the US last week, the latest official figures to highlight the devastating economic impact of the Covid-19 pandemic on the American economy.The federal labor department announced that a new record number of people sought benefits after losing their jobs in the week ending 27 March as long lines formed at unemployment offices, phone lines jammed and websites collapsed under the weight of claims across the US.Related: What US unemployment benefits can I get during the coronavirus? Your payment options explained Continue reading...
Change is coming to the UK, when this crisis is over. Unless progressives have a plan, they will lose out like they did in 2008It can take a grave national crisis to fire a flare, revealing the ugliest features of a society defined by injustices that the wealthy and powerful would rather forget. It took the second world war to achieve what the Jarrow hunger marches of the 1930s struggled for: to illustrate the national shame that millions of people who were called upon to make grand sacrifices were afflicted by poverty and malnourishment. As child evacuees with hungry bellies arrived on the doorsteps of the relatively well-to-do, the other Britain could no longer be ignored. “A revolutionary moment in the world’s history is a time for revolutions, not for patching,†declared William Beveridge as he laid the foundations for the postwar welfare state. Unprecedented state direction of the economy meant that Labour’s ambitious programme of nationalisation no longer seemed quite so scary. The old order perished in the rubble of war-ravaged Britain.Coronavirus has done two things: it has magnified existing social crises and has proved that the government can act decisively when the will is there. Millions are only ever one pay packet away from destitution; the self-employed and gig economy workers lack security and basic rights; private tenants are at the mercy of their landlords; our welfare state is woefully inadequate; and many designated “key workers†are desperately undervalued and badly paid. Who, in good faith, can now blind themselves to these grim truths?Related: Young people have paid enough – spare them from footing the coronavirus bill | Gaby Hinsliff Continue reading...
by Richard Partington Economics correspondent on (#51GAS)
Low Pay Commission says cost of fighting coronavirus pandemic endangers flagship pledge to raise national living wage to £10.50 an hourThe government has been warned it could be forced to abandon targets for ending low pay in Britain by raising the legal minimum wage, as the economic costs of Covid-19 mount.The Low Pay Commission, the independent body which advises ministers on legal wage floors, said the government target to increase the national living wage to two-thirds of average earnings by 2024 could be in danger.The national living wage is the minimum wage that must be paid to workers in the UK, and it came into effect on 1 April 2016. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#51H8W)
Lenders asked to scrap cash bonuses for 2020 in order to help ease the impact of financial turbulenceBritain’s largest banks have agreed to scrap nearly £8bn worth of dividends in light of the coronavirus crisis, giving banks an additional cushion to weather an economic downturn.The Bank of England has also ordered lenders to cancel plans for cash bonuses for executives, as it asked financial institutions to boost their strength ahead of a likely recession.Related: UK payday lenders start suspending new loans in Covid-19 crisis Continue reading...
by Richard Partington Economics correspondent on (#51H05)
Speed of US stock market fall outstrips even 1929 Wall Street crash, reflecting global scenarioThe FTSE 100 has posted its biggest quarterly fall for more than three decades amid the financial panic caused by the coronavirus, as the economic costs of the global health pandemic continue to mount.The leading index of UK company shares plunged by 25% in the three months to the end of March, the biggest quarterly contraction in London-listed share values since the aftermath of Black Monday in October 1987.Related: The stock markets have rallied, so is peak panic over?Related: China gets mixed results in its attempt to lift lockdown Continue reading...
In the past fortnight an optimism of sorts has returned but the rebound rests in part on some pretty heroic assumptionsAt the end of the first quarter of the year, stock market investors are counting their losses. The FTSE 100 index has fallen 25% since the turn of the year, its worst single quarter since 1987. The financial crisis of 2008, around the collapse of Lehman Brothers, ran for several quarters and should still be considered more severe. But, whatever your yardstick, 2020 so far has been brutal for equity investors, which includes most people with a pension plan.Narrow your focus to the last couple of weeks, however, and the picture looks different. You could almost believe normal life has returned. The FTSE 100 overall has risen in seven of the last nine trading days, and in eight of the last 12. And, if you caught the bottom, congratulations: you could have made about 16% in three days.Related: Coronavirus pandemic has delivered the fastest, deepest economic shock in history Continue reading...
Contrary to what Donald Trump would like to believe, such a pandemic was predicted last yearEvents like the Covid-19 pandemic, the US housing-market crash of 2007-09 and the terrorist attacks of 11 September 2001, are often called “black swansâ€. The term is meant to suggest that no one could have seen them coming. But, in fact, these episodes each involved known unknowns, rather than what the former US secretary of defence Donald Rumsfeld famously called “unknown unknownsâ€.After all, in each case, knowledgable analysts were aware not only that such a thing could happen but also that it was likely to happen eventually. Although the precise nature and timing of these events were not predictable with high probability, the severity of the consequences were. Had policymakers considered the risks and taken more preventive steps in advance, they might have averted or mitigated disaster.Related: Coronavirus forces economics profession to leave comfort zone | Mohamed El-Erian Continue reading...