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

While deaths continue, most people will stay at home out of choice, whatever the government does

Professor argues US president is stabbing citizens in back while pretending to be saviour

Polls finds majority would like ministers to prioritise health and wellbeing over GDP during coronavirus crisis

The mental and physical stresses caused by fear of layoff have left many workers feeling suicidal

The new Bank of England governor’s predictions about a swift bounce-back don’t inspire confidenceAndrew Bailey, the governor of the Bank of England, is only a few months into the job and already his reputation for sound management of the economy is in danger. Last week he published a scenario for the next two years that amounted to his best guess on the depth of the recession in front of us, and the prospects for a recovery.The recession would be deep, he said. Most likely the deepest in more than 300 years. It would last for much of the year and cause severe hardship to many, with increases in unemployment not seen since the 1980s.Carney was expert at conveying the sense of being one of a few wise heads able to comprehend the magnitude of a crisis Continue reading...

No other advanced nation denies healthcare and work protections, or loosens lockdown while fatalities mountNo other nation has endured as much death from Covid-19 nor nearly as a high a death rate as has the United States.Related: Donald Trump's four-step plan to reopen the US economy – and why it will be lethal | Robert ReichAround the world, governments are providing generous income support. Not in the USAmerican workers are far less unionized than workers in other advanced economiesRelated: Mothers will be hardest hit if the economy reopens too fast | Jessica ZuckerRobert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a columnist for Guardian US Continue reading...

Thatcher’s simplistic aversion to borrowing still haunts fiscal policy, but interest rates have been falling for many yearsIt is clear Boris Johnson has favoured his health advisers as he looks to ease the lockdown. Worries about a second coronavirus outbreak have clinched victory over concerns about keeping much of industry and commerce in a state of suspended animation.After weeks of pleading by the Treasury to get the nation back to work, No 10 has opted to play it safe with people’s health, and particularly older people. And no wonder, after a hapless first few months in which the UK leapt to fourth place in probably the most ignominious league table in modern history – that of Covid-19 deaths per 100,000 population – behind Belgium, Spain and Italy.There are too many savings in the world looking for a safe haven for the demand for bonds ever to fall Continue reading...

More than 20m Americans lost their jobs in April – and Friday’s report suggests there might be much more trouble ahead

Oil price rises and shares end week on a high despite growing economic damage from coronavirus pandemicGlobal markets rose on Friday despite mounting economic damage from the coronavirus pandemic, as tensions eased between the White House and Beijing.Share prices on Wall Street and in Europe ended the week on a high amid rising hopes that lockdown measures could be lifted soon to reboot growth and that a full-blown global trade war could be averted.Related: US Nasdaq index recovers all of 2020's losses triggered by Covid-19 Continue reading...

Business models reliant on maximum footfall are at odds with social distancing, leaving space for local shops and mutual aid

Former Bank of England governor attacks government’s response to pandemic

Unemployment rate rose to 14.7% from just 4.4% in March as the coronavirus pandemic shuttered the global economy

We celebrate VE Day with the need to forge new trading relationships and with the grotesque economic burden of the coronavirus

With biggest plunge in output in 300 years being predicted, we explore why the last great recession happened

Britain’s central bank warns that the spread of Covid-19 and the measures to contain it could wipe 14% off UK GDP this year

Bank outlines scale of Covid-19 shock in 2020 with forecast for deepest recession in 300 years

Pace of layoffs tests states’ unemployment benefits fund as 33m jobless Americans make claims in past seven weeks

We urgently need a fairer tax system so that rich people like me help solve the fallout from coronavirus, not just profit from it

Threadneedle Street says the economy hasn’t been as bad as this for 300 years – so it can only can get better

Recessions tend to centre on one part of the economy; coronavirus has hit them all. The road to recovery will be long

The Treasury cannot afford to spend £10bn a month indefinitely, but a cliff-edge end to Covid-19 wage subsidies is not the answerWhat’s the safest way for Rishi Sunak to wind down his wage-support furlough scheme? Well, start by finding the correct language. The imagery in the current political talk about “weaning” businesses off an “addiction” is absurd.When the chancellor introduced the coronavirus job retention scheme on 20 March, he said it was to “protect, as far as possible, people’s jobs and incomes”. There will be trouble if, less than two months later and with lockdown still in place, companies and their workers are portrayed as needy infants or addicts who should know better. Continue reading...

Rishi Sunak promises gradual end to coronavirus wage subsidies as concerns grow

Rolling coverage of the latest economic and financial news, as American companies slash payrolls at an unprecedented rate

Pandemic risks exacerbating economic and social divisions between countries

Climate advisers call for work and training in low-carbon heating, water efficiency and flood-protection

Greece’s former finance minister Yanis Varoufakis and Irish economist David McWilliams on the hope for a global new deal

UK’s 800,000 school leavers and graduates need jobs and education offers amid turmoil, says thinktank

Readers respond to John Harris’s article on how UBI could offer security to millions of peopleJohn Harris rightly points out that the need for a universal basic income is increasingly compelling (Why universal basic income could help us fight the next wave of economic shocks, 3 May). A problem that has dogged UBI is that it is perceived as a state handout and raises questions of how it will be paid for. But there is a morally just means of financing a basic income for all. Land is a gift of nature (the commons), which over the course of history has been appropriated into private ownership by the ruling minorities. Ownership of such a vital resource bestows on the rentier class owners enormous wealth, power and social advantage, to the disadvantage of the dispossessed majority.This unjust situation could be partly redressed through restoring the principle of the commons and imposing a rental charge on landholders (similar to a land value tax), with the revenue used to finance a UBI.

Fears ruling could undermine ECB’s authority to ward off the financial crisis and spell end of quantitative easing

Global economy heads for deepest recession since Great Depression as business comes to near standstill

Increasing links with US will aid recovery after coronavirus crisis, says Liz Truss

After nine weeks of confinement, Italians are back in the streets. But the most difficult decisions have yet to be made“We are living in the night of the virus,” wrote one academic, soon after Europe’s first Covid-19 lockdown was imposed in Italy. “Living in the dark, because it’s difficult to see what’s happening out there, since we are shut up in our homes.”On Monday Italians entered blinking into the light again, after nine weeks of more or less total confinement, enforced by a combination of fines and moral exhortation. As the prime minister, Giuseppe Conte, begins tentatively to reopen the economy, the employees of Ferrari and Lamborghini are returning to their factories, along with other workers in the manufacturing and construction industries. Shops will open in two weeks’ time; bars and hairdressers in June. Italians are able to exercise freely at last, stroll through late spring sunshine and visit relatives. Continue reading...

Rolling coverage of the latest economic and financial news, as investors worry about new trade war between Washington and Beijing

Health, making ends meet and job security among worries highlighted in ONS poll

Without $90bn in aid we will see soaring conflict, poverty, hunger and global instability. But a relief package is viable

The crisis has brought the economy to a near halt, and left millions of people out of work. But thanks to intervention on an unprecedented scale, a full-scale meltdown has been averted – for now. By Adam Tooze• Read the text version here Continue reading...

As previous crises have shown, prematurely halting economic stimulus would be very unwise“Those who cannot remember the past are condemned to repeat it,” George Santayana famously quipped in 1905. It is a phrase that has been repeated for over a century, but rarely heeded. As Covid-19 decimates the global economy, our understanding of history could be the difference between a V- or U-shaped recession and a W-shaped one, in which incipient recovery is followed by successive relapses.As recently as March, V-shaped recoveries in individual economies seemed plausible. Once infections and deaths had peaked and begun to decline, the logic went, people would eagerly return to work. Economic activity might even get an extra boost, as consumers released pent-up demand.Related: Ten reasons why a 'Greater Depression' for the 2020s is inevitableRelated: Economic recovery from the Covid-19 crisis will need a balancing act Continue reading...

Poll finds 90% of CFOs at big firms report high uncertainty with most forecasting a deep and prolonged downturnBusiness confidence at British companies has sunk to an all-time low because of the coronavirus pandemic, according to a survey of finance chiefs at the largest UK firms.The accountancy group Deloitte found that nine out of 10 finance directors believe there is a high or very high level of uncertainty facing their business. Continue reading...

What’s needed after Covid-19 is a bigger, smarter state, with more devolved decisions, a greener economy and a stronger safety net

The developed world’s response to the pandemic is imperilling health systems, economies and livelihoods already on the edge

The epidemic of 1918-21 is overshadowed by war and the Great Depression. But it holds lessons for us stillIt is a sobering thought that, according to the many well-researched accounts to have appeared in recent weeks, this Johnson/Cummings government seems to have been prepared to risk 250,000 deaths from the policy of “herd immunity”. This approach was, mercifully, laid to rest after the intervention of Professor Neil Ferguson, of Imperial College London, on 16 March. There followed the introduction of lockdown and what some of us prefer to call “physical distancing.”Commentators have been putting the 27,000 or more deaths in this country attributed to the virus so far in the context of the 60,000 civilian deaths recorded during the second world war. This is bad enough. But I wonder how many people are aware that during the “Spanish” flu epidemic of 1918-21, which followed the first world war, the estimated loss of life in this country was, well, 250,000?Sunak is doing his best to do the right, Keynesian thing with the economy, and has realised the importance of the state Continue reading...

US president escalates attack on Beijing’s handling of coronavirus pandemic

Each month controls are in place will cut 1.5% off annual growth, says consultancy firm

Rolling live coverage of business, economics and financial markets

Bank of England data shows sweeping changes to spending in March