Big businesses will soon be asking taxpayers for even more financial support. Let’s set out principles for who should get funds and howOne day, a billionaire; the next, a human dartboard. The attacks on Sir Richard Branson after he implored the UK government to give a £500m bailout to his Virgin Atlantic airline have been sharp and stinging. To the tycoon they must also have been unsurprising, since he knows there are powerful criticisms of state handouts to big business. Indeed, some have been made by none other than Sir Richard Branson. When, in 2009, arch-rival British Airways begged Gordon Brown’s government for help, he opposed any such intervention. “We should wait for its demise,” he proposed, arguing that “loss-making and inefficient airlines should be allowed to go to the wall”.Barely a decade later, the businessman appears to have changed his mind and so gifted the world a case study in hubris. Yet the huffing and puffing over this one heavily branded mendicant should not drown out a more significant fact: many big businesses will soon be knocking on Rishi Sunak’s door asking if the chancellor can spare a few hundred million. That will be on top of the hundreds of billions already set aside for loans, grants and support for industries such as fishing. Companies that may have been perfectly sound before this pandemic have now run aground; others that were struggling in 2019 now face complete collapse. The question for Westminster is which companies to support and on what terms. Which makes now a vital time to set out some principles for such bailouts. Continue reading...
Pace of job losses appears to be slowing but figures increase and many people yet to receive benefits as backlog hits US systemAnother 3.8 million people lost their jobs in the US last week as the coronavirus pandemic continued to batter the economy. The pace of layoffs appears to be slowing, but in just six weeks an unprecedented 30 million Americans have now sought unemployment benefits and the numbers are still growing.Related: Back to the future: are drive-in theaters the future of safe cinema trips? Continue reading...
Ominous and risky trends were around long before Covid-19, making an L-shaped depression very likelyAfter the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lacklustre U-shaped recovery this year, an L-shaped “Greater Depression†will follow later in this decade, owing to 10 ominous and risky trends.The first trend concerns deficits and their corollary risks: debts and defaults. The policy response to the Covid-19 crisis entails a massive increase in fiscal deficits – on the order of 10% of GDP or more – at a time when public debt levels in many countries were already high, if not unsustainable.Related: Economic recovery from the Covid-19 crisis will need a balancing actRelated: Donald Trump is wrong, the economic hit of the coronavirus will last for years Continue reading...
Pandemic spotlights racial disparities, with black workers expected to feature disproportionately in the 26m recent unemployment claimsJust two months ago in the Cabinet Room of the White House, sitting at a table surrounded by a handful of his black supporters, Donald Trump once again praised his job creation record. “Black people right now are having the best, statistically, the best numbers that you’ve ever had, and it’s really an honor,†he said. “Nobody has done more for black people than I have. Nobody has done more.â€That was 27 February and Trump was also still claiming he had done an “incredible job†with the looming coronavirus pandemic. Now the virus has led 26 million Americans to file for unemployment. While the US Bureau of Labor Statistics will not release unemployment figures broken down by race until the beginning of next month, economists are certain that black Americans are suffering the brunt of Covid-19’s economic impact and will probably suffer the most dramatic consequences of the looming recession. Continue reading...
The pandemic has necessitated huge borrowing – but post-crisis austerity would be the very worst way to deal with itWe do not know how this pandemic will end. We do know that we will be poorer when it’s over: GDP is plunging around the world.We also know that there will be a towering pile of IOUs left from the bills run up during the crisis. When it is over we will have to figure out how to repay them – or whether to repay them at all. That question will decide the complexion of our politics, and the quality of our public infrastructure and services for years to come. Unless we tackle this issue, coronavirus debts will be the battering ram for a new campaign of austerity.Related: In the midst of an economic crisis, can 'degrowth' provide an answer? | Lola Seaton Continue reading...
Salley Vickers is horrified at the thought of being incarcerated for a year because of her age, Bob Wolfson considers the big picture, and Ashley Seager says the young have proved themselves to be the packhorse heroes of the pandemicI read with horror (Coronavirus: what would a year of physical distancing mean for the UK?, 23 April) that I am likely to be incarcerated for a year because of my age (71). If this proposal were to be made law, I would immediately seek to crowdfund a legal challenge on the grounds that 1) there is no power in the Public Health Act to lock down people not reasonably believed to be infectious, and 2) that this would be disproportionate to the danger, and discriminatory, and therefore contrary to the human rights convention.Unless one suffers from a form of dementia, age does not impair one’s wits – over-70s with impaired health can be relied upon to take proper precautions. If, however, like me, they are healthy and in their right minds, they should be allowed their freedom like anyone else. There are no laws against dangerous sports, and it is many years since suicide was a criminal act. Continue reading...
My father, Wilfred Beckerman, who has died aged 94, was a renowned economist who combined a distinguished academic career, primarily as fellow of Balliol College, Oxford, with equally influential periods as an economic adviser for government. He was highly active (skiing into his 80s), a twinkly-eyed man with a good sense of humour whose love of learning and intellectual debate never left him.Born in London, the fifth of six children of poor Jewish immigrant parents, Moishe, a tailor, and Mattl, a seamstress, he left school at 15 but continued to study in his spare time. In 1943, aged 18, he joined the Royal Navy and quickly rose to officer rank. Having persuaded the LSE to let him briefly study there before joining up, despite not having the required academic qualifications, he was then eligible for the government’s scheme to allow ex-servicemen to complete their tertiary education free after the war had ended. Continue reading...
As 26 million Americans lose their jobs, the billionaire class has added $308bn to its wealthNever let a good crisis go to waste: as the coronavirus pandemic sweeps the world, America’s 1% have taken profitable advantage of the old saying.Some of the richest people in the US have been at the front of the queue as the government has handed out trillions of dollars to prop up an economy it shuttered amid the coronavirus pandemic. At the same time, the billionaire class has added $308bn to its wealth in four weeks - even as a record 26 million people lost their jobs.Related: Coronavirus has made Amazon a public utility – so we should treat it like one | Wendy Liu Continue reading...
Behavioural economics is being abused by politicians as a justification for flawed policies over the coronavirus outbreakI first came across “nudge†– the concept many consider to be the pinnacle of behavioural economics – at a thinktank seminar a little over 10 years ago. We were all handed a mock wine menu and asked what we’d order.This was supposed to illustrate that most price-aware diners order the second-cheapest bottle to avoid looking tight and that restaurateurs use this to nudge us towards the bottle with the highest markup. I remember thinking it an interesting insight, but that these sorts of nudges were nowhere near as likely to transform the world as their enthusiastic proponent claimed.A report on applying behavioural insights to domestic abuse included not one survivor's voice Continue reading...
While EU leaders argue over the need for coronabonds, the Federal Reserve and Congress are protecting their economyThe US model of capitalism is deeply flawed. It is highly unequal, and an inadequate welfare system means that millions of people are either living in poverty or constantly teetering on the edge. Citizens of the EU have it cushier, with more generous pensions, unemployment pay and in-work benefits.But as the events of the past month or so have shown with brutal clarity, in a crisis the American system works better. It is more flexible, more innovative and much faster to act. The Federal Reserve in Washington has acted more speedily and provided more stimulus than the European Central Bank in Frankfurt, but the contrast has been even more marked when it comes to fiscal policy – the tax and spending measures for which governments are responsible. Continue reading...
Despite the global recession triggered by coronavirus, the conditions exist to address inequality and raise living standardsThere are reasons for optimism as the UK economy and much of the rest of the world plunges into recession. That might seem like a bizarre statement when the recession is forecast to be the deepest in several centuries.Yet there are several arguments for remaining hopeful. Looking back, it is clear that previous pandemics have reduced inequality. And this one could, at least in the short term, be no exception. As the Nobel prize-winning economist Sir Angus Deaton has written: “It is an equal opportunity infection that does not pass over world leaders, senior politicians and celebrities.†Continue reading...
By helping to solve a short-term funding crisis, ministers could signal their plans for a national recoveryThere is no reason why Britain’s universities should suffer permanent damage as a result of coronavirus. But, like many other institutions, they will need support in order to avoid it. The immediate issue is the present. The deaths from Covid-19 of people such as Ade Raymond, who was studying for a nursing degree at Middlesex university, will leave big gaps.On top of such personal losses comes the virus’s wider impact. While lectures and teaching continue online, the removal of access to libraries and laboratories, and, above all, to people, takes a toll – particularly on students in their final year, or on one-year courses. Following February’s strikes, some will feel they have lost half a year of their higher education. Those reliant on income from casual work (often in retail or catering), or tied into rental agreements for shared houses, risk increased debts and other hardships. Continue reading...
Degrowthers are susceptible to caricature – but their ideas raise important questions about how, how much, and why we workAmid the misery and chaos caused by the coronavirus pandemic, there are some short-term consolations. The precipitous drop in road and air traffic has left the air cleaner and the skies clearer. For advocates of a Green New Deal (GND) – a vast, state-funded green infrastructure project, including a total transition to renewable energy and the construction of mass transit systems – there are reasons to be optimistic. As the severity of the unfolding global recession becomes clear – the IMF predicts a 3% global contraction – the GND looks like the best route to recovery.Related: Could Microsoft’s climate crisis ‘moonshot’ plan really work?Lola Seaton is assistant editor at New Left Review Continue reading...
April’s PMI data suggests the country will not bounce back quickly after the coronavirus lockdownTake your pick for which number was more shocking. Was it the reading of 12.9 on the PMI survey of UK business activity in April, a figure that was many degrees worse than any recorded during the 2008 financial crash? Or was it the quadrupling of the government’s borrowing requirement to an astonishing £180bn over the next three months?The dire numbers go hand-in-hand, obviously, but here’s the really worrying part for government: the detail in the PMI data, where a number below 50 suggests contraction, offered no support to the hopeful idea that the recovery will be rapid and V-shaped. Instead, the employment index plunged, suggesting the Treasury’s various schemes to protect jobs are having only a limited impact. The much-feared “scarring†of the economy may be happening already.Related: Business Today: sign up for a morning shot of financial news Continue reading...
For distancing reasons we are minimising the number of people on the campsite so only have room for those who have worked for us before, but we are keen to recruit local people and have been in touch with many, writes Andrew Chesson
by Richard Partington Economics correspondent on (#52HZF)
Borrowing for just four months nears annual peak figure for 2009-10 financial crisis as coronavirus ravages economyThe government plans to borrow £225bn from bond market investors in just four months to fund the huge increase in public spending during the coronavirus pandemic.In an early indicator of the soaring financial costs of the crisis, the Treasury said its debt management office – which sells bonds to finance the government’s spending requirements – would offer investors £180bn worth of gilts to buy between May and July, on top of £45bn already planned for April. Continue reading...