UK and Europe face growing inequality with layoffs hitting non-university educated

Freeze on transactions will cut sales by 38% with wide-ranging knock-on effects for economy, warns leading agencyMore than 520,000 UK home sales will be abandoned this year, after the government ordered a temporary freeze on the housing market last month because of the coronavirus outbreak, research shows.The property consultancy Knight Frank said the 38% drop in the number of house sales in 2020 would have a ripple effect across the property industry, hitting retailers, removal companies and even government coffers. Continue reading...

Internationalism is weak, diluted by the Covid-19 pandemic and the fight for hegemony between China and the USThe International Monetary Fund was eerily quiet this week. Normally, the IMF’s two buildings in Washington DC would have been full of finance ministers and central bank governors gathered together to discuss the state of the global economy. This year, the meeting was a virtual yet still an important one: the most significant since the financial crisis.Piecing together the story of the spring meetings of the IMF is a bit like peeling the skin off an onion, with the health emergency caused by the Covid-19 pandemic the outer layer. Since it was created at the 1944 Bretton Woods conference, the IMF has seen many crises, but nothing like this one. Never before has it needed advice from epidemiologists to do the predictions for its flagship publication: the World Economic Outlook.Related: Will coronavirus shock the global economy into long-term thinking?| Larry Elliott Continue reading...

With most Gatwick flights grounded and a looming economic downturn, residents of West Sussex town fear for their jobs

After the war, a new, more just social consensus emerged. The same must happen now‘When sorrows come, they come not single spies, but in battalions.” So it seems with the economy. The world economy was slowing down before the onset of the virus, with many analysts forecasting a recession. The British economy was being held back not only by the repercussions of that, but also by the impact on business confidence in general and investment in particular of the mere prospect of Brexit.Then came the classic Yes Minister compromise: we officially left the European Union on 31 January, but we had a stay of execution – remaining in it for another year, but forfeiting, in yet another act of needless self harm, the right to have any say in its governance.This latest development is not so much an economic crisis as the result of a deliberate, if reluctant, act of government Continue reading...

Even faced with another great depression, wealthier EU countries are resisting action on debt that could ultimately keep the union togetherEurope’s leaders are worried – and rightly so. The deadly impact of Covid-19 has resulted in a full-scale health crisis. Evidence of the economic consequences of trying to keep populations safe from coronavirus is starting to emerge. The political ramifications are only starting to be assessed – but they could be profound.The European Union has found itself in some tight spots over the years, but always found a way of muddling through. It survived the financial crisis and will cope with Brexit. But this time things are a lot more serious. Continue reading...

Many Republicans believe economic relief for those without jobs encourages slacking off. But it is corporations that are bailed out again and againThe coronavirus relief enacted by Congress is barely reaching Americans in need.This week, checks of up to $1,200 are being delivered through direct-deposit filings with the Internal Revenue Service. But low-income people who have not directly deposited their taxes won’t get them for weeks or months. Worse yet, the US treasury is allowing banks to seize payments to satisfy outstanding debts.Related: Ignore the bankers – the Trump economy is not worth more coronavirus deaths | Robert ReichRobert Reich, a former US secretary of labor, is professor of public policy at the University of California, 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...

Big businesses and governments are fast making themselves inviolable. There could be a backlashA global wave of injustice could follow the global pandemic. Pre-existing tendencies towards monopoly, Chinese dominance and predatory capitalism will explode unless governments take measures to contain them. I accept that it is hard to imagine public fury at a rigged economy when voters are rallying to their leaders and lockdowns are enjoying overwhelming support. Solidarity cannot last, however, as the crisis accentuates the division between insiders and outsiders.You see them now. Employees with staff jobs, and the ability to work from home, are coping, for the moment. A few might experience lockdown as something close to a holiday and rhapsodise on the joys of home baking and box sets. As insiders stay inside, they save the money they would have spent in shops, restaurants, hotels and travel agents - the places where the insecure, the luckless nine out of 10 in the bottom half of earners who cannot work from home, once made their livings.Complaints about tax-exile billionaires wanting other people’s money are a warning Continue reading...

Even before coronavirus, today’s Conservatives had a far worse record than the infamous governments of the 1970s. And yet they’re still likely to win another election

Measures to combat Covid-19 may include face masks on transport, physical distancing in offices and sport without spectators

Chancellor moves swiftly to protect jobs after coronavirus lockdown extended by three weeks

Governor Andrew Bailey says ‘livelihoods are at stake’ as figures show only £1.1bn lent to small firms

Rolling coverage of the latest economic and financial news, as investors hope that a drug developed by American firm Gilead Sciences could treat Covid-19

Economic effects of lockdowns felt globally as depressed demand affects manufacturers

No, federal government spending doesn’t have to be ‘paid for’. The crisis shows providing for our society is not a financial issueOnly a month ago, a stimulus bill of $2tn would have been unthinkable. Indignant deficit scolds would have asked how one planned to pay for it, and complained about burdening our grandchildren with debt and bankrupting our country. Bernie Sanders bent over backwards to explain how he was going to pay for a Green New Deal or Medicare for All. These programs don’t seem as expensive any more. Suddenly the government is planning “helicopter drops” of cash. Larry Kudlow, who relentlessly attacked the Obama stimulus during the global financial crisis, is touting the current stimulus as “the single largest Main Street assistance program in the history of the United States”.Related: Not even Wall Street titans know the true cost of the coronavirus crisisOnce this crisis passes, the deficit scolds will be back at it, trying to put roadblocks in front of progressive policiesRelated: How coronavirus almost brought down the global financial system | Adam ToozeYeva Nersisyan is associate professor of economics at Franklin and Marshall CollegeL Randall Wray, author of Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems; Why Minsky Matters: An Introduction to the Work of a Maverick Economist; and Understanding Modern Money: The Key to Full Employment and Price Stability, is senior scholar at the Levy Economics Institute and professor of economics at Bard College Continue reading...

Banks offering loans will work through weekend so that scheme is ready for Monday

Activists say inclusion of oil firms’ debts in bond scheme breaks new governor’s promisesThe Bank of England has been accused of failing to live up to its tough talk on the climate crisis after it revealed it would buy debt from oil companies as part of its coronavirus stimulus programme.The oil firms BP, Royal Dutch Shell and Total are among the companies whose subsidiaries’ debts are eligible for the Bank’s bond purchases, according to an indicative list published on its website this week.Income subsidies Continue reading...

More than twenty million unemployment claims have been filed in the last month across America

International community can avoid large-scale humanitarian tragedy in vulnerable regionsDeclining coronavirus infection rates and plans to begin easing lockdown measures in some parts of the developed world have provided a ray of hope after weeks of unrelenting gloom. But, for many developing countries, the crisis may barely have begun, and the human toll of a major Covid-19 outbreak would be orders of magnitude larger than in any advanced economy. With the US having recently recorded more than 2,000 deaths in a single day, this is no trivial number. If the international community doesn’t act now, the results could be catastrophic.Sub-Saharan Africa is a case in point. Several countries there would face significant challenges in enforcing physical-distancing rules and other measures to flatten the contagion curve. The region’s already weak healthcare systems could thus quickly become overwhelmed by an outbreak, especially in a high-density area.Related: Donald Trump is wrong, the economic hit of the coronavirus will last for years Continue reading...

Fund says countries are right to boost spending but should ‘keep receipts’ to ensure transparency

A dig into the data on the business interruption loan scheme unearths several areas of concern

The state has had to pump in money to prop up a system in which too many people were hanging on by their fingertips

America’s manufacturers and retailers are hit hard by coronavirus shutdown, as retail sales also suffer record slump

Jeremy Cushing, Dr Michael Griffiths and Ian Watson sound warnings over a thinktank’s call to ditch the triple lock on pensions, but Mike Pender is in favour of it. Meanwhile, Malcolm Pugh says raising tax on unearned income makes more sense

Hospitality and construction also dealt heavy blow by pandemic, says OBR

The role of the digital revolutionaries is to disrupt everything but the central institution of modern life: the market

Officially 472,000 people in the state filed for unemployment – but the true number is much higher due to the failing system

Work and pensions secretary stirs up interviewer incredulity in show of slim grasp of – mostly everythingImagine you’re a cabinet minister and you get a late-night call from the communications team at No 10 telling you that you’ve drawn the short straw for the following morning’s media round. Most would mutter “oh shit” and reconcile themselves to a night without sleep as they try to come up with some vaguely convincing answers to possible questions about the government’s handling of the coronavirus pandemic. Some might even have switched on the news and realised that deaths in care homes had become a hot topic.Not Thérèse Coffey. She just mumbles a simple “sure thing” and settles down to a good night’s sleep, certain she can wing her way through any interview. Seldom has confidence been so badly misplaced. Last week in her only previous outing, the secretary of state for work and pensions managed to underestimate the number of people claiming universal credit by 200,000. Now she was planning on going full Priti Patel in her desire never to be asked to make another public appearance. Continue reading...

JP Morgan’s $8.3bn bad loan provision is steep but it’s guesswork – no one has a clue about the final billAn $8.3bn provision for bad loans is steep, even for JP Morgan Chase, the biggest bank in the US. Is it even roughly the correct number, though?Jamie Dimon, unrivalled titan of Wall Street, didn’t quite shrug his shoulders nor did he indulge his normal habit of assessing the state of the world for lesser mortals. The provision was taken because of “the likelihood of a fairly severe recession”, which is stating the obvious, but then his finance director said the reserves “could be meaningfully higher in aggregate over the next several quarters relative to what we took in the first quarter”.Related: JP Morgan sets aside $8.3bn to cover Covid-19 lossesRelated: Banks paid millions in bonuses weeks before ban on cash rewards Continue reading...

Unemployment could hit 10% by end of spring with public borrowing rising at fastest rate since WWII

UK hospital deaths rise by 778 to 12,107 amid questions over care home figures; forecast says unemployment could soar by 2 million

UK chancellor says way to bounce back from coronavirus crisis is to reboot growth across regions

Rolling coverage of the latest economic and financial news

Industry body says latest assessment is three times worse than ‘worst-case scenario’ just five weeks ago

Wall Street bank earmarks sum to cover credit cards and oil and gas sector lossesJP Morgan, Wall Street’s biggest bank, has put aside $8.3bn (£6.6bn) to cover potential loan losses as it braces itself for a “fairly severe recession” caused by the Covid-19 outbreak.The provision – much of which is earmarked to cover consumer credit card debts – is the biggest sum put aside for credit losses since the financial crisis in 2009. It resulted in JP Morgan’s earnings for the first three months of the year plunging 69% to $2.9bn compared with $9.2bn a year earlier. Continue reading...

Save the Children says banks, commodity traders and asset management firms should not extract money from poorest countriesCommercial creditors owed money by poor countries should only be eligible for government Covid-19 bailout cash if they agree to sign up to a comprehensive global debt deal, the head of one of the world’s leading charities has said.Despite signs that the G20 group of developed and developing nations are edging towards an agreement on help for the most vulnerable nations, Inger Ashing, chief executive of Save the Children International said the plan would only be fully effective if it included the private sector.Related: IMF has no experience of recession arriving with such ferocityRelated: IMF has no experience of recession arriving with such ferocity Continue reading...

Recovery will take some time as countries will exit Covid-19 lockdown only gradually

Latest World Economic Outlook describes shock of coronavirus pandemic as ‘like no other’

All generations should have to help pay for massive economic cost, says thinktank

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 ToozeIn the third week of March, while most of our minds were fixed on surging coronavirus death rates and the apocalyptic scenes in hospital wards, global financial markets came as close to a collapse as they have since September 2008. The price of shares in the world’s major corporations plunged. The value of the dollar surged against every currency in the world, squeezing debtors everywhere from Indonesia to Mexico. Trillion-dollar markets for government debt, the basic foundation of the financial system, lurched up and down in terror-stricken cycles.On the terminal screens, interest rates danced. Traders hunched over improvised home workstations – known in the new slang of March 2020 as “Rona rigs” – screaming with frustration as sluggish home wifi systems dragged behind the movement of the markets. At the low point on 23 March, $26tn had been wiped off the value of global equity markets, inflicting huge losses both on the fortunate few who own shares, and on the collective pools of savings held by pension and insurance funds.Related: ‘We can’t go back to normal’: how will coronavirus change the world? Continue reading...

Debt relief and massive economic support are needed in Africa, as developing nations cope with health and economic emergencies

So far we haven’t had the evidence to truly judge leaders and their coronavirus policies. With policies easing, we soon will

Consumer and business spending will stay cautious but the state can fill the gap. We must not turn off the taps too early, like in 2010Donald Trump tells us that once Covid-19 is contained and it is safe to go back to work, the economy will be “great again”. Is the US president right?There is at least one reason to think he is. After all, unlike a hurricane or earthquake, the pandemic has caused no damage to the physical capital stock. It follows, Trump and his advisers argue, that we can pick up where we left off. The economy took a time-out but now output will rebound swiftly to pre-crisis levels and growth will proceed as before.Related: The 2008 financial crisis will be seen as a dry run for Covid-19 cataclysm | Kenneth Rogoff Continue reading...

More than 60 poorer countries are spending more paying creditors than on health – study

Ministers face hideously difficult tradeoffs between curbing the menace of the coronavirus and the severe damage being done to the economy

The Bank of England’s extension of the ‘ways and means’ facility adds to a mountain of loans too big to be temporaryRishi Sunak avoided calling the Bank of England last week to beg for an extension of the Treasury’s overdraft facility to meet his Covid-19 spending commitments.The chancellor was saved that job by Andrew Bailey, the central bank’s governor, who saw the red flashing signs on the side of the Treasury’s headquarters from his Threadneedle Street offices almost three miles away. In a joint statement, the Treasury and the Bank said they had agreed to extend the use of the “ways and means” facility as a temporary measure during the disruption caused by Covid-19. Continue reading...

US death toll becomes the highest in the world; Italy and India extend lockdown

With the IMF and World Bank spring conference approaching, research underlines need to bail out world’s poorest countriesFor more than two years the World Bank and the International Monetary Fund have warned that sub-Saharan Africa stands on the verge of a debt crisis. Ever since commodity prices began to fall in 2015, the public finances of nations stretching from Nigeria to Kenya and Chad to South Africa have deteriorated.If China is the manufacturing centre of the world, Africa is its chief supplier of essential materials, from oil and copper to the rare-earth minerals used in mobile phones. As China’s manufacturing waned in the middle of the last decade, so did the crucial foreign earnings that keep African nations afloat. Continue reading...

It may be months before official figures reveal the extent of decline – so analysts are using proxy data to measure it