Friday 13 March 2020

The economic consquences of C-19

If you take a couple of weeks off work, that won't affect the economy. If a million people take weeks off, that has a big effect.

You'll have heard that the stock market has plummeted; that's because people are expecting profits to fall. Or even turn into losses.

Airlines are being hit very hard; they have to pay their staff and service their loans in the face of demand falling off a cliff. Some staff might be let go.

If schools are closed, then parents will have to find childcare, so a lot of parents will have to stay at home.

The hospitality industry (tourism, hotels, restaurants, pubs etc) is already hard hit; that will get worse.

People taking time off work to self-isolate will get sick pay (unless they don't; self-employed people won't). The sick pay comes from businesses who are seeing a fall in demand, and an absent work-force. Many small businesses won't survive, especially those that are already struggling.

I believe we should expect a major fall in economic activity. Brexit is a hiccup compared to this.

Bottom line? You can hold me to account at this time next year.

This is a cull on the weak, both in terms of health and the economy.

In the UK, half the population will be infected, most will recover. Fatality rate will be a million deaths; mostly those with poor health (especially respiratory problems) and the elderly. I'm hoping that I won't be one of that one million.

Unemployment today is 3.8%. I would not be surprised if it rose to 10% or even more, with a GDP contraction of 10 or 15%.

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