The Economic Impact of COVID So Far: Is Coronavirus Causing a Global Recession? – TLDR News

by birtanpublished on June 29, 2020

hello and welcome to another TL DR video

as some countries are beginning to lift

their lockdowns and as some semblance of

normality begins to return for some the

epidemiological crisis has been

overtaken by an impending financial one

the lockdown ground economic activity to

a halt companies of collapse or on the

brink of doing so and GDP has fallen in

many countries by astronomical numbers

with UK experiencing what's expected to

be the largest fall in GDP in the post

Second World War era so in this video

we'll be taking a look at the economics

of kovat what's on the horizon and how

concerned we need to be about the future

of the economy before you get into that

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getting all of the content from us it's

no secret that the virus has had major

effects on economies globally starting

in China there was a substantive

supply-side shock as the Commons library

briefing puts it as the outbreaks spread

around the world the scope economic

damage widened considerably global

supply chains ground to a halt as parts

became hard to source and factories had

to go into lockdown workers started

taking time off either due to having the

virus or to self isolating schools

closed suddenly forcing parents withdraw

from work to provide child care and

finally non-essential firms were shut

down all in all substantially

restricting economic activity from a

supply side from the demand side the

picture doesn't get much better as

countries went into lockdown people just

didn't spend whether due to government's

heavily restricting leaving home to only

essential reasons

or simply due to personal safety in the

UK compared to February

April's output in financial services

fell 6% manufacturing 28 wholesale and

retail trade 34 construction 44 arts an

entertainment 47 and accommodation and

food some 92 percent something seen on a

micro-level is that Airlines globally

have had to obtain support from their

countries to stay afloat something that

we've covered in recent videos with the

loss of fly be in the UK at the

beginning of the crisis urging other

countries into action to protect the

likes of Lufthansa Air France and KLM of

course the UK is not alone the pandemic

has affected more or less all countries

around the globe the most recent set of

forecasts from the organization of

Economic Cooperation and Development

model for a single and double hit when a

second lockdown is necessary and both

scenarios showed just how stark the

picture is with the UK set to be hit the

hardest of all of the g7 countries in a

single hit scenario Japan's economy is

set to shrink by 6 percent

Germany by 6 point 6 the us 73 Canada

8 percent the eurozone nine point one

percent Italy eleven point three France

eleven point four and the UK at an

eleven point five percent here and this

isn't say that a recovery isn't on the

cards anything but the OECD also

predicts a strong recovery in 2021

nonetheless warning most advanced

economies would still be smaller by the

end of next year than they were before

the pandemic but even that's just a

forecast the resolution foundation in

its macroeconomic policy outlook for the

second quarter of this year temper the

strength of any recovery given the role

of savings uncertainty has undoubtably

increased families and businesses are

likely to respond to that by trying to

increase their saving buffers broad

money holdings which include balances in

bank accounts and other liquid assets as

well as cash itself this level of saving

increased sharply tis nearly 60 Billy

pounds in March nearly double the

highest monthly increase during the 2008

financial crisis much of this rise in

saving will reflect for saving as people

are unable to continue their usual

spending but it will also reflect

precautionary saving with those worried

about the future saving to make sure

their family can cope speaking of the

House of Lords Committee on Economic

Affairs on the 19th of May the

Chancellor Ritchie cynic again

highlighted the gravity of the situation

but I've said very clearly although

we've put unprecedented mitigating

actions in place I certainly won't be

able to protect every job in every

business we're already seeing that in

the data and no doubt though there will

be more hardship to come with this

lockdown as having a very significant

impact on our economy we're likely to

face a severe recession the likes of

which we haven't seen and of course that

will have an impact on employment an

impact we're already beginning to see by

midnight on the 14th of June 2020 one

point 1 million employers had furloughed

some 91 million employees through the

government's coronavirus job retention

scheme where the government stepped in

and guaranteed 80% of employees wages up

to 2,500 pounds a month

oh the scheme is set to be amended in

August and totally withdrawn in October

a cost so far of twenty point eight

billion pounds the Office for Budget

Responsibility did however revised down

some of its long-term gross estimates

for the entire scheme from 84 billion

pounds to 60 billion recently even still

though that's clearly a lot of money for

the government to be spending and when

it comes to the self-employed again by

midnight on the 14th of June 26 million

claims have been made to the

self-employed income Support Scheme to

the value of seven point six billion

pounds and when it comes to sheer

unemployment figures the headline figure

known as unadjusted claimant count rose

from March to May by 16 million

claimants to a new total of 28 million

the question nonetheless remains as to

the longer term

impact the longer-term scarring again

speaking the Lord's Select Committee on

Economic Affairs on the 19th of May the

Chancellor Ritchie cynic said it's

between 25 and 35 percent between the

Bank of England and the OB are on that

but I think actually the the more the

question that that occupies my mind and

indeed a long term is probably more

relevant is you know what degree of a

long-term scarring is there on the

economy as a result of this recession

you know what is the debt what is the

loss in productive capacity because

ultimately once we recover from this

crisis by nature it I believe it will be

temporary of course we will would

suppress the virus we will progressively

now lift the restrictions the question

is what do we return to the consensus is

that when the furlough scheme eventually

does stop completely the UK will

experience a spike in unemployment as

employers dump their employees so they

can no longer afford support on their

own two feet the gradual withdrawal of

government support set up by the

Chancellor is meant to avert a cliff

edge collapse in employment but there

still could be some very significant

effects taking place over a period of

weeks

the most recent independent forecasts

conducted on behalf of the Treasury

don't paint a pretty picture in the

fourth quarter of 2020 the unemployment

rate is expected to be at around seven

point nine percent falling slightly a

year later in q4 of 2021 to six point

six percent with public sector net

borrowing the deficit standing at 271

billion pounds for 2020 21 and a hundred

and fifty five point eight billion in

2020 122 the Obi are however estimates

that this deficit will hit two hundred

and ninety eight billion pounds in 20

2021 the highest amount of government

borrowing as a share of the economy

since the Second World War

now all of these are estimates but they

go to show the gravity of the economic

impact of the coronavirus this wider

longer-term impact isn't something

isolated to developed countries such as

the UK while the reported number of

deaths in developing countries is still

relatively low per

actions put the total number of

prospective cases in Africa a quarter of

a billion with the economic impacts

equally severe the United Nations

conference on Trade and Development in a

report back in March projects at

developing countries as a whole

excluding China will lose nearly 800

billion dollars in terms of export

revenue in 2020 such a drastic fall in

their foreign exchange earnings will add

to the challenges already posed by

currency depreciations visa vie the US

dollar with international investment

flow set to decrease by some 40 percent

dropping below a trillion dollars

globally for the first time since 2005

all in all causing the UN to highlight

the looming financial tsunami warranting

major action something echoed by the

UK's former Prime Minister Gordon Brown

writing in The Guardian about the lack

of action by the g20 it's not just an

abdication of responsibility it's

potentially a death sentence for the

world's poorest people whose health care

depends on enhance international aid and

on whom the richest countries depend to

prevent a second wave of the disease

hitting our shores so what do you think

is a v-shaped recovery on the cards for

the UK and other developed countries and

should we be taking a look at other

countries in similar detail let us know

what you think and the country do you

think we should cover next in the

comments below as always you can also

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