Health and Wealth: The Covid Crisis

Health, of course, is paramount, but another equally important thing, for many, is the economy.

Many are asking, how is COVID-19, affecting the economy?  Many businesses are temporarily closed and some smaller outlets have closed for good.  Of course, large businesses like the pub-chain Wetherspoons, for example, will be able to, much better, weather the economic downturn.  The owner and founder of the UK pub-chain, Tim Martin, wants to re-open in June.  Whether this will be practical in reality, along with other pub, restaurant and cafe chains, remains to be seen.  However, it would appear now, that such outlets may be allowed to open in a limited fashion, if phase 3 of the government’s lockdown plan, goes according to plan.

Some are predicting mass unemployment in the wake of COVID-19.  Rishi Sunak has admitted there could be a recession, in an interview with BBC’s Laura Kuennsburg.  While not saying it will be the worst economic downturn in a long time(as some have predicted) Sunak, for his part, was not encouraging in his words, either.

The nation has endured 10 years of austerity, before, COVID, took effect and the lockdown began on 23 March.  Obviously, with the government’s austerity programme, it has been the poorest, in our society, which has been the hardest hit.  The government have two choices, to balance the books, in a certain event, of a recession.  The Johnson government may have to reimpose some sort of austerity or raise taxes on the highest earners.  Certainly, when appearing on BBC’s, ‘Question Time’, former Chancellor, George Osborne, said the government may have to consider either option.    When Fiona Bruce, challenged Mr Osborne, over the 10 years of austerity, instigated by the Cameron government, he was a member of, Mr Osborne, replied, “At the time, it seemed the right thing to do”.  Certainly, if either option is necessary, the government will be on a losing wicket with many sectors within the British public.  For example, if austerity is re-imposed, it will again, hit the poorest in society, already reeling from the last 10 years of cuts.  If higher taxes are imposed, on the better off, then politically the Conservatives could find themselves damaged in future elections.  On a political note, according to the latest ‘You Gov’ poll, Labour leader, Sir Keir Starmer, is already 1 point ahead of Boris Johnson, based solely, on both men’s appearances and performances, at Prime Minister’s Question Time.  The survey gave Sir Keir Starmer, a + 23 points lead over his rival, with Mr Johnson, being on + 22.

Mr Johnson, last Sunday, announced an easing of the lockdown.  This comes, however, with a proviso, of still keeping the 2-metre distance, but ultimately, encouraging people to go back to work if they can, with employers, being responsible for the safety of their employees. The government has announced a 3-point plan on easing the lockdown, however, that will be based, on COVID, the number of deaths and the number of infected, falling, in all sectors.  The re-opening of businesses and people returning to work, however, will have to be handled carefully.  However, despite apparent government successes in the battle against COVID-19, the virus has not gone away and will remain, a clear and present danger for some time.  The casualty figures, from the virus, in the UK, remain the highest in Europe.

Countries like Japan that lifted their lockdown too early, because of economic reasons, found, to their cost, a spike in infections and deaths, once more.  Consequently, Japan had tp re-impose lockdown with restrictions.  Sir Keir Starmer, when questioning Mr Johnson at Prime Minister’s Question Time, held up Japan and other nations, as examples, of nations to follow, who lifted their lockdown too early, with tragic results.  Also, other nations who had successfully had low deaths and infections, Sir Keir explained, should be nations the UK should look to.

One of the reasons, the UK government is lifting the lockdown partially, is because the government has been coming under pressure, from its donors.

Those who are furloughed will be managing, while others will be struggling to keep a roof over their head and food on the table.  Certainly, when Rishi Sunak introduced the job retention scheme or furloughing, paying 80% of workers salaries, it was the biggest state intervention in a long time.  Many from all sectors welcomed this, including the opposition parties.  The scheme along with other measures seems highly generous, however again, when compared to other countries paying 100% of workers wages, the British scheme has been criticised by some.  Mr Sunak has addressed fears about the job retention scheme and the fact government payment of workers wages would drop to 60%.  Mr Sunak announced in parliament, that the scheme would be extended until October.  The government would carry on paying 80% of salaries, up to a value of £2.500, however, come August, there would be slight changes to the scheme.  Namely, that in that month, companies would have to come to some arrangement with the government, to help pay their employees wages.  Of course, if the lifting of the government’s 3-point plan is successful in holding COVID-19 at bay, and as more industries come back on stream, this could also be an important factor, in the furloughing scheme. Of course, some employees, who have been furloughed, may, unfortunately, have already lost their jobs, without realising it.

One of the sectors hit badly, by the lockdown, has been housing.  The housing market has nearly ground to a halt in recent weeks.  With 373,000 property transactions have been put on hold because of the lockdown. Meanwhile, in the world of finance, the Pound is currently stronger than the Dollar, but, weaker than the Euro, as the worldwide impact of Coronavirus as hit the global economy.

The total cost to the UK economy because of the subsequent lockdown over COVID-19 are as follows:

£39 billion furlough scheme.

£16 billion health services, local authorities, measures to support the vulnerable, supporting rail services, and funding for devolved administrations (who have a different approach to lockdown from the UK government and England).

£800 million in additional costs to helping charities.

£500 million also, to local authorities, etc.

£10 billion for the self-employed income support scheme.

£13 billion in business rates package

Finally, the economic fall out from COVID, not just in the UK, but around the world will reverberate for many years to come.  Some have said the great recession that is surely coming will be as great as the 1930s.  Others have predicted the recession and downturn will be the biggest disaster for 300 years.  Either way, the scenario is not good, unless as others have predicted, some sectors of the economy can bounce back quickly.

Last but not least, the cost in human lives, particularly among the old, those with underlying illnesses, ethnic minorities, men, and other at-risk groups have been horrifying.  Could more have been done to prevent this great loss of life particularly in the UK?  The answer has to be probably a resounding yes, as the UK government was warned back in December, this health crisis was coming.  Had the government acted sooner in confronting COVID-19, would we have had the enormous loss of life, that we have now?  It is hard to predict but had we have been more like Germany, South Korea, et al, one would like to think things would not have been that bad.  Then there is our brave NHS, already struggling for various reasons, who, have done a remarkable job in battling COVID-19, losing so many of their staff, even with PPE, like soldiers on a front line in war.

Humanity has proved itself time and again, to be resilient, in whatever, has confronted us.  When historians look back on the economic cost and lives lost, but also, those saved, in this crisis, the COVID battle will be up there with the other great challenges humankind has faced, down the ages.