How are people going to get through the next 12-24-36 months

[SydneyRover]

A lot of people in most countries are going to find that even though it may be extremely difficult now it can get a whole lot worse with all the things they have known that were stable no longer are. If all you have known in the past is a western life where your parents worked and it was drilled into you to do the same, for many that job defined them it's how they see themselves in society if that is taken away many will struggle more than financially.

[redarmy82]

At least 30% of the current furloughed population are expected to lose their jobs. That's getting on for 3 million people. Society will completely break down, once these people cannot pay their rent can't afford food etc.

I'm surprised more isn't being made about this to be honest

[drfchound]

Possibly because no one has the answers.

[DonnyOsmond]

Possibly because no one has the answers.

UBI?

[BillyStubbsTears]

Possibly because no one has the answers.

We do have the answer though.

Usual recessions are due to overheating of the economy sending inflation rising. That requires us to dampen down the boom, through rising interest rates. That deliberately sucks demand out if the economy and that dampens spending. So companies sell less and cut jobs.

In those usual recessions, people getting financially hurt is more or less inevitable. If you like, unemployment and reduced wages is part of the necessary medicine. Some companies have to go bust because there was too much of an economic boom before and that was the problem that had to be corrected.

This is totally different.

Here the loss of demand is not because the economy was booming. It's because people CAN'T spend because of the restrictions due to the virus.

Forcing companies out of business in this situation is absolutely NOT the solution to the problem. Sooner or later, the virus will pass, and the economic activity WILL recover. But if we have let companies go bust, and skilled workers have lost their jobs, we won't be able to recover quickly, if at all.

The answer now is very simple. Government has to keep borrowing and keeping companies afloat until the virus is defeated. If that means another £2-3-4 or even 500 billion of Govt debt, so be it. Better that than a post-virus economy that has lost 20% of its companies and has 5million on the dole.

It's elementary economics. But it's frightening that Sunak is now talking about Govt spending having to be cut because the debt is too big. If he does that, this is going to be a shockingly tough decade.

[tyke1962]

Possibly because no one has the answers.

We do have the answer though.

Usual recessions are due to overheating of the economy sending inflation rising. That requires us to dampen down the boom, through rising interest rates. That deliberately sucks demand out if the economy and that dampens spending. So companies sell less and cut jobs.

In those usual recessions, people getting financially hurt is more or less inevitable. If you like, unemployment and reduced wages is part of the necessary medicine. Some companies have to go bust because there was too much of an economic boom before and that was the problem that had to be corrected.

This is totally different.

Here the loss of demand is not because the economy was booming. It's because people CAN'T spend because of the restrictions due to the virus.

Forcing companies out of business in this situation is absolutely NOT the solution to the problem. Sooner or later, the virus will pass, and the economic activity WILL recover. But if we have let companies go bust, and skilled workers have lost their jobs, we won't be able to recover quickly, if at all.

The answer now is very simple. Government has to keep borrowing and keeping companies afloat until the virus is defeated. If that means another £2-3-4 or even 500 billion of Govt debt, so be it. Better that than a post-virus economy that has lost 20% of its companies and has 5million on the dole.

It's elementary economics. But it's frightening that Sunak is now talking about Govt spending having to be cut because the debt is too big. If he does that, this is going to be a shockingly tough decade.

Absolutely Billy , remember words coming from Sunak early in the pandemic " whatever it takes " blah blah blah .

[SydneyRover]

This government is going to struggle to take the people along with it as it's 'trust bank' is very low, it needs to find the will to make some good decisions and follow them through. There were some positive signs regarding infrastructure and 'levelling up in the press about building the 40 new hospitals, a road building program I just hope they don't lose their nerve.

[RobTheRover]

Despite what they are saying  publicly I'm hearing lots of encouraging stuff from inside departments about spending plans. Listen out for the term "shovel ready"

[SydneyRover]

Despite what they are saying  publicly I'm hearing lots of encouraging stuff from inside departments about spending plans. Listen out for the term "shovel ready"

Is that coming from the people or the government Rob? 

[RobTheRover]

Government.

And here it comes.....  Look at the bullet points.

http://news.sky.com/story/coronavirus-recovery-plan-boris-johnson-channels-1930s-us-new-deal-with-building-strategy-12017649

The company I work for have been holding meetings with government throughout the lockdown and this has been the term they have been using for around the last 4 weeks.

[BillyStubbsTears]

Government.

And here it comes.....  Look at the bullet points.

http://news.sky.com/story/coronavirus-recovery-plan-boris-johnson-channels-1930s-us-new-deal-with-building-strategy-12017649

The company I work for have been holding meetings with government throughout the lockdown and this has been the term they have been using for around the last 4 weeks.

Any new spending is welcome. But comparing this to the New Deal is like Richie Rich in Bottom, when he bought a cock pump.

"When it said, it will make your knob 'comparible in size with' a gorilla's, I didn't realise it meant 'a lot smaller than'."

In the New Deal, FDR's Govt supported the economy to the tune of 6% of GDP for 7 years. Johnson's announcement yesterday was for 0.2% of GDP for one year. If he's really serious about this, instead of fooling the gullible, he should be talking about £1-200bn of new Govt spending, not £5bn.

[BillyStubbsTears]

Actually, it's a lot worse than that. Very little of it is new spending at all. It's just re-badging stuff that was already planned.

https://www.bbc.co.uk/news/53236921

Typical Johnson. All flashy front and zero content.

[Monkcaster_Rover]

Not sure if it's relevant. But, i've been brought off of Furlough back to work (motor industry) as my colleagues are rushed off their feet with how busy it is.

Seem to be doing ok on this front!

[Sprotyrover]

'Shovel Ready' is a term that was used to describe the proposed East Coast Mainline Spur into Doncaster Airport!