To those who keep saying the “economy will recover”

[Sadie789]

And who think focusing on the economy is “money over lives”.

Please can you explain to me why you are so relaxed about this, because it affects every one of us.

This won’t be a UK recession, it will be an unprecedented global recession.

People already have lost their jobs and will continue to lose their jobs long after lockdown is over. Well into next year.

If you lose your job you need to claim UC. UC is paid for with taxes. From people who are earning money in jobs.

Taxes also pay for the NHS. Not just the NHS that is treating COVID patients. The NHS treating cancer patients, kidney patients, heart patients, brain patients. The NHS that also keeps thousands of private companies afloat as they sub services and procure resources from them.

Tax pays for just about everything else we take for granted in our daily lives from housing for millions to keeping rubbish from overflowing our streets to keeping the street lights on.

Let’s put the wider issue of how the economy runs to the side and look at individual livelihoods. People say you should have savings to cover emergencies such as these current rainy days. But this rain is unprecedented and affects us all.

DH and I have about £16000 in savings. We both work in roles that are looking very uncertain right now. If we both lose our jobs those savings will last us about 4 months realistically. If only one of us does it will last 8 months. Til the end of this year more or less. When our industries will both still be in an uncertain state of flux. Just get another job you say? What, like thousands of others in the same boat?

When the savings run out what do we do? We’d have to sell the house. There’s some equity in there but it will go down dramatically as house prices drop. Who will buy our house? If we do sell, we will need a mortgage to buy a new one - who gives mortgages to two unemployed people. Could we rent? The equity would soon run out and then who pays for the roof over our heads? So on, and so on.

The economy is about money and greed I hear people say. Lives are more important. Yes they are. But the people saying this in the context of a blase “the economy will recover”, I genuinely want to know why you think an economic depression will not affect lives?

Only the rich are worried about businesses going under is another one I hear.

Let’s see. My neighbour has his own company doing lighting and rigging for theatres. His wife has a wedding dress shop. No one is paying them furlough. They are both terrified.

Around me are a fishmonger who supplied hotels and restaurants. A nursery owner. A pub owner. A mortgage advisor. A friend is a pilot, his wife cabin crew. Another has been running a small childrenswear shop for 22 years and says this will be her last month as she’s bought thousands of pounds of stock (last year) for summer that she has to pay for along with the rent etc. Her business is finished. My hairdressers have shut up shop for good. Our main shopping centre has lost Debenhams, Oasis, Warehouse, all in a month.

Please tell me - this is a genuine question - how you can be so nonchalant about the economy if that is what you truly believe?

I'm worried but hopefull that it will not be a recession in the way we have seen before. Hopefully this is an interruption rather than a recession

In many cases the economy has "paused" rather than recessed

Is it pause though or a fundamental change? How many people will go back to eating out of the home so much now? How many will wfh a lot more in the future? How many would prefer to live a more simple life? How many are now aware that the rainy day can actually come & want to save more for future pandemics? How many will be put off from large crowds or enclosed spaces forever? How many will chose to continue dying their own hair?

Also in the years since 2008, we’ve moved to a gig economy with wages stagnating.

I think a lot of people forget this but very few people lost their jobs in that crash (as a %) however wage stagnation affected & is still affecting many industries. The gov also cut interest rates which they have struggled to raise since.

We can't go back to normal. Our growth based economy had us on a fast track to disasters far worse than coronavirus. We really need to focus on sustainability as we recover from the pandemic.

Self employed people, those with insecure jobs and seasonal workers are terrified but being accused of not caring if elderly people die if they express their views. I was told by a head teacher who is at home not working but still on a full salary that we are 'all in the same boat' No we aren't! We aren't at all - stop kidding yourself, some of us will lose our homes!

@MintyMabel I am an economist. This is the worst economic catastrophe for 300 years. We simply can't brush this off as a minor event that we are all going to bounce back from. Being unrealistically optimistic about the future is the last thing we need now. What we need is calm, fact-based remedies that aim to minimise the inevitable pain (particularly for those who are least able to cope) of what is to come.

Movements in stock markets are not to be trusted. There is a strong evidence that they over-correct - going down/up too far and then bouncing back. Don't kid yourself that the "bounce-back" is a recovery - it is most likely to be a correction.

I hope The Economy, as measured by GDP, is finished forever. Buying more and more Stuff, spending more and more frantically, flying more and more, wasting more and more, throwing away more and more, and going more and more hopelessly into debt, all goes to support GDP. A major part of what makes the world better doesn't appear on GDP, notably the unpaid work mainly carried out by women.

@20mum Totally! GDP is all about money and, whilst that is important, it is far from "everything". As you say, it doesn't measure the important contribution of the unpaid, nor does it measure happiness in any meaningful way.

This is the worst economic catastrophe for 300 years

And the bounce back we will see will be the quickest in 300 years. As an economist surely you can see that this sort of contraction isn’t happening within the same parameters as all previous recessions.

I’m not talking about stock markets, I’m talking about our actual economy. I never mentioned stock markets at all.

It isn’t unrealistically optimistic to say that construction, retail and hospitality will see an increase when things open up. It is a fact. I have £70 million of construction on pause. It will begin again as soon as construction is working again. That’s is a fact. And that’s only my projects in my small corner of construction. The construction industry index has issued their projections into next year for inflation in negative numbers. Overwhelming response to that within the industry has shown it is highly unlikely to be accurate because the industry know their order book numbers with approved projects. But that will be feeding in to government figures.

There was a thread the other day about people who will be spending as soon as they can. It won’t immediately bounce back to where it was but it won’t stagnate at these levels quarter on quarter and to suggest it will isn’t being calm, it is being needlessly pessimistic and will only serve to ensure people are over cautious which doesn’t help the economy one bit.

Is it pause though or a fundamental change?

It isn’t a fundamental change. Restaurants will not remain closed. Retail will not remain closed. People WFH are still working and earning and spending. People haven’t been avoiding a rainy day fund because they didn’t believe it would happen, they have been avoiding it because they either can’t afford to save, or prefer to spend than save.

And judging by the number of people on SM lamenting their own efforts at hairdressing, I can’t see home hairdos becoming a thing any time soon.

@mintymabel There will be an increase in economic activity. There will be things that have been placed "on hold" at the moment which will burst into life again, some will not. But, we won't and can't bounce back to where we were before. There are a lot of people, across the world, who have earned less since the lockdown and who will inevitably spend less coming out of it. This is not just about what has happened in the UK, it is a global phenomenon ... we are not an economic island.

@MintyMabel I never said retail & restaurants will remain closed however the high street is already dying & lots of fashion shops have found Covid the last straw.
I also have no desire to rush back to restaurants, particularly the small pop up type ones. So far my job & DHs have been unaffected but I definitely plan to save more as I never expected the rainy door situation to be businesses closed, schools closed for a considerable time etc. Plus DH is a higher rate tax payer & I expect income tax rises at some point & potentially other measures such as higher VAT. I work locally but DH works in the city as does DB & DS in high rise fancy office blocks, they have all been told they will be wfh for a long time due to public transport issues. Millions shifting to wfh at the same time as a big impact on industries that support the traditional 9-5.

I can’t see home hairdos becoming a thing any time soon.

It's doesn't need to become a thing, even if 40% of people who used to go to the hairdresser switch to dying their hair at home that impacts on the hair salon trade.

DHs office has about 4/5 restaurants & 3 coffee/cake stations. Which is the norm for all the HQs in the City/CW. All that catering has now gone out of the window.

Don't forget this country was bankrupt when WW2 ended, but we still managed to build the NHS & build more council houses than ever had been built before, plus the new towns that were built in the post war regeneration. We were at war for nearly 6 years, we can stand a few months of lockdown, it won't be easy but it isn't impossible, don't forget most countries are in the same boat, it isn't just us, we don't have to live with rationing like families did when the war ended either.

This is the worst economic catastrophe for 300 years

And the bounce back we will see will be the quickest in 300 years.

The Bank of England stated decline this year but I was surprised at the optimism for the following year. It is higher than the decline. I heard it on R4 anyone have the figures

Nat, what a fantastic post

@MintyMabel For the recovery you are anticipating, the population has to have the wages to start spending again and the confidence to do so. The latter is based in the the risk assessment that spending can remain high and savings minimised as they will still earn a wage. We have just had a huge increase in the population on furlough. Savings will be lost and there will be more cautious consumer behaviour, so spending will be curtailed . In terms of hidden stuff - lots of self employed didn’t get furlough and went on UC - they may well have taken mortgage holidays and other repayment holidays to manage and will need to repay once the lockdown eases so do not have liquid cash to spend after the lockdown ease.

It’s bad, very bad and that’s just a snapshot. My own sector has a number of issues.

Minty M: A project manager is wfh on a few things, with more sites planned to reopen on Monday . The firm and the industry, and the councils never seriously took up drones, which inspect more closely that people with hardhats and clipboards ever could.

It would have the side effect of being cheaper, quicker, providing automatic permanent record. Above all drones maximise useful employment of available workforces and enabling disabled workers and carers, or even people with a broken ankle, to work from home . Reasonable measures to adjust employment conditions to meet the needs of disabled workers are a legal requirement rarely considered.

The construction industry sometimes appears unable or unwilling to bring thinking into the twenty first century.. Why build, rather than assemble, which is in many cases more eco friendly, cheaper and vastly quicker?

Why have site meetings as the inflexible only method of speaking, including hours of unproductivecand planet harming time wasting travel, now that lockdown has proved it is frequently pointless?.

Why have central offices at all? Providing a social life is not the task of an employer. Full time office workers have been measured as, on average, spending only 13 hours a week on productive work for employers.

After lockdown, distancing and the need for nobody to touch communal kettles etc will make the office building an even worse waste of space,. The commuting is now proved to be a deliberate infliction of pointless harm to the planet and the employee, plus putting them to unjustifiable risk to health or even life. The legal case would be hard to defend, when the first employees or their family members die of covid 19, after they have been forced into totally pointless crowded commuting journeys to carry out tasks which can be, and now have been, carried out remotely.

But, we won't and can't bounce back to where we were before. There are a lot of people, across the world, who have earned less since the lockdown and who will inevitably spend less coming out of it. This is not just about what has happened in the UK, it is a global phenomenon ... we are not an economic island.

Did you miss (or ignore) the bit where I said we won’t immediately come back to where we were before?

For the recovery you are anticipating, the population has to have the wages to start spending again and the confidence to do so.

There are a large number of people who will have that. The entire workforce have not been furloughed, it’s less than 30%. Unemployment is up, but the vast majority of people are still working. There will be a reduction in unemployment once businesses start to open up. The number of self employed people is less than 5 million, and over half are covered by the government scheme.

I never suggested there wouldn’t be a settled contraction in the economy, but it will be nowhere near the level that it is right now and it is ridiculous to suggest it will.

The construction industry sometimes appears unable or unwilling to bring thinking into the twenty first century.. Why build, rather than assemble, which is in many cases more eco friendly, cheaper and vastly quicker?

I don’t disagree with this, but it’s a different argument.

Actually I find it isn’t the industry generally that’s the problem. Contractors will build what you ask them to. Designers are the problem, but then it also comes down to the money. Clients are unwilling to pay a premium for innovative solutions, meaning prices remain high.

The legal case would be hard to defend, when the first employees or their family members die of covid 19, after they have been forced into totally pointless crowded commuting journeys to carry out tasks which can be, and now have been, carried out remotely.

The legal aspect is exactly why so many of my relatives in banking & legal sectors have been told they will wfh for a considerable length of time.

Realistically the companies could reconfigure the offices or use rotas etc. The issue is public transport, they cannot tell people they have to travel to work by public transport.

@MintyMabel how do you envisage the cost of the current economic protection will be paid for?

this is unhelpful though. what do you expect anyone to do?

The people saying this have comfortable jobs and are living lockdown for one reason or another. I'm terrified about the economy and what it means for me personally and my job. I'm only a little concerned about getting the virus.

Should say loving not living