To think that the economy won't just bounce back in three months?

[CloudsCanLookLikeSheep]

I am really worried about the long term effects of all this on the economy. BJ has sugarcoated it saying things will just bounce back when this is over and people start getting back to normal life. I think that's overly optimistic in the extreme. The normal flow of money has been seriously disrupted. Even those furloughed will be on 80% of pay not 100% and most people will be wary of spending on anything more than essentials during these uncertain times.

There may not be 'systemic' issues in the economy at the start but there sure will be in a few months time .Many people will default on debts and bills. Many companies will go out of business and it's all a big chain reaction.

We've never dealt with anything like this before in modern times, even during the spanish flu pandemic businesses weren't disrupted like this as there wasn't a welfare state so people had to keep earning.

I think the economic impact will take years to recover from and there will be no bounce back recovery, AIBU?

No, but the government has brought in unprecedented measures to ensure that we're in the beat position possible to recover as quickly as possible.

Some people love a bit of negativity.

Many businesses were also not thriving.

If that was true then so many wouldn't be teetering on the edge. January house figures were not good. The issue is we have to pay back what the gov is spending.

I dont think anyone will be rushing to book a cruise

It's not negativity, it's realism.

The government has thrown billions at dealing with covid19 so far. Which will have to be paid for with a combination of higher taxes and/or cuts elsewhere to pay for it.

Many restaurants, travel and retail businesses have a lot of debt and no income whatsover at this current time, which doesn't put them in a good position. If they fail, many people will be out of work, which as well as ruining them financially on an individual basis, means that they won't be paying taxes, and will be entitled to benefits, so a cost to the government.

There are probably far more 'casual dining' and lunch chains than the country can sustain, especially in a recession when people can't afford to eat out.

Many retail landlords also have a lot of debt and a lot of tenants that are not paying their rent and possibly about to go bust. Intu, which owns some of the countries biggest shopping centres have said that they're on the brink of going under.

Given the above, it's not likely that we're all going to bounce back within no time, with little hang over is it?

Thousands of businesses going bust overnight and defaulting on whatever debts they have is not a problem?
Millions of people getting 4/5 pay for an extended period of time is not a problem?
That's not to mention those who have lost their jobs - unemployment set to double.
Just because there was no problem in the economy at the start, does not mean there will not be by the end.

The underlying cause of that is the lockdown. Once that’s lifted and life goes back to ‘normality’ then that disappears, unlike a recession where there are X and Y causes/factors which can take a long time to be resolved.

The Great Depression of 1929 lasted 10 years, so to say the world will ‘never’ be the same again is ridiculous.

It doesn't matter if the lockdown is causing it many businesses cant afford not to trade for months and will inevitably go bust. This will will have a knock on effect higher unemployment etc. In order to pay for coronavirus bail out taxes will get raised and services cut.

The underlying cause of that is the lockdown. Once that’s lifted and life goes back to ‘normality’ then that disappears, unlike a recession where there are X and Y causes/factors which can take a long time to be resolved.

It’s not that simple.

The people being laid off will not quickly return to work once this is over, businesses will be very cautious hiring new staff. There will be demand in some areas, but that may be lower paid. We may never return to the employment levels we had.

Certain industries will never get back to pre-Corona levels, or will take years/decades to.

People’s attitudes to spending/consumption will probably change very significantly.

So while it’s true to say ‘no underlying problems’ the sheer magnitude of the crisis will mean that no, we don’t just bounce back to normal.

I don’t think the world will ever be the same. There may be a lot of positives come out of it too, though.

The underlying cause of that is the lockdown. Once that’s lifted and life goes back to ‘normality’ then that disappears, unlike a recession where there are X and Y causes/factors which can take a long time to be resolved.

Eh? Seriously?

The debt that we're racking up in an unprecedented way isn't going to evaporate overnight when we get back to 'normal'. The world wars weren't an underlying economic challenge but it still took 30 years to recover from.

Our tax and NI is going to go up to cover costs incurred. Im dreading how much itll go up by....😬😬😬😬😬

And house prices and mortgages...worried my house will be worth less than mortgage

A house price crash (or at least a sharp slowdown) looks likely too.

A few optimistic economists - whistling in the dark - initially talked about a short V-shaped recession,
i.e. bouncing back quickly by EOY

That wishful thinking has ended among serious analysts

The talk now is of whether it will be a prolonged deep global recession or a Global Depression

The 1920s-1930s changed the "old" world - and also led indirectly to dictatorships and WW2
WW3 is NOT remotely likely to happen, but there there might be regional wars over scarce resources

Some democratic governments may be replaced by extreme left or right;
dictatorships may tighten their grip

OECD Evaluation of initial impact of COVID-19 measures on economic activity

https://read.oecd-ilibrary.org/view/?ref=126126496-evgsi2gmqj&title=EvaluatinggtheinitiallimpactoffCOVID-19containmenttmeasuresonneconomicactivity

The scale of the estimated decline in the level of output is such that it is
equivalent to a decline in
annual GDP growth of up to 2 percentage points for each month that strict containment measures continue.

If the shutdown continued for three months,
with no offsetting factors,
annual GDP growth could be between 4 - 6 percentage points lower than it otherwise might have been

simplekindoflife

Everyone said the same after Brexit but the stock market and many businesses were thriving!

Maybe because we haven't actually left yet. We are in the transition period and all agreements are still in play. It's the time for negotiations which of course are not happening due to covid-19.

We will be fucked with covid-19 but I don't think it will be for as long as some people say ie 50 years. Brexit will truly fuck us up more at a time when the other countries are also still recovering from covid-19 and looking inward.

What trade deals will be good now?

BigChocFrenzy

Yes totally agree, already the rise of a potential dictator in europe.

www.theguardian.com/commentisfree/2020/mar/29/the-guardian-view-on-hungarys-coronavirus-law-orbans-power-grab

It didn’t take 30 years for the global economy to recover from WW2.

Obviously there will be a massive impact that could take years to recover from. But in 30 years it will be 2050 and I doubt the economy will still be reeling from this. A hell of a lot will have happened and the world will be a very different place, technology-wise etc...

It didn’t take 30 years for the global economy to recover from WW2

No, but we did not pay off world war two debts until 2006!

This thread makes me thankful that Mumsnet has moved beyond the knee jerk reaction of 'but people are going to die!' to being allowed to have a more rational discussion about the other negative consequences of the pandemic.

As a mother, I look at my sleeping baby and worry for her future, what quality of life she will have if we have a modern day version of the great depression. And I know that if I were 70 and given the option of ensuring myself another 5/10 years of life at potential severe detriment to her quality of life through financial hardship, there would be no choice for me as a mother. I'm not trying to be callous or suggest we let people die but we also need to think about our children's futures.

I'm not trying to be callous or suggest we let people die but we also need to think about our children's futures.

But even if we thought that sacrificing an older generation was a morally acceptable thing to do, it would not prevent a recession / depression.

Which is why most countries are opting for the ‘let’s get this thing contained as soon as we can’ option.

I'm not trying to be callous or suggest we let people die but we also need to think about our children's future

For me it’s not only people dying , it’s the people who care , and nurse them dying

It’s appaling that NHS are getting this virus . so whilst I wince at lockdown and how much it fucks us up , I cannot comprehend or get
My head around the fact that the people I rely on to care for us could die

It didn’t take 30 years for the global economy to recover from WW2.

Arguably this is a bigger challenge because the entire planet is impacted, there's no country who'll escape this.

I doubt the economy will still be reeling from this.

It doesn't need to be 'reeling' for it to be a shit place to be by 2019 standards!