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Latest news
All UK pubs, restaurants and leisure centres to be closed
California police use drones to police coronavirus lockdown
Fed takes steps to support US municipal bond market
As the financial toll from the coronavirus pandemic starts to manifest itself, governments are desperately putting together moves to shield businesses and their workers from catastrophe.
The UK today said it would pay the wages of any employee faced with losing their job, in an unprecedented intervention to protect workers amid sweeping economic uncertainty.
Rishi Sunak, the chancellor, said the government would cover 80 per cent of salaries, or up to £2,500 per month, for any employee who is furloughed rather than made redundant. He said the measures would apply to any company, large or small.
Mr Sunak said the measures announced were “unprecedented in the history of the British state” and the government would support “as many jobs as necessary”.
Children of “key workers” will also still be able to attend schools after today’s shutdown. As well as health personnel, these exemptions include people working in utilities, transport and food supply chains, which are coming under serious pressure as households start to stockpile.
In the US, where lay-offs are already biting hard, a deal to help consumers and business is being hammered out in Congress. The Republican proposals have, however, been criticised by Democrats as too business-friendly.
The plans include some protection for the self-employed but freelancers — or “gig economy” — workers around the world are facing severe difficulties.
“One of the trends of the past 20 to 30 years is the transfer of risk from organisations under the banner of freedom,” says one academic. “You have to be very hopeful [and hope] the coronavirus will make people think how sustainable it is.”
Markets
There was some relief for equities markets on Friday as Europe and Asia took heart from the latest round of central bank interventions. US investors, however, remain unconvinced, with the S&P 500 on track to record its worst month in decades. The European Central Bank, Federal Reserve and Bank of England have all unveiled a range of measures in recent days.
The price of oil may be at a 17-year low but it isn’t bad news for everyone: some energy hedge fund managers in London have chalked up big gains after betting on a plunge.
Poor countries hit by the virus are still waiting to see if they will receive a payout from World Bank pandemic bonds. The bonds need 84 days to have passed since the WHO’s official declaration of a pandemic, which, on top of further trigger conditions, means no decision until April 9 at the earliest.
Business
There was a glimmer of hope for the global auto industry as Volvo said it was “back to normal” in China — although its US and EU plants would close. Jaguar Land Rover yesterday became the final UK car producer to shut up shop.
There was more turbulence for airlines as Ryanair, Europe’s largest low-cost carrier, announced a shutdown of at least three months alongside 50 per cent pay cuts. Easyjet will also ground the majority of its aircraft. Hong Kong’s Cathay Pacific said it would end almost all passenger flights, fuelling fears that it will not survive without a bailout.
Bankers say excessive regulations are hampering their abilities to respond to the crisis. They want global authorities to ensure that new rules — on everything from capital and liquidity to accounting and climate change — do not impede their efforts to keep money flowing to the real economy. UK regulators on Friday moved to ease some of the burden.
Global economy
Chinese businesses are slowly resuming operations, but alternative and industrial sector data show a sluggish recovery, with most activity still well below usual levels. As China-US tensions continue to hamper antivirus efforts, an FT editorial urged the world’s two largest economies to rediscover the spirit of co-operation from the 2008 financial crisis.
Rich countries cannot win this war alone, says Raghuram Rajan from the Chicago Booth School of Business and author of The Third Pillar, writing in our economic cure series. “The world needs to fight the virus into submission everywhere in order to relax measures anywhere.”
Yuval Noah Harari, author of the Sapiens and Homo Deus bestsellers, issues a stark warning: “The decisions people and governments take in the next few weeks will probably shape the world for years to come. They will shape not just our healthcare systems but also our economy, politics and culture. We must act quickly and decisively.”
The essentials
Today’s milestones included global fatalities topping 10,000 and Italy overtaking China in total number of deaths.
California — home to 40m people and the world’s fifth-largest economy — went into lockdown. New York governor Andrew Cuomo said he would sign an executive order requiring all workers for non-essential businesses to stay at home.
India’s state of Maharashtra, home to the country’s financial capital Mumbai, has ordered one of the country’s strictest shutdowns. All the state’s workplaces will close from tonight until March 31.
Nordic and Baltic nations — always conscious of the threat from nearby Russia — are much more adept at contingency planning for emergencies than countries such as the UK and France. In Finland for example, business leaders join politicians, civil servants and the military in exercises to prepare for logistics, food and energy problems at a time of crisis.
The EU has warned of the strain on broadband infrastructure as more people are forced to work at home and has asked streaming companies to limit their services. YouTube and Netflix both said they would switch to lower picture quality. Slack and Microsoft are eyeing huge opportunities for their group messaging and collaboration tools.
Here are five charts illustrating the model drawn up by Imperial College in London which detailed the potentially devastating impact of the virus on health systems and the limited effectiveness of individual measures. It has greatly influenced the direction of policy in the UK and the US. Watch the FT’s science editor Clive Cookson explain why the west will be hit harder.
Final thought
Green new world This is the month that changed the nature of work, commuting and shopping, says Simon Kuper. “If that transformation sticks, then one day we’ll have happier and more productive societies, and we’ll look back on December 2019 as the all-time peak in global carbon emissions.”
Get in touch
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Source: Economy - ft.com
